LB4HR – June 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.”
On a personal note, I had the privilege of being the commencement speaker for Kansas State University’s College of Business Administration on May 14. It was wonderful to be part of this milestone moment in students’ lives and to witness the pride and joy of assembled family, friends and the faculty who taught them so well. I’d like to dedicate this edition of LB4HR to all of the professors and teachers who pour their hearts and minds into educating the next generations, plus the education administrators who keep it all running smoothly. These are special folks who change lives in ways, great and small, every day. Thank you!
1. To Exempt or Not to Exempt – Per the quickie note sent to you on May 18, the final rule revising the FLSA’s “white collar” exemptions is here and teed up to take effect on December 1. Unless you’ve been on a desert isle, you already know that it will  increase the minimum required salary to maintain certain exemptions;  tie future changes in that number to an index; and  provide for automatic changes every three years. Employers are scrutinizing their classifications and compensation bands to identify where change will be needed and determining which option to exercise in order to come in to compliance. Concede nonexempt status? Increase a salary currently below the minimum to satisfy the new minimum? Even though there were no changes to the duties tests, this event presents the perfect opportunity to revisit the actual duties being performed by your currently exempt staff and ensure that they satisfy those tests. While the U.S. Department of Labor (DOL) is signaling “full steam ahead” there is activity in the legislative branch of the government intended to say “whoa, Nelly.” The Protecting Workplace Advancement and Opportunity Act (S. 2072 & H.R. 4773) was filed in March to nullify the reg and require deeper economic analysis of the effect on employers. If passed, it would also require that any change to the duties tests would require a period for notice and comment. This was a reaction to employers’ fears that the DOL would sneak those changes into the final rule even though the proposed rule offered no changes and only asked for general comments on the duties tests. On June 7, Sen. Lamar Alexander (R-Tenn) and Sen. Ron Johnson (R-Wisc) filed under the Congressional Review Act to nullify the final reg and prohibit a copycat rule without Congressional OK. 44 senators are co-sponsoring the CRA action. A simple majority in both chambers is all’s that required, but a veto by President Obama is pretty much a given. Stay tuned!
2. Failing Leaves – The EEOC issued new guidance on May 9 entitled “Employer-Provided Leave and the Americans With Disabilities Act.” The purpose of the guidance is to address employers’ misconceptions, such as those who require employees to be “100% healed” before being allowed to return to work or failing to offer additional time off, beyond what is required by law or offered under the employer’s policies, as a form of reasonable accommodation. The 8-page document is a quick read, with useful examples and is posted at https://www1.eeoc.gov//eeoc/publications/ada-leave.cfm?renderforprint=1.
3. Yeah, What He Said – In LB4HR #3 – 2016, I wrote about a report from the U.S. Treasury Department which studied the effects of noncompetes and pointed out the societal ills caused by employers’ overreach. On May 6, the White House released a similar paper entitled “Non-Compete Agreements: Analysis of the Usage, Potential Issues and State Responses.” The similarity is no surprise, since both reports draw heavily from the same study. Once again, the tone is pro-employee and does not acknowledge all of employers’ protectable interests, but it is a decent compilation of states’ response to enforcement of these promises. At only 16 pages, it’s a fairly quick read and is posted at https://www.whitehouse.gov/sites/default/files/non-competes_report_final2.pdf. It’s a bit late in the game to be teeing up a federal non-compete rule to supplant states’ laws on enforcement of these promises, but it sure feels like they want to.
4. Update on Toon Turf Wars – Last month, I wrote about a recurrence of litigation over “gentlemen’s agreements” between competitors to not poach each other’s highly skilled employees. The first round occurred in Silicon Valley and was undone by the one-two punch of a U.S. Department of Justice (DOJ) investigation and private litigation. Certain defendant employers’ early settlement amounts were small potatoes compared to the $415 million settlement finally OK’d by Judge Koh for the remaining defendants. More recently, the action slid south to Hollywood and involves movie studios and their animation and visual effects employees. Once again, settlements for $5.9 million (Blue Sky Studios/20th Century Fox Film Corp.) and $13 million (Sony Pictures Imageworks, Inc. and Sony Pictures Animation, Inc.) may be chump change compared to what remaining defendants (Dreamworks, Disney, Lucasfilm and Pixar) could be looking at in the class action they face. One June 9, those employers filed an appeal with the 9th Circuit to try and undo Judge Koh’s class certification. Get your popcorn ready . . . this is going to be interesting.
5. Who Ya Gonna Call? – Attorneys General in CA, CT, DC, IL, MD, MA, MN, NY and RI are coordinating their efforts to lessen or eliminate retail employers’ reliance on on-call scheduling (aka just in time scheduling) of workers. Employees subject to this approach call in on scheduled work days to see if they are needed (or will be told to stay at home, without pay), may be sent home early if the store is not busy and can be asked to be available to fill last-minute needs. The AGs have sent letters to large retailers who operate in all of these states, pointing to the loss in pay, difficulty in making in child-care or elder-care arrangements and impossibility of attending scheduled classes or working a second job. A host of retailers have already ceased this practice, in response to the AGs efforts.
6. For the Record – With so much focus on the DOL’s final rule revising the white collar exemptions, employers may not have noticed the May 12 publication of the Occupational Safety & Health Administration’s (OSHA) final rule designed to enhance record keeping and reporting of workplace injuries. With a January 1 effective date, there is plenty of time to study the rule, which can be found at https://www.osha.gov/recordkeeping/finalrule/index.html and to make needed changes. The idea is to make injury data more accessible, thereby nudging employers into being more safety-conscious. Read: Public shaming. Employers with 250+ employees will be required to electronically submit OSHA 300 logs, 301 forms and 300A summaries annually. The requirement also applies to employers of 20+ employees in hazardous industries. OSHA will analyze the data, use software to find and remove personally identifiable info (e.g., employee’s name) and post what’s left on their website. Anti-retaliation provisions are being beefed up by broadly defining it as anything that would deter a reasonable employee from reporting a work-related injury or illness, including some disciplinary policies, post-accident drug testing and safety incentive programs. As for the latter, programs which offer an individual or group incentive for remaining injury-free are in the crosshairs. At issue are programs that deny a benefit, like a cash bonus, based on a reported injury since such programs tend to deter reporting. Less problematic are programs that reward compliance with safety rules or participation in safety-oriented activities, like training.
7. Bathroom Brawl Continues – On May 13, the U.S. Department of Education and DOJ issued written guidance for K-12 schools to address transgender pupils. Receipt of federal financial assistance is conditioned upon schools’ compliance with the anti-discrimination requirements in Title IX and the guidance explains that transgender students are to be treated in the same manner as students of the same gender the student identifies with. Transgender status is determined by the individual and confirmation via medical records is not required. Transgender status is to be kept private unless the student decides to make it known. The student must be given access to the restrooms and locker rooms of the gender with which he or she identifies and not forced into a gender-neutral, separate facility. However, if the student prefers privacy and no gender-neutral facility is available, the school is to modify the existing space to make the student comfortable. Although this guidance is not directed at employers, the advice is consistent with that which has already issued to employers from the EEOC, OFCCP and OSHA.
8. Buddies with the Board – The U.S. Court of Appeals for the 7th Circuit agrees with the National Labor Relations Board (NLRB) in finding that an employer’s mandatory arbitration agreement forcing wage and hour disputes to be brought as individual and not class actions violates the NLRA and is unenforceable under the Federal Arbitration Act (FAA). Lewis v. Epic Systems Corporation (7th Cir. May 2016). The Court endorsed the NLRB’s view that mandatory arbitration interferes with employees’ section 7 rights under the NLRA. This position is at odds with U.S. Courts of Appeal in the 2nd, 5th, 8th and 9th Circuits, which all opine that the FAA encourages arbitration of disputes and an employer could require the dispute to proceed as an individual action. Looks like it will take a date with the Supremes to hash this one out.
9. Not Buddies with the Board – On June 7, Browning-Ferris Industries (BFI) asked the D.C. Circuit to push back on the NLRB’s August 2015 decision that BFI and a staffing agency providing employees to BFI were joint employers. To refresh your memory of the underlying case, go to https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-browning-ferris-industries for a press release and copy of the decision. Now, BFI is arguing that “Any joint-employer test must give parties a comprehensible statement of it boundaries, so they may lawfully and predictably create the relationships they desire, or restructure them . . . The new test fails to do so and instead creates an amorphous, unworkable fog.” In January 2016, the U.S. Department of Labor jumped on that bandwagon and issued an administrative interpretation (AI), indicating its penchant for finding joint employer status in staffing agency/employer relationships and similar horizontal and vertical relationships, at https://www.dol.gov/whd/flsa/Joint_Employment_AI.htm.
10. Employment Law Conference – If it’s July in Texas, that means Texas SHRM State Council and Texas Association of Business (TAB) 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. Info on the agenda and registration can be done via the TAB website at http://web.txbiz.org/events/Employment-Relations-Symposium-2016-387/details.
11. Stated Differently – Here are some hot topics for you multi-state employers:
1. Alabama – A federal court issued a permanent injunction against enforcement of two state laws which ban same-sex marriage. The AG and two probate judges argued the order was not necessary but the federal court noted widespread refusal to comply among state and local officials, including several member of the state’s Supreme Court. The judge announced that so long as the Sanctity of Marriage Amendment and the Alabama Marriage Protection Act remain on the books, the injunction will remain.
2. Colorado – Effective August 10, 2016, the CO Anti-Discrimination Act (CADA) is amended to provide that employers shall provide reasonable accommodation for any health conditions related to pregnancy or the physical recovery from childbirth. This does not require an ADA –qualifying disability to trigger the accommodation requirement and applies to all employers, regardless of size. CADA requires an interactive process, to determine an effective accommodation, and includes suggestions such as more frequent or longer breaks, modified equipment or seating, limits on lifting and temporary transfer to a less physically demanding job.
3. Connecticut – Effective January 1, 2017, employers of 1+ employees must not ask prospective employees about their arrests, criminal charges or criminal convictions on the employment application form. The query can occur after the initial application, such as during the interview process or a subsequent background check. A copy of the new ban the box law is posted at https://www.cga.ct.gov/2016/ACT/pa/2016PA-00083-R00HB-05237-PA.htm. Exceptions to this prohibition include jobs for which  the employer is required to make the inquiry under state or federal law ; or  a security or fidelity bond or equivalent bond is required for the job.
4. District of Columbia – The highest “state” minimum wage in the land is going higher. The D.C. Council unanimously OK’d minimum wage increases on June 7, with the first stepped increase to take effect July 1, 2016. The minimum wage will go from $10.50/hour to $11.50/hour on July 1 with further increases to $15/hour by 2020. The minimum wage for tipped employees will go from $2.77/hour to $5.00/hour by 2020. After 2020, future adjustments will be tied to the Consumer Price Index.
5. Illinois – Although several state appellate courts have opined that an employer must provide at least two years of employment to enforce a post-employment noncompete, where the consideration supporting that promise is continued employment, the IL Supreme Court has not considered the issue and several federal courts have refused to endorse this “bright line” test. More recently, another federal court has rejected the bright line in favor of a totality of circumstances approach. In Allied Waste Services of North America v. Tibble (N.D. Ill. April 2016),the court found the needed consideration via a promotion and increase in pay when the covenant was signed. Even though only 15 months lapsed between signing the agreement containing the covenant and Tibble’s resignation (to go work for a competitor),the court noted that prior findings that two years of employment was previously found to be adequate consideration, that “ is very different than saying that anything less than two years is automatically insufficient.” It also mattered that Tibble had resigned and had not been discharged.
6. Louisiana – Effective August 1, 2016, LA has a “ban the box” law deferring questions to job applicants about criminal history until after the job interview or, if there is no interview, until after a conditional offer of hire is made. The restriction applies only to state government jobs and not to the private sector.
7. Maryland – Effective October 1, 2016, the existing equal pay law is amended to  prohibit pay differentials based on gender identity and sex;  expand the definition of discrimination to include “providing less favorable employment opportunities”; and  prohibit employers from banning employees’ discussion of and questions about their own and others’ pay.
8. Minnesota (Minneapolis) – Effective July 1, 2017, employers of 1 to 5 employees must provide unpaid sick leave while employers of 6+ employees must provide paid sick leave, which accrues at the rate of one hour of sick leave for every 30 hours worked, up to a max of 48 hours per year. The devil’s in the details so check out the ordinance at http://www.minneapolismn.gov/www/groups/public/@clerk/documents/webcontent/wcmsp-180841.pdf.
9. Vermont – Effective July 1, 2017, VT “bans the box” by prohibiting inquiries into a job applicant’s criminal history on the employment application form. The query may be made, later, during the interview or once the applicant has been deemed qualified to do the job.
10. 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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