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In This Issue
March 2016 | Volume 4 Issue 1

Federal Law

DOL’s Wage and Hour Division Revisits Joint Employment

By: Thompson Information Service

Over the last year, few labor and employment law issues have been the subject of more scrutiny and controversy than questions of “joint employer” status under various workplace statutes. While the decision of the National Labor Relations Board in Browning-Ferris has triggered much of the debate, the other federal agencies that deal with employment law issues also have devoted substantial attention to the topic.

In late January, the Wage and Hour Division of the U.S. Department of Labor published guidance setting forth a new approach to determining “joint employer” status under its flagship statute, the Fair Labor Standards Act, as well as the narrower Migrant and Seasonal Agricultural Worker Protection Act. (See, Administrator’s Interpretation No. 2016-1 (January 20, 2016).) In early February, WHD published an updated summary on the same topic under the Family and Medical Leave Act. (See, Fact Sheet #28N, Joint Employment and Primary and Secondary Employer Responsibilities under the FMLA.)

This discussion will review the highlights of those DOL pronouncements, and their implications for employers that receive the services of contracted workers or other service providers.

Neither the agency’s statement on the FLSA — which appeared in the form of an “Administrator’s Interpretation” — nor the updated “Fact Sheet” on joint employer issues under the federal leave statute, carries the weight of regulations that have gone through public “notice and comment” via the rule making process. The FLSA AI may face specific challenge in jurisdictions whose approach to joint employer issues it critiques (such as prior holdings of the 1st and 3rd U.S. Circuit Courts of Appeals), and other courts may not defer to the perspective that the agency embraces.

Nonetheless, both statements will have an impact in directing the enforcement activity of DOL personnel, and undoubtedly will be influential in certain contested proceedings.

A finding of joint employer status can have a substantial impact on an employer’s potential liability and financial exposure under the workplace statutes, and it often appears as an unwelcome surprise to a recipient of services. In most of those circumstances, the business that contracts for certain services presumes that its arrangements are with the employer of third-party workers, and typically does not envision that it occupies a traditional employer’s role and responsibilities with respect to those individuals.

FLSA Interpretation

As the agency noted under the FLSA, where two (or more) employers jointly employ an individual, all of the hours worked for all of the joint employers in a given workweek are combined, and considered to be one employment. This, in turn, will determine whether overtime payments under the FLSA are due to the workers at issue, and in what quantity.

Not every contracted workforce or other labor provider arrangement will result in a finding of joint employment, but the agency’s agenda was fairly clear in the motivation and direction for its recent initiatives. The AI states:

Where joint employment exists, one employer may also be larger and more established, with a greater ability to implement policy or systemic changes to ensure compliance. Thus, WHD may consider joint employment to achieve statutory coverage, financial recovery, and future compliance, and to hold all responsible parties accountable for their legal obligations.

In its new interpretation, the agency specifically targeted several sectors in which contracting arrangements are prominent, including the construction, agricultural, janitorial, warehouse and logistics, staffing and hospitality industries. In case there remains any doubt as to the approach that DOL will bring to its scrutiny of such arrangements, it stated that the concept of joint employment “should be defined expansively” under the FLSA (and the MSPA).

The agency distinguished between “horizontal” joint employment and “vertical” joint employment, and attempted to illustrate the two. Horizontal joint employment, according to the AI, involves relationships between two or more employer entities that are “sufficiently associated or related with respect to the employee such that they jointly employ” the individual.

The concept of vertical joint employment differs. According to DOL, it will apply the “economic realities” test in assessing a potential vertical relationship between or among the putative employer entities. Although the factors may differ somewhat across jurisdictions, the key emphasis will focus on the ultimate inquiry of “economic dependence.”

The new AI’s distinction between vertical and horizontal joint employment, and the agency’s intended application of the economic realities test under the FLSA, depart from DOL’s longstanding approach to these issues. The fact that WHD did not go through traditional notice-and-comment procedures — arguably required under the Administrative Procedures Act — to change its approach and potentially impose substantial liabilities in a wide range of circumstances, is certain to draw criticism and be contested by employers in agency enforcement litigation and elsewhere. Notwithstanding such open questions, DOL’s new approach to these issues likely will threaten employers with litigation and entanglement in a wide variety of circumstances.

FMLA Document

The recently-published FMLA document, which highlighted the treatment of joint employment under the leave statute, did not break new ground as much as it illustrated the application of the somewhat unique “primary employer” and “secondary employer” concepts that apply to statutory leave rights. In distinguishing between the primary and secondary employer, key considerations include:

  • Who has authority to hire and fire, and to place or assign work to the employee;
  • Who decides how, when and the amount that the employee is paid; and
  • Who provides the employee’s leave or other employment benefits.

By way of illustration, DOL indicated that in the case of a temporary placement or staffing agency, most commonly it is the agency that is the primary employer within the meaning of the FMLA.

Both types of employers are obligated to count jointly-employed workers for coverage and eligibility determinations, refrain from retaliation, discrimination or interference, and keep records under the leave statute. In addition, primary employers, which have the more significant role, also must utilize their worksite for the eligibility test (50 employees within 75 miles), and provide FMLA notices, leave, maintenance of benefits and job restoration to the employees taking leave.

Secondary employers are responsible in some circumstances for restoring the employee to the same or an equivalent position upon return from leave (for example, when a secondary employer that is a client of a placement agency continues to use its services and the agency places the employee with the client employer). Of course, secondary employers are responsible for compliance with all provisions of the FMLA with respect to their regular permanent workforce of direct employees.

These initiatives are not surprising, in light of the writings and priorities of David Weil, Administrator of WHD, who has been a vocal critic of the so-called “fissuring” of the workplace. Dr. Weil has stated that the “impact of supply-chain relationships, branding, franchising, third-party management and subcontracting all have important implications for patterns of compliance.” The recent agency discussions appear to represent an effort to bring a new type of analysis to these arrangements.

When added to recent interpretations emerging elsewhere in the federal labor agencies — principally, the NLRB (which adopted an expansive view of joint employment in its decision in the Browning-Ferris case) — DOL’s pronouncements make it certain that the issue of joint employment will be a contentious one for the foreseeable future.

 

Proposed Rules Issued on Required Paid Sick Leave for Federal Contractors

By: Thompson Information Service

The U.S. Department of Labor issued proposed paid sick leave regulations for federal contractors on Feb. 25. The rules implement Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, signed by President Barack Obama on Sept. 7, 2015, requiring federal contractors to provide their employees with up to seven days of paid sick leave annually, including allowing paid leave for family care.

When he announced the order, the president said the order would provide 300,000 workers access to paid sick leave for the first time. The leave required under the order is in addition to any obligations required under the federal Service Contract Act and Davis-Bacon Act, and will not be credited toward a contractor’s prevailing wage or fringe benefit obligations.

Paid Leave Requirements

The order applies to contracts awarded on or after Jan. 1, 2017. As a condition of payment, the order requires that contractors and any subcontractor provide to every contract employee one hour of paid sick leave for every 30 hours worked.

Employees may use paid sick time for absences resulting from:

  • Physical or mental illness, injury or medical condition;
  • Obtaining diagnosis, care or preventive care from a health care provider;
  • Caring for a child, parent, spouse, domestic partner or other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has any of the conditions or needs the care, diagnosis or preventative care described above; or
  • Domestic violence, sexual assault or stalking, if the time absent from work is for any of the purposes described above, to obtain additional counseling, to seek relocation, to seek assistance from a victim services organization or to take related legal action (including preparation for or participation in any related civil or criminal legal proceeding).

Obligations under the order take effect only after DOL has issued implementing rules.

Expanded Obligations Under Proposed Rules

The proposed rules expand paid leave rights in some areas beyond what is required by current federal law and by the five states that have passed paid sick leave laws. A key area of differences lies in the proposed rules’ definitions of “child” and “family.”

DOL proposes to define “child” to mean not only a biological, adopted, step or foster son or daughter of an employee or employee’s spouse or domestic partner, but also a legal ward or person for whom the employee stands in loco parentis, whether currently or in the past. DOL noted that the proposed definition is deliberately broader than the definition of “son or daughter” in the Family and Medical Leave Act, and is intended to allow employees to use paid sick leave for more purposes than FMLA allows, including to care for their child of any age.

The definition of “family” has likewise been expanded. DOL is proposing to include in the definition any “individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” The term is conceived to mean “any person with whom the employee has a significant personal bond that is or is like a family relationship, regardless of biological or legal relationship.” This would include, but not be limited to, grandparents, brothers- and sisters-in-law, fiancés, cousins and even close friends. DOL explained that it will interpret the term to be inclusive of non-nuclear family structures.

The proposed regulations also expand contractor’s obligations beyond current practice in other areas. For example, employees will accrue paid sick leave for all time that an employee is or should be paid for work, not just hours actually worked. This means an employee would accrue sick leave time while out on paid time off. In addition, employers cannot set an annual cap on the amount of paid sick leave employees can use, and are required to provide employees written notification of available leave balances a multiple times and occasions, including each time an employee requests to use paid sick leave.

Costs of Implementing Proposed Rules

According to analysis by DOL, the industry-wide cost of implementing the proposed regulations in the initial year range from $57.5 million for federal contractors that already have a paid sick leave policy to $74 million for contractors with no current paid sick leave policy. The bulk of the expense ($45 million), applicable to all contractors, is for human resource professionals to become familiar with the new regulatory requirements.

Under the executive order, DOL is required to issue final regulations by Sept. 30, 2016; the deadline for submitting comments on the proposed rule is March 28. After final rules are adopted, the Federal Acquisition Regulatory Council will have 60 days to include the regulations in the Federal Acquisition Regulation (48 C.F.R. ch. 1) that governs covered government contracts.

 

ADA Suit Dismissed Because Worker Failed to Identify Accommodation

By: Thompson Information Service

To keep an Americans with Disabilities Act failure-to-accommodate claim alive, an employee must show that a reasonable accommodation exists that would enable her to perform the essential functions of her job, the 11th U.S. Circuit Court of Appeals ruled in a recent case.

A photographer who requested a lighter camera could not continue with her discrimination claim because she failed to show that such a camera existed, the court found in Tetteh v. WAFF Television, No. 15-12278 (11th Cir. Feb. 17, 2016).

Facts of the Case

Michaelene Tetteh worked for WAFF Television, an NBC affiliate, in Alabama. Her job required her to shoot video and report on news events. When a basketball player crashed into her while she was filming, she suffered an injury that required a five-pound lifting restriction.

Because her camera weighed about 20 pounds, she requested that the station provide her with either a lighter camera or another photographer to accompany her on assignments.

The station said she could not work until she could use the camera provided. When she eventually attempted to return to work, the station said it had replaced her and that no positions were available.

Tetteh sued, alleging that WAFF failed to accommodate her disability, in violation of the ADA.

WAFF moved for summary judgment, arguing that because she could not perform an essential function of her job — and had not pointed to a reasonable accommodation that would allow her to do so — she was not a qualified individual and therefore not entitled to the law’s protections.

A federal district court agreed and granted summary judgment for WAFF. Tetteh appealed.

Appeals Court Weighs in

Tetteh first argued that shooting video was not an essential function of her job. The appeals court disagreed, finding that her job description said her duties included “acting as Sports Anchor/Reporter/Photographer.”

Tetteh then argued that she could have performed her job functions with either of her proposed accommodations.

The 11th Circuit, however, said that she had not shown that her requests were reasonable. First, the ADA does not require an employer “to reallocate job duties in order to change the essential functions of a job,” the court said, citing its own precedent in Earl v. Mervyns, Inc., 207 F.3d 1361, 1367 (11th Cir. 2000). Tetteh’s request for another photographer, therefore, was not reasonable.

Additionally, the employee has the burden of persuading the factfinder that reasonable accommodations are available (Holbrook v. City of Alpharetta, 112 F.3d 1522, 1526 (11th Cir. 1997)). “Although she had the opportunity to do so, Tetteh did not present the district court with any credible evidence that another video camera was available that both fell within her lifting restrictions and was compatible with WAFF’s broadcasting equipment,” the court said.

Because Tetteh has failed to show that she was qualified for the job, with or without a reasonable accommodation, her disability discrimination claim fails, the court said, upholding summary judgment for the employer.

Employer Takeaway

Federal appeals courts have reached different conclusions regarding the ADA’s interactive process and an employee’s responsibility to identify a reasonable accommodation.

Some courts have said the employee bears the burden of identifying an accommodation that would enable him or her to perform a job’s essential functions, as well as the burden of showing that an accommodation is reasonable (Willis v. Conopco, 108 F.3d 282 (11th Cir. 1997); Stewart v. Happy Herman’s Cheshire Bridge, 117 F.3d 1278 (7th Cir. 1997)).

Others, however, have stated that the interactive process requires the employer to take some initiative (Taylor v. Phoenixville School Dist., 184 F.3d 296 (3d Cir. 1999)). “[T]he interactive process would have little meaning if it was interpreted to allow employers, in the face of a request for accommodation, simply to sit back passively, offer nothing, and then, in post-termination litigation, try to knock down every specific accommodation as too burdensome. That’s not the proactive process intended,” the Taylor court stated. “The obligation to participate in the process falls on both parties,” according to the 5th Circuit (Cutreau v. Board of Supervisors of Louisiana State Univ., 429 F.3d 108 (5th Cir. 2005)).

For more information on conducting the interactive process, see ¶325 in the ADA Compliance Guide.

 

Employee’s ‘Hope’ to Return to Work Insufficient to Require ADA Additional Leave

By: Thompson Information Service

One of the most difficult issues a human resources professional or in-house employment counsel faces is how to deal with an employee who cannot return to work after Family and Medical Leave Act expires. Is additional leave beyond 12 weeks required? The answer is almost always “yes.” But how much leave in an employer obligated to provide? And what if the employee already has taken months of leave and doesn’t really know when she’ll return?

Take, for instance, the situation involving Penelope. We’ll call her Pippy, for short.

Pippy suffered from sarcoidosis (inflammation of the lungs) as well as arthritis related to her condition. In September, she inquired about reducing her work schedule as a reasonable accommodation. Before her employer responded, however, Pippy suffered an injury that aggravated her medical condition. The injury caused Pippy to take time off in December 2006 and January 2007, and in February, she stopped working.

Between February and May, Pippy’s employer sent her multiple letters requesting documentation of the injury, but she didn’t respond. In June, her employer told her that she either had to report to work or provide medical documentation supporting her need for leave. Soon thereafter, Pippy sent her employer a “disability certificate” signed by her doctor indicating that the injury suffered a few months earlier left her “totally disabled” and she would remain so “indefinitely.” In contrast to her physician, however, the employee told her employer that she “hoped” to return by September 2007. Unwilling to wait any longer for Pippy’s uncertain return, the employer terminated her employment.

Like a typical, litigious former employee, Pippy filed an Americans with Disabilities Act suit. It didn’t last long. Pippy forgot one basic principle — an employer is never required to provide an employee an indefinite leave of absence. Particularly after the employer already has provided a reasonable amount of leave as an accommodation to help the employee return to work.

Like many others have done in similar situations, this court dismissed Pippy’s ADA claim in large part because her employer provided her a reasonable amount of leave (here, three months), and she could not provide a reasonable estimation of her return to work. In other words, she was asking for an open-ended, indefinite leave of absence.

Courts almost always will support an employer’s right to terminate employment in instances like these. Other employers should take note — when an employee cannot provide a reasonable estimate of when they will again be able to perform their essential job duties, their ADA claims skate on thin ice. (Minter v. District of Columbia 2015 WL 9466224 (D.C. Cir. Dec. 29, 2015))

But let’s not be too confident …

In situations like these, it is imperative that employers engage in the interactive process with the employee to determine whether any accommodation is available to help the employee return to work. When employers don’t, they risk significant liability under the ADA.

Just ask the Wayne Township Fire Department. The fire department hired Kristine as a reserve paramedic in February 2009 and as a full-time paramedic a few months later, knowing that she had Type 1 diabetes. While on the job, Kristine’s blood-sugar levels dropped on two occasions while she was on duty — once while she was driving and again while she was caring for a patient in the back of an ambulance.

Kristine told her supervisor and other officials what had happened. Shortly thereafter, she was told she could not return to work without approval from the agency’s medical director, who refused to return Kristine to work because she could not “guarantee” there would be no further incidents. Declining to engage in any interactive process, the fire department simply terminated Kristine’s employment.

That cha-ching sound is the Fire Department’s cash register, which opened wide to the tune of $725,000 to pay Kristine for its ADA violations and her attorney’s fees. (Rednour v. Wayne Township Fire Dept., 51 F.Supp.3d 799 (S.D. Ind. Sept. 24, 2014)) One of the “fundamental” issues for the jury’s verdict in favor of Kristine? The mere fact that the employer did not engage in the ADA’s interactive process.

Think about it. Three-quarters of a million dollars simply because the employer failed to engage in the interactive process. What a waste.

In her analysis of Kristine’s case, attorney Miriam Rosen of McDonald Hopkins PLC’s Detroit office identified several steps that an employer should take to identify accommodations in situations like these. I really liked her suggestions, so I paraphrase them here:

  • Obtain information from the employee and employee’s physician (through the employee, of course) to understand the medical condition and how it affects the employee’s ability to perform essential job functions.
  • Identify the essential job functions that the employee must perform with or without an accommodation. Up-to-date job descriptions are key to this process.
  • Do not make assumptions about whether the employee can or cannot perform the essential job functions. Rather, engage in a dialogue with the employee about what modifications would help the employee perform the essential job functions. Consider whether other options for accommodation are available if the suggested accommodations are not reasonable.
  • Determine if it is possible to provide reasonable accommodations that allow the employee to perform the essential functions of the position. Remember that accommodations such as a leave of absence or, if available, light duty may allow the employee to perform job functions within a reasonable time.
  • If an accommodation is identified, put it into place. If it is not possible to provide a reasonable accommodation, communicate that to the employee as well and any employment-related consequences.
  • Document the process and outcomes to establish that the employer’s obligations to engage in the interactive process have been met.

Engage in a meaningful interactive process. Conduct an individualized assessment. Be creative in providing accommodations to keep the employee on the job. Avoid liability.

Easier said than done, right?

 

Staying Compliant When Employees Take Time Off

Frequently Asked Questions about the FLSA and Vacation Time

By: Thompson Information Service

This could have been a very short article since the Fair Labor Standards Act does not require employers to provide any vacation time to employees (see, for example, Wage-Hour Op. Ltr. FLSA2005-41 (Oct. 24, 2005)). Nevertheless, there are FLSA implications for employers that provide vacation voluntarily or are required to do so by other laws — such as the Service Contract Act (41 U.S.C. §6701 et seq.), which applies to many contractors to the federal government.

Q: Does paid vacation count as hours worked?

No. Section 7 of the FLSA (29 U.S.C. §207) requires employers to pay nonexempt employees one-and-one-half their regular rate for hours worked in excess of 40 in a workweek. If an employee works 10 hours a day on Monday through Thursday — a total of 40 hours — and takes eight hours of paid vacation on Friday, the employee will have been paid for 48 hours, but he will not have worked more than 40 hours in the workweek. Therefore, he is not entitled to premium pay under the FLSA.

Note that an applicable collective bargaining agreement or employment contract could provide that some hours that are paid, but not worked, will count as hours worked.

Q: Must nonexempt employees be paid if they work while they are on paid vacation?

Yes and no. The FLSA requires employers to pay for all work that is “suffered or permitted,” even if it is unauthorized. However, since the FLSA does not require paid vacation, it can be argued that the employer already has discharged its FLSA obligation to pay for the work by giving the employee vacation pay for the very same unit of time when he performed the work. This presumes, of course, that the vacation pay is at a rate that would satisfy the minimum wage.

Note that state law may dictate a different outcome, as may a collective bargaining agreement or employment contract. For instance, in both California and Massachusetts, earned vacation is considered wages, meaning that it becomes the employee’s property when it is earned (see, for example, Mass. Attorney General Advisory 99/1). It that case, the vacation pay cannot be used to discharge a different obligation and, if a nonexempt employee works during vacation, you would have to pay separately for that work or give the employee additional vacation.

Q: May an employer require exempt employees to use accrued vacation time when work is slow or if the workplace is closed for bad weather?

Yes. Exempt employees must be paid a salary which is not subject to reduction because of variations in the quantity of work performed (29 C.F.R. §541.602(a)). But, this requirement is met if the exempt employee receives his regular paycheck, whether that paycheck is for working or for taking vacation. The U.S. Department of Labor has stated many times that “since employers are not required under the FLSA to provide any vacation time to employees, there is no prohibition on an employer giving vacation time and later requiring that such vacation time be taken on a specific day(s)” (Wage-Hour Op. Ltr. FLSA2009-2 (Jan. 14, 2009) and FLSA2005-41 (Oct. 24, 2005)).

Q: May an employee require an exempt employee to use accrued vacation time to cover a partial day absence?

Yes, for the same reason and based on the same Wage and Hour Opinion Letters as in the previous response. Such a policy has been approved even in California, which arguably has the strongest vacation laws of any state (see, for example, California Division of Labor Standard Enforcement Opinion Letter 2009.11.23).

Q: If an exempt employee leaves the company and has a negative leave balance, may the employer recoup that amount from his last paycheck?

It depends. An exempt employee who has a negative balance still must receive the employee’s guaranteed salary (Wage-Hour Op. Ltrs. FLSA2009-2 (Jan. 14, 2009) and FLSA2005-41 (Oct. 24, 2005)). But, if the exempt employee has any commissions, bonuses or other non-salary compensation coming to him, the negative leave balance could be offset against that non-salary compensation.

Once again, be sure to consult the applicable state law, which could dictate different results (see, for example, California Division of Labor Standard Enforcement Opinion Letters 1986.10.28; 1991.05.16 and 1998.09.17).

Q: Can an employer require employees to use their accrued vacation time before requesting unpaid time off?

Sometimes, for whatever reason, an employee may ask to take days off without pay in order to save vacation time for later in the year. The FLSA does not expressly deal with this subject; however, as noted above, an employer may require an exempt employee to use vacation pay to cover time off. In the case of a nonexempt employee, this question is moot, since a nonexempt employee is not required to be paid when he does not work.

If unpaid leave is requested under the Family and Medical Leave Act, the employer may require the employee to use accrued paid leave to cover some or all of the FMLA leave taken.