Tag: Labor Law

Are they Worth Price of Paper They’re Printed On? – Ubersization of Arbitration Clauses

Arbitration has long been treated as an inferior method of resolving disputes, despite pronouncements to the contrary from the U.S. Supreme Court. However, arbitration does serve a purpose. The process is less formalized, so it moves much faster than the court system. That means less disruption to business. It’s also less expensive than bringing a civil action, making it easier for individuals to assert their rights or air their grievances. For these reasons and more, many businesses have incorporated arbitration provisions into their contracts and handbooks. The Federal Arbitration Act was enacted in 1925, yet these types of contractual agreements to arbitrate still get shot down in certain courts and by certain administrative authorities.more

Drivers v. Uber – The Arbitration Dispute

In Uber’s California litigation, Judge Chen has examined various aspects of the arbitration provisions contained in the various versions of Uber’s agreements with its drivers.  The 2013 Agreement and the 2014 Agreement shared several key features:

(1) all disputes not exempted from the scope of arbitration were subject to resolution by final and binding arbitration;

(2) arbitration could proceed only on an individual basis, not by class;

(3) the delegation clause in the provision stated that “disputes arising out of or relating to the interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision” shall be decided by the arbitrator; and,

(4) an opt-out clause allowed drivers to avoid the arbitration clause.

In separate litigation, the Court had Uber revise the opt-out provision to make it more conspicuous and less onerous on the drivers.  Because the 2013 Agreement contained the original opt-out provision, it did not stand a chance of being found enforceable.  In later 2014 and 2015 Agreements,  Uber included the provision in boldface and ALL CAPS with text larger than the provisions around it.  Language also was added to explain the significance of arbitration and the right to opt-out.  Additionally, to exercise that right now, a driver need only send an email to Uber stating his/her name and the desire to opt-out (although he/she could send a letter by regular mail, overnight delivery, or hand-delivery, too).  As a result, when the Court certified a class on September 1, 2015, those drivers who failed to opt-out of the provision were excluded from the class.  However, in December, the Court found the arbitration agreements were unenforceable on California public policy grounds, irrespective of the opt-out provision, thus dramatically increasing the size of the class.

Meanwhile, delegation clauses, like the one set forth under (3) above, seem to cause consternation in courts across the nation.  Even the U.S. Supreme Court has recognized that courts are the typical adjudicators of whether the parties have agreed to arbitrate in the first instance.  Because a delegation clause puts this determination in the hands of the arbitrator instead, it must be clear and unmistakable.  In Uber’s case, the clause was clear, but it was made ambiguous because it conflicted with other clauses contained in the Agreements.  For instance, a separate clause in Uber’s 2013 and 2014 driver agreements stated that the state and federal courts in San Francisco had exclusive jurisdiction over any disputes, actions, or claims arising out of the Agreement.  While Uber argued that the forum selection clause reserving jurisdiction in San Francisco courts was for any disputes found not subject to arbitration, Judge Chen did not buy into that argument.  He felt the clauses conflicted, and since the courts would have to apply rules of construction to resolve the ambiguity created by the competing clauses, that meant that the delegation clause was not clear and unmistakable, and therefore, was unenforceable.

The arbitration provision in Uber’s 2013 and 2014 Agreements also addressed responsibility for payment of the arbitrator’s fees.  It provided that if applicable law did not require Uber to pay for all of the costs and fees of arbitration, then the costs would be apportioned between the parties as required by law.  Judge Chen found that because the delegation clause would force drivers to pay exorbitant fees just to arbitrate whether or not their substantive disputes even belonged before the arbitrator in the first place, when drivers would not have to pay a court to make that determination, such a clause deprived drivers of any forum for their claims.

The arbitration provision contained three additional unfavorable terms which Judge Chen found were not sufficiently highlighted for the drivers’ attention.  For one, the confidentiality clause precluded the parties from disclosing the existence, contents, or results of any arbitration.  For another, the intellectual property carve-out clause excluded intellectual property disputes from arbitration – something the Court found favored Uber.  Finally, the unilateral modification clause permitted Uber to unilaterally modify the terms of the agreement without notice to the drivers.  As a result of all of the foregoing issues, the Court found the agreements to arbitrate were unconscionable.  Thus, Judge Chen refused to enforce them.

Can an enforceable arbitration agreement even be written? 

Arbitration agreements are evaluated on a case-by-case basis.  While many are still disfavored, as I mentioned earlier, they are more likely to be upheld if they are not unconscionable.  The procedural component of the unconscionability analysis usually deals with the formation of the agreement itself.  This includes the characteristics of the parties (e.g., age, literacy, sophistication), the manner and circumstances under which the contract was executed, and whether terms of the agreement are hidden or complex, among other things.  The substantive component looks at the unfairness of the agreement.  Judge Chen, acknowledging that the issue wasn’t fully settled, nevertheless evaluated the arbitration provision through the lens of an employer/employee relationship.  Let me provide some tips that make arbitration agreements more likely to be upheld by courts in the employment context.

  • Keep your agreement to arbitrate in a separate document requiring a separate acknowledgement.

  • While the agreement may cover all workplace disputes between the parties, do not preclude employees from filing charges with state or federal administrative agencies, like the EEOC.

  • If you reserve the right to modify or discontinue the arbitration clause, include a requirement that notice will be given to employees and that the modification or rescission will be applied prospectively.

  • Since cost is a big issue for courts reviewing these agreements, make sure the employee will only be required to pay what the arbitrator finds is reasonable should the employee lose, or make sure the costs to pursue arbitration are not more costly than those to bring a lawsuit.

  • The remedies available in arbitration should be similar to those available in court.

  • Avoid delegation clauses.

As always, there is no substitute for consulting with an attorney when attempting to draft one of these agreements.

ARTICLE BY Vanessa L. Goddard of Steptoe & Johnson PLLC
© Steptoe & Johnson PLLC. All Rights Reserved.

Are they Worth Price of Paper They're Printed On? – Ubersization of Arbitration Clauses

Arbitration has long been treated as an inferior method of resolving disputes, despite pronouncements to the contrary from the U.S. Supreme Court. However, arbitration does serve a purpose. The process is less formalized, so it moves much faster than the court system. That means less disruption to business. It’s also less expensive than bringing a civil action, making it easier for individuals to assert their rights or air their grievances. For these reasons and more, many businesses have incorporated arbitration provisions into their contracts and handbooks. The Federal Arbitration Act was enacted in 1925, yet these types of contractual agreements to arbitrate still get shot down in certain courts and by certain administrative authorities.more

Drivers v. Uber – The Arbitration Dispute

In Uber’s California litigation, Judge Chen has examined various aspects of the arbitration provisions contained in the various versions of Uber’s agreements with its drivers.  The 2013 Agreement and the 2014 Agreement shared several key features:

(1) all disputes not exempted from the scope of arbitration were subject to resolution by final and binding arbitration;

(2) arbitration could proceed only on an individual basis, not by class;

(3) the delegation clause in the provision stated that “disputes arising out of or relating to the interpretation or application of this Arbitration Provision, including the enforceability, revocability or validity of the Arbitration Provision or any portion of the Arbitration Provision” shall be decided by the arbitrator; and,

(4) an opt-out clause allowed drivers to avoid the arbitration clause.

In separate litigation, the Court had Uber revise the opt-out provision to make it more conspicuous and less onerous on the drivers.  Because the 2013 Agreement contained the original opt-out provision, it did not stand a chance of being found enforceable.  In later 2014 and 2015 Agreements,  Uber included the provision in boldface and ALL CAPS with text larger than the provisions around it.  Language also was added to explain the significance of arbitration and the right to opt-out.  Additionally, to exercise that right now, a driver need only send an email to Uber stating his/her name and the desire to opt-out (although he/she could send a letter by regular mail, overnight delivery, or hand-delivery, too).  As a result, when the Court certified a class on September 1, 2015, those drivers who failed to opt-out of the provision were excluded from the class.  However, in December, the Court found the arbitration agreements were unenforceable on California public policy grounds, irrespective of the opt-out provision, thus dramatically increasing the size of the class.

Meanwhile, delegation clauses, like the one set forth under (3) above, seem to cause consternation in courts across the nation.  Even the U.S. Supreme Court has recognized that courts are the typical adjudicators of whether the parties have agreed to arbitrate in the first instance.  Because a delegation clause puts this determination in the hands of the arbitrator instead, it must be clear and unmistakable.  In Uber’s case, the clause was clear, but it was made ambiguous because it conflicted with other clauses contained in the Agreements.  For instance, a separate clause in Uber’s 2013 and 2014 driver agreements stated that the state and federal courts in San Francisco had exclusive jurisdiction over any disputes, actions, or claims arising out of the Agreement.  While Uber argued that the forum selection clause reserving jurisdiction in San Francisco courts was for any disputes found not subject to arbitration, Judge Chen did not buy into that argument.  He felt the clauses conflicted, and since the courts would have to apply rules of construction to resolve the ambiguity created by the competing clauses, that meant that the delegation clause was not clear and unmistakable, and therefore, was unenforceable.

The arbitration provision in Uber’s 2013 and 2014 Agreements also addressed responsibility for payment of the arbitrator’s fees.  It provided that if applicable law did not require Uber to pay for all of the costs and fees of arbitration, then the costs would be apportioned between the parties as required by law.  Judge Chen found that because the delegation clause would force drivers to pay exorbitant fees just to arbitrate whether or not their substantive disputes even belonged before the arbitrator in the first place, when drivers would not have to pay a court to make that determination, such a clause deprived drivers of any forum for their claims.

The arbitration provision contained three additional unfavorable terms which Judge Chen found were not sufficiently highlighted for the drivers’ attention.  For one, the confidentiality clause precluded the parties from disclosing the existence, contents, or results of any arbitration.  For another, the intellectual property carve-out clause excluded intellectual property disputes from arbitration – something the Court found favored Uber.  Finally, the unilateral modification clause permitted Uber to unilaterally modify the terms of the agreement without notice to the drivers.  As a result of all of the foregoing issues, the Court found the agreements to arbitrate were unconscionable.  Thus, Judge Chen refused to enforce them.

Can an enforceable arbitration agreement even be written? 

Arbitration agreements are evaluated on a case-by-case basis.  While many are still disfavored, as I mentioned earlier, they are more likely to be upheld if they are not unconscionable.  The procedural component of the unconscionability analysis usually deals with the formation of the agreement itself.  This includes the characteristics of the parties (e.g., age, literacy, sophistication), the manner and circumstances under which the contract was executed, and whether terms of the agreement are hidden or complex, among other things.  The substantive component looks at the unfairness of the agreement.  Judge Chen, acknowledging that the issue wasn’t fully settled, nevertheless evaluated the arbitration provision through the lens of an employer/employee relationship.  Let me provide some tips that make arbitration agreements more likely to be upheld by courts in the employment context.

  • Keep your agreement to arbitrate in a separate document requiring a separate acknowledgement.

  • While the agreement may cover all workplace disputes between the parties, do not preclude employees from filing charges with state or federal administrative agencies, like the EEOC.

  • If you reserve the right to modify or discontinue the arbitration clause, include a requirement that notice will be given to employees and that the modification or rescission will be applied prospectively.

  • Since cost is a big issue for courts reviewing these agreements, make sure the employee will only be required to pay what the arbitrator finds is reasonable should the employee lose, or make sure the costs to pursue arbitration are not more costly than those to bring a lawsuit.

  • The remedies available in arbitration should be similar to those available in court.

  • Avoid delegation clauses.

As always, there is no substitute for consulting with an attorney when attempting to draft one of these agreements.

ARTICLE BY Vanessa L. Goddard of Steptoe & Johnson PLLC
© Steptoe & Johnson PLLC. All Rights Reserved.

Supreme Court Rules Public Sector Union Agency Fees Still Alive

The U.S. Supreme Court was equally divided 4-to-4 on a case that asked the Justices whether to overturn long-established law that allows a public sector union to charge an agency or service fee to those employees who choose not to join the union. With the Court equally split, the lower court’s decision is automatically affirmed, and public sector unions can continue to charge agency fees to employees who do not join the union.

Overturning Abood Appeared A Real Possibility

In the 1977 Abood v. Detroit Board of Education decision, the Supreme Court ruled that unions could charge an agency fee to public employees who chose not to join the union to cover the union’s costs to negotiate a contract that covers all the public employees. For over thirty years, that has been settled law. In 2014, however, the Court suggested it might be willing to overturn Abood, questioning its analysis on several grounds, including whether a mandatory agency fee violates a non-union member’s First Amendment right to free speech.

That apparent willingness to overturn Abood set up the First Amendment challenge to public union agency fees in this term’s case of Friedrichs v. California Teachers Association. At the oral argument in Friedrichs in January, the Court’s more conservative Justices appeared ready to overrule Abood. Even the four more liberal Justices appeared to concede that the First Amendment argument may be tough to uphold but instead focused on the importance of not overturning prior rulings unless there is a compelling reason to do so. The long-standing Abood precedent appeared in jeopardy.

Justice Scalia’s Death Creates Stalemate 

Justice Antonin Scalia’s unexpected death in February left the Court at a 4-to-4 stalemate in Friedrichs. With the even split, the Ninth Circuit’s ruling applying Abood stands.

Opponents of unions and the Abood decision will have to wait for another case to work its way through the judicial system to raise the issue for consideration by a future Court. Of course, depending on who fills Justice Scalia’s vacancy, the majority of Justices may no longer have an appetite to reconsider Abood. We’ll all have to wait and see. In the meantime, public sector unions may continue to charge agency fees to those employees not paying union dues.

Article By Jason S. Ritchie of  Holland & Hart LLP

Copyright Holland & Hart LLP 1995-2016.

Sick Leave and Minimum Wage Update: Oregon, Vermont, Santa Monica

On Wednesday, Oregon Governor Kate Brown signed into law legislation that increases that state’s minimum wage from $9.25 to up to $14.75 by 2022, the highest of any state.  The first increases go into effect on July 1, 2016.  Under SB 1532 [PDF], minimum wage rates vary based upon the employer’s location, as set forth in the table below.  Beginning in 2023, the rate will be indexed to inflation.  The Commissioner of the Bureau of Labor and Industries has been charged with adopting rules for determining an employer’s location.

Oregon, Vermont, Santa Monica

In addition, Santa Monica, California quietly passed a law raising the minimum wage and mandating paid sick leave starting July 1, 2016, adding to the regulatory maze for employers with employees in California.  As currently written, Santa Monica’s sick leave law tracks San Francisco’s (arguably the most generous sick leave law in the nation), in that it does not contain an annual accrual or use cap.  Instead, employees are allowed to accrue paid sick leave at the rate of one hour for every 30 hours worked, up to 40 hours (if the employer has 1-25 employees in Santa Monica) or 72 hours (if the employer has 26 or more employees in Santa Monica).  If the employee reaches that cap, then uses some sick leave, the employee begins accruing leave again, up to that cap.  In addition, employees are entitled to roll over all accrued, unused sick leave to the next year. As with the San Francisco ordinance, this creates difficulties for employers who wish to front-load a predetermined amount of sick leave (a practice that is permissible under California and many other sick leave laws).  Of note, the City has established a working group to review and recommend technical adjustments to the adopted ordinance.  The sick leave law goes into effect on July 1, 2016.

The Santa Monica law also establishes a minimum wage for employees who work at least two hours per week in Santa Monica.  Large employers—those with 26 or more employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2016, increasing annually to $15.00/hour on July 1, 2020.   Small employers—those with 25 or fewer employees in Santa Monica—must pay a minimum wage of $10.50/hour beginning on July 1, 2017, increasing annually $15.00/hour on July 1, 2021. Beginning July 1, 2022, and each year thereafter, the minimum wage will increase based on Consumer Price Index (CPI).   The working group is also reviewing the minimum wage portion of the law.

Finally, Vermont is on the verge of becoming the fifth state (following California, Connecticut, Massachusetts and Oregon) to require private employers to provide paid sick leave for employees.  All that is left is for Governor Shumlin to sign the legislation [PDF], which he is expected to do.  Vermont’s sick leave law differs somewhat from laws in other jurisdictions in that 1) it only requires paid sick leave for employees who work an average of at least 18 hours/week, 2) employees accrue sick leave at a rate of one hour for every 52 worked (one hour for every 30 worked is the most common rate of accrual) and 3) it allows employees to use leave to accompany a parent, grandparent, spouse or parent-in-law to long-term care related appointments.

In addition, the law has a stepped approach for implementation.  First, for small employers (those with 5 or fewer employees) the law does not go into effect until January 1, 2018; the effective date for all other employers is January 1, 2017.  Second, through December 31, 2018, employees may only accrue and use up to 24 hours of paid sick leave per year; beginning January 1, 2019, that amount increases to 40 hours per year.

Article By Shennan Harris of Squire Patton Boggs (US) LLP

© Copyright 2016 Squire Patton Boggs (US) LLP

Does the DOL Consider You a Joint Employer under Its “Broad as Possible” Standard? You May Be Surprised at the Answer

DOLOn January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division (DOL) articulated a new standard that it will use to identify joint employment relationships. Specifically, the DOL published Administrator’s Interpretation No. 2016-1 (AI 2016-1), which is the first Administrator’s Interpretation this year, following the DOL’s similar pronouncement regarding independent contractor classifications in July 2015.

AI 2016-1 broadly interprets the Fair Labor Standards Act (FLSA) and Migrant Seasonal Agricultural Worker Protection Act (MSPA) and narrowly interprets case law regarding joint employment, resulting in its conclusion that “the expansive definition of ‘employ’ . . . reject[s] the common law control standard and ensures that the scope of employment relationships and joint employment under the FLSA and MSPA is as broad as possible.”

AI 2016-1 also sets forth two approaches for analyzing whether a joint employment situation exists: (1) horizontal, which looks at the relationship of the employers to each other, and (2) vertical, which examines “the economic realities” of the employee in relation to a “potential joint employer.” The structure and nature of the relationship(s) will dictate which analysis applies. In some cases both may be applicable, for example, when two businesses share an employee provided by a third-party intermediary, such as a staffing agency, that is the direct employer.

Horizontal Joint Employment

Citing the FLSA regulations, the DOL explained horizontal joint employment as follows:

Where an employee’s work simultaneously benefits two or more employers, or an employee works for two or more employers throughout the week, a joint employment relationship “generally will be considered to exist” in circumstances such as where:

  1. the employers arrange to share or interchange the employee’s services;

  2. one employer acts directly or indirectly in the interest of the other employer(s) in relation to the employee; or

  3. “one employer controls, is controlled by, or is under common control with the other employer.”

In addition, the DOL set forth the following factors as potentially relevant in gauging the relationship between two or more employers and the degree of shared control over employees that might suggest a horizontal joint employment arrangement:

  • who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners);

  • do the potential joint employers have any overlapping officers, directors, executives, or managers;

  • do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);

  • are the potential joint employers’ operations inter-mingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);

  • does one potential joint employer supervise the work of the other;

  • do the potential joint employers share supervisory authority for the employee;

  • do the potential joint employers treat the employees as a pool of employees available to both of them;

  • do the potential joint employers share clients or customers; and

  • are there any agreements between the potential joint employers.

According to the DOL, not all (or even most) of these factors need to be present for a horizontal joint employment relationship to exist. The agency set forth an example of a server who works at two separate restaurants owned by the same entity. The managers at each restaurant share the employee and coordinate the employee’s schedule between the two locations. Both employers use the same payroll processor and share supervisory authority over the employee. The DOL would find this to be a horizontal joint employment relationship. The agency distinguished this from a scenario where an employee works at two restaurants, one in the mornings and the other in the afternoons, and while each restaurant’s owners and managers know of the employee’s other job, the restaurants are completely unrelated. However, these examples leave quite a bit of grey area where the DOL apparently envisions a fact-intensive analysis under “as broad a standard as possible.”

Vertical Joint Employment

When it comes to vertical joint employment, the DOL maintains that the proper analysis is an economic realities test, and not the traditional inquiry focused on control. AI 2016-1 focuses on an employee’s “economic dependence” on the “potential joint employer” as the critical inquiry. This view appears to conflate the principles underlying the DOL’s recent independent contractor analysis with the question of whether an additional employment relationship exists beyond the one already established between an employee and his/her direct employer. The resulting approach likely will result in the DOL (and many courts) finding more entities to be joint employers under the FLSA where they otherwise would not—and in situations where a joint employer determination has largely been unnecessary because the employees in question already receive FLSA protections in their employment relationships with their direct employers.

To explain what it views to be the proper analytical approach, the DOL heavily relies on an MSPA regulation listing seven factors to consider under that statute’s version of the economic realities test for farm laborers. While the DOL acknowledges that the MSPA regulation does not actually apply to the FLSA, the agency believes the MSPA’s factors are “useful guidance in a FLSA case” and that “an economic realities analysis of the type described in the MSPA joint employment regulation should be applied in [FLSA] cases” to determine whether a situation is one of vertical joint employment. The MSPA’s seven factors are as follows:

  • Directing, Controlling, or Supervising the Work Performed. “To the extent that the work performed by the employee is controlled or supervised by the potential joint employer [i.e., the end user] beyond a reasonable degree of contract performance oversight, such control suggests that the employee is economically dependent on the potential joint employer.” The DOL goes on to clarify, as did the National Labor Relations Board recently, that such control need not be direct, but can be exercised through the intermediary employer. Likewise, the end user need not exercise as much control as the direct employer for it “to indicate economic dependence by the employee.”

  • Controlling Employment Conditions. Along the same lines, if an end user “has the power to hire or fire the employee, modify employment conditions, or determine the rate or method of pay,” this indicates economic dependence on the end user, even if the control is indirect or not exclusive.

  • Permanency and Duration of Relationship. If a work assignment for the end user is “indefinite, permanent, full-time, or long-term,” this suggests economic dependence. The DOL further instructs that analysis of this factor should consider “the particular industry at issue” such as “if the work . . . is by its nature seasonal, intermittent, or part-time.”

  • Repetitive and Rote Nature of Work. If the employee’s work for the end user “is repetitive and rote, is relatively unskilled, and/or requires little or no training,” this indicates economic dependence on the end user.

  • Integral to Business. “If the employee’s work is an integral part of the potential joint employer’s business, that fact indicates that the employee is economically dependent on the potential joint employer. . . . .”

  • Work Performed on Premises. If the work is performed “on premises owned or controlled by” the end user, this indicates economic dependence on the end user.

  • Performing Administrative Functions Commonly Performed by Employers. Economic reliance also can be imputed if the end user performs “administrative functions for the employee, such as handling payroll, providing workers’ compensation insurance, providing necessary facilities and safety equipment, housing, or transportation, or providing tools and materials required for the work.”

The DOL acknowledges that there are other possible factors that courts consider, but states that “regardless, it is not a control test.” To the extent that some, if not many, courts still do apply a control test, the DOL responds that doing so “is not consistent with the breadth of employment under the FLSA.” The agency buttresses its stance with citations to case law from the Second Circuit (covering New York, Vermont and Connecticut), while noting elsewhere that other circuits have not followed suit.

Despite the lack of consensus among jurisdictions to apply an economic realities test to determine joint employment, the DOL encourages application of the test in a way that would drastically expand the scope of joint-employment liability. In a footnote, for example, the agency notes that in general, an employee need not even economically depend more on the end user than on his/her direct employer for a finding of vertical joint employment. “The focus . . . is not a comparison [of the two relationships].”

In summary, businesses must carefully monitor their relationships with affiliated companies or business partners. If affiliated entities employ the same person and do not take measures to maintain the separateness of their operations and management, the DOL likely would find horizontal joint employment, requiring the aggregation of work hours for purposes of overtime pay. Likewise, under the DOL’s interpretation of vertical joint employment, if a worker tends to economically depend on the end user business, which could be imputed from a wide variety of factors, the DOL likely would deem that end user business a joint employer for purposes of wage and hour liability—regardless of the employee’s primary economic reliance on his/her direct employer. These expansive interpretations could be especially problematic for staffing agencies and other types of tiered business models.

AI 2016-1 signifies the latest effort by the DOL to expand the FLSA’s reach to nontraditional work arrangements. Like its other recent effort, this may result in more DOL investigations and litigation. The AI 2016-1 almost certainly will be challenged in court. Additionally, legislation has been proposed (but not passed) to curtail similar attempts by federal agencies to expand joint employment liability. Nonetheless, based on the DOL’s new guidance, companies should reassess their business and staffing arrangements to manage the risks associated with costly governmental investigations.

Article By Elizabeth Gotham of Honigman Miller Schwartz and Cohn LLP

© 2015 Honigman Miller Schwartz and Cohn LLP

USCIS Issues New Rule for Highly Skilled Workers: U.S. Citizenship and Immigration Services

U.S. Citizenship and Immigration Services (“USCIS”) issued its long-awaited final rule regarding highly skilled workers from Australia, Chile, Singapore, and the Commonwealth of the Northern Mariana Islands (“CNMI”), along with amendments favoring employment-based immigration. In summary, this rule:

  • facilitates more favorable processing of H-1B1 and E-3 treaty-based extension of status petitions;

  • adds E-3 Australian, H-1B1 Chilean/Singaporean, and CW-1 CNMI nationals to the list of those work-authorized nonimmigrants who can secure up to 240 days of continued employment authorization beyond their current expiration date simply by filing their timely extensions with USCIS before their current status expires;

  • clarifies that principal E-3 and H-1B1 nonimmigrants are authorized to work incident to their status and thus do not have to obtain independent employment authorization (applied in practice but not officially adopted as a formal regulation); and

  • expands the type of evidence that foreign nationals being sponsored under EB-1 outstanding professor and researcher permanent residency petitions can submit to include “comparable evidence” of their outstanding professor or research work.

This rule is expected to take effect on February 16, 2016.

Article By Robert S. Groban, Jr., Pierre Georges Bonnefil, Patrick G. Brady & Jang Hyuk Im of Epstein Becker & Green, P.C.
©2015 Epstein Becker & Green, P.C. All rights reserved.

Executive Action: Obama’s Legacy and 2016 Predictions (Part 2 of 2)

As promised in our previous post, today we conclude our predictions on President Obama’s 2016 executive activity.  While we believe the President’s final executive orders will target immigration and perhaps even corporate political expenditures, we predict executive agency action will cover a broad range of pressing labor and employment issues.  With federal legislative gridlock expected to continue through 2016, employers should prepare themselves for a barrage of agency activity, especially from the Equal Employment Opportunity Commission (“EEOC”), National Labor Relations Board (“NLRB”), and Department of Labor (“DOL”).  Our summary is below.

Expected Agency Activity of 2016

Based on the 2015 Supreme Court decisions in Young v. UPS and EEOC v. Abercrombie & Fitch Stores, Inc. and the EEOC’s interest in systematic discrimination in the workplace, we predict the EEOC will focus heavily on companies’ policies regarding pregnancy and religious discrimination and accommodation in 2016.  As a refresher, in Young the Court held a genuine factual dispute existed as to whether UPS provided more favorable treatment to at least some employees whose situation “cannot reasonably be distinguished” from Ms. Young’s —e.g., workers unable to lift up to 70 pounds due to reasons other than pregnancy limitations such as a workplace injury or a recognized disability.  In Abercrombie (blogged about here) the Court concluded an employer violates Title VII by rejecting an applicant in order to avoid making a religious accommodation, even if the employer only has an “unsubstantiated suspicion” that the applicant may eventually request an accommodation.

Along with discrimination/accommodation policies, we predict the EEOC and NLRB will focus on company-wide social media policies in 2016. While the NLRB has been hounding employers on social media policies since 2010, the EEOC did not really begin gathering information on the issue until 2014.   We believe 2016 will be the year the EEOC begins targeting employers’ social media policies to evidence discrimination.  We also predict the EEOC’s focus on gender identity discrimination and the NLRB’s focus on FLSA class action settlements will continue with full force into 2016.

With the DOL’s Final Rule on overtime exemption updates expected to roll out this year, we predict the agency will focus on wage-hour reform and that employers will be expected to get into compliance sooner rather than later. Although Solicitor of Labor Patricia Smith stated in November 2015 that final guidelines will not likely be issued until “late 2016,” we believe the DOL will push them out before November’s presidential election.  Employers should expect the Final Rule to increase the minimum salary exemption requirement from $455/week to $970/week.  We would not be surprised if the DOL also finalizes revisions to the duties test, which is a factor along with salary level used to determine whether an employee qualifies under a white collar exemption to minimum wage and overtime rules.

Although the 2016 federal legislation horizon looks bleak, President Obama and his executive agencies are poised for a busy final year. Stay tuned for further developments.

Article By Kristine M. Woliver of Squire Patton Boggs (US) LLP
© Copyright 2015 Squire Patton Boggs (US) LLP

Supreme Court Poised to Strike Down Union Agency Fees for Public Employees?

The U.S. Supreme Court, in argument on Jan. 11, from all accounts appears poised to strike down its prior decision in Abood v. Detroit Board of Education and conclude that mandatory agency fees paid by public employees to unions that represent them are unconstitutional.Classroom Supreme Court teachers decision

​In Friedrichs v. California Teachers Association, the petitioners contend that mandatory fair share dues to cover the cost of collective bargaining and other representational activities violate the free-speech rights of nonunion workers.  Chief Justice John Roberts summarized the issue similarly: “The problem that’s before us is whether or not individuals can be compelled to support political views that they disagree with.”

The case, which poses a significant threat to the funding of public employee unions in the 20 states that allow so-called fair share fees, has generated substantial interest and coverage. The SCOTUS Blog is an excellent stepping off point to review coverage of the case.

Court watchers are suggesting that Friedrichs will overturn Abood not only because of the tone of the questioning during argument but in large part because of the Court’s 2014 decision in Harris v. Quinn in which the Court’s 5-4 majority wrote of Abood and its “questionable foundations.”

Article By Gerald F. Lutkus of Barnes & Thornburg LLP
© 2015 BARNES & THORNBURG LLP

Let’s Talk Turkey: Wage/Hour and Other Laws to Feast on Over Thanksgiving

We all know that employers do not receive “time off” from applicable employment laws during the holidays. To avoid unnecessary holiday headaches, be mindful of the following issues as you conduct your workplace holiday staffing and planning.

Comply with your Policies and Collective Bargaining Agreements

Remember to abide by the applicable holiday provisions of your policies, agreements, or collective bargaining agreements. Pay for unworked time on recognized holidays; how time worked on holidays is computed or paid; and eligibility requirements for receipt of holiday pay are often a matter of policy or contract. Breaching such provisions—or disparately enforcing them—can give rise to a claim, charge, or grievance.

Think Beyond your Holiday Policy—Comply with Wage Laws

Be mindful of wage payment laws when you are planning office closures to ensure that you do not run afoul of state requirements governing the time, frequency, and method of paying earned wages. Also, remember that time worked on a holiday should be counted as “hours worked” for purposes of overtime laws, regardless of whether you provide a holiday premium or other benefit.  Further, be careful about making deductions from exempt employees’ salaries for time off around the holidays so as not to jeopardize the exempt status—a company closure for the holidays is not listed among the Department of Labor’s enumerated instances of proper reasons to make deductions under the salary basis rules of the Fair Labor Standards Act.

No Break from Meal and Rest Period Laws

Even if your employees are frantically setting up holiday displays or assisting eager consumers on Black Friday, provide meal and rest periods in accordance with state law. Many states require that employers provide meal and break periods, and the frequency and timing of such periods are often dependent upon the total number of hours worked in a day. For instance, Illinois employers must allow a meal break for employees working 7.5 continuous hours or longer within 5 hours of starting work; New York’s Department of Labor guidelines specify requirements for a “noonday” meal period between 11:00 a.m. and 2:00 p.m., with additional meal periods for shifts extending into specified evening hours.

Also, while bona fide meal breaks of a sufficient duration can generally be unpaid, beware that restrictions, duties, or parameters on such breaks might run afoul of your state’s law and can make a meal period compensable.

A “Blue” Christmas

If your business has operations in one of the few states that impose “Blue Law” requirements for business operations on holidays, then be aware of obligations or restrictions that might apply. For instance, if you operate in Massachusetts, then you might be required to obtain a local permit and/or be subject to extra pay or other standards for employees working on a holiday. In Rhode Island, you might be subject to an overtime pay rate on holidays or other requirements.

Be sure to check your state and local laws to confirm applicable standards.

Accommodate Observation of Holidays Due to Religious Beliefs

Finally, remember that Title VII of the Civil Rights Act of 1964 and many state or local laws require employers to reasonably accommodate employees’ sincerely held religious beliefs, unless doing so would cause an undue hardship. “Religion” can include not only traditional, organized religions such as Judaism, Islam, Christianity, Hinduism, and Buddhism, but also sincerely held religious beliefs that are new, uncommon, not part of a formal church or sect, or only held by a small number of people.

Thus, while your company may be closed on Christmas Day, you may need to allow an employee time off to celebrate a religious holiday that your company does not recognize. Businesses can accommodate in the form of time off, modifications to schedules, shift substitutions, job reassignments, or other modifications to workplace policies or practices.

Ford UAW Workers Defy Logic Of Ricky Bobby With New Tentative Agreement

If you ain’t first, you’re last. Not so, say the Ford UAW workers whose bargaining committee recently reached a new tentative agreement with Ford. While Ford was the last to reach a tentative agreement with the UAW, if the membership ratifies the tentative agreement, the UAW workers at Ford stand to receive a better overall deal than their counterparts at Fiat Chrysler and GM. Highlights of the tentative agreement with Ford include:

  • Investment of $9 billion in the U.S. by Ford over the life of the agreement;

  • $8,500 ratification bonus along with a $1,500 profit-sharing prepayment;

  • Entry level employees can progress to the Tier 1 wage rates within 8 years; and

  • $70,000 retirement incentive for eligible employees.

As with the ratification process for Fiat Chrysler and GM, the UAW membership at Ford will now be asked to vote in the coming days to approve the tentative agreement. The fact that the Ford tentative agreement is already better than the tentative agreements with Fiat Chrysler and GM should aid in the ratification process. Additionally, the UAW has already seen firsthand what works and what does not when it comes to seeking ratification of a tentative agreement in the current automotive climate.

While the bargaining process at Ford seems to be headed in the right direction, GM is still waiting to announce the ratification of its tentative agreement with the UAW. Despite a majority of the hourly production workers supporting the tentative agreement, a majority of the skilled-trades workers voted “no.” Based on the UAW’s constitution, the UAW is required to meet with the skilled-trades members to hear their complaints. Those meetings began this week. We will have to wait and see if the UAW attempts to go back to the bargaining table based on the issues raised by the skilled-trades workers.

Article By Michael W. Groebe of Foley & Lardner LLP

© 2015 Foley & Lardner LLP