Legal Updates

IS YOUR COMPANY READY FOR THE JULY 1, 2024 INCREASE IN THE SALARY THRESHOLD FOR NON-EXEMPT EMPLOYEES UNDER THE FLSA?

The U.S. Department of Labor (DOL) published a Final Rule on April 26, 2024, increasing the salary threshold for an employee to be classified as exempt from the Fair Labor Standards Act (FLSA) (i.e., not eligible for overtime). The first increase becomes effective July 1, 2024, followed by a second increase effective January 1, 2025. The Final Rule also includes a mechanism by which salary thresholds will continue to increase beginning July 1, 2027, and every three years thereafter. The increase affects the standard “white collar” exemptions (executive, administrative, professional, and some computer employees) as well as the Highly Compensated Employee exemption.

The “default” classification of an employe under the FLSA is non-exempt (i.e., eligible for overtime), and employers bear the burden of showing that an exemption applies. To determine whether a particular employee should be classified as exempt or non-exempt under the executive, administrative, professional, and some computer employee exemptions, two tests must both be satisfied: (1) the salary threshold test, and (2) the job duties test. The Highly Compensated Employee exemption sets an even higher salary threshold, plus the customary and regular performance of at least one of the job duties that qualifies for an executive, administrative, professional, or a certain computer employee exemption.

The DOL’s Final Rule does not impact the job duties test, and those requirements remain the same.  The Final Rule, however, markedly increases the salary thresholds beginning July 1, 2024 and they will continue to rise, as summarized in the chart below:

To prepare for the July 1, 2024 and January 1, 2025 increases, HGRS recommends that employers identify all employees who are compensated between $35,568 and $58,656 and review how much overtime is worked by each. By comparing future anticipated overtime costs against the salary increase necessary to remain classified as exempt, employers can estimate whether raising a particular employee’s salary to satisfy the new threshold or reclassifying the employee as non-exempt makes more financial sense.

In states with pay equity laws, increasing salaries for FLSA purposes may necessitate similar increases to comply with the applicable pay equity requirements.  When setting or restructuring your company’s current compensation structure, also keep in mind how the future increases will come into play.  California, Washington, and New York already have exempt salary thresholds above the new July 1, 2024 threshold (but not above the January 1, 2025 threshold), which provides a little breathing room in those states.

Other aspects of the FLSA remain unchanged.  Exempt employees under these exemptions must be paid on a “salary basis.” Employers may also continue to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the salary level in certain circumstances.  Further, employers’ recordkeeping requirements for all non-exempt employees stay the same.

The FLSA is a technical statue that can be tricky for employers to comply with.  Please contact HGRS to consult with an experienced attorney to ensure your company remains in compliance.

Elizabeth M. Newton, May 2024

Muldrow v. City of St. Louis: New U.S. Supreme Court Ruling Lowers Bar for Title VII Discrimination Claims

In a significant decision that reshapes the landscape of employment discrimination law, the U.S. Supreme Court has recently handed down an opinion in Muldrow v. City of St. Louis, which fundamentally alters the burden for plaintiffs alleging discrimination under Title VII of the Civil Rights Act of 1964. Previously, courts in several circuits, including the 11th Circuit, required plaintiffs to demonstrate a “materially adverse employment action” in Title VII cases. The Supreme Court’s ruling in Muldrow overturns this standard, requiring plaintiffs to show they suffered only “some injury.”

The Case.

Jatonya Muldrow, a sergeant in the St. Louis Police Department, claimed she was the victim of sex discrimination following her involuntary transfer from a prestigious position in the Intelligence Division to a patrol role. Despite maintaining her rank and pay, Muldrow experienced a notable change in her job responsibilities, perks, and work schedule. After lower courts ruled against her, stating that the transfer did not meet the threshold of a materially significant disadvantage, the Supreme Court agreed to hear her case.

In a unanimous decision, the Court held that, to prove discrimination under Title VII, it is not necessary for a transfer to inflict significant or material harm.  Writing for the Court, Justice Elena Kagan emphasized that the statutory language of Title VII requires only a showing of some disadvantageous change to an employment term or condition based on discrimination. The Court thus rejected the higher thresholds used by some circuits, which demanded that a plaintiff demonstrate significant, serious, or substantial harm.

Implications for Employers and Employees.

This decision marks a pivotal shift in how employment discrimination cases will be evaluated, particularly concerning job transfers that do not result in an outright demotion or pay cut. It opens the door for more claims to proceed in federal court by lowering the burden on employees. Employers must now exercise greater caution in how they manage employment actions that might be perceived as discriminatory, even if these actions do not alter an employee’s title, salary, or benefits.

The ruling in Muldrow v. City of St. Louis signals a more inclusive interpretation of what constitutes harm under Title VII, focusing on the broader spectrum of discriminatory impacts rather than just the most overt or substantial changes.

For those navigating the complexities of employment law, understanding the nuances of this ruling is essential. Should you have questions or require further information on how this decision might impact your situation, do not hesitate to consult with the attorneys at Hall, Gilligan, Roberts & Shanlever LLP (HGRS LLP), who are equipped to provide comprehensive legal guidance and support.

Wayne M. Cartwright, May 2024

Reducing Legal Risk to Your Company

As an owner or executive of your company, there are five improvements you should consider making within your organization to help prevent legal issues. Handling these things proactively will make your business run smoother and can mitigate the burden on your business if an employee files a lawsuit against your company or you are otherwise faced with a difficult employee issue.

(1) Review your employees’ pay and positions.

There are a lot of ways a company can run afoul of the Fair Labor Standards Act when a business grows and changes over time. All organizations should carefully evaluate how their employees are paid to ensure the organization is in compliance with applicable laws. Even if you follow what others in your industry do, it may not be enough to prevent a claim from being brought against your company.

Do you have employees doing the same job but who have different titles? Are they also paid differently? Do you have contractors working alongside employees for a long period of time? Do you have managers that don’t actually manage people and also don’t manage an entire project or line of business? If any of these apply to your organization, it is a good time for an employment audit to ensure your business is complying with applicable laws.

(2) Train your managers.

Continuously training management often gets overlooked. There is rarely a good time to have your management employees turn their attention from the goals of the business to focus on legal risk and compliance. But there are numerous benefits of periodic training, including educating management on how to properly handle complaints of harassment and discrimination.

Additionally, ensuring employees know how to report any issues, concerns, or suspected discrimination or harassment is critically important. Employers must have a strong reporting procedure that provides for multiple avenues of reporting and guarantees employees that they will not face retaliation for making good faith complaints of discrimination or harassment. Management training can also be used to coach managers and strengthen the skills they need to navigate other difficult management issues they may face. If you have not done management training recently, getting a training session scheduled would provide valuable protection to your company, as it is essential that your managers know their legal obligations as a part of your leadership team.

(3) Establish a performance review process.

Many of the claims we see against companies are pursued when an employee feels mistreated or wronged. This is often due to receiving little to no feedback on their performance from management during the course of their employment. This lack of communication can lead to misunderstandings in the workplace, which can then result in litigation.

It is natural for managers to shy away from difficult conversations and confrontations when an employee is not meeting expectations, but this leaves the company exposed to risk when the time comes to make a decision on termination. As a business leader, you should prioritize giving managers the tools they need to address performance deficiencies while communicating respectfully and fairly with employees.  Empowering your managers to raise and document performance concerns early in the process will go a long way in protecting your company and minimizing the chances you are sued. And, with regular training and good documentation practices, you’ll be ready to strongly defend yourself in the event of litigation.

(4) Protect your confidential information and trade secrets.

What is your business’s most valuable information? What kind of information gives your business a competitive advantage? Is that information properly protected? Who has access to your confidential information?

Confidentiality agreements are an important tool for protecting your business’s most important information. These agreements are used to set forth employees’ obligations to not to share your sensitive information. Such agreements also make clear that the company, not the employee, owns the information, even if the employee worked on or compiled the information during the course of their employment. Depending on your business, confidentiality agreements can also be used alongside noncompete agreements, nonsolicitation agreements, and/or nonrecruitment agreements, all of which should be tailored to your specific business needs and must be carefully drafted to comply with constantly-changing state laws.

(5) Set an example.

Finally, it is worth considering other steps you can take to cultivate a positive workplace environment that lets employees know they are valued. If you spend the time necessary to actively develop your culture and ensure that your managers are acting to best represent the organization, it is less likely you will be the target of a disgruntled employee’s lawsuit. No employer can completely prevent all personnel issues, but when complaints are taken seriously with proper investigations and managers exemplify the company’s professional and respectful culture, it greatly mitigates any problems that may arise.

Conclusion

Not only do these steps help put your organization in a position to efficiently and effectively defend against claims that may be asserted against it, they will also help you avoid having to deal with expensive litigation. The time you spend focusing on these key improvements will pay off. If you would like to learn more about any of the topics discussed in this article, please reach out to a member of our firm.

Kristina K. Griffin, May 2024

Legal Update: Pregnant Workers Fairness Act (PWFA)

This week, the EEOC issued its final rule on the Pregnant Workers Fairness Act. The PWFA has been in effect since June 27, 2023, so employers who have not yet taken steps to ensure compliance should do so immediately.

The Pregnant Workers Fairness Act (PWFA) requires employers to provide reasonable accommodations to workers with limitations related to: pregnancy, childbirth, or any related medical conditions. Accommodations must be provided as needed to qualified employees unless providing the accommodation would create an undue hardship on the business.

The PWFA applies to all employers with 15 or more employees and covers both employees and applicants.

The accommodations requirements under the PWFA are fundamentally the same as the requirements under the Americans with Disabilities Act (ADA), which requires employers to provide reasonable accommodations to qualified employees with disabilities. Notably, however, the PWFA does not require that an employee have any kind of disability. Therefore, an individual may be entitled to accommodations under the PWFA for things beyond health conditions relating to pregnancy.

The EEOC has specifically provided the following examples of possible reasonable accommodations under the PWFA:

• Additional, longer, or more flexible breaks to drink water, eat, rest, or use the restroom;
• Revised uniform or dress code requirements, or providing safety equipment that fits;
• Leave to attend healthcare appointments;
• Leave to recover from childbirth, a miscarriage, or other medical conditions related to pregnancy or childbirth.

Determining whether a requested accommodation is reasonable requires careful consideration of an employee’s role and the employer’s business.  If you need assistance analyzing how the law applies to an employee’s particular circumstances, please reach out to one of the attorneys at our firm.

Key Takeaways:

Employers who have not yet reviewed their policies and practices to ensure compliance with the PWFA should promptly do so. Employers should also immediately inform all managers of the new law’s requirements, and consider training management employees on how to properly respond to requests for accommodation, both for employees who are pregnant or have pregnancy related health concerns, and for employees who need an accommodation for a disability. Our firm is here to answer any questions you may have about the PWFA and how it applies to your business.

Trump Appoints Former Management Attorneys at EEOC and NLRB

On January 25, 2017, it was announced that President Trump has appointed Victoria Lipnic as Acting Chair of the Equal Employment Opportunity Commission (EEOC).  Ms. Lipnic first became a commissioner at the EEOC in March 2010, when she received a recess appointment from President Obama.  In 2015, she was nominated and confirmed for a second term, which is set to expire in July 2020.  Prior to joining the EEOC, Ms. Lipnic was an Assistant Secretary of Labor for the U.S. Department of Labor from 2002 until 2009, at which time she joined the labor and employment department at a large national firm that primarily represents employers.

President Trump also appointed another former management attorney, Philip A. Miscimarra, as Acting Chair of the National Labor Relations Board (NLRB).  Prior to becoming a NLRB Board Member in 2013, Mr. Miscimarra worked at several private firms that focus their labor and employment practices on the representation of management.

These two appointments are expected to bring more balance to the approach of their respective agencies with regard to efforts to enforce various labor and employment laws.

Are You Prepared for the Revised EEO-1 Reporting Requirements?

Have you thought about what changes you may need to make to your payroll system and/or human resources information system (HRIS) in order to comply with the recently revised EEO-1 reporting requirements?  If you have 100 or more employees (or if your company is affiliated with other entities in which there are a total of 100 or more employees), you may be subject to these new reporting obligations.

Private employers who are subject to Title VII of the Civil Rights Act of 1964 and have 100 or more employees have long been required to file annual EEO-1 Reports, reporting on the race, ethnicity and gender of the employees in their workforce, grouped together by ten (10) job categories established by the EEOC (the “EEO job categories”).

Starting with the 2017 EEO-1 Report, those employers now will need to include information regarding annual employee pay and work hours, aggregated by race, ethnicity, gender, and EEO job category.  Fortunately, the filing deadline for the EEO-1 Report has been changed from September 30^th of each year to March 31^st of the succeeding year, so the 2017 EEO-1 Report will not be due until March 31, 2018.  However, if these revised requirements apply to your company, you should start now to make sure your payroll and/or HRIS systems are set up to capture all the information that must be included in the revised EEO-1 Report.

The previous EEO-1 Report required employers to select a pay period between July 1 and September 30 of each year and report on the number of males and females of each race/ethnicity the employer had in each of the 10 EEO job categories.  The new EEO-1 Report will require employers to break this information down further into twelve (12) pay bands, starting with the lowest pay band of $19,239 and under, and going to the highest band of $208,800 and over.  The number of employees will be based upon a pay period between October 1 and December 31, but the salary information must include pay information for the full calendar year, using information reported in Box 1 of the employee’s W-2.

Employers also will be required to provide aggregated annual work hours for employees broken out by race, ethnicity, gender, EEO job category, and pay band, using total hours worked during the calendar year.  “Hours worked” is defined consistent with the Fair Labor Standards Act (FLSA).  For employees who are non-exempt under the FLSA, employers are already required to maintain records regarding each employee’s work hours under the FLSA.  For exempt employees, an employer may report actual hours worked if the employer accurately maintains such information; alternatively, the employer may report a “proxy” of 40 hours per week for full-time exempt employees and 20 hours per week for part-time exempt employees multiplied by the number of weeks the individuals were employed during the year.

New DOL Overtime Rule Blocked by Federal Court in Texas

A federal court in Texas has put on hold (for now) nationwide implementation of the new rule by the U.S. Department of Labor (DOL) raising the salary requirement for certain types of employees to be exempt from federal overtime requirements.

The New DOL Overtime Rule

Earlier this year, the DOL issued a new rule that changed the requirements for overtime exemptions under the federal Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees by raising the required salary level from about $23,660 per year to $47,476 per year.  Under the new rule, the salary threshold would automatically reset (presumably increase) every three years.  There has been a large outcry among employers and business groups since the new rule was announced.  It was scheduled to take effect on December 1, 2016.

The injunction means that the DOL’s new rule will not go into effect as of December 1 unless the court takes additional action or an appeals court issues a decision before then, there likely will be an appeal, and it is unclear whether the new rule ultimately will be invalidated in whole or in part.

The Court’s Ruling

On November 22, 2016, US. District Judge Amos Mazzant issued an order enjoining nationwide implementation of the DOL’s new rule “pending further order of this Court.”  This means that thousands of employers will not be required to meet the heightened salary threshold for FLSA overtime

Exemptions for executive, administrative, and professional employees.

The Court’s Memorandum Opinion and Order concludes that the DOL did not have authority to set a heightened salary threshold and effectively supplant the “duties test” for these exemptions.  The Court reasoned that Congress intended these exemptions to depend on the employees’ duties, not on their salary levels.

The Court also noted, but did not address, an argument that the new rule’s mechanism for automatically resetting the required salary level every three years is invalid because it would not include a separate public notice and comment process required for new administrative regulations.

What This Ruling Means For Employers

The Court’s injunction means that employers are not required to comply with the DOL’s new rule pending further ruling from the Court, which means that salary increases are not necessary at this time.  Thus, employers may decide to postpone implementing or announcing any salary increases that are being planned solely to comply with the new rule.  (If employers already have increased salaries in contemplation of the new rule, they should consider employee relations issues changes.)

Employers also may decide to postpone reclassifying salaried employees who are currently deemed exempt to non-exempt, to the extent such changes are being planned solely because of the DOL’s new rule.  However, to the extent employers have salaried employees who do not meet the duties test for an exemption (regardless of the new salary level requirement), employers should not necessarily delay reclassifying them as non-exempt (hourly or salaried) to comply with existing law, given that the new rule only relates to the salary level and not the duties requirement.

We will be glad to discuss your Company’s specific situation and how the recent ruling may affect its plans.  Please do not hesitate to contact us.

Only 30 Days Until OSHA’s New Recordkeeping Rules Go Into Effect

Employers will face a number of new obligations under OSHA’s revised recordkeeping rules as of August 10, 2016.  These include (1) a new anti-retaliation provision; (2) new employee notification requirements; and (3) a new requirement to implement and maintain a “reasonable” injury and illness reporting procedure.  For employers required to record injuries and illnesses under OSHA’s Recordkeeping Standard, the new rules may require some immediate action.

New Anti-Retaliation Provision.

The new regulation prohibits retaliation against an employee for reporting a work-related injury or illness.  Although OSHA already prohibits retaliation against employees for participating in agency proceedings, currently the employee must initiate a complaint within 30 days of the alleged retaliatory action.  Under the new rules, OSHA can issue a Citation, with penalties and abatement requirements, on its own initiative.  Thus, rather than simply defending against an employee complaint, the employer will be contesting a Citation issued by a government agency.

“Reasonable Procedures” to Report Work-Related Injuries and Illnesses.

The new rules also require employers to implement “reasonable procedures” for the reporting of work-related injuries and illnesses.  There is no specific definition of “reasonable,” but the procedures must not deter or discourage employees from reporting injuries or illnesses.  For example, it must not impose unreasonable deadlines for reporting.

New Notification Requirements.

The new rules also require employers to provide specific notice to their employees of each of the following: (1) the procedure for reporting an injury or illness; (2) the employee’s right to report an injury or illness; and (3) the prohibition against retaliation for such reports.

Electronic Submission of Injury and Illness Records.

Starting on January 1, 2017, certain employers that are not otherwise exempt from the recordkeeping rules will be required to submit their annual OSHA injury and illness records (e.g., OSHA 300, 300A, 301) electronically.  The electronic submission requirement will apply to: (1) large employers (establishments with 250 or more employees); (2) “high risk” employers (establishments with 20-249 employees in certain “high-risk” industries listed in Appendix A to the rule (e.g., manufacturing, hospitals, nursing care facilities, construction, etc.)); and (3) any employer that receives “notification” from OSHA.

Previously, OSHA obtained injury and illness records only if it asked for them during inspections or as part of its annual sampling of certain employers.  Under the new program, we can expect to see more inspections focused on those companies that report high incident rates.

OSHA Will Provide Public Access to Injury and Illness Records.

Perhaps the most significant change to the regulation is that OSHA plans to make Injury and Illness Reports publicly available.  Employees’ personal information will be redacted to protect their privacy, but all other data will be viewable—and searchable—on OSHA’s website.  This new requirement is consistent with OSHA’s expressly stated policy of “regulation by shaming” – OSHA believes that the public disclosure of unfavorable injury and illness data to “the public, including investors and job seekers” will incentivize employers to improve worker safety.

What to Do Before August 10, 2016? 

First, make sure your company procedure for reporting workplace injuries and illnesses is reasonable.  If you have no policy, it is time to create one.

Second, complete the employee notification requirement (i.e., inform employees about your reporting procedure and their right to report without fear of retaliation).

Third, train your managers on the new anti-retaliation protections, and make sure these protections are explained in employee handbooks and similar materials.

Finally, get started on a plan for the electronic reporting of injury and illness records in 2017 – which is only six months away.

A copy of the Final Rule implementing these changes is available here.

If you have questions about any of the above, please contact us.

DOL Issues New Final Rule on FLSA Exemptions Vastly Increasing the Number of Employees Eligible for Overtime Pay

Yesterday, the U.S. Department of Labor Wage and Hour Division announced its Final Rule updating the salary requirements for exemptions from overtime pay requirements under the Fair Labor Standards Act (FLSA).

The Final Rule more than doubles the salary threshold needed to satisfy the most common exemptions, raising it from $23,660 to $47,476 annually ($455 to $913 weekly), and increases the total annual compensation threshold for the “highly-compensated employee” exemption from $100,000 to $134,004.  (Note that employees still must perform job duties that meet the substantive requirements of these exemptions.)

There will be additional, automatic increases in the compensation levels every three years, with the next increase occurring on January 1, 2020.  The Final Rule also amends the salary basis test to allow employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.

The Final Rule goes into effect December 1, 2016.

The new requirements do not have to result in drastically higher expenses or exposure.  What can employers do to minimize the impact?  NOW is the time to get your house in order.  Start by considering the many legal and business implications of the new Final Rule:

1. Identify both sets of employees affected by this change.  But also understand that the new Final Rule does not apply to all exemptions.
2. How will you evaluate you evaluate the financial impact of the new Final Rule on your business?  What are the unique challenges to this analysis?
3. There are at least six options available to you for each impacted employee to minimize the financial impact of the new Final Rule.  Are you considering all of the options?  How do you know which option is best for you?
4. Also consider the impact on your company’s administrative functions.  Are you thinking about your timekeeping and attendance systems?  The way you train your managers and employees?  The policies in your handbook?  Your benefits packages?
5. The new regulations will bring new scrutiny to your employee classifications across the board, not just to the specific employees impacted by the new regulations.  Are you ready for that?  If there is a silver lining to the new Final Rule, it’s the hidden opportunity to review your entire employee classification system and make appropriate changes without drawing undue attention.

Again, the new salary requirements do not have to mean drastically higher expenses for your business.  And, perhaps this presents an opportunity for an overdue examination of your exempt classifications.  Please do not hesitate to contact us for guidance to remain in compliance and keep costs in check.

Are You Ready for the New Overtime Exemption Rules?

The new salary requirements for overtime exemptions are expected to take effect in 2016.  As reported in a previous legal update, the proposed final rule would more than double the salary level required for exemptions applicable to executive, administrative, or professional employees, from $455 per week ($23,660 per year) to $970 per week ($50,440 per year).

Employers are urged to review their payrolls with qualified employment counsel now, and to consider strategies to remain in compliance and keep costs in check.  The new salary requirements do not have to result in drastically higher expenses or exposure, but could if appropriate steps are not taken.  Please do not hesitate to contact one of our attorneys for guidance.

New Federal Trade Secrets Law Features “Civil Seizure” Remedy

The “Defend Trade Secrets Act” has passed through Congress and is awaiting signature by President Obama, which is expected any day now.  Up to now, trade secrets have been the exclusive province of state law.  Although the new law will not displace state laws, it will provide an overlapping set of procedures to protect trade secrets and allow for enforcement of misappropriation claims in federal court.

One key feature of the statute is a “civil seizure” remedy, which under some circumstances would allow a trade secret’s owner to obtain a court order to seize a defendant’s property (such as computers or files) without providing advance notice to the defendant.  This remedy would be only temporary and would be appropriate only to the extent the owner can show it is necessary to prevent “propagation or dissemination” of the trade secret leading to irreparable harm.  Such an order would require a hearing within seven days after the order (unless otherwise agreed between the parties).  The defendant can challenge an improper seizure and potentially recover attorneys’ fees, but the civil seizure remedy still constitutes a powerful tool for protecting trade secrets.

The new law cannot be used simply to prevent a person from entering into an employment relationship, but it gives courts substantial discretion to enjoin acts that could result in use or disclosure of trade secrets.  Further, the law provides for immunity and whistleblower protection for an employee who reports a suspected violation of the law to a government agency or officer or an attorney, and employers are required to provide notice of such immunity in contracts governing the use of trade secrets or confidential information.

We would be glad to discuss how this new federal law may affect your business and how you can best comply and make use of its protections.

Untimely Discrimination Claims Could Be Revived

A recent decision by the Eleventh Circuit Court of Appeals (covering Georgia, Florida, and Alabama) may have opened the door for countless otherwise-expired claims of age discrimination with no evidence of intentional basis.

In Villareal v. R.J. Reynolds Tobacco Co., the Court ruled that an unsuccessful job applicant could pursue a claim of age discrimination under the federal Age Discrimination in Employment Act based on a “disparate impact” theory.  Under this approach, the claimant does not have to prove (or even allege) intentional discrimination, but instead that a neutral policy or practice resulted in adverse actions (e.g., non-hire) that are statistically disproportionate against older individuals.

Perhaps the most disturbing thing about the decision was the Court’s ruling that the running of the 180-day statute of limitations did not necessarily preclude the filing of a claim.  The Court held the statute could be “equitably tolled” as long as the claimant did not know and could not reasonably have known about any discriminatory practices or statistical disparities.

The Court’s rulings on both the “disparate impact” and the “equitable tolling” claims could have substantial repercussions for employers.  This case highlights the importance of ensuring that employment-related policies do not have a discriminatory impact.  The best way to guard against such a policy is to have a qualified employment attorney conduct a privileged employment practices audit.  For more, please do not hesitate to call any of our attorneys.

DOL Continues Expansion of “Joint Employer” Coverage

The US Labor Department’s Wage and Hour Division (WHD) recently issued an Administrative Interpretation that greatly expands the possibility that two or more businesses are “joint employers” of one employee.  Joint employment status means two or more employers may be held jointly and severally responsible for fulfilling minimum wage, overtime, and other obligations under the Fair Labor Standards Act.

The WHD’s guidance discusses two types of relationships:  (i) “horizontal,” in which the employee is potentially employed by two related companies, and (ii) “vertical,” in which the employee is directly employed by a staffing company or contractor but is dependent upon (and thus employed by) a second business.  If joint employment exists under either analysis, both employers could be liable for overtime and other wage and hour violations.

When viewed alongside last summer’s DOL guidance on classification of independent contractor/employees, the imminent increase on salary level required for white collar exemptions, and the National Labor Relations Board’s recent decisions on joint employment, it is clear that today’s labor and business models face a rapidly changing legal landscape.

While these Administrative Interpretations are not binding law, they are persuasive to courts and are used by DOL agents in compliance investigations.  The WHD has made clear that it intends to influence how companies do business.  This opinion specifically highlights a few industries, but all businesses should be mindful of these issues when considering alternative staffing models and labor related contracts.  Having a qualified employment law attorney review the arrangement can go a long way to addressing joint employer risks.

For more information, contact a Hall, Arbery, Gilligan, Roberts & Shanlever attorney in Atlanta or Savannah.

NLRB Widens the Goalposts for Labor Union Organizers

A recent decision by the National Labor Relations Board could have a major impact on tens of thousands of employees who never thought that they would have to worry about labor unions.  In Browning Ferris Industries of California, Inc. et al., NLRB Case No. 32-RC-109684 (August 27, 2015), a majority of the five member Board held that a company was required to recognize and bargain with a union that was elected not by its own employees but instead by the employees of a services contractor.  In so deciding (over vehement dissent by two members), the Board overturned longstanding precedent and applied a new standard for determining “joint employer” status.

For decades, joint employer status and obligations applied only to entities that exercised “direct and immediate” control over workers, which generally excluded employees of outside contractors or franchisees. Under the Board’s new interpretation, an entity could be deemed a joint employer of a contractor’s employees — and be required to recognize and bargain with a union — if it has only indirect control over working conditions or has the right to control such conditions, even if it does not actually exercise that right.

By expanding joint employer status to include entities who merely have the right to control some aspects of the workplace indirectly, it is conceivable that collective bargaining obligations could apply to entities that have no actual employees at a particular location, such as general contractors, franchisors, or even property owners who engage outside contractors for cleaning or landscaping services. The Board’s new interpretation potentially could even restrict such an entity’s rights to terminate a service contract if such a termination could be deemed to discriminate against workers for whom the entity is deemed to be a joint employer.

To discuss how to prepare for the possibility that your business could be targeted for union organizing activity, please contact one of our attorneys.

What is Your Employment Risk Profile?

Are you prepared for a potential lawsuit or government investigation involving your employment practices?  Most employers know they have significant risk in this area, but do not know how to limit their legal exposure.  To properly assess and improve its risk profile, and potentially avoid a legal dispute altogether, an employer should work with legal counsel to focus on the following key areas:

Policies:  Assess and revise where necessary the Employee Handbook and other employment-related policies to ensure optimal protection and to avoid facial violations and other evidence of non-compliance.

Placement:  Examine practices for recruiting, selecting, onboarding, and promoting employees to avoid potential claims of discrimination and ensure compliance with government regulations (EEOC, OFCCP, NLRB, ICE, and other agencies).

Pay:  Ensure that compensation practices are sound and compliant with FLSA/DOL requirements (including classification of workers as exempt employees or independent contractors) and anti-discrimination laws.

Performance:  Focus on effective methods for fair and consistent evaluation of performance and correction of disruptive workplace behavior, including best practices for investigation and documentation.

Accommodation:  Educate and prepare managers to handle requests for job modifications or leaves of absence due to disabilities or serious health conditions under the ADA or FMLA.

Addressing Concerns:  Establish and maintain channels for responding to internal complaints or reports of perceived harassment or other misconduct, including best practices for investigation, documentation, and avoidance of potential claims of retaliation under Title VII, ADA, ADEA, and other applicable laws.

Asset Protection:  Consider the use of restrictive covenants, information security, and other means of protecting trade secrets and confidential information, important relationships, and other investments, particularly in light of new Georgia law.

These are just a few of the steps our attorneys can take to help you assess and improve your employment risk profile.  If you might have needs in any of these areas, please do not hesitate to call for a “P4A3 Assessment.

11th Circuit Rejects “Not Our Fault” Defense

The Eleventh Circuit Court of Appeals recently held that an employer is not absolved from liability for unreported overtime under the Fair Labor Standards Act (FLSA) if it has actual or constructive knowledge that time records are inaccurate.  The ruling in Bailey v. TitleMax of Georgia (No. 14-11747) reversed a lower court’s decision accepting the defense that an employee could not recover overtime pay because he underreported his own work hours.

In the TitleMax case, there was evidence that the employee’s supervisor encouraged the underreporting of hours to avoid paying overtime and occasionally edited time records after they had been entered.  The Court of Appeals found that this showed the employer had either actual or constructive knowledge of the underreporting of work hours.  According to the court, “[i]f an employer knew or had reason to know that its employee underreported his hours, it cannot escape FLSA liability by asserting equitable defenses based on that underreporting.”

The TitleMax case highlights the importance of maintaining accurate time records, ensuring that supervisors and managers are trained on FLSA requirements, and requiring non-exempt employees to accurately report all working time.  This is one of the many areas in which our firm can provide guidance to reduce employers’ legal risk.

Beyond Liability: Get Employees In S.H.A.P.E.

What are you providing employees in exchange for their time and service?  The answer many managers and supervisors probably would give is “a regular paycheck; insurance.”  Unfortunately, most employees probably would give the same answer.  Managers who want more from employees should consider what more they are doing (or should be doing) for employees, every day.

Managers and supervisors should view their roles as providing value to employees above and beyond monetary compensation.  In many ways, a supervisor is a coach whose function is to get employees in optimal SHAPE to benefit the company and themselves.  A good supervisor builds the following in each employee:

Skills:  job skills are a true source of economic value and personal pride
Habits:  good working habits allow employees to succeed in their current roles and beyond
Attributes:  a healthy culture can help each employee develop valuable character traits
Purpose:  a strong sense of mission is the foundation of accomplishment
Energy:  constructive motivation provides intangible benefits on and off the job

With the right mindset, any supervisor can significantly improve employee engagement without necessarily increasing costs for the company.  There are many ways to accomplish this, but it should start with a mindset of mutual exchange:  “Ask not (only) what your employees can do for you, ask what you can do for your employees.

EEOC Issues Guidance on Pregnant Employees

The U.S. Equal Employment Opportunity Commission (“EEOC”) recently issued guidance regarding protections for pregnant employees under federal law.  The guidance, published on the EEOC’s website and linked below, states that some temporary impairments arising out of pregnancy can be considered “disabilities” under the Americans With Disabilities Act (“ADA”) which employers must reasonably accommodate.

The guidance also states that an employer’s failure to reasonably accommodate a pregnancy-related impairment could be a violation of the Pregnancy Discrimination Act (“PDA”), which is incorporated within Title VII of the Civil Rights Act (“Title VII”), to the extent the employer accommodates employees with similar limitations that are not pregnancy-related.

The EEOC’s guidance notes that pregnancy itself is not a disability covered by the ADA, but that impairments arising out of pregnancy are not necessarily excluded from coverage.  The threshold inquiry is whether the impairment substantially limits a major life activity (such as standing, sitting, walking, lifting, etc.) or bodily functions or organs.  However, in keeping with the mandate of the ADA Amendments Act of 2008, the EEOC’s guidance urges employers to focus on reasonable accommodations rather than on whether the impairment or condition might not be covered.  Examples of reasonable accommodations listed by the guidance range from allowing the employee to take more frequent breaks, to keep a water bottle handy, or to use a stool, to temporarily reassigning the employee or altering the way the job is performed.

Of course, employers must be wary of imposing job restrictions on pregnant employees—in the absence of a request—if such restrictions could limit job opportunities.  Title VII and the PDA have been interpreted to prohibit an employer from excluding an employee from a job or assignment based on pregnancy, even if the action is intended to protect the employee or her unborn child.

The timing of the EEOC’s guidance is somewhat controversial, in light of the fact that the U.S. Supreme Court recently agreed to hear a case that could decide the extent to which an employer must accommodate a pregnant employee.  Nevertheless, the guidance signals clearly that the EEOC intends to make pregnancy-related job decisions a priority in its enforcement of Title VII, the PDA, and the ADA.  As a result, employers should exercise caution and consult qualified employment law counsel on decisions involving pregnant employees.

The full Guidance is available here.

Affordable Care Act: Employers Required to Provide Notice of Health Insurance Exchanges

Although the Obama Administration announced last week that it will delay implementation of some employer mandate and penalty provisions of the Patient Protection and Affordable Care Act (ACA) until 2015, other requirements remain in place and on schedule.

For example, by October 1, 2013, all employers who are subject to the Fair Labor Standards Act (FLSA) (which applies to virtually all businesses with $500,000 or more in gross annual revenues) must provide a written, individualized notice to all employees advising them of the existence of and benefits available through government-sponsored Health Insurance Marketplaces (or “Exchanges”).  Open enrollment for the Exchanges is still scheduled to begin on October 1, 2013.

The “Exchange Notice” must be sent to all employees, full-time or part-time, regardless of whether the employer is subject to the health insurance mandate (now delayed) and must contain certain information regarding the Exchanges, including a description of services provided and contact information.  The notice also must inform employees that they may be eligible for a premium tax credit if they purchase a qualified health insurance plan through an Exchange.  In addition, the notice must state that, if the employee purchases a qualified plan through an Exchange, the employee may lose any employer contribution to any employer-offered health benefits plan and all or a portion of such contribution may be excludable from federal income tax.  Model language for the Exchange Notice is available on the Department of Labor website at www.dol.gov/ebsa/healthreform.

Employers must provide notice to current employees not later than October 1, 2013, and to new employees at the time of hiring beginning on that date.  Beginning in 2014, the notice will be considered timely if provided within 14 days after the date of hire.

Employers also will be subject to other requirements regarding benefits and reporting, including health plan coverage and design mandates, provisions for pre-existing conditions and waiting periods, distribution of benefits and coverage summaries, and W-2 reporting of insurance benefits provided.  So far, these requirements remain on schedule for 2014.

For more information, contact Chris Arbery.

Recent U.S. Supreme Court Decisions Employers Should Know About

The most recent term of the U.S. Supreme Court yielded a number of key decisions affecting employment law.  Following is a brief summary of a few of these decisions with the key legal points they establish or affirm.

University of Texas S.W. Med. Ctr. v. Nassar:  An employee claiming retaliation under Title VII of the Civil Rights Act must show that the adverse employment action would not have occurred  “but for” the protected activity engaged in by the employee.  This holding is based on a strict reading of the statutory language providing a more rigorous standard of proof for retaliation claims than for discrimination claims, which require a showing that the protected factor was only a “motivating factor” in the employer’s decision.

Vance v. Ball State University:  In order for an employer to be vicariously liable for the acts of a supervisor (such as sexual harassment), the supervisor must have authority to take “tangible employment actions” such as hiring, firing, promoting, or demoting employees.  This decision rejected the view of the Equal Employment Opportunity Commission (EEOC), which promoted a much broader definition of “supervisor” for purposes of establishing employer liability.

Genesis Healthcare Corp. v. Symczyk:  Dismissal of a collective action under the Fair Labor Standards Act was upheld, affirming the appellate court’s ruling that the claims were rendered moot by the employer’s offer of judgment before the filing of a motion for conditional certification.  However, in order for an offer of judgment to render a case moot, it must include the entire amount of the plaintiff’s unpaid wages, attorneys’ fees, costs, and expenses (potentially a substantial amount), and even then dismissal is not guaranteed.

American Express Co. v. Italian Colors:  An agreement with an arbitration and class action waiver clause may be enforceable under the Federal Arbitration Act (FAA) even if the cost of arbitration exceeds the potential recovery.  This decision (not an employment case but potentially applicable in such cases) continues a trend upholding enforcement of agreements between consenting parties to arbitrate claims arising under state or federal law.  However, this does not guarantee that every arbitration agreement will be enforced; some agreements could be deemed “unconscionable” under state law.

For more information, contact Matt Gilligan.