We 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 episode includes:
Former Workers Violated Ex-Employer’s Trade Secret Rights
Financial Regulators Propose Banker Bonus Restrictions
D.C. Circuit: Musicians Are Employees
NLRB Alleges Misclassification Violates NLRA
In-House Tip of the Week
This month, the San Francisco Board of Supervisors unanimously approved an ordinance that provides six weeks of parental leave for bonding with a new child at 100% of the employee’s rate of pay (subject to certain caps). The ordinance which will take effect beginning January 1, 2017, will make San Francisco the first U.S. city to require employer-paid parental leave.
The new ordinance will go above and beyond the California state mandate, which currently provides covered employees six weeks of paid family leave at 55% of their pay for baby bonding or to care for a sick family member. That paid leave is funded by the employee who is taking the leave, through regular payroll contributions to the California State Disability Insurance (“SDI”) program. The new ordinance requires covered San Francisco employers to pay the remaining 45% of a covered employee’s wages during the six weeks of paid parental leave.
The law’s effective dates are staggered as follows:
|
Effective Date |
Size of Employer |
|
January 1, 2017 |
50 or more employees regardless of the employees’ location. |
|
July 1, 2017 |
35 or more employees regardless of the employees’ location. |
|
January 1, 2018 |
20 or more employees regardless of the employees’ location. |
In determining the size of a covered employer, the ordinance looks at the size of an employer’s total workforce, regardless of the actual location of the employees. Accordingly, an employer may be subject to the ordinance even if it does not employ 50 (or 20) employees within the city of San Francisco.
The City and other governmental entities are not covered employers under the ordinance.
Employees (including part-time and temporary employees) are eligible for the fully paid leave if they meet all of the following criteria:
Are employed for at least 180 days prior to the start of the leave;
Work at least 8 hours per week in San Francisco;
Work at least 40% of their weekly hours in San Francisco; and
Are eligible for California Paid Family Leave for baby bonding.
Notably, employee eligibility is based on the number of hours the employee works in San Francisco, regardless of his or her residence and regardless of the employer’s work location.
Union employees are not covered if (1) their collective bargaining agreement expressly waives the requirements under the ordinance in clear and unambiguous terms, or (2) the collective bargaining agreement was entered into before the ordinance’s effective date.
The new ordinance requires covered employers to pay 45% of the employee’s weekly gross wages, up to a maximum of $924 per week, for six weeks. This cap is based on the California Paid Family Leave program’s 55% wage replacement provision, which is capped at $1,129 per week. Between the two programs, covered employees should receive 100% wage replacement for a six-week parental leave, up to a total of $2,053/week.
If the covered employee works for more than one employer, the 45% supplemental compensation amount is apportioned between or among the covered employers based on the percentage of the employee’s total weekly wages received from each employer. For example, if the employee earns $800 per week from Employer A and $200 per week from Employer B for a combined total of $1,000, Employer A pays 80% of the supplemental compensation and Employer B pays 20% of the supplemental compensation.
An employer can require employees to use up to two weeks of unused, accrued vacation to help meet the employer’s obligation under the ordinance. This vacation time can be counted toward the six-week paid parental leave period.
Employers may not interfere with, discriminate, or retaliate against employees for exercising their rights under the ordinance. Terminating a covered employee within 90 days of their request or application for California Paid Family Leave, or taking adverse action against an employee within 90 days of their filing a complaint based on the new ordinance, will raise a rebuttable presumption that such action was taken to avoid the employer’s obligations under the law.
Employers will be required to post in a conspicuous place, at any workplace where a covered employee works, a notice informing employees of their rights under the ordinance. The notice must be in English, Spanish, Chinese, and any other language spoken by at least 5% of the employees at the workplace or job site.
Employers must retain for three years records documenting the supplemental compensation paid to its employees, and make the records available to San Francisco’s Office of Labor Standards Enforcement (“OLSE”) upon request. Failure to do so will raise a rebuttable presumption that the employer has violated the ordinance.
The ordinance provides for remedies through the OLSE and through the courts. The OLSE or “a person or entity acting on behalf of the public as provided for under applicable state law” may bring a civil action in court for alleged violations of the ordinance.
If the OLSE (after an administrative hearing) or court determines that the employer has violated the ordinance, the employer may be required to pay:
the total supplemental compensation withheld,
penalties to the employee of $250 or three times the amount of supplemental compensation withheld (whichever is greater),
penalties of $50 per day to each employee whose rights were deemed violated (e.g., in the instance of a failure to post a notice, this may be several employees per workday),
interest, and
in the event of a lawsuit, the plaintiff’s attorneys’ fees and costs.
Courts may also provide injunctive relief. In addition, the OLSE may require the employer to pay the City penalties of $50 per day per “employee or person as to whom the violation occurred or continued.”
Paid leave is an area gaining increasing attention from state and local governments. San Francisco’s new law comes on the heels of New York state’s enactment of a new paid family leave law and California’s Assembly Bill No. 908 which, beginning in 2018, will raise California’s current family leave pay rate from 55% to 60% or 70% depending on the employee’s wage rate. The U.S. Department of Labor has also set requirements for federal contractors to provide their employees with paid sick leave.
While San Francisco has gone farther than any other jurisdiction in what it requires employers to provide to new parents, employers should expect similar legislation in more jurisdictions across the U.S. in the years to come.
Employers with employees who work in San Francisco are highly encouraged to review the new ordinance carefully and to consult with an employment attorney to begin exploring what steps they may need to take now to ensure they are able to comply with the law upon its enactment.
We will continue to monitor the increasing and various city, state, and federal laws surrounding paid leave and provide additional analysis and guidance on compliance.
More than a few media sources have reported on the March 10, 2016 wage-hour “victory” by a class of Taco Bell employees on meal period claims in a jury trial in the Eastern District of California. A closer review of the case and the jury verdict suggests that those employees may not be celebrating after all — and that Taco Bell may well be the victor in the case.
The trial involved claims that Taco Bell had not complied with California’s meal and rest period laws. The employees sought meal and rest period premiums and associated penalties for a class of employees that reportedly exceeded 134,000 members.
Now, it is certainly true that, at trial, a class of employees prevailed on a claim that Taco Bell did not comply with California meal period laws for a limited period of time (2003-2007), when Taco Bell reportedly provided employees with 30 minutes of pay when they were not able to take meal periods, rather than the full one-hour of pay provided for by California law.
And it is certainly true that the class of employees was awarded approximately $496,000 on that claim.
But as it appears that there were more than 134,000 employees in the class, a few punches on the calculator show that, on average, each employee would receive approximately $3.
Perhaps more importantly, while it may have lost on that one claim, Taco Bell prevailed on the remaining claims in the case where the class alleged that Taco Bell had violated both meal and rest period laws as to its employees, including a claim that Taco Bell had not provided meal periods in compliance with the law for a period of approximately 10 years (2003-2013). That claim alone likely would have resulted in a jury verdict of several million dollars had the employees prevailed on it. But they did not. Taco Bell did.
In other words, in a case where the employees were presumably asking a jury for several millions of dollars for alleged violations dating back to George W. Bush’s first term as President, they were only awarded approximately $496,000.
In the grand scheme of a class action, where employers must constantly weight the costs of litigation with the benefits of settlement, that is a small sum. It is likely an amount Taco Bell gladly would have paid to settle the case. In fact, one would have to speculate that $496,000 is likely much less than the amount Taco Bell actually offered the employees and their attorneys to resolve the case in mediation or otherwise.
So while the media may be reporting that this is a “victory” for Taco Bell employees, those employees, who will receive $3 each on average, may not see it that way. Instead, they may well be questioning the lead plaintiffs and their attorneys about how much Taco Bell offered at the settlement table, if it was rejected, and why.
(And before anyone responds, “But the employees’ attorneys will get their attorneys fees,” we’re talking about the recovery for the employees themselves. If the real victors in the case are the attorneys, that’s another issue, isn’t it?)
©2016 Epstein Becker & Green, P.C. All rights reserved.
A particularly noteworthy case was recently decided by the Appellate Division on November 20, 2015. This case, Colleen Fitzgerald v. Walmart, is so interesting because the Court found that the worker’s injured condition did not qualify as a work related injury simply because she felt a “pop” in her low back while walking at work.
The Petitioner, Colleen Fitzgerald, filed a claim for an accident that occurred on April 26, 2010, while she was working for Walmart. She stated that she was merely walking in the store and felt a “pop” in her low back. While at the time of the claim Ms. Fitzgerald said she felt the pop she was not doing anything other than walking, later testimony revealed that at some time prior to the incident she had been doing some lifting at work in her position as a zone merchandise supervisor.
She reported the accident to her manager, and after seeing her family doctor who diagnosed her with protruding lumbar discs, she took FMLA for 12 weeks and a leave of absence while she received treatment. She did return to work at Walmart for a period of time, however because she then had another non-work related slip and fall accident where she broke her elbow, she was ultimately terminated from her job at Walmart. There was never any authorized treatment provided by the Workers’ Compensation carrier for Walmart.
Petitioner filed two claim petitions, one for the specific incident that occurred on April 26th and an occupational claim for work she did from December 2008 through April 2010. Since Walmart denied both claims, petitioner filed a Motion for Medical and Temporary Disability benefits with the Workers’ Compensation Court. The Motion was heard by Judge Gangloff, who found in favor of Walmart, as did the Appellate Division on appeal.
In the trial before Judge Gangloff, both sides called medical experts to testify. Petitioner’s expert, Dr. Gaffney, testified that in his opinion petitioner’s injury was caused by her work at Walmart, while Respondent’s expert, Dr. Meeteer felt that the injury was not related.
The Appellate Division upheld Judge Gangloff’s decision under Close v. Kordulak and held that they found no reason to disturb his well-reasoned findings. They stated that the Judge reviewed the applicable case law and applied the two step “positional risk test” for determining whether the injury arose out of the course of employment. The first part of this test requires the petitioner to prove that “but for” the fact of employment the injury would not have happened. The next part of the test is to analyze the “nature of the risk” that caused the injury.
In this case, the Court concluded that that the petitioner failed to satisfy the first part of the test because “the facts here do not establish that the petitioner would not have been exposed to the risk if she had not been at work.” In other words, as she was simply walking when she felt the “pop” in her back, the back injury could have just as easily occurred while she was not at work. According Judge Gangloff, “she could have been walking anywhere at the time of onset of pain.” He found that there was nothing about the workplace that contributed to petitioner’s injuries. The Judge did not find that petitioner had a compensable occupational claim either, because the medical records did not support Dr. Gaffney’s opinion that her condition was somehow related to a progressive occupational condition.
The Department of State (DOS) recently published its annual report of immigrant visa applicants (2015 Annual Immigrant Visa Report), which tallies up the number of total applicants—including spouses and children—who are waiting for their respective priority date to become current, allowing for them to obtain their green card. The annual report, which totals the number of applicants up to Nov. 1, 2015, does not take into account those applicants who have adjustment of status applications pending with the U.S. Citizenship and Immigration Services (USCIS) as of Nov. 1.
Overall, 2015 saw a three precent increase of total applicants compared against last year, increasing from a total of 4,422,660 for 2014 to 4,556,021 for 2015. This total includes both family-based green cards and employment-based green cards. Employment-based green card applicants only accounted for roughly 100,000 of the 4.5 million. When compared against 2014, the percentage of employment-based applicants waiting to apply for their green cards increased from 90,910 to 100,747—an increase of 10.8 percent.
While a 10.8 percent increase seems like a marginal increase, examining specific categories individually reveals that certain categories—namely Employment First, Second, and Fifth—have grown in popularity with employers and investors. Employment First encompasses green card applications for aliens of extraordinary ability, outstanding researchers, and multi-national managers or executives. From 2014 to 2015, the Employment First category saw an increase of 27.1 percent on the waiting list, from 2,733 to 3,474. Employment Second is reserved for Aliens of Exceptional Ability, which is measured by positions that require a U.S. Master’s degree (or higher), or a Bachelor’s degree and five years of progressive experience. In 2015, there was an increase of 36.5 percent for Employment Second, with 11,440 on the waiting list as opposed to 8,380 in 2014. Finally, Employment Fifth is reserved for investors and entrepreneurs who invest substantial capital into the U.S. economy, among other requirements. Employment Fifth saw the greatest increase from 2014 to 2015—175.2 percent. The specific wait list numbers, broken down by category, are below:
At first glance, the 140,000 of expected employment-based green card approvals this year seems like it would clear the existing backlog of green card applications of 100,747 left from 2015, but this is not the case because there is a seven percent per-country limit, which visa issuances to any single country, including China and India, cannot exceed. What this looks like for applicants from countries such as China and India is that the wait for green cards will only increase, absent legislative or executive action.
Reviewing the 2015 Annual Immigrant Visa Report by country reveals that India and China remain the world’s largest applicants across each Employment Category, a trend that will likely continue into 2016. For Employment First, China represents more than 25 percent of all applicants, with India coming in a distant second at 9.6 percent.
For Employment Second, India accounts for a two-thirds of all applicants at 66.8 percent; China, on the other hand, accounts for only 7.8 percent, falling just behind South Korea at 8.4 percent.
For Employment Fifth, China leads the applicant-pool with 89.6 percent of all applications. The next two countries—Hong Kong S.A.R., and Vietnam, only account for 1.4 percent each.
For 2016, approximately 140,000 employment-based green cards are projected to be approved, meaning that the wait will continue for most of the 100,747 who are already waiting for their priority date to become current so that they can obtain their green cards. As the U.S. economy continues to rebound, it is safe to assume that only more applicants, especially from India and China, will continue to apply for employment-based green cards in the higher preference categories—Employment First, Second, and Fifth—where the wait is shorter as compared to Employment Third and Fourth, reserved for skilled workers, and special immigrants, respectively.
©2015 Greenberg Traurig, LLP. All rights reserved.
If an employer doesn’t follow certain requirements when it terminates an employee holding an H-1B visa, then the employer could be surprised to learn that employee wasn’t properly terminated, and the obligation to pay that employee wages and benefits continues despite the attempted termination. As background, Department of Labor (DOL) regulations at 20 CFR §655.731 provide guidance regarding wage obligations relating to H-1B (“specialty occupation”) employees. Employers are required to pay to H-1B visa holders the higher of the prevailing wage for the occupation, or the actual wage for the position, as confirmed in the Labor Condition Application (LCA) that the employer must file during the H-1B petition process.
This wage obligation even applies to H-1B nonimmigrants who have been “benched” or are no longer actively working for the employer. When an employer terminates an H-1B employee prior to the expiration date of the employee’s H-1B status, DOL considers this action to be a form of benching the employee UNLESS/UNTIL the employer has taken the following steps to effectuate a “bona fide” termination:
STEP 1 – The employer must notify the USCIS that the relationship has been terminated (USCIS will then cancel the petition); and
STEP 2 – The employer must provide the employee with offer of payment for return transportation abroad [for these purposes, the term “abroad” is defined in 8 CFR 214.2(h)(4)(iii)(E) as the foreign national’s last place of foreign residence].
Although not required by regulation, it is also advisable for the employer to withdraw the underlying Labor Condition Application (LCA), as long as the terminated employee is the only employee who has been covered by that particular LCA.
Failure to take Steps 1 and 2 above may result in DOL’s requiring the employer to pay back wages commencing on the date of attempted dismissal and continuing until the date upon which DOL determines that the termination has been perfected.
Note that these regulations do not apply to an H-1B employee who has voluntarily terminated his/her employment prior to the H-1B expiration date. Termination by the employer launches these stringent requirements. In reality, many terminated H-1B employees are able fairly quickly to secure new employment and to transfer their H-1B sponsorship to the new employer; however, these two simple steps should shield the original H-1B sponsor from potential back-pay obligations.
After ringing in 2016, employers may want to skip the eggnog and check their wages to make sure they are properly paying their employees. On Jan. 1, the minimum wage rates in 14 states went up and all are higher than the federal minimum wage. These states and rate increases include:
|
Alaska |
$9.75 per hour |
|
Arkansas |
$8.00 per hour |
|
California |
$10.00 per hour |
|
Connecticut |
$9.60 per hour |
|
Hawaii |
$8.50 per hour |
|
Massachusetts |
$10.00 per hour |
|
Michigan |
$8.50 per hour |
|
Nebraska |
$9.00 per hour |
|
New York |
$9.00 per hour |
|
Rhode Island |
$9.60 per hour |
|
Vermont |
$9.60 per hour |
|
West Virginia |
$8.75 per hour |
The minimum wage rates in both Colorado and South Dakota will increase due to a cost of living adjustment tied to inflation. For 2016, Colorado’s minimum wage is $8.31 per hour and South Dakota’s minimum wage now is $8.55 per hour.
Other notable minimum wage increases that will occur throughout 2016 include:
|
District of Columbia |
$11.50 per hour, effective July 1, 2016
|
|
Maryland |
$8.75 per hour, effective July 1, 2016 |
|
Minnesota |
$9.50 per hour for large employers, effective August 1, 2016
$7.75 per hour for small employers, effective August 1, 2016
|
Finally, for employers who have federal service contracts, the minimum wage for employees has increased to $10.15 per hour. These employers should pay close attention to the hourly rates in effect for the applicable contract as some rates will be higher than the minimum wage rate.
© 2015 BARNES & THORNBURG LLP
African American Bakery Workers Subjected to Racist Comments and Graffiti in the Worksite, Federal Agency Charged
DALLAS – Hillshire Brands Company (formerly known as the Sara Lee Corporation) will pay $4 million to a group of 74 African-American former employees and provide other significant relief to settle a lawsuit where they were subjected to a racially hostile work environment at a former Sara Lee facility in Paris, Texas, the agency announced today.
EEOC claimed African-American employees were subjected to racist graffiti on the walls of the bathrooms and locker room. The former bakery employees also alleged that during work hours, they were berated with racial slurs by supervisors and other white co-workers, and complaints by the plant workers went unaddressed by management.
Race discrimination in the workplace, including race harassment, violates Title VII of the Civil Rights Act of 1964. The EEOC filed suit (Case No. 2:15-cv-1347) in U.S. District Court for the Eastern District of Texas, Marshall Division, after first attempting to reach a pre-litigation settlement through its conciliation process.
“The Commission completed an extensive investigation at the Sara Lee plant, which included conducting interviews with the former bakery workers,” said Meaghan L. Shepard, trial attorney for the Dallas District of EEOC. “EEOC determined racial slurs and graffiti continued at the facility in Paris for years, until the doors finally closed in November 2011.”
“EEOC strongly believes it is critically important for companies to set policies and provide effective avenues for complaints to address racial harassment in the workplace,” said EEOC Supervisory Trial Attorney Suzanne Anderson. “African-American workers on the Sara Lee bakery production lines in Paris felt embarrassed and intimidated by the graffiti in the bathroom and the racial slurs on the production floor. Strong corporate policies and quick remedial action protects against this type of workplace discrimination.”
The two-year consent decree settling the case provides for an injunction where Hillshire Brands will implement various preventative approaches regarding discrimination or harassment against any employee on the basis of race and will periodically report incidents or investigations to EEOC. Hillshire Brands also agreed to engage in remedial measures such as anti-discrimination training and implementation of procedures to prevent and promptly address graffiti issues.
Belinda McCallister, acting director of EEOC’s Dallas District Office, said, “We are pleased with the approach taken by the employer to acknowledge the hostile environment that once existed and for taking positive steps toward ensuring a healthy workplace in the future.”
EEOC enforces federal laws prohibiting employment discrimination. Further information about EEOC is available on its web site at www.eeoc.gov.
See original news release here: http://www1.eeoc.gov/eeoc/newsroom/release/12-22-15.cfm
A federal district court judge ruled that the U.S. Equal Employment Opportunity Commission’s (EEOC) claim that Costco violated Title VII of the Civil Rights Act of 1964 by failing to prevent a male customer from stalking and harassing a female employee at the company’s Glenview, Ill. warehouse will be decided by a jury.
Judge Ruben Castillo, the chief judge of the U.S. District Court for the Northern District of Illinois in Chicago, denied Costco’s motion for summary judgment on EEOC’s claim it failed to protect one of its former employees from a sexually hostile work environment. The decision in EEOC v. Costco Wholesale Corp., 14-cv-6553, was entered on Dec. 16, 2015. The court announced it will select a jury trial date at a status hearing in January.
The court said it found evidence the employee was subjected to harassing behavior by a customer for more than a year, including ominous staring, unwanted physical touching, unwanted requests for dates and overly intrusive personal questions. The court found evidence the customer interactions continued to escalate, even though he had been talked to by Costco’s managers and the Glenview police to avoid her. The court also concluded that, added together and given the length of time over which the incidents occurred, they amounted to a level of a hostile work environment.
The court also found evidence Costco failed to take reasonable steps to stop the harassment, noting that Costco waited more than a year to ban the customer from the store. The court granted summary judgment for Costco on EEOC’s constructive discharge claim.
Costco is an international membership warehouse retailer which, according to its website, has over 650 locations worldwide, annual revenues over $100 billion, and over 125,000 employees in the United States.
EEOC’s Chicago District Office is responsible for processing discrimination charges, administrative enforcement and the conduct of agency litigation in Illinois, Wisconsin, Minnesota, Iowa, and North and South Dakota, with area offices in Milwaukee and Minneapolis.
EEOC enforces federal laws prohibiting employment discrimination. This information was previously published on the EEOC website, www.eeoc.gov.
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