02 Apr LB4HR – April 2018
Welcome to Legal Briefs for HR, an update on employment issues sent to more than 6000 individual HR professionals, in-house counsel and business owners plus HR and legal professional organizations (who have been given permission to republish content via their newsletters and websites). My mission is to help you stay in the know about employment issues. Back issues are posted at www.munckwilson.com under News & Knowledge/Legal Briefs for HR and you can also join the group by clicking on “Subscribe” at the bottom of the page.
1. Whistle All the Way to the Bank – On March 19, the Securities and Exchange Commission (SEC) announced the largest Dodd-Frank whistleblower awards ever, clocking in $83 million. The awards to individual whistleblowers who voluntarily provide the SEC with original and credible information can run from 10 to 30% of the amount the SEC collects for violations. This award stems from a $415 million settlement in 2016, between the SEC and Merrill Lynch. A $17 million whistleblower award was paid out in November 2017. To date, the SEC has paid out $262 million to 53 whistleblowers in the seven years since the program was launched. The top official in charge of the whistleblower program said “We hope that these awards encourage others with specific, high-quality information regarding securities laws violations to step forward and report it to the SEC.” Make sure that your organization has nothing to fear because the SEC is ringing a dinner bell and your employees may be listening.
2. Heads’ Up Federal Contractors – The predetermination notices are back. See the OFCCP announcement at https://www.dol.gov/ofccp/regs/compliance/directives/dir2018_01.html?utm_campaign=&utm_medium=email&utm_source=govdelivery. The agency used to send out PDNs prior to a Notice of Violation, to give the employer a chance to file a rebuttal before the Notice of Violation issued. Regional offices no longer have the discretion to skip this step.
3. Hot Tip – The spending bill signed by President Trump on March 23 includes an amendment of the Fair Labor Standard Act’s pronouncements on tipped employees. The U.S. Department of Labor (DOL) and courts have been in a tug-of-war over “tip pools” with employers in the middle, asking for clarity. Here it is. First, the employer “may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” Second, tip sharing (aka tip pools) among both tipped and nontipped (think the cooks in the back of the house) where no tip credit is taken is OK. The DOL’s Obama-era rule which prohibited employers from forcing tipped employees to share tips with nontipped employees is toast. Burnt toast.
4. Board Matters
1. Speak Up – If you have an opinion on the National Labor Relations Board’s “quickie” election rules, you have until April 18 to express yourself. The extension to the comment period was announced via this notice: https://www.nlrb.gov/reports-guidance/public-notices/request-information. The Board is asking if the rule should be [a] kept as is; [b] modified; or [c] junked. If [c] is your answer, do you want the old rule back, or should it be modified? Ready, set, speak!
2. Out of Joint – If you want to know your exposure to liability as a joint employer under the NLRA, buckle your seat belts . . . it’s going to be a bumpy ride. In 2015, the Browning Ferris decision broadened the reach by saying joint employer status could be found where there direct control and where the control was indirect, such as when the right to control was “reserved” in an agreement between the parties, regardless of whether that control was actually exercised. Next, in December 2017, the Board overruled Browning Ferris and returned to the prior, narrow standard via the Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. decision. Not so fast my friend, because on February 26, 2018, the Board vacated the Hy-Brand decision because one of the Board members who participated in that decision should’ve recused himself. Which means we are back to the standard set forth in Browning-Ferris. For a more detailed discussion, check out LB4HR from Sept. 2015 posted at https://www.munckwilson.com/legal_briefs/legal-briefs-for-hr-84/.
3. Ring on Deck – A Senate committee has OK’d John Ring as the newest member of the NLRB. A vote by the full Senate, and he’s in as the guy who will give the Board a Republican majority until 2020.
5. #MeToo – You’ve seen the headlines. Here are other developments which you may not have noticed:
1. Oprah (and others) spoke and Congress listened. Congress amended section 162 the Internal Revenue Code so that employers can no longer deduct the price paid for confidential sexual harassment settlements and any attorneys’ fees paid in defense or settlement of those claims. This amendment took effect for any such settlements paid or fees incurred after December 22, 2017. Guidance in the form of regulations has not been released, yet.
2. A series of “Biglaw” firms have dumped their mandatory arbitration agreements covering employment-related disputes with non-partners, for both existing staff and new hires as they come on board. While such provisions, when properly written, are not illegal they are contrary to the trend of bringing misconduct out of the dark and into the light.
3. While the latest budget numbers for most federal agencies are flat, the Equal Employment Opportunity Commission (EEOC) got a $15 million boost “to address the increased workload associated with sexual harassment claims.”
4. New Jersey has two pending bills designed to [a] ban prospective arbitration agreements and jury trial waivers for employment discrimination, retaliation and harassment claims; and [b] ban confidentiality provisions in settlement agreements which arise out of such claims.
5. My dance card is filling up fast, to come to workplaces and present my anti-harassment training program “#MeToo! You Next?” to managers/supervisors and employees, in separate sessions. Lots of examples, interactivity and a touch of humor are needed to break through denial and misconceptions. The program is good offense (prevent problems) and defense (if misconduct happens, despite your best efforts), so let me know if I can help.
6. The Other “Time’s Up”
1. March 31 is the deadline for filing your Standard Form 100 aka EEO-1 Report
2. All open cases in the E-Verify’s employment confirmation program must reach a final conclusion and be closed by the end of the month, when all case data will be moved to a new interface. Cases that have been open for more than 365 days will be automatically closed by USCIS.
7. The Depth and Breadth of Title VII – According to the 6th Circuit (which includes KY, MI, OH and TN) employment discrimination based on an employee’s transgender status is discrimination based on sex which violates Title VII of the Civil Rights Act of 1964. Stephens presented as a male upon hire but told her employer six years later that when she returned from vacation she would present as female. The employer, which was the owner of a funeral home, fired her. The EEOC determined the law had been violated, both by the termination of employment and because the funeral home provided free suits and ties to male employees but no clothing benefit to female employees. Conciliation failed and a lawsuit was filed. The district court sided with the employer by saying it had a defense under the Religious Freedom Restoration Act of 1983, even though it conceded that the termination of employment was based on Stephens’ failure to conform to sex stereotypes which was a Title VII violation. On appeal, the 6th Circuit agreed that the Title VII violation had occurred but expanded the reason to include discrimination “on the basis of sex.” The Court then gutted the employer’s RFRA defense by finding the funeral home’s alleged burdens, if it retained Stephens, were not substantial in light of the EEOC’s compelling interest in combatting employment discrimination via Title VII. EEOC v. R.G. & G.R. Harris Funeral Homes, Inc. (6th Cir. 3-7-18)
8. New WHD Program: Boon or Bane? – The Wage & Hour Division of the U.S. Dep’t of Labor has a deal for you. Maybe. If you’ve learned via internal audit that employees were not paid correctly under the FLSA (think overtime) and you want to make amends and avoid future investigation and/or litigation, the agency will soon be offering the equivalent of a “get out of jail” card. Maybe. You’ve always been able to do the math and pay the back wages owed, but there was no protection from the DOL or private suits unless this settlement was part of a DOL investigation or had court oversight as part of litigation. The release you asked the employee(s) to sign when the money was paid was not enforceable, outside of those two settings. Now, it can be. Maybe. If you want to know more about the Payroll Audit Independent Determination (PAID) program, go to https://www.dol.gov/whd/paid/. Note that this option is not available if you are already being investigated by the DOL, are in litigation or arbitration or been tapped on the shoulder by counsel who represent one or more employees in a FLSA matter. And there are a lot of questions including how a difference in opinion between the employer and the DOL about the amount owed will be resolved. Or whether the release will apply to both federal and State wage and hours claims. For now, this is a six-month pilot program so let’s see how this things goes.
9. To Poach or Not to Poach – Employers often include language in employment agreements which purport to restrict employee’s ability to recruit or “poach” their former co-workers to greener pastures with a different employer, after employment ends. Some employers went further, by having a pow-wow with their competitors and entering into written and unwritten agreements that they would not poach each other’s workers, as part of their recruitment efforts. The latter prompted the U.S. Department of Justice (DOJ) to jump in with both feet and declare these arrangements to be a restraint on the market and potential violations of the Sherman Act. Multi-million dollar settlements ensued, especially in Silicon Valley and Hollywood. In 2016, the Antitrust Division of the DOJ shot off another warning, this time aiming it at HR professionals and telling them that “naked” no poaching agreements and engaging in action that could “fix” wages in the industry, such as sharing wage data with their HR peers at other companies, was inviting prosecution for criminal antitrust violations. For a refresher on that pronouncement, see https://www.justice.gov/atr/file/903511/download In February, the head of the Antitrust Division, Makan Delrahim, said there are several active criminal investigations and charges are forthcoming. Also in February, a class action was certified in North Carolina, on claims that that deans of Duke and UNC medical schools had a deal that would preclude lateral moves of faculty between those schools. Next up, some Congressional Democrats are hinting that legislation to crack down on no-poach agreements may be needed to augment the DOJ’s efforts. See https://www.warren.senate.gov/newsroom/press-releases/warren-and-booker-raise-concerns-over-doj-enforcement-against-franchises-for-collusive-and-quotno-poach-and-quot-agreements. Bottom line is that this issue is heating up, so look around and make sure that your organization has not set itself up for a date with the DOJ.
10. Who’s Last? Not Me! – The legislatures in Alabama and South Dakota are racing to enact data breach notification laws, as the last two remaining U.S. states which do not have laws on this subject. Someone’s going to be #49 and someone’s going to be dead last and both are trying very hard to be #49. For actual text of the bills, look at SB 318 in Alabama and SB 62 in South Dakota.
11. Speechify – Thanks to the following for their invitations to speak and please join me, if you can:
1. Texas Workforce Commission’s Texas Business Conferences, in The Woodlands on April 19 & 20
2. Marsh & McLennan Spring Summit, in Dallas on April 24
3. University of Texas School of Law 25th Annual Labor and Employment Law Conference, in Austin on May 10 & 11
4. North American Petroleum Accounting Conference, in Dallas on May 17 & 18
5. Texas Workforce Commission’s Texas Business Conference, in Arlington on July 19 & 20
6. Texas Workforce Commission’s Texas Business Conference, in Abilene on July 27
12. Stated Differently – Here are some hot topics for you multi-state employers:
1. California – Effective 7-1-18, hoteliers will need to comply with a new Cal/OSHA hotel housekeeping standard which is designed to prevent musculoskeletal injuries. The standard is posted at http://www.dir.ca.gov/OSHSB/Hotel-Housekeeping-Musculoskeletal-Injury-Prevention.html. It requires that you have a written injury prevention program focused on the hazards arising out housekeeping duties which is readily accessible to employees. The first step will be the mandatory workplace evaluation, which must be complete by 10-1-18.
2. Colorado – The CO Supreme Court examined three parts of the wage and hour law which were not entirely in sync and determined that wage and hour claims must be brought within two (for a regular claim) or three years (if there was a “willful violation”) of when the wages first became due and payable. This decision nixes the argument that provisions governing final pay upon termination of employment could be used to breathe new like into very old claims and make an end run on the statute of limitations for such claims. Hernandez v. Ray Domenico Farms, Inc. (Colo. 3-5-18).
3. Massachusetts – Effective 7-1-18, there is new guidance for employers to help toward their compliance with the MA Equal Pay Act. The guidance is posted at https://www.mass.gov/files/documents/2018/03/01/AGO%20Equal%20Pay%20Act%20Guidance.pdf
4. Massachusetts – Effective 4-1-18, employers will be subject to the MA Pregnant Workers Fairness Act. What’s required is discussed in the initial guidance (at https://www.mass.gov/files/documents/2018/01/24/Guidance%20on%20Pregnant%20Workers%20Fairness%20Act%20%202018-01-23.pdf) and a more recent updated guidance at https://www.mass.gov/files/documents/2018/02/26/Pregnant%20Workers%20Fairness%20Act%20Questions%20and%20Answers%202018-02-26.pdf. Written notice of rights are to be provided to employees by 4-1-18, with subsequent notices given to new hires and within ten days of notice that the employee is pregnant. There are additional requirements related to reasonable accommodation of conditions both during and after the pregnancy, breaks for the purpose of breast-feeding or expressing breast milk and private space for the same.
5. New Jersey – Effective 7-1-18, the NJ wage and hour law which prohibits unequal pay based on an employee’s gender will be expanded to include all protected categories under the State’s anti-discrimination law. The bill’s language does not track the federal Equal Pay Act, so employers with employees in NJ will want to review their compensation methods against the specifics in the new law. See full text at http://www.njleg.state.nj.us/2018/Bills/S0500/104_R2.PDF
6. New York (NY City) – A bill introduced on March 22, if enacted, will prohibit private sector employers of ten or more employees from requiring their employees to access or respond to electronic communications outside of their normal working hours. The bill includes exclusions for workers who are “on call” and others.
7. Texas (Austin) – Effective 10-1-18, employers in Austin with more than five employees will be required to provide sick pay to employees. Smaller employers have until October 2020 to comply. The sick pay is earned at a rate of one hour for every 30 hours worked and is capped at 64 hours per year for employers with 15 or more employees and 48 hours for those with less than 15 employees. See http://assets.austintexas.gov/austincouncilforum/0E-20180215135505.pdf for all the details.
8. Washington – Effective 6-7-18, employers are restricted from asking job applicants about prior convictions in this latest “ban the box” law. The bill does not preempt existing ban the box ordinances in Seattle and Spokane. For full text see http://lawfilesext.leg.wa.gov/biennium/2017-18/Pdf/Bills/House%20Passed%20Legislature/1298-S2.PL.pdf
13. For the Birds – If you like being tweeted and want breaking news on employment law changes (and the occasional random cheer for K-State), follow me on Twitter. I’m at @amross. Very proud of my Wildcats for making it to the Elite Eight in the NCAA tourney and will be rooting for my cousins, the Kansas Jayhawks, to bring it home!
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