According to recent guidance issued by the DOL and NLRB, workers in the so-called “gig,” “on-demand,” or “sharing” economy are independent contractors, not employees. This represents a significant departure from Obama-era policy and is expected to have significant consequences for both employers and workers in that sector.
First, on April 29, 2019, the DOL issued letter guidance in response to a request by an unnamed “virtual marketplace” company which operates a platform which directly connects consumers with “service providers,” i.e., workers who provide a variety of services, such as transportation, delivery, shopping, moving, cleaning, and household services. In applying the longstanding “economic dependence” test, the DOL found that these service providers did not fit into any “traditional employment paradigm” covered by applicable law. Instead, the DOL determined that the company simply provides a “referral service,” which “empowers service providers to provide services to end-market consumers.” As a result, the DOL concluded that these service providers are not covered by the FLSA, and therefore are not entitled to be paid the federal minimum wage or overtime. Although this opinion is technically limited to the circumstances of this one unnamed company, it will undoubtedly be cited by other employers in this space.
Then, less than three weeks later, on May 14, 2019, the NLRB released a memorandum in which it found that Uber drivers are contractors. The Board based its decision largely on its finding that these drivers had “near complete control of their cars and work schedules, together with freedom to choose log-in locations and to work for competitors of Uber.” The Board further observed that, “[o]n any given day, at any free moment, drivers could decide how best to serve their economic objectives: by fulfilling ride requests through the App, working for a competing ride-share service, or pursuing a different venture altogether.” Notably, the Board repeatedly cited its recent SuperShuttle DFW, Inc. decision, which we have previously covered here on this blog. That January 2019 decision substantially modified the standard for classifying independent contractors and made it more likely that workers fall outside the NLRA’s protections. Accordingly, the Board’s finding here does not come as an enormous surprise. As a result of this decision, Uber drivers – and other gig economy workers – are likely to find it extremely difficult to form a union.
These developments track the employer-friendly positions that the current administration’s labor and employment agencies have been adopting over the past two years. However, employers should be cautioned that properly classifying workers is not only a matter of federal law; it also requires careful attention to overlapping state laws. Additionally, as we have seen, these agencies’ positions can change quickly – the previous administration took an entirely different approach to these issues, with the Obama DOL publishing guidance that strongly suggested that gig economy workers should be classified as employees.
Given the ever-changing landscape of these and other employment law issues, we recommend subscribing to the blog for future updates. And, if you have any questions about these topics, please do not hesitate to contact your Akerman Labor & Employment attorney.
“Fair workweek” laws are sweeping the nation, bringing new challenges for employers. Also referred to as “predictable scheduling,” “advanced scheduling,” or “secure scheduling laws,” these laws typically require larger employers in restaurant and retail industries to provide employees with advanced schedules and “predictability pay” if schedules are changed after a certain time period before an employee’s shift.
Earlier this month, Pennsylvanian politicians and labor leaders introduced state fair workweek laws, which would require large hospitality, retail, and food service companies to provide employees with schedules two weeks in advance or, alternatively, compensate employees if their shifts were adjusted at the last minute. These proposed laws are similar to the Philadelphia Fair Workweek Employment Standards Ordinance signed into law in December 2018, which required employers to: (1) give existing employees the right of first refusal to work additional hours before hiring new employees; (2) post and provide advance written notice of work schedules; (3) provide predictability pay for any departures from the posted schedules; and (4) permit a rest period of nine hours between shifts.
Between 2014 and today, numerous city governments have passed Fair Workweek laws in order to regulate industries like retail and fast food. These cities include New York City, Seattle, San Francisco, San Jose, Washington, D.C., and more, with Chicago, Los Angeles, and Boston currently considering fair workweek legislation. At this point, Oregon is the only state to pass a state-wide fair workweek law, however, states like Illinois, Maine, Massachusetts, and Pennsylvania (as noted above), have also seen fair workweek legislation proposed at the state level.
Although the laws vary widely, depending on the industry, employer size, and city, there are common requirements and prohibited practices among most fair workweek laws, including, but not limited to:
Providing employees with advance and sometimes written notice of their work schedules, ranging from 72 hours to 14 days in advance, and permitting employees to request changes to these schedules;
Providing employees with the most current version of the work schedule for all employees at the at work location;
Banning or limiting the use of “on-call scheduling” for employees, which requires an employee to be available to work, to contact the employer or to wait to be contacted by the employer, in order to determine whether the employee must report to work;
Presenting employees with good faith estimates of employee’s work schedule on or before their start date, including average weekly hours or expected hours each week;
Paying employees over their scheduled rate of pay per hour if the employee’s scheduled hours are reduced without the requisite advanced notice;
Considering employee requests not to be scheduled for certain times or work locations; and
Providing employees with a private right of action for violations of the fair workweek laws for remedies including compensatory damages, liquidated damages, attorneys’ fees, and equitable relief.
Notwithstanding such restrictions, some fair workweek laws have delineated exceptions, useful and practicable for employers and their fast-paced industries. In New York City, for example, certain retail and food service employers may (1) grant a retail employee time off pursuant to an employee’s written request; (2) allow an employee to voluntarily trade shifts with another employee; and (3) make changes to employees’ work schedules with less than 72 hours’ notice, if the employer’s operations cannot begin or continue due to (a) threats to the retail employees or the retail employer’s property; (b) the failure of public utilities or the shutdown of public transportation; (c) a fire, flood or other natural disaster; (d) a state of emergency declared by the President of the United States, Governor of the state of New York or Mayor of the city; or (e) severe weather conditions that pose a threat to employee safety. Oregon’s fair workweek laws have similar exceptions, and also permit employers to maintain a list of “voluntary standby” employees, who have requested to or agreed to take on extra shifts in advance in writing.
In light of the passage and proposals of fair workweek/predictive scheduling legislation, industry groups across the country are challenging these laws. For example, in December 2018, three New York City industry groups (the International Franchise Association, the New York Restaurant Association, and the National Restaurant Association) brought a lawsuit attempting to void the NYC’s fair workweek laws on the grounds that the state labor law preempts the city from enacting or enforcing more restrictive scheduling and workplace laws. The groups also argued that NYC’s fair workweek laws unfairly target franchise and multi-location employers who are required to comply with the laws, as opposed to smaller businesses with less employees and fewer locations. More challenges to fair workweek laws are expected in cities and states where this legislation is being proposed, including Massachusetts and Philadelphia.
As cities and states are proposing and amending fair workweek and predictive scheduling legislation, employers, particularly in the retail, hospitality, and food service industries, should take proactive action. Employers should evaluate their scheduling and payment practices, as well as prepare the required notices to employees in their scheduling and hiring processes. Multi-state or multi-city employers may be forced to comply with different fair workweek laws in each jurisdiction, so these employers must be careful to understand the nuances of local laws, agency opinion letters, and court actions and rulings that govern this area of the law. Your Akerman Labor & Employment attorney can provide further guidance.
For the moment, employers with 100 or more employees should plan to report pay data and hours worked by race, sex, and ethnicity for employees in each of 10 job categories, as a result of a recent court ruling. That ruling requires that the data for 2017 and 2018 payrolls be reported by September 30, 2019 as part of the revived Component 2 of the annual EEO-1 Report. However, on May 3, 2019 the Department of Justice appealed both the ruling that set the September 30 deadline and the earlier court ruling that revived the EEO-1 pay and hours data requirement. If upheld, these decisions will have a significant impact on employers. In addition, employers will face heightened investigatory and enforcement activity due to the EEOC’s access to detailed pay data.
For more than half a century, the EEO-1 Report required employers to disclose the same basic workforce information: the number of individuals employed by the employer organized by job category, race, ethnicity, and sex. This information is referred to as “Component 1” data.
In February 2016, the Equal Employment Opportunity Commission (“EEOC”) announced that it would be mandating significantly more data from employers in future EEO-1 Reports. The new information, called “Component 2” data, includes employee W-2 earnings as well as hours worked in 12 pay bands. As we previously reported in our blog, the business community opposed the new requirements for a myriad of reasons. For one, the overly broad “pay bands” that employees must be grouped into for the EEO-1 Report were an area of concern. For example, a hospital employer might have to count its surgeon, attorney, and accountant employees together in the “Professionals” category – positions that have obvious dissimilarities. There was also a concern with the burden these expanded requirements would place on employers to compile Component 2 data. Additionally, employers complained about the likelihood of increased scrutiny of pay practices and enforcement activity by the EEOC and lack of usefulness of the data to be collected. The EEOC advised that it planned to run “statistical tests” on the Component 2 data as a means “to evaluate whether and how to investigate . . . allegations of discrimination.” However, the EEOC itself acknowledged that “it does not intend or expect that this data will identify specific similarly situated comparators or that it will establish pay discrimination as a legal matter.”
Despite significant employer concerns, the Office of Management and Budget (“OMB”) under President Obama approved the EEOC’s proposed changes on September 29, 2016 and these were scheduled to go into effect in March 2018. Before implementation, however, in August 2017 the Trump Administration placed a stay on the addition of the Component 2 data to the EEO-1 Report. Many employers assumed that this meant the end of the expanded EEO-1 Report, and that is where the matter stood for more than 18 months.
In response to the stay, two organizations – the National Women’s Law Center (“NWLC”) and Labor Council for Latin American Advancement (“LCLAA”) – filed suit in federal court seeking to overturn the stay and on March 4, 2019 Judge Tanya S. Chutkan granted their request in National Women’s Law Center, et al. v. Office of Management and Budget, et al. Judge Chutkan’s order vacated the stay and effectively reinstated the OMB’s prior approval of the expanded EEO-1 Report, including the Component 2 data. The order declared that the revised EEO-1 Report “shall be in effect.” However, the effect of this order remained unclear.
The EEO-1 reporting deadline that followed this order was May 31, 2019. Given the short time frame, it seemed unlikely that employers could realistically be able to submit the Component 2 pay data by that deadline. Alternatively, there were concerns that the EEOC would not be able to receive and process this data. The EEOC, therefore, advised the court that it sought to require employers “to collect retroactively 2018 Component 2 pay data and submit the relevant data to the EEOC by September 30, 2019.” The NWLC and LCLAA opposed the EEOC’s proposed September 30, 2019 deadline. The organizations argued that the EEOC should be ordered to develop a plan to open the collection of Component 2 pay data in advance of the May 31, 2019 deadline, and to develop a plan for retroactive collection of 2017 pay data – data that would have been collected last year, but for the OMB’s stay.
After taking this into consideration, on April 25, 2019, Judge Chutkan ordered that employers must submit the expanded EEO-1 Reports containing the Component 2 data by September 30, 2019. Judge Chutkan also ordered the EEOC to retroactively collect 2017 pay data by the same deadline. The EEOC is expected to begin this collection on July 15, 2019 and will likely issue guidance and training for employers sometime in advance of that date.
Next Steps – EEO-1 Reporting Requirements
Employers who are required to file EEO-1 Reports annually with the EEOC include the following:
Businesses with at least 100 employees;
Businesses with fewer than 100 employees if the company is owned or affiliated with another company and the entire enterprise employs 100 or more people; and
Federal contractors with at least 50 employees and a federal contract, subcontract, or purchase order of at least $50,000.
This year, the deadline to file the EEO-1 Reports with Component 1 data is May 31, 2019. This deadline is later than usual due to the government shutdown that occurred from December 2018 to January 2019.
To comply with the Component 2 requirements, employers must choose a payroll period between October 1 and December 31, and include data for all employees (full-time and part-time) during that payroll period in the Component 2 report. For each employee in that payroll period, the employer must report earnings and hours data in the aggregate, based on the EEO-1 job categories of the employees.
For pay data, the employer should list the number of employees falling within each pay band by sex, race, and ethnicity. To identify the right pay band for each employee, employers are to use the earnings identified in Box 1 on the employees’ Form W-2 for both 2017 and 2018.
For hours data, the employer should report the aggregate hours data for all employees in each pay band by sex, race, and ethnicity. For non-exempt employees, employers should report the hours worked, just as they would under the Fair Labor Standards Act. For exempt employees, employers should multiply 40 hours by the number of weeks worked by the employee in that year.
The Component 2 data for 2017 and 2018 must be reported to the EEOC by September 30, 2019. The EEO-1 Report can be completed online here: https://egov.eeoc.gov/eeo1/login.
If you need assistance complying with the new EEO-1 requirements, please contact your Akerman attorney.
Ambiguous language in an arbitration agreement is not a sufficient basis for concluding a party has agreed to class arbitration, the U.S. Supreme Court ruled last week. In Lamps Plus, Inc. v. Verela, the Court held that, under the Federal Arbitration Act (“FAA”), courts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide, rather than individual, basis. Instead, class arbitration must be expressly authorized in the contract.
By way of background, after a data breach resulted in the disclosure of more than 1,000 Lamps Plus employees’ tax information, an employee brought a putative class action against the company. Because the employee had signed an arbitration agreement upon being hired to work for Lamps Plus, the company moved to compel individual arbitration. The employee’s arbitration agreement with Lamps Plus provided for arbitration of “all claims that may . . . arise in connection with [employee’s] employment,” and further provided that “arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings relating to [employee’s] employment.” The arbitration agreement said nothing explicit about class arbitration. The district court agreed that the case should be arbitrated, but held that the arbitration should be conducted on a classwide, rather than individual, basis. The U.S. Court of Appeals for the Ninth Circuit affirmed that ruling, relying on the state law principle of contract interpretation that ambiguities in a contract must be construed against the drafter (Lamps Plus). The appellate court concluded that the contract was ambiguous, and therefore the parties agreed to class arbitration.
Reversing the Ninth Circuit, Chief Justice John G. Roberts, writing for the 5-4 majority, explained: “[c]ourts may not infer from an ambiguous agreement that parties have consented to arbitrate on a classwide basis.” With this pronouncement, the Court rejected the Ninth Circuit’s reasoning based on state law contract principles, and created a new rule based on the FAA, holding that ambiguous agreements do not authorize class arbitration. The majority squared its conclusion with its previous decision in Stolt-Nielsen v. Animal Feeds Int’l Corp., in which the Court held that a court cannot compel class arbitration when the arbitration agreement in question is “silent” on the availability of class arbitration.
Reiterating the principle previously illuminated in the Court’s Epic Systems Corp. v. Lewis decision (which we wrote about here), the majority explained that allowing a party to assert class claims in arbitration under an agreement that is silent or ambiguous on class arbitration is at odds with the goals of individual arbitration, which includes “lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes.”
The Lamps Plus decision is a win for employers as it clarifies that an agreement that is ambiguous as to whether class arbitration is available cannot provide the necessary contractual basis for concluding that the parties agreed to class arbitration. However, to avoid a fight over contractual ambiguities, employers who want to avoid class arbitration are best served by explicitly, and specifically, including a class and/or collective action waiver in arbitration agreements. For assistance with drafting employee arbitration agreements to include class/collective action waivers, contact your Akerman employment lawyer.
Employers cannot permit employees to use PTO or other paid leave prior to using unpaid FMLA leave for an FMLA qualifying condition, according to a new Department of Labor Opinion Letter. The Opinion Letter also provides that employers cannot designate more than 12 weeks of leave per year as FMLA (or 26 weeks per year if leave qualifies as FMLA military caregiver leave).
FMLA-Qualifying Leave Must Run Concurrently With Paid Leave Policies
Under the FMLA, covered employers must provide eligible employees up to 12 weeks of unpaid, job and benefit-protected leave per year for qualifying medical or family reasons (or up to 26 weeks per year for qualifying military caregiver leave). The Opinion Letter addresses the situation where an employee anticipates a leave of absence for an FMLA-qualifying reason and the employee wants to take off more than the 12 weeks allotted under the FMLA by using other available paid leave policies (such as vacation, sick pay, PTO, etc.) at their disposal. Under this scenario, the employee notifies the employer that he or she plans to exhaust an available paid leave policy first for an FMLA-qualifying reason, and then after that time has run out, he or she desires to take the 12 weeks of FMLA leave.
In the Opinion Letter, the DOL rejected this practice, stating that the FMLA precludes employees from taking advantage of paid leave policies for FMLA-qualifying reasons before designating FMLA leave. The Opinion Letter makes clear that once an employer learns that an employee’s absence qualifies for FMLA leave, the employer must start counting that absence against the employee’s 12 weeks under the FMLA and give notice to the employee of such designation within five business days thereafter. In fact, according to the DOL, it is not acceptable to delay FMLA leave in favor of a paid time off policy even if the employer and employee both desire to do so because the employee would lack the substantive protections of the FMLA during the period of time that they were exhausting a paid-time off policy. To avoid confusion, the Opinion Letter confirms that an employer may require, or an employee may elect, to substitute a paid time off policy to cover all or part of an unpaid FMLA leave; however, the paid leave must run concurrently with unpaid FMLA leave.
FMLA Leave Is Limited to 12 (or 26) Weeks
The Opinion Letter also prohibits an employer from designating more than 12 weeks of FMLA leave in a year. In other words, while employers may offer employees paid leave policies that provide greater rights and protections than the FMLA, FMLA leave is limited to 12 (or 26) weeks and cannot be expanded.
All personnel in charge of implementing and administering leave policies and requests should be made aware of the DOL’s position in the Opinion Letter. As a result of this Opinion Letter, employers should review and update relevant leave policies to ensure, among other things, that practices are in place to make the correct leave designation promptly so that employees are afforded the full protection of FMLA as soon as they are eligible. Employers should also be sure to count time off for FMLA-qualifying reasons against the employee’s annual FMLA leave allotment and notify the employee that it is doing so, even if the employee is taking leave concurrently under an available paid time off policy.
For employers in the Ninth Circuit (covering Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, Northern Mariana Islands, Oregon, and Washington), the Opinion Letter explicitly rejects the 2014 decision in Escriba v. Foster Poultry Farms, Inc. In Escriba, the U.S. Court of Appeals for the Ninth Circuit held that an employee could decline to begin using available FMLA leave until the employee exhausted leave available under other employer policies. Although the Opinion Letter is not binding authority and does not reverse the Ninth Circuit’s Escriba decision, employers should be aware that a court revisiting this issue may defer to the DOL’s new guidance. Given the opposing views taken by the DOL and the Ninth Circuit on this issue, employers in the Ninth Circuit should consult legal counsel on how to best navigate this discrepancy. However, employers in other jurisdictions may rely on the DOL’s pronouncement as a defense in litigation that it was acting in good faith reliance on the Opinion Letter when making FMLA decisions.
As a final note, employers should be mindful of their responsibilities and obligations under other laws such as the Americans with Disabilities Act and analogous state law to provide additional leave when appropriate as a reasonable accommodation. Such additional leave may extend beyond the number of weeks available for leave under FMLA. For assistance with complicated ADA and FMLA leave issues, contact your Akerman employment lawyer.
Job descriptions can be a shield or a sword for employers. In addition to setting clear job expectations, informing candidates of what the job entails, and providing a framework for evaluations, they are often used in litigation arising from workplace claims.
Job descriptions can be critical in litigating actions under the Fair Labor Standard Act, the Americans with Disabilities Act and the FMLA. Most employers know job descriptions are important, but are you doing them right? Let’s look at how they can be used in different workplace claims.
Wage and Hour litigation
Wage and hour litigation often involves claims that employees were not properly treated as exempt from overtime and record-keeping requirements of the Fair Labor Standards Act. In order to be exempt under the FLSA, an employee must both 1) be paid on a salary basis (meaning he/she receives a guaranteed minimum for each week in which the employee performs any work), and 2) meet the duties tests of one or more of the recognized exemptions.
Employers should draft job descriptions using the targeted exemption as the starting point. Let’s say you are hiring a new head of your three-person marketing department and anticipate that person will be exempt under the executive exemption. Let’s say your job description says: “Provide oversight and direction in the operating unit in accordance with the organization’s policies and procedures.” In litigation concerning whether the employee is properly treated as exempt, that description isn’t likely to be much help – it doesn’t describe the actual duties in a way that aligns with the duties test for the executive exemption. To better align with the duties test, your job description should identify specific responsibilities that show the employee’s primary duty will be managing the department and that he/she will have substantial authority when it comes to hiring, firing, promotion and discipline of employees.
Be careful using terms like “support,” “help with,” and “assist with,” as those words can reflect diluted responsibilities of an employee. Merely “supporting” another employee who is fulfilling an exempt task may not be enough to impute the exempt task to the supporting employee. For example, if you are describing an IT employee, saying he/she “provides support to the software team” won’t likely cut it. Instead, highlight the employee’s underlying activity that supports the software team, such as “responsible for modifying computer systems or programs related to user or system design specifications.”
Remember, while it’s important to highlight exempt functions, such functions shouldn’t be added to exaggerate the employee’s actual duties. If the employee doesn’t actually perform the duties listed, a plaintiff’s attorney will use that against you.
Americans with Disabilities Act Litigation
Much of ADA litigation centers around whether an employee can perform the essential functions of the job. Job descriptions should make clear what job functions are essential, as the description will be Exhibit A in any litigation.
Employers should be aware that the EEOC makes a distinction between qualification standards and essential functions. EEOC’s regulations say that qualification standards are: “personal professional attributes including the skill, experience, education, medical, physical, safety and other requirements.” In contrast, “essential functions” are those duties that an employee actually performs on the job, such as waiting on tables, sorting packages, repairing computers or whatever.
According to the EEOC, “qualification standards,” should predict whether an applicant can perform the essential functions of the job. For example, the requirement that an applicant be able to lift 30 pounds, seems like an essential function of a job, but the EEOC takes the position it is actually a qualification standard. And employers must always keep in mind that an employee may still be able to perform the essential functions of the job, even if it appears he/she does not meet the qualification standard. Employers must make an individualized assessment and engage in the interactive process if an accommodation is necessary.
Employers should avoid language in job descriptions that, on its face, is discriminatory. For example, don’t use words such as “youthful,” “strong,” or “able-bodied.” Job descriptions should include adjectives that describe the pace of work (“deadline-driven,” “fast-paced”) or the work environment (“exposure to heat and cold,” “enclosed area,” or “noisy setting”).
Multi-site employers should ensure the description is tailored to the specific location because what is essential at one location may not be essential at another.
When an employee is having a medical condition that impacts performance, employers should provide the employee a job description with a list of the essential functions of the job to review with their doctor. It may not be the published job description, as the job may have changed over time. With that list of essential job functions, the employer and employee can work together to determine whether there is a reasonable accommodation that would enable the employee to perform the essential functions of the job.
Family and Medical Leave Act
Job descriptions that reflect actual job duties are equally critical under the FMLA and should be attached to two of the FMLA forms.
First, employers should attach job descriptions showing the essential functions of the job to the FMLA Designation Notice, DOL Form 382. If the employer attaches that description, the employee must provide a fitness for duty certification that addresses the employee’s ability to perform those particular functions to be restored to employment. Again, the description attached should reflect the employee’s actual day-to-day duties and responsibilities. Second, employers should attach the same listing of essential job functions to the Certification of Health Care Provider, DOL Form 380-E, so that the physician can evaluate how the employee’s serious health condition impacts the employee’s ability to perform each of the job functions listed.
Job descriptions present an opportunity for an employer to define a working relationship and set clear expectations. Crafting thoughtful, effective job descriptions are also critical in defending legal claims. They will invariably become exhibits in legal proceedings. If you need assistance with job descriptions or handling leave issues where they come into play, contact your Akerman Labor & Employment lawyer.
Employers should be careful about designating Employee Handbooks confidential as, according to the National Labor Relations Board’s advice division, that would be unlawful. That advice was contained in one of five memoranda issued by the advice division last month. While not binding on the Board and not official Board precedent, advice memoranda provide guidance to the Board’s Regional Offices on how to handle difficult and novel issues that arise. The recent memoranda cover a variety of workplace issues and apply to both unionized and non-unionized worksites. While the advice division found that particular handbook confidentiality rule to be unlawful, it greenlit several other work rules providing employers with useful guidance when drafting and updating their employee handbooks.
Two of the memoranda weighed in on the validity of eight different workplace rules or policies, applying the National Labor Relations Board’s Boeing test. That test weighs an employer’s interests in maintaining work rules against their effects on employees’ National Labor Relations Act rights. For a discussion of the Boeing decision, see our January 5, 2018 HR Defense blog post and for a discussion of the Board’s General Counsel’s Memorandum providing guidance on applying the Boeing test, see our August 7, 2018 HR Defense blog post.
One of the two “workplace rules” memoranda discussed not only the previously mentioned employee handbook confidentiality policy but also policies preventing employees from disclosing payroll information and placing restrictions on employees’ use of employer email. The handbook confidentiality rule designated the entire employee handbook and its contents confidential and prohibited employees from disclosing that information to non-employees. This rule is unlawful because it effectively precludes employees from discussing handbook policies regarding employee pay, benefits, and working conditions with unions and other third parties (even though the rule did not prohibit discussions with other employees).
The policy restricting the disclosure of payroll information was also found to be unlawful because employees could reasonably interpret the rule as prohibiting them from discussing wages and benefits with each other or with third parties, a fundamental NLRA right.
The employer’s rule banning personal use of its email system, even on non-work time, was found to be in blatant violation of the NLRA. Under current Board law, employers that provide employees with access to email as part of their work must allow employees personal use of the email system during non-working time such as meal or break periods and before and after work, unless they can show “special circumstances” necessary to maintain production and discipline. While the employer’s policy did permit “incidental personal use,” the memorandum stated that this did not save the policy since it specifically forbids such use for messages that “are not considered in support of the [Employer] objective,” which could be interpreted as a reference to union or protected concerted activity.
The memorandum did find that the employer’s directive to an employee requiring him to participate in employer investigations was lawful. While an employer may not require an employee to participate in an investigation regarding NLRA violations, an employee would not construe a rule merely requiring cooperation with employee investigations as requiring participation in an NLRA investigation. Unless the employer specifically referenced an unfair labor practice or NLRA investigation, an employee would reasonably interpret the rule to apply to employer investigations of workplace misconduct.
The other “workplace rules” memorandum, also examined four employer workplace rules, finding three of those rules to be lawful. First, the memorandum found that an employer rule preventing workers from wearing “items of apparel with inappropriate commercial advertising or insignia” was lawful because workers would not interpret it to prohibit wearing items with a union logo, which could violate the NLRA. The rule instead focused on appropriate and professional attire, which could include clothing with a union insignia; it would only restrict inappropriate or unprofessional attire.
Also found to be lawful was the Employer’s rule on the handling of confidential information. This rule directed employees to “exercise a high degree of caution” when handling confidential information, which is defined in three categories: (1) “business plans, internal correspondence, [and] customer lists . . .”; (2)“[p]ersonally identifiable customer and employee information, including name, address, social security, credit card and bank account numbers, and similarly personally identifiable information”; and (3) HIPAA-related information. The rule further explained that certain employees, particularly those in positions supporting managers or performing human resource and timekeeping functions, may have access to personal information concerning employees or confidential information about the employer or its customers, which is maintained by the employer, and those employees should not discuss or divulge the information. This rule was found to be lawful because employees would not reasonably interpret it as limiting their NLRA rights or preventing them from sharing employee names and addresses obtained without resort to an employer’s files. Moreover, the employer had a legitimate business interest and, in some instances, a legal duty, to maintain the confidentiality of certain employee data such as HIPAA information.
The memorandum also validated the employer’s rule on media relations. This rule allowed only employer designated spokespeople to speak to the media, financial analysts, or investors about the employer to avoid sharing information that “could be incorrectly interpreted as an official position” of the employer. The memorandum stated that the rule is clearly directed to when employees are (or are not) authorized to speak on the employer’s behalf. Employees would not interpret this rule as blocking them from discussing workplace grievances with the media.
The employer’s rule barring employees’ from using their personal cellphones during non-work time was found to be unlawful, however, because the Board has long protected employee’ rights to communicate through non-employer methods during lunch or break periods.
While both memoranda provide employers with additional clarity on what types of workplace rules and policies the Board might find to be lawful or unlawful, employers must continue to evaluate the specific language of their rules, the particular employer interests at stake, and employee NLRA rights. Also, employers should keep in mind that even if a policy or rule is lawful, if inconsistently applied it may be found to interfere with employee rights.
If you have questions about your employee handbook or any of your workplace rules or policies, contact your Akerman Labor & Employment lawyer.
A recent ruling by the United States District Court for the District of Columbia calls into question the recently expanded regulations allowing small employers to band together to establish Association Health Plans. This development should be monitored closely by employers and employer organizations currently sponsoring, or considering sponsoring, these plans.
A group of unrelated employers wishing to establish an Association Health Plan (AHP) must satisfy a bona fide association test, as defined by regulations issued by the U.S. Department of Labor (DOL) interpreting the definition of employer under ERISA. Through advisory opinions issued to groups of employers wishing to establish an AHP, the DOL explained that satisfying the bona fide association test requires, among other things, that a commonality of interest be established among the employers. On June 21, 2018, the DOL published final regulations relaxing the long-standing factors required to establish a commonality of interest under the bona fide association test (the Final Rule). Additionally, the Final Rule expanded the scope of prior AHP guidance to allow working owners (i.e., self-employed individuals) to participate in an AHP. In doing so, the DOL made it easier for groups of small employers and sole proprietors to band together to form an AHP in order to avoid some of the more onerous requirements that apply to the small and individual group markets, including community rating.
Previously, under the more stringent AHP guidance, groups of employers generally needed to be in the same line of business and geographic area in order to satisfy the commonality of interest component of the bona fide association test. Before the Final Rule, “geography, alone, was not sufficient to establish commonality.” However, under the Final Rule, the commonality of interest component may be satisfied if the group of employers is in the same line of business or the same geographic area. The Final Rule can be found here.
In July 2018, a coalition of 12 attorneys general, led by New York and Massachusetts, filed a lawsuit challenging the Final Rule. The attorneys general argued that the expansion of the commonality of interest component of the bona fide association test, and the inclusion of working owners under the Final Rule was inconsistent with the purpose of ERISA and the Congressional intent of the Affordable Care Act (“ACA”).
On March 29, 2019, Judge John D. Bates of the United States District Court for the District of Columbia (the “Court”) invalidated two major portions of the Final Rule – the modified commonality of interest component of the bona fide association test, and the working owner provision. The Court was concerned that expanding the scope of the bona fide association test to allow small employers to band together without a true “commonality of interest” so that they may offer large group health insurance was an unlawful expansion of the existing AHP regulations. Additionally, the court found it “absurd” that working owners with no common law employees could take advantage of the group health insurance market. The court was concerned that this expansion by the DOL was “clearly an end-run around the [Affordable Care Act].” The Court ruled that these provisions of the Final Rule misinterpreted the definition of Employer under ERISA to unlawfully expand the term’s meaning by ignoring “Congress’s clear intent” for the ACA to distinguish between large group, small group, and individual markets.
The Court set aside these sections of the Final Rule, remanded the Final Rule, and directed the DOL to revise the Final Rule in accordance with the Court’s ruling. Moving forward, the DOL has the option to rescind the Final Rule altogether, revise the Final Rule in accordance with the Court’s decision, or appeal the decision to the Court of Appeals for the D.C. Circuit. Judge Bates’ ruling can be found here.
Next Steps for Employers
Although a change to the Final Rule will not occur overnight, and though it is extremely likely that the DOL will appeal the decision, we believe that this is something that employers that have implemented an AHP or are considering implementing an AHP should monitor closely. AHPs created since the Final Rule should also consult with their service providers and benefits counsel to determine whether they should make any changes pending final resolution of this issue.
As of April 1, 2019, U.S. employers requesting a change of status for H-1B hopefuls should request Premium Processing by concurrently filing visa petitions with Form I-907, Request for Premium Processing Service, available here. But don’t expect the Federal Immigration Service to begin working immediately. In a statement released on March 19, 2019, the U.S. Citizenship and Immigration Services (“USCIS”) announced that “Premium Processing” – a 15-day expedited service available in exchange for a $1,410 filing fee – will not immediately begin for H-1B cap cases this fiscal year. While USCIS plans to formally notify the public when Premium Processing begins for lottery (“cap-subject”) H-1B visa petitions, employers should expect Premium Processing to commence for H-1B cases requesting a change of status by no later than May 20, 2019. Employers looking to hire foreign national students who are currently inside the U.S. and maintaining lawful immigration status are expected to benefit most from the Immigration Services’ latest procedural shift.
Employers Take Note: Any employer who, during the first five business days of April 2019, fails to request Premium Processing service at the time of filing a cap-subject H-1B petition seeking a change of status might very well have to wait until May 20 to take advantage of expedited service. According to the Federal Immigration Agency, USCIS will reject any Premium Processing request that is not filed concurrently with an eligible H-1B petition during the specified time period. Employers must appropriately select response “b” for Item 4 in Part 2 of Form I-129, Petition for a Nonimmigrant Worker, to be eligible to concurrently file Form I-907, Request for Premium Processing Service.
The situation is further complicated for U.S. employers eager to hire H-1B workers who are currently outside of the U.S. In an effort “to prioritize data entry for cap-subject H-1B petitions,” USCIS will postpone Premium Processing for all other FY 2020 cap-subject H-1B petitions until at least June 2019. U.S. employers planning to file a lottery-subject H-1B petition on behalf of any foreign national who is presently outside the United States, or out of lawful-status, will not be eligible to concurrently request Premium Processing service. Instead, these employers are now forced to wait until USCIS announces a confirmed date when Premium Processing will become available for cap-subject H-1B petitions not requesting a change of status.
At this time, Premium Processing remains available for U.S. employers whose H-1B petitions are exempt from the annual randomized lottery-selection process, such as extension of stay requests and other cap-exempt categories.
To avoid adverse consequences under the two-phase Premium Processing policy, employers are encouraged to file H-1B petitions with Premium Processing on April 1 for any H-1B worker who is requesting a change of status to ensure uninterrupted work authorization. For F-1 students who are inside the U.S. and currently employed pursuant to valid Optional Practical Training (OPT), failure to concurrently request Premium Processing on April 1 may result in a lapse in employment authorization if H-1B petitions are not approved by October 1. Under the H-1B “Cap-Gap” extension, F-1 students will be permitted to remain in the United States if their H-1B petition remains pending on October 1, but will have to forego any employment after September 30 until their H-1B status is approved. Employers are also alerted that international travel should be avoided after an H-1B petition is filed for any applicant requesting an initial change of status to H-1B classification. Travel outside of the U.S. after April 1 could give rise to a determination by USCIS that the applicant has abandoned the change of status petition. Travel during this timeframe also revokes Cap-Gap privileges, including legal work status for F-1/OPT students.
Employers are advised to contact an immigration attorney regarding any H-1B applicant who may be impacted by anticipated processing delays or may experience difficulty with driver’s license renewals or international travel.
Akerman continues to monitor this situation and will keep clients informed of immigration developments as they occur.
A second federal appellate circuit has ruled that the Age Discrimination in Employment Act (the ADEA) does not apply to job applicants’ claims that a policy or practice has a disparate impact on older individuals. In so holding, the Seventh Circuit Court of Appeals, covering Illinois, Indiana, and Wisconsin, joins the Eleventh Circuit, covering Florida, Georgia, and Alabama.
However, while employers in those states may now successfully argue that job applicants’ disparate impact claims cannot be brought under the ADEA, the same is not necessarily true of state laws. It is possible that more plaintiffs will now simply pursue such claims in state court.
The Seventh Circuit case involved Dale Kleber, a 58-year-old attorney who applied for a job in CareFusion Corporation’s legal department. The job description specified that applicants should have three to seven (and not more than seven) years of experience. Kleber was not interviewed or hired for the position, and CareFusion ultimately hired a 29-year-old individual for the position, who met, but did not exceed, the prescribed experience.
Kleber sued under the ADEA, initially pursuing both disparate treatment and disparate impact claims. It has long been understood that disparate treatment claims involve intentional discrimination and that ADEA applies to claims of intentional discrimination for employees and applicants alike. In contrast, disparate impact claims do not require proof of intentional discrimination. Instead, they require a showing that a facially neutral employment practice has a disproportionately adverse impact on a protected group, such as individuals over 40 years of age.
The trial court granted CareFusion’s motion to dismiss Kleber’s disparate impact claim, finding that the relevant provision of the ADEA does not protect job applicants. Kleber voluntarily dismissed his disparate treatment claim and appealed the ruling on his disparate impact claim. In April 2018, a split panel of appellate judges reversed the trial court and found that the ADEA does cover disparate impact claims for applicants. However, the court granted en banc review, where eight of ten appellate judges agreed with the trial court, confirming that the ADEA does not apply to job applicants’ disparate impact claims.
The majority found that the specific language used in the relevant provision (which makes it unlawful for an “employer to limit, segregate or classify his employees in any way which would deprive or would tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age”) only applies to employees. In reaching this conclusion, the majority looked at the surrounding provisions, which explicitly reference the hiring process and therefore include job applicants, and found the provision about disparate impact claims does not include any such reference. Finding the absence notable, the majority stated it “is implausible that Congress intended no such distinction in [the relevant disparate impact provision], however, and instead used the term employee to cover both employees and applicants.” Two judges – Judges Easterbrook and Wood – dissented. Judge Easterbrook noted that “normally one word used in adjacent paragraphs means a single thing.”
The Seventh Circuit’s majority ruling is consistent with a 2016 decision from the Eleventh Circuit, the only other court of appeal to address the issue. The U.S. Supreme Court declined to hear an appeal of the Eleventh Circuit’s decision. Accordingly, if the Seventh Circuit decision is appealed, it seems unlikely that the Supreme Court would hear it.
Notwithstanding this decision, wise employers will still consider their recruiting practices carefully. If you have questions about this new Seventh Circuit decision and its impact on your company, contact your Akerman L&E lawyer.