Federal Overtime Rule Blocked!

By Elizabeth A. Coonan and Ann Holden Kendell

Late yesterday, a federal court in Texas issued a nationwide injunction blocking the Department of Labor’s new overtime rule. This rule aimed to raise the Fair Labor Standards Act’s (FLSA’s) salary threshold for the white collar exemptions from overtime pay from $23,660 to $47,476 per year. 

This means that if you were contemplating re-classifying your employees due to a salary shortfall, you don't need to do that....yet.  We expect that the matter will be appealed but in the meantime, employers should follow the existing rule. 

Click here for a copy of the court’s Order.

Click here for a summary description of the existing rule.

Should you have any questions about the Order or its impact on your business, please contact Elizabeth A. Coonan, Ann Holden Kendell or the Brown Winick attorney with whom you work.

IRS Extends Due Date for 2016 ACA Employer Forms

By Cynthia Boyle Lande

On November 18, 2016, the IRS issued Notice 2016-70, which extends the due date for certain forms required to be provided to employees of applicable large employers (or ALEs) under the Affordable Care Act. Under Notice 2016-70, the deadline for distributing the Form 1095-C to full-time employees was extended from January 31, 2017 to March 2, 2017. Notably, the deadline for filing the Form 1094-C and 1095-Cs with the IRS was not extended. The IRS filings must still be completed by February 28, 2017 if filed by paper, or March 31, 2017 if filed electronically.

Notice 2016-70 also extends two other pieces of transition relief that applied during the 2015 filing season. First, individuals who do not receive a Form 1095-C in time to file their individual return may rely on other information received from their employer for purposes of reporting health insurance offered by their employer. Additionally, Notice 2016-70 extends the good-faith transition relief afforded to 2015 filings under the final ACA regulations. Employers who can show that they have made a good-faith attempt to comply with the ACA information reporting requirements will not owe a penalty for incorrect or incomplete information reported on their return or statement. This good-faith relief does not apply to employers who fail to file or furnish a statement by the applicable due date.

If you have any questions about your reporting or other obligations under the Affordable Care Act, you should contact your BrownWinickemployee benefits attorney.

USCIS Publishes Revised Version of Form I-9, Employment Eligibility Verification

By Elizabeth A. Coonan

USCIS has published a revised version of Form I-9, Employment Eligibility Verification. Beginning 1/22/17, employers must use the new version. The new form bears the date 11/14/16.  Employers may continue to use the prior version until 1/21/2017 (dated 3/8/2013) or may adopt the new version immediately.

Changes to the fillable form include drop-down lists, on-screen instructions for each field (similar to other USCIS forms) and when the employer prints the completed form, a QR code is automatically generated. Substantively, the changes are subtle. For example, the new form asks for “other last names used” rather than “other names used,” includes space to enter multiple preparers and translators and includes prompts to ensure information is entered correctly.

If you have questions about the new form, please contact me or the BrownWinick Employment Attorney with whom you work.

I-9 Form Update

By Elizabeth A. Coonan

USCIS has indicated that employers may continue to use the Form I-9 dated March 8, 2013, through January 21, 2017. After January 22, 2017, employers must use the revised form. Please contact Elizabeth Coonan at coonan@brownwinick.com or 515-242-2408.

AARP Sues EEOC Over Final Wellness Program Rules

By Cynthia Boyle Lande

On October 24, 2016, AARP sued the EEOC regarding the final wellness program regulations issued by the EEOC earlier this year. While the final wellness program regulations have received criticism, this is the first major lawsuit filed against them. AARP claims that the final regulations violate laws aimed at protecting the privacy of employee medical information. AARP is seeking a preliminary injunction to stop implementation of the final wellness program regulations, which are set to take effect in 2017.

Under federal law, employers generally cannot require their employees to share medical information. Motivated in part by new HIPAA rules under the Affordable Care Act, many employers have started offering health assessments and other wellness programs that involve the sharing of employee medical information. The final wellness program regulations allow these types of programs so long as they are voluntary and meet certain other requirements. If the incentive under a wellness program is significant enough, it may be deemed essentially a requirement to share medical information. Under the final wellness program regulations issued by the EEOC, if the incentives under a voluntary wellness program do not exceed 30% of the cost of health insurance coverage, the program will not be deemed to require employees to share medical information.

We will continue monitoring this lawsuit and provide updates when they are available. If you have any questions about your wellness program, we would encourage you to contact any member of the BrownWinick employmentpractice group. 

STUDENTS UNITE!

By Ann Holden Kendell

Yesterday, the National Labor Relations Board issued a decision in Columbia University (Case 02–RC–143012), in which it determined that student assistants working at private colleges and universities are statutory employees covered by the National Labor Relations Act.  https://www.nlrb.gov/case/02-RC-143012

The Board has bounced back and forth on this issue since 2000:

• New York University, 332 NLRB 1205 (2000) = first time certain university graduate assistants were held to be employees under the statutory definition and common law principles of the master-servant relationship. 332 NLRB 1205
   
• Brown University, 342 NLRB 483 (2004) = overruled New York University and held that graduate assistants cannot be statutory employees because they “are primarily students and have a primarily educational, not economic, relationship with their university.”  342 NLRB 483

• Columbia University, Case 02–RC–143012 (2016) = overruled Brown University

In overruling Brown University yesterday, the Board stated bluntly, “We revisit the Brown University decision not only because, in our view, the Board erred as to a matter of statutory interpretation, but also because of the nature and consequences of that error.”  The Board noted that statutory coverage is “permitted by virtue of an employment relationship; it is not foreclosed by the existence of some other, additional relationship that the Act does not reach.”  As such, because the student assistants perform work at the direction of the university for which they are compensated, the Board has the authority to treat them as statutory employees under Section 2(3) of the National Labor Relations Act.  Simply put, the fact that these people also have an educational relationship with the university does not negate the employment relationship with the university.

Companies Must Update Policies, Agreements To Receive Benefits Under New Federal Trade Secrets Act

By Bryan Ingram

Trade secrets are common in virtually every industry and range from complex technical designs to simple business processes.[1] Prior to the enactment of the Defend Trade Secrets Act (“DTSA”)[2], if an employee illegally took a valuable design or process to a competitor, the company could only seek recovery under state law.[3] However, on May 11, 2016, The DTSA created a federal private right of action and expanded the benefits for victims of misappropriated trade secrets.

The DTSA automatically creates a federal private right of action if a company’s misappropriated trade secret is “related to a product or service used in, or intended for use in, interstate or foreign commerce.”[4] The remedies available under the DTSA include injunctive relief, damages, and attorney’s fees.[5] The DTSA also includes a three-year statute of limitations.[6] While the DTSA creates a new federal pathway to protect trade secrets, it does not preempt existing state law.[7] Consequently, companies now have more jurisdictional options when pursuing trade-secret litigation.

The DTSA also creates a mechanism to recover stolen trade secrets in “extraordinary circumstances.”[8] According to the DTSA, a court may “issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.”[9] The court may issue a seizure order only if specific requirements are met, including: (1) another order or form of equitable relief is inadequate; (2) immediate and irreparable injury exists; (3) the harm to the applicant outweighs the harm of the person against whom seizure would be ordered or a third party; (4) there is a likelihood of success in showing that the information is a trade secret and the person misappropriated the trade secret; (5) the person has actual possession of the trade secret/property; (6) the application describes with particularity the location and item to be seized; (7) the trade secret would be destroyed “if the applicant were to proceed on notice to such person”; and (8) “the applicant has not publicized the requested seizure.”[10] A seizure order must also meet strict statutory requirements.[11] While the DTSA’s stringent requirements make it difficult to pursue a court-ordered seizure of a trade secret, companies now have the ability to recover trade secrets in extraordinary circumstances.

The DTSA offers many financial advantages to companies, including access to exemplary damages (awards of up to twice the amount of damages) and attorney’s fees for the willful and malicious misappropriation of trade secrets.[12] Attorney’s fees are also available if a motion to terminate an injunction is made in bad faith.[13] However, these provisions are not automatic. In order to qualify for exemplary damages and attorney’s fees, the DTSA’s compliance provision requires companies to give notice of the whistleblower protection available under the DTSA.[14]

The broad language of the DTSA means that most agreements and policies require attention. Any Non-Disclosure Agreement, Employee Handbook, Employee Contract, or other agreement “govern[ing] the use of a trade secret or other confidential information” created or executed after May 11, 2016, should be reviewed and updated.[15] Thus, if an employee operating under a contract signed after May 11, 2016, quits and takes valuable trade secrets to a competitor, the employer cannot recover exemplary damages and fees, unless the contract was updated with the appropriate notice requirement. By proactively updating agreements now, companies can save millions in future trade-secret litigation. Failure to act may prohibit litigants from seeking exemplary damages and attorney’s fees in misappropriation suits under the DTSA. Provided the relevant agreements comply with the statutory requirements, the DTSA is a win for virtually all companies and industries. 

Should you have questions about the DTSA and its impact on your business, please contact me or your BrownWinick attorney.

---

[1] 18 U.S.C. § 1839 (3).

[2] 18 U.S.C. §§ 1831–1839.

[3] Under Iowa law, the Uniform Trade Secrets Act protects the misappropriation of trade secrets. Iowa Code § 550 (2015).

[4] § 1836 (b)(1).

[5] Id. at (b)(3).

[6] Id. at (d)

[7] § 1838.

[8] § 1836 (b)(2)(A)(i).

[9] Id.

[10] Id. at (ii)(I)–(VIII).

[11] Id. at (b)(2)(B).

[12] § 1836 (b)(3).

[13] Id.

[14] § 1833 (b)(3)(c).

[15] Id. at (b)(3). 

DOL's Time-Limited Non-Enforcement Policy of New Salary Level for Certain Medicaid-Funded Providers

By Megan Erickson Moritz

The new overtime regulations were officially published on May 23, which among other things, more than doubles the salary level requirement for exemption under the Executive, Administrative, and Professional (so-called “white collar”) exemptions under the FLSA.  At the same time the final rule was published, the agency also published in the Federal Register a “time-limited non-enforcement policy for providers of Medicaid-funded services for individuals with intellectual or developmental disabilities in residential homes and facilities with 15 or fewer beds.” The regs are effective Dec 1, 2016; however, the agency has announced that for this limited category of employers, it will not enforce the new salary level until March 27, 2019.  This means the current salary level of $455 per week will continue to apply to employees working in these small residential homes and facilities with 15 or fewer beds and providing Medicaid-funded services to people with certain disabilities.

While this is welcomed news to this subset of organizations, do keep in mind the effective date of the new Final Rule remains December 1, 2016.  Although this policy announcement means the DOL will not take agency action to enforce the new salary level for this segment of employers, the agency’s non-enforcement policy does not protect these employers from private lawsuits by employees.  Additionally, these employers should keep in mind this limited non-enforcement policy only applies to the new salary requirement, and not to other FLSA compliance issues (such as the duties test requirements for the exemptions).  

Employers who have questions about the application of this policy, would like help evaluating their policies and practices, or are interested in a customized wage and hour Audit or assistance with reclassifying employees, may contact Megan Moritz or another member of our Employment & Labor Law Practice Group for more information.

EEOC Increases Civil Penalty for Posting Violation

By Elizabeth Coonan

The U.S. Equal Employment Opportunity Commission issued a Final Rule increasing the maximum penalty for violation of posting requirements relating to Title VII and other employment-related laws. The agency cited inflation as the reason for increasing the maximum penalty from $210 to $525. Penalties will still be assessed on a per-violation basis. The final rule is effective 30 days after publication in the Federal Register. Employers should use this as an opportunity to check all postings for compliance. If you have questions, please contact a member of the BrownWinick Employment Law Practice Group.

NLRB General Counsel’s Policy Initiatives Non-Unionized Employers Should Be Very Concerned

By BrownWinick Employment Law Practice Group

On March 22, 2016, the National Labor Relations Board (NLRB) General Counsel, Richard Griffin, issued Memorandum GC 16-01. The memorandum instructs NLRB regions to submit cases and issues, which are listed in the memorandum as special concern or interest to the General Counsel, to the Board’s Division of Advice so the General Counsel’s office can provide centralized consideration before taking action.

The memorandum sets forth a laundry list of subjects that the General Counsel considers the NLRB’s priorities through 2016.

For non-unionized employers the list includes several initiatives in which the General Counsel is seeking to change and expand Board law.

Weingarten Rights in Non-Unionized Settings.

Since the Supreme Court first extended the right to representation to union employees in National Labor Relations Board v. J. Weingarten, Inc., 420 U.S. 251 (1975), the NLRB has changed its position four times as to whether so-called "Weingarten rights" extend to non-union employees. In the most recent decision addressing whether "Weingarten rights" extend to non-union employees, the Board ruled that non-union employees do not have the right to have a co-worker present during an investigatory interview that might lead to discipline. See, IBM Corp., 341 NLRB 1288 (2004).

The General Counsel has announced that the NLRB is looking for cases where employees in non-unionized settings are denied their request to have coworker representatives present in workplace investigatory meetings that might lead to discipline.

Assuming the NLRB is able to find the right case, it is likely the Board will reverse IBM Corp. and extend representation rights to non-union employees – returning to the Board's prior position in Epilepsy Foundation of Northeast Ohio, 331 NLRB 676 (2000) and Materials Research Corp., 262 NLRB 1010 (1982), where the Board first extended “Weingarten rights” to employees in a non-union workforce.

  

Expand Access to Employer's Electronic Communications Systems

The General Counsel is looking for cases to expand the Board's decision in Purple Communications, Inc., 361 NLRB 126 (2014), to allow employees access to electronic systems beyond the employer’s email systems for activities covered by Section 7 of the National Labor Relations Act, which includes both the right to organize and the right to engage in protected concerted activities (e.g. group discussions about employee terms and conditions of employment).  

In Purple Communications, Inc., 361 NLRB 126 (2014), the National Labor Relations Board overturned established precedent (Register Guard, 351 NLRB 1110 (2007)) that employees have no statutory right to use employer email systems for activities covered by Section 7 of the NLRA. In Purple Communications, the Board held that absent a showing by the employer of special circumstance that justify specific restrictions “we will presume that employees who have rightful access to their employer’s email system in the course of their work have a right to use the email system to engage in Section 7-protected communications on nonworking time.”

The Board’s decision in Purple Communications applies only to employer provided email systems. However, the Board did indicate that other employer-provided electronic communication systems (i.e. instant messaging or texting systems, or employer social media accounts), “may ultimately be subject to a similar analysis.”  The Board also left open the question as to whether it would consider overturning precedents limiting employee use of employer phone systems for Section 7 purposes. 

Once again, assuming the General Counsel can find the right case, the Board is likely to expand the Purple Communication decision to a broader group of employer provided electronic communication systems.

Misclassification of Employees as Independent Contractors

The National Labor Relations Act excludes independent contractors from its coverage. Notwithstanding, the General Counsel is looking for cases in which the Board may argue that misclassification of employees as independent contractors would violate Section 8(a)(1) of the National Labor Relations Act.

Consistent with the General Counsel’s stated priorities, on April 18, 2016, the NLRB Regional Director in Los Angeles issued an unfair labor practice complaint against Intermodal Bridge Transport alleging that the company “has misclassified its employee-drivers as independent contractors, thereby inhibiting them from engaging in Section 7 activity and depriving them of the protections of the Act.” The complaint further states “By the conduct described above … Respondent has been interfering with, restraining, and coercing employees in the exercise of the rights guaranteed in Section 7 of the Act.”

In addition to the misclassification allegations, the regional director's complaint asserts that Intermodal’s managers improperly made threats of job loss if employees supported union activities, interrogated employees about their union support, and promised more work if they refrained from supporting a union.

Based upon the General Counsel’s stated priorities, it appears the NLRB is taking the position that misclassification of workers as an independent contractor in and of itself constitutes a violation of the National Labor Relations Act.

A hearing on the complaint is scheduled for June 13, 2016. Intermodal Bridge Transport v. International Brotherhood of Teamsters, Case No. 21-CA-157647.

English-Only policies

The General Counsel is also looking for cases to assert that employer English-only policies violate Section 8(a)(1) of the National Labor Relations Act.

Consistent with the General Counsel’s stated priorities, an Administrative Law Judge in Valley Health Systems, LLC, Case Nos. 127147 (2015) ruled, in a case of first impression, that a healthcare providers “English- only” rule violated employees’ rights under Section 7 of the National Labor Relations Act to engage in protected “concerted activities,” which includes the ability to discuss and communicate about wages, hours, and other terms and conditions of employment (in their native language).

The hospital’s rule required all employees to speak and communicate only in English “when conducting business with each other,” “when patients or customers are present or in close proximity,” and “while on duty between staff, patients, visitors [and/or] customers . . . unless interpretation or translation is requested or required.”  The policy, however, did permit “[e]mployees who speak languages other than English [to] speak to each other in their language on their own time, i.e., before and after their designated work schedule and on breaks and lunch.”

The General Counsel’s complaint asserted that hospital’s rule was so overbroad, that it inhibited employees, particularly non-native English speaking employees, from being able to freely communicate (in their native language) about working conditions and/or other terms and conditions of employment.

In response, the employer argued that its rule was compliant with the EEOC’s guidelines regarding “English-only” rule since its purpose was to maintain hospital efficiency and minimize disruption in patient care by employees speaking in languages other than English.

The Equal Employment Opportunity Commission (EEOC) Compliance Manual, Section 13 on National Origin Discrimination permits “English-only” rules provided that the rule is not overly broad and is justified by a “business necessity.” According to the EEOC guidelines, the following justify business necessity:

• In communications with customers, co-workers, or supervisors who only speak English;
• In emergencies or other situations in which workers must speak a common language to promote safety;
• For cooperative work assignments in which the English-only rule is needed to promote efficiency; and
• To enable a supervisor who only speaks English to monitor the performance of an employee whose job duties require communication with coworkers or customers.

The Administrative Law Judge rejected the employer’s argument, and found the rule was not justified by business necessity.

Relying upon Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), the Administrative Law Judge found that employees would reasonably construe the hospital’s “English-only” rule to restrict them from engaging in protected concerted activity. More specifically, the Administrative Law Judge found the hospital’s rule was akin to rules that infringe upon an employee’s right to engage in “negative speech” and “negative conversations;” that the rule was vague as to time and location (i.e., must use English in patient and non-patient areas, in patient access areas, and between employees, staff, customers, patients and visitors), and that it infringed on an employee’s ability to freely discuss and communicate about work conditions, wages and other terms and conditions of employment (in their native language).

The Administrative Law Judge also failed to see how patient care would be disrupted by the hospital restricting employees to speaking only English in non-patient care areas and even between employees, staff, visitors, and customers, particularly if a non-native English-speaking employee desires to converse with another non-native English speaking employee about their respective working conditions.

On May 5, 2016, the Board affirmed the Administrative Law Judge’s ruling regarding the hospital’s “English-only” rule.  Valley Health System, LLC d/b/a Spring Valley Hosp. Med. Ctr., 363 NLRB No. 178 (May 5, 2016). On May 24, 2016, the employer filed a Petition for Review of the Board’s Order with the Ninth Circuit Court of Appeals.

Take Aways

• Employers need to remember that the NLRA applies to both union and non-union companies.
• Employers should be aware of and monitor developments of the NLRB General Counsel’s stated policy priorities.
• Employers should continually review their Employee handbooks to ensure their policies are not over-broad and infringe on employee rights protected by the National Labor Relations Act.

Should you have any questions about the National Labor Relations Act and protected concerted activity or Employee handbooks, contact your own legal counsel or any of our Employment& Labor Law Practice Group members.

How the DOL's Final Rule on White Collar Exemptions Compares To Its Original Proposal

By Megan Erickson Moritz

As we posted on Wednesday, we finally know details of the Department of Labor’s long-awaited Final Rule updating the executive, administrative, professional, and outside sales exemptions – i.e., the so-called “white collar” exemptions. 

Although the Office of Management and Budget has approved the DOL’s Final Rule, it has not been officially published in the Federal Register, which publication is scheduled for May 23, 2016. In the meantime, the substance of the OMB-approved Final Rule is available online. This post responds to some questions we have received about how the Final Rule compares to the agency's original proposal. 

To recap, the DOL issued its Notice of Proposed Rulemaking (“NPRM”) in July of 2015, which outlined its original proposal for the changes to these regulations. The agency then accepted public comment on its proposal through September 4, 2015. At that time, BrownWinick submitted an extensive public comment outlining a number of concerns with the DOL’s proposed changes.  Not surprisingly, the Agency did not agree with our detailed critiques of its proposal; nevertheless, of the nearly 300,000 public comments received by the DOL, the submission by BrownWinick on behalf of the Iowa Association of Business and Industry was cited multiple times in the DOL's Final Rule. Despite expressed opposition from many, the DOL went forward with much of its original proposal. A few important changes between the DOL's NPRM and its Final Rule, however, did result from the collective efforts of the public commenters:

Salary Level. 

1. Current regulations set the salary level at $455 a week ($26,600/year), which was established to exclude the lowest 20th percentile of the country’s lowest-wage region and lowest-wage industry.
2. The NPRM proposed raising the threshold to $970 a week ($50,440/year), which was the 40th percentile of full-time non-hourly workers on a national basis – without regard to regional differences.
3. The Final Rule keeps the 40th percentile measure proposed in the NPRM, but looks to the 40th percentile of full-time salaried workers in the lowest-wage Census Region (currently, the South), which results in a salary level of $913 a week ($47,476/year).

Highly Compensated Employee Compensation Level.

1. Current regulations establish a salary level for the HCE exemption at $100,000 annually.
2. The NPRM proposed a new level of $122,148, based on the 90th percentile of full-time non-hourly workers nationally.
3. The Final Rule uses the same 90th percentile of full-time non-hourly workers on a national basis as was proposed in the NPRM, which number has since gone up to $134,404 annually.

Automatic Adjustments.

1. Current regulations do not require periodic or automatic adjustments to the salary level.
2. The NPRM proposed incorporating a mechanism to re-calculate a new salary level annually, based either on a fixed percentile of BLS earnings data or using the CPI.
3. The Final Rule does require regular, periodic updates to maintain the salary level at the 40th percentile of full-time salaried workers in the lowest-wage Census region (and HCE comp at the 90th percentile nationally), but calls for updates every three years rather than annually.

Bonuses.

1. Current Regulations do not allow any portion of nondiscretionary bonuses or commissions to count toward the salary level requirement.
2. The NPRM indicated it would consider whether it might allow some portion of bonuses to count toward the requirement, but did not give specific proposed language.
3. The Final Rule allows up to 10% of certain non-discretionary bonuses, incentive payments, and commissions (so long as they are paid at least quarterly) to count toward the required salary level.

Duties Tests. 

1. Current regulations impose a “duties” test in addition to the salary level and salary basis requirements for each exemption.
2. The NPRM suggested the agency was considering revisions that might significantly change the duties tests.  Although the NPRM said “[t]he Department is also considering revisions to the duties tests in order to ensure that they fully reflect the purpose of the exemption,” the DOL proposed no specific regulatory language and offered few details regarding the changes being contemplated.
3. The Final Rule makes no changes to the standard duties tests.  

Effective Date. Of course, at the time of the NPRM, it was unclear exactly when the Final Rule would be released, or how much time would be given between its publication and its effective date.  We know now the effective date of the Final Rule is December 1, 2016.  The automatic updates to the salary thresholds will occur every three years, beginning on January 1, 2020.

We will continue to monitor and provide updates on these important developments. In the meantime, contact Megan Erickson Moritz or any of our Employment & Labor Law Practice Group members for more information about the impact of these changes on your business. 

Breaking News: DOL Releases Final Rule Expanding Overtime Pay

By Elizabeth A. Coonan

Despite vocal opposition from the business community, the Department of Labor has released a final rule providing for substantial changes to the overtime exemption provisions of the Fair Labor Standards Act (FLSA). The final rule, effective December 1, 2016, will:

• Double the salary threshold from $455/week ($23,660 per year) to $913/week ($47,476 per year);
• Automatically increase the salary threshold every three years; and
• Increases the Highly Compensated Employee Exemption to $134,004.

The final rule does not make any changes to the duties test for executive, administrative and professional exemptions.

We will continue to update you regarding the far-reaching implications of this significant development. In the meantime, contact Beth Coonan or or any of our Employment & Labor Law Practice Group Members for more information about the impact of these sweeping changes on your business.

Equal Pay Day: Tips for Avoiding Pay Discrimination

By Megan Erickson Moritz

In honor of Equal Pay Day, here are five tips employers should follow to avoid pay discrimination in the workplace.

1. Establish and enforce anti-discrimination and anti-retaliation policies, and consider including specific prohibitions against pay discrimination and against retaliation against employees who raise potential wage complaints.  No employment decisions, including decisions about wages, should be based on sex, gender, or other legally protected classes. Ensure employees have an internal reporting mechanism with multiple points of contact (so an employee is not required to follow a specific chain of command to voice concerns).
2. Audit pay practices.  Review wages, bonuses, and other forms of compensation, as well as processes and practices used to determine starting wages, wage increases, advancement opportunities. Consider establishing objective guidelines to help decision makers navigate these decisions with consistency and fairness.  Look for disparities in pay among various groups.
3. Maintain documentation about pay and other employment decisions.  Ensure documentation shows decisions are made on legitimate, non-discriminatory bases.  Employers should also establish document retention policies and practices to ensure preservation of all wage records consistent with all wage and hour laws.
4. Don’t prohibit employees from discussing their wages or other terms and conditions of employment. The National Labor Relations Act protects non-supervisory employees’ right to discuss wages and other working conditions. (Some states also protect these discussions.)
5. Train decision-makers.  Supervisors and other decision-makers should be trained on EEO procedures, how to identify and avoid unlawful discrimination in pay (and other) decisions, proper evaluation and advancement procedures, and so forth. 

The EEOC is increasing enforcement efforts with respect to potential wage discrimination, and is revising its EEO-1 Form to include collection of pay data from employers (presumably to help the agency identify and address wage discrimination). Employers who would like help evaluating their policies and practices, or interested in a customized HR Audit, may contact Megan or any of our Employment & Labor Law Practice Group Members for more information.

New Overtime Rules One Step Closer to Final Publication

By Megan Erickson Moritz

The U.S. Department of Labor's changes to the white collar exemption regulations have moved closer to publication. Earlier this week, the DOL sent the final rule to the White House Office of Management and Budget. This means the final rule could be published and publicly available sooner than many were expecting.  Although we still don't have precise timing, this most recent development suggests the final rule could be approved as early as April -- but more likely by May of 2016. The Rule is likely to go into effect 60 days after it's published.

The DOL has flip-flopped about about expected timing.  Last fall, the Wall Street Journal reported that the Solicitor of Labor said the final rule wasn't expected until late 2016. Others surmised the final rule should be expected in July of 2016. It seems, however, the agency is likely eager to push the rule forward as soon as possible to avoid a challenge under the Congressional Review Act.  

Should We Fire Him for That Post?

The March edition of the Harvard Business Review ("HBR") features expert commentary by BrownWinick employment law attorney, Megan Erickson Moritz, in response to the magazine's monthly Case Study.

HBR's fictional Case Studies pose challenges faced by real business leaders, with solutions and analysis from experts in response - usually featuring two different viewpoints.

HBR invited Moritz to provide her response to the March 2016 Case Study: Should We Fire Him for That Post? This Case Study features a small business owner's reaction to an employee's questionable Facebook remarks. Moritz was one of two industry experts providing featured commentary.  

The print edition of the HBR is available on newsstands now, and the Case Study and Commentary is available online here. Clients who would like a complimentary copy of the HBR Case Study and Moritz's Commentary are welcome to e-mail BrownWinick's Marketing Coordinator, Debi Bull to request a copy. Megan may be contacted at moritz@brownwinick.com.

The Third Circuit Clarifies What Constitutes Individual “Concerted Activity” and Reminds the NLRB of the Appropriate Test for Determining Whether an Alleged Discriminatory Discharge was Lawful

By BrownWinick Employment Law Practice Group

In MCPc Inc. v. NLRB, 2016, --- F.3d ---, Case Nos. 14-1379 and 14-1731 (3d Cir. Feb. 12, 2016), the United States Court of Appeals for the Third Circuit affirmed the Board’s determination that an individual employee engaged in protected concerted activity when he complained about shared work conditions to a member of  management, in the presence of other employees during a “team building” lunch; but remanded the case for further proceedings because the Board failed to apply the correct legal test (Wright Line) for determining whether the employee was discharged for that protected activity or whether he was discharged for his alleged misconduct, irrespective of any protected activity. The Court also found that the company violated the NLRA by maintaining an "overly broad" confidentiality policy.

Background

The case arose when a senior solutions architect (employee) of MCPc (Employer) complained to management in a “team building” lunch about his and fellow employees workloads, as well as the need need to hire more staff.  The employee further expressed how the salary ($400,000) paid to a recently hired executive could have been used to mitigate their workloads.  After the employee raised those concerns, his coworkers joined the discussion and expressed agreement.

A week later, the Employer questioned the employee about how he had obtained the confidential salary information he mentioned at the lunch. The employee’s responses were inconsistent and not candid. The Employer terminated the employee for improperly accessing and disclosing confidential salary information and dishonesty.

Following his discharged, the employee filed a complaint with the NLRB. The general counsel argued that the employee’s complaints about work load and executive pay (workplace conditions) were protected concerted activity.

The Board found that MCPc, Inc. violated the Act for discharging the employee based on his complaints about workplace conditions. In finding his discharge unlawful, the Board rejected the Employer’s claim that it discharged him for improperly accessing an executive’s confidential salary information from the company personnel system and disclosing it during the group meeting, because the alleged misconduct did not, in fact, occur.  The Board did not comment on the additional claim that the Employer discharged him for lying when MCPc questioned how he obtained the information.

MCPc, Inc. appealed the decision and order of the NLRB holding that MCPc violated the Act by discharging an employee for concerted activity, and the Board cross-appealed for enforcement of its order.

Decision

Concerted Activity - Upon review, the Third Circuit held the employee had engaged in concerted activity and not mere griping. The Court found that the employee engaged in protected, concerted activity “when he communicated his dissatisfaction about shared working conditions . . . during the ‘team building’ lunch that provided a group forum within which [he] could relay to management complaints shared by other employees about workplace conditions they wished to see improved.” The Court stated that it was not necessary for the employee to have organized with employees before or after the lunch at which he voiced his complaints. The Court stated that “the touchstone for an individual’s concerted activity . . . remains whether the employee intends to induce group activity or whether the employee’s action bears some relation to group action in the interest of the employees.” 

Wright Line - The Court found the employee’s misconduct did not take place during his protected discussion with management. As such, the Burnap & Sims test used by the Board and ALJ did not apply. The Burnap & Sims test applies to misconduct “arising out of” protected activity and misconduct occurring “in the course of” protected activity. See NLRB v. Burnap & Sims, 379 U.S. 21 (1964).  The court held that the "mixed motive" or "dual motive" discharge test of Wright Line, 251 N.L.R.B. 1083 (1980) is the appropriate test for determining whether an employee is discharged for engaging in protected concerted activity unrelated to his/her protected activity. The court further noted that, while the Board may have meant to invoke Wright Line as the appropriate test, it did not note the applicability of Wright Line or apply it in the case. Accordingly the Court remanded the case to the Board for application of the correct test.

Under Wright Line, the General Counsel must demonstrate that protected activity was a “motivating factor” in an employer’s challenged action. Molon Motor & Coil Corp. v. NLRB, 965 F.2d 523 (7th Cir. 1992); Wright Line, 251 NLRB at 1089 (1980). To carry this burden, the General Counsel must demonstrate that the employee was engaged in protected activity, the employer had knowledge of that activity, and the employer bore animus toward that activity. Once the General Counsel establishes a prima facie case, the burden then shifts to the employer to show by a preponderance of the evidence that it would have taken the same action even absent the prohibited motivation. If unable to make this showing, the employer is in violation of Section 8(a)(1). Wright Line, 251 NLRB at 1089.

Confidentiality Policy - The Court found that the company violated the NLRA by maintaining an "overly broad" confidentiality policy. MCPc's confidentiality policy stated that "dissemination of confidential information within, such as personal or financial information, etc., will subject the responsible employee to disciplinary action or possible termination." 

Take Away

1. The activity of a lone employee can constitute “concerted activity” where the individual employees seek to initiate or to induce or to prepare for group action;" and where the "individual employee truly brings group complaints to the attention of management."
2. The "dual motive" discharge test established in Wright Line is the appropriate test where an employer argues that it discharged an employee for reasons unrelated to his/her protected activity.
3. Employers should continually review their Employee handbooks to ensure their policies are not over-broad and infringe on employee rights protected by the NLRA.

Should you have any questions about the NLRA and protected concerted activity or Employee handbooks, contact your own legal counsel or any of our Employment & Labor Law Practice Group members.