In This Issue
September 2018 - December 2018 | Volume 6 Issue 4
- State Minimum Wage Increases for 2019
- Top 10 Things Employers Need To Know About Midterm Election Results
- EEOC Fiscal Year-End Lawsuits Filed Provide Insight into Agency Priorities
- NLRB Proposes Employer-Friendly Rule to Standardize the Joint-Employer Test
- DOL Reissues Opinion Letter Eliminating the 80/20 Rule for Tip Credits
- Mandatory Flu Shots: Can You Make Employees Roll Up Their Sleeves?
- New OSHA Guidance: Certain Safety Incentive Programs, Post-Accident Drug Tests Permissible
State Minimum Wage Increases for 2019 (Map)
By: Susan Prince, J.D., M.S.L., Legal Editor
Minimum wage increases will affect numerous states across the country in January 2019.
Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour, but the FLSA does not supersede any state or local laws that are more favorable to employees. Therefore, if a state or municipality has a minimum wage that is higher than the federal minimum, employers subject to the state or local minimum wage law are obligated to pay the higher rate to employees working there. The minimum wage for federal contractors in 2019 is $10.60 per hour.
Top 10 Things Employers Need To Know About Midterm Election Results
By: Benjamin Ebbink & Richard Meneghello
As many predicted, Democrats recaptured the House for the first time in eight years in yesterday’s midterm elections, while Republicans retained and strengthened their grip on the Senate. That will lead to a dynamic in Washington, D.C. that the Trump administration has yet to face: a fractured legislature and a tug-of-war at the federal level. What does this development mean for employers? Here are the top 10 things to expect in the labor and employment law arena given the results in yesterday’s historic elections.
1. Worker-Friendly Bills Expected To Pass The House…Then Stall In The Senate
Eager to repay the support they received that vaulted them into power, employers can expect to see a slew of worker-friendly measures introduced and passed in the House. It would not be surprising to see newly installed members of Congress swiftly pass a series of bills aimed directly at employers. Among them, you might see a repeal of the Epic Systems case that cleared the use of class waivers, a full-scale prohibition on mandatory arbitration agreements, measures to limit right-to-work laws, a passage of card-check provisions to streamline union organizing, a return of the expansive persuader rule, the expansion of the worker-friendly ABC test for determining independent contractor status, and a boosting of the federal minimum wage towards $15 per hour.
However, most of these actions would be largely symbolic and would amount to nothing in the end. The Republican party continues to control the Senate, and in fact expanded their slim margin of power in yesterday’s election. There is almost no scenario imaginable where any of these measures would clear the Senate hurdle, although a more moderate increase to the federal minimum wage might not be out of the question.
2. House Members Could Throw Their Weight Around
This isn’t to say that the new Democratic House would be completely powerless, however. Indeed, many congressional candidates ran on a platform to provide a check on the Republican leadership in the White House and Congress, and they will look to fulfill their campaign pledges once in office. By using their power to seek additional information, hold hearings, and levy more control over executive activity, the new House could provide sufficient oversight over several federal agencies—namely the U.S. Department of Labor (USDOL) and the National Labor Relations Board (NLRB)—to slow down their agenda.
Expect to see the USDOL’s effort to provide a more balanced overtime rule and the NLRB’s move to return the joint employment rule to a more measured level both caught up in the political turmoil that will descend on the nation’s capital.
3. New House Leadership Could Turn Attention To Labor And Employment Matters
Chatter among those in the know would seem to indicate that Congressman Bobby Scott (D-Virginia) will be the new Chair of the Committee on Education and the Workforce. He currently serves as the minority Ranking Member, and many believe his tenure on the committee will lead his fellow Democrats on the committee to install him into the top position once the new Congress is sworn in this coming January. He is widely regarded as a progressive member of the House and would probably bring his philosophy to matters of federal labor and employment law.
4. Paid Sick Leave Might Be Top House Priority
Of all of the measures expected to be pushed by the new House, it seems fairly likely that paid sick leave will be on the top of the agenda when it comes to realistic goals. After all, many Republican members of Congress have indicated support for such a law, and even President Trump has provided words of support for some form of paid sick leave. The devil is in the details, however, and it remains to be seen what form of paid sick leave would be agreed upon by the Senate and the president.
Some Republicans have floated the concept of a voluntary paid sick leave program, or one that is borne by employees themselves through a reduction in Social Security or other benefits, which has not been well received by Democratic leadership. Employers should monitor this development to see if House and Senate members can work out a bipartisan solution that would be amenable to all and to President Trump.
5. Immigration Will Also Be A Priority For New House
Perhaps the most hot-button issue of the day, immigration will continue to be a matter of significant attention and interest when the new Congress is sworn in this January. Now that Democrats are about to control the House, they will almost certainly seek to curb some of the more controversial positions taken by the White House. You can expect to see greater oversight attempted over the administration’s aggressive immigration agenda, but it is an open question as to whether they will be able to have a significant impact.
6. House Could Get Bogged Down By Anti-Trump Activity
Another possibility that could emerge in the coming months is that of complete gridlock and contentious wrangling between the House, the Senate, and the White House as new House members get swept up in anti-Trump sentiment. Some candidates campaigned on a platform that led them to promise impeachment proceedings, subpoena requests, oversight hearings, and any other mechanism available to them to throw a monkey wrench into the Trump administration’s activity. Such actions could eat up valuable time and resources and distract the new House leadership from accomplishing their legislative and policy goals, including labor and employment initiatives.
7. Senate Could Streamline Consent And Approval Activity
While the House has been flipped, the Senate remains red, and this could free up senators to move forward to approve appointments that have been held up in political limbo while the fate of the midterm elections remained uncertain. Expect to see action at the USDOL and the Equal Employment Opportunity Commission (EEOC) in short order to add key leadership personnel.
8. Expect Stability At The Labor Department
Although news reports in the last several months have hinted at major shakeups at several federal agencies soon after the midterms were concluded—including at the Departments of Justice, Homeland Security, Defense, and Interior, to name a few—there has been nary a word about the fate of USDOL Secretary Alexander Acosta. By all accounts, President Trump has been pleased with Acosta’s no-drama personality and the relatively smooth operations at the Labor Department, so most expect Acosta to survive what could be a mass exodus.
9. Another Attack On The ACA Awaits Its Final Fate
While the Republican-controlled Congress could not kill the Affordable Care Act (ACA) in 2017 or 2018, its fate could still hang in the balance in the coming months and years. A legal challenge filed by current House members seeking to strike down the entire law has been pending in a Texas federal court for several months. Many expect that the judge on the case has been waiting until the midterm elections were concluded before issuing his ruling so as to not introduce a political element into the proceedings. But now that the elections are behind us, a decision may soon be forthcoming.
If the law is struck down, you can expect an immediate appeal to the 5th Circuit Court of Appeals—and a probable stay in the proceedings delaying any sort of immediate revocation of the law—and then yet another round at the U.S. Supreme Court.
10. Future Elections May Never Look The Same
Finally, employers and others may see an entirely new kind of election season in 2019 and beyond given a recent monumental ruling from the Supreme Court. The recent decision in Janus v. AFSCME struck down the ability of public sector entities to automatically collect fees from non-union members. Now that non-union employees are no longer obligated to finance union efforts to support anti-employer legislation and progressive candidates, you can expect to see a potentially devastating impact on the finances of public sector unions—and the worker-friendly causes they generally support at all levels of government across the nation.
This could lead to a new kind of election season where unions play a less pivotal role in the outcomes of local and federal elections. Stay tuned to next year’s elections and the blockbuster 2020 elections that are just a short 24 months away to see what kind of impact Janus has on the national landscape.
Conclusion
A divided Congress that is unable to pass significant employment legislation—whether it be pro-employer or pro-worker—means that we are likely to continue to see the drive for legislative changes pursued at the state, or even local, government level. You will likely continue to see a hodgepodge of local labor policies that vary from jurisdiction to jurisdiction, which can pose compliance challenges if you operate across large areas or multiple regions.
EEOC Fiscal Year-End Lawsuits Filed Provide Insight into Agency Priorities
By: J. Lane Crowder
During the week of August 9, 2018 alone, the EEOC filed seven different lawsuits alleging harassment against employers, including claims against the Piggly Wiggly grocery store and United Airlines. The suit against United Airlines claimed one of the international airline's flight attendants suffered a hostile work environment over several years. The claims allege that a United Airlines pilot posted "sexually explicit images" of the flight attendant to various public websites. The images referred specifically to the flight attendant by name, her home airport, and even occasionally referenced the company's well-known ad, "Fly the Friendly Skies." The EEOC alleges that the company failed to take action to prevent the conduct of the pilot even after the flight attendant complained.
On September 25, the EEOC sued a national discount retailer for sexual harassment claims involving a store manager's alleged harassment of an assistant store manager that began within a week of her start date. The manager allegedly targeted the assistant manager with sexually suggestive and crude comments, as well as unwelcome touching, including ripping her blouse and forcefully grabbing her. However, what is even more surprising than the manager's initial unwelcome conduct is the company's alleged reaction to her complaints to management. Instead of punishing the manager, they transferred the assistant manager to a less convenient location on an earlier shift at a different store – resulting in an hour longer daily commute. The company refused to transfer her back to the more convenient location, and it let the manager accused of harassment work with the assistant manager at the new store on one occasion. The assistant manager resigned based on the company's inadequate attempt to remedy the situation.
Although sex harassment claims were plentiful in the wave of lawsuits the EEOC filed at its year-end, other issues, such as age discrimination, also made multiple appearances. For example, the EEOC filed age discrimination lawsuits against DG Grill & Chill, Norfolk Southern, and the University of Wisconsin.
The agency also targeted employers for disability and pregnancy discrimination, bringing lawsuits against such nationwide employers as Pilgrim's Pride and Bath and Body Works for such claims. The EEOC sued one major national retailer in two different lawsuits, alleging disability discrimination in one and pregnancy discrimination in the other. In the disability action, the EEOC alleged the retailer violated the ADA by refusing to hire a congenital amputee because the company assumed she could not perform the essential functions of the job. However, the applicant had previously worked as a stocker for a different retail company prior to applying to work at the company and was able to perform the duties of that job without accommodation. In the pregnancy discrimination lawsuit, the EEOC alleged that the company refused to offer a light duty program to a class of pregnant workers even though it offered the benefits of a light duty program to other employees with work restrictions. The EEOC also sued another major national retailer for failing to interview a qualified applicant once the company's Human Resources representatives learned he was deaf.
What can employers glean from the EEOC's year-end lawsuits?
As expected, employers should ensure that their anti-harassment policies are up-to-date in light of the #MeToo movement, and they should continue to be vigilant about enforcing those policies to minimize allegations of sexual or other harassment. What is notable in several cases filed is the inadequacy of the employer's response to complaints of harassment. In addition, the EEOC continues to maintain its focus on other discriminatory practices, such as targeting older workers for disparate application of policies and treating disabled individuals, whether as applicants or employees, less favorably than other individuals. So, employers should continue to be aware of the need to provide critical training to managers and HR that promotes fair and equitable treatment of all employees and gives appropriate guidance for responding to claims of harassment and discriminatory treatment.
NLRB Proposes Employer-Friendly Rule to Standardize the Joint-Employer Test
By: Shayna Giles
Under Hy-Brand, an entity is considered a joint employer if that entity asserts direct control over another entity. More specifically, a finding of joint-employer status requires proof that putative joint employer entities have actually exercised joint control over essential employment terms, as opposed to merely having reserved the right to exercise control. This control must be direct and immediate, and joint-employer status will not result from control that is limited and routine. Hy-Brand overturned the joint employer test set out in Browning-Ferris Industries (Browning-Ferris) and replaced it with this more employer-friendly standard.
In Browning-Ferris, the NLRB put in place an employee-friendly joint employer test, which allowed for a finding of joint-employer status for any potential control. More precisely, under the Browning-Ferris standard, two or more entities are joint employers if they are both employers within the meaning of the common law and they share or codetermine the essential terms and conditions of employment. In assessing whether an employer retains sufficient control over employees to qualify as a joint employer, the NLRB, under Browning-Ferris, focuses on whether an employer has exercised control over terms and conditions of employment indirectly or through an intermediary, or whether the employer has reserved the authority to do so.
The effect of this proposed rule would be substantial on employers, particularly franchisors, as it would allow employers to take a step back, refrain from asserting direct control, and thus potentially avoid liability as a joint employer. In contrast, under the current standard from Browning-Ferris, any potential control, whether indirect or through an intermediary, exposes an employer to potential liability as a joint employer.
Although the NLRB has proposed this rule establishing a conclusive joint-employer test, the rule must survive a 60-day comment period in the Federal Register. Then, based on the comments, the NLRB will either adopt, modify, or abandon the proposed rule. Additionally, even if the rule is eventually adopted, it could be overturned on appeal in federal court.
The NLRB's proposed rule is clearly an attempt to definitively establish the employer-friendly joint-employer standard from the Hy-Brandopinion, which the NLRB was forced to vacate in February due to ethical concerns regarding the participation of NLRB Member William Emanuel. Member Emanuel remains an active member of the NLRB but is completely barred from all proceedings involving the Browning-Ferris decision and as a result, the Hy-Brand decision as well. Notably, however, Member Emanuel joined Chairman John F. Ring and Member Marvin E. Kaplan in proposing this rule regarding the joint-employer standard.
DOL Reissues Opinion Letter Eliminating the 80/20 Rule for Tip Credits
By: Tracy A. Millero
On November 8, 2018, the Department of Labor (DOL) gave hospitality employers good news when it retracted its “80/20 rule,” which prevented employers from taking the tip credit when tipped employees spent more than 20 percent of their working time on non-tipped work.
The Fair Labor Standards Act (FLSA) allows employers to pay their tipped employees not less than $2.13 per hour in cash wages and take a tip credit equal to the difference between the cash wages paid and the federal minimum wage. If a tipped employee engaged in a different, non-tipped occupation for the same employer (for example, an employee was a server and a maintenance person), the employee is said to have “dual jobs” and must be paid the cash minimum wage when engaged in the non-tipped occupation. The DOL also recognized that there were tipped occupations that required non-tip-generating duties not amounting to a separate occupation. For example, a server may spend time cleaning and setting tables, rolling silverware, stocking service areas, and filling condiment containers. In these situations, the DOL applied the 80/20 rule, where these related side duties could not exceed 20 percent of the employee’s time in order for the employer to utilize the tip credit.
Many employers found the 80/20 rule unworkable since it required them to constantly monitor and account for the duties of tipped employees. The 80/20 rule was challenged by employers in the courts as contrary to the regulations and the DOL’s prior guidance. Recently, the en banc Ninth Circuit Court of Appeals sided with the DOL on this issue and upheld the 80/20 rule.
Today, the DOL changed course and reissued a short-lived opinion letter abandoning the 80/20 rule. The opinion letter gives employers clearer guidance on what is related side work and states that employers are no longer required to track the time spent on side work as long as such work is “performed contemporaneously with the duties involving direct service to customers or for a reasonable time immediately before or after performing such direct-service duties.” Employers can look to Occupational Information Network (O*NET) lists or Title 29 of the Code of Federal Regulations, Section 531.56(e) for what is considered directly related to the tip-producing duties of an occupation. Maintaining the “dual jobs” distinction, the opinion letter stated that employers “may not take a tip credit for time spent performing any tasks not contained in the O*NET task list” unless the tasks are de minimis as defined by the DOL regulations in Title 29 of the Code of Federal Regulations, Section 785.47.
While there are still ambiguities (e.g., what constitutes related side work and direct service for certain positions, what is “a reasonable time” before or after direct service), the opinion letter brings welcomed clarity and a common sense framework for hospitality employers.
Mandatory Flu Shots: Can You Make Employees Roll Up Their Sleeves?
By: JW Furman
It's time to think about flu vaccines again! How effective will the shots be this year? Will you and your family get them? Can you require your employees to be vaccinated?
New OSHA Guidance: Certain Safety Incentive Programs, Post-Accident Drug Tests Permissible
By: Tressi L. Cordaro and Kathryn J. Russo
Earlier this year, we predicted that the National Labor Relations Board (NLRB) would be “loosening the reins on employer handbook rules.” We can finally tell you exactly how much the reins have been loosened because the NLRB’s General Counsel has outlined the standards the Board will follow when assessing employers’ personnel policies. Overall, you will have much greater leeway in drafting and enforcing workplace rules and, in particular, any rules related to civility, insubordination, disruptive behavior, photography/recordings in the workplace, confidential information, defamation, disloyalty, or media contact on behalf of the company.
Background
In its decision in The Boeing Company on December 14, 2017, the NLRB reassessed its standard for determining when a workplace policy or rule violates Section 7 of the National Labor Relations Act (NLRA). The NLRB established a new standard that focuses on the balance between (1) the policy’s negative impact on employees’ ability to exercise their Section 7 rights and (2) the policy’s connection to the employer’s right to maintain discipline and productivity in the workplace. The NLRB not only added a balancing test but also significantly altered its jurisprudence on the reasonable interpretation of handbook rules, severely criticizing the effects of the previous standard set forth in 2004 under Lutheran Heritage Village-Livonia.
Under the previous standard, almost any workplace policy could be interpreted as applicable to Section 7 activity. Under the new standard, ambiguities in workplace policies are no longer interpreted against the drafter of the policy, and generalized provisions will not be interpreted as banning all activity that could conceivably be included under the policy’s prohibitions.
On June 6, the NLRB’s General Counsel published a memorandum outlining general guidance and the standards the Board will follow when evaluating the lawfulness of employee handbook policies. The standards are organized in three categories:
- Rules that are generally lawful to maintain;
- Rules that demand individualized scrutiny; and
- Rules that are unlawful.
(See GC 18-04, “Guidance on Handbook Rules Post-Boeing” (June 6, 2018), available at https://www.nlrb.gov/reports-guidance/general-counsel-memos.)
Category 1: Rules that Are Generally Lawful
Category 1 rules are presumed to be lawful because when they’re reasonably interpreted, they do not prohibit or interfere with employees’ exercise of any rights guaranteed by the NLRA or because the potential adverse impact on protected rights is outweighed by the business justifications associated with the policy. Examples of policies or rules that are generally presumed to be lawful under the new balancing standard include rules that address:
- Civility, including policies and prohibitions related to inappropriate conduct; rude, condescending, or otherwise socially unacceptable behavior; negative or disparaging comments about another employee or a visitor; rude, discourteous, or unprofessional behavior; disparaging or offensive language; or statements, photographs, video, or audio that could reasonably be viewed as disparaging to other employees;
- No-photography/no-recording rules, including policies and prohibitions related to using camera-enabled devices; recording conversations, meetings, and images without approval; or recording coworkers’ conversations without approval;
- Insubordination, noncooperation, or on-the-job conduct that adversely affects operations, including policies and prohibitions related to insubordination, unlawful or improper conduct, uncooperative behavior, a refusal to comply with orders or perform work, or other on-the-job conduct that adversely affects the employer’s operations;
- Disruptive behavior, including policies and prohibitions related to boisterous behavior and other disruptive conduct, creating disturbances on company premises or creating discord with clients or fellow employees, or disorderly conduct on company premises or during working hours for any reason. (The no-disruption rule may not be used to discipline employees for a strike or walkout.);
- Confidential, proprietary, and customer information or documents, including policies and prohibitions related to nondisclosure of customer information; nondisclosure of confidential financial data or other nonpublic proprietary company information; nondisclosure of confidential information to partners, vendors, customers, or other employees; and nondisclosure of business secrets or other confidential information;
- Defamation or misrepresentation, including policies and prohibitions related to misrepresenting company products, services, or employees or sending defamatory e-mails;
- Use of employer logos or intellectual property, including policies and prohibitions related to use of company logos or intellectual property for non-business-related purposes;
- Authorization to speak on behalf of the company, including policies and prohibitions related to employees not being authorized to comment to the media and only designated spokespersons being able to respond to media requests for information; and
- Disloyalty, nepotism, or self-enrichment, including policies and prohibitions related to conduct that is disloyal, competitive, or damaging to the company; illegal acts in restraint of trade; employment with another employer; and activities or investments that compete with the company, interfere with an employee’s judgment regarding the company’s best interests, or exploit the employee’s position with the company for personal gain.
Category 2: Rules that Require Individualized Scrutiny
Category 2 rules are not obviously lawful or unlawful, and must be evaluated on a case-by-case basis to determine whether they would interfere with employees’ NLRA rights and, if so, whether any adverse impact on employees’ rights is outweighed by legitimate justifications. Examples of policies or rules that must be evaluated on a case-by-case basis include:
- Broad conflict-of-interest rules that do not specifically target fraud or self-enrichment;
- Confidentiality rules that are not limited to restricting the use of customer or proprietary information;
- Rules that restrict disparagement or criticism of the employer rather than disparagement of other employees;
- Rules that restrict the use of the employer’s name rather than the use of its logo or trademark;
- Media contact rules that generally restrict employees from speaking to the media or third parties about the employer rather than speaking to the media/third parties on the employer’s behalf;
- Rules that ban off-duty conduct that might harm the employer rather than banning insubordinate or disruptive conduct at work; and
- Rules that ban false or inaccurate statements rather than defamatory statements.
Category 3: Rules that Are Unlawful
Category 3 rules are generally unlawful, and you should ensure that you don’t implement any policies or practices that fall into this third category. Examples of policies or rules that are unlawful include rules that address:
- Confidentiality of wages, benefits, or working conditions, including policies and prohibitions related to the disclosure of salary; employment contracts and terms of employment; wages, commissions, or performance bonuses; or information about an employee’s identity or disclosures to the media or any third party about any employee’s employment and working conditions; and
- Membership in an outside organization or voting on matters that concern the employer, including policies and prohibitions related to general restrictions on an employee’s membership in any outside organization (because this may reasonably be interpreted to include union activity) or general restrictions on employee voting (because this may reasonably be interpreted to include voting on union matters).
Bottom Line
The General Counsel’s memo finally gives employers the necessary guidance to properly apply the revised standard for lawful workplace policies set forth in Boeing in December. The three categories enumerated in the memo include examples to help you ensure the proper balance between a policy’s negative impact on employees’ Section 7 rights and your right to maintain discipline and productivity in the workplace.
As always, you should continue to work with your employment lawyers to ensure your policies comply with the law, and keep performing annual policy audits and reviews. Categories 2 and 3 contain some “red flag” areas that you should scrutinize and use as guidance for revising your policies if necessary. On the other hand, you can look to Category 1 for some much-welcomed breathing room.
