Welcome to Legal Briefs for HR, an update on employment issues:
EEOC on Receiving End of Insult and Injury – Not only did the 4th Circuit affirm a lower court’s summary judgment ruling in favor of the employer, it quoted much of the harsh critique penned by the district court judge in its decision and then added some of its own. The story unfolds with the EEOC launching an investigation into the criteria used by Freeman to hire new employees. The skirmish started with credit checks and was expanded to include criminal checks. The EEOC claimed that use of these criteria had a disparate impact on black and male job applicants. A class action was approved and the EEOC provided an expert’s statistical analyses to support their theory of a Title VII violation. Prior to trial, the court granted Freeman’s motion to exclude the expert’s report, agreeing that it was “rife with analytical errors” and “completely unreliable” under the Federal Rules of Evidence. The EEOC appeals. The 4th Circuit takes little time to affirm the grant of summary judgment to Freeman, agreeing that the report contained “pervasive errors and utterly unreliable analysis.” But there’s more. One judge wrote a concurrence which listed other cases in which the same expert’s work was found to be unreliable, including EEOC v. Kaplan Higher Education Corp. (6th Cir. 2014). This judge summed up the concurrence by faulting the EEOC for trying to defend the expert’s work and chided the agency for abuse of its broad discretion. EEOC v. Freeman (4th Cir. Feb. 2015). This case does not provide much-anticipated clarity on the viability of the EEOC’s position on use of criminal records as a hiring criteria, but it is an excellent read for any employer on the receiving end of what feels like overreaching by a certain enforcement agency.
Not So Fast, My Friend – On February 16, Judge Andrew Hanen of the U.S. District Court in Brownsville TX ruled in favor of the State of Texas and 25 other states by issuing a temporary injunction, effectively halting President Obama’s order to stop deportation of certain immigrants and issue some of them work permits, Social Security eligibility and eligibility for other federal and state benefits. The White House argued it was exercising its prosecutorial discretion via the executive order but the states and the judge believed the Administrative Procedure Act, which requires notice and a period for comment before action is taken, was violated. For now, both the Deferred Action for Childhood Arrivals (DACA) and the Deferred Action for Parental Accountability (DAPA) programs are on ice. The White House plans to appeal.
Low Prices and Higher Wages – Last week, retailer Wal-Mart announced that it will bump all non-exempt worker’s pay to at least $9/hour this April and to $10/hour by February 2016. The announcement letter from the CEO can be found at http://blog.walmart.com/in-letter-to-associates-walmart-ceo-doug-mcmillon-announces-higher-pay. With states and local governments ratcheting up their minimum wage figures well above the federal minimum wage of $7.25/hour, at some point it becomes administratively easier for multi-state employers to go the highest common denominator. Food for thought.
Oh Lord, Grant Me Patience – Yet another misguided soul refused to provide a social security number to his prospective employer and then cried “religious discrimination!” when he did not get the job. The individual did not win his case (Yeager v. FirstEnergy Generation Corporation (6th Cir. Feb. 2015) and he would benefit from reading a great 62-page treatise on the subject from our friends at the IRS. It can be found at www.irs.gov/pub/irs-utl/friv_tax.pdf.
That Ship Has Sailed –Back in 2012, a federal appellate court held that severance payments were not wages subject to FICA taxes, prompting some employers to file for tax refunds on those payments. In 2014, that door slammed shut via the U.S. Supreme Court’s decision in U.S. v. Quality Stores, Inc., with a holding that severance payments were indeed subject to Social Security and Medicare taxes. Apparently some employers are still filing for tax refunds from the IRS, so they have issued an opinion letter making clear no more refunds for taxes withheld from severance payments will be made. Message received. See http://www.irs.gov/pub/irs-drop/a-15-08.pdf.
Hiring Help – The EEOC and DOL have partnered on a new hiring guide aimed at federal contractors entitled “Recruiting, Hiring, Retaining and Promoting People with Disabilities.” The revised regulations for affirmative action plans under section 503 of the Rehabilitation Act require annual evaluation of an employer’s workforce against a 7% disabled utilization goal, so some contractors may want to do more in attracting and retaining the disabled. The guide is at http://www.whitehouse.gov/sites/default/files/docs/employing_people_with_disabilities_toolkit_february_3_2015_v4.pdf.
There Oughta be a Law – Just in case common sense is no longer a job requirement for being hired in the public sector, a bill was filed that expressly prohibits federal employees from perusing porn while on the job (H.R. 901). Really. A copy of the bill can be found at https://www.congress.gov/bill/114th-congress/house-bill/901. The bill appears to be in response to an investigation last year of an EPA salaried employee who earns $120K per year, downloaded 7000 plus files of pornography and watched between two to six hours of porn per day, at work. The senior official was placed on paid leave last September, pending investigation, and may still be on the payroll. Despite an outcry of righteous indignation from Congressional members last fall, I can’t locate any confirmation that he has been let go. Someone please tell me that I’m wrong.
PEO Uh Oh – A professional employer organization based in MN was tagged with 243 Form I-9 violations which cost them more than $227K in civil money penalties. What did they do wrong, according to the U.S. Department of Justice? The PEO contracted with a temp staffing agency to on-board new hires for their clients, including completion of the I-9. The local staffer gave the I-9 to the new hire for completion, looked at the new hire’s documents which prove identity and authorization to work, and made a copy of those documents. The I-9 and document copies were then shipped to the PEO in MN, where a PEO employee looked at the copy of the documents and completed the employer attestation in Section 2 of the I-9 form. The problem is, the form clearly states that the person who completes Section 2 is attesting to the fact that he or she looked at the original documents, not copies. The decision can be read at http://www.justice.gov/eoir/OcahoMain/publisheddecisions/Looseleaf/Volume11/1242.pdf.
More Fun With FMLA – The DOL announced a change to its definition of “spouse” under the FMLA, in order to confer FMLA rights to same-sex couples. Under the prior wording, the couple would be seen as spouses if they lived in a state that recognized same-sex marriages. The new version looks to the “place of celebration” to determine eligibility, regardless of where they choose to live. For couples marrying outside of the U.S., the DOL will keep the current rule of recognizing them as spouses for FMLA purposes if the marriage was valid where entered into and would be considered valid in at least one U.S. state. The change takes effect March 27, 2015. Here is a link to the announcement — http://www.dol.gov/whd/fmla/spouse/.
That’s Sick – The Healthy Families Act, a federal bill that would mandate seven days of paid sick leave per year for employees who work for an employer with 15 or more employees, is back. It has been re-introduced in Congress as H.R. 932 and S. 497. The benefit would accrue at a rate of one hour of sick pay for every 30 hours worked, up to a max of 56 hours per year. Smaller employers would be required to offer unpaid time off to their employees, for the same reasons. You can see full text of the bill and track it’s progress at www.congress.gov.
Accommodation? No – Plaintiff alleged that her new boss belittled her which exacerbated her bipolar depression. The only requested accommodation was a switch in supervisors (remember when this was referred to as a bossectomy in an ADA case from a few years back?). Once again, the request fails because a request to transfer to a new supervisor is unreasonable as a matter of law. Alsup v. U.S. Bancorp (E.D. Cal. Jan. 2015).
Accommodation? Yes – Plaintiff had end-stage renal disease and physically could not provide a urine sample as part of a post-offer drug screen. He offered to provide hair, blood or any other item that could be tested for drugs but the employer stuck to its “urinalysis only” policy and rescinded the job offer. In the end, the employer settled with the EEOC rather than take the ADA claim to trial. The settlement included money for the plaintiff and revision of the drug-free workplace policy and the drug testing policy, to include the possibility of reasonable accommodation in the testing process including use of other testing methods. EEOC v. Kmart Corp. (D. Md. 2014)
Heads’ Up Federal Contractors – OFCCP published a list of resources to help federal contractors who are subject to EO 13672 (which becomes effective on April 8, 2015) in complying with its prohibition against employment discrimination based on LGBT status. The handy helper can be found at http://www.dol.gov/ofccp/LGBT/LGBT_resources.html. Keep in mind that OFCCP’s Final Rule to implement EO 13672 was published on December 3, 2014 but a comment period was opened on December 9, to run through February 6. Hmm. Aren’t you supposed to have a comment period before you publish the Final Rule?
Stated Differently – Here are some hot topics for you multi-state employers:
New York – An employer was unable to enforce a noncompete provision against a former employee because it had demoted him before he resigned. The demotion was seen as a breach of the employment agreement and the employer “did not have a legitimate interest in restricting [Fewer] from working for a competitor once he was in his demoted position.” Fewer v. GFI Group Inc. et al (NY App Ct Jan. 2015).
New York – Effective February 27, NY has beefed up its Wage and Theft Prevention Act. The penalties jump from $50 per week to $50 per day and the max penalty per employee goes from $2500 to $5000. The ten members of an LLC with the largest percentage of ownership are now jointly and severally liable for all debts, wages or salaries owed to employees & employees may now seek liquidated damages, penalties, interest and attorney’s fees and costs, on top of backpay. Successor liability for unpaid wages will apply where the ownership, employees, products and customer are similar to those of the prior employer. Employers with particularly egregious violations and/or repeat offenders will be posted on the NY DOL website and may be subject to enhanced penalties. In one small bit of good news, the annual wage notice to employees has been eliminated starting in 2015.
Pennsylvania (Philly) – A new ordinance requires employers of ten or more employees to provide up to 40 hours of paid sick leave per calendar year to full-time, part-time and temp employees who work in Philadelphia and who work at least 40 hours in a year. Paid sick leave accrues at the rate of one hour for every 40 hours worked. Accruals begin on May 13, 2015 for individuals employed as of that date and as of the first day worked for individuals hired after that date. Employers with nine or fewer employees must allow for the same amount of time off, but it can be without pay. Unused paid sick leave carries over to the next year, but need not be paid out to an employee upon termination of employment.
- California – Effective January 1, individuals being treated as exempt under the state’s computer professional exemption must be paid at least a salary of $85,981.40 or at the rate of at least $41.27/hour. The federal hourly minimum for this exemption is only $27.63 per hour.
- Illinois – Effective January 1, IL requires employers of one or more employees to reasonably accommodate female applicants and employees who are pregnant, recovering from childbirth or have a medical condition related to pregnancy or childbirth, unless the employer can show to do so would amount to undue hardship. Info on the new law is to be disseminated in your employee handbook and via a mandatory poster which can be found at http://www2.illinois.gov/dhr/Publications/Pages/Pregnancy_Rights_Notice_Requirement.aspx.
- Illinois (Cook County) – Under a startling new Wage Theft Ordinance which takes effect May 1, 2015, Cook County businesses risk revocation of property tax incentives, retroactive payment of prior tax savings, ineligibility to do contract work for the county and denial of new business license or revocation of an existing business license if they admit guilt/liability or are adjudicated to be guilty/liable in any judicial or administrative proceeding under a series of named IL and federal employment laws “or any comparable state statute or regulation of any state.” (emphasis added). Gulp.
- Minnesota – A suite of bills referred to as the Working Parent Act, if passed, will force employers into new territory for scheduling workers and paying them. Some of the more unusual provisions include:
- Fair Scheduling – New hires receive a schedule for their first 21 days of employment & no changes are made unless the employee OKs the change in writing; the schedule for each workweek must be posted 21 days in advance; the employee can request changes to the schedule; the employer cannot require the employee to find a replacement employee for any hours the employee cannot work [Note: The U.S. DOL is also very interested in this issue, per the new Wage and Hour Division Administrator, David Weil.]
- Day of Rest – Employee can decline work that is scheduled less than 11 hours after the end of the prior shift worked; if the employee does not decline and works the hours voluntarily, the employee must be paid for those hours at 1.5 times the employee’s regular rate of pay.
- Extra Pay – If an employer cancels or changes a scheduled shift within 21 days of the shift, but not less than 24 hours before the start of the shift, the employer must give the employee one hour of “predictability pay” plus pay for hours actually worked. One hour of predictability pay also applies if notice of the change is within 24 hours of the start of the shift and the shift is either the same amount or hours or more hours. If the notice is within 24 hours of the start of the shift and the shift is shorter or cancelled, then the employer must pay the lesser of four hours or the length of the original shift to the employee.
- Flex Time – Employees can ask for a modified schedule, different start/stop time, telecommuting arrangement or different duties in writing at any time. Employers are obligated to engage in an interactive process within two days of the request and notify the employee of the decision, in writing, within two days after the final communication about the request.
- Tips – Where an employee receives a gratuity via a debit, charge or credit card, the employee must be paid that amount via a debit or credit card during the pay period in which the tip was received. Employers would no longer be able to deduct credit card processing fees from employees’ tips.
- Rest Breaks – Employers must provide a ten-minute paid break for each four hours worked.
Provided with permission by:
Audrey E. Mross
Labor & Employment Attorney
Munck Wilson Mandala LLP
Legal Briefs for HR (“LB4HR”) is provided to alert recipients to new developments in the law and with the understanding that it is guidance and not a legal or professional opinion on specific facts or matters. For answers to your specific questions, please consult with counsel.