Thursday, March 17, 2016

DOL Pushes Ahead with Overtime Regulations


On March 15, the U.S. Department of Labor sent its final rule expanding overtime eligibility for millions of workers to the Office of Management and Budget, which is the final step before the rule becomes official in the next few months.  The most notable change in the DOL’s proposed FLSA rules is an increase in the minimum weekly salary to the 40th percentile of weekly earnings for full-time salaried workers, based on data maintained by the Bureau of Labor Statistics.  

The DOL projects that the 2016 level will increase to $970 per week (or $50,440 per year). For highly compensated employees, the threshold would be set to the annualized value of the 90th percentile of earnings for full-time salaried workers, or $122,148 annually.  More importantly, for the first time in the FLSA’s history, the salary and compensation levels would be indexed to this BLS data and updated annually, without the need to go through further rulemaking.  That would almost certainly catch many employers off guard.  The DOL is also considering whether non-discretionary bonuses, incentive payments and commissions may be allowed to satisfy a portion of the salary level test.

So, what should employers do right now?  There are several options:
  • Do nothing other than get ready to start paying overtime to employees who are currently exempt but whose weekly earnings are below the 40th percentile of weekly earnings for full-time salaried workers.
  • Limit the amount of overtime allowed for currently exempt employees who may no longer qualify as exempt.  The downside to this, however, is that limiting the hours of current workers, while it will control overtime, may result in having to hire more workers.
  • Increase the salaries of employees who are currently exempt but who are below the 40th percentile of weekly earnings for full-time salaried workers so that their new salaries are at least at the level needed to continue to be exempt.
  • Reclassify currently exempt salaried employees who are below the 40th percentile of weekly earnings for full-time salaried workers to hourly non-exempt status.  Then, set their hourly wage rate at a level that will result in essentially the same income they make now, after taking into account the number of hours they work and the overtime that will have to be paid.
Whether an employer chooses one of these options or some other one, it should perform an audit of its employee classifications and job descriptions.  (In fact, employers should regularly do that anyway.)  It is critical that job descriptions accurately describe the duties performed by someone in the position.  Likewise, if someone is classified as an independent contractor, the employer must ensure that they aren’t actually a misclassified employee.  Finally, because there is a chance that the DOL will modify the primary-duty test for exempt employees, the audit should examine whether some of the non-exempt duties currently being performed by ostensibly exempt employees can be reassigned to non-exempt employees.  If so, remember to revise job descriptions accordingly.

Sunday, December 20, 2015

Is No Class Action Waiver Safe From the NLRB's Sword?


Despite getting virtually no backing from the courts, the National Labor Relations Board continues to invalidate employers’ arbitration policies that require employees to waive their right to collective or class actions involving employment-related claims.
You may recall that the Board decided in 2012, in the D.R. Horton decision (here), that such provisions are invalid, and the U. S. Court of Appeals for the Fifth Circuit refused to enforce that portion of the decision.  Unfazed, the NLRB has continued to apply its rejected rationale to invalidate similar prohibitions in employer policies, even where there is no union involved.
The most recent decision (here) came out on Thursday.  The Board determined that Kmart Corporation violated Section 8(a)(1) of the National Labor Relations Act by maintaining an employment policy that required employees, as a condition of employment, to waive the right to maintain class or collective actions in all forums, whether arbitral or judicial.  The NLRB found the violation even though Kmart’s arbitration policy contained an opt-out provision.
For employers wanting to implement class action waivers in arbitration agreements, the good news is that most courts across the country are quite amenable.  The bad news is that getting to an appellate court can be a costly process, and the NLRB shows no signs of changing its tune any time soon.  The Board only has to reverse course if the Supreme Court or a later decision by the Board itself directs it to do so.  Maybe the NLRB is waiting for a different case with more favorable facts before trying to get the Supreme Court on its side, or perhaps it is waiting for a different Supreme Court with more favorable members.
Whatever the case, employers should expect that the NLRB will continue to find violations when employees are required to sign waivers of class or collective actions, even though four federal appellate circuit courts have ruled against the agency on the issue.  Nor does it apparently matter at all to the Board that many of the challenged policies allow the employees an opportunity to opt-out of the waiver agreements altogether. 

Thursday, July 2, 2015

What Will Employers Likely See (or Not See) in the Wake of the Supreme Court's Same-Sex Marriage Decision?



Now that the hubbub surrounding the Supreme Court’s June 26 decision in the consolidated case of Obergefell v. Hodges has begun to level off, employers are wondering how the decision will impact their workplaces.  (In case you were on vacation, deliberately not paying attention, or otherwise disengaged, the justices decided by a 5-to-4 margin that the right to marry is a “fundamental right” that is protected by the Constitution and that all 50 states must allow and recognize marriages between two people of the same sex.)  Here are some of the relatively immediate consequences of the decision that may affect employers: 

Employees Now May Enter into a Same-Sex Marriage in Every State

The most obvious result of Obergefell is that everyone who is otherwise eligible to be married may now enter into same-sex marriages in their state of residence or in any other state.  Also, all same-sex marriages that are valid where they were performed must now be recognized by all states.

That doesn’t mean, however, that same-sex couples who decide to rush off and get married at their local courthouse will necessarily be greeted with open arms.  There will be administrative hurdles to be worked out in some locales, and some state and local officials have announced that they will not abide by the Supreme Court’s decision until directed to do so by officials from their state government.  For instance, some county clerks in Texas have said that they will wait for guidance from the Texas Attorney General before issuing any same-sex marriage licenses, and that state’s attorney general has publicly denounced the Obergefell decision and said that public officials who do not want to issue licenses or perform marriage ceremonies for same-sex couples cannot be compelled to do so.

There are also legal storm clouds gathering around the issue of whether religious liberty might somehow dilute the Court’s same-sex marriage ruling.  The Texas Attorney General has already taken the position that county clerks and their employees have Constitutionally-protected religious freedoms that permit them to refuse to license or perform same-sex marriages.  Likewise, evangelical, Catholic, and Jewish organizations have made it clear that Obergefell is an impediment to the full exercise of religious expression guaranteed by the Constitution and is likely to generate additional litigation that ultimately will have to be resolved by the Supreme Court. 

So, for now, employers may continue to see strong and spirited debate in their workplaces.  These are still very much hot-button issues about which employees on both sides may be very passionate.  Employers may see bullying and other civility problems, and they should be prepared to address them just as they would any other workplace issue.  No one is entitled to violate workplace standards of behavior just because their cause happens to be one that is politically- or religiously-charged.

Family and Medical Leave Act

The U.S. Department of Labor previously issued a final rule that modified the definition of “spouse” under the Family and Medical Leave Act to include same-sex spouses whose marriages were valid in the state in which they were celebrated.  Four states obtained a preliminary injunction staying enforcement of the DOL’s final rule in Arkansas, Louisiana, Nebraska, and Texas.  The injunction was based on the proposition that states define marriage and states are not required to recognize marriages performed in other states.  We don’t yet know what will happen next in the four states that obtained the injunction.  Obergefell validates the DOL’s definition of “spouse,” and employers must afford FMLA rights to eligible employees in same sex-marriages, regardless of where the marriage was performed or where the employee resides.  The DOL has not yet issued any statement on enforcement in the four states that are part of the challenge to the definition.  Employers in those states that still choose not to grant FMLA leave to same-sex spouses are probably now taking a big risk.

Obergefell has no impact on FMLA leave taken for the serious health conditions of children of same-sex couples, whether married or unmarried.  The DOL previously reaffirmed that eligible same-sex parents standing in loco parentis to children are protected under the FMLA.

Title VII

Obergefell does not directly implicate Title VII because it was not an employment case, nor does it expand Title VII’s protected classes to include anyone who is not already protected.

Title VII does not prohibit discrimination based on sexual orientation or gender identity or expression.  However, employers should bear in mind that gender stereotyping, which is an issue that naturally arises from the Obergefell decision, can lead to discrimination claims under Title VII.  There also are state and local laws and ordinances that protect LGBTQ individuals, and others give similar protections for gender identity and expression.  And don’t forget that may states prohibit discrimination based on marital status.  All of those issues now rise to the surface for employers in light of Obergefell.  And who knows, Obergefell may even rekindle interest in the Employment Non-Discrimination Act, which is the perennial legislation aimed at giving employment protections to LGBT individuals, which never seems to get traction in Congress.

Americans with Disabilities Act

The Supreme Court’s decision does not directly impact any rights or obligations under the Americans with Disabilities Act.  The ADA expressly excludes “homosexuality” and “bisexuality” from the definition of disability, as well as “transsexualism,” “transvestism,” and “gender identity disorders not resulting from physical impairments.”  Even though same-sex employees now have the right to marry in each state, Obergefell based that right on their sexual orientation.  It clearly did not expand the definition of who is considered “disabled” for purposes of the ADA to include LGBTQ status.  Attempts to change the definition of “disabled” to include any aspect of LGBTQ status would almost certainly face stiff opposition from the LGBTQ community itself.

Nor does Obergefell apparently expand associational discrimination claims under the ADA, since no spousal relationship is necessary to show association with a disabled individual in the first place.  Associational claims have long been recognized for spouses, partners, and others, regardless of gender or marital status.

Tuesday, June 23, 2015

Despite State Laws, Marijuana Use is Illegal and Can be Grounds for Discharge



A client in North Carolina recently asked me whether it was lawful to fire an employee for smoking marijuana.  “Of course,” I replied.  She then added another fact:  the employee had been on vacation in Colorado and returned to work bragging to everyone how he had smoked marijuana while on vacation “because it’s legal there.”  The client seemed surprised when I told her that she could still lawfully fire the worker.  (I didn't stray into the issue of whether she should; I simply said that she could.)

Ever since Colorado legalized the recreational use of marijuana back in 2012, employers in that state and elsewhere have asked whether they have the right to terminate employees who use the drug, especially those who do so on their own time (i.e., outside of work hours and away from the employer’s premises).  The short answer is “yes,” and even in states, such as Colorado, that have legalized or decriminalized it.

The Colorado Supreme Court recently addressed that question in a case involving a quadriplegic who was licensed to use marijuana to help alleviate pain.  He smoked it only at home and in full compliance with his medical marijuana license and the state law allowing recreational use.  Colorado also has a statute that makes it unlawful to fire a worker because they engage in lawful activities outside of work.  When the employee failed a random drug test, however, he was fired.  The court ruled in favor of the employer because although marijuana use is now lawful under Colorado law, it is still a crime under federal law.  Thus, regardless of the permissive state law, the employee was not engaged in a lawful activity when he smoked marijuana at home.

Other states, including North Carolina, have similar laws that protect employees from being fired for engaging in lawful activities or using lawful products on their own time away from the workplace.  (No, North Carolina does not have a state law allowing marijuana use.)  However, as the recent Colorado case shows, workers who choose to smoke marijuana cannot hide behind those “lifestyle protection” statutes.  Unless Congress changes federal law – not going to happen anytime soon – or the state statutes are amended to protect conduct that is lawful specifically under state law – not going to happen in most states anytime soon, either – employees who choose to get high do so at their own peril.

As long as marijuana use remains prohibited by federal law, employers in North Carolina and elsewhere have the right to fire workers for the actual or suspected use of marijuana, whether on the job or at home.  In fact, even if an employee goes to Colorado, Alaska, or some other state that has voted to legalize marijuana and gets high while on vacation, there's still a very good chance they can be discharged back in their home state because marijuana use is still a federal crime throughout the land.