The NLRB offers “clarity” on its joint-employer test by issuing its final rule

On February 26, 2020, the National Labor Relations Board (NLRB) issued its final rule governing joint-employer status under the National Labor Relations Act (NLRA) in the federal register. The final rule will undo a more relaxed Obama-era joint-employer test by reinstating the joint-employer standard that the Board followed for several decades prior to its 2015 decision in Browning-Ferris Industries of California, Inc. According to the Board, its ruling provides “greater precision, clarity, and detail that rulemaking allows,” as to what constitutes a joint employer.

The Browning-Ferris decision held that a company could be deemed a joint employer if “its control over the essential terms and conditions of another business’s employees was merely indirect, limited and routine, or contractually reserved but never exercised.” However, with its final rule, the Board will reinstate a pre-Browning-Ferris test which holds that a business is only a joint employer if it “has substantial direct and immediate control” of one or more essential terms or condition of a worker’s job such that the business “meaningfully affects matters” pertaining to the employment relationship. In its ruling, the NLRB defined those “essential terms and conditions of employment” as “wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.” It also defined “substantial” direct control as actions that have “a regular or continuous consequential effect” on one of the eight core aspects of a worker’s job that the Board listed, while pointing out that any direct control that is “sporadic, isolated, or de minimus” is insufficient to warrant a finding of joint employment.

Fifth Circuit clarifies when improper pay deductions make an employee ineligible for exemptions from overtime under the FLSA

By Paul Knettel and Peter Stuhldreher on 24 February 2020 Posted in Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

The Fair Labor Standards Act (FLSA) exempts employees with certain executive, administrative, or professional job duties from the requirement that they receive overtime pay for hours worked over 40 in a workweek. Determining whether one or more of these “white collar” exemptions apply to a particular employee requires a fact-intensive analysis of the employee’s job duties. But there is another, sometimes overlooked, requirement: the employee must be compensated on a “salary basis” at a rate of not less than $684 per week. 29 C.F.R. § 541.600(a). An employee is paid on a salary basis if the employee regularly receives, on a weekly or less frequent basis, a predetermined amount which “is not subject to reduction because of variations in the quality or quantity of the work performed.” 29 C.F.R. § 541.602(a). Employers who make improper deductions from their employees’ salaries will lose the ability to claim that the executive, administrative, and professional exemptions apply if the facts demonstrate that they did not pay the employee on a salary basis. 29 C.F.R. § 541.603.

There has been a substantial amount of litigation regarding the types and frequency of deductions from an otherwise exempt employee’s salary that will cause an employer to lose the ability to claim that the white collar exemptions apply. One area of contention has been whether an employer’s policy stating that it will make improper deductions from an employee’s salary is sufficient to defeat exempt status, or whether there must be an actual practice of making such deductions for the employer to lose the exemption. Previously, courts followed the Secretary of Labor’s view that, if an employer’s policy created a “significant likelihood” of improper salary deductions, this could result in a loss of exempt status. Auer v. Robbins, 519 U.S. 452 (1997). But the Department of Labor has since promulgated regulations stating that the focus is on “an actual practice of making improper deductions.” 29 C.F.R. § 541.603. Continue Reading

Significant changes to Colorado’s wage rules on the horizon

By Michael Correll and Joseph J. Mammone Jr. on 17 February 2020 Posted in Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

The Colorado Department of Labor and Employment’s Division of Labor Standards and Statistics (the Division) recently adopted Colorado Overtime and Minimum Pay Standards Order # 36 (COMPS), which will take effect on March 16, 2020.^[1] COMPS will replace the Colorado Minimum Wage Order, which had largely remained substantively unchanged for two decades. With the adoption of COMPS, the Division seeks to broadly expand Colorado’s wage-and-hour regulations, limit the reach of exemptions, and require more complete and accurate payment for all time worked.

The Division spent most of 2019 conducting extensive workplace, economic, and legal research and began an eight month pre-rulemaking comment period on March 6, 2019. Over 1,300 people submitted comments. The commenters spanned nearly all industries and regions in Colorado, including workers, employers, public officials, unions, policy analysts, and advocates for both labor and employers. Given the number of comments received, the deadline to submit comments was extended. The Division’s policy team met repeatedly over five months, making modifications to COMPS before adopting it.

As adopted, COMPS will make three significant changes to Colorado’s wage-and-hour regulations:

COMPS dramatically expands the coverage of previous minimum wage orders to presumptively embrace all employees and all industries, unless specifically exempted. This broadened scope marks a major departure from the four narrowly defined industries that were previously covered.
COMPS progressively raises the minimum salary required for exempt employees, such as administrative workers, and executives or supervisors. The minimum salary will be phased in over the next four and a half years as follows:
- $35,568 from July 1, 2020 to December 31, 2020
- $40,500 from January 1, 2021 to December 31, 2021
- $45,000 from January 1, 2022 to December 31, 2022
- $50,000 from January 1, 2023 to December 31, 2023
- $55,000 from January 1, 2024 to December 31, 2024

Every January 1 after 2024, the minimum salary will be adjusted using the same Consumer Price Index metrics that annually adjust the Colorado minimum wage.

COMPS expressly disallows the de minimis defense and clarifies that any activity that is reasonably expected to take one minute or more must be compensated.

Additionally, COMPS makes technical changes to the following: (i) certain exemption requirements; (ii) the rules regarding rest periods; (iii) credits towards minimum wages; and (iv) posting and distribution requirements. For example, COMPS grants flexibility for required 10-minute rest periods to now be taken as two five-minute breaks.

We will continue to monitor developments and provide updates regarding COMPS as additional information becomes available. In the meantime, if you have any questions or concerns regarding whether your pay practices and policies comply with COMPS, please do not hesitate to reach out to the authors of this post or any member of Reed Smith’s Labor & Employment Group.

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^[1] Adopted Rule: Colorado Overtime & Minimum Pay Standards (COMPS) Order #36, Colorado Department of Labor and Employment, https://www.colorado.gov/pacific/cdle/adopted-rule-colorado-overtime-minimum-pay-standards-comps-order-36 (last visited February 12, 2020).

Cupid’s arrow strikes at work: Managing romantic and personal relationships in the workplace

By James A. Holt and Raeann Burgo on 14 February 2020 Posted in Employment & Labor (U.S.), Workplace Laws and Regulations

Valentine’s Day offers an annual reminder to every employer that Cupid’s arrow can strike at the workplace. According to certain studies, 25 to 50 percent of employees have been a part of a workplace romance. This might not be surprising given the amount of time employees spend with each other, in many cases over the course of several years, and the bonds that can form among and between coworkers who share common interests and experiences, whether professional or personal in nature.

So what can employers do to manage romantic and personal relationships when “love is in the air” at the workplace?

Employers may consider implementing a personal relationship policy to address the subject of workplace romances. Even if not required by law, having a written policy in place can be viewed as a best practice. A policy that clearly and effectively provides employees with guidance as to what is permitted and what is prohibited with respect to workplace romances, as well as the consequences for violations of the policy, can be beneficial to management and nonmanagement employees alike.

Don’t Ask, Don’t Use – the Third Circuit allows the Philadelphia salary history ban ordinance to go into effect

By Lori Armstrong Halber and Gavin Carpenter on 11 February 2020 Posted in Employment & Labor (U.S.), Pennsylvania Employment Beat, Wage and Hour, Workplace Laws and Regulations

In 2017, the City of Philadelphia enacted the Wage Equity Ordinance to address the pay gap between men and women and between different races and ethnicities. The Ordinance contains two provisions: the “Inquiry Provision,” which prohibits employers from asking about a prospective employee’s wage history; and the “Reliance Provision,” which prohibits an employer from relying on wage history at any point in the process of setting or negotiating a prospective employee’s wage. Mayor Jim Kenny signed the Ordinance into law in January 2017 after it was unanimously passed by Philadelphia City Council.

The Greater Philadelphia Chamber of Commerce, however, filed a lawsuit alleging that both provisions of the Wage Equity Ordinance infringed on the chamber and its members’ First Amendment freedom of speech rights. In the Chamber of Commerce for Greater Philadelphia v. City of Philadelphia et al., the Honorable Mitchell Goldberg from the Eastern District of Pennsylvania granted the chamber a preliminary injunction on the Inquiry Provision in April 2018, holding that the Ordinance violates employers’ freedom of speech rights. Judge Goldberg, however, upheld the Reliance Provision, which prohibits reliance on wage history, based on the court’s conclusion that such reliance did not implicate protected speech. In other words, Judge Goldberg found that an employer could ask about a candidate’s salary history, but could not use the information. Both parties appealed to the Third Circuit Court of Appeals. Continue Reading

Election season is here: Can your employees leave work to vote?

By Hannah L. Sorcic and Adam Weiner on 4 February 2020 Posted in Employment & Labor (U.S.), Wage and Hour, Workplace Laws and Regulations

With the 2020 presidential primaries underway, now is the time for employers to review their voting leave policies to ensure that supervisors and human resources departments understand applicable law. In addition to avoiding legal liability, compliance with voting-related laws helps employers maintain workplace harmony during a potentially contentious period.

Currently, 30 states^[1] (and Puerto Rico) require private employers to provide time for employees to vote. These statutes vary, however, on the issues of whether the leave is paid, notice requirements, minimum amount of leave, and employer control over when employees take leave. These laws also change periodically. For example, in 2019, New York state revised its voting leave law to provide employees with three hours of paid leave (an increase from two hours), which must occur at the beginning or end of assigned working hours. In addition, New York employees now only need to provide two days’ advance notice of their intent to take voting leave.

While 20 states (and Washington, D.C.) do not have statutory voting leave laws covering private employers, many have related provisions that become important during election season. For example, in Florida it is a third-degree felony for any employer to discharge or threaten to discharge an employee for voting or not voting in any election or for any candidate. In Indiana, Montana, New Jersey, Pennsylvania, and Rhode Island it is illegal for an employer to post a handbill or placard with threats that work will stop, that the location will be closed, or that wages will be reduced as a result of a particular election.

Knowing the rules of engagement is critical.

Additional reminders

Posted notice. Some states, including California and New York, require employers to conspicuously post a notice of employees’ right to take time off to vote at least 10 days before the election.
Election/political officials. Some states also provide leave for employees to serve as election judges at polling places or as political party officials, or to participate in other political activities.
Local law. While most voting leave laws come from the state level, employers should confirm that no municipalities or counties in which they operate provide similar leave.
No retaliation. As with other protected leave, employers cannot retaliate against employees for taking time off to vote in accordance with applicable law.

If you have any questions about the voting leave laws applicable to your workforce, contact an experienced Reed Smith Labor and Employment attorney.

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[1] AK, AL, AR, AZ, CA, CO, GA, HI, IA, IL, KS, KY, MA, MD, MN, MO, ND, NE, NM, NV, NY, OH, OK, SD, TN, TX, UT, WV, WI, and WY.

New Jersey enacts major changes on the independent contractor front

By John T. McDonald and Saranne Weimer on 27 January 2020 Posted in Discrimination, Employment & Labor (U.S.), Labor (U.S.), New Jersey Employment Beat, Wage and Hour, Workplace Laws and Regulations

The start of 2020 has already proven to be a busy year for employers in New Jersey. In addition to becoming the first state in the nation to mandate severance payments for mass layoffs, New Jersey has enacted some sweeping changes to its independent contractor laws.

Governor Phil Murphy recently signed five bills aimed at addressing misclassification of workers. These bills impose new requirements on companies, expand the scope of liability, and give the New Jersey Department of Labor and Workforce Development significant new authority.

New York State and City expand Human Rights Law protections to freelancers and independent contractors

By Mark S. Goldstein and Alexandra Manfredi on 24 January 2020 Posted in Discrimination, Employment & Labor (U.S.), Labor Relations, New York Employment Beat, Workplace Laws and Regulations

Independent contractors have long been excluded from the protections afforded by traditional workplace anti-discrimination laws. That is no longer the case in New York State and City. In recent months, legislators in both Albany and Manhattan have extended substantial workplace-related protections – once only afforded to traditional employees – to freelancers, consultants, and the like (that is, independent contractors). We will discuss these measures below.

New York State

Effective October 2019, the antidiscrimination provisions of the New York State Human Rights Law (NYSHRL) now protect nonemployees, such as contractors, subcontractors, vendors, consultants, temporary workers, “gig” workers, and other non-employee persons providing services pursuant to a contract. In practice, this means that independent contractors may now pursue claims of workplace discrimination, harassment, and retaliation under the NYSHRL. This change is particularly impactful when considered in conjunction with the recently lowered standard for proving claims of harassment.

At present, these laws only apply to entities with four or more employees. However, effective February 8, 2020, the protections will cover all businesses operating within the state. Continue Reading

New Jersey law requires severance pay in mass layoffs

By John T. McDonald and Saranne Weimer on 22 January 2020 Posted in Employment & Labor (U.S.), New Jersey Employment Beat, Wage and Hour, Workplace Laws and Regulations

Governor Phil Murphy signed legislation yesterday, January 21, 2020, amending New Jersey’s mini-WARN law, the Millville Dallas Airmotive Plant Job Loss Notification Act (the “Act”). Most notable among the changes is the requirement that companies with 100 or more employees (now including part-time workers) pay severance to employees impacted by a mass layoff. A “mass layoff” is considered any plant closing or transfer resulting in 50 or more employees losing their jobs.

Pursuant to the Act, impacted employees must receive at least one week of pay for every year of service as a severance payment. When calculating the amount of severance pay, the rate of pay must be the greater of the employee’s average rate of compensation during the last three years or the employee’s final rate of pay. If the employee is entitled to a greater amount of severance under any contract, policy, or collective bargaining agreement, the employee must receive the greater amount. The Act classifies the severance payments as “compensation due to an employee” that has been “earned in full,” so that employees who do not receive the required severance have a priority claim if the employer files for bankruptcy.

EEOC rescinds longstanding policy statement on mandatory binding arbitration

By Betty S.W. Graumlich and Noah Oberlander on 22 January 2020 Posted in Discrimination, Employment & Labor (U.S.), Labor Relations, Workplace Laws and Regulations

Last month, the U.S. Equal Employment Opportunity Commission (EEOC) surprisingly announced that it was formally rescinding its longstanding “Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment,” which took the position that mandatory arbitration provisions between employers and employees were contrary to federal antidiscrimination laws.

Originally issued in July 1997, the EEOC’s policy statement expressed its position that mandatory arbitration agreements could have “chilling effects” on charge filing because employees (1) may not be aware of their right to nonetheless file an EEOC charge despite such an agreement; or (2) might otherwise be discouraged from coming to the EEOC when they know that they cannot litigate their claim outside of arbitration. The policy statement also identified overall concerns with arbitration, arguing that, by its nature, arbitration does not allow for development of case law, lacks certain constitutional and procedural safeguards afforded by the federal court system, and includes structural biases against discrimination plaintiffs.