Colorado has issued a new wage order titled, Colorado Overtime and Minimum Pay Standards Order #36. (“COMPS Order”). This Order replaces Colorado Minimum Wage Order #35 and is set to institute significant changes affecting minimum wage, wage deductions and credits, overtime compensation, and other important wage and hour issues. Unlike previous wage orders that only covered specific industries, the COMPS Order presumptively covers all employers (unless expressly exempted) and significantly expands employer obligations and liability. Click here to read our advisory.
Labor and Employment Law Blog
A former employee who transitioned to female during her employment brought claims of hostile work environment, discriminatory termination, and retaliation under Title VII. The complaint alleged multiple instances of coworkers and third parties refusing to call her by her preferred pronouns and female name (purposefully misgendering her), and expressing disapproval of her wardrobe choices at work. The plaintiff allegedly complained to her supervisors and was discharged several months later. Defendants moved to dismiss the complaint for failure to state a claim.
The U.S. District Court for the District of Maryland dismissed the plaintiff’s claim of hostile work environment, with permission for the plaintiff to restate that claim with more specific information about who misgendered her and when. The plaintiff has a diary that documents 35 specific instances of discriminatory treatment, but she failed to spell out the details in her complaint. The court allowed the plaintiff’s claims of discriminatory termination and retaliation to proceed.
Whether Title VII prohibits discrimination on the basis of transgender identity is an issue pending before the Supreme Court of the United States, and here, the District Court left room for the Supreme Court’s decision to guide the case as it proceeds. But, in practice, discrimination on the basis of transgender identity may already be barred by state and local laws. Employers should take measures to ensure all employees are treated respectfully by their supervisors, coworkers, and third parties. Train your employees to avoid improper sex stereotyping, misgendering, and similar conduct that could give rise to a discrimination claim.
The Fifth Circuit recently affirmed summary judgment against an employee caught sleeping at his desk. A personnel manager for a security company suffered from Type II diabetes and had previously requested and received reasonable accommodations, but none involved the employee’s potential loss of consciousness due to diabetes. After two reports of the employee sleeping at his desk, his supervisor took a photograph of him sleeping again. When the employee awoke, his supervisor confronted him. The employee claimed that he may have experienced a diabetic emergency and immediately drove himself to the hospital. While in the emergency room, the company discharged the employee for violating its policy of requiring employees to remain “alert” at work. The employee filed suit alleging claims of disability discrimination, failure to accommodate, harassment, and retaliation. The district court granted summary judgment for the employer on all counts, and the Fifth Circuit affirmed.
The employee alleged, in part, that the company never gave him an opportunity to request a reasonable accommodation for his loss of consciousness because the company discharged him while he was at the hospital. The Fifth Circuit ruled the employee could have (but did not) request an accommodation any time before his discharge, but that “an after-the-fact, retroactive exception to the alertness policy as an accommodation for his underlying disability” would not constitute an accommodation.
Employees’ after-the-fact, disability-related, excuses for misconduct are commonplace. This court’s approach to that tactic…not so much. Kids, don’t try this at home. The optics of firing an employee while she or he is in the ER are, well, awful, and could give rise to other claims even if not under the ADA. However, here, the employer had an express, written “Alertness” policy that it had previously enforced on the same kind of evidence – a photo of the sleeping employee. It doesn’t hurt to have a written policy to rely on when defending an employment decision.
Clark v. Champion National Sec, Inc., No. 18-11613 (5th Cir. Jan. 14, 2020).
(Link to the opinion: http://www.ca5.uscourts.gov/opinions/pub/18/18-11613-CV0.pdf)
Certain exemptions from employee rights to overtime premium pay require the employee to be paid on a salary basis or on a fee basis. On January 7, 2020, the U.S. Department of Labor (“DOL”) issued opinion letter FLSA2020-2 discussing a specific pay arrangement – where the total compensation is set by the scope of an assigned project, but the amount paid each week is a set amount. According to the DOL, these payments indicate a salaried employee (and exempt from overtime), so long as the payments do not change too often. The letter responds to the specific inquiry posed to the DOL, but the opinion informs payments generally for project-basis workers.
The DOL inquiry addresses an educational consultant hired to perform a specific project. The consultant was to receive a predetermined amount in 20 equal biweekly installments paid throughout the district’s academic year. The DOL found this qualifies as a salaried employee, assuming the educational consultant meets the duties tests of the administrative or professional exemptions and the weekly pay exceeds the salary threshold for those exemptions. The DOL’s opinion focuses on the pre-determined nature of the consultant’s weekly compensation. The weekly pay is the same regardless of actual hours spent and the quality of work performed during the week—the definition of a salary basis pay.
The DOL then considered whether additional compensation changes an employee’s pay status. For example, what if the same employee works, not only the agreed 40 weeks to develop the literacy curriculum, but also on a side project conducting teacher workshops over an eight week period? Because compensation in addition to the salary can be paid on any basis, such as a flat sum, bonus, or hourly amount, without undermining the salary basis test, the employee is still salaried if the employee receives an additional pre-determined amount for the side project in addition to their pay for the 40 week project.
The opinion letter specifically notes that an employee’s exempt status may be undermined, however, “if there are such frequent revisions to the contract that the amount of the employee’s biweekly compensation for a certain project is rarely the same from pay period to pay period and the circumstances suggest the amount of the payment is, in fact, actually based on the quantity or quality of work performed.”
On January 12, 2020, the Department of Labor, Wage and Hour Division (“DOL”) announced its revisions to the federal regulation interpreting joint employer status under the Fair Labor Standards Act (“FLSA” or “Act’). The new rule is set to take effect on March 16, 2020.
For decades, federal regulations have recognized two situations in which an employee may have two or more employers. In the first scenario, the employee works two jobs, each for different employers (i.e. a day job and a night job). Here, the employers are not associated with one another and may ignore the employee’s work performed in the other job.
In the second scenario, the employee has one job and two or more employers. In these cases, employment by one employer is “not completely disassociated” from the employment by the other employer. With this newly promulgated rule, the DOL tries to clarify when an employee has two or more employers for the same job.
The DOL adopted a four-factor test fashioned after Bonnette v. California, 704 F.2d 1465 (9th Cir. 1983). The test considers whether a potential joint employer may:
- Hire or fire the employee;
- Supervise and control to a substantial degree, the employee’s work schedule or employment conditions;
- Determine the employee’s rate and method of payment; and
- Maintain the employee’s records.
No single factor is dispositive, and the weight given each factor will vary depending on the circumstances. However, the maintenance of employee records alone will not sufficiently demonstrate employer status. Additionally an employer’s reservation of the right to control the worker’s schedule or conditions alone, will not establish employer status; the employer must actually exert control over the worker. Additional factors may be considered if they indicate whether the employer exercises control over the terms and conditions of the employee’s work.
To round things out, the DOL has specified several factors that are NOT relevant to joint employer status under the FLSA, including:
- Whether the organization operates under a certain business model, such as a franchise;
- Whether the organization adheres to certain business practices, such as allowing the operation of a store on one’s premises;
- Provision of handbooks or other forms;
- Offering association health or retirement plans;
- Whether the organization entered into contractual agreements, such as requiring a party to institute sexual harassment policies, or requiring quality control standards; and
- Whether the employee is economically dependent upon the potential joint employer.
The Final Rule is long. There are many changes and clarifications not detailed above. Moreover, the DOL is clear that this is the rule for the FLSA. A different rule might apply for the National Labor Relations Act or for liability under various federal employment statutes. The situation is as clear as mud.
On January 7, 2020, the U.S. Department of Labor (“DOL”) issued a new Opinion Letter on “nondiscretionary” bonuses. When a bonus is offered to employees “to induce them to remain” with the company, the DOL considers the bonus to be “nondiscretionary.” Nondiscretionary bonuses “must be included in the regular rate of pay” for non-exempt employees. Determining how to allocate such bonuses can get a bit more complicated… When employers require that the employee stick around for some set amount of time to get the bonus and the bonus program does not clearly articulate how much of the bonus was earned in which week, the employer may “assume” each week within that period of time “counts equally in fulfilling the criteria for receiving the lump sum bonus.” In short, the employer allocates the bonus equally to each week in the time period covered by the bonus. Then, the employer must calculate overtime – taking into account this added compensation – separately for each workweek in which the employee worked more than 40 hours.
At the end of the day, this new Opinion Letter is not “new” news – it’s just a reminder that employers must carefully analyze what period of time a bonus is intended to cover and fairly and equally allocate the bonus across that period. DO NOT attempt to game the system and allocate a bonus in a manner inconsistent with this directive or you could find yourself in trouble. Another reminder – not covered in the Opinion Letter but still worth noting – don’t forget that state laws, including Colorado’s, often establish overtime requirements in addition to those set by the federal law. Make sure you are doing all of your overtime calculations in accordance with all applicable laws.
It is time for employers to make their plans if they intend to seek “H-1B” U.S. work authorization for a foreign professional under U.S. immigration law.
During January and February, 2020 employers should begin drafting key forms that must go to the U.S. Department of Labor and the U.S. Citizenship and Immigration Services.
Between March 1 and March 20, 2020, the immigration agency plans a period of electronic pre-registration by all employers that are hoping for H-1B work authorization for a desired foreign recruit. The random electronic selection process is intended to pre-select those employers who can submit full H-1B petitions for the limited bachelor’s degree level annual quota of 65,000. Another 20,000 per year are authorized for foreign recruits with U.S. master’s degrees or higher.
If an employer is notified of its selection to submit the full H-1B petition, finalizing the steps taken preliminarily must promptly proceed in late March. Work authorization, if approved, would begin October 1, 2020.
By James Korte
Employers rejoice! The National Labor Relations Board (NLRB) released a string of rulings on Monday reversing three controversial Obama-era decisions. With these rulings, the NLRB returned to long-standing rules in areas of significance prior to the sweeping changes made by the Obama-era Board. The NLRB’s return to the “old” tests should again provide employers with the clarity necessary to determine their legal obligations.
The NLRB in Caesars Entertainment d/b/a Rio All-Suites Hotel and Casino, 368 NLRB No. 143 (Dec. 16, 2019), found that the casino’s policy barring use of its email system for nonbusiness purposes did not violate federal labor law. This decision overruled Purple Communications, where the Obama-era Board had found employees could generally use their employers’ email systems to organize or engage in union or other concerted activities protected by Section 7 of the National Labor Relations Act. Caesars reinstates the standard announced in Register Guard, 351 NLRB 1110 (2007), where employees have no statutory right to use employer equipment, including IT resources, for Section 7 purposes. Caesars, however, established an exception to the Register Guard standard “in those rare cases where the employer’s email system furnishes the only reasonable means for employees to communicate with one another.”
The NLRB also issued Apogee Retail LLC, 368 NLRB No. 144 (Dec. 16, 2019), overruling Banner Health System and finding that employers do not violate workers’ rights to act collectively when employers bar employees from discussing workplace investigations. The Board found that invoking confidentiality for workplace investigations is generally legal as long as it is limited to the period of active investigation. The Board applied its 2017 decision, Boeing Co., 365 NLRB No. 154 (2017), to find that investigative confidentiality rules fall with the “Boeing Category 1” rules.
Finally, the NLRB issued Valley Hospital Medical Center, Inc. dba Valley Hospital Medical Center, 368 NLRB No. 139 (Dec. 16, 2019), which reinstated the principle that dues checkoff ends with the expiration of a collective bargaining agreement. This decision overruled the NLRB’s 2015 decision in Lincoln Lutheran of Racine, that a union can continue to insist on dues checkoff post-expiration. The Board returned to the rule of Bethlehem Steel, which had stood for half a century, that employers do not have to facilitate a union’s finances if there is no collective bargaining agreement in place.
In Fischer v. Sentry Ins. A Mutual Co., an employee kept a log of when she felt sexually harassed or discriminated against by her employer. The log went missing shortly before the company fired her. In her retaliation complaint, the employee essentially asked the Court to infer her employer was aware of the log and that it was no coincidence they fired her after becoming aware of her list of harassment and discrimination. The Court found that although the employee’s theory was speculative, it was plausible, and her retaliation claim survived the employer’s motion to dismiss.
In the end, for the log to constitute protected activity under Title VII, the employee will still be required to prove the employer actually knew of her complaints in the written log. At only the pleading stage, however, the Court steered away from dismissing the claim before the employee had a chance to conduct discovery about her employer’s knowledge and notice of her complaints. The court reasoned that outright dismissal would discourage employees from keeping a written record of discrimination or from planning future lawsuits for fear of retaliation if their notes were found by their employer, and protecting such employee activity is the purpose of the Title VII retaliation provision.
Fischer v. Sentry Ins. A Mutual Co., No. 19-cv-00156-bbc, 2019 U.S. Dist. LEXIS 214434, at *1 (W.D. Wis. Dec. 10, 2019)
In November 2019, the Pennsylvania Supreme Court looked at the conflict between federal and state law concerning the calculation of overtime compensation for non-exempt salaried workers. The Court ruled that although federal law explicitly adopted the fluctuating workweek (FWW) method for employees paid a set amount each week, despite the hours worked fluctuating, Pennsylvania law necessitated a different, more employee-friendly overtime calculation method.
Both the Pennsylvania Minimum Wage Act of 1968 (PMWA) and the federal Fair Labor Standards Act (FLSA) require payment of at least “one and one-half” of the employee’s “regular rate” for each hour worked in excess of 40 hours. This calculation is straightforward for employees who earn a set hourly wage, but it is more complicated for employees who are paid a set weekly amount for fluctuating hours. In these cases, the “regular rate” is calculated under the FLSA by dividing the employee’s weekly compensation by the actual hours worked in the week. With this calculation, the employees receive their “straight” time for hours over forty as part of the set weekly amount, and employers only owe an additional half of the regular rate for overtime hours.
The PMWA, however, does not address how to calculate overtime for these workers. The employer in this suit argued Pennsylvania should use the federal FWW method. The employees argued that the PMWA had not specifically incorporated the FWW method’s 0.5 multiplier, and if Pennsylvania wanted to adopt the federal method for salaried employees, it would have.
The Court ultimately agreed with the employees. Based on a mechanical application of the PMWA’s statutory and regulatory language, the Court concluded that use of the federal calculation method violated the PMWA, and Pennsylvania salaried, non-exempt employees are entitled to a 1.5 overtime multiplier.
The effect is retroactive liability for an employer that used recognized federal pay practices. Employers in many states might find themselves in the same situation. The legality of the FWW method is not fully resolved in Connecticut, Delaware, Hawaii, Idaho, Indiana, Maine, Maryland, Nevada, New Hampshire, New Jersey, New York, North Dakota, Rhode Island, Vermont, Virginia, Washington, West Virginia, Wisconsin, or Wyoming. See Wage & Hour Defense Institute, State-By-State Wage and Hour Law Summary (2017).