Category: Labor & Employment

Executive Incentive Pay, Race Discrimination, Pokémon Go, Commercial Non-Competes: Employment Law This Week – August 1, 2016 [VIDEO]

Executive Incentive PayWe invite you to view Employment Law This Week – a weekly rundown of the latest news in the field. We look at the latest trends, important court decisions, and new developments that could impact your work.

This week’s stories include . . .

(1) Chamber: Executive Incentive Pay Rule Could Stunt Growth

Our top story: The U.S. Chamber of Commerce claims that the new executive incentive pay rule could stunt economic growth. The proposed rule lays out a tiering system for regulating bonus pay for bank executives and other employees in the financial sector. The Chamber’s 26-page letter argues that the rule could deter the best minds from entering the financial sector and discourage economic growth and job creation. The FDIC has said that the letter will be taken into account during the review process.

(2) Eighth Circuit Rules for Employer in Race Discrimination Suit

The U.S. Court of Appeals for the Eighth Circuit upholds an employer’s win in a race discrimination suit. An African-American employee of medical technology company Siemens was terminated as part of a reduction in force. The employee alleged that his selection was race-based, and he provided evidence of racial discrimination by his direct supervisor. The plaintiff claimed that poor evaluations by that supervisor “duped” the service director into firing him. The court found that the supervisor who wrote the evaluations did not know about the workforce reductions and, therefore, could not have intentionally triggered a discriminatory termination.

(3) Pokémon Go Sparks Privacy Concerns

Pokémon Go creates privacy concerns for employers. The first mainstream augmented reality game is sweeping the nation, and the game never stops, even during work hours. Despite a recent update to the game that reduces its access to players’ Google accounts, Pokémon Go’s data collection practices are under fire from privacy advocates. This week, the Electronic Privacy Information Center joined the fray, calling for the Federal Trade Commission to investigate security risks associated with the game. In light of the popularity of the game, employers should consider adding more detail to their policies about how and where business mobile devices can be used.

(4) Michigan’s High Court Changes Standard for Commercial Non-Competes

The “rule of reason” standard applies to commercial non-competes in Michigan, the state’s highest court says. Innovation Ventures contracted with a manufacturing plant to produce and package the “5-Hour ENERGY” drink. After the relationship was terminated, the plant began to produce competing energy drinks. Innovation Ventures argued that this action violated a non-compete clause in its termination agreement. Lower courts found that the clause was unenforceable under a provision in the Michigan Antitrust Reform Act (MARA). On appeal, the Michigan Supreme Court remanded the case, ruling that the MARA provision applies only to non-competes between employers and employees and that the federal “rule of reason” standard should be applied to commercial non-competes in Michigan.

(5) Tip of the Week

Ariel Merkrebs-Finkelstein, Director of Human Resources at HelloFresh, is here with some advice on best practices for developing company culture.

“It’s important for you to establish a strong company culture within your organization, because it will help you attract and retain top talent. One thing you can do is call each other a ‘family’ or a ‘team,’ rather than coworkers or colleagues. This will help you break down the barriers and facilitate conversations more easily. . . . Create opportunities for interacting with one another outside of the formal landscape of the office. This might include something like exercise classes, interactive games like ‘Escape the Room,’ or even just a picnic in a nearby park. . . . I also recommend that you recognize your employees. It’s a really great way to make them feel valued, and it’s free. So get creative.”

ARTICLE BY George Carroll Whipple, III of Epstein Becker & Green, P.C.

IFrame©2016 Epstein Becker & Green, P.C. All rights reserved.

IRS Tax Treatment of Wellness Program Benefits

Business people doing yoga on floor in office

The IRS Office of Chief Counsel recently released a memorandum providing guidance on the proper tax treatment of workplace wellness programs. Workplace wellness programs cover a range of plans and strategies adopted by employers to counter rising healthcare costs by promoting healthier lifestyles and providing employees with preventive care. These programs take many forms and can encompass everything from providing certain medical care regardless of enrollment in health coverage, to free gym passes for employees, to incentivized participation- based weight loss programs. Due to the wide variation in such plans the proper tax treatment can be complicated. However, the following points from the IRS memo can help business owners operating or considering a wellness program evaluate their tax treatment.

First, the memo confirmed that coverage in employer-provided wellness programs that provide medical care is generally not included in an employee’s gross income under section 106(a), which specifically excludes employer-provided coverage under an accident or health plan from employee gross income. 26 USC § 213(d)(1)(A) defines medical care as amounts paid for “the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body,” transportation for such care, qualified long term care services, and insurance (including amounts paid as premiums).

Second, it was made clear that any section 213(d) medical care provided by the program is excluded from the employee’s gross income under section 105(b), which permits an employee to exclude amounts received through employer-provided accident or health insurance if it is paid to reimburse expenses incurred by the employee for medical care for personal injuries and sickness. The memo emphasized that 105(b) only applies to money paid specifically to reimburse the employee for expenses incurred by him for the prescribed medical care. This means that the exclusion in 105(b) does not apply to money that the employee would receive through a wellness program irrespective of any expenses he incurred for medical care. 26 CFR 1.105-2.

Third, any rewards, incentives or other benefits provided by the wellness program that are not medical care as defined by section 213(d) must be included in an employee’s gross income. This means that cash prizes given to employees as incentives to participate in a wellness program are part of the employee’s gross income and may not be excluded by the employer. However, non-money awards or incentives might be excludable if they qualify as de minimis fringe benefits (ones that are so small and infrequent that accounting for them is unreasonable or impracticable). 26 USC § 132(a)(4). The memo gives the example of a t-shirt provided as part of a wellness program as such an excludable fringe benefit, and notes that money is never a de minimis fringe benefit.

Fourth, payment of gym memberships or reimbursement of gym fees is a cash benefit, even when received through the wellness program, and must be included in gross income. This is because cash rewards paid as part of the wellness program do not qualify as reimbursements of medical care and cannot be a fringe benefit.

Fifth, where an employee chooses a salary reduction to pay premiums for healthcare coverage and the employer reimburses the employee for some or all of the premium amount under a wellness program, the reimbursement is gross income.

These points laid out in the IRS memo provide a solid foundation for understanding the tax treatment of workplace wellness programs and should be kept in mind by business owners deciding how to structure new wellness plans for their employees, or ensuring the tax compliance of existing plans.

New EEOC Hours Reporting Requirements

EEOC Hours Reporting RequirementsAs you may have heard, the Equal Employment Opportunity Commission (“EEOC”) released revised EEO-1 reporting guidelines on July 13, 2016 (for an overview of the new guidance in its entirety, see EEOC Issues Revised EEO-1 Proposal). These new guidelines apply to employers with 100 or more employees and require them to report, among other things, hours worked by exempt and non-exempt employees, subdivided by gender, race, ethnicity, job classification, and pay band.  For an example of the proposed new reporting form, click here. Although employers and other members of the public will have until August 15, 2016 to comment on the revised proposal, it is unlikely that any further substantive revisions will be made. Currently, it appears that employers will be required to submit the new EEO-1 form on March 31, 2018, giving them approximately a year and a half to prepare their recordkeeping systems to capture the newly required data.  Therefore, employers are advised to review, and update if necessary, internal recordkeeping systems to be prepared to report hours worked, and pay data, for calendar year 2017 when filing the EEO-1 on March 31, 2018.

What Are “Hours Worked” And Why Does The EEOC Want Them?

In response to employer requests for guidance concerning the definition of “hours worked,” the EEOC has specified that, for employees covered by the Fair Labor Standards Act (“FLSA”), their hours should be recorded as follows:

Non-exempt Employees: The EEOC should report “hours worked” as defined by the FLSA.  “Hours worked” includes time when the employee is actually working (either at the employer’s premises or remotely).  Therefore, “hours worked” would not include meal time, vacation, PTO or other leave, even if the non-exempt employee is paid for that time off, and even though the compensation for those hours will be reflected in the W2 data provided on the EE0-1 form.

Exempt Employees. Employers have two options: (1) provide the actual hours of work of exempt employees if the employer already maintains accurate records of this information, or (2) report a proxy of 40 hours per week for full time exempt employees and 20 hours per week for part-time exempt employees, multiplied by the number of weeks the individuals were employed during the reporting year.

The EEOC provides a few reasons for requiring disclosure of hours worked. First, if the EEOC discovers a pay disparity, it intends to use this information to it assess whether a disparity is caused by the part-time or full-time status of the respective employees, rather than by gender, race, or ethnicity.  Second, the EEOC intends to use the hours worked data to assess whether employees in protected classes are subject to discrimination in terms of hours instead of pay, with an employer habitually assigning more hours and overtime to some employees while denying it to others.

Next Steps For Employers

Employers are well-served to apply the same analysis that the EEOC intends to use while doing internal audits to determine if there are statistical concerns, and the reasons behind the patterns.  The employer can then consider if actions are warranted now to remediate any issues before 2017, or, be able to explain the legitimate business reasons for any disparities if called upon to defend pay practices.

Employers should also audit time-keeping protocols and policies to be sure that non-exempt employees are accurately recording “hours worked”.  Employers should also confirm that their HRIS systems can run reports of hours worked, that do not include paid timeEEOC Hours Reporting Requirements off.  Additionally, if employers intend to report actual hours worked for exempt employees, rather than the 40 hour proxy for full time employees, then the same recommendations apply.

ARTICLE BY Valerie Kahn, Kate S. Gold & Lynne Anne Anderson ofDrinker Biddle & Reath LLP

©2016 Drinker Biddle & Reath LLP. All Rights Reserved

California Will Resume Enforcement of The Requirement To Electronically Submit Certified Payroll Records

On July 20, 2016, California Department of Industrial Relations (“DIR”) issued a press release stating DIR enforcement of a contractor and subcontractor’s requirement to submit Certified Payroll Recordscertified payroll records (“CPRs”) using DIR’s online system will resume on August 1. DIR clarified that the requirement to keep CPRs has not changed. Previously, DIR suspended enforcement of filing CPRs electronically because of problems with the system and improvements. However, employers should have continued to maintain CPRs and the ability to file them electronically was operational. The key difference is now DIR will enforce the filing requirement effective August 1st. See press release

ARTICLE BY Jonathan A. Siegel of Jackson Lewis P.C.

Jackson Lewis P.C. © 2016

Are Your Anti-Harassment Initiatives Working? EEOC Says NO

It has been thirty years since the U.S. Supreme Court ruled that workplace harassment was a form of discrimination prohibited by Title VII of the Civil Rights Act of 1964. In a series of court and agency decisions since that time, we have been provided some guidance on what the courts and the EEOC expect employers to do in order to protect their employees from unlawful harassment, but never has the guidance been more clear than in a report the EEOC released in June.

Zero Tolerance, EEOC, harassmentThe report is the result of an EEOC task force charged with examining workplace harassment and methods for preventing and addressing it. The report is clear – it’s time for a reboot of workplace harassment prevention and compliance initiatives. The report is rich with statistics and examples, and worth a read for the list of 12 harassment risk factors and recommendations. Pay particular attention to the section on training. The report unequivocally states: training should be conducted by qualified, live, and interactive trainers. In addition, the EEOC advises what we have long believed to be the case: in order to be effective, anti-harassment training should be delivered “live” with the top level of leadership present and participating.

So, we encourage you to take pause and inventory your anti-harassment initiatives. Is your current program effective and are your training dollars well-spent?

You can find a copy of the EEOC’s report here.

ARTICLE BY Christine McLaughlin of Godfrey & Kahn S.C.

Copyright © 2016 Godfrey & Kahn S.C.

Pokémon Go in the Workplace: Oh Look There’s a Pikachu!

Did you know that the world is now inhabited by creatures called Pokémon?  (Or maybe they’ve always been there?)  Some run across the plains; others fly through the skies; and some live in the mountains….and some, yes, some, are located right in your workplace.

Through the magic of downloading Pokémon Go to your smartphone, you too can see these creatures and catch them for some apparently critical scientific testing.

Workplace, Pokémon GoEmployers not familiar with Pikachu, Charizard, and Lucario can rest assured – your employees are.  In less than one week,Pokémon Go became the most downloaded smartphone videogame ever, and employers are clamoring for advice on how to deal with a workforce that already seems sufficiently and consistently distracted.

While employers may be used to seeing brief levels of high distraction during community events like March Madness, uncertainly surrounds this new obsession.  And an obsession it seems to be: sometimes when you look around Manhattan, you think you are in the least threatening version of the Walking Dead.  We even heard that someone just opened the first ever Pokémon-friendly hotel in Australia!  And this may only be the beginning as “augmented reality”-based gaming technology will likely improve in the coming years.

So what should employers do in response?

The first thing we’d say is to keep some perspective.  Before you do anything else, make a judgment call over whether you think the Pokémon Go craze will be short-lived – just a temporary blip on the employee-distraction radar, and if you think it will be, consider whether your planned reaction would really amount to an overreaction.  Remember: everyone could not get enough of Angry Birds, Words with Friends, and Candy Crush.  Is this just more of that?  If so, perhaps a quick and friendly preemptive reminder to employees that working time does not mean training your Bulbasaur to fight a Charmelon.  But if you think this is something different; something more serious, then a stronger communication/directive or an outright workplace ban may be in order.

The second thing we’d say is to consider converting this into an employee engagement opportunity.  Determine whether embracing this latest fad rather than suppressing it will pay morale boosting dividends.  There may be tremendous team-building and social engagement opportunities available, given the game’s team-based format.  Further (and we never thought we’d write something like the following, but), consider whether incentivizing your employees to search for imaginary monsters is an effective employee wellness activity.  (See: a more creative version of paying someone to walk 10,000 steps a day.)

Driving, Pokémon GoThird, remind employees to play safely. This picture says it all.  People are playing Pokémon Go while driving, and two men even fell off a 90-foot cliff in San Diego searching for Pokémon! The humorous and not-so-humorous Pokémon-related accident examples grow by the day. There have even been reports of employees leaning out of windows to get better reception and chasing Pokémon critters and nearly falling downstairs.  And problems can and often will arise when employees encroach on another employee’s work space or enter dangerous workplace areas while playing.  Employers therefore, should consider prohibiting their employees from playing the game on company premises or at least restrict it to certain areas and to certain times.

And the risk of an accident becomes even greater when employees operate company vehicles.  Employers should remind employees that while the game creates an augmented reality, they live in plain old regular reality, so if they see an ultra-rare Articuno Pokemon in the center lane of the 405, ignore it and keep driving.  At the same time, it’s not just the game-playing employee who creates the danger; often times, it is the game-playing civilian.  So tell employees, like your delivery drivers, to be on the lookout for individuals not paying attention to their surroundings as they cross streets even if it seems ridiculously obvious that they should know this already.

Pokémon Go, Work, Lastly, remind employees about your electronic use policies’ application toPokémon Go (or scramble to put some in place)!  Within certain parameters, employers have widespread discretion to monitor employees’ internet use on employer-provided computers and devices, to track employees’ data usage on the company’s purchased bandwidth, and to block certain websites and traffic patterns.  And this is no different when it comes to using employer-provided mobile devices where employees play Pokémon Go, or when employees are playing Pokémon Go in workplaces on work time.  Employers therefore, should seize this opportunity to review existing acceptable use policies to ensure that the risks posed by this “phenomenon” are specifically addressed – and if your company does not have an electronic use or acceptable use policy, this is absolutely the time to get one in place.  Some of the more immediate risks (beyond the loss of productivity) that should be addressed, include the following:

  • If using company-owned devices, a download of this app or any related app should be prohibited.  Some of the Pokémon Go-related applications have been proven to contain malware and depending what is on the device, this may be creating a potential data leak (or even data breach) situation.

  • Depending on where employees might be wandering, they are recording what they see while playing Pokémon Go, and could create privacy issues or even create data breaches that may be reportable.

  • Registration using a company-provided email address should be prohibited.  Collection of email addresses ofPokémon Go players have been reported to have been used in “phishing” involving the game and could put company information at risk.

Conclusion

In an age where technological innovation can negatively affect productivity by making it easier for employees to indulge in frivolous distractions (not to mention impact the overall quality of the labor pool when employers mistakenly hire candidates who have merely wandered into an interview in pursuit of an Ivysaur), employers can sometimes overlook the benefits of a tech-savvy workforce and the technology they have at their disposal. While employers should take steps to limit the employee distraction, safety, data breach and privacy-related concerns associated with Pokémon Go, they should also recognize the potential employee engagement opportunity that this novel game presents.

ARTICLE BY Michael S. Arnold, Cynthia J. Larose & Brent Douglas of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
©1994-2016 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

Chicago Adopts Paid Sick Leave Following Burgeoning National Trend

Chicago paid Sick leaveLate last month, the Chicago City Council unanimously approved a new paid sick leave ordinance requiring virtually every employer in the city to provide at least some paid time off to employees for sick leave purposes. Cook County’s Board of Commissioners is expected to approve a similar ordinance later this year. Chicago is not setting any trends by doing so — it is only the latest example of a nationwide trend to mandate that employers provide paid time off to employees to care for themselves or their families — a trend certain to continue and expand.

Although there is currently a patchwork of rules and regulations regarding paid sick leave across the country, Chicago’s ordinance is a fair representative of similar requirements in other states and municipalities. The ordinance, which will become effective on July 1, 2017, covers any employee based in and/or working inside Chicago’s city limits who works 80 or more hours within a 120-day period — essentially anyone taking home a paycheck on a regular basis. Employers must provide these workers the right to accrue and use up to five paid sick days (or 40 hours) per year, earned at a minimum rate of one hour for every 40 hours worked.

Further, workers must be allowed to roll over up to two and a half days (20 hours) of unused sick leave into the subsequent year — but employers can cap the total accrual amount at 40 hours, if they desire. Accrual of paid sick leave must begin on an employee’s first day of employment (or July 1, 2017, for existing employees — whichever is later), and accrual and use requirements are then measured from that date going forward. Employers may, however, restrict new employees’ use of paid sick leave until after they complete six full months of continuous employment.

Importantly, the Chicago ordinance does not require that employers create a separate paid sick leave scheme if they already maintain a general undifferentiated Paid Time Off (PTO) policy that meets or exceeds the required accrual rates. For example, if an employer maintains a PTO policy that provides accrual of PTO at a rate of two hours for every 40 hours worked, capping the total number of PTO days at 15, then the PTO policy exceeds the requirements. However, if PTO accrues at a rate slower than one hour for every 40 hours worked, the policy will need to be revised to meet the minimum requirements.

Sick leave may be used by employees to care for themselves or their families when they are sick, to receive medical care, including treatment, diagnosis, or preventive care, and if the employee or family member is the victim of domestic violence or sexual abuse. Employers must also give employees the ability to use their accrued sick time if the employer, or the employee’s children’s schools, are closed because of a public health emergency.

There are additional nuances to the law, some of which vary, depending on a particular workforce, including interplay with the Family and Medical Leave Act (FMLA) calculation of sick pay for tipped workers, and waiver of sick leave requirements in a collective bargaining agreement. Also, just as employers with PTO policies will want to ensure theirs is up to snuff in light of these new rules, employers without a PTO policy may want to consider adopting one to simplify their time-off benefit administration. As a result of these and other issues and trends across the country, employers should consult with counsel to ensure they are meeting or exceeding the minimum sick leave requirements in their places of work.

ARTICLE BY Bennett L. Epstein, John L Litchfield & Christopher G. Ward of Foley & Lardner LLP

© 2016 Foley & Lardner LLP

To Be or Not To Be an Uber Employee: That Is [and will Remain] the Question

Federal judge probes deep on Uber’s proposed deal with drivers in 2 states as drivers in the other 48 sue, yet ride-sharing giant appears set to avoid trial on merits of misclassification issue

uber employeeIf you are waiting for an answer to the question of how workers in the “gig economy” should properly be classified, you probably should not hold your breath.

As the ride-sharing tech company Uber has grown into a megacorporation, on-demand workers have kept up a steady pace of lawsuits against it (and against its competitor, Lyft) on the theory that they are employees misclassified as independent contractors. While there is disagreement among courts, agencies, legal scholars and practitioners on the issue, most might agree on one thing: the traditional framework of employee vs. independent contractor does not account for today’s new tech-driven gig economy. Neither classification is a good fit for work performed on demand through a smartphone app that controls price and other operating standards. Yet a new, more fitting worker classification from Congress is highly unlikely. In effect, classifying workers in the gig economy will continue to present a legal quagmire for years to come.

From Uber and Lyft’s perspective, a legal quagmire (i.e., the status quo) appears to be the preferred course. After all, despite high litigation costs, the company has grown exponentially in recent years, expanding into 449 cities since it officially launched in 2011 and amassing a value most recently estimated at $68 billion. This success is attributable in part to Uber’s lucrative business model. The company avoids the costs of an employment relationship with millions of drivers while profiting from the service they provide via its smartphone app. It connects supply with demand (i.e., people who need rides) by providing a hassle-free platform for the transaction to take place. And by setting the price and imposing other usage requirements and “suggestions” for drivers using its app, Uber has developed a relatively uniform and reliable standard of service that has built brand trust from customers. On the flip side, it offers a relatively flexible means for almost anyone with a driver’s license and a car to earn additional income.

To maintain this advantageous operating model, Uber is trying to keep the misclassification issue from going to a jury. This means settling two class actions with some 385,000 California and Massachusetts drivers involving claims for business expenses and gratuities. Its proposed $100 million settlement to resolve both actions has been pending before the federal court in the Northern District of California since late April 2016. The court recently sent the parties scrambling to provide additional information which the court said it needs to determine whether the settlement is fair. To pre-approve the deal, the court has to conclude it is fair to all unnamed class members—i.e., all drivers in California and Massachusetts who have used the app since August 16, 2009. The court noted that a more probing inquiry is warranted here because the settlement seeks to (1) apply to drivers previously excluded from the class and (2) encompass claims not previously asserted in the case, but asserted and still pending in other lawsuits.

Under the settlement agreement, Uber would provide monetary and non-monetary relief, but it would not reclassify drivers. Specifically, Uber would pay out $84 million, and an additional $16 million if Uber’s future value (at its initial public offering) reaches 1.5 times its most recent valuation. Of the $84 million, $8.7 million would be taxable as wages. After shaving off sums for class administration, attorneys’ fees, and to compensate the named and contributing class members, the remaining fund would be split, with $5.5-$6 million going to Massachusetts drivers and $56-$66.9 million to California drivers. Drivers who drove the most would receive a few thousand dollars payout, while most drivers would receive a few hundred.

The settlement would not resolve the ultimate issue of whether Uber drivers are employees or independent contractors. Rather, it would allow Uber to continue operating in its current business model treating drivers as independent contractors. Yet at the same time, the settlement includes certain operational changes that would provide drivers with more job security than most at-will employees enjoy. For one, Uber agreed to write a comprehensive deactivation policy whereby it would only deactivate drivers from the app for sufficient cause, and it would share this list of reasons with drivers. Uber would also provide drivers with at least two advance warnings before they are deactivated from the app, with certain exceptions such as if a driver engages in illegal conduct. Uber also promises to provide the reason(s) for deactivation and develop an appeals process for drivers who believe they have been deactivated unfairly. Further, Uber agreed to recognize and fund a “drivers’ association” to enable dialogue between the company and its drivers. Uber also agreed to other measures such as providing more information about its rating system and making clear to customers that tips are not included in its fare price.

If the court denies approval of the settlement, this would be a major blow to the ride-sharing company. In the current proceedings, it would require Uber to offer more, else go to trial. The court’s refusal to approve this deal would also set a precedent for courts in subsequent class actions against Uber, such as one recently filed in Illinois federal court, where other judges may be inclined to take a similar approach to any proposed deal with other classes of drivers. Further, a finding that the proposed deal is not fair to unnamed class-members could embolden more drivers to sue and could tilt the scales in future settlement negotiations with other plaintiffs.

Even if the court in California approves this deal, Uber has a long road ahead. While this settlement may provide a temporary stopgap in California and Massachusetts, it creates an incentive for drivers elsewhere to sue. Less than two weeks after Uber proposed this $100 million settlement with the two states’ drivers, the company was hit with another putative class action – this time with drivers from the remaining 48 states. The new lawsuit filed in Illinois federal court likewise concerns worker classification and claims for tips, overtime, and expenses.

Meanwhile, Uber’s competitor Lyft recently achieved pre-approval of its settlement with California drivers in the federal class action of Cotter v. Lyft, Inc.—but only after it appeased the judge by increasing the value of the settlement from $12 million to $27 million. In addition to higher payouts for mileage reimbursements and other expenses, the settlement includes operational changes. Similar to Uber, Lyft agreed to changes that give drivers more job security, such as providing a finite list of reasons for a driver’s deactivation. Other changes give drivers more control over when, where, and for whom they drive, which makes the arrangement more reflective of a classic independent contractor relationship. The Uber court cited to Cotter in its recent order, and may continue to measure Uber’s proposed deal against this benchmark.

Uber’s implementation of arbitration clauses in its driver agreements should help it dodge a future of many more large-scale class actions by drivers of every other state. In Maryland and Florida, for example, two other attempted class actions with similar claims against Uber are going to arbitration. Even so, the classification of workers in the gig economy will remain a hot-button issue for the foreseeable future, and Uber seems poised to remain at the center of it.

ARTICLE BY Elizabeth Gotham of Honigman Miller Schwartz and Cohn LLP

© 2016 Honigman Miller Schwartz and Cohn LLP

UPDATE: San Diego’s Expansion of Minimum Wage and Paid Sick Leave

San Diego Earned Sick LeaveOn July 11, 2016, the San Diego Earned Sick Leave and Minimum Wage Ordinance became effective. As of the effective date, employers are required to pay employees who work at least two hours in a calendar week within the geographical boundaries of the City of San Diego a minimum wage of $10.50. Employers are also now required to provide employees one hour of paid sick leave for every 30 hours worked. The City also published the notices employers are required to post in the workplace regarding the new minimum wage and sick leave laws.

The San Diego City Council is currently in the process of considering an implementing ordinance for the Earned Sick Leave and Minimum Wage Ordinance. The implementing ordinance will, inter alia, designate an enforcement office, establish a system for receiving and adjudicating complaints, amend the remedy for violations and the accrual requirement for sick leave, and clarify the language of the Ordinance. If the implementing ordinance takes effect it will:

  • Allow employers to cap an employee’s total accrual of sick leave at 80 hours;

  • Allow employers to front load no less than 40 hours of sick leave to an employee at the beginning of each benefit year;

  • Clarify the enforcement process including a civil penalty cap for employers with no previous violations; and

  • Clarify language regarding the award of sick leave to be more consistent with State law.

Read the Implementing Ordinance.

Read about the noteworthy changes, including the minimum wage increase schedule.

View the required minimum wage and sick leave notices.

ARTICLE BY Josi Kennon Swonetz of Allen Matkins Leck Gamble Mallory & Natsis LLP

© 2010-2016 Allen Matkins Leck Gamble Mallory & Natsis LLP

EEOC Revises Its Proposal To Collect Pay Data Through EEO-1 Report

EEOC EEO-1 reportOn July 13, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) announced that it has revised its proposal to collect pay data from employers through the Employer Information Report (EEO-1). In response to over 300 comments received during an initial public comment period earlier this year, the EEOC is now proposing to push back the due date for the first EEO-1 report with pay data from September 30, 2017 to March 31, 2018. That new deadline would allow employers to use existing W-2 pay information calculated for the previous calendar year. The public now has a new 30-day comment period in which to submit comments on the revised proposal.

Purpose of EEOC’s Pay Data Rule 

The EEOC’s proposed rule would require larger employers to report the number of employees by race, gender, and ethnicity that are paid within each of 12 designated pay bands. This is the latest in numerous attempts by the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) to collect pay information to identify pay disparities across industries and occupational categories. These federal agencies plan to use the pay data “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”

Employers Covered By The Proposed Pay Data Rule 

The reporting of pay data on the revised EEO-1 would apply to employers with 100 or more employees, including federal contractors. Federal contractors with 50-99 employees would still be required to file an EEO-1 report providing employee sex, race, and ethnicity by job category, as is currently required, but would not be required to report pay data. Employers not meeting either of those thresholds would not be covered by the new pay data rule.

Pay Bands For Proposed EEO-1 Reporting 

Under the EEOC’s pay data proposal, employers would collect W-2 income and hours-worked data within twelve distinct pay bands for each job category. Under its revised proposed rule, employers then would report the number of employees whose W-2 earnings for the prior twelve-month period fell within each pay band.

The proposed pay bands are based on those used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey:

(1) $19,239 and under;

(2) $19,240 – $24,439;

(3) $24,440 – $30,679;

(4) $30,680 – $38,999;

(5) $39,000 – $49,919;

(6) $49,920 – $62,919;

(7) $62,920 – $80,079;

(8) $80,080 – $101,919;

(9) $101,920 – $128,959;

(10) $128,960 – $163,799;

(11) $163,800 – $207,999; and

(12) $208,000 and over.

Stay Tuned For Final Developments 

The EEOC’s announcement of the revised pay data reporting rule opens a new 30-day comment period, providing a second chance for the public to submit comments on the proposal through August 15, 2016. The EEOC is also formally submitting the proposed EEO-1 revisions to the Office of Management and Budget for consideration and decision. We will keep you posted on any further developments.

Please note that employers required to file an EEO-1 report for 2016 must do so by the normal September 30, 2016 filing date using the currently approved EEO-1 and must continue to use the July 1st through September 30th workforce snapshot period for that report.

ARTICLE BY Cecilia M. Romero of Holland & Hart LLP
Copyright Holland & Hart LLP 1995-2016.