In This Issue
January-March 2017 | Volume 5 Issue 1

Federal Law

Breathtakingly radical: Acosta questions legality of any overtime threshold

By: Thompson Information Service; Kate McGovern Tornone

President Donald Trump's nominee for secretary of labor has questioned whether the U.S. Department of Labor (DOL) has the authority to set any salary threshold for overtime pay---not just the pending increase that would raise the threshold to $47,476.

Alexander Acosta volunteered that concern twice during his March 22 confirmation hearing, despite no questions from lawmakers to that effect. A former DOL economist who worked under President Barack Obama called Acosta's statements "breathtakingly radical," noting that an overtime threshold has been in place since 1938.


The Fair Labor Standards Act (FLSA) requires employers to pay overtime to employees earning less than $455 per week ($23,660 per year), regardless of whether they meet one of the law's duties tests for exemption. The Obama administration issued a final rule that more than doubled the threshold, but a federal district court judge temporarily blocked it just days before it was set to take effect in November 2016.

Judge Amos Louis Mazzant III, who was nominated to his position by Obama, determined that Congress clearly intended the FLSA's white-collar exemptions to apply to employees who actually perform executive, administrative, and professional duties---not just employees who meet a salary requirement. Nothing in the law indicates that Congress intended that the DOL would set a minimum salary level, he wrote in his order enjoining the rule.

In a footnote, however, Mazzant said he was not taking a position on the general lawfulness of an overtime threshold. "The Court is evaluating only the salary-level test as amended under the [DOL's] Final Rule," which was so high that it supplanted the duties test, he said. Obama's DOL immediately appealed the order, and the Trump administration has until May 1 to decide whether it wants to continue with the appeal.

The current, lower threshold was adopted in 2004 under President George W. Bush. Just last week, Tammy D. McCutchen, the Wage and Hour Division (WHD) administrator at the time, told attendees at a conference that she is fine with an increase but believes that $35,000 to $38,000 is the appropriate range. McCutchen is reportedly under consideration for solicitor of labor.

Acosta's position

During the hearing, Acosta generally was silent about his plan for the litigation challenging the order enjoining the overtime rule. Members of Congress---Senator Elizabeth Warren (D-Massachusetts), in particular---asked him directly and repeatedly whether he would defend the rule in court or drop the appeal.

Acosta spoke at length about the need to balance protections for workers against the economic impact of the overtime rule. However, when it came to the litigation, he promised only to consult with the DOL and U.S. Department of Justice officials who defended the rule under Obama.

However, Acosta then questioned the appropriateness of a DOL-determined threshold at all:

A related issue to this is the question of whether the dollar threshold is within the authority of the secretary. When Congress passed these statutes, it provided in essence for a duties test[,] and one of the questions that's in [the] litigation is: does a dollar threshold supersede the duties test and as a result is it not in accordance with that law? And I mention that because I think the authority of the secretary to address this is a separate issue from what the correct amount is and the litigation needs to be considered carefully [not only] with respect to what would be the appropriate amount if the rule were to be changed or revised but also [with respect to] what is within the authority of the secretary to do.

Later, when questioned about whether a lower threshold would be appropriate, Acosta offered the same sentiment:
Because of the size of the increase[,] there are serious questions as to whether the secretary of labor even has the power to enact this in the first place[,] which is what . . . the basis of the litigation is.

The committee members, however, focused on a potential lower threshold. Even officials at the Society for Human Resource Management (SHRM) have consistently said that although the threshold is due for an update, the final rule merely went "too far, too fast."
"It is breathtakingly radical for a labor secretary nominee to be questioning the authority of the Labor Department to set the overtime threshold," Heidi Shierholz, former chief economist at the DOL under Obama, said in a statement. "The Labor Department has exercised this authority since 1938, and has done so under 10 presidents, including Franklin D. Roosevelt and George W. Bush. Congress has amended the [FLSA] many times and has never objected to the salary test," said Shierholz, who now works at the Economic Policy Institute, which describes itself as a think tank focused on the needs of low- and middle-income workers.

Other DOL regulations

Acosta was tight-lipped about other DOL regulations. Warren asked him to comment on the silica rule, an Occupational Safety and Health Administration (OSHA) regulation that is in effect but faces legal challenges. She asked him to promise that he would not weaken the rule, but he said he would be bound by Trump's Executive Order (EO) to review all rules once confirmed. "Based on that executive action, I cannot make a commitment because the [DOL] has been ordered to review all rules," he said. He added, however, that the DOL would enforce rules as long as they are in effect.

Acosta similarly dodged questions about the DOL's fiduciary rule, again citing an EO specifically directing the DOL to revisit that rule. "You've refused to answer my questions, hiding behind an executive order," Warren said. "I'm not asking you how you will respond to President Trump's executive order; I'm asking you about what your priorities will be if you're confirmed."
Senator Lamar Alexander (R-Tennessee) defended Acosta, saying it would be presumptuous of him to take a position on the regulations in question before consulting with DOL staff.

Acosta's philosophy

When asked how he would implement Trump's proposed 21 percent cut to the DOL's budget, Acosta said he would not advocate for an across-the-board reduction for all DOL programs. Instead, he believes that the success of initiatives should be evaluated individually and their budgets adjusted accordingly.

Acosta offered the example of job corps centers, which Trump took aim at in his budget proposal. The DOL should consider which centers are successful and which ones are not; it must consider states' and localities' individual needs, he said.
Senator Patty Murray (D-Washington) asked whether Acosta will bow to political pressure should he be confirmed. "You have to stand up for workers," she said. "That will be your job." In reply, Acosta said officials shouldn't bow to such pressure but, at the same time, Trump is the boss.

"We all work for the president[,] and we all will ultimately follow his direction unless we feel that we can't," Acosta continued. "And if we can't, we resign."

EEOC releases guidance on mental health conditions

By: Thompson Information Service

The Equal Employment Opportunity Commission (EEOC) has released informal guidance to advise employees of their legal rights in the workplace with regard to depression, posttraumatic stress disorder (PTSD), and other mental health conditions. Although the guidance is geared toward employees, it provides insight for employers on the EEOC's position on employee protections under the Americans with Disabilities Act (ADA).

Guidance covers broad range of topics

The guidance is provided in a question-and-answer format and covers the following areas.

Discrimination. The EEOC advises that it's illegal for employers to discriminate against an individual because he has a mental health condition. The guidance explains the exceptions for individuals who pose a safety risk and for those who are unable to perform their job duties. The EEOC says you can't rely on myths or stereotypes about a mental health condition when making an employment decision but instead must base your decision on objective evidence.

Privacy/confidentiality. The guidance explains that employees and applicants are entitled to keep their condition private and that employers are permitted to ask medical questions in four situations only:

    1. When an individual asks for a reasonable accommodation;
    2. After a conditional job offer has been extended but before employment begins (as long as all applicants in the same job category are asked the same questions);
    3. For affirmative action purposes---and a response must be voluntary; or
    4. When there is objective evidence that an employee may be unable to do his job (or may pose a safety risk) because of a medical condition.

When medical information is disclosed, you must keep the information confidential---even from coworkers.

Job performance. Reasonable accommodation is the focus of the EEOC's guidance in this area. It describes a reasonable accommodation as a change in the way things are normally done at work and gives the following examples:

  • Altered break and work schedules (e.g., scheduling work around therapy appointments);
  •  A quiet office space or devices that create a quiet work environment;
  • Changes in supervisory methods (e.g., written instructions from a supervisor who doesn't usually provide them);
  • Specific shift assignments; and
  • Telecommuting.

"Substantially limiting" condition. The guidance points out that a condition doesn't need to be permanent or severe to be substantially limiting under the ADA. A condition that makes activities more difficult, uncomfortable, or time-consuming to perform (when compared to the general population) may be substantially limiting.

And even if symptoms come and go, the guidance notes that "what matters is how limiting they would be when the symptoms are present." It also notes that mental health conditions like major depression, PTSD, bipolar disorder, and obsessive compulsive disorder "should easily qualify." According to this section, you shouldn't conduct an extensive analysis of whether a condition qualifies as a disability. Instead you should focus on complying with the ADA's antidiscrimination and reasonable accommodation requirements.

Reasonable accommodation. The guidance advises employees that they may ask for a reasonable accommodation at any time but that it's generally better to ask before any workplace problems occur because employers aren't required to excuse poor job performance---even if it's caused by a medical condition or the side effects of medication.

The guidance notes you may ask an employee to put an accommodation request in writing and may ask her healthcare provider for documentation about the condition and the need for an accommodation. The EEOC suggests that employees bring to their medical appointment a copy of the EEOC publication "The Mental Health Provider's Role in a Client's Request for a Reasonable Accommodation" (available at

The guidance adds that an unpaid leave may be a reasonable accommodation if the leave will help the employee get to a point where she can perform a job's essential functions. And if the employee is permanently unable to do her regular job, the guidance explains that she can request reassignment to another job if one is available.

Harassment. The EEOC advises employees to tell their employer about any harassment if they want the employer to stop the problem. The guidance recommends that employees follow your reporting procedures and explains your legal obligation to take action to prevent future harassment.

Bottom line

Although the EEOC's guidance is directed specifically at employees and their healthcare providers, you may also benefit from it for several reasons. First, the document makes clear that you must rely on objective evidence in making employment decisions and requesting medical information from employees---myths, stereotypes, and rumors are insufficient. In addition, given the document's focus on confidentiality, you should ensure you have in place a process guaranteeing the appropriate treatment of information regarding employees' mental health conditions.

Also, the guidance highlights the significance of healthcare provider documentation in accommodation requests. Indeed, documentation from a healthcare provider often serves as a catalyst for the interactive dialogue between you and the employee that is required by the ADA.

Finally, the guidance underscores the importance of training supervisors. Supervisors must be able to identify an accommodation request and understand your obligations once a request is received. They also must manage performance and conduct issues that may be caused by employees' mental health conditions---a difficult task that can be accomplished with proper education and guidance.

The EEOC guidance is available online at

Employer's past practices can actually expand liability for failure to accommodate

By: Thompson Information Service, Mathew A. Goodin, Epstein Becker and Green, P.C.

In this case involving police recruits who were injured during training at the Los Angeles Police Department's (LAPD) Police Academy, the court confirmed that an employee may not be a qualified individual for purposes of a discrimination claim but may be a qualified individual for purposes of a failure-to-accommodate claim. The case also illustrates how an employer's past practices can affect the scope of its duties to disabled employees under the California Fair Employment and Housing Act (FEHA).

Police recruits injured during training placed in light-duty assignments

Five recruits suffered temporary injuries while they were training at the LAPD's Police Academy. At the time they were injured, the LAPD had been assigning injured recruits to light-duty administrative positions indefinitely until their injuries healed or they became permanently disabled. The department ended that practice while the five recruits were still recuperating from their injuries.

Rather than allowing the recruits to remain in their light-duty assignments, the LAPD asked them to resign, telling them that they would be terminated unless they could get immediate medical clearance to return to the academy. None of the recruits was able to obtain the necessary clearance, and the police department terminated them or forced them to resign. The recruits sued the LAPD under the FEHA.

At trial, a jury found that the city unlawfully discriminated against the recruits based on their physical disabilities, failed to provide them reasonable accommodations, and failed to engage in the interactive process required by the FEHA. The city challenged the jury's verdict on a number of grounds, including that the recruits weren't "qualified individuals" under the FEHA because they couldn't perform the essential duties of a police recruit with or without a reasonable accommodation, and it wasn't required to accommodate them by making their temporary light-duty positions permanent or by transferring them to other jobs.

Recruits not qualified individuals for purposes of discrimination claim

To establish a disability discrimination claim, a disabled employee must establish that he is a "qualified individual"---that is, he can perform the essential functions of his position with or without a reasonable accommodation. The city argued that because the disabled individuals were hired as police recruits, they had to prove they could perform the essential functions of a police recruit to prevail on their discrimination claim. However, the recruits argued that the relevant question was whether they could perform the essential functions of the light-duty positions to which they sought reassignment.

The court clarified that for a discrimination claim, the relevant question is whether the employee can perform the essential functions of the job he held. Therefore, the recruits had to establish that they could perform the essential functions of a police recruit.

The undisputed evidence showed that recruits must be able to perform the same duties as police officers. Those duties are well-defined by a variety of LAPD standards and certification requirements, and include the ability to go over a six-foot fence within a specified time, sprint 500 yards, navigate an obstacle course, and drag a 150-pound dummy a certain distance. It was undisputed that the injured recruits could not perform those functions.

The recruits argued that they could perform the essential functions of the police officer position with the accommodation of being placed in a light-duty position. However, the court clarified that in a discrimination claim under the FEHA, an accommodation isn't "reasonable" if it eliminates one or more essential functions of the job.

Different analysis for failure-to-accommodate claim

The analysis was significantly different for the recruits' claim that the city failed to accommodate their disabilities. In a failure-to-accommodate claim, the employee still must prove he is a qualified individual. But if he contends that the employer failed to accommodate him by reassigning him to another position, he can prove he is a qualified individual by establishing that he can perform the essential functions of the job to which he seeks reassignment rather than the essential functions of his existing position. So, for the accommodation claim, the relevant question was whether the recruits could perform the essential functions of the light-duty assignments they sought.

The court reiterated that when a disabled employee requests reassignment as an accommodation, the FEHA requires the employer to offer him a vacant "comparable" or "lower-grade" position for which he is qualified. The FEHA doesn't require accommodation if there are no vacant positions that the employee is qualified to fill, nor is the employer required to promote the employee or create a new position for him. An employer is relieved of its obligation to reassign an employee only if reassignment would impose an undue hardship on the employer.

The city argued that the FEHA doesn't require employers to accommodate employees by placing them in light-duty positions indefinitely or converting temporary assignments into permanent jobs. But the court pointed out that while the FEHA may not require those things, if an employer's policies or past practices show that such accommodations are reasonable, the employer may violate the FEHA by not making the accommodations available to all employees.

In other words, the FEHA doesn't require an employer to make a disabled employee's temporary assignment permanent or create a new position for a disabled employee unless the employer has regularly offered such assistance to disabled employees in the past. The court pointed to past cases in which employers were obligated to provide disabled employees permanent assignments to light-duty positions because they had a consistent policy of doing so for other employees. In other cases, courts found no duty to make such assignments permanent because, for example, they had no practice of assigning disabled employees to light-duty positions or did so only temporarily.

In this case, because the city had a long-standing practice of allowing employees to remain in light-duty assignments until they healed or until their disabilities became permanent, it couldn't treat the recruits differently. Atkins v. City of Los Angeles (California Court of Appeal, 2nd Appellate District, 2/14/17).

Bottom line

This case illustrates the seemingly counterintuitive fact that there are situations in which an employee might not be a qualified individual for purposes of a discrimination claim, but he might be a qualified individual for purposes of a failure-to-accommodate claim. While this was a unique case involving police recruits, many employers have a practice of assigning injured employees to light duty. This case shows that your own practices can actually expand your liability under the FEHA.

Salaried employees miss work, too: handling absenteeism and tardiness issues

By: Thompson Information Service

Increases in absenteeism and tardiness can be especially frustrating when they involve exempt salaried employees because many practices often used to curb those issues may not be permitted. Although it is generally understood that some tactics---e.g., docking an employee's pay---should not be used to curb chronic absenteeism or tardiness, there are a few other options employers can try to tackle the problem.

Beware of docking pay

It can be very tempting to dock an exempt employee's pay for constant tardiness or absences. However, caution should be exercised. Under the Fair Labor Standards Act (FLSA), exempt employees must be paid on a salaried basis for each week in which they perform any work regardless of the quantity of work, and their salaries are not subject to reduction based on the quality or quantity of work. So, with limited exceptions, you should not dock an exempt employee's pay because she is tardy or misses work, even if she does so chronically.

When and how an employer may adjust an exempt employee's pay for absences often depends on the circumstances. For example, you may dock pay for full-day absences if an employee is absent for personal reasons other than sickness or disability, but you may not adjust pay for absences of less than a full day. You may dock an employee's accrued paid leave for partial-day absences, but if an employee does not have any accrued leave, her salary may not be reduced. Once a salaried employee's accrued paid leave has been exhausted, she must be paid for the entire day. The nuances of docking pay for absenteeism are significant, so to avoid penalties, the best course of action is to seek advice before docking pay.

Clocking in and out

Employers are permitted to require exempt employees to clock in and out each day. Such timekeeping methods and tracking systems can be effective in reminding employees that their timely presence at work is important. They can often be used as a simple reminder to avoid absenteeism and tardiness issues. Of course, such systems must be used across the board. Singling out an employee or requiring a specific individual to clock in and out is sure to lead to problems or claims of improper or different treatment. Thus, it is important to use a timekeeping system in a universal fashion. It is also important to note that timekeeping systems cannot be used to adjust or reduce an employee's pay except in very limited circumstances.

Attendance policies

One of the most effective ways to tackle tardiness and attendance issues is to implement a clear written attendance policy that applies (and is implemented) equally to all employees. The policy must be made available to all employees so they have fair warning of the standards to which they will be held. Once you have in place a policy clearly describing the type of discipline that can and will occur for absenteeism or tardiness, you are entirely within your rights to apply the policy, so long as it is applied equally and in a nondiscriminatory fashion. Discipline can include termination. However, be sure to keep detailed records of absences and tardiness, and be careful to exclude absences or tardiness that results from a disability, approved sick leave, or other excused leave.

A twist on an attendance policy is to reward employees for exceptional promptness and for not missing work. For example, an employer can include guidelines for extra compensation for 100 percent attendance for certain periods of time or other nominal rewards for good attendance. A reward is positive reinforcement of the importance of attendance, and it can often help combat absenteeism and tardiness before they start.

Bottom line

Absenteeism and tardiness are issues employers must deal with in virtually all lines of work. There are laws governing employers' ability to deal with absenteeism and tardiness issues, and employers questioning their current attendance policies or practices should seek advice as soon as possible. Although docking the pay of exempt employees is generally discouraged, there are many methods employers can use to improve attendance at work, including using incentives and discipline. But one thing is sure: Reviewing your company's current policies and making sure they are being implemented equally and regularly will serve your best interest.

Obamacare replacement proposals: HRAs, employer payment plans

By: Thompson Information Service, Eric Schillinger, Trucker Huss, APC

Shortly after Donald J. Trump was sworn in as president in January, Republicans in Congress began the process to repeal and replace the Affordable Care Act (ACA). Colloquially known as "Obamacare," the ACA was signed into law in 2010 by then-President Barack Obama and made sweeping changes to federal laws governing most aspects of health care and insurance.

The repeal and replacement process is in its early stages, and Senate parliamentary rules limit the types of ACA changes that can be made without a 60-vote majority (i.e., without some Democratic support). Nonetheless, over the past year, several prominent Republican officials have released ACA-replacement proposals that have received much attention for their changes to the individual insurance markets, Medicare, and Medicaid. However, those proposals also address employer-sponsored plans---the source of health insurance for over 150 million Americans.

One proposed change in particular would allow employers to significantly alter how they provide their employees with health insurance by allowing employers to reimburse employees' individual medical insurance premiums and expenses instead of providing a group medical insurance plan. Such a structure likely would reduce the employer's legal compliance and administrative costs (albeit the employer would lose any ability to customize the major medical plans its employees choose).

A health reimbursement arrangement (HRA) is an unfunded account that an employer can use to reimburse an employee tax-free for out-of-pocket medical expenses and health insurance premiums paid by the employee, the employee's spouse, or the employee's eligible dependent children. Similarly, an "employer payment plan" allows an employer to reimburse an employee tax-free for insurance premiums only, but with fewer restrictions than an HRA.

Current ACA rules prohibit most employers from using HRAs and employer payment plans to reimburse their current (i.e., nonretired) employees for premiums and other expenses related to individual insurance plans (e.g., from the state insurance exchanges and private exchanges managed by health insurance brokers). As a result, those employers are able to provide their employees with major medical coverage only by sponsoring their own insured or self-funded plans. When compared to the "hands-off" approach of using an HRA or employer payment plan to pay for employees' individual insurance coverage, sponsoring a major medical plan places significantly higher legal compliance and administrative burdens on the employer---and results in higher costs for HR personnel and outside legal counsel.

Most Republican replacement proposals eliminate the ACA's restriction on HRAs and employer payment plans for current employees. As a result, an employer that sponsors its own major medical plan would be able to replace that plan with an HRA or employer payment plan that pays for individual insurance coverage, such as by partnering with an insurance broker (which contracts with insurers to make individual plans available) or simply by offering to reimburse employees for the plans they purchase on their own through insurers.

Although an HRA or employer payment plan would still be subject the federal laws governing employer-sponsored health coverage (e.g., the Employee Retirement Income Security Act, or ERISA), ensuring that the plan complies with such laws generally is less rigorous than managing an employer-sponsored plan. In addition, an HRA generally is considered easier to administer than a major medical plan. As a result, an employer shifting from its own major medical insurance plan to this type of HRA might find a reduced need for additional HR personnel and outside legal counsel.

From a business standpoint, however, the "hands-off" HRA approach likely does not come without a downside. Employers that sponsor their own major medical plans have more control over their plan's eligibility requirements, covered benefits, deductibles, and copayments (especially when the employer self-funds the plan instead of purchasing a policy from an insurance company). And many employers consider the ability to offer more robust health insurance coverage a competitive necessity---particularly with regard to higher-paid and specialized employees (such as executives and engineers).

Therefore, in the event the ACA's restrictions on HRAs and employer payment plans are repealed, employers likely will want to weigh the costs and benefits of shifting from sponsoring major medical plans to providing HRAs or employer payment plans that pay for individual health insurance coverage.

Predictive scheduling provides shift notice, income consistency

By: Thompson Information Service

The needs of businesses---especially in the retail, food services, and hospitality industries---change from week to week. Therefore, it has benefited businesses to be able to schedule shifts and change those schedules without providing much notice to employees. Companies want their workers to be flexible and available when they're needed.

But that lack of notice is very difficult for workers and doesn't allow them to schedule their lives before or after work or maintain any type of consistency. In some cases, employees are simply on call and aren't even guaranteed work. Therefore, the incomes of these employees can fluctuate drastically, depending on whether they're called into work or not or whether their shifts are shortened or lengthened.
What is predictive scheduling?

The first predictive scheduling ordinance was passed in San Francisco in 2014, and since then, other localities have taken notice. Seattle recently enacted a similar secure scheduling ordinance, effective in July 2017. Areas across the country as well as the federal government are considering the issues and determining whether predictive scheduling laws should be implemented on a larger scale.

Predictive scheduling laws generally require a minimum amount of notice to be provided for an employee's scheduled shift or if changes are made to an employee's scheduled shift. Predictability pay may be required if shift reductions or changes are made after the initial notice of the shift is provided or if on-call employees aren't ultimately called in to work.

San Francisco: the pioneer of predictive scheduling

In San Francisco, employers covered by the law are required to provide new employees with a good-faith written estimate of the minimum number of scheduled shifts per month as well as the days and hours of those shifts. Employees must receive their schedules two weeks in advance. Schedules can be posted or provided electronically if employees are given access to the electronic schedules at work.

If an employer changes an employee's schedule with less than seven days' notice, the employer must pay the employee an additional one to four hours of pay based on the amount of notice provided and the length of the shift. If an employee is required to be on call but isn't called in to work, the employer must pay her an additional two to four hours of pay based on the amount of notice provided and the length of the shift.

There are several exceptions to the rules, such as:

  • When operations can't begin or continue because of threats to employees or property, because public utilities fail, or when something beyond the control of the employer happens;
  • When another employee previously scheduled to work a shift is unable to work and doesn't provide at least seven days' notice;
  • When another employee fails to report to work or is sent home;
  • When the employer requires the employee to work overtime; or
  • When the employee switches shifts with another employee or requests a change in shifts.

Seattle: cutting edge of secure scheduling

In Seattle, employers must provide new employees with a good-faith estimate of the median hours they can expect to work, including on-call shifts. Employees may request a preferred schedule to meet their commitments outside working hours. Employers must post employees' work schedules 14 days in advance.

If an employer adds hours to an employee's schedule after the schedule is posted, it must pay the employee for one additional hour. If an employee is scheduled for a shift and then is sent home early, the employer must pay him for half of the hours not worked. Employees receive half-time pay for any shift on which they're on call and don't get called in to work.

There are exceptions to the rules in Seattle as well, such as:

  • When an employee requests a change to his schedule;
  • When an employee trades shifts with another employee;
  • When an employer provides notice of additional hours through mass communication and an employee volunteers to cover those hours; and
  • When an employer conducts an in-person group conversation with employees currently on a shift to cover new hours to fill customer needs and an employee agrees to work more hours.

Helping employees gain consistency

In the end, predictive scheduling makes life much easier for employees by allowing them to maintain a steady flow of income, schedule transportation to and from the workplace without continual last-minute changes, allow time for a second job if additional income is needed, organize child care, and even commit to attending educational classes during off hours to further their education.