The ARB Potentially Broadens Protected Activity Under Sarbanes-Oxley

Posted in Litigation, Retaliation, Sarbanes-Oxley

Just when employers thought that the anti-retaliation provision of the Sarbanes-Oxley Act of 2002 (SOX), 15 U.S.C. § 1514A, already covered a broad range of protected conduct, the Department of Labor’s Administrative Review Board (ARB), the appellate body that reviews Administrative Law Judge (ALJ) decisions, potentially broadened the scope of conduct that is protected from retaliation under SOX’s anti-retaliation provision.

In Timothy C. Dietz  v. Cypress Semiconductor Corp., ARB 15-107 (Mar. 30, 2016) the ARB affirmed an ALJ ruling that awarded a former program manager for Cypress more than $250,000 in back pay and benefits under the SOX anti-retaliation provision, 15 U.S.C. § 1514A, finding protected activity where the employee raised state law violations that could demonstrate fraudulent conduct.

Background

In 2012, Complainant Timothy Dietz (Dietz) worked for Ramtron International Corporation (Ramtron). In September 2012, Cypress acquired Ramtron and ultimately hired Dietz as a program manager. Cypress required certain employees to participate in a Design Bonus Plan (Bonus Plan). Dietz was not subject to the plan, but many of the former Ramtron employees, including those who worked under Dietz’s supervision at Cypress in Colorado, were subject to it.

Under the Bonus Plan, Cypress deducted 10 percent of participants’ salaries. These deductions were mandatory. At the end of each calendar quarter, Cypress calculated the employees’ “bonus” and some employees received less than the amount that was deducted from their compensation. Payouts were based on team performance and not individual performance. Cypress communicated this plan to the former Ramtron employees via a website, email, and video conferencing. None of the former Ramtron employees were notified about the Bonus Plan prior to taking their jobs with Cypress.

Continue Reading >

The DOL Issues Broader Fiduciary Adviser Definition: What Does it Mean for You?

Posted in Department of Labor, ERISA

Since the enactment of ERISA in 1974, there has been a dramatic shift in the retirement savings marketplace from employer-sponsored defined benefit plans to participant-directed 401(k) plans, coupled with the widespread growth of Individual Retirement Accounts and Annuities (IRAs). In fact, 401(k) plans did not exist at the time the Department of Labor (DOL) published its ERISA fiduciary rules governing retirement investment advice in 1975, while IRAs were just introduced in the same year. Until recently, these rules had not been meaningfully changed since 1975.

The DOL believes that many investment professionals, consultants, brokers, insurance agents, and other advisers operate within compensation structures that are “misaligned with their customers’ interests and often create strong incentives to steer customers into particular investment products.” According to the DOL, these conflicts of interest result in the loss of billions of dollars a year for retirement investors. Specifically, the White House Council of Economic Advisers has determined that conflicts of interest lead, on average, to 1 percentage point lower annual returns on retirement savings or a total of $17 billion of losses every year for America’s families.

To learn more, please read the GT Alert “The DOL Issues Broader Fiduciary Adviser Definition: What Does it Mean for You?”

 

 

U.S. Department of Labor Issues Final Rule Boosting Minimum Salary for Overtime Exemptions

Posted in Department of Labor, FLSA

On May 18, 2016, President Obama and U.S. Department of Labor Secretary Thomas Perez announced the issuance of the Final Rule updating the salary requirements of the Fair Labor Standards Act’s overtime exemptions.  The increase in salary standard, which will go into effect on Dec. 1, 2016, boosts the minimum salary level for exempt status from $455 per week to $913 per week, or from $23,660 per year to $47,476 per year (reduced from the initially proposed figure of $50,440 per year).  In addition, the Final Rule raises the requirement for the highly compensated employee exemption from $100,000 to $134,004 per year.  Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.  The Final Rule also establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the percentiles used to determine the current increases.  The Department of Labor announced that the increased salary levels will extend overtime pay protections to over 4 million workers within the first year of implementation.   For further information please check the U.S. Department of Labor’s summary of the Final Rule.

PLEASE NOTE:  For employers who wish to maintain the level of a previously exempt employee’s total annual compensation, but not wish to boost the salary to the minimum required to maintain the exemption, there are steps which may be taken with regard to hourly rates and bonuses which can accomplish this objective while at the same time paying overtime pay.  Please contact one of our Labor and Employment Group attorneys to discuss various options regarding compliance under the Final Rule.

What the New Final White Collar FLSA Regulations Mean for California Employers

Posted in Department of Labor, FLSA

As it really is not in the GT California Labor and Employment Group’s interest for this to be the final straw that causes national employers to throw up their hands in surrender and decamp from California, we offer an interim planning guide for developing the 2017 payroll budget. The larger import of the FLSA regulations is discussed in our previous blog post and GT Alert, but now it’s time for some budget guidance in planning for 2017.

Exempt status under California law is nominally similar to federal law under the FLSA with some subtle and not so subtle nuances. There is a California requirement that 50 percent or more of the exempt employee’s time be spent on exempt duties. Although incorporating a version of California’s approach was part of the proposed new federal rule, it was not incorporated into the final version of that rule. The duties test remains important under California law for employers with California employees. The employer with California exempt employees must still contend with the duties test.

Both California and federal law have a minimum salary amount requirement and an employer of California employees will need to pay the greater of the two minimum salary amounts in order to comply with both laws. The California minimum is driven by the full time equivalent of two times the California minimum wage. At the moment (the legislature is still in session) that is $41,600 per year or $800 per week. When the FLSA regulations become effective (absent a court challenge and stay) on Dec. 1, the new federal minimum salary will rise to $47,476.

Factoring in the election or a court injunction, it is possible that the new federal minimum rate will not survive beyond inauguration day in 2017. If the new federal standard is stayed or repealed, a California employer could safely revert to the $41,600 per year level, right?

Well, proving that nothing is ever easy or simple in California, the answer is a resounding maybe, but perhaps not, or at least not for long.

The reason being that the California minimum wage will go up again Jan. 1, 2017, and that means the new salary threshold for California exempt status will increase to a minimum of $43,680.

By Jan. 1, 2018, if nothing else changes, the new California minimum will be not less than $45,760. Thus, either a stay or repeal of the new federal minimum salary amount will permit employers with exempt California employees to reduce the salary amount but probably not back to the 2016 level for very long if at all.

Stay tuned and subscribe to GT’s L&E Blog for further developments.

Final Rule Change to FLSA Salary and Salary Basis Tests for Overtime Exemption

Posted in Department of Labor, FLSA

On May 18, 2016, the United States Department of Labor (DOL) unveiled new overtime regulations that represent the largest change in the Fair Labor Standards Act (FLSA) in over two-decades.  The final version of the new FLSA rule will increase the salary threshold from $23,660 annually ($455/week) to $47,476 annually ($913/week) for a worker to be considered exempt from the FLSA’s overtime requirements.  The new salary threshold automatically will update to the 40th percentile of full-time salaried workers in the lowest wage region in the United States, currently the Southeast, every three years.  The FLSA’s other requirement for a worker to be exempt from overtime – that the worker satisfy certain duties – will not change.  Employers will have until Dec. 1, 2016, to comply with the new rule and should consider using the impending 200 day grace period to engage outside counsel in a privileged audit of worker salaries and duties to ensure compliance.

Background On The FLSA’s Overtime Exemption Requirements

As background, currently, in order to be exempt from overtime under the FLSA, a worker must: (i) earn at least $23,660 annually; (ii) earn at least $455 per week; and (iii) perform exempt job duties as outlined in 29 CFR Part 541.  The former two are referred to as the “salary test” and “salary basis test,” respectively.  The third test is known as the “duties test.”  Most workers must meet all three tests in order to be exempt.

In addition to the FLSA, most states also have their own laws that govern overtime exemptions within those jurisdictions.  Some states have “salary test,” “salary basis test,” and “duties test” requirements that are more stringent than the FLSA.  Employers are reminded that they still must satisfy both state overtime law and the new FLSA rule.

Changes To The FLSA’s Overtime Exemption Requirements

The new rule impacts the “salary test” and “salary basis test” while leaving the “duties test” unchanged.  More specifically, the “salary test” is increasing from $23,660 annually to $47,476 annually by Dec. 1, 2016.  The “salary basis test” is similarly increasing from $455 per week to $913 per week by Dec. 1, 2016.  Both the “salary test” and “salary basis test” will also be indexed to the lowest wage region in the United States and will automatically update every three years.  This means that employers should be diligent in performing audits of their employees’ wages and may need to consider salary adjustments in order to comply with the FLSA, particularly in industries that employ low-wage managers.

The new rule is intended to expand access to overtime pay for low-salary workers that work over 40 hours per week but have been treated as exempt because they perform some exempt duties (most commonly executive, administrative, and professional work).  According to the DOL, 35 percent of salaried workers meet the salary-basis aspect of the new rule – i.e., by earning less than $47,476 annually ($913/week) – and will thus be eligible for overtime payments under the new rule.  The DOL also projects that the new salary-basis standard could rise to $51,000 annually ($981/week) by 2020 based on estimated wage growth.  Overall, nearly $12b could be earned by workers in additional overtime payments over the next decade.

For impacted workers, this means that they are likely to either earn more in wages or work fewer hours.  Most employers are expected to either: (i) increase the workers’ salaries so that they satisfy the increased “salary test” and “salary basis test” and remain exempt from overtime; (ii) keep the workers’ salaries the same and pay them any earned overtime (if paying the workers’ earned overtime will be cheaper than their increasing salary); or (iii) monitor the workers’ hours so that they are not working any overtime (note, employers will still have to pay employees overtime if worked, even if not authorized; this does not prevent other discipline for any policy violations).  Employers should keep in mind that these pay increases are only necessary if their workers meet the “duties test.”  If workers do not meet the “duties test,” they should be classified, or reclassified as necessary after an audit, as non-exempt from the FLSA overtime rules.  Non-exempt workers do not need a salary increase if they do not perform any exempt duties under the FLSA and are properly classified as non-exempt from the FLSA overtime rules.

Key Takeaways

  • The DOL more than doubled the “salary test” and “salary basis test” for a worker to be exempt from overtime under the FLSA.  The “salary test” will increase from $23,660 annually to $47,476 annually and the “salary basis test” will rise from $455 per week to $913 per week.  The increases are effective Dec. 1, 2016.
  • Employers have a variety of options in dealing with the new rule.  For example, they may (i) increase the workers’ salaries so that they satisfy the increased “salary test” and “salary basis test;” (ii) keep the workers’ salaries the same and pay them any earned overtime; or (iii) monitor the workers’ hours so that they are not working any overtime, among other options.
  • While the “duties test” remains the same under the new rule, employers should not assume that they satisfy that test.  The “duties test” is always the most difficult with which to comply.  The new rule will likely result in an increase in FLSA suits when it goes into effect on Dec. 1, 2016.  As a consequence of any suits, increased scrutiny may be applied to employees’ job descriptions and assignments.  Employers are advised to take time in the next 200 days consult with counsel in order to perform a privileged audit and to ensure that employees satisfy all three of the FLSA and state law overtime exemption tests.

 

 

How ‘The Defend Trade Secrets Act’ Affects Your Employment Agreements

Posted in Federal Law, Trade Secrets

On May 11, 2016, President Obama signed the Defend Trade Secrets Act (DTSA) into law. The DTSA is immediately effective, and applies to misappropriation that occurs after its enactment. The DTSA is the most significant expansion of intellectual property law since the Lanham Act was passed in the 1940s. The DTSA largely tracks the Uniform Trade Secrets Act (UTSA), with a few notable exceptions, including that, in extraordinary circumstances, the DTSA will provide for ex parte seizures of property to prevent the dissemination of trade secrets.

Exemplary Damages and Attorneys’ Fees Conditioned on Notice

If a trade secret protected under the Act is “willfully and maliciously” misappropriated, the DTSA provides for an award of attorneys’ fees and exemplary damages in an amount not more than twice the damages awarded. 18 U.S.C. §§ 1836(b)(3)(C)-(D). The DTSA also provides for attorneys’ fees to be awarded to a prevailing party where the claim of trade secret misappropriation is made in bad faith, or where a motion to terminate an injunction is made or opposed in bad faith. 18 U.S.C. § 1836(b)(3)(D). The DTSA requires, however, that the employee against whom the action is brought must have received specific notice of certain immunity provisions as a condition of awarding exemplary damages and/or attorneys’ fees under §§ 1836(b)(3)(C)-(D).

Immunity Provision

Under § 1833(b)(1)(A) of the DTSA, employees have the right to turn over protected trade secrets to the government or to an attorney when illegal conduct is suspected, provided that the disclosure is solely for the purpose of reporting or investigating the suspected violation of the law. Similarly, under §§ 1833(b)(1)(B) of the DTSA, employees can disclose protected trade secrets in a complaint or other document filed in a legal proceeding, provided the filing is made under seal. The DTSA places the burden on the employer to provide notice of these immunity provisions to its employees, and specifically excludes from available remedies the attorneys’ fees and exemplary damages that are available under §§ 1836(b)(3)(C) and (D) if the notice requirements are not met, but only for contracts or agreements updated or entered into after enactment of the DTSA. §§ 1833(b)(2)(C) and (D).

Continue Reading.

OSHA’s Final Rule on ‘Improving Tracking of Workplace Injuries and Illnesses’

Posted in OSHA

Employers’ Injury and Illness Information Becomes Public and Expanded Protections for Employees that Report Injuries and Illnesses

On May 11, 2016, the Occupational Safety and Health Administration (OSHA) issued its much anticipated final rule on recordkeeping and reporting. The final rule requires employers in certain industries to electronically submit information about workplace injuries and illnesses to OSHA. OSHA will post the electronically submitted information, according to the final rule, on its public website. The final rule’s new recordkeeping requirement does not go into effect until July 1, 2017.

The final rule also provides updated requirements on how employers must inform employees to report work-related injuries and illnesses to their employer. In short, the final rule requires employers to inform employees of their right to report work-related injuries and illnesses free from retaliation, and clarifies the existing implicit requirement that an employer must provide reasonable procedures for reporting work-related injuries and illnesses that do not deter or discourage employees from reporting them. To this end, OSHA will now be permitted to cite an employer for taking an adverse employment action against an employee for reporting an injury or illness, even if the employee does not file a retaliation complaint with OSHA. The expanded protections for employees who report workplace injuries or illnesses go into effect 90 days after the final rule is published in the Federal Register.

Continue Reading.

Crossing Borders: Employment Considerations – English IS a Second Language

Posted in Global Workforce Strategies

GlobeMany countries outside the United States consider their choice of language to be an essential part of who they are and how they conduct business. Regardless of their residents’ skill in demonstrating a remarkable ability to speak numerous languages, many countries do not suffer angst over their legal commitment to their national language. They expect commerce to be conducted in the local language in their country, even if the participants are fluent in another language (often English). English may be the universal language through which many business arrangements are negotiated, but when it comes to documentation, in many locations, it can still be a second language.

Language is far more indigenous than many of us in the United States understand. Our view is admittedly colored by the fact that we speak what we believe to be the universal language of business and commerce. We find it hard to believe that English is not the automatic language of choice when drafting documents that will be enforced in locations outside the United States. Through my international practice, I have come to understand not only is English not universally welcomed but, indeed, even our understanding of Spanish or French will not always translate into what we are intending to convey in a document that is to be interpreted in other countries. Perhaps the most basic example that comes to mind is that, depending on where you are in Latin America, the word used to describe employer is a different word depending on your location.

Language evinces culture, heritage and community. Locals hear non-local phrases and, although they might comprehend them, they know the speaker is not from the area. What is true of the colloquialisms of the New England area as compared with Southern dialect and manners of speech is true in every corner of the globe — just because we speak the same language doesn’t mean we speak the same language.

Even beyond comprehending how certain differences in language define local cultures is the hard and fast rule in some countries that an agreement written in another language is VOID. Yes, you read that correctly. As noted above, countries are proud of their linguistic heritage. They expect everyone who wants to do business there to respect their way of life and their language. And some countries go so far as to protect that use of language right down to the language of the document being enforced. Translations after the fact can be enforced in some locations. Other locations require the original agreement to be in the local language. Some allow for a dual column translation to include both the local language and the employee’s native language. Others do not.

As your business spans the globe, keep in mind that English IS a second language in many countries. Pay attention to the local culture, including its language choice. If you use a translation service, ensure your translator is native to that country. Otherwise, you may find yourself with an unintelligible or unenforceable agreement. And explaining that to a Board of Directors is enough to make anyone stutter, no matter their language preference.

The Defend Trade Secrets Act of 2016

Posted in Trade Secrets

On April 27, 2016, Congress passed the “Defend Trade Secrets Act of 2016.” The Act (the DTSA) passed the House by a vote of 410 to 2. The bill passed the Senate April 4, 2016, by a vote of 87 to 0. Congress enacted the DTSA largely due to its concerns about Chinese espionage and online hacking by cyber-criminals.

The DTSA is expected to be signed into law promptly. Even before the Senate passed the Act, the Obama administration voiced strong support for it. The DTSA is intended to go into effect on the date of its enactment and applies to any misappropriation that occurs after that date.

General Background

The Act amends the Economic Espionage Act to create a civil cause of action for trade secret misappropriation. The federal statute previously provided only criminal penalties for trade secret misappropriation. Historically, trade secret misappropriation has been a matter of state law, commonly addressed under the Uniform Trade Secrets Act. The DTSA does not pre-empt these state laws. Instead, it leaves all state trade secret laws in place and creates the availability of an additional federal remedy.

Continue Reading.

Greenberg Traurig’s Jim Boudreau Quoted in Bloomberg BNA’s Labor and Employment Blog Series

Posted in Federal Law, FLSA

Jim Boudreau, shareholder at Greenberg Traurig, was recently quoted in two articles in Bloomberg BNA’s Labor and Employment Blog series discussing issues relating to Article III in Fair Labor Standards Act (FLSA) class and collective actions. Jim also discussed the federal courts’ reaction to Campbell-Ewald and the potential for due process issues that may arise in similar cases. To review these articles, please click here for part one and here for part two.

LexBlog