Labor & Employment Archives - Page 67 of 154

New Legislative Action on “Tip Pooling”

Congress and the President have waded into the ongoing debate regarding employers’ use of “tip pools” under the Fair Labor Standards Act (“FLSA”) by passing the Tip Income Protection Act (“TIPA”) as part of the omnibus spending bill.

The FLSA permits an employer to take a partial credit against its minimum wage obligations based on employee tips if the employee retains all of his or her tips, or they are made part of a tip pool shared only with employees who “customarily and regularly receive tips.” See 29 U.S.C. § 203(m). Thus, an employer utilizing a tip credit to comply with minimum wage obligations cannot establish a tip pool that includes non-tipped employees (e.g., back-of-the-house restaurant employees). The FLSA left the allocation of tips unregulated where an employer did not use tip credits.

In 2011, the Department of Labor (“DOL”) issued a regulation applying the limitation on the use of tip pools to cases where the employer did nottake a tip credit and paid employees the full federal minimum wage. See 29 C.F.R. § 531.52. A number of federal courts concluded that the regulation was inconsistent with the text of the FLSA. See, e.g., Marlow v. New Food Guy, Inc., 861 F.3d 1157, 1163-64 (10th Cir. 2017) (2011 DOL regulation was inconsistent with the FLSA, which did not authorize the agency to “regulate the ownership of tips when the employer is not taking the tip credit”). However, the Ninth Circuit disagreed, reasoning that because the FLSA is “silent as to the tip pooling practices of employers who do not take a tip credit” it should defer to the DOL. Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080, 1090 (9th Cir. 2016).

In 2017, the DOL announced proposed rulemaking to rescind the 2011 regulation. See here and here. After much deliberation regarding the proposed agency action, Congress enacted TIPA, which states, in relevant part:

“An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.”

TIPA also provides that the 2011 regulation shall have “no force of effect.” An employer that violates TIPA may be liable for any tip credit taken, the amount of the withheld tips, liquidated damages, and $1,100 civil penalty for each violation.

Stated simply, TIPA limits the permissible use of tip pooling for all employers irrespective of whether an employer takes advantage of a tip credit or whether its employees’ regular hourly rate exceeds the minimum wage. However, TIPA’s language raises a number of interpretive questions, such as:

What does it mean for an employer to “keep tips” received by employees? The law very likely prohibits an employer from diverting tips directly to its own coffers. But does an employer “keep tips” by implementing a standard tip pool that does not include “managers or supervisors?”
TIPA does not define a manager or supervisor. Assuming TIPA permits standard tip pools, does an employer violate the law if the pool includes modestly-paid hourly employees with minimal management responsibilities and limited or no ability to discipline employees (e.g., shift leads)?

These are a few of the questions employers with tipped employees will confront in the coming months and years as we await additional guidance from the courts and the DOL. Employers in the restaurant and other industries should closely analyze how they distribute employee tips to ensure compliance with TIPA.

This post was written by James C. Sullivan and Brian K. Morris of Polsinelli PC, Polsinelli LLP in California.

For more on Employment Legislation, Check out the National Law Review’s Employment Law Page.

Happy 25th Birthday, FMLA! 25 Years Later – Where Are We Now?

The Family and Medical Leave Act (FMLA) is celebrating its 25^thanniversary this month. On February 5, 1993, President Bill Clinton signed the FMLA into law guaranteeing certain employees up to 12 unpaid weeks off of work a year to care for children or ill family members, or to recover from one’s own serious health condition. During the time off, an employee’s medical benefits would remain intact.

When initially passed, the statute’s purpose was to address the rising number of American households with working parents who were concerned about losing their jobs when taking time off to care for a child or a sick family member. It was also meant to allow people who had serious health conditions to remain employed when taking time off work for temporary periods.

Since that time, the FMLA has become a source of contention for employers and employees alike. Employers often feel overburdened by the paperwork’s technical requirements, the ever-increasing threat of litigation, and the costs of complying with the statute. Employees and workers’ rights groups are concerned about the FMLA’s lack of coverage for part-time and small-business workers and the narrow definition of family. Either way you slice it, the FMLA is due for a revamp, but are the Trump administration’s budget proposal and tax cuts pushing the FMLA in the right direction?

FY2018 Budget Proposal

Although in its nascent form, President Donald Trump followed up on a campaign promise and included a proposal for paid parental leave in his FY2018 Budget Proposal. The Budget Proposal would give new mothers and fathers up to six weeks of paid parental leave. The funding for the proposal would come from the Unemployment Insurance system and be funded and run, at least in part, by the states. A reduction in improper payments, assistance finding new jobs, and the ability to keep reserves in the Unemployment Trust Fund accounts are listed as possible vehicles to fund the program.

As we previously reported, some state and local governments have already enacted their own Paid Family Leave measures. It is unclear at this point how the new proposal would affect these state and local laws. Although making coverage mandatory and taking the burden off of employers to pay for leave are attractive goals for many, there are practical concerns about how this proposal would be funded and which employees would be covered.

Tax Act

In December, a bill formally known as the Tax Cut and Jobs Act was signed into law. Beginning in 2018, employers who voluntarily provide paid family and medical leave are eligible to receive a tax credit of between 12.5 percent and 25 percent of the cost of each hour of paid leave based on the amount of compensation provided during the leave. The employer must provide at least two weeks of leave and compensate the worker for at least 50 percent of the worker’s earnings to be eligible. The tax credit will only be applied toward paid leave for employees who make less than $72,000. The employer must also make the paid leave available to both full-time and part-time employees who are employed at the organization for at least a year to receive the credit.

The tax act also broadens the scope of paid leave to cover part-time employees and may incentivize employers to voluntarily provide paid leave, but the act ends in 2019 and may not provide enough credit for all employers to buy into the program.

As the policy landscape shifts at the federal and state level towards paid leave, employers should consider which approach is best for their current situation. If relying on the tax incentive for purely financial reasons, an employer should analyze the numbers to make sure that the tax incentive is worth offering the paid leave, taking into consideration that the tax incentive may extinguish at the end of 2019 unless extended by Congress. Employers would also be wise to review state and local laws to make sure that their policies align with local paid leave mandates. Employers could proceed ahead of any mandatory change and voluntarily implement paid leave based on intangibles such as recruitment, retention, and worker productivity or wait and see if the family and medical leave winds change direction yet again.

This post was written by Taylor E. Whitten of Foley & Lardner LLP.

R2-Me2? How Should Employers Respond to Job Loss Caused by Robots?

There is no question that the use of robots, along with other similar technological changes in the workplace, will continue to eliminate or downgrade jobs. Indeed, it has been estimated that on average, each workplace robot eliminates six jobs. This article will examine (1) the impact such changes will have on women and (2) whether these changes can be subject to legal challenge as prohibited gender discrimination.

The gender pay gap has become a much debated and controversial topic, but this article will stay out of the fray. However, data produced by the consultancy firm Korn Ferry has concluded that women in Britain make just one percent less than men who have the same function and level at the same employer. Therefore, some have suggested that the main problem today is not necessarily unequal pay for equal work, but rather the forces and circumstances that lead women to be forced into and stuck in lower-paid jobs at lower-paying organizations. According to The Economist, this is the true gender “pay gap,” which is a much more difficult problem to solve.

Current research suggests that, unless addressed, this gender “pay gap” will increase rather than decrease. Last month, a report to the World Economic Forum in Davos, Switzerland, predicted that “artificial intelligence, robotics and other digital developments,” and the consequent job disruption, are likely to widen rather than diminish the gender pay gap. See “Towards a Reskilling Revolution” at p. 3. Citing statistics published by the federal Bureau of Labor Statistics, the report concluded that of the 1.4 million U.S. jobs that are projected to become “disrupted” because of robotic and other technological changes between now and 2026, 57 percent will be held by women.

But there could be good news for those concerned about gender wage equality. The report argued that an increased awareness of the impending effect of these changes, along with a concerted plan by governments, employers, businesses, labor unions and employees themselves to retrain or “reskill” disrupted workers, will present displaced workers with more opportunities for jobs at higher pay levels than their current wages. In a summary of the main report, the authors predicted that reskilling programs could result in higher wages for 74 percent of all currently at-risk female workers, thereby narrowing the gender wage gap.

Although job disruption from the use of robots will disproportionately impact women, the fact that it will result from “business necessity” means that employees may have difficultymounting successful legal challenges to this practice. Instead, thoughtful employers may want to focus their energies on learning more about the scope of this looming problem and, wherever possible, create or participate in programs that will reskill impacted employees, and thereby provide them with more opportunities in expanding and higher-paid occupations. Nor is this an unrealistic proposition as, overall, in the decade ending in 2026, the U.S. job market is projected to create 11.5 million new jobs.

This post was written by Gregory W. McClune of Foley & Lardner LLP.

Recent Challenges to the Use of Hair Follicle Drug Testing

Without question, the trucking industry must do all it can to make sure its drivers are drug-free. However, employers must establish policies and procedures that recognize the diversity in the work force and the need to be flexible in the types of drug tests it administers to drivers and applicants. Hair testing is very effective in detecting drugs but should not be used as an end all for all applicants and experienced drivers. The National Minority Trucking Association reports that of the 3.5 million truck drivers in the United States, 1.5 million are minorities. As demands for new drivers increases, minorities are increasingly entering the profession. In addition, employers seek to retain experienced drivers. Recent court cases and EEOC settlements point to the need for those wishing to hire and retain minority drivers to have flexibility when it comes to the types of drug testing used on minority drivers and candidates.

Race-Based Challenges to Hair Follicle Testing

A recent decision from the United States District Court of Appeals for the First Circuit revived a lawsuit filed by eight police officers, a cadet, and a 911 operator. All are African American. All tested positive for cocaine after a hair follicle test was administered by the Boston Police Department. This was the second time the First Circuit found that the hair follicle test had a statistical disparate impact on African American officers in violation of Title 7 of the Civil Rights Act of 1964.

Title 7 prohibits employers from utilizing “employment practices that cause a disparate impact on the basis of race,” unless those practices are justified by business necessity. A disparate impact claim can succeed even when the employer did not intend to discriminate against persons in a protected class. The Boston Police Department’s officers and cadets had been subject to annual hair follicle drug tests. When the testing agency reported that a sample tested positive for cocaine, a physician chosen by the department checked to see if the individual had been administered certain medications during a medical procedure. If not, the individual could elect to have a “safety net” test of a different hair sample. The safety net tests were much more sensitive than the initial tests in detecting the presence of cocaine and its chemical by-products.

Plaintiffs challenged the reliability of hair testing. They pointed out that the federal government has refused to authorize hair testing in drug screening of federal employees and employees of private industries for which the government regulates drug testing. Plaintiffs argued that black individuals have higher levels of melanin in their hair and that causes cocaine and cocaine metabolites to bind to the hair at higher rates. If someone snorts or smokes cocaine its “aerosolized powder” will deposit on any nearby surface, including non-users hair. These deposits cannot be distinguished from the effects of actual use by current hair testing methods.

The plaintiffs also pointed to statistics kept by the department over a seven-year period. The statistics showed that out of 4,222 blacks that were hair follicle tested, 55 were positive. That compared to 10,835 whites being tested and 30 being positive. This resulted in a standard deviation of 7.14. The court acknowledged Mark Twain’s quip that there are three kinds of lies: lies, damned lies and statistics. However, the statistical analysis provided by plaintiffs provided to the court that “…we can be almost certain that the difference in outcomes associated over race over that period cannot be attributed to chance alone.”

The court then discussed whether the testing was job related. The court readily agreed that the hair test was job related since abstention from drug use was an important element of police behavior and that having a work force that did not consume drugs was a legitimate business need for the department. It noted that there was no reason why a test need be anything near 100% reliable – as few tests are – to be job related and consistent with business necessity. However, the disparate impact claim of the plaintiffs survived if they could show that an alternative test would decrease the chances of impacting innocent officers. Plaintiff’s suggested that those who had a positive hair follicle test go through a series of random follow up urinalysis tests in order to reduce the number of experienced officers being terminated and recruits being denied the opportunity of joining the force. The court found that a jury could agree with that approach and ordered that the suit go forward.

Religious Challenges to Hair Follicle Testing

In a charge filed with the EEOC, four East Indian Sikh applicants challenged J.B. Hunt’s drug testing policy. The policy required applicants to provide a hair sample for follicle testing. One of the five Articles of Faith for a Sikh is to maintain uncut hair. The Sikhs sought a religious accommodation, but were denied by J.B. Hunt. Though other testing methods were available, J.B. Hunt elected to require hair follicle testing, arguing that hair follicle testing was more accurate – and therefore more likely to assist in the company’s compliance efforts in having a drug-free driver force – than other methods.

The EEOC found reasonable cause to believe that Hunt failed to accommodate the Sikhs’ religious beliefs and effectively failed to hire a class of individuals due to race, national origin and religion in violation of Title 7 of the Civil Rights Act of 1964. The EEOC believed that alternate testing methods were a reasonable accommodation for the Sikhs, even if marginally less accurate than hair follicle testing. Hunt agreed to pay $260,000 and extend unconditional offers of employment to the complainants. In addition, it agreed to designate an EEOC consultant, develop written policies and procedures, and conduct training for all employees participating in the hiring, compliance, and grievance process.

These cases highlight the need for trucking companies to balance their responsibilities of keeping a drug-free driver corps while also respecting the rights of their diverse applicants and employees. Though hair follicle testing is common in the industry, it is important to note that there are some situations where trucking companies need to be flexible in its use.

This post was written by Doug Heise of Heyl, Royster, Voelker & Allen, P.C.

Read more at the National Law Review’s Transportation Page.

Raise Your Hand If You’re Confused about I-9 Reverifications for Employees with TPS

Temporary Protected Status (TPS) is a humanitarian benefit available to foreign nationals who are unable to return to their home countries because of certain temporary conditions including ongoing armed conflict such as civil war, an environmental disaster like an earthquake, hurricane, epidemic, or other extraordinary conditions. During TPS designation, qualifying foreign nationals are not removable from the US and can obtain work authorization and travel permission.

The Department of Homeland Security (DHS) has recently terminated TPS for nationals of El Salvador, Haiti, Nicaragua, and Sudan but has granted a period of orderly departure to allow time for this population to wind up their affairs in the US. This has left employers in a quandary about which TPS holders remain able to work and how to comply with Form I-9 Employment Eligibility Verifications.

To help ease the confusion, the chart below illustrates TPS-designated countries, the dates by which beneficiaries were required to re-register and, for those who do re-register, how long their current Employment Authorization Cards (EAD) are automatically extended pending decisions of EAD renewal applications. The TPS termination dates for El Salvador, Haiti, Nicaragua, and Sudan are also included.

Country	Re-Registration Period Ends	EAD Auto-Extended Until	TPS End Date
El Salvador	03/19/2018	09/05/2018	09/09/2019
Haiti	03/19/2018	07/21/2018	07/22/2019
Honduras	02/13/2018	07/04/2018	–
Nepal	12/27/2016	06/24/2017	–
Nicaragua	02/13/2018	07/04/2018	01/05/2019
Somalia	03/20/2017	–	–
South Sudan	11/20/2017	05/01/2018	–
Sudan	12/11/2017	05/01/2018	11/12/2018
Syria	09/30/2016	03/31/2017	–
Yemen	03/06/2017	09/03/2017	–

As reflected in the chart above, sometimes DHS issues a blanket automatic extension of the expiring EADs for TPS beneficiaries of a specific country in order to allow time for EADs with new validity dates to be issued. The automatic extension periods are available to those TPS beneficiaries who timely re-register and apply to renew their EADs.

Although an employer cannot specify which documents an employee can present in connection with the I-9 Employment Eligibility Verification process, TPS beneficiaries with automatic EAD extensions may present an expired EAD bearing the C19 eligibility code along with a Form I-797C Notice of Action indicating the eligibility category code A12 or C19. The codes need not be the same.

The M-274 Handbook for Employers is an excellent resource in determining how to complete the Form I-9 for those employees with automatic EAD extensions. It specifies that:

“For a current employee, update Section 2 of Form I-9 with the new expiration date as follows:

Draw a line through the old expiration date and write the new expiration date in the margin of Section 2;
Write EAD EXT in Section 2;
Initial and date the correction.”

For TPS beneficiaries, the new expiration date should correspond with the respective date as noted in the chart above. An employee whose employment authorization is automatically extended along with his/her EAD may cross out the “employment authorized until” date in Section 1, write the new expiration date as reflected in the chart, initial and date the change.

A new employee may present the expired EAD and Form I-797C Notice of Action indicating USCIS’s receipt of the employee’s timely filed renewal application. When completing Section 1, the employee should enter the corresponding date from the chart in the “employment authorized until mm/dd/yyyy” field.

When completing Section 2, the employer should enter into the Expiration Date field the date the automatic extension period expires, not the expiration date on the face of the expired EAD. The employer should enter the receipt number from the I-797C Notice of Action as the document number on Form I-9. Note that reverification is required when the employee’s automatic extension ends.

While an employer is not required to be an expert in I-9 documents and review, having access to reliable resources comes in handy and will take you to the head of the class.

This post was written by Jennifer Cory of Womble Bond Dickinson (US) LLP.

New Jersey Amends Its Law Against Discrimination to Provide Protections to Nursing Mothers

On January 8, 2018, former New Jersey Governor Chris Christie signed new legislation (the “Amendment”) amending the New Jersey Law Against Discrimination (“NJLAD”) to add breastfeeding as a protected class under the law. The Amendment, which takes effect immediately, makes it unlawful to discriminate or retaliate against an employee that the employer knows, or should know, is either breastfeeding or expressing milk for her infant child.

The Amendment also requires employers to provide reasonable accommodations to nursing women, unless it would result in an undue hardship to the employer, and specifically requires employers to provide:

Reasonable break time each day for the employee to express breast milk for her child; and
A suitable location with privacy, other than a toilet stall, in close proximity to the work area for the employee to express breast milk for her child.

To determine whether an accommodation would provide an undue hardship, the NJLAD provides that the following factors should be considered:

the overall size of the employer’s business with respect to the number of employees, number and type of facilities, and size of budget;
the type of the employer’s operations, including the composition and structure of the employer’s workforce;
the nature and cost of the accommodation needed, taking into consideration the availability of tax credits, tax deductions, and outside funding; and
the extent to which the accommodation would involve waiver of an essential requirement of a job as opposed to a tangential or non-business necessity requirement.

The Amendment also provides that breastfeeding employees are entitled to paid or unpaid leave as a reasonable accommodation, in the same manner as “provided to other employees not affected by pregnancy or breastfeeding but similar in their ability or inability to work.” While the Amendment does not provide an express right to leave, it requires employers to treat such a leave request as they would any other request for leave.

While many New Jersey employers have already been subject to similar requirements to provide breaks and private spaces for nursing mothers to express breast milk in accordance with the Patient Protection and Affordable Care Act’s 2010 Amendment to the federal Fair Labor Standards Act (“FLSA”), the key differences between the breast feeding protections in the FLSA and in the NJLAD are:

Which employees are covered? The FLSA’s protections apply only to “non-exempt” workers (i.e., those workers entitled to overtime pay), while the NJLAD’s protections apply to all New Jersey employees.
Which employers are covered? Small businesses (fewer than 50 employees) may not be covered by the FLSA break-time-for-nursing-mothers provision if they can demonstrate that compliance with the provision would impose an undue hardship. The NJLAD contains a similar “undue hardship” exception, but does not limit the exception to small businesses.
How long must employers accommodate nursing mothers? Protections under the FLSA apply up until one year after the birth of the child, while the NJLAD’s protections do not provide a time limit and apply while the mother is “breast feeding her infant child.” The NJLAD does not define “infant child.”

What should employers do?

New Jersey employers should review their procedures and practices to ensure compliance with the Amendment by:

Reviewing anti-discrimination and reasonable accommodation policies to ensure compliance with the law;
Training supervisors and managers on how to handle accommodation requests related to breastfeeding;
Providing an employee who is breastfeeding with reasonable break times and a suitable private location, other than a toilet stall, in close proximity to the work area to express breast milk for her child.

In addition, employers should consult with counsel before denying an employee an accommodation related to breastfeeding to determine whether an “undue hardship” may be established.

This post was written byAmy E. Hatcher and Denise Merna Dadika of Epstein Becker & Green, P.C.

More Labor and Employment News on the Labor and Employment Practice Group page.

Keep Rollin’ Rollin’ Rollin’: DOL Reissues 17 Opinion Letters That Had Been Withdrawn Under the Obama Administration

In late June 2017, the United States Department of Labor (DOL) announced it would be reinstating Opinion Letters issued by its Wage and Hour Division, which was a practice that had ceased back in 2010. This announcement is significant from both the procedural and substantive basis. From 2010 to July 2017, Opinion Letters were replaced by Administrator Interpretations, which set forth a more general interpretation of the law and regulations as they pertained to a particular industry or set of employees. Opinion Letters, on the other hand, are official written opinions that set forth how wage and hour laws apply in very specific circumstances as presented to the DOL Wage and Hour Division via specific employer questions asking for a formal opinion to guide the employer as to how to proceed. In other words, employers submit questions based on their specific factual circumstances and policies and the DOL issues a written opinion as to the legality of the employer’s policies.

With Opinion Letters back, businesses have been waiting to see what the DOL would do with them. In the first week of 2018, the DOL answered that question by re-instating 17 Opinion Letters that were issued in January 2009 but withdrawn during the Obama administration. The DOL also reissued over a dozen advisory Opinion Letters that had been published during former President Bush’s administration, but were also later rescinded.

Because Opinion Letters answer specific business questions related to wage and hour issues in various business segments, the 17 reinstated Opinion Letters and the dozen plus reissued advisory Opinion Letters may provide businesses specific and tailored guidance on various wage/hour issues under the Fair Labor Standards Act (FLSA).

The reinstated letters cover a wide variety of topics including, appropriate inclusions in an employee’s regular pay rate, types of employment that qualify for the FLSA’s minimum wage and overtime exemptions, and how ambulance service workers’ “on-call” time should be treated for purposes of “hours worked” under the FLSA. Here is the full list of reinstated Opinion Letters (all dated January 5, 2018) and links:

Number	Letter Subject
FLSA2018-1	Construction supervisors employed by homebuilders and section 13(a)(1)
FLSA2018-2	Plumbing sales/service technicians and section 7(i)
FLSA2018-3	Helicopter pilots and section 13(a)(1)
FLSA2018-4	Commercial construction project superintendents and section 13(a)(1)
FLSA2018-5	Regular rate calculation for fire fighters and alarm operators
FLSA2018-6	Coaches and the teacher exemption under section 13(a)(1)
FLSA2018-7	Salary deductions for full-day absences based on hours missed and section 13(a)(1) salary basis
FLSA2018-8	Client service managers and section 13(a)(1)
FLSA2018-9	Year-end non-discretionary bonus and section 7(e)
FLSA2018-10	Residential construction project supervisor and section 13(a)(1)
FLSA2018-11	Job bonuses and section 7(e)
FLSA2018-12	Consultants, clinical coordinators, coordinators, and business development managers under section 13(a)(1)
FLSA2018-13	Fraud/theft analysts and agents under section 13(a)(1)
FLSA2018-14	Calculation of salary deductions and section 13(a)(1) salary basis
FLSA2018-15	Product demonstration coordinators and section 13(a)(1)
FLSA2018-16	Volunteer fire company contracting for paid EMTs – joint employment and volunteer status
FLSA2018-17	Construction supervisors employed by homebuilders and section 13(a)(1)

As demonstrated by the list above, there are a number of broad topics covered, i.e., Section 13(a)(1) of the FLSA, which exempts employees employed in a bona fide administrative function, and a number of extremely narrow ones, e.g., those dealing with helicopter pilots, coaches, construction supervisors employed by homebuilders.

Here is a summary of some of the noteworthy findings in the reinstated Opinion Letters:

Bonus Compensation

The DOL reviewed the issue of whether certain bonuses (or other payments) should be included in an employee’s regular rate of pay under the FLSA. See FLSA2018-5, FLSA2018-9, and FLSA2018-11.

Exempt Employee Deductions

The DOL reviewed the issue of whether a salary deduction is permissible when an exempt employee is absent for a full day, but does not have enough leave time in the employee’s leave bank to cover the entire absence. The DOL concluded that, “if the absence is one full day in duration, the employer may deduct one full day’s pay or less. Therefore, in answer to your first question, if an employee is absent for one or more full days, but does not have enough time in his or her leave bank to cover the entire absence, the employer may make a deduction from the employee’s pay for any portion of the full-day absences that is not accounted for by the leave bank.” SeeFLSA2018-7.

Administrative Exemption

In reviewing whether client service managers at an insurance company qualified as exempt administrative employees, the DOL focused on the “independent judgment” factor in determining that their primary duty was to use independent judgment over matters of business significance when issuing advice and, generally, without first seeking upper-level management approval.

On-Call Hours

The DOL concluded that on-call hours of ambulance service personnel are not compensable time under the FLSA for purposes of the regular rate and overtime calculations. The issue arose from an ambulance service’s unwritten policy that required on-call employees to arrive for service at the ambulance garage within five minutes of being notified. The DOL determined the five-minute requirement was “not a significant hindrance” to the employees that would require the employer to convert their on-call time to compensable hours worked. Notably, the scope was an ambulance company servicing a small city of approximately 4,000 individuals.

Takeaways:

Nothing New as the DOL Returns to the Prior Opinion Letter Process. The important news is the return to the more focused, less-sweeping means to establishing DOL-interpretation policy. Otherwise the information provided in the reinstated Opinion Letters is not new; it has been available to businesses for years and, as such, most businesses with issues relevant to the topics in the reinstated Opinion Letters are likely already complying. The reinstated Opinion Letters do not take on any topics that had been severely altered during the Obama administration. We addressed this rolling-back issue in our All Things HR in a post titled “The Way We Were: The NLRB’s Time Machine Resets the Clock on Employer Work Rules and Joint Employer Status” demonstrating this is not just a NLRB mantra, it looks to be the DOL’s too.
Ranging Applicability. As the ambulance-employer DOL Opinion Letter demonstrates, some of the reinstated Opinion Letters will have very limited applicability as Opinion Letters are only as good as the overlapping facts in the circumstances presented in them and the business seeking to use them as guidance. Nevertheless, while many Opinion Letters focus on specific legal issues specific to certain employers/businesses/industries, they are still valuable resources and may provide answers or guidance in many areas in wage and hour law.
More Defenses Available to Businesses. Opinion Letters were and continue to be another tool businesses have in their arsenal to help ensure compliance with the FLSA, and another tool in their defense arsenal. Specifically, Section 10 of the Portal-to-Portal provides businesses an affirmative defense to all monetary liability if the business can demonstrate it acted “in good faith and in conformity with and in reliance on any written administrative regulation, order, ruling, approval, or interpretation” of the DOL Wage and Hour Division. See 29 U.S.C. § 259 and 29 C.F.R. Part 790.

In addition, Opinion Letters can be used to prove the “good faith” defense against the double liquidated damages penalty available under the FLSA, and the third-year of damages in the case of willful violations, of which the bar is extremely low. See 29 U.S.C. § 260. The availability of newly-issued Opinion Letters means that a business can request and obtain an Opinion Letter addressing a specific practice, policy, and/or factual circumstance for guidance and rely on a favorable Opinion Letter in response to a charge or lawsuit on the same issue.

This is a Good Thing. This is good news for businesses because it demonstrates two things: (1) businesses will be able to have and rely on additional resources to meet their statutory and regulatory wage and hour obligations; and (2) the Trump administration seems intent on turning back the clock to a time pre-Obama administration, but not necessarily instituting new guidance or interpretations (not in the labor and employment context at least). This means that businesses are likely already familiar with what they should be doing and have been doing it.

Written by Sara H. Jodka of Dickinson Wright PLLC.

For more Labor and Employment news go to the National Law Review’s Labor and Employment Page.

Addressing Workplace Sexual Harassment in the Wake of #MeToo

Revelations of the Harvey Weinstein scandal, and those that have followed, have ignited sexual harassment complaints against employers across all industries. Recent news more than confirms that the issue of sexual harassment is not limited to Hollywood. As U.S. Equal Employment Opportunity Commission (“EEOC”) Acting Chair Victoria Lipnic recently said in an interview with Law360, “We see this everywhere. This happens to women in workplaces all over the place.”

With the outpouring of support for victims of sexual harassment, the creation of the #MeToo movement in the last quarter of 2017, and Time magazine’s “Silence Breaker” person of the year, it is clear that this is an issue that employers will need to proactively address in 2018. A study by theBoardlist and Qualtrics, based on a survey conducted this summer, reported that 77 percent of corporate boards “had not discussed accusations of sexually inappropriate behavior and/or sexism in the workplace.” Less than 20 percent of the 400+ people surveyed had reevaluated their company’s risks regarding sexual harassment or sexist behavior, even in light of the recent revelations in the media. Plainly, those numbers are expected to, and no doubt will, increase in the coming year.

Failure to take affirmative steps to prevent harassing behavior and adequately respond to allegations of sexual harassment can have serious consequences. While sexual harassment claims may originate as internal complaints, which must be promptly addressed, they may also result in a discrimination charge filed with the EEOC or the corresponding state or local agency. Since fiscal year 2010, roughly 30 percent of the approximately 90,000 charges of discrimination received by the EEOC each year have alleged sex-based discrimination, and the number of charges alleging sex-based harassment has gradually increased from just below 13 percent to just above 14 percent. Next year, this number is expected to increase because employees are becoming more comfortable reporting and publicizing incidences of sexual harassment in light of recent news, and due to the EEOC’s digital upgrade that allows employees to file EEOC complaints online.

Sexual harassment claims may also lead to litigation, which can be expensive and time-consuming and can create negative publicity. For instance, Mr. Weinstein’s former company, The Weinstein Co. (“TWC”), has been named in a $5 million civil suit alleging that executives of the company did nothing to protect women who did business with Mr. Weinstein, despite being aware of his inappropriate behavior. On December 6, 2017, TWC was one of the named defendants in a proposed class-action racketeering lawsuit alleging that TWC helped facilitate Mr. Weinstein’s organized pattern of predatory behavior. Additionally, the New York attorney general’s office is investigating TWC for potential civil rights violations in its handling of claims of sexual harassment.

There may also be unseen consequences of sexual harassment on the makeup of a workforce. Various studies have reported that harassment may lead to the departure of women from the workforce or the transition into lower-paying jobs. Further, women in jobs with a higher risk of sexual harassment often earn a premium over employees in positions with a lower risk of sexual harassment. Sexual harassment, therefore, may have real impact on compensation and implicate the pay gap and pay equity.

For these reasons, many employers are looking to implement and also supplement sexual harassment training seminars provided for their employees in order to combat sexual harassment in the workplace.

Employers should also consider whether their current practices include the following:

A robust complaint procedure. Sexual harassment at work often goes unreported. According to the EEOC, as many as three-quarters of harassment victims do not file workplace complaints against their alleged harassers. Make sure that you have reporting mechanisms in place to receive complaints and consider allowing employees to complain directly to human resources, to a supervisor, or to an anonymous hotline.
A prompt investigation of complaints. Upon receiving a complaint, promptly and thoroughly investigate the allegations, and make sure that your employees do not retaliate against the alleged victim or any person who cooperates in the investigation.
Independent investigations. Ensure impartiality in the process. In certain cases, that may mean hiring an outside consultant or outside legal counsel to conduct the investigation.
Thorough communication practices. A common objection asserted by complainants is that they are not informed about the status of an investigation. While complainants need not (and should not) be notified about the details or even given regular status reports, inform the complainant that an investigation will occur and be sure to provide closure—regardless of the outcome of the investigation.
A proactive approach. Consider conducting employee engagement or climate surveys (with or without a consultant) to better understand the work atmosphere, rather than simply reacting to workplace complaints. Before doing so, consult with counsel to determine whether and how such a survey may be conducted (potentially under the self-critical analysis privilege, depending on the jurisdiction) to avoid it unwittingly becoming evidence in a proceeding.
An atmosphere of inclusiveness. Foster an atmosphere of inclusiveness to help prevent sexual harassment. Make sure that your top-level management is involved in setting the tone, modeling appropriate behavior, and effecting positive change. Some organizations should consider creating a task force to root out and address inappropriate conduct—again with the oversight of legal counsel.
Effective training. While most employers conduct some form of anti-harassment training (and those that don’t offer training, should), make certain that your training is designed to effectively combat sexual harassment. Tailor the training to your specific workplace and audience. Use real-world examples of what is, and is not, harassment, and make sure that managers know how to spot potential issues and respond to any and all complaints.

This post was written by Nathaniel M. Glasser and Yael Spiewak of Epstein Becker & Green, P.C.

For more labor and employment news visit the National Law Review’s Labor and Employment page.

New Year’s Resolution Series – Ringing Your Post-Employment Covenants into the New Year

Many state legislatures spent 2017 tinkering with post-employment covenants. Given the growing trend to legislate locally and the employee mobility issues that seem to nag every employer, we thought the New Year would be a perfect time to review and revisit your post-employment covenants. So for our multi-jurisdictional employers (which seems to be everyone these days), how do your post-employment covenants legally measure up?

Even California got into the act this year. Everyone (well, almost everyone) knows of the long-time California legislative non-compete ban (except in the context of a sale of business or equity). But did you know that as of 2017 California now regulates choice of law provisions in employment contracts? This new Labor Code provisionwas passed in an effort to stamp out the practice of some out-of-state employers who were using choice of law/venue provisions in the hope of applying some other state’s law to their California-based employees, thereby (they hoped) avoiding California’s non-compete ban. A review of that provision is in order for any employer hiring individuals in California.

Other states have gotten into the act by banning or regulating non-competes. Nevada, not known for its active employee mobility legislation, passed legislation this year governing non-competes, joining Colorado, Florida, Georgia, Illinois, and Texas, to name a few. New Jersey is also actively considering similar legislation.

And while Massachusetts tried but failed to pass statewide legislation, don’t overlook specific Massachusetts provisions addressing non-competes for Physicians, nurses, psychologists, social workers, and those in the broadcasting industry.

But don’t stop at a state law review. Remember: many states (and many state statutes) require an assessment of the reasonableness of post-employment covenants. The very best evidence of reasonableness is employer mindfulness regarding what agreements are truly necessary to protect some legitimate interest of the employer – and, most importantly, a deep dive into why they are necessary.

So here are a few action items to consider for your post-employment covenants resolution for 2018:

Where are your employees performing services for you? Do your post-employment covenants comply with the legislative mandates applicable in the various jurisdictions in which you have employees?
What impact, if any, do promotions have on your employees? Do they now have access to sensitive information, in addition to expanded job duties? If so, should they have new or different post-employment covenants?
How if at all has your business changed? Are you doing business in new locations or have you abandoned business in other locations?
Are post-employment covenants truly necessary – or will a solid proprietary rights agreement (and the applicable trade secrets law) provide the legal protection you really need?
Are you just as eager to recruit individuals bound by these agreements as you are to enforce your own? Have you considered the possible cognitive dissonance of such an approach?

We hope you have enjoyed our New Year’s Resolution Series and we look forward to a prosperous, productive and compliant 2018!

This post was written by Jennifer B. Rubin of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Handbook Wars – Common Sense Returns NLRB Overhauls Standard for Legality of Work Rules

We have noted many times over the years how the NLRB’s zeal to review employer policies, or more correctly, fragments of employer policies, for lawfulness has led to nettlesome issues that rarely, if ever, involve actual employees. The results have been absurd and have raised an entire cottage industry of attacks on language by unions and vetting of employer policies for lawfulness.

This may be ending. As we noted yesterday, the NLRB issued a significant decision that will have far-reaching implications for both unionized and non-unionized workplaces. In Boeing Company, 365 NLRB No. 154 (2017), the Board established a new standard for evaluating whether facially lawful workplace rules, policies or employee handbook provisions unlawfully interfere with employees’ exercise of Section 7 rights. In so doing, the Board placed in doubt the applicability of scores of decisions issued in the 13-years since Lutheran Heritage, 343 NLRB 646 (2004), was decided. We previously identified this issue as a case that the NLRB would revisit once a new majority was installed.

“Reasonably Construe” Standard

For the last 14 years the Board evaluated whether an employee would “reasonably construe” the language of a work rule to prohibit the exercise of NLRA rights. If it did, then the rule—regardless of whether it actually restricted Section 7 activity—was found unlawful. Applying this standard, an inconsistent line of cases developed. Take, for instance, a sampling or recent decisions concerning “civility in the workplace.” A rule prohibiting “abusive or threatening language to anyone on Company premises” was lawful, while a rule restricting “loud, abusive or foul language” was not. And, as noted, a policy or fragment of a policy could be found unlawful even if there was no evidence that employees read the policy or were even aware of its existence. It was, in terms of the NLRA, a victimless crime.

Policy Considerations Behind Abandoning The Lutheran Village Standard

The new three member Board majority (Miscimarra, Kaplan and Emmanuel) decided to change this standard because employers were often held to an impossible standard of precision in drafting language in which they would need to foresee any potential impact on any Section 7 right, regardless of how remote. An employer would have to foresee the future, which the majority characterized as requiring “perfection that literally is the enemy of the good.” The Lutheran Heritage standard has been criticized as unworkable by many in the employer community, and by various Board members over the years. So it is not surprising that that a new standard was on the agenda.

New Balancing Test

The Board abandoned the singularly-focused and vague “reasonably construe” standard, in favor of a new balancing test, which would consider the impact of the rule on NLRA rights and an employer’s business justification for the rule. Going forward, in order to provide greater clarity and certainty to all parties, the Board indicated it would categorize the results of future decisions in three ways:

Category 1: Lawful rules because (i) when “reasonably interpreted,” the rule does not prohibit or interfere with the exercise of NLRA rights or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. Examples of these types of rules include the no-camera requirement in the Boeing case, where the employer supported its rule with multiple business and security justifications. The Board also found that a rule requiring employees to have “harmonious interactions and relationships” in the workplace, and other rules requiring employees to abide by basic standards of civility would be categorically lawful.
Category 2: Rules warranting individual scrutiny on a case-by-case basis.
Category 3: Unlawful rules because they would prohibit or limit NLRA-protected conduct, and the adverse impact is not outweighed by legitimate business justifications (e.g., a rule prohibiting discussion of wages or benefits with another).

The Board proceeded to use this new framework to find that Boeing’s policy restricting the use of camera-enable devices was justified in light of the employer’s security concerns. As it does in every case in which it overrules precedent and/or sets a new standard, the Board weighed whether to apply this new test retroactively, and decided to apply the standard to all pending cases in whatever stage.

Impact of this Decision

It will be some time before the full impact of the decision will be felt as rules are evaluated under the new standard. However, the fact Lutheran Heritage was overruled likely will inhibit unions from attacking employer policies as the forum for these sorts of claims is less receptive.

Because the Board will evaluate the purpose for the rule, employers should consider clearly articulating the reasons for a rule in the policy.

Also, employers may feel less constrained by the thicket created by the previous standard; however, the true impact of Boeing likely will be felt once the host of pending cases work their way through ALJs and the Board under this new paradigm. Only then will employers understand how the Board’s new categories will work. We will keep you posted…there is sure to be more to follow.

This post was contributed by Mark Theodore and Joshua S Fox of Proskauer Rose LLP.

For more on the NLRB go to the National Law Review’s Labor and Employment Practice group page.

Category: Labor & Employment

New Legislative Action on “Tip Pooling”

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