LB4HR – February 2017
A new year and a fresh slate . . . a belated Happy New Year and here’s what should be on your radar:
1. White House Wonderland – It did not take our new president long to shake things up and grab employers’ attention:
- Department of Labor – Secretary of Labor nominee, Andrew Puzder, is openly opposed to the NLRB’s stand on franchisors as joint employers with their franchisees and the dizzying hike in the FLSA’s minimum salary needed to preserve exempt status. His confirmation hearing, originally set for Feb. 7, has been delayed to give him time to divest holdings in CKE Restaurants, Inc. On February 3, President Trump signed an executive order seeking review of the new fiduciary rules applicable to financial advisors but stopped short of postponing implementation of the rules in April. The DOL replied that same day that it will consider a delay in implementation of the rule. See https://www.dol.gov/newsroom/releases/opa/opa20170203. Today, a federal judge in Texas upheld the rule against a challenge filed by the U.S. Chamber of Commerce and other business groups. Are you enjoying the merry-go-round ride?
- EEOC – Victoria Lipnic was named acting chair of the EEOC. Ms. Lipnic has been with the agency as a commissioner since 2010 and is a former defense-side attorney. She often seemed to be a voice of reason among her more combative cohorts at the EEOC and openly disagrees with the EEOC’s proposed collection and analysis of wage data.
- NLRB – Philip Miscimarra, the lone Republican on the five-member board, has been elevated to acting chair of the NLRB. Mr. Miscimarra is also a former defense-side attorney, representing employers. See discussion about the proposed National Right-to-Work Act under Stated Differently/Missouri, below.
- Supreme Court Justice nominee – Judge Neil Gorsuch (from the 10th Circuit Court of Appeals) is regarded as a conservative, an eloquent writer, mostly a friend to employers and is on the record as questioning how much Chevron deference the judiciary should give to agencies in the executive branch of the federal government.
- Immigration – The ban on travelers and refugee admissions from seven countries who are not U.S. citizens was limited by one judge and then nixed by another. The Executive Order gave DHS 30 days to devise a more robust checklist against which entering individuals on nonimmigrant visas will be measured. Prior to the injunction, individuals who are U.S. permanent residents (“green card” holders) were carved out of the ban via a clarification penned by counsel to President Trump. The Washington state judge who OK’d an injunction on the EO has strong support from businesses, especially those in the tech sector, as explained at http://www.seattletimes.com/nation-world/nation-politics/microsoft-apple-google-and-94-more-tech-companies-support-legal-challenge-to-trump-entry-ban/. As I typed this newsletter late in the day on Tuesday, arguments were being heard in the 9th Circuit Court of Appeals. Stay tuned!
2. It’s Baaaack – Per an IRS Alert, an ugly scam designed to steal your employees’ personal information has surfaced again. It begins with a spoofed email sent to HR, Payroll, Benefits or other internal custodians of employees’ private information. The email appears to be from the CEO or other top exec, asking for all employees’ W-2 forms (or similar aggregated data) for what appears to be a legit purpose, like an audit. The bandits are hoping the recipient is diligent and responsive, handing over the goods without further inquiry. If you are in the c-suite, send a message to your folks with words to effect of “If you get a request to send me employees’ W-2s or other private information, it’s not me! Disregard the request and tell us right away so that we can nip it in the bud.” And if you are privy to sensitive information as part of your duties, be aware of the scam and alert your co-workers. Falling prey to these liars triggers of lot of work, expense and embarrassment to your organization. Don’t assume it can’t happen to you. Here is the complete Alert: https://www.irs.gov/uac/dangerous-w-2-phishing-scam-evolving-targeting-schools-restaurants-hospitals-tribal-groups-and-others
3. You Are Cordially Invited – OFCCP has updated the Invitation to Self-Identify certain federal government contractors must use in conjunction with their affirmative action efforts under the Rehabilitation Act. The new form can be found at https://www.dol.gov/ofccp/regs/compliance/sec503/self_id_forms/selfidforms.htm. If the form you are using does not have an expiration date of January 31, 2020 . . . stop and get the new one, ASAP (and start using it, no later than Feb. 10, 2017). And be sure to use the provided form verbatim . . . OFCCP does not want employers to get creative with this message.
4. More Contractor News – You can most likely scratch what remains of the Fair Pay and Safe Workplaces Rule (E.O. 13673)(aka the blacklisting rule) off of your To Do list. The first haircut to the rule came via a preliminary injunction on Oct. 24. That measure nixed the requirement that contractors report any of a host of possible employment law violations (and likely lose out on federal work). On Feb. 2, the U.S. House of Representatives voted to permanently block what remains, using the Congressional Review Act (CRA). The measure heads to the Senate (where it is expected to easily pass) and then to the president’s desk (ditto). See LB4HR #10-2016, item 3 for more info on what E.O. 13673 used to look like, if you are interested. So far, there is no movement on repeal of E.O. 13706, which requires certain federal contractors to offer paid sick days. If you are a regulatory wonk and want to read more about how CRA can be used by Congress to undo any regulation published after May 30, 2016 check out the Congressional Research Report posted at https://fas.org/sgp/crs/misc/R43992.pdf.
5. Gentle Reminder – Did you start using the updated Form I-9 no later than January 22, 2017? The new form is posted at https://www.uscis.gov/i-9. You’ll see a link to the new “smart” version, which you can fill out on-line and then print in order to add signatures, and a link to the paper version which you print out as a blank and complete the entire document the old-fashioned way, with a pen. Note that the “smart” form is not an electronic version so it’s not compatible with use of e-signatures.
6. Out of Joint – Heads’ up, employers in the 4th Circuit (MD, NC, SC, VA & WV) . . . you may be a joint employer with another entity and not know it. Two cases issued on the same day announced a new six-factor test for determining joint employer status in wage and hour claims under the Fair Labor Standards Act (FLSA). In one of the cases, the dispute involved drywall installers who sued their subcontractor employer, the owners of the subcontractor and the general contractor (GC) for whom they worked almost exclusively. The lower court granted an MSJ to the GC on the workers’ FLSA claims, citing the traditionally recognized legitimate contractor-subcontractor relationship between the sub and the GC and a lack of intent on the part of the GC to avoid FLSA compliance. The 4th Circuit reversed, noting that neither the employers’ good faith/lack of intent or the traditional business relationship mattered when deciding if they were joint employers. Salinas v. Commercial Interiors, Inc. (4th Cir. Jan. 2017) This list is not exhaustive and no single factor is controlling, but here is what will be used to decide if both entities should pay for FLSA violations:
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to – directly or indirectly – hire or fire the worker or modify the terms or conditions of the worker’s employment;
- The degree of permanency and duration of the relationship between the putative joint employers;
- Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control of the other putative employer;
- Whether the work is performed on premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another;
- Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools or materials necessary to complete the work
- Wellness and Taxes (Instead of Death and Taxes) – Check out this Dec. 16 IRS Memorandum on proper handling of income payments under a fixed indemnity health plan where the employer paid the premiums for the plan, or the premiums were paid by the employee on a pre-tax basis via a section 125 cafeteria plan. https://www.irs.gov/pub/irs-wd/201703013.pdf It also provides advice on cash incentives paid to employees under wellness plans. Yep, that $100 payment for attending smoking cessation is taxable income, my friend.
- Background Check Boo-Boo – If an employer uses a third person or entity to perform inquiries into the fitness for employment of its job applicants or employees, the federal Fair Credit Reporting Act (FCRA) is in play. Disregard the title of the FCRA, since it applies to more than just credit checks. One of the most basic requirements is that the employer give notice that a check is going to be done and obtain the subject individual’s written OK, in advance of even asking for the check to be done. The FCRA states that the notice is be provided on a page that consists “solely” of that notice. The agency later amended that position by saying it would OK to include the written authorization on the same page as the notice. Nothing else can be on that page. That message was hammered home in Syed v. MI-LLC (9th Cir. Jan. 2017) where the Court said inclusion of a liability waiver on that page violated the FCRA. And because the statute is so clear on this issue, the Court said the employer in this case had willfully violated the FCRA. When a court adds the word “willfully” to its determination, that’s gonna cost you more money. In this case, that means the possibility of $100 to $1000 per violation (think: all job applicants and/or employees who signed that form within the limitations period) plus punitive damages. And arguing that your background check vendor was the one who provided the errant forms for your use is no defense, since the duty to comply with FCRA remains with the employer.
- EEOC Playbook – I’ve got another enforcement guidance for your bedside reading table, at https://www.regulations.gov/document?D=EEOC-2016-0009-0001. . In LB4HR #6 -2016, I provided a link to 109 pages of musing on workplace harassment from an EEOC taskforce. The next play is in, with a 75-page Proposed Enforcement Guidance on Unlawful Harassment. The theme remains the same . . . employers’ efforts to prevent and remedy harassment are not working & the agency opines on why and provides a list of “Promising Practices” they think will help. Public comments are welcome through February 9, 2017. Even if you believe the advice overreaches in some respects, it is useful to know the standard by which you will be judged if they come a callin’. So get comfy and start readin’!
- Calendar That – Flip that fresh 2017 calendar to June and mark June 12 and 13 as the 24th Annual University of Texas School of Law Labor and Employment Law Conference, to be held at the AT&T Conference Center on the UT campus. Yours truly is chairing this year’s conference, will speak on a topic, and can attest that the planning committee has assembled a meaty slate of topics and speakers to educate, bemuse and amuse you. Info is posted at https://utcle.org/conferences/EL17. I hope to see YOU in Austin! Other speaking engagements you can hear me speak at include:
- Feb. 15 – 3rd Annual HR Management & Leadership Conference co-hosted by Cross Timbers SHRM and Tarleton State’s student SHRM chapter (Stephenville TX); info is posted at https://crosstimbersshrm.wildapricot.org/events
- March 3 – TWL Annual Meeting & Learning to Lead hosted by TexasWomen Lawyers at SMU Dedman School of Law (Dallas TX); info is posted at http://www.texaswomenlawyers.net/home/events/cle/
- April 27 – Texas Business Conference Employment Law Update hosted by Texas Workforce Commission at the Gaylord Texan (Grapevine TX); info is posted at http://www.twc.state.tx.us/texas-business-conferences
- Stated Differently – Here are some hot topics for you multi-state employers:
- Illinois – The IL Employee Sick Leave Act took effect on January 1 and has already been amended to clear up the head-scratchers in the original draft. The amended law is posted at http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=099-0921&GA=99.
- Louisiana (New Orleans) – In response to a perceived wage gap between male and female workers, the City of New Orleans now bans questions about wage/salary history for applicants seeking jobs with the City. The Civil Service Commission is ordered to conduct a pay disparity study and submit the results to the mayor and top admin officer. Pending measures include a ban on pay discrimination, for both city workers and employees of contractors who provide services to the city, and creation of an advisory committee to study and advise on pay equity.
- Missouri –MO will become the 28th state to become a “right to work” state, effective August 28. Two prior attempts by the state legislature were nixed by the MO governor at the time but the new guv had no problem signing this measure. Labor contracts which are existing prior to the effective date are grandfathered and will not have to comply with the new law, which prohibits conditioning new or continued employment on the employee being a member of the union or paying union dues. For more info on right to work and a complete list of all states which are right to work, go to www.nrtw.org. Also, keep your eye on the National Right-to-Work Act, which was filed in the House of Reps on Feb. 1. If passed, it will amend the NLRA to forbid union security clauses in collective bargaining agreements across the U.S.(and likely replace the patchwork quilt of state laws).
- New York – New notice and consent requirements if you want to pay your employees via direct deposit or payroll debit card take effect March 7, 2017. NY’s Dept. of Labor posted proposed forms for review and comment. The proposed form for direct deposit is at https://www.labor.ny.gov/formsdocs/wp/LS15.pdf. The proposed form for payroll card is at https://www.labor.ny.gov/formsdocs/wp/LS14.pdf.
- Pennsylvania (Philly) – Effective May 23, 2017, a city ordinance bans employers from asking prospective employees about their wage and salary history, with an exception where such inquiry is authorized under other federal, state or local law. The ordinance is modeled on a similar law enacted in Massachusetts. For full text of the ordinance, use this link and click on the embedded attachment. https://phila.legistar.com/LegislationDetail.aspx?ID=2849975&GUID=239C1DF9-8FDF-4D32-BACC-296B6EBF726C This ban (and others like it) are intended to combat pay inequity, by removing the data that can be used to perpetuate unequal pay between males and females where females have lower past earnings or expectations regarding compensation.
12. 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