LB4HR – September 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.” A big welcome to new subscribers who attended my presentation to the North Texas Compensation Association on August 18. I look forward to presenting to:
• Cement Employers Association’s Annual Meeting in Orlando, FL on September 28 (thank you for the referral, Jeana Smith)
• Hospitality Financial & Technology Professionals on September 29 (thank you for the invitation, Angie Abston)
• Texas Workforce Commission’s Texas Business Conference in Mesquite on September 30 (thank you for the invitation, Tommy Simmons)
It’s back to school time, but your education never ends . . .
1. Whistle While You Work – The Dodd-Frank Wall Street Reform Act provides both protection and monetary incentives for employees who blow the whistle on securities law violations. And the SEC is dead serious about policing language in employers’ severance, employment and similar agreements which seem to deter such reports. One employer’s confidentiality clause caught their eye and their ire. While the clause said that nothing in the agreement prevented the employee from filing claims with several named agencies, it also instructed that if the disclosure was required by law or legal process, the employee should speak to the employer’s legal department first (to give time to seek a protective order) and that the employee was waiving right to any monetary recovery in connection with the complaint. The SEC ordered the employer to inform the affected employees that they could talk to the SEC without going to legal first and they weren’t waiving a SEC whistleblower award. The SEC also required them to revise their agreements with provided language which accurately explained the employee’s rights. And then it fined them $265K. Ouch.
2. Strength in Numbers – The U.S. Department of Labor has signed another Memorandum of Understanding (MOU) as part of its misclassification initiative, bringing the tally to 34 states who have pledged to assist in identifying and punishing employers who fail to properly classify their workers as employees. The latest additions to the “party” are North Carolina and Nebraska. To see the actual MOU, see which states have signed on (oh yes, Texas did) and read about their enforcement activities, check out the DOL’s designated page at https://www.dol.gov/whd/workers/misclassification/.
3. NLRB Nods in Agreement – The National Labor Relations Board applauds the DOL’s effort and raises them one, by issuing an advice memorandum proclaiming that misclassification of workers as independent contractors violates section 8 of the NLRA since it deprives those workers of their section 7 rights. The 12-page decision issued in December 2015 but was just published on www.nlrb.gov in late August. To read the memo, click on this link and then click on the Pacific 9 Transportation case. The link is at https://www.nlrb.gov/cases-decisions/advice-memos?issuance_date=2015&=Apply.
4. Back in Black – The Fair Pay and Safe Workplace Executive Order (E.O. 13673)(aka the blacklisting EO) was signed on July 31, 2014 to require prospective federal contractors to disclose their labor law violations (of 14 named federal laws plus their State law equivalents) and give guidance to federal agencies on how to evaluate those confessions when handing out federal contracts. The final rules and guidance issued on August 25, 2016, and are now available at https://www.dol.gov/asp/fairpayandsafeworkplaces/. The regs take effect October 25, 2016, and initially apply to federal K’s valued at $50 million or more. The look-back period for reporting of “sins” will initially be one year and expand to three years by October 25, 2018. On January 1, 2017, the paycheck transparency provisions take effect (e.g., notice of independent contractor status, notice of FLSA exempt status, detailed info on overtime, deductions and hours worked). On April 25, 2017, the disclosure of “sins” threshold drops from $50 million to $500K. And on October 25, 2017, the provisions will apply to federal subcontractors with a federal contract valued at $500K or more. Contractors with K’s valued at $1 million or more must agree not to impose mandatory arbitration on employees’ Title VII discrimination or sexual harassment claims. A pre-assessment of existing or prospective contractors by the DOL will be available starting on September 12, 2016. If they “like” you, the contract process will go much smoother. Think of it like a flu shot.
5. Retaliation Redux – EEOC’s guidance on retaliation was last updated in 1998 and a number of courts have opined on the scope of the claim since then. In response, a new guidance on retaliation claims issued on August 29, 2016, and is posted at https://www.eeoc.gov/laws/guidance/upload/retaliation-guidance.pdf. Retaliation still comes in two types – opposition or participation – but the EEOC’s view of what employee conduct is sufficient to be one of those two things is remarkably broad. For example, “participation” can include a formal or informal charge or complaint, made internally at work or with an outside entity, or testifying, assisting or participating in any manner in an investigation, even when the underlying allegation is not meritorious or was not timely filed and “regardless of whether an individual has a reasonable, good-faith belief that the underlying allegations are, or could become, unlawful conduct.” Most situations will be fact-specific and must be evaluated individually, but the guidance identifies certain employer conduct that will always be deemed to be retaliatory, such as prohibiting or punishing employees for asking about and discussing their own pay and that of their co-workers. If that is on your employee handbook list on punishable offenses, it should be removed. Like yesterday. The NLRB has a problem with that, too.
6. Hot Tip – That rumbling you feel emanating from the west is not an earthquake. It’s hospitality employers who are none too pleased with the 9th Circuit right now because of their latest pronouncement on tip pooling. Heads’ up employers of tipped employees in CA, NV, WA, AR, OR, ID, MT, HI and AK. At issue is section 203(m) of the FLSA which defines “wages” and explains how tips figure into that definition. Following the explanation of the tip credit, it says “this subsection shall not be construed to prohibit the pooling of tips among employees who customarily and regularly receive tips.” In 2010, the 9th Circuit opined that the statute was silent on and therefore did not prohibit pooling with employees who don’t receive tips (e.g., kitchen help) if no tip credit was being taken on behalf of the tipped employees. The DOL responded with a regulation stating that tips are the sole property of the of the tipped employee and cannot be shared with non-tipped staff. A hospitality employer consortium challenged the DOL in court but the 9th Circuit reversed itself and sided with the DOL, in February 2016. The employer group requested an en banc (full panel) review, which was denied on September 6. Then all heck broke loose. Ten 9th Circuit judges vigorously dissented, excoriated deference to the DOL and pointed out that numerous other courts have invalidated that DOL regulation. If you like reading snarky dissents, this one is gold. Check it out at http://scholar.google.com/scholar_case?case=7547559534583567337&q=oregon+restaurant+and+lodging+association+v.+perez&hl=en&as_sdt=6,44&as_vis=1. This looks like a job for Superman! No, the Supreme Court!
7. Joined Forever? – In August 2015, the NLRB broadened its standard for finding joint employment in the Browning-Ferris case. They appear to be stretching it even further, by finding a construction company and a temporary staffing service to be joint employers even though the latter provided workers to the former for only two projects and there have been no requests for temps to be provided since those projects wrapped up. The Construction and Master Laborers’ Local filed a petition to represent a group of laborers, including those who had been assigned by the temp agency to the construction company. The NLRB Regional Director dismissed the R-petition, noting the two entities had no shared work since the projects ended, there were no bids for future work and the construction company used other temp services. The Board disagreed, relying heavily on evidence of joint control of the workers to establish the two entities were joint employers, and noting that the construction company could resume use of the temp service at any time since neither went out of business, changed the nature of their business or moved their business. And there was no evidence either one intended to discontinue the relationship. The petition was reinstated and remanded for further action. Retro Environmental Inc/Green Works, LLC, 364 NLRB No. 70 (Aug. 16, 2016). Food for thought . . . you might want to provide for definite end dates on those temporary services agreements, tied to the completion of the project.
8. New Stuff – Heads up regarding new items that are already here and some that coming down the pike:
1. New FLSA poster – Go to https://www.dol.gov/whd/regs/compliance/posters/flsa.htm to see the version that should be posted as of August 1, 2016
2. New Form I-9 – We were told that a new form was on its way back in November 2015 but we are still waiting. OMB has blessed the new form and indicates it will be released within 90 days. The new form will include a bar code which will help the USCIS identify errors. They also recently increased the amount of the fines for paperwork violations. It sure looks like they are teeing up a big review and compliance push. You may want to audit your forms on file.
3. SCOTUS on Class Waivers in Arbitration Agreements – Ernst & Young LLP has asked the high court to opine on whether or not class waivers in arbitration agreements are unlawful under the NLRA. The 9th and 7th Circuit say they are unlawful. The 2nd, 5th and 8th Circuits say they are fine. Stay tuned!
4. FOX News apologizes to Gretchen Carlson for former CEO Roger Ailes’ sexual harassment and settles her lawsuit for $20 million.
9. Worth Repeating – As summer simmers into back-to-school time, many employers know that means it’s also time to file their Standard Form 100 (aka EEO-1 Report), a VETS-4212 Report (fka VETS-100 and -100A reports), or both:
1. EEO-1 is an annual exercise to report gender and race demographics of your workforce, by EEO job groups. Employers who are subject to Title VII and have 100+ ees must complete the report. Also, federal contractors with 50+ ees and are [a] a prime contractor or first-tier subcontractor with a contract/subcontract/purchase order for $50,000+; [b] a depository of Government funds in any amount; or [c] a financial institution that issues/pays U.S. Savings Bonds and Notes are also required to submit this report. For more info on the process, see https://www.eeoc.gov/employers/eeo1survey/2007instructions.cfm. The deadline for filing is September 30. In preparation for the proposed expanded form and beginning with the 2017 report, EEOC is proposing to give employers until March 31st of the following year to file their EEO-1s. This proposed change aligns the EEO-1 filing deadline with employer’s December 31 deadline for calculating and reporting W-2 earnings . . . because you’re going to need that W-2 info to provide wage data on the “new and improved” EEO-1. Oh, joy.
2. VETS-4212 is an annual exercise to report covered employers’ affirmative action in employing U.S. military veterans. Employers with a federal contract or subcontract for $150,000+ are required to submit this report. If the contract was entered into prior to October 1, 2015, the threshold is $100,000+. For more info on the process, see https://www.dol.gov/vets/vets4212.htm. The deadline for filing is September 30.
10. Stated Differently – Here are some hot topics for you multi-state employers:
1. California (Berkeley) – Add another local government which will require employers to provide paid sick time to its employees. The ordinance takes effect October 1, 2017, and has an interesting interplay with the statewide paid sick time law. Implementation could be derailed by a competing paid sick time measure on the November ballot. Stay tuned for more details on which version prevails.
2. California (San Francisco) – Effective January 2017, employers of 50+ employees will augment paid time off received by their employees via the CA Paid Family Leave Program (which pays 55% of weekly wages for up to six weeks) by paying the other 45% of weekly wages. The law will gradually apply to smaller employers.
3. Illinois – A dust-up with Jimmy John’s sandwich shops led the IL legislature to prohibit imposition of noncompete promises on low-wage workers. Effective January 1, 2017, an agreement between a low-wage worker and an employer is illegal and void if it purports to restrict the employee from working for another employer for a specified amount of time, restricts the worker from working in a defined geographic area or restricts the worker from working for an employer in a similar type of business. A low-wage worker is defined as one earns $13/hour or less, or the applicable local/state/federal minimum wage if it is greater than $13/hour.
4. New York – The NY Governor, AG and Dep’t of Labor have acted on their distaste for wage payment via payroll cards by enacting regulations prohibiting restrictive practices and hidden fees. Gone are fees for customer service, start-up or maintenance of the account, overdraft, inactivity, balance inquiries and closing of the account. Also, employees provided with these cards must have at least one ATM which charges no fees near where they work or live and the employer is responsible for ensuring that access. Employers can’t receive any kick-backs from the card issuer and employees must have unlimited free withdrawals from the designated fee-free ATM.
5. New York – Effective January 1, 2018, eligible employees will be entitled to up to eight weeks of paid leave per year to bond with a child, care for an ill family member or tend to issues related to a family member who is on active duty in the U.S. military. The paid leave will begin at 50% of the employee’s normal rate of pay. When the law takes full effect, the amount of time granted increases to 12 weeks and the pay rate jumps to 67% of the employee’s normal rate of pay. This benefit ties into NY’s temporary disability insurance program and is funded by employees via payroll deduction.
6. Virginia – A bill which would amend existing law and clarify that franchisors are not the employer of their franchisees or their franchisees’ employees fell one vote short of overcoming the Governor’s veto. Similar enactments are already on the books in LA, TN, TX and WI.
11. 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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