Employer Law Report

FTC poised to consider regulation of non-competes

microphone at podiumFederal regulation of employee non-compete agreements will be the focus of a workshop hosted by the Federal Trade Commission (FTC) Thursday, Jan. 9, 2020, in Washington, DC. First announced by the FTC on Dec. 5, 2019, the purpose of the workshop is “to examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts.”

The FTC has now released the agenda for the workshop, which is titled “Non-Compete Clauses in the Workplace: Examining Antitrust and Consumer Protection Issues” and will be webcast live. Among the topics that will be addressed by the speakers and panelists – which include mostly law professors, economists and policy analysts, and only one practicing attorney – are the economic effects of non-competes, the FTC’s authority to address non-competes and whether the FTC should initiate a rulemaking regarding non-competes. The FTC has released the following list of questions that will be addressed at the workshop, and on which the FTC is soliciting public comment through Feb. 10, 2020: Continue Reading

Fair Chance to Compete for Jobs Act creates federal “Ban the Box” law for federal contractors

Cropped shot of a man and woman completing paperwork together at a deskEffective Dec. 20, 2021, the federal Fair Chance to Compete for Jobs Act will prohibit federal contractors from inquiring-either directly or through a background screening process-into an applicant’s criminal background until after the contractor extends a conditional job offer to the applicant. The law will only impact those applicants seeking employment in positions related to “work under” the federal contract.

Furthermore, the law will not prohibit pre-offer criminal background inquiries related to contracts where criminal background checks are otherwise required by law, where the contract requires an individual hired to work under the contract to access classified information or to have sensitive law enforcement or national security duties or in connection with other positions that will be identified in regulations to be issued  by the federal Office of Personnel Management no later than April 20, 2021.

Federal contractors will want to confirm that their policies, procedures, applications and forms all comply with this new law, which will be in addition to any applicable state or local law that prohibits criminal background inquiries at any point in the job application process.

DOL issues final rule clarifying the regular rate of pay

The U.S. Department of Labor (DOL) is making significant changes to the regulations covering the regular rate of pay under the Fair Labor Standards Act (FLSA) for the first time in more than 50 years. The FLSA entitles most covered, nonexempt employees to receive overtime pay of at least one and one-half times the employee’s regular rate of pay for all hours worked over 40 in a workweek.

Definition of “Regular Rate”

Under the FLSA, “regular rate” includes all remuneration for employment paid to the employee, but excludes the following eight categories of payments:

  • Gifts and payments for special occasions
  • Payments for periods when no work is performed, such as vacation, and payments for expenses incurred in furtherance of the employer’s interest
  • Discretionary bonuses, payments to profit-sharing plans or savings plans that meet certain requirements, or certain talent fees
  • Contributions to a bona fide retirement or life, accident or health insurance plan
  • extra compensation provided by a premium rate paid for hours worked in excess of eight in a day, 40 hours in a workweek, or the employee’s normal work hours
  • Extra compensation provided by a premium rate paid for work performed on Saturdays, Sundays, holidays, or regular days of rest, or for sixth or seventh day pay
  • Extra compensation provided by a premium rate paid pursuant to a contract or collective bargaining agreement for work outside the employee’s normal workday
  • Value or income derived from employer-provided stock options, stock appreciation rights, or stock purchase programs if certain restrictions are met

New Rule, New Clarity

Calculating the regular rate

On Dec. 16, 2019 the DOL published its final rule, seeking to update the regular rate of pay regulations and bring them more in line with 21st Century pay practices, including state and local wage and hour laws. These newly updated regulations will go into effect on Jan. 15, 2020.

The final rule clarifies the following types of payments, benefits, and perks may be provided to employees but are not included in the regular rate of pay:

  • Loans or advances made by the employer
  • The cost of providing:
    • parking benefits
    • gym access, memberships, fitness classes or recreational facilities
    • wellness programs
  • Discounts on employer-provided retail goods and services
  • Tuition benefits and adoption assistance
  • Payments for unused paid leave
  • Payments for certain call-back pay penalties
  • Reimbursed expenses incurred on the employer’s behalf – including for cell phone plans, organization membership dues, credentialing exam fees, supplies, tools, materials, equipment or travel – where the amount of the reimbursement reasonably approximates the actual expense incurred
  • Gifts and special payments, such as:
    • Certain sign-on and longevity bonuses
    • Office coffee and snacks
  • Benefit plan contributions for death, disability, accident, retirement, unemployment, legal services, or other events that could create significant future financial hardship or expense

Further, the rule clarifies that a reimbursement for travel when done for the employer’s business is “per se” reasonable if it does not exceed the maximum reimbursement payment or per diem allowance under the Federal Travel Regulation System or IRS guidance.

Finally, although discretionary bonuses were clearly excluded from the regular rate of pay under the previous regulations, the final rule provides that a label given to a particular bonus does not determine whether the bonus is truly discretionary. Rather, a bonus will be deemed to be discretionary or nondiscretionary based on the operative facts.

For a full review of the changes, the final rule is available here.

A holly jolly holiday party: Keeping this year’s gathering fun and safe for all

A diverse group of coworkers celebrate with an office holiday partyTo borrow a line from a well-known Andy Williams song, “It’s the most wonderful time of the year.” The months of November through January are known for office holiday parties. All of this fun brings an increased risk of liability for employers, and for that reason it is important to be proactive and create a plan to avoid risks so that your company is not left dealing with any headaches in the New Year.

Decking the halls: Employment law considerations for planning your holiday party

A number of religious groups celebrate significant holidays during the month of December. Federal and state law prohibit discrimination on the basis of religion. This means that an employer cannot treat employees differently on the basis of religion or favor one religion over another. Also, not all employees associate the holidays with any religious observance. To avoid creating the appearance of favoring one religion over another or of having your party perceived as having a religious theme, consider doing the following:

  • Choose festive, non-religious decorations. Bring out your snowflakes, snowmen and boughs of holly, but leave out decorations with religious connotations like nativity scenes and menorahs. Unless you display religious symbols from a number of different religions at your holiday party, you will only create the appearance of religious preference.
  • Be mindful of your menu. Consider food options that are sensitive to various religions and nationalities, and survey your employees about any dietary restrictions ahead of time. Some religious observances restrict diets or require fasting during particular periods. Avoid scheduling your holiday party during these periods
  • Spotify responsibly. If you choose to play music, select non-religious songs.
  • Make the holiday fun optional. No one has ever enjoyed a compulsory party. Allow your employees to decide on their own whether they would like to attend.

 Rein in any reindeer games: Avoiding holiday party harassment

Workplace holiday parties are a common ground for harassment—particularly sexual and religious. Alcohol consumption can make people less thoughtful with their words, and when parties are held away from the office, employees feel more at ease to say and do as they please.

Under federal and state law, employers have a legal obligation to prevent harassment in the workplace. This duty extends to work-sponsored events, like holiday parties (even parties that take place off-site). To avoid holiday party harassment, employers should

  • Make sure handbook policies make clear that work conduct rules apply at work functions after working hours
  • Remind employees that company policies, including the harassment policy apply at work functions, and that being under the influence is not a defense for bad behavior
  • Consider designating specific managers to avoid alcohol and monitor the event and intervene if anything gets out of hand
  • Promptly investigate any claims of harassment after the party

Holiday hangover: Navigating employee DUI arrests

As raucous holiday celebrations burn late into the night, alcohol oftentimes serves as the fuel. This could lead some party revelers to get behind the wheel while under the influence. The winter holiday season is one of the most dangerous times of the year on our roadways, and the peak time for driving under the influence (DUI) arrests.

But beware before terminating an employee on the basis of a DUI arrest because many states and municipalities prohibit taking an adverse employment action on the basis of an arrest record. An arrest does not necessarily equal guilt. For any number of reasons, the arrest may not result in a conviction. Further, the EEOC closely scrutinizes criminal record screening policies, including policies calling for automatic termination upon arrest. For these reasons, terminating an employee based on a DUI arrest is usually a high risk decision.

To avoid the risk of your employees getting a DUI on the way home from your holiday party, consider limiting intake by only keeping the bar open for a portion of the evening, requiring drink tickets, and/or limiting choices to beer and wine. Additionally, by including spouses and significant others in the evening, you increase the likelihood that your employees will have a designated driver for the ride home. Depending on the size and scope of the party, you might also consider shuttle services to get everyone home in one piece.

Enjoy the holiday season, have fun and be safe!

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H-1B registration for 2021 cap season dates announced

On Dec. 6, 2019, U.S. Citizenship and Immigration Services (USCIS) announced that the initial registration period for the H-1B cap season 2021 will begin on March 1, 2020 and end on March 20, 2020. Once selections have been announced, those selected will have 90 days to submit the petitions.

H-1B electronic registration requirement

immigration h-1B visa registration

On Jan. 31, 2019, USCIS issued the final rules requiring employers to electronically register each intending beneficiary to enter the random selection process for H-1B cap cases. The registration requirement is expected to streamline the random selection process by permitting only those who are selected to submit the actual petitions. The registration requirement was suspended for the fiscal year 2020, but on Sept. 30, 2019, the USCIS announced that it intended to implement the registration process for the FY2021 cap season.

The rules provide that while there is no limit to the number of registrations that may be submitted by an employer, duplicate registrations for a beneficiary from the same employer will render invalid all registrations for that beneficiary.

Registration for the random selection process must be submitted during the initial registration period, which will last a minimum of 14 calendar days and begin at least 14 days prior to April 1, 2020, the earliest date that cap petitions can be filed for that particular fiscal year. Each registration will be subject to a $10 fee. Once the selection has been made and announced, USCIS will announce the 90 day period to submit the petition, which most likely will be from April 1, 2020 to June 30, 2020.

Caveat

For those beneficiaries whose Optional Practical Training (OPT) expires in April or early May and will rely upon the cap gap rule, which automatically extends the employment authorization to Sept. 30th with the timely filing of the H-1B cap petition, petitions must be filed before the expiration of the OPT.  Thus, employers should not wait until the selection is announced to prepare the petition. Depending on the actual expiration date of the OPT, the beneficiary may need to have the petition filed on April 1 or shortly after April 1 to benefit from the cap gap extension  There may not be sufficient time after the announcement of the selection for the employer to prepare the petition before it must be filed. Thus, the best practice in these cases would be to prepare the petition ahead of time.

Multi-state employers: Be prepared for January 1 minimum wage increases

While many employers are gearing up for the holidays, many employees across the U.S. will see an increase in minimum wage. On Jan. 1, 2020, the minimum wage will increase in numerous states and cities throughout the country that have adopted their own minimum wage laws, which provide for a higher rate than the federal minimum wage of $7.25 per hour. In areas where minimum wage laws overlap, employees are entitled to receive the highest applicable rate.

The following minimum wage increases will become effective Jan. 1, 2020:

Alaska

  • State-wide: $10.19 per hour

Arizona

  • State-wide: $12.00 per hour
  • Flagstaff, Arizona: $13.00 per hour

Arkansas

  • State-wide: $10.00 per hour

California

  • State-wide: $13.00 per hour (26 or more employees); $12.00 per hour (fewer than 26 employees)
  • Belmont, California: $15.00 per hour
  • Cupertino, California: $15.35 per hour
  • Daly City, California: $13.75 per hour
  • El Cerrito, California: $15.37 per hour
  • Los Altos, California: $15.40 per hour
  • Menlo Park, California: $15.00 per hour
  • Mountain View, California: $16.05 per hour
  • Novato, California: $13.00 per hour (100 or more employees); $13.00 per hour (26 to 99 employees); $12.00 per hour (fewer than 26 employees)
  • Oakland, California: $14.14 per hour
  • Palo Alto, California: $15.40 per hour
  • Petaluma, California: $15.00 per hour (26 or more employees); $14.00 per hour (fewer than 26 employees)
  • Redwood City, California: $15.38 per hour
  • San Diego, California: $13.00 per hour
  • San Jose, California: $15.25 per hour
  • San Mateo, California: $15.38 per hour
  • Santa Clara, California: $15.40 per hour
  • Sonoma, California: $13.50 per hour (26 or more employees); $12.50 (fewer than 26 employees)
  • South San Francisco, California: $15.00 per hour
  • Sunnyvale, California: $16.05 per hour

Colorado

  • State-wide: $12.00 per hour
  • Denver, Colorado: $12.85 per hour

Florida

  • State-wide: $8.56 per hour

Illinois

  • State-wide: $9.25 per hour

Maine

  • State-wide: $12.00 per hour
  • Portland, Maine: $12.00 per hour

Maryland

  • State-wide: $11.00 per hour

Massachusetts

  • State-wide: $12.75 per hour

Michigan

  • State-wide: $9.65 per hour

Minnesota

  • State-wide: $10.00 per hour ($500,000 or more in annual gross revenue); $8.15 per hour (less than $500,000 in annual gross revenue)
  • Paul, Minnesota: $12.50 per hour (more than 10,000 employees)

Missouri

  • State-wide: $9.45 per hour

Montana

  • State-wide: $8.65 per hour

New Jersey

  • State-wide: $11.00 per hour

New Mexico

  • State-wide: $9.00 per hour
  • Albuquerque, New Mexico: $9.35 per hour (no health and/or childcare benefits); $8.35 per hour (if employer provides health and/or childcare benefits)
  • Bernalillo County, New Mexico: $9.20 per hour (no health and/or childcare benefits); $8.20 per hour (if employer provides health and/or childcare benefits)
  • Las Cruces, New Mexico: $10.25 per hour

New York

  • New York City, New York: $15.00 per hour
  • Nassau, Suffolk, and Westchester Counties, New York: $13.00 per hour
  • New York (all other locations): $11.80 per hour

Ohio

  • State-wide: $8.70 per hour

South Dakota

  • State-wide: $9.30 per hour

Vermont

  • State-wide: $10.96 per hour

Washington

  • State-wide: $13.50 per hour
  • Seattle, Washington (more than 500 employees): $16.39 per hour
  • Seattle, Washington (500 or fewer employees): $15.75 or $13.50 (at least $2.25 per hour earned in medical benefits or tips)
  • Tacoma, Washington: $13.50 per hour

**Additional minimum wage rates may apply to specific industries (e.g., hospitality, transportation, fast food) or classes of employees (e.g., tipped employees, minors).

We will continue to provide updates on future increases.

Employers should review their parental leave policies in wake of parental leave class action settlement

With multiple avenues for expanding a family and a plethora of different family models, employers would be wise to re-consider their parental leave policies to suit the needs of the modern family.

In May, a large multi-national corporation settled a class action lawsuit regarding its parental leave policy for $5 million. As written, the employer’s policy gave its employees who were primary care-givers 16 weeks of paid leave, and gave its employees who were non-primary care-givers only 2 weeks of paid leave. According to the lawsuit, the employer had an unwritten policy that made it almost impossible for men to qualify as a primary caregiver unless the birth mother was unable to care for the baby because she was medically incapable or because she was back at work. Such a policy, even if unwritten, could violate federal and state laws that prohibit employers from making employment decisions on the basis of sex. Continue Reading

NLRB invites businesses to provide feedback on when an employee’s offensive comments should lose the protection of federal labor law

The National Labor Relations Board (NLRB or Board) invited interested parties to submit feedback about when an employee’s offensive or inappropriate workplace comments should lose the protection of the National Labor Relations Act (NLRA). Specifically, the NLRB is inviting employers and other parties to submit briefing about whether it should reconsider its standards for determining whether Section 7 of the NLRA protects employees who make “profane outbursts and offensive statements of a racial or sexual nature…during the course of otherwise protected activity.” By way of background, Section 7 of the NLRA gives employees the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” That can include raising work-related disputes or complaints. This right extends to all non-management employees, not just those represented by a union. But what if the employee raising specomplaints uses obscene or otherwise offensive language directed at a supervisor? In some NLRB cases, employee outbursts that have included offensive language have been shielded from punishment by the employer because the language was considered a part of protected speech. Continue Reading

Sixth Circuit: Employer can’t enforce shorter contractual statute of limitations period to bar Title VII action

A federal lawsuit alleging discrimination under Title VII must be filed within ninety days after the EEOC has completed its handling of the related discrimination charge and issued its Notice of Right To Sue. Some employers attempt to shorten the time for filing discrimination charges by getting employee or applicants to sign agreements to that effect. On Sept. 25, 2019, in Logan v. MGM Grand Detroit Casino, the 6th Circuit Court of Appeals ruled that efforts to shorten the statute of limitations for Title VII cases are not enforceable.

The Circuit Court overturned a district court decision that found that Barbrie Logan’s sex discrimination lawsuit could not proceed because it was barred by a six-month statute of limitations to which she agreed when she applied for employment with MGM. In overturning the lower court’s decision, the 6th Circuit stated,

“The limitation period of Title VII is part of an elaborate pre-suit process that must be followed before any litigation may commence. Contractual alteration of this process abrogates substantive rights and contravenes Congress’s uniform nationwide legal regime for Title VII lawsuits.”

Two hundred and sixteen days after resigning her employment with MGM on Dec. 4, 2014, Ms. Logan filed an EEOC charge alleging that she was constructively discharged due to sex discrimination in violation of Title VII. The EEOC issued a right to sue notice in November 2015 and she filed suit in federal district court on Feb. 17, 2016—440 days after resigning. MGM filed a motion for summary judgment, arguing that both the EEOC charge and her subsequent federal lawsuit were barred by the contractual 6 month statute of limitations. A magistrate judge of the district court agreed and issued a report recommending that summary judgment be entered in MGM’s favor. The district judge adopted the magistrate’s recommendation and entered judgment for MGM.

After a detailed discussion of the Title VII charge process and enforcement scheme, the 6th Circuit reversed. Noting that “[i]n crafting Title VII, Congress chose ‘[c]ooperation and voluntary compliance…as the preferred means’ for eradicating workplace discrimination,” the court stated that

“[a]ny alterations to the statutory limitation period necessarily risk upsetting this delicate balance, removing the incentive of employers to cooperate with the EEOC, and encouraging litigation that gives short shrift to pre-suit investigation and potential resolution of disputes through the EEOC and analog state and local agencies.”

In this way, according to the court, Title VII claims are distinguishable from claims of discrimination brought under 42 U.S.C. Section 1981 and claims brought pursuant to ERISA (regarding which the 6th Circuit previously has endorsed shorter contractual statutes of limitations.)

How does this affect those in Ohio?

In Ohio, employees challenging an adverse employment decision as having been based on their protected status under Ohio Chapter 4112 (similar in most respects to the protected statuses found in Title VII) have the option to file a lawsuit directly in the court of common pleas rather than a charge with the Ohio Civil Rights Commission. Therefore, when an employee chooses to forego the charge filing process with the OCRC to enforce his or her rights, Ohio employers should argue for enforcement of a shorter contractual statute of limitations because the Logan court’s analysis would no longer be applicable. As we previously reported, federal courts in Ohio already have upheld employers’ rights to enforce contractual statutes of limitations in employment actions that did not raise claims under Title VII.

DOL increases salary threshold for white collar exemptions to $35,568

After more than 15 years, the U.S. Department of Labor (DOL) is updating the overtime regulations under the Fair Labor Standards Act (FLSA). The FLSA entitles most employees to minimum wage and overtime pay for all hours worked over 40 in a workweek. However, employees who meet the salary threshold and the relevant duties test qualify for the executive, administrative, professional exemption (white collar exemption), and are not entitled to overtime pay. On Sept.24, 2019, the DOL issued a news release announcing its final rule regarding overtime regulations.

Effective Jan. 1, 2020, the new salary threshold for white collar exemptions will increase to $684 per week, which is the equivalent of $35,568 per year for a full-time employee. Currently, the salary level is set at $455 per week ($23,660 annually for a full-time employee).

In addition to the increased salary threshold, the final rule:

  • Raises the annual compensation level for “highly compensated employees” to $107,432 per year, up from the currently-enforced $100,000 amount
  • Allows employers to include nondiscretionary bonuses and incentive pay (including commissions) paid at least annually to account for up to 10 percent of the salary threshold
  • Revises the special salary levels for employees in U.S. territories and the motion picture industry

According to the DOL, these changes will mean 1.3 million additional American workers are eligible for overtime pay under the FLSA. The DOL notes that the “increases to the salary thresholds are long overdue in light of wage and salary growth since 2004.”

A previous rule issued under the Obama Administration in 2016 was blocked by a federal judge before the rule could go into effect. The 2016 rule was more expansive than the 2019 final rule announced on Sept. 24, 2019.

Takeaways

For full-time employees with salaries below $35,568, employers will need to consider whether to implement salary increases to ensure the salary threshold for white collar exemptions is met or to convert those employees to non-exempt status. Conversion would require those employees to track their hours and make them eligible for overtime pay. This is also a good time for employers to review job descriptions to ensure they accurately reflect the work performed and to ensure those duties still qualify under one of the white collar exemptions for exempt employees.

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