LB4HR – May 2016
Welcome to Legal Briefs for HR, an update on employment issues sent to over 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), to help them stay in the know about employment issues. Anyone is welcome to join the email group . . . just let me know via reply email you’d like to be added to the list and you’re in! Back issues are posted at www.munckwilson.com under Media Center/Legal Briefs and you can also join the group by clicking on “Subscribe.”
School is almost out but your education never ends . . .
- Bathroom Brawl – The federal government just stepped into the bathroom debate, in response to North Carolina’s H.B. 2 which mandates, among other things, that individuals use the gender-specific restroom matching the gender stated on their birth certificate. On May 2, the EEOC issued a fact sheet on bathroom access rights for transgender employees at https://www.eeoc.gov/eeoc/publications/fs-bathroom-access-transgender.cfm and pointedly said that contrary state law is not a defense to employer violations of Title VII. On May 5, the U.S. Department of Justice made its presence known, by advising the NC governor, in writing, that H.B. 2 violates Title VII and Title IX . . . and asking for notification of what the state is going to do about it, by May 9. If the Tar Heel state chooses to ignore DOJ’s letter (or flatly states they are not going to change the law), they risk loss of buckets of money in federal funding. The DOJ letter is posted at http://www.wral.com/read-the-justice-department-letter-regarding-house-bill-2/15682478/. The governor announced they would respond timely. The legislature said they are not changing the law before the Monday deadline. One NC legislator in support of repealing the law smirked “HB2 became law in less than two hours . . . five days should be more than enough time to decide how to clean up after it.”
- Trading Up – While the patchwork of state laws regulating trade secrets will remain, employers have a new tool in the federal Defend Trade Secrets Act (DTSA) which will take effect immediately when signed by Pres. Obama. Which means you do not have long to amend your employment agreements, contractor agreements, NDAs and similar documents containing non-disclosure requirements. Why? Because your bid for attorney’s fees and exemplary damages as part of a DTSA action will fail, unless you can show that the defendant was provided with notice of immunity from civil or criminal prosecution for trade secret misappropriation where the person was acting as a whistleblower, disclosing that info “in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and solely for the purpose of reporting or investigating a suspected violation of law; or is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” For complete text of the bill, check out https://www.congress.gov/bill/114th-congress/senate-bill/1890/text.
- Tick Tock – Legislative wonks are betting that the revised “white collar” exemptions, which help employers decide which employees are exempt from the FLSA’s minimum wage and overtime provisions, will be published before May 16. A later date exposes the new rule to potential nullification via the Congressional Review Act. The last time these regs had a major overhaul, in 2004, employers were given 120 days after publication to comply. It’s certain that employers will be given at least 60 days, and possible that the grace period will be 120 or even 180 days. HR departments will have their hands full, in deciding whether to give salary increases, to preserve an exemption, or concede nonexempt status. Changes must be made to payroll systems and both employees and managers will need training. And there are states which require advance written notice to employees regarding changes to their pay. The minimum salary is likely to be somewhere in the $45 to $50K range, assuming they stick with the indexing method set forth in the proposed reg. And don’t even get me started on the possibility of some change to various duties tests.
- Toon Turf Wars – Not so long ago, several large Silicon Valley employers paid dearly for having “gentlemen’s agreements” to not poach each other’s software engineers. The DOJ took the first bite out of their apple and then the plaintiff’s lawyers showed up and walked away with a $415 million settlement, in just one of those disputes. Looks like Hollywood was not listening, as two movie-makers have now settled for $5.9 million (Blue Sky Studios) and $13 million (Sony Pictures Imageworks and Sony Pictures Animation) to avoid the suit claiming they had a similar agreement involving employees who were animation and visual effects artists. These agreements are alleged to violate anti-trust laws and have the effect of keeping the lid on employees’ salaries and mobility. Close scene with bolt of lightning, clap of thunder and disoriented creature burned to a crisp who crumbles into dust pile.
- More Fun With FMLA – You may want to double-check your FMLA policy and procedure for completeness and accuracy. The DOL just released an Employee’s Guide to the FMLA, which will make employer errors easier to spot. The guide is posted at http://www.dol.gov/whd/fmla/employeeguide.pdf. Those busy bees also released a new FMLA poster which is re-designed to focus the eye on how to file a complaint. Seeing a pattern here? There is no need to shred your current poster for now . . . the guidance explains that the current version (the one with a Feb. 2013) still satisfies the posting requirement.
- Clock Watching – A nationwide class action has been certified, in CA, over claims that overtime was not properly paid. Tapia v. Zale Delaware Inc. (S.D. Cal. Apr. 2016) There are 1600 members to the class in CA plus another 20,000 conditional members across the U.S. The employer denies the claim that it engaged in unlawful rounding practices and that a 30-minute lunch period was deducted each day, whether the nonexempt worker took lunch or not. While the facts have yet to surface, this case provides an opportunity to revisit the FLSA’s rounding rule. 29 CFR §785.48 (b) explains that the agency accepts industry customs of rounding employee’s time to the nearest five minutes, one-tenth or quarter of an hour where this practice averages out over time so that employees are eventually paid for all time actually worked. Many folks ignore that last half of this sentence, which is suggesting two things . . .  don’t just round down every time; and  you may want to audit your records occasionally to confirm that your rounding practice is not resulting in a failure to compensate employees for all the time they actually worked. On the brighter side, the 9th Circuit upheld another employers’ rounding policy, where the employer’s time-keeping system automatically rounded to the nearest quarter-hour, with no manager interference or edits. The plaintiff’s argument that he was shorted $15.02 “plus one minute” was roundly rebuffed. Corbin v. Time Warner Entertainment (9th Cir. May 2016).
- Biting Commentary – Businesses with employees who work outside may want to read a Fact Sheet just issued by OSHA discussing occupational exposure to the Zika virus. At seven pages, it’s a quick read and is loaded with helpful tips to protect your team. And maybe yourself, too, as you hang out at the homestead or the lake this summer. Check it out at https://www.osha.gov/Publications/OSHA3855.pdf.
- Smokin’ – The FDA has been handed the authority to regulate all tobacco products, which includes cigars, hookah and e-cigarettes. Employers often ask if their smoking policies can or should address e-cigs. This change supports those who want to do that. Here is the new reg which is (fair warning) 499 pages long. https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-10685.pdf
- This Joint (Issue) is Jumpin’ – The NLRB and the Wage and Hour Division of the DOL have already graced us with their opinion that many horizontal and vertical relationships between two distinct entities are really joint employer relationships. Now comes OSHA singing the same refrain, via issuance of guidance explaining the joint responsibility of temporary agencies and their clients for the health and safety of temporary workers assigned to the client. Temporary Worker Bulletin #4 addresses training at https://www.osha.gov/Publications/OSHA3859.pdf. TWB #5 addresses hazard communication at https://www.osha.gov/Publications/OSHA3860.pdf.
- Double Trouble – Last month’s edition of LB4HR shared an IRS alert about a phishing scam targeting payroll and HR departments. An email appears to be from someone in company’s c-suite, asking for employee W-2s or other documents containing personal information. In case you thought no one would ever fall for that scam, think again. In April, two class action lawsuits were filed by employees whose personal info was compromised via this type of scam, alleging negligence and statutory violations tied to data breaches and unfair business practices. It seems the workers were not satisfied with one year of credit monitoring for free after all of their W-2s were provided to the phisher. Castellano v. Sprouts Farmers Market, Inc. (Cal. App. Supp. 4-16) and Price v. Sprouts Farmers Market, Inc. (D. Colo. 4-16).
- Shark School – For those of you with in-house lawyers who would benefit from some skills polishing, I’d like to introduce you to Jane McBride:
Jane McBride provides on-site, interactive training programs that are specifically designed for in-house lawyers, bringing proven techniques and strategies to help lawyers communicate more effectively in the business world. All of her workshops are customized to handle specific company or departmental concerns. Jane, a lawyer herself, has coached attorneys and executives for more than twenty years. She brings to the table her experience as General Counsel, as corporate executive and as business leader. Jane can be reached at email@example.com or 972 964-7526.
- Go Team! – I am really pleased to share that my firm’s litigation and IP teams came together to defend our client against the truly unsavory business practices of a competitor and in so doing, notched the 16th largest jury verdict in the U.S. for 2015. If you’d like to read more about it, go to https://www.munckwilson.com/media-center/press-releases/texas-court-awards-77-million-following-16th-largest-verdict-2015.
- Employment Law Conference – If it’s July in Texas, that means Texas SHRM State Council and Texas Association of Business are banding together for their annual Employment Relations Symposium in San Antonio! Yours truly is pleased to be among the host of speakers who will do our best to bring you up to speed with the latest developments and share practical advice with HR folks, attorneys, business owners and others tasked with managing employment concerns. Mark your calendar for a reception at 6 p.m. on Wednesday, July 20 and the educational sessions on Thursday and Friday.
- Stated Differently – Here are some hot topics for you multi-state employers:
1. California – Effective January 2018, the paid family leave program will increase the benefit from 55% of the employee’s pay to 60% or 70% of pay, depending upon the employee’s pay rate. CA was the first state to implement a paid family leave program, back in 2002. The state minimum wage is also pegged to rise incrementally until it reaches $15/hour in 2022.
2. Florida (Miami) – The mayor of Miami plans to propose a citywide minimum wage hike to $13.31/hour by 2020, but faces a state law challenge. Florida passed a law in 2013 which bans local governments from setting their own minimum wage rates, with the exception of a rate that applies to employees of city contractors. Just next door, in GA, the NAACP is suing the GA governor and attorney general and claiming a similar GA law is unconstitutional and racially-motivated because it blocked a minimum wage hike in the City of Birmingham which would’ve benefited the mostly black community.
3. Nebraska – Effective July 20, 2016, the state data breach law is amended to add a requirement that notice of breach must be made the state attorney general, as well as the affected individuals. The definition of “personal information” has been expanded and the exception to notice which applies if the breached data was encrypted will no longer apply if the breach included disclosure of the encryption key or info on the encryption method used.
4. New York – The NY minimum wage will incrementally rise to $15/hour, with variations in timing based on location. In NYC, employers for 11+ employees will bump to $11/hour on Dec. 31, 2016 and hit the $15/hour mark on Dec. 31, 2018. Smaller employers in NYC will get an extra year to hit the $15/hour mark. Nassau, Suffolk and Westchester counties hit the $15/hour mark in 2021 and the remaining NY communities will have even longer, to get there. Also, a new family leave law will take effect Jan. 1,2018, providing up to 12 weeks of paid time off to qualifying employees for baby bonding, to care for a family member with a serious health condition or a FMLA-qualifying leave arising out of U.S. military active duty leave. Note it does not apply to the employee’s own serious health condition.
5. New York (NYC) – The NYC Earned Sick Time Act was amended, effective March 4, 2016, and places new obligations on covered employers (those who have 5+ employees in NYC). For more info, go to http://www1.nyc.gov/site/dca/about/paid-sick-leave-law.page.
6. North Carolina – NC courts apply a strict “blue pencil” approach to overbroad restrictive covenants. They cannot add or change words but they can strike out unenforceable parts and enforce the reasonable parts that remain. Even a contractual provision in the agreement which attempts to give the court the ability to modify overbroad terms will fail, as recently demonstrated in Beverage Systems of the Carolinas LLC v. Associated Beverage Repair LLC (N.C. March 2016). The trial court said “no” to enforcement. The appellate court reversed saying the blue pencil doctrine was n/a given the contractual OK to modify. The Supreme Court had the last word and said the “parties cannot contract to give a court power that it does not have.” ‘Nuff said.
7. Ohio – A former employer was denied a TRO against its former employee during a hearing because of two little words in the noncompete agreement at issue. The prohibition was prefaced with “Either during your working relationship with Alloy Bellows or for a period of two years after your [employment ends] . . . .” Because the prohibition was written in the disjunctive by using the words “either” and “or” and there was no allegation the employee engaged in prohibited conduct while employed . . . case dismissed. Alloy Bellows & Precision Welding, Inc. v. Cole (N.D. Ohio Apr. 2016)
8. Pennsylvania – Effective May 17, 2016, PA will legalize the use of medical marijuana in certain situations. While the law prohibits employment discrimination against individuals who are certified to use medical marijuana, there are exceptions to that ban. The antidiscrimination protection will not apply where  compliance with law would put the employer or its agent(s) in violation of federal law;  the employee who is under the influence of MM is [a] operating or being in control of chemicals which require a federal or state agency permit; [b] working with high-voltage electricity or other public utility; or [c] working in a confined space or at a raised height; or  the employer deems a particular task to be life-threatening to the employee or others or could result in a public safety risk, if the employee is under the influence of MM. The law also OKs employer discipline where the employee is at work under the influence of MM and the employee’s conduct falls below the standard of care normal for the job. There are many undefined terms yet to be parsed here, so stay tuned for more.
9. Tennessee – Effective April 14, 2016, certain public sector employers in TN may not ask about the applicant’s criminal convictions on the employment application. This prohibition does not apply to private sector employers.
10. Washington (Seattle) – The U.S. Supreme Court declined to review a decision that lumps certain franchisees into the “large employer” definition of Seattle’s $15/hour minimum wage hike and forces them to accelerate their wage increases more quickly than small employers. Large employers must hit the $15/hour mark by January 1, 2017 while smaller employers have until January 1, 2021. The large employer definition includes those who are part of a franchise network with 500+ employees in the U.S. The International Franchise Association unsuccessfully pled that the Seattle ordinance discriminates against the franchisees based on their ties to interstate commerce.
- 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.
Until next time,
Audrey E. Mross
Labor & Employment Attorney
Munck Wilson Mandala LLP
600 Banner Place
12770 Coit Road
Dallas, TX 75251
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