U.S. DOL Releases Long-Awaited Proposal to Expand Overtime Protections

This post was written by Betty S.W. Graumlich and Mark S. Goldstein.

Just hours ago, the U.S. Department of Labor (DOL) released its highly anticipated proposed revisions to the Fair Labor Standards Act’s (FLSA) so-called “white collar” exemptions, the first major update to the federal overtime rules in more than a decade. Although the proposed rule more than doubles the pay threshold for exempt employees – from $455/week to $970/week – the DOL, in a surprise move, did not address the “duties” tests associated with the exemptions, as many had anticipated.

Background

The FLSA, enacted by President Franklin D. Roosevelt as part of the New Deal, requires generally that all employees earn at least the federally mandated minimum wage (currently, $7.25/hour) plus time-and-a-half for all overtime hours – i.e., all hours worked above 40 in a given week. The law, however, contains exemptions for, most notably, bona fide executives, administrators, and professionals (known more commonly as the "white collar" exemptions). Under these exemptions, workers need not receive: (1) an hourly rate of pay or (2) overtime for any time worked in excess of 40 hours in a given week. Instead, exempt employees may be paid a fixed weekly salary. In order for an employee to be properly classified as exempt from the FLSA’s minimum wage and overtime regulations, his/her salary level and job duties must first satisfy certain threshold criteria. These criteria are referred to, respectively, as the “salary basis” and “duties” tests.

Under the current salary basis test, exempt employees must earn at least $455/week to maintain their exempt status. Critically, an exempt employee’s salary may not fluctuate from week to week. Rather, subject to a few narrow exceptions, such salary must remain constant regardless of the number of hours worked or quality of work performed. Fluctuations, even sporadically, in an exempt employee’s salary, may forfeit an employer’s right to claim that an employee is exempt.

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New York Employment Law Roundup: June 2015

This post was written by Cindy S. Minniti and Mark S. Goldstein.

Today’s New York employment law landscape is increasingly dynamic, with a constant stream of newly issued legislation and judicial opinions. To keep our readers current on the latest developments, we will share regular summaries of recent developments affecting Empire State employers. Here’s what happened in June 2015:

Wage Board Recommendations Taking Shape?

As we previously reported, in early May Governor Andrew Cuomo empaneled a wage board to remedy alleged wage inequality in the fast food industry. Cuomo directed the three-person board to examine and recommend whether – and by how much – to raise the minimum wage for New York fast food workers. The board held several meetings throughout state this past month.

In its June 29 meeting, the board finally hinted at its possible proposal to the governor. During that meeting, all three wage board members agreed that fast food workers should receive a "substantial” pay increase – which advocates are hoping will be as high as $15/hour – and expressed concern about unpredictable schedules, which has been a recent focus of State Attorney General Eric Schneiderman. In addition, Buffalo Mayor Byron Brown, board chair, suggested that the wage board is considering a proposal that would set the pay rate for part-time workers higher than for full-time workers, to incentive employers to create full-time jobs. The wage board also conceded that it is still sorting out precisely which “fast food” restaurants would be impacted by proposal.

We will notify you when the wage board issues it final proposals to Governor Cuomo, which could be as early as the end of this week.

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Should voluntary overtime be included when calculating holiday pay?

Another decision has been handed down to clarify – or complicate – the position on which aspects of pay should be included when calculating an employee’s entitlement to holiday pay.

The Court of Appeal in Northern Ireland (“CA”) has held that voluntary overtime is not necessarily excluded from the calculation of holiday pay for the purposes of the Working Time Regulations 1998 (as derived under the EU Working Time Directive).

The case of Patterson v Castlereagh Borough Council held that it was a “question of fact” for each Tribunal to determine whether or not voluntary overtime was “normally” carried out by the employee. If so, it should be considered to be part of the employee’s “normal remuneration” and included when calculating holiday pay.

The case was remitted to the Tribunal to hear further evidence of the overtime actually worked by the employee within a suitable reference period. Once this is determined, the Tribunal will decide as a question of fact whether the voluntary overtime should be included in this particular case.

Background

There have been a number of recent cases about the scope of holiday pay and how this should be calculated. In brief:

Williams and others v British Airways plc – held that holiday pay should not be calculated by reference to basic salary, but should correspond to “normal remuneration”.

Lock v British Gas Trading Limited – held that holiday pay under the Working Time Directive cannot be calculated on basic pay alone where remuneration also includes commission. Please see the link to our previous blogs on this case here and here.

Bear Scotland Limited v Fulton and another – held that there should be an intrinsic or direct link between holiday pay and the work the worker is obliged to carry out. It was held that “non-guaranteed overtime” (i.e., where employees were required to work, but which employers were not obliged to offer) should be included when calculating holiday pay. Please see the link to our blog here.

Whether voluntary overtime should be included in holiday pay calculations was not dealt with in the Bear Scotland case at EAT stage, and so the position remained unclear on this point. However, at the Tribunal stage for Bear Scotland, the Tribunal found that overtime that could be refused should be included in the calculation of statutory holiday pay, and it has been suggested in commentary that whether this should be included is fact-specific.

What was considered in the Patterson case?

At the Employment Tribunal stage, it was held that voluntary overtime should not be included in the calculation of holiday pay, taking the approach that the Bear Scotland case either implicitly excluded voluntary overtime, or it allowed Tribunals to decide to exclude it.

The key issue in question was whether the Tribunal had made a mistake by finding that, as a point of principle, voluntary overtime could not be included, or whether the Tribunal had decided that the appellant had factually failed to establish that the overtime formed part of his “normal remuneration”.

Finding

The CA found that there was no reason why voluntary overtime should not be included as part of the holiday pay calculation, and that the Tribunal had been in error in this regard. It found that it was a question of fact for each Tribunal to determine whether the voluntary overtime in question was “normally carried out by the worker”. If so, it should be included when calculating holiday pay.

Practical points

Given that this is a Northern Ireland decision, it is not binding on Tribunals in England and Wales, although it will be persuasive.

The difficulty for employers putting a policy in place in relation to voluntary overtime, is that it seems Tribunals will look at whether an employee is entitled on a case-by-case basis.

However, where employees habitually work overtime, even if they are not required to do so, it is probable that they are entitled to holiday pay calculated by reference to this. This could have a high impact on employers, as voluntary overtime is likely to be more common than other forms of overtime. It would be prudent for employers to put policies in place to restrict the levels of overtime that employees may carry out, to try to control potential holiday pay costs.

A further difficulty is determining the correct reference period to calculate what the pay should be as no definitive guidance has been given on this point. Employers could use the 12-week period which is set out in legislation relating to other pay calculations, or alternatively the 12-month period suggested by the Advocate General in the Lock case. Again, it appears that a case-by-case basis will be the most appropriate (but also the most administratively difficult).

Finally, it is important to remember that where employers are obliged to include overtime in holiday pay calculations, this only applies to four weeks of the employee’s holiday pay granted under the EU Working Time Directive (rather than the full 5.6 weeks prescribed by the Working Time Regulations 1998).

California Sick Leave To Go into Effect July 1 - Be Aware of These Common Traps

This post was written by Michael Kleinmann and Julia Trankiem.

The California Healthy Workplaces, Healthy Families Act of 2014 (“Healthy Families Act”) is fully effective July 1, 2015, including the significant potential for class-action liability for non-compliance. It is critical that employers ensure that their sick leave policy is current, given the ever-developing legal guidance. We have created a helpful list of common areas of confusion with this new law.

(1) General Background on the Healthy Families Act

The Healthy Families Act provides sick leave for absences from work for: (1) the diagnosis, care, or treatment (including preventive treatment) of an existing health condition of the employee or the employee’s family member, and (2) the employee being the victim of domestic violence, sexual assault, or stalking. Family member is expansively defined to include children, parents, foster parents, legal guardians, siblings, grandparents, grandchildren, spouses, and domestic partners.

The law requires employers to include information regarding accrual and use of sick leave with their employees’ wage statements. Further, employers must preserve these sick leave records for three years. Moreover, relevant posters and individual notices should have been posted and delivered as of January 1, 2015. New hires must also receive pertinent individual notices explaining their rights under the Healthy Families Act.

(2) Employees Must Provide “Reasonable” Notice.

The Healthy Families Act limits employers to requiring only “reasonable advance notification” of employee use of sick leave. Where unforeseeable, an employer may only require notice when “practicable.”

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Caught Stealing More Than Bases, St. Louis Cardinals Teach Trade Secret Safety to All Employers

This post was written by Mark Temple, Peter Stuhldreher, and CJ Rejda-Ponce.

The recent hacking attack against the Houston Astros is a wake-up call for all employers: no organization is safe from its adversaries’ attempts to steal proprietary information to gain a leg up in the competition. The infiltration of the Houston Astros’ network reportedly was carried out by employees of the Cardinals – an Astros’ arch rival. The compromised database contained highly proprietary information, including scouting reports, player statistics, and internal trade strategy – considered the "crown jewels" for any major league baseball team. While the FBI and Justice Department investigations are still ongoing, it appears the perpetrators accessed the Astros’ network using a "master password list" maintained by Astros’ General Manager, Jeff Luhnow – who had used the same list when working in a prior role as an executive for the Cardinals. These events underscore for all companies the critical importance of safeguarding your proprietary information.

Here are a few basic steps with broad applicability that should help employers of all types:

  • Limit access to confidential information to only those employees who need the information to perform their job duties.
  • Implement written policies that clearly define what you deem to be confidential information, and then communicate clearly to all employees that they may not:
    • use that information for any purpose other than fulfilling their job responsibilities; or
    • disclose such information to any other person or entity (excepting the government), without the company’s prior written permission.
  • Consider having key employees sign non-compete/non-solicitation agreements that prevent them from leaving you to go work in a similar role for a competitor, or from contacting your customers or using any confidential information they obtained about you or your customers after they leave.
  • Password protect all computers and computer systems, implement a written policy requiring that employees change their passwords frequently, and enforce that policy.

And finally – a lesson straight from the Astros/Cardinals incident – do not allow your employees to use the same passwords they used at prior employers. Competitor companies are likely to keep records of former employees’ passwords, and would-be hackers are likely to try these passwords first if intent on breaking into your internal systems to take confidential information.

Time travelling to and from work can count as working time

In the case of Federacion de Servicios Privados del sindicato Comisiones Obreras –v – Tyco, the Advocate General has held that, where an employee has no fixed or habitual place of work, time spent travelling from home to the first place of work of the day and from the last place of work of the day to home should be counted as working time for purposes of the EU Working Time Directive.

Background

The employees in this case installed and maintained security alarm systems. They had no fixed place of work. They were provided with a company vehicle and allocated to a particular region. On each working day, the employees travelled to jobs at customers’ premises allocated by the employer. At least once a week, the employees would travel to a logistics centre to collect parts needed for their work.

The employer counted the employees’ working time as starting when the employee arrived at the first job of the day and continuing until the end of the final job of the day. Travel time between jobs counted as working time. However, time spent travelling from home to the first job of the day and from the last job of the day back home did not count. The employees challenged this before the Spanish courts, saying that this was “working time” for the purposes of the EU’s Working Time Directive.

The Spanish court referred the matter to the Court of Justice of the European Union (“CJEU”). Prior to the CJEU making a decision, a preliminary assessment had been undertaken by the Advocate General. The Advocate General’s view is usually, but not always, followed by the CJEU.

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Is Your Company Prepared for the Changes to CFRA Leave?

The changes to employees’ rights to take leave under the California Family Rights Act (CFRA) go into effect July 1, 2015. Your company should be prepared only if it has done the following:

  • Reviewed the changes to the CFRA regulations, which may be found here.
  • Updated your policies and employee handbooks to reflect the legal changes in CFRA eligibility, medical certification, and leave administration.
  • Trained managers, supervisors and human resources professionals on the CFRA legal changes.
  • Updated electronic and hard copy postings and notices regarding CFRA leave – ensuring they are legible; in large, easy-to-read text; with the postings in conspicuous places that can be viewed by both employees and applicants.
  • Ensured that all postings and notices are translated in any language(s) spoken by 10 percent or more of the workforce.

The amended CFRA regulations synthesize the requirements for CFRA leave with those under the federal Family and Medical Leave Act (FMLA) to the extent there are no conflicts between the federal and state laws. Here are the key points in the revised CFRA regulations for employers:

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Colorado Employers Can Prohibit Employee Off-Duty Marijuana Use

The Colorado Supreme Court issued its highly anticipated decision in Coats v. DISH Network, holding that the recreational use of marijuana is not a lawful activity under Colorado’s Lawful Activities Act (“Act”). The Act prohibits employers from terminating employees for off-hours lawful activities. The court applied the Act broadly, holding that the recreational use of marijuana remains a crime under federal law and, therefore, unprotected by the Act. The ruling is clear guidance that Colorado’s marijuana laws do not invalidate employers’ zero-tolerance drug policies, and it may provide a roadmap for other states grappling with similar issues.

'School's Out!' Means More Free Time for Kids, But None for Working Parents. Here is Help for Employers Managing the Fallout.

This post was written by Amanda D. Haverstick and Lindsay J. Freid.

As our nation’s built-in babysitters close shop for the next three months, the bulk of our nation’s workforce braces for the barrage of new summer stressors, including: the uncertain reliability of teenage babysitters needed to cover 7-8 extra childcare hours per day; the effective imposition of second full-time job duties at home, with predictably unpredictable hours; and, for many, the summertime onset of “work-life imbalance malaise.”

These summertime stressors also cause angst for employers. Employees’ additional responsibilities at home invariably mean spikes in last-minute employee requests for “emergency” sick leave, attempts to “take off” early, and other impromptu absenteeism issues. All this can be incredibly disruptive to an employer’s normal business operations. Here are three tips to help maximize a smoother summer transition in your workplace:

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Transgender at Work: How Employers Can Stay Off the EEOC Radar Screen

This post was written by Nikki Kessling and Mark Temple.

It’s no secret that the EEOC—and even some courts—read Title VII to prohibit discrimination against transgender employees. A growing number of state and city laws also specifically include gender identity and/or expression as protected characteristics. But while employers may understand the legal dangers of firing someone for “coming out” as transgender, the extent of employers’ day-to-day obligations with respect to transgender employees in the workplace is far less clear. For example:

  • Are transgender employees entitled to access particular bathrooms or change their company employment records? And, if so, at what point in an employee’s gender transition must an employer accommodate such requests?
  • How should employers address negative reactions and attitudes from coworkers?

Two recent EEOC cases provide initial guidance for employers trying to navigate these tricky—and still relatively uncharted—employment law waters.

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EEOC v. Abercrombie & Fitch: Do You Need to Ask Applicants Whether They Require Religious Accommodation?

This post was written by Stephanie Wilson, James A. Burns, Jr., and Megan E. Farrell.

On June 1, 2015, the United States Supreme Court held that a job applicant can establish religious discrimination under Title VII of the Civil Rights Act of 1964 without proof that the employer had “actual knowledge” of the applicant’s need for an accommodation; instead, the applicant “need only show that his [or her] need for an accommodation was a motivating factor in the employer’s decision” (emphasis added). Writing for eight of the Court’s nine Justices, Justice Scalia explained that employers “may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.” EEOC v. Abercrombie & Fitch Stores, Inc., No. 14-86, ___ S. Ct. ___ (2015).

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BREAKING: NYC "Bans the Box," Barring Most Pre-Employment Criminal Inquiries

This post was written by Cindy S. Minniti and Mark S. Goldstein.

Just weeks after prohibiting employers from using credit checks, the New York City Council Wednesday passed yet another bill that handcuffs businesses attempting to vet new job applicants. Most notably, the bill, commonly referred to as the Fair Chance Act (the Act), bars employers from inquiring about a job applicant’s criminal history before extending a conditional offer of employment to the applicant. In other words, the Act “bans the box” – typically found on employment applications – that asks about a candidate’s criminal background.

The Act is an amendment to the already-liberal NYC Human Rights Law (NYCHRL) and, beyond “banning the box,” it also creates other new legal protections for current and prospective employees who have criminal histories. Pundits expect that Mayor Bill de Blasio will immediately endorse the Act – possibly in the next few days.

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Employers Must Use New FMLA Forms from U.S. Dept of Labor

On May 27, the U.S. Department of Labor (DOL) published updated model Family and Medical Leave Act (FMLA) notices and certification forms. Copies of the updated forms, which should be used through May 31, 2018, are available on the DOL’s website.

The most notable change to the forms is their reference to the Genetic Information Nondiscrimination Act of 2008 (GINA). GINA is a federal law enforced by the Equal Employment Opportunity Commission (EEOC) that makes it illegal for employers to discriminate against employees or applicants based on their genetic information. GINA also restricts employers from requesting employees’ and their family members’ genetic information, except in extremely limited circumstances. An employer does not violate GINA, however, if it receives genetic information from a health care provider (HCP) in response an FMLA-compliant request for information, so long as the employer instructed the HCP not to furnish any genetic information in response to the request.

Consistent with the above, the DOL’s revised instructions in the “Certification of Health Care Provider for Employee's Serious Health Condition” state:

Do not provide information about genetic tests, as defined in 29 C.F.R. § 1635.3(f), genetic services, as defined in 29 C.F.R. § 1635.3(e), or the manifestation of disease or disorder in the employee's family members, 29 C.F.R. § 1635.3(b).

The DOL has added similar disclaimer language to other certification forms. Surprisingly, the DOL’s disclaimer does not track the GINA warning language that the EEOC had previously approved (see question 17 in link), creating uncertainty between the two federal agencies. The EEOC's stance on the DOL’s GINA language is currently not clear and may need to be resolved in court or with future EEOC guidance.

Irrespective of future resolution of this uncertainty, however, one thing is clear: employers using outdated FMLA forms need to update their FMLA document library as soon as possible. We also recommend that employers consult with counsel about the appropriate GINA disclaimer language to include in their new FMLA forms.

UK Government reveals new legislative programme - Implications for employment law

Following the unexpected victory by the Conservatives in the UK general election on 7 May, the Government has announced its programme for the next session of Parliament. Amongst its proposals, the Government is proposing new laws regulating the ability to take lawful strike action.

The new proposals will require a 50% voter turnout threshold in strike ballots, while retaining the condition that a simple majority of those votes must be in favour of industrial action.

Additionally, the new proposals will require that 40% of those entitled to vote must vote in favour of industrial action in certain essential public services (health, education, fire and transport). The Bill will also introduce time limits on a mandate following a ballot for industrial action. The Conservatives proposed in their manifesto that employers would be allowed to use agency workers to cover for striking employees. No mention of this proposal was made in the Queen’s Speech, so we will have to wait for the Bill to be published before we see if this proposal becomes reality.

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New York Employment Roundup: May 2015

This post was written by Cindy S. Minniti and Mark S. Goldstein.

Today’s New York employment law landscape is increasingly dynamic, with a constant stream of newly issued legislation and judicial opinions. To keep our readers current on the latest developments, we will share regular summaries of recent developments affecting Empire State employers. Here’s what happened in May 2015:

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