A Big (Bad?) Week for Employers Under the FLSA

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overtimeIt was a big week for the Fair Labor Standards Act.

On March 7th, the Supreme Court let stand a decision that the owner, president and CEO of a supermarket chain in New York is personally liable for his company’s failure to make required payments on a FLSA settlement agreement.  The owner argued that to be held personally liable he had to be responsible for the violations (rather than just have general control over corporate operations). However, the Supreme Court refused to hear his arguments against the court of appeals’ decision, which can be interpreted broadly to suggest that an individual may be held personally liable for FLSA violations by virtue of general control of over corporate affairs.

On March 10th, the Supreme Court declined to review an appeals court decision finding that undocumented workers can sue — and recover wages owed — under the FLSA.

Then, on March 13th, President Obama directed the Secretary of Labor to update the FLSA’s overtime exemptions to provide more employees with overtime pay.  Some have speculated that the change will be to significantly raise the minimum weekly salary for an employee to be considered exempt under most exemptions (currently $455/week), but changes could also include rewrites of the job duties tests for the frequently used “white collar exemptions” or other limitations on current exemptions.  It remains to be seen what changes will be proposed by the administration and whether they can be implemented before the end of the President’s term.  We will keep you posted as we learn more.

EEOC and FTC Offer Joint Tips on Use of Employment Background Checks

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UntitledOn Monday, the Federal Trade Commission and the Equal Employment Opportunity Commission issued joint publications offering informal guidance on conducting background checks that comply with the Fair Credit Reporting Act and anti-discrimination laws. The overlapping rules and jurisdiction of these two agencies in this area of the law can sometimes be confusing for employers.

The first brochure, Background Checks: What Employers Need to Know, offers nuts-and-bolts guidance for employers to consider when investigating the backgrounds of applicants and employees for use in hiring, retention, promotion, and reassignment decisions. The publication also reminds employers to review local laws regarding background reports and information because some states and municipalities regulate the use of that information for employment purposes in addition to what federal law requires. The brochure also has many helpful links to other EEOC and FTC guidance in this area.

The second brochure, Background Checks: What Job Applicants and Employees Should Know is geared toward job applicants and employees.

The EEOC press release describes the joint guidance as “a unique opportunity for the agencies to work together to provide user-friendly technical assistance to our stakeholders.” Given that the EEOC has not been particularly successful in the cases it has brought against companies for allegedly using background checks improperly, it is likely that the agency also has decided that getting employers to voluntarily alter their practices by providing additional guidance to them may be a better enforcement strategy.

New EEOC Guidance Highlights Religious Accommodations

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EEOC ImageThe U.S. Equal Employment Opportunity Commission has issued new, detailed guidelines for employers with respect to required accommodation of religious dress and grooming under Title VII of the Civil Rights Act. Businesses covered by Title VII must permit applicants and employees to follow religiously mandated dress and grooming practices unless it would pose an undue hardship to the operation of an employer’s business.

While the laws themselves are not new, the guide and fact sheet provide clear, practical advice for employers and offer several real-world examples from recent EEOC cases.

Religious Garb and Grooming in the Workplace: Rights and Responsibilities

Fact Sheet on Religious Garb and Grooming in the Workplace: Rights and Responsibilities

Supreme Court Expands Sarbanes-Oxley Whistleblower Protections

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gavelpictureYesterday, the Supreme Court handed down its decision in Lawson v. FMR LLC, holding 6-3 that employees of public companies’ private contractors are protected by the Sarbanes-Oxley Act’s whistleblower protections.  The Sarbanes-Oxley Act (“SOX” — which was enacted in 2002 following the collapse of Enron) includes a provision that protects whistleblowers from adverse employment action for reporting corporate misconduct by public companies.  The Court’s ruling clarifies who can bring a whistleblower claim under SOX, concluding that both employees of public companies and employees of their contractors can raise a claim of retaliation under the Act.

So how does yesterday’s decision impact private employers?  For most employers the impact is somewhere between nothing and minimal.  However, private companies that are contractors of publicly traded companies — and in particular private companies that are closely related to public companies — should take care to respond to concerns raised by their employees about the conduct of their public client to avoid any adverse employment action in response.

Fewer EEOC Charges in 2013 than 2012

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graphThe EEOC’s recently released 2013 charge statistics show the agency received 5,685 fewer charges in 2013 than it did in 2012. This more than 5% reduction is somewhat surprising after three years of near flat charge filings.

Charges were down slightly for race, national origin, religion, and disability discrimination claims and more markedly for sex discrimination claims (-8.8%) and age discrimination claims (-6.4%). The only major area where the EEOC saw more charges in 2013 was retaliation claims (+1.8%).

While it’s difficult to draw conclusions from a single year’s data, the increase in retaliation claims is a good reminder of the importance of how an employer responds to a complaint of discrimination or harassment.

Court Reaffirms Burden of Proof for Retaliatory Discharge Claims

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gavelpictureIn Phillips v. Continental Tire, the federal Court of Appeals sitting in Chicago confirmed that to prove retaliatory discharge under Illinois law, an employee must establish that he was terminated “primarily in retaliation for” his protected activity. The court found that it wasn’t enough that the employee’s protected activity (here, filing a worker’s comp claim) set into motion a string of events that ended in termination.

Continental Tire’s policy required that an employee submitting a worker’s compensation claim to submit to a drug test and provided that failure to do so would result in termination. Jeff Phillips tried to file worker’s compensation but refused to submit to a drug test. Continental Tire terminated his employment for refusing the drug test and Phillips sued claiming retaliatory discharge on the theory that because the drug test was triggered by his worker’s comp claim, they were “causally related.”  The Seventh Circuit rejected Phillips’ argument, finding that “[c]ausation requires more than a discharge in connection with filing a claim” — “[t]o establish causation, the employee must affirmatively show that the discharge was primarily in retaliation for [his] exercise of a protected right.”

We’ve recently seen a small uptick in worker’s compensation retaliation claims, so the Phillips decision is a helpful reminder of the high bar for establishing retaliatory discharge. Still, employers should take extra care in terminating an employee who has filed a worker’s comp claim or engaged in other protected activity.

Illinois Supreme Court Upholds Constitutionality of the Employee Classification Act

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gavelpictureOn February 21, 2014, in Bartlow v. Costigan , the Illinois Supreme Court unanimously upheld the constitutionality of the Employee Classification Act (ECA).

The ECA is aimed at cracking down on misclassification of employees as independent contractors in the construction industry. The ECA deems an individual performing services for a “contractor” as an employee of the contractor unless the individual can meet certain specific tests (e.g., is the individual free from the direction and control of the contractor? Is the service performed by the individual outside the usual course of services performed by the contractor?). A “contractor” is any person or firm “who engages in construction.”  One of the complaints from employers about the ECA is that “construction” is broadly defined to include everything from “maintenance” and “landscaping” to more traditional construction tasks such as “remodeling,” “wrecking,” and “refurbishing.”

The Bartlow case hinged on whether or not the ECA was impermissibly vague and violated procedural due process rights.  After years of back and forth in lower courts, the Supreme Court rejected all of the plaintiff’s constitutional challenges.  With regard to the plaintiff’s vagueness argument, the court held that “a person of ordinary intelligence could understand the conduct prohibited under the act” and that recent amendments to the law essentially rendered the plaintiff’s other concerns moot.

Employers who were hoping the law might be repealed or modified by the state legislature or overturned by the Illinois Supreme Court need to recognize that it is here to stay.  If your business is connected in any way to the construction industry, as broadly defined under the statute, you need to scrutinize your use of independent contractors to ensure it is in compliance with the ECA.

EEOC Files Suit Over Separation Agreement Language

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The EEOC filed suit Friday in U.S. District Court for the Northern District of Illinois claiming that CVS Pharmacy violated Title VII by using separation agreements that allegedly limited the rights of employees to communicate with the agency, file charges, and participate in investigations (EEOC v. CVS Pharmacy Inc., Civil Action No. 1:14-CV-683).  EEOC ImageThe EEOC specifically took issue with provisions in the separation agreements requiring employees to notify CVS if they receive a subpoena, deposition notice, interview request, or other inquiry from any investigator, attorney, or other third party; prohibiting employees from disparaging the company; prohibiting employees from disclosing confidential information; releasing “charges” against the company relating to “unlawful discrimination;” and agreeing not to sue the company.  As one of the remedies requested, the EEOC wants the court to give employees who were subject to the agreements the opportunity to file a charge within three hundred days, basically restarting their limitations period.  If the case moves forward, it will be interesting to see whether the court agrees with the EEOC’s position.  After all, the employees who signed the agreements presumably did so precisely because they had no intention of taking any sort of legal action against CVS.  Unfortunately, these types of cases often get settled early, allowing the EEOC to declare victory, but leaving employers uncertain about the law governing their agreements.    

Are You Ready for 2014?

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checkLaws are always changing and can sneak up on even the most aware companies. Each year, LP’s Labor & Employment Practice Group is pleased to offer a short checklist of items all companies should consider to improve their readiness, avoid litigation, meet compliance obligations, and stay current with best practices in 2014. We hope you find this 2014 Labor and Employment Law Compliance Checklist to be a helpful guide for the year ahead.

2014 Labor and Employment Law Compliance Checklist

Company Handbook Items Draw NLRB Scrutiny

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EmployeeHandbookThe National Labor Relations Board is drawing a lot attention from the media for its recent crackdowns on companies’ social media policies, but the NLRB has increasingly been scrutinizing other common policies in non-union companies’ employee handbooks.  Guidelines on keeping information confidential, being courteous in the workplace, not disparaging the company or supervisors, and resolving disputes are all under the NLRB’s microscope. The key, in the NLRB’s eyes, is whether the policy would limit employees’ right to “engage in concerted activity” (which includes everything from two employees discussing the workplace to a group of employees forming a union) or suggests that employees can’t engage in collective bargaining.  So, for instance, the NLRB has taken issue with confidentiality policies that prohibit the sharing of information regarding other employees because sharing employee information is a key step in organizing.  Similarly, the NLRB has taken action against non-union companies that prohibit employees from disparaging co-workers or the company, because employees have a right to share their grievances about the workplace.  There is no question that the NLRB is continuing to assert itself in non-union workplaces. Employers can look forward to more NLRB cases claiming that standard handbook policies violate the National Labor Relations Act.  If you haven’t recently reviewed your employee handbook and policies with an eye toward these issues, it makes sense to do so before you find yourself in the NLRB’s crosshairs.