2015-16 employment law update juan c. lopez-campillo angela m. duerden wilson elser july 28, 2015
TRANSCRIPT
2015-16 Employment Law Update
Juan C. Lopez-Campillo
Angela M. Duerden
Wilson Elser
July 28, 2015
Breaking Developments in Wage-Hour Law
Background
• White collar exemptions exclude executive, administrative, and professional employees from FLSA minimum wage and overtime requirements.
• To qualify, employees must:
- be paid a fixed salary that is not subject to reduction because of quality/quantity of work (salary basis test);
- be paid more than $455 per week or $23,660 annually (salary level test); and
- primarily perform executive, administrative, or professional duties (duties test).
Background
• Highly-compensated employees are exempt from FLSA’s overtime requirements if they:
- are paid total annual compensation of at least $100,000;
- receive at least $455 per week on a salary or fee basis;
- perform office or non-manual work; and
- regularly perform at least one of the exempt duties of an executive, administrative, or professional employee.
The Proposed Rule
• Published in the Federal Register on July 6, 2015
• Sets forth three key proposed changes to the current FLSA regulations:
New Minimum Salary Level
• Set at the 40th percentile of weekly earnings for full-time salaried workers (as published in Bureau of Labor Statistics).
• In 2013 - $921 per week or $47,892 annually.
• In 2016 – projected by DOL to be $970 per week or $50,440 annually.
• Automatically increases annually based on percentiles of earnings for full-time salaried workers or changes in inflation.
New Minimum Total Annual Compensation for Highly-Compensated Employees
• Set at the 90th percentile of weekly earnings for full-time salaried workers (BLS).
• In 2013 - $122,148 annually.
• DOL does not project what the amount will be in 2016.
• Automatically increases annually based on percentiles of earnings for full-time salaried workers or changes in inflation.
Effect of New Regulations
• DOL estimates 11 million employees will be impacted by new regulations.
• Most impact on production, service, and retail industries that have substantial numbers of lower-paid supervisors.
• Employers in states with wage-hour laws that are more restrictive (i.e., CA) will need to review coverage requirements in light of new regulations.
DOL Request for Comments
• Comments due on or before September 4, 2015• Submit comments to www.regulations.gov• Should DOL allow incentive compensation and
nondiscretionary bonuses to be considered to satisfy salary level test?
• Should commissions be included as part of nondiscretionary bonuses and other incentive payments to satisfy salary level test?
• Should employees be required to spend a minimum amount of time performing exempt duties (similar to CA’s 50%)
What Can Employers Do?
• Consider submitting comments to ensure regulatory record reflects impact of proposed changes and to shape the final rule.
• Start reviewing positions now to have a sense of what you will need to do in 2016.
• Consider converting questionable exempt positions to nonexempt.
• Consider raising salaries of exempt employees and bolstering job duties to meet new standards.
• Be ready to answer questions from employees about their entitlement to overtime.
Economic Realities Test
• DOL Wage and Hour Division issued an Administrator’s Interpretation on July 15, 2015.
• Agency takes the position that most workers are employees under the FLSA and not independent contractors.
• The appropriate test to determine employee or independent contractor status is economic realities test.
• No one factor (particularly the control factor) is determinative. All factors must be considered.
Economic Realities Test
1. Is the work an integral part of the employee’s business?
2. Does the worker’s managerial skills affect the worker’s opportunity for profit or loss?
3. How does the worker’s relative investment compare to the employer’s investment?
4. Does the work performed require special skill and initiative?
5. Is the relationship between the worker and the employer permanent or indefinite?
6. What is the nature and degree of the employer’s control?
NLRB’s New Joint Employer Standard
Browning-Ferris Industries
• In May 2014, the NLRB GC expressed his desire to overturn the Board’s decades-old standard for determining whether two or more business may be found to be “joint employers.”
• Under the current standard, two or more employers must “share or co-determine matters governing essential terms and conditions of employment” (i.e., hiring, firing, discipline, supervision, setting wages).
Browning-Ferris Industries
• In his brief, the NLRB’s GC argued that the Board should adopt an amorphous “totality of the circumstances” test:
“Under that standard, the Board finds joint employer status where, under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.”
Browning-Ferris Industries
According to the general counsel, indicia of such control include:
•setting and policing employee work schedules;•tracking wage reviews;•acceptance of employment applications through company systems;•reimbursement of wages;•retention of right to approve employees;•requiring the company and its employees to follow safety rules; and•making recommendations during the collective bargaining process or retaining the right to provide such input.
Browning-Ferris Industries
• The NLRB has yet to issue a decision in the Browning-Ferris case.
• With Browning-Ferris still pending, the NLRB Office of the General Counsel filed a number of ULP’s against franchisees and franchisors as joint employers under the “totality of the circumstances” test.
• It is expected that the NLRB’s ruling will make it easier for unions to organize “temp” workers and “contractors” and to include bargaining units with the employees of the “joint employer.”
Ban the Box Legislation
Background
• “Ban the Box” refers to the policy of removing the conviction history check-box from job applications.
• As of July 1, 2015, 18 states and more than 100 cities and counties have adopted “ban the box” legislation (see www.NELP.org).
• Ban the box legislation does not require an employer to hire any candidate with a criminal background, and employers may still conduct background checks.
• Ban the box simply requires an employer to wait until later in the hiring process – at the interview stage or a when a conditional job offer has been extended – before asking the applicant about their criminal record or conducting a criminal background check.
• Employers must view ban-the-box legislation in conjunction with the 2012 EEOC guidelines concerning the use of arrests and convictions in employment decisions.
Guidance
• Remove the question about criminal arrests/convictions from the employment application.
• Evaluate applicants on the basis of their qualifications for the position.
• Narrow the field to qualified applicants.• Conduct job interviews of qualified applicants.• Extend written job offer contingent on candidate
successfully passing a criminal background check.• Offer letter accompanied by form asking whether
candidate has been arrested/convicted (with disclaimer) and asking for details.
Guidance
• Candidate must sign the form attesting to the truth of the disclosures.
• Conduct criminal background search.• If the search reveals an arrest or conviction:
- Cannot have a blanket policy of excluding all arrests or convictions.
- Conduct individualized assessment considering: (1) the nature and gravity of the offense or conduct; (2) the nature of the job held or sought; and (3) the time that has passed since the offense or conduct (7-10 years).
Guidance
- Inform the candidate that s/he may be excluded from employment because of past criminal conduct.
- Provide an opportunity to the candidate to demonstrate that the exclusion does not properly apply to him/her.
- Consider whether the candidate’s additional information shows that the exclusion should not apply.
- Send out final decision letter.
Complying with Union Regulations
Background
• Section 7 of the National Labor Relations Act gives employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.”
• According to the NLRB General Counsel, a work rule will be found unlawful if “employees would reasonably construe the rule’s language to prohibit Section 7 activity.”
• On March 15, 2015, the NLRB GC issued a 30-page memo (Memorandum GC 15-04) that provides guidance on handbook policies the NLRB considers unlawful.
Confidentiality
Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as with nonemployees, such as union representatives.
Unlawful
“Do not discuss customer or employee information outside of work, including phone numbers and addresses.”
Lawful
“Misuse or unauthorized disclosure of confidential information not otherwise available to persons or firms outside [Employer] is cause for disciplinary action, including termination.”
Employee Conduct
Employees have a Section 7 right to criticize or protest their employer’s labor policies or treatment of employees.
Unlawful
“Be respectful to the company, other employees, customers, partners, and competitors.”
“Do not make statements that damage the company or the company’s reputation or that disrupt or damage the company’s business relationships.”
Lawful
“Being insubordinate, threatening, intimidating, disrespectful or assaulting a manager, coworker, customer or vendor will result in discipline.”
Third Party Communications
Employees have a Section 7 right to communicate with the news media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment.
Unlawful
“Associates are not authorized to answer questions from the news media. When approached for information, you should refer the person to [the Employer’s] Media Relations Department.”
Lawful
“The company strives to anticipate and manage crisis situations in order to reduce disruption to our employees and to maintain our reputation as a high quality company. To best serve these objectives, the company will respond to the news media only through designated spokespersons.”
The Bottom Line
• Review employee handbooks carefully.
• Well intentioned as it may be, the GC’s memo fails to bring significant clarity as to what is permitted.
• Simply utilizing the language, or even individual policies, referred to as “lawful” in the memo will not guarantee compliance with the NLRA.
• When in doubt, contact counsel for guidance.
LGBTQ Workplace Issues
Obergefell v. Hodges, No. 14-556, 576 U.S. --- (June 26, 2015)
• 5-4 decision written by Justice Kennedy.
• Struck down same-sex marriage bans in 13 states.
• Holds that the Fourteenth Amendment requires a state to license a marriage between two people of the same sex.
• Holds that the Fourteenth Amendment requires a state to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-state.
Key Issues for Employers to Consider
• Family and Medical Leave
Allow employees in same-sex marriages protected time off under the FMLA.
• Health Insurance & Benefits Plans
Review health insurance and other benefits programs and forms to be sure they are inclusive of same-sex spouses.
• Discretionary Benefits
Ensure discretionary benefits (e.g., bereavement leave, relocation benefits, education benefits, employee discounts) are provided for all spouses.
Key Issues for Employers to Consider
• Marital Status Discrimination
Ensure policies and practices comport with state laws and local ordinances prohibiting marital status discrimination.
• General Employment Policies
Update policies and forms to use inclusive language such as “spouse” rather than “husband” or “wife.”
• Domestic Partnership Issues
What Lies Ahead?
• Employment Non-Discrimination Act (ENDA).
• Sexual orientation and gender identity issues.
Marijuana Legalization and Drug-Free Workplace Policies
Marijuana
• Twenty-three states and the District of Columbia currently have laws legalizing medical marijuana.
• Four states and the District of Columbia have legalized marijuana for recreational use.
• A number of states have also decriminalized the possession of small amounts of marijuana.
Marijuana
• Some states (AK, CA, CO, HI, MA, MI, MO, NH, NJ, OR, RI, WA) have pro-employer laws regarding the use of marijuana.
• Some states (AZ, CT, DE, IL, ME, MN) provide for strong employee protections.
For example:
• On May 29, 2014, Minnesota enacted the Medical Cannabis Act provided that an employer may not discriminate against a person in the terms or conditions of employment based upon the employee’s status as a qualified patient or a qualified patient’s positive drug test for medical marijuana.
Bottom Line
Marijuana remains classified as a Schedule I narcotic under the Federal Controlled Substances Act
• Marijuana cultivation, distribution, possession, and use are still criminal acts under federal law, even in states where marijuana is legal.
• Marijuana is in the same category as Cocaine, Heroin, LSD, and Ecstasy.
Significant Ruling From Colorado Supreme Court
Coats v. Dish Network, LLC, No. 13SC394 (June 15, 2015)
• Coats received a medical marijuana license to treat muscle spasms caused by his paraplegia.
• Coats tested positive for THC during random drug test.
• Employer fired Coats for violation of Company’s drug policy.
• Coats sued alleging wrongful termination under Colorado’s “lawful activities statute.”
- Prohibits discharge based on employee’s engagement in “lawful activities” while off duty and off company premises.
Significant Ruling From Colorado Supreme Court
Coats v. Dish Network, LLC, No. 13SC394 (June 15, 2015)
• Colorado Supreme Court held that the term “lawful” refers only to activities that are lawful under both state and federal law.
• Because Marijuana remains unlawful under federal law, Coats was not engaged in “lawful activity.”
• Employers have successfully litigated medical marijuana cases in California, Colorado, Michigan, Montana, Oregon, and Washington.
• Court recognize that federal illegality is still a significant obstacle for marijuana users to challenge employment actions.
Do I need to allow an employee to smoke or ingest marijuana at work or on company time?
No. Legalization does not affect employers’ ability to enforce their policies or require employees to follow lawful instructions on workplace conduct.
Do I have to accommodate an employee who fails a drug test?
No. Because marijuana remains illegal under the Controlled Substances Act, employers have no duty to engage in an interactive process or to accommodate an employee’s drug use in violation of company policy.
BUT, be careful with “recovering” drug addicts and underlying impairments.
Can I terminate an employee who tested positive for THC but who smoked off work and off company premises?
Yes. Employers may treat an employee who failed a drug test for THC like any other employee who failed a drug test. See Coats v. Dish Network.
Should I update my policies to reference medical and/or recreational marijuana use in the workplace?
Most definitely.
Employers should ensure that their drug and alcohol policies are up-to-date, that they expressly reference both medical and recreational marijuana, and that policies prohibit not simply the “use” of or impairment by a substance, but also the mere presence of an “illegal” substance in an applicant’s or employee’s system. “Illegal” can be defined to include all substances that are illegal under federal, state, or local laws.
THANK YOU!
Juan C. Lopez-Campillo
Wilson Elser
407-203-7564 (office)
321-948-4758 (cell)
Angela M. Duerden
Wilson Elser
407-203-7569 (office)