Court of Appeal: holiday pay must include regular voluntary overtime

Does pay for regular voluntary overtime need to be included in the calculation of holiday pay? Yes, says the Court of Appeal in a decision which confirms several prior Employment Appeal Tribunal (EAT) decisions that the entitlement to holiday pay under the Working Time Directive (WTD) must include pay for regular voluntary overtime. As we explain below, the outcome is more complex in practice as tribunals will now have to decide, on a case-by-case basis, whether a particular pattern of voluntary overtime is sufficiently regular and settled to fall within the category of regular voluntary overtime.

Background

Under article 7 of the WTD, EU member states must ensure that workers have the right to at least four weeks’ paid annual leave. The WTD does not expressly specify how statutory holiday pay is to be calculated. However, it is well established that holiday pay should equate to ‘normal remuneration’. Normal remuneration has been interpreted to include not only basic salary but also remuneration which is intrinsically linked to the tasks the worker regularly performs.

The EAT held in Bear Scotland v. Fulton and others that compulsory non-guaranteed overtime (i.e., overtime that is compulsory for the employee if the employer requires it but which is not guaranteed to be provided) must be included in the calculation of holiday pay. The EAT also held, in Dudley Metropolitan Borough Council v. Willetts and others, that holiday pay should correspond to normal remuneration so that workers should not be discouraged from taking their annual leave entitlement; in other words, pay during holidays should not be below the rate a worker would expect to receive had they been working. For a payment to be treated as normal, it should have been made over a sufficient period of time on a regular or recurring basis.

The calculation of holiday pay has also been considered by the European Court of Justice (ECJ), which held in Hein v. Albert Holzkamm GmbH & Co. KG that remuneration received for overtime does not, in principle, form part of normal remuneration. However, where the employment contract requires the worker to work overtime on a broadly regular and predictable basis then that overtime should be included in the calculation of holiday pay. Continue Reading

New marijuana laws and court cases continue to provide inconsistent guidance for employers: a summary of recent developments in Illinois, Nevada, New Jersey and Michigan

By Melissa M. Ferrara and Meghan O. Offer on 25 June 2019 Posted in Employment & Labor (U.S.), Medical Marijuana, Workplace Laws and Regulations

Over the past few years, 31 states have legalized some form of medical or recreational marijuana use and this wave of legalization continues to grow. Since there has been no consistent approach taken related to the intersection of legalized use and employment, employers must stay vigilant about recent developments in each location in which they operate.

To assist in navigating these waters, below is a summary of the recent enactments in Illinois and Nevada, as well as an update as to newly published judicial interpretations of the medical marijuana laws in New Jersey and Michigan. Continue Reading

Paid sick leave to take effect soon for employers in three cities in the Lone Star State

By Peter Stuhldreher and Rachel Machisak on 13 June 2019 Posted in Employment & Labor (U.S.), Texas Employment Beat, Wage and Hour, Workplace Laws and Regulations

Employers in three major cities in the Lone Star State should begin preparing for compliance with paid sick leave ordinances. Joining a number of other states and cities to have enacted paid sick leave laws, the cities of San Antonio, Austin, and Dallas passed ordinances requiring private employers to provide employees with paid sick leave. While the Austin ordinance has been blocked due to litigation regarding its constitutionality, which is now before the Texas Supreme Court, the San Antonio and Dallas ordinances are set to go into effect on August 1, 2019 (except as to employers with five or fewer employees in the preceding year, for which paid sick leave obligations will not go into effect until August 1, 2021).

The paid sick leave ordinances – which largely mirror each other – require all private employers to provide employees who perform at least 80 hours of work per year in the applicable city with one hour of paid sick leave for every 30 hours worked. Employees working for employers with 15 or more employees may accrue a maximum of 64 hours of paid sick leave annually. Employees who work for employers with fewer than 15 employees at all times during the preceding 12 months may accrue a maximum of 48 hours. Employees may carry over accrued, unused paid sick leave up to the maximum except where the employer makes sick leave equal to the maximum amount available to employees at the beginning of the year.

Texas Legislature takes aim at Anti-SLAPP challenges

By Peter Stuhldreher and Paul Knettel on 23 May 2019 Posted in Employment & Labor (U.S.), Texas Employment Beat, Workplace Laws and Regulations

The Texas Citizens Participation Act, Tex. Civ. Prac. & Rem. Code §§ 27.001 et seq. (the TCPA), Texas’ anti-SLAPP statute, is likely to receive a much needed overhaul after the Texas Senate unanimously passed H.B. 2730 on May 17, 2019. If the Texas governor signs it into law, as expected based on the bill’s broad bipartisan support in the Texas House and Senate, the revisions will take effect on September 1, 2019, and will clarify – and significantly narrow – the types of claims to which the TCPA applies. Also, importantly for companies seeking to protect their trade secrets and enforce their restrictive covenants, the changes to the TCPA would exempt such claims from its purview.

The TCPA was originally enacted in 2011 to protect citizens who exercise their First Amendment rights from retaliatory legal actions that seek to intimidate or silence them. Specifically, the TCPA allows a party to file a motion to dismiss within 60 days of service of a lawsuit if it can establish that the legal action is based on, relates to, or is in response to the party’s exercise of the right of free speech, the right to petition, or the right of association. If the party-defendant meets this burden, the plaintiff must then establish “by clear and specific evidence a prima facie case for each essential element of the claim in question.” If the defendant is ultimately successful on its motion to dismiss, the defendant is entitled to recover its attorneys’ fees.

Importantly, while a TCPA motion to dismiss is pending – and during any subsequent appeal of the trial court’s ruling on the motion – discovery and all other proceedings at the trial court are stayed. This stay can result in significant delay, which can be particularly harmful in cases in which an employer seeks emergency injunctive relief to prevent the irreparable harm associated with the use and disclosure of misappropriated trade secrets or the violation of restrictive covenants by former employees.

Don’t Fuggedaboutit: Keeping up with the ever-changing New York State and City employment law landscape

By Cindy Schmitt Minniti, Mark S. Goldstein, Saranne Weimer and Talia N. Fiano on 23 May 2019 Posted in Employment & Labor (U.S.), Labor Relations, New York Employment Beat, Workplace Laws and Regulations

New York State and City legislators have enacted a flurry of new workplace-related regulations in the past few years. The new laws touch upon everything from high-profile issues like sexual harassment prevention and paid family leave, to seemingly more mundane matters like paid time off to vote. With this bustle of legislative activity, it is entirely possible that one or more of the new laws flew under your radar. With that in mind, we want to flag some of the more important New York State and City legislative developments from the past few years (with corresponding links to our prior posts on these topics): Continue Reading

Promising news for companies in the transportation industry

By Mara Curtis and Brittany Hernandez on 15 May 2019 Posted in California Employment Beat, Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

Companies in the transportation industry with operations in California have some positive news to celebrate. On May 3, 2019, in Anthony Ayala v. U.S. Xpress Enterprises, Inc., et al., the Central District of California granted partial summary judgment and dismissed a truck driver’s meal and rest period claims, finding that they were preempted by the December 2018 ruling of the Federal Motor Carrier Safety Administration (FMCSA).

In its December ruling, the FMCSA stated that California cannot enforce its meal and rest period laws with regard to interstate motor carriers because those laws do not provide any additional safety benefits above those already provided by the meal period rules contained in the federal hours of service rules. It also found that the California meal and rest period rules unduly burden interstate commerce. Continue Reading

EEOC updates its guidance on employers’ duty to report EEO-1 pay data by September 30, 2019

By James A. Holt and Claire Throckmorton on 9 May 2019 Posted in Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

The EEO-1 Report is a compliance survey mandated by federal law. Generally, employers with 100 or more employees and federal government prime contractors and first-tier subcontractors with 50 or more employees and federal contracts worth at least $50,000 are required to submit EEO-1 Reports to the U.S. Equal Employment Opportunity Commission (EEOC) annually.

A brief history on the expansion of the EEO-1 data reporting requirements

Historically, the EEO-1 Report has required employers to disclose certain demographic data on their workforce population based on job category, gender, race and ethnicity.

In 2016, the Obama Administration announced a plan to expand the EEO-1 data reporting requirements such that employers would be required to report two sets of data: “Component 1” data and “Component 2” data. Component 1 data includes the customary gender, race and ethnicity data historically required in the EEO-1 Report. Component 2 data, which was not previously required in the EEO-1 Report, includes an aggregate of all employees’ W-2 earnings and hours worked based on job category, salary range, gender, race and ethnicity.

The new pay data reporting requirements were scheduled for implementation during the 2017 EEO-1 reporting cycle, for which the filing deadline was March 31, 2018. However, in August 2017, the Trump Administration indefinitely froze the revised EEO-1 Report to reevaluate the need and purpose of the new reporting requirements.

Dynamex in retrograde – misclassification test and its retroactive reach may open the flood gates for misclassification cases in California

By Anne Cherry Barnett, Mara Curtis and Eniola Akinrinade on 6 May 2019 Posted in California, California Employment Beat, Employment & Labor (U.S.), Wage and Hour

In April 2018, the California Supreme Court turned worker classification on its head when it decided Dynamex Operations West Inc v. Superior Court (Dynamex). In Dynamex, the court adopted a three-factor “ABC” test for analyzing misclassification claims under the California Wage Orders. Under the ABC test, for an employer to show that workers were properly classified as independent contractors, they must demonstrate that: the worker (A) was not under the company’s direct control and direction; (B) performed work that was outside the usual course of the hiring entity’s business; and (C) was customarily engaged in an independent business. Because of, in particular, the second element of the test, this standard makes it very difficult for businesses to prove that workers are independent contractors.

Since last year’s ruling in Dymanex, there has been much speculation about the application of the decision, specifically whether it applies retroactively and the scope of any application of the “ABC” test.

To the shock of employers, on May 2, 2019, a unanimous three-judge panel of the Ninth Circuit of the United States Court of Appeals (the Panel), in Vasquez v. Jan-Pro Franchising International, Inc. (Jan-Pro), held that the Dynamex rule should be applied retroactively.

Class arbitration requires contractual clarity

By Michele Haydel Gehrke and Brian Morris on 29 April 2019 Posted in California, California Employment Beat, Class Actions, Employment & Labor (U.S.)

In 2010, the United States Supreme Court struck a blow to class action plaintiffs subject to Federal Arbitration Act (FAA)-covered arbitration agreements when it concluded that a court may not compel class arbitration when the agreement is silent regarding the availability of such proceedings. Stolt-Nielsen SA v. AnimalFeeds Int’l, 559 U.S. 662 (2010). “[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Id. at 684.

On April 24, 2019, the Court went one step further, holding that “[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement” consented to class arbitration. Lamps Plus, Inc. v. Varela, Case No. 17-988 (Apr. 24, 2019) (Lamps Plus). The Court reversed the Ninth Circuit decision, which found that contractual ambiguity coupled with state contract law requiring courts to construe ambiguities against the drafter created a contractual basis for class arbitration. See Varela v. Lamps Plus, Inc., 701 Fed. Appx. 670, 673 (9th Cir. 2017). The Court held that the FAA preempted the state contract law doctrine as applied by the Ninth Circuit because it “manufactured [class arbitration] by state law rather than consen[t].” When an arbitration agreement is ambiguous regarding class proceedings, the Court will “not seek to resolve the ambiguity by asking who drafted the agreement.” Rather, the FAA provides the default rule that class arbitration is not available when the contract is ambiguous.

9th Circuit to consider whether the FAAAA preempts California’s ABC test for independent contractor truck drivers

By Mara Curtis and Michael Kleinmann on 24 April 2019 Posted in California, California Employment Beat, Employment & Labor (U.S.), Labor Relations, Wage and Hour, Workplace Laws and Regulations

California companies have been required to reconsider their use of independent contractors since the state’s Supreme Court outlined the new ABC test in Dynamex Operations West, Inc. v. Superior Court. Unlike the prior Borello test, which involved the balancing of numerous factors, the ABC test requires that a company establish all of the following: (A) the worker is free from the control and direction of the company; (B) the work is outside the company’s usual course of business; and (C) the worker is customarily engaged in an independent established business in the same line of work.

In the transportation industry, however, the ABC test may be preempted by the Federal Aviation Administration Authorization Act (the FAAAA). The FAAAA preempts all state laws that “relate[] to a price, route, or service of any motor carrier . . . with respect to the transportation of property.” The United States Supreme Court has held that preemption may occur “even if a state law’s effect on rates, routes, or services is only indirect” and applies “at least where state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.”

Because the ABC test is new, there is no binding authority in California on the question of whether it is preempted by the FAAAA. Given this fact, Western States Trucking Association filed a lawsuit against the Acting Director of the California Department of Industrial Relations (Andre Schoorl) and the California Attorney General (Xavier Becerra) seeking a finding that the FAAAA preempts the ABC test.