Given the national spotlight on pay equity, in 2016 there was a radical change in the equal pay legal landscape, as federal administrative agencies and states implemented laws and regulations to improve and enforce pay equity for individuals in protected classes (i.e., sex, race, ethnicity, gender identity, color, religion, national origin, and sexual orientation). Prior to 2016, equal pay claims were largely enforced via Title VII. In some cases, equal pay claims were also enforced via the Equal Pay Act (EPA), which only protects pay inequity between the sexes. The recent changes in state equal pay laws post-2016 not only seek to aggressively close the pay gap, but lower the bar for employees to bring equal pay lawsuits.
On July 13, 2017, the Eleventh Circuit Court of Appeals was tasked with deciding what constitutes a “machine” under OSHA’s lockout/tag-out (LOTO) standard (29 C.F.R. § 1910.147). Sec’y of Labor v. Action Elec. Co., 868 F.3d 1324 (11th Cir. 2017). Specifically, the court had to decide under what circumstances different pieces of equipment are considered one “machine” thus mandating that all pieces of equipment that comprise the “machine” must be de-energized when employees are only servicing one of the pieces of equipment.
On 10 October, after a record 208 days of negotiations, the prospective coalition partners for a new government in the Netherlands presented their coalition agreement (regeerakkoord). The agreement will be the basis for a new Dutch coalition led by the liberal VVD party, with Mark Rutte as prime-minister.
Shareholder Jerrold Goldberg, with the assistance of Practice Group Attorney Melanie Sarver, recently published an article in Law360 discussing the Fair Labor Standards Act (FLSA). The FLSA requires the payment of overtime to all employees unless their work fits within one of the statute’s exemptions. The burden of proof for establishing that an FLSA exemption applies to a particular position rests with the employer, and the exemptions are narrowly construed against employers seeking to assert them. Their article addresses whether the FLSA computer professional exemption and/or the administrative employee exemption apply to information technology/computer staff. To read the entire article, please click here.
On Nov. 22, 2016, a Texas federal court stayed implementation of the U.S. Department of Labor’s (DOL) rule amendment which would have roughly doubled the minimum salary threshold for many employees to be considered exempt from federal overtime requirements under the Fair Labor Standards Act (FLSA). On Aug. 31, 2017, the same court declared that the DOL’s rule amendment “is invalid” as a matter of law, reasoning that the DOL exceeded its authority by adopting “a salary-level test that will effectively eliminate the duties test” that Congress established in the FLSA.
The court’s ruling adds another layer of complexity to the uncertainty that employers have confronted since May 23, 2016, when the DOL published its rule amendment. Nonetheless, there are a handful of key “take-aways” that employers should consider as they weigh their options:
- For the time being, the law remains what it has been since 2004. To qualify for the FLSA’s “bona fide executive, administrative, or professional capacity” (EAP) exemption, an employee must: (i) be paid on a salary basis; (ii) receive a salary of at least $23,660 annually; and (iii) in fact perform executive, administrative, or professional capacity duties as defined in the current regulations, which have been in effect since 2004.
- Although it is now highly unlikely the DOL’s rule amendment will become effective as written, it is similarly unlikely the court’s invalidation of that amendment will be the last word. Following the November 2016 stay, the DOL asked the Fifth Circuit Court of Appeals to reaffirm its authority to set at least some minimum salary test, arguing the stay order suggested it had no such authority. In its Aug. 31 opinion, the court acknowledged that the DOL “has the authority to implement a salary-level test” – the court reasoned only that the DOL had exceeded that authority by adopting “a salary-level test [of $47,476 annually] that will effectively eliminate the duties test” required under the FLSA. What impact that more narrow ruling may have on the DOL’s current appeal, or on its decision whether to appeal the Aug. 31 ruling, is not yet clear.
- Separately, even before the court’s Aug. 31 ruling, the DOL under the Trump Administration already announced its intention to walk back its rule amendment. On July 26, 2017, the DOL released a Request for Information (RFI) seeking public comments on a set of questions that suggest the DOL is considering several regulatory possibilities, including (i) calculating the salary threshold differently based on factors such as exemption category, geographical area, employer size and/or industry; (ii) establishing a new minimum salary level at some point between the current $23,660 minimum and the $47,476 level the court has now declared invalid; or (iii) eliminating the minimum salary requirement entirely and determining exemption status solely based upon the duties an employee performs. The comment period is currently set to close in late September, and what the DOL may propose thereafter is uncertain. However, the RFI does not in itself begin the formal rule-making process that would be required to rescind or adjust the now-invalidated rule amendment.
- Remember, neither the rule amendment nor the court’s opinion invalidating it impacts the traditional “duties” tests, but only the “salary-level” test. For the many employers who conducted audits and reclassified employees based upon their duties, those decisions should likely not be impacted. For those who may have reclassified employees based on the $47,476 salary-level test in anticipation of the rule amendment, however, those decisions may be reconsidered. Of course, human resources and communications will likely want to address situations where employers may have already promised (or even implemented) either raises or reclassifications.
As always, employers are wise to review employees’ job descriptions and actual duties. The duties test is far more fertile ground for FLSA misclassification claims, and employers can help avoid potential exposure by ensuring that only those employees who meet the duties test are classified as EAP exempt.
Jamie R. Adams and Ian R. Macdonald recently published an article in SHRM Online titled, “Immigration Rechecks May Violate the NLRA.” The article discusses I-9 rechecks and the potential for violations of federal labor law, as organizations must satisfy their obligations to comply with both the Immigration Reform and Control Act of 1986 (IRCA) and the National Labor Relations Act (NLRA). The authors specifically highlight the recent Cinelease case, while examining violations that companies should be aware of as well as a list of best practices for employers. To read the entire article, please click here.
On August 7, 2017, the California Department of Industrial Relations and the California Environmental Protection Agency amended the California’s Occupational Safety and Health Process Safety Management (PSM) standard to improve workplace safety and hazard prevention and management at the 15 refineries in California. The new standards are more stringent than federal OSHA’s process safety management (PSM) standard. They place new administrative and financial burdens on refiners and, according to a state regulatory impact assessment, will cost refineries $58 million dollars to comply with the new standards in the first year alone. The new standards take effect on October 1, 2017.
On July 27, 2017, Massachusetts Governor Charles Baker signed into law “An Act Establishing the Massachusetts Pregnant Workers Fairness Act.” The new law (i) prohibits discrimination against employees on the basis of pregnancy or a condition related to pregnancy and (ii) requires employers to provide reasonable accommodations to expectant and new mothers in the workplace.
The Pregnant Workers Fairness Act does not go into effect until April 1, 2018; at which time Massachusetts employers will be required to provide written notice to employees of their rights under the Act.
Characterizing its own precedent as “inconsistent” and “confusing,” the Third Circuit Court of Appeals, in a published opinion earlier this month, undertook to “clarify” the “correct standard” for establishing a hostile work environment claim under federal anti-discrimination law (in particular, Title VII). Castleberry v. STI Group, No. 16-3131. To state such a claim, plaintiffs must show that the harassment they experienced was either “severe” or “pervasive”—they need not plead or prove that it is both. Following Castleberry, employers in the Third Circuit may face greater challenges in defeating hostile work environment claims on summary judgment.
Employers in the gaming and hospitality arena are eagerly awaiting the results of the upcoming changes to the legal landscape that are expected to emerge from a business-oriented administration. These employers have long tried to reduce the costs and length of litigation, particularly in the context of wage and hour claims, by requiring employees to arbitrate work-related disputes on a bilateral, rather than collective or class-wide, basis.
The Trump administration has already begun to change course regarding the legality of class action waivers, which is affecting employers in dozens of cases. In a rather expected move, the Department of Justice now says it no longer believes that class action waivers in arbitration agreements infringe upon workers’ Section 7 rights under the National Labor Relations Act (NLRA). On June 16, the Department of Justice filed an amicus brief with the Supreme Court in NLRB v. Murphy Oil USA, Inc., which oral arguments on this issue are scheduled for October. The DOJ’s brief argues that, “Nothing in the NLRA’s legislative history indicates that Congress intended to bar enforcement of arbitration agreements like those at issue here…And while the National Labor Relations Board’s (“NLRB” or “Board”) reading of ambiguous NLRA language is entitled to judicial deference, the Board’s analysis of the interplay between the NLRA and the FAA is not.” The DOJ acknowledges that it previously filed a petition for a writ of certiorari on behalf of the NLRB, but that after the change in administration, it reconsidered the issue and has reached the opposite conclusion.
The saga started in January 2012 with the controversial ruling in D.R. Horton, Inc., in which the Board ruled that agreements between an employer and its individual employees interfere with the employees’ right to engage in concerted activities if the agreements require arbitration of work-related disputes on a bilateral rather than collective or class wide basis. This issue has created a split among the circuit courts. On review, the Fifth Circuit rejected the Board’s D.R. Horton analysis and held that enforcement of the challenged arbitration agreement would not deny a party any statutory right because the use of class action procedures is not a substantive right under the NLRA. The Seventh and Ninth Circuits have disagreed. In Epic Systems Corporations v. Jacob Lewis, the Seventh Circuit affirmed a district court’s ruling that an arbitration agreement requiring employees to waive the right to participate in a class proceeding was invalid and unenforceable under the NLRA. In a similar case, the Ninth Circuit reversed a district court’s order granting an employer’s motion to compel bilateral arbitration. The Ninth Circuit held that the NLRA gives employees a “right to pursue work-related legal claims together” and that the employer had violated that right by requiring employees to resolve their legal claims in separate arbitration proceedings. Most recently, the NLRB’s General Counsel reaffirmed the Board’s prior decision in D.R. Horton, Inc., notwithstanding the Fifth Circuit’s ruling rejecting that decision, by issuing a complaint against Murphy Oil USA, Inc. for requiring its employees to waive their rights to commence or participate in a class action.
In October, the Supreme Court will address this split among the circuits and hear Murphy Oil, Epic Systems, and the Ninth Circuit case. Notably, on June 16, the NLRB announced that the Acting Solicitor General of the United States has authorized the NLRB to represent itself at the hearing. The General Counsel’s office, headed up by Richard F. Griffin, Jr. until his term ends in November, will represent the Board. It is unclear whether the DOJ will face off with the General Counsel, given its new take on this issue.
It is currently unclear how the U.S. Supreme Court will decide this issue in October, or what effect the Department of Justice’s new position will have on its ultimate ruling. Either way, it is likely that employers will soon have new guidance on whether class waivers in arbitration agreements infringe upon workers’ Section 7 rights. Shortly after the hearing, President Trump is expected to nominate a new General Counsel whose views will certainly align with the business-friendly Trump administration. While we wait for the Supreme Court’s ruling and at least until Griffin’s term ends, employers should continue to consult counsel when considering including class waivers in their arbitration agreements.