Back to School for Michigan Employers–Minimum Wage Increase

Barnes Thornburg

As the kiddies get ready to go back to school, employers too should freshen up on a few items that are about to change in Michigan, including the minimum wage. Back on May 28, we reported on this blog that Michigan had passed The Workforce Opportunity Wage Act, by which the minimum wage will increase from $7.40 to $9.25 per hour over the next four years. The first incremental increase takes effect on September 4, when the minimum wage will increase to $8.15 per hour. So, if you haven’t done so already, please mark September 4 on your calendar.

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EEOC Signals Intent to Tighten Enforcement of Laws Prohibiting Pregnancy-Related Discrimination

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Noting that it continues to see “a significant number of charges alleging pregnancy discrimination,” and that its “investigations have revealed the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices,” the U.S. Equal Employment Opportunity Commission (“EEOC”) recently issued Enforcement Guidance on Pregnancy Discrimination and Related Issues (“Enforcement Guidance”). The full text of the Enforcement Guidance is available here

The EEOC’s issuance of the Enforcement Guidance, which focuses primarily on the fundamental requirements of the Pregnancy Discrimination Act (“PDA”), while also touching on the pregnancy-related protections provided under the Americans with Disabilities Act (“ADA”), sends a strong signal to employers that their employment decisions and policies will now be more intently scrutinized for actionable pregnancy discrimination.1

The Enforcement Guidance focuses on the issue of equal access to benefits – in particular, to light duty, leave, and health insurance. With regard to light duty, employers may not treat employees whose capacity is limited by pregnancy, or a pregnancy-related condition, any differently than they do employees who are similarly limited, but for reasons unrelated to pregnancy.

As for leave, employers should be cognizant of the following. First, they may not force an employee to take leave because she is or has been pregnant, so long as she is able to perform her job. Second, the PDA mandates that employers permit women with pregnancy-related physical limitations to take leave on the same terms and conditions as employees who are similarly limited for other reasons. Finally, while leave related to pregnancy-related medical conditions will, necessarily, be limited to female employees, leave to bond with or care for a newborn must be extended to male and female employees on an equal basis.

With regard to health insurance, employers should note that an employer-provided health insurance benefit plan must cover pregnancy-related costs to the same extent it covers medical costs unrelated to pregnancy. This required symmetry of coverage must extend to costs stemming from an insured employee’s pre-existing pregnancy. Additionally, an employer may be in violation of the PDA if the health insurance it provides does not cover prescription contraceptives, regardless of whether the contraceptives are prescribed for birth control or for medical purposes. The Enforcement Guidance does not address whether, in the wake of the U.S. Supreme Court’s Hobby Lobby decision, certain employers may be exempt from providing insurance coverage for contraceptives.

The guidance also addresses the obligations under the ADA to provide pregnant employees with reasonable accommodations to address pregnancy-related limitations. Such accommodations may include:

  • redistributing marginal or nonessential functions – such as occasional lifting – that a pregnant worker cannot perform;

  • modifying workplace policies, such as to afford a pregnant employee more frequent breaks; 

    • allowing a pregnant employee placed on bed rest to work remotely (where

      feasible); or

    • granting leave to a pregnant employee in excess of what the employer typically provides under its sick leave policy.

      The final section of the Enforcement Guidance provides “best practices” that employers can utilize to reduce their exposure to pregnancy-related liability under the PDA and ADA. The EEOC suggests, as a general matter, that employers should:

    • develop, disseminate and enforce a strong policy based on the requirements of the PDA and ADA;

    • train managers and employees regularly about their rights and responsibilities related to pregnancy, childbirth, and related medical conditions;

    • conduct employee surveys and review employment policies to identify and correct any policies or practices that may disadvantage women affected by pregnancy, childbirth, or related medical conditions, or that may perpetuate the effects of historical discrimination in the organization;

    • respond to pregnancy discrimination complaints efficiently and effectively; and

  • protect applicants and employees from retaliation.

    In light of the EEOC’s heightened emphasis on PDA and ADA enforcement, employers should consult counsel before undertaking employment actions that may implicate pregnancy-related protections under the PDA or ADA, and to evaluate whether revisions to existing employment policies are needed to limit exposure to pregnancy- related liability. 

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It Depends: The Top 3 Inherently Gray Areas of Employment Law

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Fact-specific.

 Case by case.

 These are just two of the terms that stand for one of the frustrating (for employers) truths of many areas of employment law:  there are few black and white answers. There are endless shades of gray, and in honor of this week’s letter of the law (G), we recognize three common gray areas and some specific questions that must be asked when addressing situations under each. The fact that there are so many questions that need to be answered under each explains why they are gray areas!

The Letter G

1. Is a noncompete agreement enforceable?

  • What duties did the employee perform for the previous employer?

  • What duties is the employee performing for the new employer?

  • Did the employee engage in any underhanded behavior while still employed by the previous employer (such as copying confidential documents)?

  • What have been the previous employer’s practices and track record in enforcing noncompetes in the past?

  • What state’s law does the agreement say will apply?

  • What state is the employee located in now?

  • Does the contract specify where any disputes must be litigated?

2. Does an employer have to provide a particular reasonable accommodation under the disability discrimination laws?

  • What efforts have been made to communicate with the employee about the situation?

  • Has the employee been cooperative in responding to inquiries?

  • Do you have a medical assessment of the employee’s ability to perform his/her job?

  • Do you trust that assessment (or do we think the physician’s assistant filled it out the way the employer wanted him/her to)?

  • How unique are the employee’s job duties?

  • What are the job duties?

  • Which job duties do you thing are not being adequately performed?

  • Do you question the employee’s efforts in attempting to work, or do you think the employee is to any degree malingering?

3. Is a worker an independent contractor or an employee?

  • Is there any written agreement with the worker?

  • Are there are other workers performing the same or similar tasks, and are they considered employees or contractors?

  • How much direction is the worker receiving from the company on the details of performing tasks?

  • Does the worker provide services for other companies?

  • Is the worker full time or close to it for your company?

  • Does the worker provide any or all of the tools need to perform his/her work?

  • How long has the worker been working for your company?

These issues are like snowflakes. With so many questions (and these are not intended to be exhaustive lists), no two sets of answers will be exactly alike. That can be frustrating, because it is easier to administer rules with clearer thresholds: Two weeks of vacation. No flip flops at work. The work day is 8:30 to 5:00 with a half hour lunch break at noon. Those rules are usually pretty easy. Like it or not, though, what employment lawyers and employers spend most of their time on are the snowflakes, and carefully working through the situations to manage them as cost-effectively as possible.

What gray areas are you spending your time on this week?

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E-Verify Update and Improvements

Poyner Spruill Law firm

​E-Verify has been operational since 1997 as part of a Basic Pilot Program to assist employers to verify electronically that a newly hired employee is authorized to work in the US.  A number of states have made use of E-Verify mandatory, including North Carolina which requires that employers with 25 employees to have been enrolled in E-Verify by July 1, 2013.

Update

Currently there are over 530,000 employers nationwide enrolled in E-Verify.  Statistically, the program has grown rapidly as has its accuracy, having verified close to 24 million cases.  Of those, 98.81% have been confirmed as employment authorized.  The US Citizenship and Immigration Services (USCIS) graphic below provides E-Verify’s latest statistics:

E-verify

The Monitoring and Compliance Branch (M&C Branch) was created by the USCIS in 2009 to ensure E-Verify is being used properly.  Its main function is to monitor and guide E-Verify participants by phone, email, desk reviews and site visits.  This unit does not fine employers, but does refer cases of suspected misuse, abuse or fraud to Immigration Customs and Enforcement (ICE) and the Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC).  There has been an uptick in complaints to the OSC resulting in some sizeable settlements.  All settlement agreements described on the OSC website have one thing in common: all employers participated in E-Verify and the OSC became involved, for the most part, by the USCIS referring the employer to OSC.  Thus, it is noteworthy that participation in E-Verify alone does not protect an employer from enforcement action and penalties.

Recent Improvements to E-Verify System

E-Verify has announced some needed improvements to its system to assist employers who, in doing so, will hopefully not attract M&C Branch attention:

  • Duplicate Case alert now notifies the employer if a social security number  matches any other social security number entered for an existing case with the past 30 days.
  • The user’s name no longer auto-fills: it must now be completed each time to ensure accuracy, providing a prompt to validate or update email and phone number whenever the user’s password expires, which is every 90 days.
  • An employee whose information is entered in E-Verify resulting in a tentative nonconfirmation will receive email notification if they provide their email address on the Form I-9.
  • There is a new photo tool that will display any photo on record with E-Verify, enabling the user to compare it to the photo ID being presented.
  • E-Verify now verifies a driver’s license as to authenticity by matching the data entered by the user against participating state motor vehicle department records. Currently, North Carolina does not participate in this so-called RIDE system.
  • If E-Verify detects fraudulent use of a social security number, it prevents that number from being used more than once.
  • Notices generated by E-Verify are now available in 18 languages.
  • There are monthly webinars in Spanish for employers.
  • E-Verify screens for typographical errors and requires employers to correct them.
  • The Further Action Notice that is generated after a Tentative Nonconfirmation from the Department of Homeland Security includes instructions on how to correct immigration records after resolving the Tentative Nonconfirmation on E-Verify.
  • Updated Further Action Notices are also no longer pre-populated, but are easy to complete.
  • Customer support has been improved and includes an “E-Verify Listens” link that can be accessed by the E-Verify user while in the E-Verify system to assist with E-Verify completion.

While the system is not perfect, it is increasingly pervasive and increasingly “user friendly.”  Further, employers have a strong incentive to use E-Verify properly to avoid settlements generated by  enforcement actions that appear to be directly linked to E-Verify misuse, abuse and fraud.

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Inflexible Leave Policies under the ADA since Hwang

Jackson Lewis Law firm

Since 2009, the EEOC has sued numerous employers who have terminated employeespursuant to an inflexible leave policy, a policy that provides a defined amount of leave and results in an employee’s termination once the employee exhausts that leave.  The EEOC argues that such policies are unlawful because they do not allow for additional leave to be provided as a reasonable accommodation.

And then along came Hwang.  Hwang had used all of the six months of leave under her employer’s inflexible leave policy. When her request for additional leave was denied, she sued, arguing that her employer needed to provide additional leave as a reasonable accommodation. The Tenth Circuit held that the very policy decried as blatantly unlawful by the EEOC was fair, lawful and actually protects employees with disabilities.  Hwang v. Kansas State University (10th Cir. May 29, 2014). “After all,” the court said, “reasonable accommodations … are all about enabling employees to work, not to not work.” (Emphasis added). See our Hwang post here.

What has happened since Hwang? One month after Hwang, on June 30, 2014, according to an EEOC press release, Princeton Health Care System settled an inflexible leave policy lawsuit brought by the EEOC by paying $1.35 million. The System also agreed, among other things, not to adopt an inflexible leave policy, i.e., that type of policy found lawful in Hwang.  PCHS had provided its employees up to 12 weeks of leave, the maximum amount provided by the FMLA, according to the EEOC.  The EEOC’s press release also notes that employers have paid more than $34 million to resolve lawsuits the EEOC has brought concerning leave and attendance policies.

More recently, on July 10, 2014, the EEOC sued Dialysis Clinic, Inc. for terminating a nurse who had exhausted her employer’s inflexible leave policy (four months of leave). EEOC v. Dialysis Clinic, Inc. (E.D.CA). At the time of termination, according to the EEOC press release, the employee had been “cleared by her doctor to return to work without restrictions in less than two months.”

The apparent conflict between Hwang and the EEOC’s view that inflexible leave policies are indefensible exacerbates the challenge facing employers in search of the answer to the most vexing ADA question–how much job-protected leave must an employer provide under the ADA?  More than three years have passed since the EEOC held a public hearing on leave as a reasonable accommodation under the ADA and suggested it might issue guidance on the topic. We posted previously that waiting for that guidance is like waiting for Beckett’s Godot, where those waiting come to the realization at the end of each day that he is not coming today, he might come tomorrow.  Employers continue to wait. In the words of Beckett’s Estragon, “such is life.”

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Donning & Doffing (Wage Disputes): Old Is New Again

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Our Letter of the Law series is focused on current employment law developments, anddonning and doffing wage disputes are anything but “new” to the courts.  The U.S. Supreme Court and Congress were dealing with donning and doffing work clothing and equipment in the 1940s.  (Perhaps that is obvious given that nobody really says “donning” or “doffing” in recent years other than in this context.)

Donning and Doffing

But donning and doffing, and when employees must be paid for getting dressed for work, continues as an important and tricky wage/hour law issue.  That and the 7th Circuit U.S. Court of Appeals’ “novel approach” to judicial curiosity in Mitchell v. JCG Industries, Inc. merits inclusion as this week’s letter D.  The court in Mitchellrecently weighed in on the proper compensation for workers who are required to don and doff safety protective gear at work.  Union workers in a poultry processing plant brought the suit, alleging violations of state and federal wage laws for the employer’s failure to pay wages for time spent donning and doffing protective work gear.  Workers were required to put on jackets, aprons, gloves, hairnets, and other items at the start of every shift.  In addition, they had to remove and put back on the gear at the start and end of lunch breaks.  The principal issue was whether the employer had to compensate workers for the time spent changing in and out of gear.

Relying on Section 203(o) of the federal Fair Labor Standards Act, the court concluded that donning and doffing time is excluded from compensable time.  In its opinion, the court noted that it took very little time to dress in the gear – and indeed noted that the court staff had done so.  Additionally, the court noted that it would be overly burdensome to require employers to track such time for every employee.

Donning and doffing remains a tricky issue, a perfect example of what lawyers call “fact specific” cases.  Compare DeKeyser v. Thyssenkrupp Waupaca, Inc., 735 F.3d 568 (7th Cir. 2013) (holding that summary judgment was improper to the employer in the case involving foundry employees who were required to shower and change after their shifts).  Employers who require safety and other equipment or clothing must, decades after the law was first passed, continue to watch cases like Mitchell that might affect their decision making on what donning and doffing time must be paid.

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Executive Order Extends Workplace Anti-Discrimination Protections to LGBT Workers of Federal Contractors

Jackson Lewis Law firm

Though it took longer than expected, President Barack Obama has signed an Executive Order extending protections against workplace discrimination to members of the lesbian, gay, bisexual, and transgender (“LGBT”) community. Signed July 21, 2014, the Executive Order prohibits discrimination by federal contractors on the basis of sexual orientation or gender identity, adding to the list of protected categories. It does not contain any exemptions for religiously affiliated federal contractors, as some had hoped. Religiously affiliated federal contractors still may favor individuals of a particular religion when making employment decisions.

The President directed the Secretary of Labor to prepare regulations within 90 days (by October 19, 2014) implementing the new requirements as they relate to federal contractors under Executive Order 11246, which requires covered government contractors and subcontractors to undertake affirmative action to ensure that equal employment opportunity is afforded in all aspects of their employment processes. Executive Order 11246 is enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP).

The Executive Order will apply to federal contracts entered into on or after the effective date of the forthcoming regulations. OFCCP likely will be charged with enforcement authority.

We recommend that employers who will be impacted by this Executive Order review their equal employment opportunity and harassment policies for compliance with the Executive Order. For example, employers who are government contractors should add both sexual orientation and gender identity as protected categories under these policies and ensure that mechanisms are put in place to ensure that discrimination is not tolerated against LGBT employees.

We will provide additional information and insights into the proposed regulations when they are available.

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Supreme Court Gives Second Win in Two Days to Caregivers Challenging Compulsory Union Dues

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The United States Supreme Court acted today in another case involving a scheme to siphon millions of dollars in compulsory union dues from home caregivers assisting public aid recipients.  On June 30, 2014, the Court decided Harris v. Quinn and held that the First Amendment to the United States Constitution prohibits the collection of a compulsory agency fee from rehabilitation program personal assistants who do not want to join or support the union.  Today, the Court applied Harris to Schlaud v. Snyder, vacating the judgment, and remanding the case to the United States Court of Appeals for the Sixth Circuit for further consideration in light of Harris v. Quinn.  As the Schlaud case continues, look for another blow to the forced-dues arrangment perpretrated by various union officials and their friends in government.

Schlaud and other plaintiffs in the case are home childcare providers in Michigan who sought class-action certification in their First Amendment challenge to the state’s compulsory deduction of union dues from subsidies paid to home childcare providers.  In January 2009, the Michigan Department of Human Services (DHS) began deducting 1.15% from subsidy payments made to home childcare providers. The funds were forwarded to the union, which was a joint venture between the United Auto Workers union and the American Federation of State, County and Municipal Employees union.  According to the opinion of the United States Court of Appeals for the Sixth Circuit, the union collected $2,000,019.09 in 2009 and at least $1,821,635.21 in 2010.

Schlaud and her co-plaintiffs sought the return of the compulsory union dues that were collected in violation of their First Amendment rights. The district court denied certification of the plaintiffs’ proposed class — all home childcare providers in Michigan — because it concluded a conflict of interest existed within the class: some members voted for union representation and others voted against union representation.  The Sixth Circuit affirmed, and Schlaud sought review by the Supreme Court.

Attorneys at the National Right to Work Legal Defense Foundation filed and have litigated both Shlaud and Harris on behalf of personal assistants and home childcaregivers.  In Harris, the Supreme Court did not reach the issue of the constitutionality generally of compelling public sector employees to pay union dues or agency fees, but it strongly signaled that the legal analysis of a 1977 Supreme Court decision, Abood v. Detroit Board of Education, which found compulsory agency-fee requirements to be constitutional, was “questionable.” The Harris opinion opens the door, cracked initially in Knox v. Service Employees, for the Court to revisit the constitutionality of compelling public employees to pay union dues or agency fees as a condition of employment.

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U.S. Supreme Court Upholds D.C. Circuit Decision in Noel Canning

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In a lengthy opinion authored by Justice Stephen Breyer, and drawing heavily on historical practice of Presidents and the Senate, the United States Supreme Court has upheld the decision of the U.S. Court of Appeals for the D.C. Circuit in Noel Canning v. NLRB, concluding that President Obama’s three recess appointments to the National Labor Relations Board in January 2012 (Sharon Block, Richard Griffin, and Terence Flynn) were invalid. The Court upheld the right of the President to make recess appointments both inter- and intra-session, but held that it is the Senate that decides when it is in session by retaining the power to conduct business pursuant to its own rules. The Court also found that a recess of less than ten days “is presumptively too short” to permit the President to make a recess appointment, except in “unusual circumstances”, such as a “national catastrophe”. (The recess here was three days.) The Court also decided that the recess appointment power applies to appointments that first come into existence during a recess and to those that initially occur before a recess but continue to exist during a recess.

As a result of the decision, over 1,000 Board decisions likely are now invalid. According to the National Right to Work Foundation, 999 unpublished decisions and 719 published decisions (totaling 1,718) could be affected. The Chamber of Commerce estimates 1,302 decisions from August 27, 2011 through July 17, 2013 to be suspect.

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Michigan Minimum Wage Increases Enacted

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Michigan Governor Rick Snyder has signed the Workforce Opportunity Wage Act, mandating gradual increases in the state’s minimum wage to $9.25 an hour by January 1, 2018. The Act ties increases to the rate of inflation beginning 2019.

The first of four raises mandated by Senate Bill 934 (Public Act 138), to $8.15 an hour, occurs September 1, 2014. Michigan’s minimum wage since 2008 has been $7.40 an hour for workers who do not receive a tip and $2.65 an hour for workers earning tips, such as waiters.

Also beginning September 1, 2014, tipped employees would have a minimum rate that is 38 percent of the minimum for non-tipped workers, or about $3.51 an hour.

The state’s hourly minimum for non-tipped workers will increase as follows:

  • Beginning September 1, 2014, to $8.15.
  • Beginning January 1, 2016, to $8.50.
  • Beginning January 1, 2017, to $8.90.
  • Beginning January 1, 2018, to $9.25.

Starting in 2019, minimum wage increases will be tied to the rate of inflation, but any increase will be capped at 3.5 percent a year. The rate will adjust annually based on a five-year rolling average of inflation for the Midwest. Annual increases would take effect on April 1 of each year. No increase would occur if the state’s unemployment rate for the preceding year was 8.5 percent or higher.

Several other states, including Delaware and Minnesota, also have adopted increases this year, and the minimum wage for workers on new federal contracts has been raised to $10.10 per hour.

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