TEXAS BUSINESS CONFERENCE

Update on Recent Trends in Employment Law

Michael Holland Holland & Holland, LLC

1250 N. E. Loop 410, Suite 808 San Antonio, Texas 78209

(210) 824-8282 (210) 824-8585 facsimile

e-mail address: mholland@hollandfirm.com

www.hollandfirm.com

WHAT’S HAPPENING OUT THERE?

• No new federal or state legislation

• Federal agencies very active - aggressive

MISCLASSIFICATION OF EMPLOYEES

● Exempt from overtime? (Fair Labor

Standards Act)

● Independent Contractor – is your independent contractor really an employee?

THE BIG QUESTION

Is the employee exempt from the FLSA

requirements concerning minimum wage and overtime compensation?

Overtime Misconceptions

● Belief: Employees are entitled to overtime after working a certain number of hours in a particular day.

● Belief: Overtime is required for work on weekends or holidays.

● Belief: Only low paid, hourly wage employees are non-exempt.

● Belief: Salaried employees are exempt

● Belief: All college-degreed

workers are exempt

Overtime

● All work after 40 hours during a particular

workweek must be paid at 1.5 times the regular rate of pay

Exempt Employees

● Many exemptions – industry specific

● Most common exemptions – “white collar”

Executive

Administrative

Professional – Learned

Professional – Creative

Outside Sales

Executive Exemption

● Salary basis (as defined in the regulations) at a rate not less than $455 per week;

● Primary duty: Managing the enterprise, or

managing a customarily recognized department or subdivision of the enterprise;

● The employee must customarily and regularly

direct the work of at least two or more other full-time employees or their equivalent; and

● The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Morgan, et al v. Family Dollar Store

(11th Cir 2008)

• 1400 store managers – working 60-70

hours/wk

• Employer classifies all top store managers as exempt Executives

Family Dollar Store Case

Executive Store Managers?

80-90 % of time doing tasks like • stocking shelves

• running cash registers

• unloading trucks

• cleaning the stores

Closely supervised by district managers

No authority to hire or fire store personnel and recommendations as to hiring and firing not given any particular weight

Pay not significantly higher compared to non-exempt workers

Family Dollar Store Case

• $35 million (½ of it in liquidated damages for willful violation)

Administrative Exemption

●Salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

●Primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

●Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

Rieve v. Coventry Healthcare, Inc.

● Coventry provides “solutions to help its clients, including workers’ compensation insureds and employers, reduce the cost associated with workers’ compensation injuries, ensure quality care.”

● Julia Rieve was a registered nurse and case manager for Coventry. She had many years experience as a case manager.

● Rieve was responsible for assessing and analyzing an injured employee to evaluate the medical needs required to facilitate the patient’s appropriate and timely return to work.

Rieve v. Coventry Healthcare, Inc. - 2

● Job duties included: providing ongoing, day to day case management services for Defendant’s customers with documenting the cost of care, preparing reports regarding a plan of care, and identifying and implementing medical services to meet the needs of Coventry’s customers.

• Rieve admitted in deposition that she spends more than 50% of her time communicating with doctors, patients, and claims adjusters in order to understand the patient’s conditions, determine what medical care was being provided, and evaluate whether it was appropriate.

Rieve v. Coventry Healthcare, Inc. - 3

• Rieve received a guaranteed weekly salary of $1,096.00 and received little to no supervision from Coventry.

• The court held: employer fails to meet administrative exemption

The professional exemption – learned

professional

• Salary or fee basis (as defined in the regulations) at a rate not less than $455.00 per week;

• Primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;

• The advanced knowledge must be in a field of science or learning; and

• The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

The professional exemption – creative

professional:

• Salary or fee basis (as defined in the

regulations) at a rate not less than $455.00 per week;

• Primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

Outside Sales Exemption

● The employees primary duty of making

sales (as defined by the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

● The employee must be customarily

and regularly engaged away from

the employer’s place or

places of business.

ALWAYS REMEMBER

● FLSA is arguably the most violated civil law in our country

● Burden of proof is on employer to prove

exemption

● U. S. DOL is aggressively enforcing this law right now

● When in doubt – err on the side of caution

ALWAYS REMEMBER (CON’T)

● There are many additional restrictions contained within this law, such as restrictions on child labor, home workers, and equal pay between men and women

● DOL has an excellent website – www.dol.gov (Note: will need to dig down by clicking on “wages” on right side of web page and then click on “overtime pay” and then look for “Fair Pay Fact Sheet by Exemption”)

MISCLASSIFICATION: Is your

independent contractor really an

independent contractor?

● Second most violated employment law in our country

● Issues are decided on a case by case basis

● Several different tests are used by different agencies all with subparts

MOST COMMON ELEMENTS USED IN

THE TESTS TO DETERMINE

INDEPENDENT CONTRACTOR STATUS:

● opportunity for profit or loss for employee

● Skill and initiative required in performing job

● Permanency of the relationship

● Tools, equipment, uniforms

● Insurance/benefits

MOST COMMON ELEMENTS USED IN

THE TESTS TO DETERMINE

INDEPENDENT CONTRACTOR STATUS:

● Economic realities

● At-will discharge without liability

● Advertising by worker

● Training by employer

MORE COMMON ELEMENTS USED IN

THE TESTS TO DETERMINE

INDEPENDENT CONTRACTOR STATUS:

● Schedule established by employer

● Contractor has own employees

● Who controls manner and details of work

● Regular business of employer

● Use of written contract

NOTE: Holland & Holland, LLC has a form Independent

Contractor contract available for review

EEOC’s Guidance on Use of Arrest and

Conviction Records

● On April 25, 2012, EEOC issued “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964”

● In January 2012 the EEOC announced a $3.13 million settlement with Pepsi Beverages over its use of criminal background checks that adversely affected African-American job applicants

● On March 10, 2014, EEOC and FTC Offer Joint Tips on Use of Employment Background Checks

March 2014

EEOC to Employees

“Even if the employer treated you the same as everyone else, using background information still can be illegal discrimination. For example, employers shouldn't use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and doesn't accurately predict who will be a responsible, reliable, or safe employee. In legal terms, the policy or practice has a "disparate impact" and is not "job-related and consistent with business necessity." (It doesn't matter whether or not the information was in a background report.)”

What’s the Theory?

● EEOC’s Guidance focuses on the use of criminal records under a disparate impact theory

• Disparate impact. The EEOC suggest that nationally, and in most areas, use of criminal records to screen out applicants will have a disparate impact on minorities

• Job-related and Consistent With Business Necessity Defense

▪ EEOC claims that using arrest records is almost never a business necessity

▪ To satisfy this defense, the employer must prove an effective link exists between the specific criminal conduct and its dangers with the risks inherent in the job position

How do You Satisfy the “Effective Link”

Requirement?

● An employer may deploy a “targeted screen” that considers the three Green factors:

1. The nature and gravity of the offense;

2. The time that has passed since the offense and/or completion of the sentence; and

3. The nature of the job held or sought.

● Derived from Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1975), and has been the basis of the EEOC’s guidance for many years.

What is an “Individualized Assessment”?

● Per the EEOC, it should be made by an employer in virtually all instances before the employer disqualifies an individual for employment based on past criminal conduct, using the following specific factors:

1. the facts or circumstances surrounding the offense or conduct;

2. the number of offenses for which the individual was convicted;

3. older age at the time of conviction or release from prison;

4. evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents or criminal conduct.

What is an “Individualized Assessment”? (con’t)

● the length and consistency of employment history before

and after the offense or conduct;

● rehabilitation efforts, e.g., education and training;

● employment or character references and any other information regarding fitness for the particular position; and

● whether the individual is bonded under a federal, state, or local bonding program.

NOTE: Military installations, schools

Suggestions

● Always hire the most qualified applicant

• Policies which automatically exclude applicants from hiring process due to criminal history may be illegal

• Policies which negatively impact an employee’s opportunities for advancement within the company due to past criminal activity may be illegal

EEOC TARGETING LEAVE OF ABSENCE

POLICIES

● LOA policy with cap or maximum amount of time off before automatic termination may be a violation of the Americans With Disabilities Act

● May violate employer’s duty to accommodate (interactive process)

NATIONAL LABOR RELATIONS BOARD -

- VERY ACTIVE

● This law applies to non-unionized employers

● NLRB has issued several controversial decisions involving employees’ use of social media

● Bottom line: Employer cannot have a very broad/blanket policy prohibiting employees from engaging in any form of criticism of the employer, its product, service, or management

Social Media

March 12, 2014 - EOOC Press Release

Social Media May Raise Employment Discrimination Concerns • Use third party or a designated person who does not make

hiring decisions to do the check

• Use only publicly available information, not requesting passwords for social media accounts

• EEOC found a claim of racial harassment due to a co-worker’s Facebook postings could go forward

OSHA – Injury Reporting

Temporary Workers

March 13, 2014 –Educational bulletin

Responsibility Determined by Supervision

Day-to-day supervision - Employer who controls conditions presenting potential hazards and directs the worker’s activities around and exposure to them

In most cases, the host employer is the one responsible for recording the injuries/illness of temporary workers.

Religious Garb and Grooming

March 6, 2014 EEOC Publication

Discrimination

• Discriminatory customer preference is no defense

Accommodation

• Adjusting policies may be required

Common Mistakes Made By Supervisors

Negative attitude regarding injured employee

Terminating employee within one month of on-the-job injury

No evaluation

Good evaluation when employee not performing

Promises made but not kept

Promises made that employee has guaranteed job

Common Mistakes Made By Supervisors - 2

Lack of communication

Yell, cuss, threat, intimidate

Off-color jokes/slurs (if you don’t want it told in a courtroom, don’t say it)

Progressive discipline not followed

No documentation regarding poor performance

Common Mistakes Made By Supervisors - 3

No written/oral warnings

Don’t get employee to sign warning

Saying the wrong thing in a written warning (it’s all discoverable)

No clear reason for termination

More than one reason for termination

Spreading rumors

Common Mistakes Made By Supervisors - 4

Failing to investigate problems

Giving false/bad references on ex-employees

No witnesses in a termination or discipline session

Allowing employees to work off the clock

Allowing employees to work during lunch or docking pay of exempt employees

Common Mistakes Made By Supervisors - 5

Terminating/retaliating against employees who group together to voice concerns

Treating someone as disabled when they are not

Not applying employment policies uniformly

Not counting leave as FMLA-qualifying

Failing to go over employee handbook with new hires

Q u e s t i o n s ?