Last week, the Department of Labor issued an opinion letter finding that that at least some gig-economy workers can be properly classified as independent contractors — not employees — and thus are not covered by the federal Fair Labor Standards Act (FLSA). This opinion letter is in stark contrast to the DOL’s prior position and to other decisions regarding the proper classification of gig-workers. You can read more about the Department of Labor’s recent opinion letter here.
Last week, Facebook agreed to withhold a wide array of detailed demographic information — including gender, age and zip codes (which are often used to determine race) from advertisers when they market, among other things, job opportunities. You can read more about Facebook’s move here.
Although these claims involve Facebook, employers advertising job opportunities on other online platforms should be careful not to target employment ads to specific demographics that could be seen as discriminatory.
It was less than a year ago that the Supreme Court ruled that employees could be required to individually arbitrate claims (and waive their right to participate in a class action), but arbitration agreements aren’t a silver bullet. In fact, some employers are responding to local legislation and employee resistance by pulling back from arbitration requirements.
Just last week, Google responded to employee protests and announced that it would no longer require its workers to arbitrate employment related claims. Read more about Google’s decision here.
Whether or not employee arbitration agreements make sense is a very company-specific decision. Think carefully about what you’re trying to accomplish with these agreements and talk to your legal counsel about the risks and benefits.
Last week the Illinois Senate moved forward with Governor Pritzker’s priority to increase the minimum wage to $15/hour by 2025. Read more about it here. We’ll keep you posted as this effort moves forward….
Last week, the Department of Labor (DOL) issued a news release stating that going forward, it will use the seven-factor “primary beneficiary” test — set forth by the 2nd Circuit and applied by other Circuits — to determine whether interns working at for-profit employers are employees under the Fair Labor Standards Act (FLSA), expressly rejecting its previous test from 2010.
The “primary beneficiary” test that will now be applied by the DOL analyses the following seven, non-exhaustive factors:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The DOL noted that this new test will be applied in a “flexible” manner, and that whether an intern qualifies as an employee under the FLSA depends on the unique circumstances of each case.
It is widely agreed that the primary beneficiary test is easier for companies to satisfy than the DOL’s prior test, but it’s too early to tell how much of an impact this change will be. If you do have an internship program, it’s a great time to review intern classifications and make sure that they are being treated properly under employment laws.
In a very employer-friendly decision, the 7th Circuit Court of Appeals held that the Americans with Disabilities Act (ADA) does not give employees the right to take an extended leave of absence.
In Severson v. Heartland Woodcraft, Inc., the 7th court considered a discrimination claim brought by an employee who was fired when his 12 weeks of FMLA-protected leave for a pre-existing back condition expired and he was still unable to return to work. The employee claimed that his firing violated the Americans with ADA because the “at least two additional months” that he needed to recover from surgery after his FMLA leave ended was a “reasonable accommodation.” The 7th Circuit strongly disagreed, holding that the employee’s proposed accommodation of at least two additional months of leave was not reasonable. According to the Court, the ADA “is an anti-discrimination statute, not a medical leave entitlement.”
This ruling is contrary to the position taken by the Equal Employment Opportunity Commission (EEOC) that multi-month leaves of absences may be required under the ADA. According the EEOC, leave or extended leave as a job accommodation should be considered when a worker’s doctor is able to estimate a specific endpoint for the leave, the employee asks for the leave ahead of time, and the leave will likely enable the employee to fully perform the job afterward.
In light of the decision in Severson, employers (especially those in Illinois, Indiana and Wisconsin) can feel more comfortable refusing requests for multi-month and indefinite leave requests under the ADA. And while the language in Severson should apply to shorter leaves as well, its holding is limited to extended leaves, so employers still need to consider whether an employee’s request for a shorter leave (either after the expiration of an FMLA leave or if the employee did not qualify under the FMLA) would be a reasonable accommodation.
In a surprise ruling, a federal judge in Texas today issued a nationwide injunction preventing the new overtime rules issued by the Department of Labor from going into effect on December 1. Twenty-one states had filed suit against the U.S. Department Labor challenging the validity of the new rules. In granting the request for a preliminary injunction, U.S. District Judge Amos Mazzant decided that the states were likely to succeed in their challenge and that there would be irreparable harm if the rules were allowed to go into effect next month.
As discussed in prior posts, the rules would have implemented a new minimum salary threshold of $913/week for employees falling within the “white collar” exemption under the Fair Labor Standards Act.
Although it is clear that the rules will be delayed as a consequence of the ruling, it is not clear whether this delay will be measured in weeks or months. It also is possible that the injunction may lead the incoming Trump administration to roll the rules back in their entirety or to implement one of the compromise positions urged on the administration by business groups.
Until further action by the court or the Department of Labor, employers who have not yet taken steps to comply with the new overtime rules may want to put any contemplated changes on hold. We will provide further information about developments in this area as soon as they occur.