DOL Announces New Proposed Minimum Salary for Overtime Exemptions

600px-US-DeptOfLabor-Seal_svgThis morning the Department of Labor announced that it is seeking to increase the number of employees eligible for overtime pay by increasing the minimum salary required if an employee is to be considered exempt under the administrative, executive and professional exemptions.  The proposed increase would take the minimum annualized salary from $23,660 to $50,440.  In addition, under the proposed rule the threshold for the FLSA’s Highly Compensated Employee exemption would rise from $100,000 to $122,148.  Both the minimum salary and the Highly Compensated Employee threshold would be indexed for inflation. The DOL also suggested that it may seek other changes to limit the available overtime exemptions.  If this change becomes a final rule, we would expect it to become effective in 2016.

Note that even if employees meet the higher minimum salary requirement, they still must meet the other requirements for exempt status — being paid on a salary basis and satisfying one of the duties tests — to qualify as exempt from overtime requirements.

No action is necessary at the moment as the proposed rule is not final.  We will keep you updated on future developments.

Supreme Court Speaks on Religious Accommodation

supreme court sealYesterday, the Supreme Court handed down its decision in EEOC v. Abercrombie & Fitch Stores, Inc., ruling in favor of a Muslim woman who claimed that she was denied employment at an Abercrombie & Fitch (A&F) store because she wore a headscarf.  With this decision, the Supreme Court sent a clear message: an employer may not make a hiring decision based on an applicant’s need for a religious accommodation, regardless of whether the employer had actual knowledge of such a need.

Samantha Elauf (Elauf) is a practicing Muslim who wears a headscarf for religious reasons. Elauf claims that she applied for a job at an A&F store and that, although she was otherwise qualified to be hired, she was ultimately denied employment because her headscarf would violate A&F’s “Look Policy.” The Look Policy prohibits “caps” because they are too informal for A&F’s desired image. Elauf never identified her headscarf as religious to anyone at A&F, nor did she ever communicate a need for any religious accommodation.  The EEOC sued A&F on Elauf’s behalf, claiming that A&F’s refusal to hire her violated Title VII.  In response, A&F argued that it could not be found to have discriminated against Elauf by failing to priovide a religious accommodation unless it had “actual knowledge” of Elauf’s need for a religious accommodation.  The district court disagreed with A&F’s argument and held in favor of Elauf the EEOC.  However, the Tenth Circuit reversed, agreeing with the “actual knowledge” standard put forth by A&F.

The Supreme Court reversed the Tenth Circuit and remanded the case for further consideration, holding that, under Title VII, an applicant only needs to show that her need for an accommodation was a “motivating factor” in the employer’s decision — she need not show that the employer had actual knowledge of the need for an accommodation. In other words, an “employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions” [emphasis added]. The Court gave as an example a situation where an employer thinks (but doesn’t know for sure) that a job applicant may be an orthodox Jew who will observe the Sabbath and thus unable to work on Saturdays. If the applicant actually does require accommodation of that religious practice and the employer’s wish to avoid the accommodation is a motivating factor in its decision to not hire the applicant, the employer violates Title VII. The Court was clear in its decision that its ruling only applies to accommodation under Title VII, and not to accommodation under the Americans with Disabilities Act (ADA), which follows a different framework.

The take away here?  Employers need to avoid basing employment decisions on any protected characteristic — whether confirmed or suspected. Although this case centered on a hiring decision and the anticipated need for an accommodation, it should apply equally to other terms and conditions of employment.

We recommend that managers, supervisors and those involved in the hiring process be trained on the legal requirements surrounding equal employment opportunity and on how to appropriately respond to requests for  — or other information suggesting that there is a need for — an accommodation.

Full text of the EEOC v. Abercrombie & Fitch Stores, Inc. decision can be found at:  http://www.supremecourt.gov/

DOL Releases Busy Spring Agenda

600px-US-DeptOfLabor-Seal_svgThe U.S. Department of Labor (DOL) has released its spring 2015 regulatory agenda, which provides a window into what we can expect from the agency over the coming months.  The agenda provides updates on 70 rulemaking measures and suggests that — with President Obama’s term approaching its end —  the DOL is putting its rule-making into high gear.

Here are some highlights from the agenda:

Overtime Pay

The DOL indicates that we should see the proposed rule redefining the white-collar exemption under the Fair Labor Standards Act (FLSA) in June. As we reported last year, President Obama has directed Labor Secretary Thomas Perez to “modernize and streamline” the regulations defining this exemption for executive, administrative, professional, outside sales, and computer employees. We expect that the proposed rule will narrow the white-collar exemptions, resulting in fewer employees qualifying as exempt from overtime requirements.

Use of Technology during Non-Working Hours

Also on the agenda is information seeking – in the pre-rule stage – on “the use of technology, including portable electronic devices, by employees away from the workplace and outside of scheduled work hours.” It appears that the DOL is seeking this information with an eye toward proposing a rule clarifying how this type of 21st Century off-the-clock work is compensated (likely to the benefit of employees).  The request for information is expected in August.

Reporting under the Labor-Management Reporting and Disclosure Act

Lastly, the DOL agenda also indicates that we should expect a controversial final rule on the narrowing of the “advice” exception under the Labor-Management Reporting and Disclosure Act (LMRDA) in December. The LMRDA requires employers and labor relations consultants (or other similar individuals) to report any agreement or arrangement they have to engage in activities to persuade employees concerning the right to organize or bargain collectively.  The LMRDA contains an exception for “advice,” stating that no employer or consultant has to file a report concerning services of a consultant if that consultant just gives “advice” to the employer. The proposed rule would limit the definition of “advice” to “oral or written recommendations,” so that any other activity would need to be reported.  This proposed rule has been on the books for a number of years and continues to face serious opposition from many groups — including the American Bar Association — because it raises critical concerns about attorney-client privilege.  We expect lengthy legal challenges to this rule.

It should be a busy second-half of the year for the DOL. We will keep you updated on any new developments.

Wage Theft Prevention Laws Spread… and D.C. deadline approaches

dc-blogThe District of Columbia has joined New York and California in enacting a Wage Theft Prevention Act.  And while D.C. employers have been required to provide certain notices since late February, the deadline for providing notices to current employees and meeting record-keeping requirements (including keeping more specific time records) is Wednesday, May 27th.

Wage Theft Prevention laws require employers to provide employees with a detailed notice setting out details about their compensation and how they are employed. While in California these notices need only be presented to non-exempt employees, in New York they must be given to all new employees (a requirement that employees be provided with notices annually was recently repealed).

The D.C. law requires that a notice similar to those required in these other jurisdictions  be provided to all current employees by Wednesday, May 27th (a sample of the “Notice of Hire” to be provided to employees notice can be found here).  Employers with employees in the District of Columbia need to act fast to provide these notices and post the required posting regarding the Wage Theft Prevention Act by the deadline.

But that’s not all…. the D.C. law also requires employers to record non-exempt employees’ “precise time worked”, rather than just “hours worked”. While the law doesn’t define “precise time worked,” it presumably requires that the employer record the employee’s start time, end time, and the beginning and end of any break time, rather than simply “eight hours worked.” The law requires that employers maintain these records for all employees who are non-exempt under D.C. standards (which are more employee-friendly than federal standards).

Companies with D.C. employees should confirm that notices are provided, that the required poster is posted and that a method for recording “precise time worked” is in effect by the time employees return from the Memorial Day holiday.

SEC Takes Aim at Confidentiality Agreements

We – and the SEC – think it’s a good time to review your confidentiality agreements.confidentiality-agreement (2)

It’s no secret that the Securities and Exchange Commission (SEC) has had employee confidentiality agreements on its mind for some time now. In the eyes of the SEC, confidentiality agreements, if overly-broad, may prevent or discourage would-be whistleblowers.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended the Securities Exchange Act to include protections and incentives for individuals who come forward with allegations of wrongdoing. Rule 21F-17(a) explicitly prohibits employers from taking action that would “impede” an employee from “communicating directly” with the SEC about a “possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement.”

On April 1, 2015, the SEC announced that it had settled its first enforcement action involving an overly-restrictive confidentiality provision under Rule 21F-17(a). The action primarily focused on a confidentiality statement that employees were required to sign in connection with the company’s internal investigation procedures. The statement read:

I understand that in order to protect the integrity of this review, I am prohibited from discussing any particulars regarding this interview and the subject matter discussed during the interview, without prior authorization of the Law Department. I understand that the unauthorized disclosure of information may be grounds for disciplinary action up to and including termination of employment.

The SEC determined that this statement violated the whistleblower protections under Rule 21F-17(a), even though there was no evidence that any employee was prevented or discouraged from communicating with the SEC because of the language. The company agreed to resolve the matter by: (i) paying a penalty; (ii) agreeing to cease and desist from any future violations, (iii) amending the language of the provision; and (iv) agreeing to make reasonable efforts to contact employees who had already signed the agreement to inform them that they did not need to gain permission from anyone to contact governmental agencies. The SEC approved the following amended language:

Nothing in this Confidentiality Statement prohibits me from reporting possible violations of federal law or regulation to any governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. I do not need the prior authorization of the Law Department to make any such reports or disclosures and I am not required to notify the company that I have made such reports or disclosures.

In light of this ruling (and the NLRB’s activity in this area that we discussed in our post yesterday), we recommend that you review all agreements containing confidentiality clauses – including employment agreements, severance agreements, employee handbooks, settlement agreements, nondisclosure agreements and any other similar agreements. If necessary, these clauses should be revised to include an express statement that nothing in the agreement discourages and/or prevents any individual from communicating with any government agency, including the SEC.

“Spring Cleaning” Item: Review Your Employee Handbook

You may want to include a review of your employee handbook in your “spring cleaning” this year.

National Labor Relations Board Building Sign

Employee handbooks and work policies have been at the forefront of the National Labor Relations Board’s mind recently. The Board has held that a work rule may violate Section 8(a)(1) of the National Labor Relations Act if the rule has a “chilling effect” on employees’ Section 7 activity – whether it be union activity or simply discussing the terms and conditions of employment with one another. According to the Board, a work rule not only violates the Act if it explicitly restricts this protected activity, but also if it: (1) can be reasonably construed by its language to prohibit protected activity; (2) was promulgated in response to union or other protected activity; or (3) was actually applied to restrict the exercise of the protected rights.

Earlier this spring, the Board’s General Counsel issued a detailed report providing examples of unlawful policies as well as their lawful counterparts. The report discusses:

  • Confidentiality Rules
  • Rules Regarding Employee Conduct toward the Company and Supervisors
  • Rules Regulating Conduct Towards Fellow Employees
  • Rules Regarding Employee Interactions with Third Parties
  • Rules Restricting Use of Company Logos, Copyrights, and Trademarks
  • Rules Restricting Photography and Recording
  • Rules Restricting Employees from Leaving Work
  • Conflict-of-Interest Rules

The full text of the report can be found at: http://www.nlrb.gov/reports-guidance/general-counsel-memos.

In light of this report, we recommend that you carefully review all of your policies, with particular emphasis on the ones listed above.

EEOC Issues Proposed Regulations on Employer Wellness Programs

EEOC ImageCan your employees participate in a wellness program through work? Do you offer financial incentives for participating in the program? If so, listen up.

In April, the U.S. Equal Employment Opportunity Commission issued proposed regulations focusing on how the American with Disabilities Act applies to corporate wellness programs. The proposed regulations give some guidance on how to legally use financial incentives to encourage workers to participate in such programs.

Although Title I of the ADA generally prohibits employers from obtaining medical information from employees, it allows employers to give medical examinations to employees and ask about their health if they are part of a voluntary “employee health program.” Before the proposed regulations, the EEOC had not yet determined whether employers could offer financial incentives to encourage employees to participate in such programs or whether offering incentives would make participation involuntary. The new proposed regulations answer these questions — according to the EEOC, employers may offer incentives up to 30% of the cost of the employee-only coverage to employees who participate in a wellness program and/or achieve certain health outcomes.

The proposed regulations (http://www.regulations.gov), in most pertinent part:

  • Define an “employee health program;”
  • Set forth the requirements that must be met for a program to be considered “voluntary;”
  • Detail the 30% of cost incentive limit; and
  • Set forth additional confidentiality requirements of information gathered during participation in wellness programs.

Although these regulations are only proposed and may or may not go into effect as written in the near future, we suggest that you review your wellness programs and corresponding financial incentives in light of the regulations. Please note that under existing laws – even before the introduction of the proposed regulations – you cannot:

  • Require employees to participate in a wellness program;
  • Deny health insurance to employees who do not participate in the program;
  • Take any adverse employment action or retaliate against, interfere with, coerce, or intimidate employees who do not participate in the program; or
  • Deny employees with disabilities reasonable accommodations that allow them to participate in a wellness program and receive any related incentives.
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