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NLRB Issues New Joint Employer Standard

Posted in Labor Law & NLRB

In a long-awaited and split decision, Browning-Ferris Industries of California, Inc., the National Labor Relations Board addressed whether BFI should be deemed a joint employer with the staffing agency whose employees performed various work functions for BFI and, in so doing, the Board revised its 30+-year standard for determining joint employer status. According to the three-member Democratic majority, the new standard in intended “to better effectuate the purposes of the Act in the current economic landscape.” This decision clearly alters the landscape for staffing agencies and host companies utilizing the services of staffing agencies. The two-member Republican minority castigates the new standard as a test that “confuses the definition of a joint employer and will predictably produce broad-based instability in bargaining relationships.”

The Staffing Arrangement Between BFI and Leadpoint

BFI owns and operates a recycling facility. It employs its own employees to operate forklifts and loaders on the outside portion of its facility, where the material to be recycled is delivered, moved around, and staged for processing. These 60 employees are represented by the Teamsters Union and subject to a collective bargaining agreement. Inside the recycling facility are conveyor belts on which the material to be recycled is placed for sorting and screening. A temporary staffing agency, Leadpoint, provides 240 workers to perform the sorting and screening services, as well as housekeeping services for BFI. Leadpoint also provides on-site supervision and lead workers who create the workers’ schedules and oversee the work.

The staffing arrangement between BFI and Leadpoint is typical of the type of arrangement that many companies have with the staffing agencies that they use. Under the staffing agreement, Leadpoint is responsible for the recruiting and hiring of workers, although it must ensure that the workers have the appropriate qualifications to perform BFI’s work. Leadpoint also conducts drug testing, piece-of-the-job testing, and background checks. Leadpoint is responsible for all discipline, evaluation and termination of the workers, but BFI has the authority to order the removal of any worker. Leadpoint sets the wages for its workers, although the agreement specifies that the wages cannot exceed those paid to BFI workers performing similar tasks (of which there was one worker, making $5.00 more per hour). All benefits, including holidays, PTO, and insurance are provided by Leadpoint.

BFI has established three shifts of work, and Leadpoint schedules the workers to cover all shifts. BFI determines if overtime is required on a particular shift, and Leadpoint then chooses which workers will work the overtime. The workers submit a weekly summary of hours worked, which must be signed by a BFI representative attesting to its accuracy. If no signature is obtained, BFI may refuse payment. On a daily basis, BFI decides which material stream will run and how many workers are required to work each stream, while Leadpoint chooses which workers will be assigned to the stream. BFI also determines the work priorities each day. BFI monitors the operation and productivity of the work, and issues are addressed with Leadpoint supervisors. On occasion, however, BFI managers have addressed job task and quality issues directly with Leadpoint workers. Orientation and job training is initially provided by Leadpoint, but BFI periodically conducts substantive job and safety training as well. Leadpoint workers must comply with BFI’s safety standards.

The Prior Standard

The union sought to unionize the agency workers, arguing that BFI was a joint employer with Leadpoint. Under the prior standard for joint employer status, BFI likely would have not been found to be a joint employer. The prior standard is based on the 1982 decision, NLRB v. Browning-Ferris Industries of Pennsylvania. Under this standard, an entity must exercise direct control over the employees of the other entity in order to be considered a joint employer. Later Board decisions further refined this standard. Thus, there must be actual exercise of this control, and the control must be “direct and immediate”; the mere possession of the authority to exercise such control or the indirect control over these employees is not enough to establish joint employer status. In this case, BFI did not have direct control over the Leadpoint workers – the actual employment actions, wages and benefits were handled by Leadpoint.

In addition, the control exercised by the host entity must be more than “limited and routine” in nature. Under prior Board law, supervision is limited and routine where the supervisor tells employees what work to perform, or when and where to perform the work, but does not tell the employee how to perform the work. Thus, the limited instances where BFI managers directly addressed job task and quality issues with employees by directing them to perform a particular task or reassigning them to another stream would not have been sufficient to render BFI a joint employer.

The New Standard

Under the Board’s new standard, which it characterizes as a return to the original principles of Browning-Ferris Industries of Pennsylvania, two or more employers are joint employers of the same employees if they “share or codetermine those matters governing the essential terms and conditions of employment.” The first question in applying the standard is “whether there is a common-law employment relationship with the employees in question.” If so, then the next question is whether the “employer” in question “possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.”

According to the Board, the essential terms and conditions of employment includes hiring, firing, discipline, supervision and direction. It also includes wages and hours, as well as dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance.

The Board specifically states that it will no longer require that the employer actually exercise such authority to control the terms and conditions of employment; the mere possession of this authority is sufficient to support a finding of joint employer status. In addition, the Board rejects the requirement that this authority must be exercised “directly and immediately.” Instead, it may be exercised indirectly, through an intermediary (such as the staffing agency).

In applying this new standard, the Board found BFI to be a joint employer, determining that it exercised significant control – both indirect and direct – over the terms and conditions of employment of the Leadpoint workers. The Board found that BFI imposed specific conditions on Leadpoint’s ability to make hiring decisions, by establishing qualifications and requiring certain tests. BFI also retained the right to reject any worker. Its complaints about workers led to two instances where Leadpoint chose to impose discipline and ultimately remove them from the BFI facility.

The Board also found that BFI controlled work processes by establishing work speed and productivity standards, thereby affecting break times, safety, the speed of work, and need for overtime. BFI also determines what tasks must be completed, and exercises “near-constant oversight” of job performance. BFI decides how many workers are needed, dictates the timing of shifts, and determines overtime.

The Board further held that BFI interacted directly with workers by directing them to perform certain tasks or assignments, and conducting trainings and meetings about BFI objectives or concerns. BFI must also approve the weekly wage summaries for Leadpoint workers.

In addition, the Board determined that BFI “plays a significant role in determining employees’ wages,” by establishing a “ceiling” based on the wage rate of the single BFI employee performing sorting work. In addition, the Board found that BFI also apparently required approval over wage increases, as it negotiated a new wage rate with Leadpoint after a minimum wage increase went into effect.

What This Means for Employers

This decision vastly expands the universe of who will be deemed a joint employer. The typical staffing agency relationship will now be deemed a joint employer situation, thereby subjecting the host employer to the panoply of labor obligations. This decision will also undoubtedly implicate other business relationships, such as franchise and subcontractor arrangements, where the union could argue that the franchisor or contracting company has some control over the franchisee or subcontractor employees. For example, franchise agreements often contain provision specifying what the franchisee must do vis-à-vis the franchisee’s employees: qualifications, appearance and schedules. The concern is that the Board’s opinion would allow joint employer status to be found where the franchise agreement imposes the most indirect influence over the working conditions of the franchisee’s employees.

As the dissent notes, “[t]his change will subject countless entities to unprecedented new joint-bargaining obligation that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts and picketing.” We anticipate that there will be legal challenges to this new standard. In the meantime, however, companies engaged in business relationships with entities such as staffing agencies, franchises and subcontractors must be aware that they could be deemed a joint employer under this expanded standard, and thereby subject to significant labor obligations under the NLRA.

NLRB Rejects Union for College Football Players

Posted in Labor Law & NLRB, Unions

The National Labor Relations Board on Monday dismissed a petition filed by Northwestern football players who were seeking to unionize. In what is widely viewed as a surprising decision by the union-friendly Obama Board, in Northwestern University, the three Democrats and two Republicans on the Board unanimously declined to assert jurisdiction over Northwestern scholarship football players. Instead, the Board determined that even if the student-athletes were statutory employees, it would not effectuate the policies of the National Labor Relations Act to assert jurisdiction.

In 2014, Northwestern University scholarship football players filed a petition with the Board’s Chicago Regional office seeking representation by the College Athletes Players Association, a United Steelworkers-supported group that sought to represent the players. The Regional Director found that the scholarship players were employees within the meaning of Section 2(3) of the Act. In so finding, the Regional Director determined that the players were not primarily students because they devoted over 50 hours per week to football, a separate activity from the academic degree program. Likewise, the Regional Director reasoned that the scholarship athletes were subject to the University’s control – – the athletes were required to attend workouts, and were restricted from certain personal activities solely because they were members of the football team.

Northwestern University appealed the Regional Director’s decision to the Board, arguing that the scholarship players were not employees under the Act. To the surprise of many scholars and practitioners, the left-leaning Board, citing competitive balance and the potential impact on NCAA rules, determined that it would not effectuate the policies of the Act to assert jurisdiction. Put differently, the Board specifically declined to determine whether the scholarship players were statutory employees. In so holding, the Board reasoned that the case involves “novel and unique circumstances,” because there has never been a petition for representation before the Board in a unit of a single college team, or a group of college teams.

The Board announced that “it would be difficult to imagine any degree of stability in labor relations if we were to assert jurisdiction in this single-team case.” Specifically, the Board explained that bargaining has never involved a bargaining unit consisting of a single team’s players, where the players for competing teams were unrepresented or entirely outside of the Board’s jurisdiction. All previous Board cases concerning sports involved professional leaguewide bargaining units. Here, the Board explained, roughly 125 colleges and universities participate in the Division I Football Bowl Subdivision, with all but 17 of the universities outside of the Board’s jurisdiction because they are state-run institutions, and are therefore not considered “employers” within the meaning of the Act.

Notably, the Board distinguished the instant case from cases involving graduate student assistants, student janitors and cafeteria workers whose employee status the Board has considered, and rejected, in prior cases. The Board noted that, unlike graduate assistants, the scholarship players are undergraduates, and the football activities they engage in are unrelated to their course of study or education programs. Moreover, the Board noted, the fact that the scholarship players are students who are also athletes receiving a scholarship to participate in what has traditionally been regarded as an extracurricular activity sets them apart from the Board’s previous decisions involving students. However, in observing that the Board has never confronted a case involving students who are similarly situated to the scholarship players at issue in this case, the Board clarified that it has no opinion as to whether the cases discussing graduate student assistants or student janitors and cafeteria workers were correctly decided.

The Board’s decision is a blow to the union movement in college sports, which was led by the former Northwestern quarterback Kain Colter. The decision leaves no recourse for Northwestern players to appeal. And while the Board emphasized that its decision not to assert jurisdiction does not preclude reconsideration of this issue in the future, it is unlikely that the Board will revisit this issue anytime soon. By punting the issue of jurisdiction, the Board avoided a backlash from not only the pro-employer community, but nearly every private college and university in the country.

While unionization is unlikely in college sports in the foreseeable future, the NCAA has taken notice. The NCAA recently changed its governance structure to allow its wealthiest conferences to make some of their own rules, including allowing full-cost-of-attendance stipends, offering four-year scholarships, and providing more comprehensive health care to its student-athletes.

EEOC v. Abercrombie & Fitch: The Epilogue

Posted in Employment Discrimination, HR Compliance, Litigation, Reasonable Accommodation

I’m the type of person who reads the ends of books first (which drives my book club friends crazy).  I always want to know how things turn out, which can be a little frustrating in my area of practice.  I provide advice and counsel to clients on how to deal with sticky employment situations, but I don’t always hear what happens afterwards. ( I assume things go as planned, since my clients don’t have to ask for further advice, but who knows?)

I also wonder what happens in important and interesting cases after an appeals court weighs in and reverses a lower court.  In those cases, the matter is sent back to the lower courts for further proceedings consistent with the appellate court decision, but you don’t always hear what actually happens there.  One such recent important and interesting case was EEOC v. Abercrombie & Fitch , in which the U.S. Supreme Court reversed the U.S. Court of Appeals for the 10th Circuit.  In this case, the applicant for employment did not state that her headscarf was worn for religious reasons, but the company believed that it was and it chose not to hire her because she did not fit its East Coast Preppy “Look” policy.

The 10th Circuit had held that an employer must have actual knowledge of an individual’s religious need in order to be liable for failing to accommodate that need under Title VII.  The Supreme Court reversed the 10th Circuit, however, and held that if an employer refuses to hire an individual based on its belief that she will require a religious accommodation, and she actually would need one if hired, Title VII is violated. Proof of actual knowledge is not required.

So, for those of you, like me, who wondered what happened after the Supreme Court’s ruling, the Equal Employment Opportunity Commission issued a press release, announcing that Abercrombie & Fitch had settled the case by paying $25,670 in damages to the applicant (who apparently now works at Urban Outfitters) and $18,983 in court costs.

Although it wasn’t included in the press release, I’m sure that Abercrombie & Fitch is also reworking its interview and hiring policies, and training its managers, with regard to possible religious dress accommodations – a step that other employers should also consider.  If an applicant dresses in a manner that is not compliant with the company’s dress code, it may be wise for the employer to explain the dress code and ask if the applicant can comply with it – this would likely trigger the applicant to explain any religious dress needs, enabling the employer to engage in the obligatory reasonable accommodation interactive discussion.  In fact, employers may wish to make this a generally applicable question to all applicants, so as to not target individuals based on a “perceived” religious dress requirement.

And they all lived happily ever after.  The end.

President Obama to Require Federal Contractors to Provide Paid Sick Leave

Posted in Government Contractors, Workplace Trends

Contractors are still reeling from the many executive orders coming from President Obama in the last year or so, including raising the minimum wage for federal contract employees to $10.10, requiring contractors to disclose labor law violations, demanding pay transparency and the reporting of compensation, prohibiting discrimination on the basis of sexual orientation or gender identity, and more. Now, the New York Times has reported that President Obama has drafted an executive order to force federal contractors and subcontractors to issue paid leave to employees who are sick, are seeking medical attention, or need to care for a sick relative. The online article, which appeared in print today, can be found here. This proposed paid sick leave order is another action that will have a dramatic and costly impact on contractors.

The draft executive order is exceptionally broad in coverage. According to the New York Times, the draft executive order sets a minimum of 56 hours a year of paid sick leave (7 days). The leave would cover not only the employee’s illness, but also caring for a child, parent, spouse, domestic partner, or “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” It would also apply to absences from work resulting from domestic violence, sexual assault or stalking, if that time was used to seek medical attention, obtain counseling, seek relocation assistance from victim services organizations or prepare civil or criminal proceedings. In addition, unused paid leave will accrue, year after year.

At this point, no actual date for the issuance of the Executive Order has been announced, and the draft order itself apparently has been marked “deliberative and pre-decisional.” The New York Times reports, however, that the Labor Department was to have approved the Order and sent it to the White House as of 2 p.m. on Wednesday, August 5, thereby indicating some urgency to the matter.

We will keep you posted on any further developments.

Court Finally Brings Sanity to NLRB Prison Garb Decision

Posted in Labor Law & NLRB, Litigation, Unions

AT&T Connecticut and the Communications Workers of America were embroiled in bitter contract negotiations in 2009. Among other efforts to let the public know about the dispute, employees, many of whom had to go into customers’ homes, began wearing shirts that said “Inmate” on the front with a black box underneath the lettering. The back of the shirt said “Prisoner of AT$T” with several vertical stripes and bars above and below the letters. The shirt did not have the Union’s name on it. AT&T suspended, for one day, over 100 employees who wore the shirt and who regularly interacted with the public.

Board proceedings ensued and an NLRB ALJ decided that AT&T violated the Act by suspending the employees. In 2011, by a 2 – 1 decision, the Board affirmed the ALJ decision. The Board reasoned that the “special circumstances” doctrine allowing employers to restrict employees from wearing buttons or insignias at work “when the company reasonably believes the message may harm its relationship with its customers and its public image” was not applicable because the “prisoner” shirt was not likely to cause fear or alarm among AT&T customers.

In reversing that decision, in Southern New England Telephone Co. v. NLRB, the U.S. Court of Appeals for the D.C. Circuit started its opinion with:

Common sense sometimes matters in resolving legal disputes. This case is a good example. AT&T Connecticut banned employees who interact with customers or work in public – including employees who enter customers’ homes – from wearing union shirts that said “Inmate” on the front and “Prisoner of AT$T” on the back. Seems reasonable. No company, at least one that is interested in keeping its customers, presumably wants its employees walking into people’s homes wearing shirts that say “Inmate” and “Prisoner.”

In concluding that the Board’s decision failed to take into account the reasonable and practical conclusion that the message on the shirts was offensive and bound to undermine the company’s relationship with its customers, the Court restated, as it had in a previous case a few years earlier that “the Board’s expertise is surely not at its peak in the realm of employer-customer relations.” Because the Court of Appeals found that the special circumstances exception applied, the one-day suspensions were lawful.

Making the NLRB decision particularly head scratching was that just a few years prior to the events in this case there had been, according to The Hartford Courant, “possibly the most widely publicized crime in the state’s history,” involving a home invasion resulting in the murder of several members of a family.

I’d like to say that it’s a sorry state of affairs that a federal Court of Appeals has to rein in the activity of the NLRB that’s supposed to have expertise in enforcing the statute it’s charged with enforcing, but, of course, this is not the first time the D.C. Court of Appeals has had to step in to do so.

EEOC Says Sexual Orientation Is Protected Under Title VII!

Posted in Employment Discrimination, Laws & Regulations

So I’ve noticed that the EEOC likes to adopt major policy shifts in sneaky ways.  For example, when the EEOC first decided that pregnancy-related impairments may be disabilities under the amended Americans with Disabilities Act, it didn’t put in the revised regulations, but slid it into the Q&A document on the revised regulations.  When the EEOC decided that discrimination based on gender identity or transgender status was sex discrimination under Title VII, it stated this in a federal sector case (there’s a different EEOC process for government employees than for the rest of us), which is more difficult for the public to hear about.  (I previously blogged about this case, Macy v. Dept. of Justice).  And now the EEOC has done it again, with regard to sexual orientation discrimination, in another federal sector case – Baldwin v. Dept. of Transp.

Prior to this case, the EEOC had been very clear that sexual orientation itself was not protected by Title VII.  In November 2014, it issued a document, “What You Should Know about EEOC and the Enforcement Protections for LGBT Workers.”  (Let’s call this version 1 – you’ll see why in a minute).  In that document, while the EEOC flatly stated that gender identity discrimination is discrimination on the basis of sex under Title VII, the EEOC originally said, “The Commission has … found that discrimination against lesbian, gay, and bisexual individuals based on sex-stereotypes, such as the belief that men should only date women or that women should only marry men, is discrimination on the basis of sex.” (Emphasis added).

Courts in private sector cases, as well as the EEOC in other federal sector cases, have also consistently found that sexual orientation was not protected by Title VII, except to the extent that sex-stereotypes were involved.  For example, the EEOC stated in a 2014 case, Complainant v. Dept. of Homeland Security, that claims of sexual orientation discrimination “may intersect with” claims of sex discrimination where sex-stereotyping is involved.  This use of “intersect” necessarily involves two separate items that meet.

In Baldwin, however, the EEOC now takes the position that “sexual orientation is inherently a ‘sex-based consideration,’ and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII.”  (Emphasis added).  In addition to noting that sexual orientation discrimination is often illegally based on sex stereotypes (the EEOC’s original, limited position), the EEOC now has added two other reasons as to why sexual orientation discrimination is sex discrimination: (1) “sexual orientation is inseparable from and inescapably linked to sex,” and (2) Title VII prohibits discrimination based on an individual’s association with someone with a protected characteristic (i.e. “associational discrimination”) – in this case, someone of the same sex.

Interestingly, the EEOC admits that “Congress may not have envisioned the application of Title VII to these situations.”  And, in fact, Congress clearly thinks that sexual orientation is not covered by Title VII, as it has repeatedly (over the last 20+years) considered – and rejected – legislation (The Employment Non-Discrimination Act) to make sexual orientation a protected category. But the EEOC apparently will proceed, nonetheless, to broaden the scope of Title VII.

Following the issuance of Baldwin on July 16, the EEOC is moving swiftly and silently to cement this position.  Yesterday, I viewed version 1 of EEOC’s “What You Should Know” document on its website.  This morning (July 23), however, I found a new version of the document has replaced version 1 – without fanfare, announcement, or even any indication that it had been revised!  This new version eliminates the sex-stereotyping limitation and baldly states: “The Commission has also held that discrimination against an individual because of that person’s sexual orientation is discrimination because of sex and therefore prohibited under Title VII. See David Baldwin v. Dep’t of Transportation, EEOC Appeal No. 0120133080 (July 15, 2015).”  In one fell swoop, the EEOC has just expanded the law!  Who needs Congress?

Sneaky.

The DOL Issues Guidance on Independent Contractors

Posted in Independent Contractors, Wage & Hour

So the Department of Labor is on a mission to extend the reach of the Fair Labor Standards Act.  Following on the heels of the proposed overtime regulations, in which the DOL is seeking to expand the number of workers eligible for overtime pay (and thereby increase their income – at least theoretically), the DOL has now issued an Administrator’s Interpretation in which it provides guidance to employers on how to determine whether a worker is an employee or an independent contractor for purposes of the FLSA.  Notably, the DOL states that, under its analysis, most workers are employees. (Well, that’s not surprising, coming from the DOL).

The DOL uses an economic realities test, and notes that this test is broader than the common law test, which focuses on the employer’s right of control over the worker. The economic realities test analyzes whether a worker is economically dependent on the employer, and is thus an employee, or is truly in business for himself as an independent contractor.

The FLSA defines employee as “any individual employed by an employer” and defines employ to mean “suffer or permit to work.” As described in the Administrator’s Interpretation, the following six factors are considered in determining whether a worker is economically dependent on the employer:

  1. “Is the work an integral part of the employer’s business?” If so, it is more likely that the worker is economically dependent on the employer. Work can be integral to a business even if it is just one component of the business, is performed by many others, or is performed away from the employer’s premises.
  2. “Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?” This factor does not focus on whether a worker can simply choose to work more hours, but on whether the worker exercises managerial skills that affects the opportunity for profit or loss beyond the current job (such as decisions to hire others, purchase materials and equipment, advertise, rent space, manage time tables, etc.)
  3. “How does the worker’s relative investment compare to the employer’s investment?” Under this factor, not only must the worker make some investment, but the worker’s investment must be compared to the employer’s investment. If the worker’s investment is relatively minor, that suggests the worker is economically dependent on the employer.
  4. “Does the work performed require special skill and initiative?” Under this factor, a worker’s business, not technical skills, are the focus. The DOL states that “Even specialized skills do not indicate that workers are in business for themselves, especially if those skills are technical and used to perform the work.”
  5. “Is the relationship between the worker and the employer permanent or indefinite?” If so, this suggests an employment relationship. The DOL notes, however, that the lack of permanence or indefiniteness does not automatically suggest an independent contractor relationship; the reason for the lack of permanence or indefiniteness must be reviewed to determine if it is due to “operational characteristics intrinsic to the industry” (such as the use of staffing agency workers) or the worker’s “own business initiative.”
  6. “What is the nature and degree of the employer’s control?” In order to support an independent contractor designation, the worker must actually – not theoretically – control meaningful aspects of the work being performed. An employer who determines a worker’s schedule, dress, or tasks is exercising control over the worker.

The DOL states that no one factor – particularly control – is determinative of whether a worker is an employee.  All the factors must be examined in a qualitative, not quantitative, manner in the broader context of economic dependence.

What does this mean for employers?  Well, your independent contractor relationships should be examined with a critical – and conservative – eye.  And realize that the worker may be deemed an independent contractor under some laws, but an employee under others!

Same Sex Marriage in the Workplace

Posted in Employee Benefits, Employee Leave (FMLA and ADA), Employment Discrimination, HR Compliance, Laws & Regulations

The U.S. Supreme Court’s decision in Obergefell v. Hodges, in which it held that same-sex couples have a constitutional right to marry, made headlines.  This decision has a practical impact on employers – particularly on those with operations in states that to date had not recognized the validity of same-sex marriages.

There are a number of employment rights and benefits that are affected by the Supreme Court’s ruling. These include the following:

  • Federal Family and Medical Leave Act leave, as well as family/medical-type leaves under State laws. The Department of Labor had previously announced a “place of celebration” rule, meaning that if the marriage is valid in the State in which the marriage took place, the FMLA will protect an employee needing leave to care for his or her spouse, regardless of where the employee lives (including in those States that do not recognize same-sex marriage). This ruling, however, means that leave rights under State laws, which may not have previously applied, must be extended to same-sex spouses as well. This includes such statutorily-provided leaves such as sick leave, family and medical leave, domestic violence leave, military family leaves, and Flexible Leave Act leaves (which enable employees to use paid leave for purposes of family illness).
  • Employment policies. If your policies provide other rights for spouses, such as bereavement leave, same-sex spouses will be covered. You should also update any policy definitions to ensure that same-sex spouses are not excluded. Remove any references to “husband” or “wife,” and replace them with “spouse.”
  • Employee benefits. Your insurance, pension, and retirement plans may need to be updated. You should consult your plan administrators and benefits attorneys regarding any required changes. In addition, employees may wish to change beneficiary designations. COBRA will apply to same-sex spouses.
  • Employee contact information. Employees may also wish to update basic contact information as to their spouses.
  • Employee tax information. In addition, employees may wish to adjust withholding information to account for a now-legally recognized same-sex spouse. Income imputed from employer contributions for a same-sex spouse’s health coverage will not be subject to federal income taxes. Employees will also be able to use flexible spending accounts to cover a same-sex spouse’s medical costs on a pre-tax basis.
  • Marital status discrimination. Same-sex spouses will be entitled to protection under State marital status discrimination laws.

Concerns About the Proposed Overtime Rules

Posted in Laws & Regulations, Legislative Developments, Wage & Hour

So, after many months of anticipation, I found the Department of Labor’s proposed overtime rules oddly disappointing. This was supposed to be a major overhaul of the regulations governing which employees would be exempt from the requirement to pay overtime for all hours worked over 40 in a workweek. The current regulations set forth three tests for exempt status: (1) the employee must be paid on a salary basis; (2) the salary level must be at least $455 per week ($23,660 per year); and (3) the employee must meet duties tests specific to the exemption in questions (executive, administrative or professional). We all knew there would be a significant increase in the minimum salary level required for exempt status. But we also expected the DOL to address the duties tests. It didn’t.

In the Executive Summary of the proposed rule, the DOL actually said:

The Department is not making specific proposals to modify the standard duties tests but is seeking comments on whether the tests are working as intended to screen out employees who are not bona fide [Executive/Administrative/Professional] employees; in particular, the Department is concerned that in some instances the current tests may allow exemption of employees who are performing such a disproportionate amount of nonexempt work that they are not EAP employees in any meaningful sense.

What?!! Over 16 months after President Obama signed the Executive Order directing the DOL to revise the overtime rules and almost 300 pages of proposed rules later, all the DOL did was to increase the salary level? And they’re still thinking about what to do about the duties tests?

What is even more troubling is what is likely to happen – that the DOL will make changes to the duties tests in the final rule. These changes will become effective without any of us ever having the chance to see them and comment on them. Regulations are supposed to be subject to a notice and comment period, allowing us – the American public – to weigh in on the proposed rules. The agency is then supposed to consider these comments before issuing a final rule. Apparently, this is not going to happen to any changes to the duties tests!

And back to the salary increase. In his Huffington Post blog announcing the overtime rules revision, President Obama touted an increase to $50,400 per year (which is approximately $970 per week). Oddly, however, the proposed regulations themselves use $951 per week and $49,452 per year, which is supposedly equal to the 40th percentile of earning for full-time salaried workers.  The DOL drops a footnote explaining that this number is based upon 2013 data, but that it will be updated for the final rule. At that point, the DOL said it would “likely rely on data from the first quarter of 2016.” It goes on to note that:

The latest data currently available is from the first quarter of 2015, in which the 40th percentile of weekly earning is $951, which translates into $49,452 for a full-year worker. Assuming two percent growth between the first quarter of 2015 and the first quarter of 2016, the Department projects that the 40th percentile weekly wage in the final rule would likely be $970, or $50,440 for a full-year worker.

I am puzzled by why the DOL, having more current 2015 data on hand, would use clearly obsolete data from two years ago. How is that helpful, really?

But another thing that the DOL fails to mention is in the context of the highly-compensated employee exemption. Under the current rules, an employee who makes $100,000 a year and performs at least one exempt duty also is exempt. The proposed rule states that it is setting the highly compensated salary level equal to the 90th percentile of earnings for full-time salaried workers, which it says is $122,148 annually. Again, according to the Executive Summary footnote, this is based on 2013 data. Unlike the 40th percentile number, however, the DOL wholly fails to address how this 90th percentile number will be updated for 2016. If it applies the same updating methodology as its does for the 40th percentile number, the actual required compensation to meet the highly-compensated exemption in the final rule will be quite a bit higher – likely in excess of $128,000!

We’ll certainly watch to see what happens. Maybe the DOL will pull it together and issue a final rule that makes sense. But I am not optimistic.

 

GINA and “The Mystery of the Devious Defecator”

Posted in Employment Discrimination, Litigation

I love cases with weird facts! And this one has the added benefit of providing an example of a violation of the Genetic Information Nondiscrimination Act. When I do training on non-discrimination and harassment, I have all sorts of fun and interesting examples of other forms of discrimination – sex, race, age, etc. But not genetic information – at least not until now…

In Lowe v. Atlas Logistics Group Retail Servs. (Atlanta), LLC, the court described the situation as “the mystery of the devious defecator.” Apparently, an unknown employee was habitually defecating in one of the company’s warehouses. (The court noted that “Apparently, this problem is not as rare as one might imagine,” citing to a 2014 Huffington Post article, “EPA Employees Asked to Stop Pooping in the Hallway.”) To try to solve the mystery, the company identified which employees were working in the location and at the time of the “defecation episodes.” The company then retained a lab to conduct cheek swab testing for DNA analysis, in order to identify the culprit.

Two of the tested employees (neither of whom was the culprit) subsequently brought suit against the company for violation of GINA, which makes it “an unlawful employment practice for an employer to request, require, or purchase genetic information with respect to an employee.” The company tried to argue that the information sought was not “genetic information,” which it interpreted to mean “information related to an individual’s propensity for disease.” The court, however, pooh-poohed this crappy argument. The court noted that the plain meaning of the statutory language was not so limited. In addition, the legislative history of the statute established that the company’s limited reading of genetic information had been advocated by a small group of legislators but was rejected by Congress. Also, the EEOC’s GINA regulations contemplate that genetic testing can occur for reasons other than the identification of disease.

Bottom line – the court found that the testing violated GINA, and the company’s defense ended up in the toilet.

P.S. And I don’t know if the mystery of the devious defecator was ever solved…