Employers confused over what constitutes joint employment have seen the confusion largely cleared up, thanks to a National Labor Relations Board (NLRB) decision issued December 14.
The 3-2 decision overrules the Browning-Ferris decision, which broadened what could be considered a joint employment relationship. Under the Browning-Ferris decision, employers that had even indirect control over employees of another employer could be considered joint employers. The party-line decision reinstates the old standard that was used for decades before the 2015 Browning-Ferris decision issued by the Obama-era NLRB.
“I think the most important aspect of the case is that it really ends the uncertainty and unpredictability that Browning-Ferris created because the prior decision never really gave anybody a clear understanding of indirect control,” Burton J. Fishman, an attorney with Fortney & Scott, LLC, in Washington, D.C., and a contributor to Federal Employment Law Insider, said of the new ruling.
The Browning-Ferris decision was especially opposed by employers using employees of temporary staffing agencies and employers working in the franchisor-franchisee business model. This decision is a “terrific victory” for them, Fishman said.
“It creates certainty and predictability,” Fishman said. “I think the business community will value that enormously.”
Ryan J. Funk, an attorney with Faegre Baker Daniels LLP in Indianapolis, Indiana, and a contributor to Indiana Employment Law Letter, agrees the new ruling is a relief to many employers. He said reverting to the old standard helps them in two ways. “The most immediate thing is it provides a clear standard of who is a joint employer,” he said. Employers had a good understanding of the old standard that had been clarified in decades of NLRB decisions, but the Browning-Ferris decision “scrapped that and replaced it with a vague standard.” Now employers as well as unions and employees get the clearer standard back, he said
The second benefit for employers is that under the newly reinstated standard, they are less likely “to be lumped together as a joint employer with other businesses,” Funk said. “As the Board points out here, when an employer is considered a joint employer, it can have new bargaining obligations, liability, and vulnerability to economic protest activity from unions,” he said.
The NLRB’s new decision will have many kinds of employers breathing a sigh of relief, said Funk, calling it “labor law issue No. 1” for many employers lately. “Any employer under the jurisdiction of the NLRB that enters into business relationships with other entities, where those relationships could affect employees, might find relief here,” he said. “Temp agencies, those who use temp agencies, franchisors, and franchisees are prime examples of employers who will probably find relief.”
Effect of new decision
In the announcement of the ruling, the NLRB said that from now on, “two or more entities will be deemed joint employers under the National Labor Relations Act (NLRA) if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.”
The NLRB statement went on to explain that under the pre-Browning-Ferris standard, which has now been restored, “proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship.”
Fishman pointed out an interesting aspect to the case that prompted the reversal of the Browning-Ferris standard: The employers involved, Hy-Brand Industrial Contractors, Ltd., and Brandt Construction Co., were determined to be joint employers in spite of the restored standard and were therefore jointly and severally liable for the unlawful discharges of seven striking employees.
New direction for NLRB
Fishman called the decision overruling Browning-Ferris a harbinger of a reversal in the direction the NLRB took under the Obama administration. “We’re going to see some sweeping changes,” he said.
The joint-employment ruling is one of four major actions the NLRB has taken in recent days. On December 14, the Board announced it was taking action that may result in the rescission of the controversial “quickie” union election rule implemented during the Obama administration. Also on December 14, the Board issued another 3-2 decision affecting whether workplace rules, policies, and handbook provisions interfere with employee rights under the NLRA. Those actions followed a 3-2 decision announced on December 11 reinstating the “reasonableness” settlement standard in single-employer claims.
The NLRB is about to lose one member—Chairman Philip A. Miscimarra—whose term ends on December 16. His departure means the Board will have two Republicans—Marvin E. Kaplan and William J. Emanuel—and two Democrats—Mark Gaston Pearce and Lauren McFerran.
Fishman expects a quick replacement for Miscimarra since the NLRB seems to have the attention of President Donald Trump as well as Congress.
The National Labor Relations Board’s (NLRB) decision to seek public input on the controversial 2014 rule that sped up the union election process is likely to result in the rescission of the rule, according to an attorney who keeps a close watch on the Board’s actions.
On December 14, the NLRB announced that it would publish a Request for Information (RFI) in the Federal Register asking for public input regarding the election rule. The RFI seeks input on three questions:
Should the 2014 election rule be retained without changes?
Should the 2014 election rule be retained with modifications? If so, what should be modified?
Should the 2014 election rule be rescinded? If so, should the Board revert to the Representation Election Regulations (RERs) that were in effect prior to the 2014 election rule’s adoption, or should the Board make changes to the RERs? If the Board should make changes to the RERs, what should be changed?
“I anticipate that the RFI will be the first step in a rulemaking procedure that ultimately will result in the rescission of the so-called ‘quickie’ election rule,” Fortney said after the announcement of the RFI. “I believe that the newly constituted Board will return to the standard election procedures that were in place before the quickie election rule was instituted during the Obama administration.”
The Obama-era rule, which was implemented in 2015, was vehemently opposed by many employers because it was seen as giving an unfair advantage to unions in the union election process. The rule (1) shortened the time between the filing of an election petition and the election, (2) provided for electronic filing of election petitions and other documents, and (3) delayed legal challenges until after elections had been held.
The 2014 rule requires employers to provide lists of a potential bargaining unit’s employees and their contact information as well as a statement of position identifying employers’ stand on various issues early in the process. The rule stipulates that issues not raised in the position statement will be waived in NLRB hearings challenging the election.
Union election statistics
Figures from the NLRB show that the 2014 election rule hasn’t had the dramatic prounion effect many had predicted, Fortney said. He cites NLRB statistics showing that after the rule was implemented in 2015, unions won approximately 10% more elections, including 69% of elections in 2015, 72% in 2016, and 71% in 2017. Previously, Fortney said, unions won about two-thirds of elections—68% in 2014, 63% in 2013, and 65% in 2012.
“However, there has not been a significant increase in the number of elections under the quickie election rules, as was anticipated, with only 1,290 elections in 2015, 1,299 in 2016, and a drop to 1,193 elections in 2017,” Fortney said. The previous years saw slightly more than 1,200 elections per year—1,202 elections in 2012, 1,238 in 2013, and 1,260 in 2014.
“Although unions now win more elections under the quickie election rule, the slight increase, and [this] year the drop, in the number of elections indicate[s] that the quickie election rule has not had as significant a boost in union representation of workers as was predicted by many,” Fortney said.
Effect of new Board
The Board’s decision to issue the RFI was made possible by the addition of two new Republican members. The five-member Board is made up of three Republicans—Chairman Philip A. Miscimarra and the two new Republican members, Marvin E. Kaplan and William J. Emanuel—and two Democrats, Mark Gaston Pearce and Lauren McFerran. Pearce and McFerran wrote dissents to the decision to issue the RFI.
Responses from the public will be accepted through February 12, 2018.
The North Carolina Employee Fair Classification Act (EFCA), which will take effect on December 31, provides a mechanism that allows workers to more easily report—and state agencies to more easily prosecute—employers that misclassify workers as independent contractors instead of employees.
The new law increases the potential impact of worker misclassification, including higher legal expenses and other costs. Worker misclassification remains a hot topic for employers and a priority for federal and state agencies. Workers who are classified as employees are provided certain protections under the law regarding issues like minimum wage, overtime pay, benefits, equal employment opportunities, and on-the-job injuries. Those protections don’t apply if a worker is an independent contractor.
In addition, employers must pay certain state and federal taxes for employees but not for contractors. Over the last 10 years, state and federal agencies have become much more aggressive in investigating worker misclassification and seeking to recover unpaid taxes and wages.
The EFCA establishes a new division of the North Carolina Industrial Commission called the Employee Classification Section (ECS). The ECS will investigate reports of worker misclassification and assist other North Carolina agencies, including the Industrial Commission, the Department of Labor, and the Department of Revenue, in recovering money owed as a result of misclassification. The ECS also will assist state agencies and district attorneys’ offices in prosecuting employers that fail to pay penalties assessed as a result of worker misclassification.
The new law doesn’t change the definitions of “employee” or “independent contractor” under state law. It simply provides an enforcement mechanism for the current law. The practical effect of the EFCA is that a single misclassification complaint could trigger a full-fledged, multiprong investigation into an employer’s classification of all workers.
Also, the new law requires employers to post a workplace notice informing workers that they should be classified as employees unless they are independent contractors and stating that workers who believe they have been incorrectly classified have the right to report potential misclassification to the ECS.
Additionally, licensure applicants before state licensing boards must certify that they have read and understand the ECS public notice statement defining employee misclassification and disclose any investigations into misclassification, including the outcome of the investigations. Applicants that fail to comply with those requirements will have their license, permit, or certification application denied.
The EFCA applies to the misclassification of workers under multiple areas, including wage and hour law, workers’ compensation law, and tax law. Because different tests for determining employee and independent contractor status are applied under different areas of the law, a worker’s correct classification depends on the legal context. The analysis is always a case-by-case determination and typically turns on control—i.e., whether the worker is truly an independent agent who controls her own work (an independent contractor) or whether the worker’s service is controlled and directed by the employer (an employee).
Nevada’s law requiring employers to provide victims of domestic violence time off, reasonable accommodations, and protection against discrimination and retaliation takes effect January 1.
The state’s Domestic Violence Leave Act covers all employers. The law states that employees who have worked for an employer for at least 90 days and are victims of an act of domestic violence or have family or household members who are victims of an act of domestic violence are entitled to 160 hours of leave in a 12-month period, provided they are not the alleged perpetrator. Leave must be taken during the 12 months following the date the domestic violence occurred. Leave may be paid or unpaid and may be used consecutively or intermittently.
Under the Nevada law, “domestic violence” includes as potential victims the perpetrator’s spouse and former spouse and any person with whom the perpetrator:
Shares a blood or marriage relationship;
Is or was residing;
Has had or currently has a dating relationship; or
Has a child in common.
The definition also includes a minor child or any of the listed persons and any other person who has been appointed custodian or legal guardian of the perpetrator’s minor child.
Under the law, the following crimes can constitute domestic violence:
Coercion (compelling a person by force or threat of force to perform an act from which he or she has a right to refrain or to refrain from performing an act that he or she has a right to perform);
Sexual assault; and
Other forms of harm, such as stalking, arson, trespassing, larceny, false imprisonment, unlawful entry, and destruction of private property (including financial abuse).
Employers may also have obligations to employees who are victims of domestic violence under federal family and medical leave laws, occupational safety and health laws, or federal mandates related to nondiscrimination and sexual harassment. If domestic violence leave is used for a reason for which leave can also be taken under the federal Family and Medical Leave Act (FMLA) (i.e., if an employee suffers from a serious health condition because of domestic violence), the two types of leave must run concurrently.
Reasons for leave, accommodations
Provided that the employee is not the alleged perpetrator, domestic violence leave can be used for the following reasons:
To receive diagnosis, care, and treatment of a health condition related to domestic violence committed against the employee or a member of the employee’s family or household;
To obtain counseling or assistance related to domestic violence committed against the employee or a member of the employee’s family or household;
To participate in court proceedings related to an act of domestic violence committed against the employee or a member of the employee’s family or household; or
To establish a safety plan, including taking any action that will provide safety for the employee or a member of the employee’s family or household from a future act of domestic violence.
The law requires employers to reasonably accommodate employees who are victims of domestic violence through:
Transfers or reassignments;
A new work telephone number; and
Any reasonable accommodations that will not create an undue hardship and are deemed necessary to ensure the safety of the employee, the workplace, the employer, or other employees.
Employers may not deny an employee leave authorized by the law, require an employee to find a replacement worker as a condition of taking leave, or retaliate against an employee for taking leave under the law.
The law also makes it unlawful for an employer to discharge, discipline, discriminate against in any manner, deny employment or promotion to, or threaten to take such actions against employees because they exercise rights granted under the law.
In most cases, unemployment benefits cannot be denied to victims of domestic violence. The law states that no otherwise-eligible persons who have left employment to protect themselves or a member of their family or household from domestic violence can be denied unemployment benefits if they are actively seeking employment.
Often, employment contracts contain arbitration clauses that require disputes to be settled through arbitration instead of litigation. Also, complaint settlements frequently include nondisclosure agreements that keep claims out of the public eye. The new bill, called the Ending Forced Arbitration of Sexual Harassment Act, is intended to keep harassers from settling claims in secret and then continuing to harass.
The measure has gained bipartisan support. Representative Cheri Bustos (D—Illinois) and Senators Kirsten Gillibrand (D—New York) and Kamala Harris (D—California) are sponsors. South Carolina Senator Lindsey Graham and Representatives Walter Jones of North Carolina and Elise Stefanik of New York are Republican cosponsors.
“Arbitration is something we have kind of looked upon favorably since the 1930s,” Rawitt says. She says the lawmakers behind the bill “are responding to the rage that I think our society is feeling right now.” Even if arbitration is removed from the picture and claims become lawsuits, claims won’t necessarily “worm [their] way into the public eye,” she says.
The bigger question, Rawitt says, is: What can employers do to make employees understand that there is no tolerance for sexual or other kinds of harassment? Laws already are in place, and employment policies against harassment are common. But it seems they “aren’t doing the trick” since harassment still occurs, she says.
So the problem, at its root, is bigger than the solution proposed by the bill, Rawitt says. She says that even if the bill passes, it may not provide much change because as complaints go through administrative agencies, they’re often settled and may still be kept secret. Plus, she doesn’t think passage of the bill would be a deterrent to a harasser “who probably doesn’t understand what [it] means in the first place.”
As for the effect of the bill, Rawitt says many employers with an at-will workforce don’t have arbitration agreements in place, so they won’t be affected. The bill would affect “the union world,” she says, since a lot of collective bargaining agreements include arbitration clauses.
Of course, employers that do use arbitration agreements would be affected, but Rawitt says her understanding of the bill is that it is aimed at just sexual harassment and gender discrimination complaints.
H. Juanita Beecher, an editor of Federal Employment Law Insider and attorney with Fortney & Scott, LLC, in Washington, D.C., says she expects opposition to the bill because employers want employees to arbitrate employment disputes. Also, the U.S. Supreme Court has held that claims made under Title VII of the Civil Rights Act of 1964, the law that outlaws sex discrimination and sexual harassment, can be covered by arbitration.
“Arbitration tends to be more employer[-]friendly, less expensive, and less likely to get press attention,” Beecher says, adding that employers that use arbitration “are not necessarily trying to protect harassers but rather [trying] to protect [themselves] from liability.”
Backers of the bill hope to find support in the employer community. Beecher points out that Graham specifically asked the U.S. Chamber of Commerce and the Business Roundtable to support the bill during a press conference announcing the measure.
“Employers generally favor arbitration clauses because they keep litigation costs down and provide for stability in their business, including with workplace disputes involving wage and hour claims,” Austin says. “However, should this bill pass, it would certainly provide clarity with regard to the handling of sexual harassment claims in the workplace . . . versus the current uncertainty within individual courts and administrative agencies, and employers [that] use arbitration agreements will have to respond accordingly[,] as they do to any other federal legislation.”
Changes to the Maine minimum wage law taking effect January 1 mean that the minimum wage for tipped workers will continue to be $5 an hour instead of rising $1 an hour like the minimum wage for workers who don’t receive tips.
Maine voters approved Question 4 on the 2016 ballot. The initiative set in motion annual minimum wage increases that will take the minimum wage from $7.50 an hour in 2016 to $12 an hour by 2020. The rate going into effect on January 1, 2018, puts the nontipped minimum wage at $10 an hour, up from the 2017 rate of $9 an hour.
The 2016 ballot initiative also called for an increase in the minimum wage for tipped workers from 50 percent of the nontipped minimum wage ($3.75 in 2016) to $5 an hour as of January 1, 2017. Under the ballot initiative, the tipped minimum wage would increase $1 a year until 2024, when it would also reach $12 per hour.
However, those changes in the tipped minimum wage won’t take place. Last summer, the state legislature passed a law reinstating the tipped minimum wage as 50 percent of the nontipped minimum, meaning the tipped minimum wage will remain at $5 an hour instead of rising by $1 to $6 an hour.
The legislation was in response to a campaign by a number of restaurant workers. After the 2016 referendum passed, many servers began to see customers tipping less based on their belief that they didn’t have to tip because servers were being paid higher wages. Although the ballot initiative was intended to increase servers’ earnings, some reported a reduction in their take-home pay.
Employers still must make up the difference if servers don’t make at least as much as the nontipped minimum wage with tips.
Much of a new law affecting overtime pay in mills, factories, and manufacturing facilities in Oregon will take effect on January 1.
In most circumstances, employers in Oregon must pay overtime wages after an employee has worked 40 hours in a week, but mills, factories, and manufacturing facilities also face a daily overtime requirement after 10 hours. In December 2016, the Oregon Bureau of Labor and Industries (BOLI) changed its long-established interpretation of overtime rules for mills, factories, and manufacturing facilities to require employers to sometimes pay more overtime than under the previous interpretation.
A state judge soon barred the new interpretation, and then the legislature passed House Bill 3458, which clarifies that a manufacturing employer must pay only the greater of daily overtime or weekly overtime. The portion reversing BOLI’s interpretation became effective immediately, but other aspects of the bill will take effect on January 1.
The law defines “manufacturing facility” to say that manufacturing is the use of machinery to transform materials, substances, or components into new products. Machinery can include material-handling equipment and power-driven machines powered by anything other than human hand, foot, or breath.
Also, the new law limits the number of mandatory work hours in a manufacturing facility to 55 hours in one week. Employees may consent in writing to work up to an additional five hours in a week.
The law provides an exception to those rules for “undue hardship,” which refers to the period during which a perishable product must be processed after harvesting, slaughter, or catch. During that time, employees may work up to 84 hours per week for four weeks and up to 80 hours per workweek for the remainder of the hardship period. There is a detailed process for declaring an undue hardship, and employers may declare no more than 21 weeks of undue hardship per year.
Employees in a sawmill may not be required to work more than eight hours in a day or 48 hours in a workweek. They may work an additional three hours each day with overtime pay up to the 48-hour maximum.
Employers in New York need to be ready to provide paid family leave (PFL) to eligible employees as of January 1.
The PFL law, signed into law in April 2016, allows eligible full- and part-time employees to take payroll-deducted paid leave for qualifying circumstances such as a serious health condition of a close family member, bonding with a newborn or adopted child, and exigencies arising out of a close family member’s active military service.
As with the federal Family and Medical Leave Act (FMLA), employees’ health insurance coverage will continue while they are on PFL. Unlike the FMLA, the PFL law doesn’t allow employees to take leave for their own serious health condition. Other highlights of the PFL law: It applies to all private-sector employers, large and small, and its benefits will be available to full-time employees who have worked for just 26 consecutive weeks.
Effective January 1, eligible employees will receive a maximum of eight weeks of PFL benefits at 50% of their average weekly wage, with a maximum benefit of 50% of New York state’s average weekly wage. PFL benefits will “phase in” and increase annually so that by January 1, 2021, eligible employees can receive 12 weeks of benefits at 67% of their average weekly wage, with a maximum benefit of 67% of the state’s average weekly wage.
Regulations implementing the PFL law were proposed in the spring of 2017 to clarify some aspects of the law such as how part-time employees become eligible, how payroll deductions work, notice requirements, how disputes will be resolved, the law’s effect on collective bargaining agreements, and penalties for employer noncompliance.
Employers in Washington will be required to comply with a new minimum wage and offer paid sick leave beginning January 1, 2018.
As a result of Initiative Measure (IM) 1433, approved by voters in November 2016, the state’s minimum wage will rise to $11.50 an hour on January 1, 2018, up from the $11 rate that went into effect on January 1, 2017. In 2019, the minimum wage will rise to $12 per hour, and in 2020, it will increase to $13.50. Beginning in 2021, the minimum wage will be adjusted annually to keep up with inflation.
The new rate doesn’t mean the same minimum wage will apply to all employees in the state for three reasons:
The increases won’t necessarily apply to workers who are 17 or younger. The minimum wage for workers under 18 is established by regulation.
Employers are required to pay employees all tips and gratuities (and certain service charges) in addition to the established minimum wage.
The initiative doesn’t override higher local minimum wages. Local minimum wages will continue to apply unless the state minimum wage surpasses them.
Paid sick leave
The paid sick leave component of IM 1433 requires employers to allow employees to accrue at least one hour of paid sick leave for every 40 hours worked. Employees may not use accrued sick leave until they have been employed for 90 days. Once 90 days have passed, employees may use leave:
For their own illness, injury, or medical treatment;
To care for an ill or injured family member;
For the closure of their place of business or a child’s school for a health-related reason; and
For absences that qualify for domestic violence leave.
Employees using paid sick leave may be required to give reasonable notice, and employers may require verification that employees’ absences are for an authorized purpose if they exceed three days. Employers are permitted to limit the number of hours an employee can carry over each year to 40. Employers aren’t required to pay for sick leave when employment is terminated, but they are required to restore previously accrued sick leave if an employee is rehired within 12 months.
As with the minimum wage, some cities in Washington have their own paid sick leave laws with requirements that differ from the statewide law.
For more information on Washington’s new minimum wage and paid sick leave requirements, see the February and March 2017 issues of Washington Employment Law Letter.
Delaware’s new law limiting employers’ ability to inquire about job candidates’ compensation history is set to take effect on December 14.
The law is intended to address pay disparities between men and women. Because women often make less than their male counterparts, the pay gap is perpetuated if women’s wages are based on salary history instead of a set range for a particular position. Thus, according to the theory, the new law will level the playing field.
The law prohibits employers from asking about an applicant’s salary history or using salary history as a screening criterion. A candidate may volunteer salary information, and the law explicitly allows employers to discuss and negotiate compensation. Once a job offer (including the terms of compensation) has been extended and accepted, the employer may inquire about the applicant’s salary history, but it may not use the information to make pay decisions.
If an employer contracts with an outside recruiter who violates the law, it won’t be liable if it can show that it informed the recruiter of the legal requirements and gave the recruiter instructions on how to comply.
Employers that fail to comply with the new law can be sued by employees or prosecuted by the Delaware Department of Labor (DDOL). A first violation carries a penalty of $1,000 to $5,000. Subsequent violations will result in penalties of $5,000 to $10,000.