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.Read More
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.Read More
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.Read More
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.Read More
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.Read More
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.Read More
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.Read More
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.Read More
As of July 1, 2013, all private employers in Georgia with 11 or more employees must use E-Verify, the federal online system for confirming whether new hires are legally authorized to work in the United States. This requirement has been in place for the last year and a half for larger employers, following passage of Georgia’s Immigration Reform and Enforcement Act of 2011 (IREA). All employees who work at least 35 hours per week count toward the new coverage threshold of 11 employees.
The Georgia legislature also recently expanded the IREA to require the use of E-Verify by private employers contracting with public entities to provide labor or services of $2,500.00 or more, regardless of the number of employees. By adding “or services” to the statute’s original language, the legislature expanded the law’s reach beyond providers of physical labor and construction to providers of services such as information technology, accounting, or auditing. The requirement also applies to all subcontractors and sub-subcontractors.
The new Georgia law states that a public employer shall not enter into a contract with a private company unless the company registers and participates in E-Verify. To ensure compliance, the private employer’s bid or contract to provide labor or services must include a signed, notarized affidavit attesting that it uses E-Verify, that it will continue to use E-Verify, and that it will ensure that all sub-contractors will do the same. The affidavit must include the company’s federal work authorization user ID number and date of authorization.
Lastly, before any county or municipality in Georgia issues a business license, occupational tax certificate, or other document required to operate a business, the business applicant must provide an affidavit that it uses E-Verify, employs fewer or 11 employees, or is otherwise exempt from the E-Verify requirement. The affidavit also must include the affiant’s work authorization user ID number and date of authorization.
For more information, contact Chris Arbery.Read More
Many employers would be surprised to learn not only that undocumented workers can sue for unpaid overtime under the federal Fair Labor Standards Act (FLSA), but also that company supervisors, officers, directors, and owners can be personally liable for such damages. In Lamonica et al. v. Safe Hurricane Shutters, Inc. et al. (No. 07-cv-61295), the federal 11th Circuit Court of Appeals (covering Georgia, Florida, and Alabama) recently held that two salaried workers were entitled to recover back pay, liquidated damages, and attorneys’ fees from their employer, a hurricane shutter installer, and two of the company’s owners. At trial, the plaintiffs were found to be non-exempt workers who were entitled to overtime.
The Court rejected arguments by the employer and two individual owners that the workers should be precluded from recovering back pay because one or both were undocumented aliensand allegedly used false social security numbers to obtain the jobs. Regardless of any alleged wrongdoing by the workers, the Court held, the employer still was responsible for payment of wages under the FLSA for work already performed. The Court distinguished a previous decision by the U.S. Supreme Court, Hoffman Plastic Compounds, Inc. v. NLRB (2002), which held that undocumented workers could not recover back wages for wrongful termination because they were not entitled to the job in the first place. In that case, the 11th Circuit observed, the workers had not already performed work for which they were seeking compensation.
Further, even though the two owners were minority shareholders and were not present in the workplace for more than a few days or weeks each month, the Court held that they had “sufficient control of the company’s financial affairs to cause the corporation to compensate or not to compensate employees in accordance with the FLSA,” and therefore they could be deemed “employers” along with the company. As a result, the Court held that the owners/board members were individually and personally liable to the plaintiffs.
This case highlights the importance to business owners and managers alike of ensuring that all employees are properly classified (as either exempt or non-exempt from overtime requirements) and compensated under the FLSA. Overtime pay requirements are applied rigidly and are the source of a surprisingly large amount of employment litigation. The best way to avoid such litigation is to have a qualified employment attorney conduct a privileged audit of pay practices, including an evaluation of all positions as either exempt or non-exempt.Read More