Have 100 or More Employees? You Need a Pay-Equity Audit STAT!

By Amanda Jansen

The EEOC announced today its plan to revise the EEO-1 report to collect data on pay ranges and hours worked, in order “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”  If the Office of Management and Budget approves the new EEO-1, employers will have to start providing the pay/hours data in the 2017 EEO-1 collection cycle.  You can review the proposed form, as well as a Questions and Answers document and a Fact Sheet on the EEOC’s website. 

In the meantime, employers would be wise to get ahead of the game and start conducting a pay-equity self-audit.  (Better to have the house in order before the EEOC comes knocking!)  Contact a member of BrownWinick’s Employment Practice Group for assistance.

Whose Employees Are They Anyway? DOL Issues Guidance on Joint-Employer Liability

By Amanda Jansen

On January 20, 2016, the Wage & Hour Division of the Department of Labor issued an Administrator’s Interpretation providing a roadmap to liability in “situations where more than one business is involved in the work being performed.”  A very common example of this is construction projects where work is being performed by laborers and tradesmen, and various businesses are “involved”—i.e., a general contractor and various subcontractors.  Even though all parties in such a situation probably consider the laborers to be employees of their respective subcontractors (and therefore, the subcontractors’ responsibility with respect to proper payment of overtime), the DOL now says it’s not so simple.

Instead, in considering which company is (or which companies are) responsible for paying workers overtime, we are supposed to “determine whether, as a matter of economic reality, the employee is economically dependent on the potential joint employer.”  How do we do that?  By applying another multi-factor test, of course!  The seven factors are below.  (This is not a “checklist” where each factor needs to be present.)

1. Does the company control or supervise the worker “beyond a reasonable degree of contract performance oversight”?  This control/supervision can be direct or indirect through the other company (e.g., subcontractor).   
2. Does the company have the power to hire or fire the worker, modify employment conditions, or determine the rate or method of pay (again, directly or indirectly)?
3. Does the worker work on the company’s project(s) full time and/or on a long-term/ongoing basis?
4. Is the nature of the work “repetitive and rote” and/or relatively unskilled (e.g., painting)?
5. Is the worker’s work “an integral part” of the company’s business?
6. Does the company control (own or lease) the premises where the work is being performed? 
7. Does the company do things for the workers that would normally be handled by an employer—e.g., providing necessary facilities and safety equipment, tools and materials for the work, training, transportation, etc.?

The DOL provides an example to illustrate how joint employment might exist in a construction setting:

Example: A laborer is employed by ABC Drywall Company, which is an independent subcontractor on a construction project. ABC Drywall was engaged by the General Contractor to provide drywall labor for the project. ABC Drywall hired and pays the laborer. The General Contractor provides all of the training for the project. The General Contractor also provides the necessary equipment and materials, provides workers’ compensation insurance, and is responsible for the health and safety of the laborer (and all of the workers on the project). The General Contractor reserves the right to remove the laborer from the project, controls the laborer’s schedule, and provides assignments on site, and both ABC Drywall and the General Contractor supervise the laborer. The laborer has been continuously working on the General Contractor’s construction projects, whether through ABC Drywall or another intermediary. These facts are indicative of joint employment of the laborer by the General Contractor.

So what happens if you think you may be a joint employer of another company’s employees? You are responsible (along with the other company) for ensuring those workers get paid at least minimum wage and time-and-half for all time worked over 40 hours in a workweek.  And if that other company drops the ball and doesn’t pay overtime?  The DOL and/or the workers can (and will) come to you with their hands out looking to collect that unpaid overtime, as well as liquidated damages and attorney fees.  So don’t let yourself become a joint employer of someone else’s workers!  And if you do, make sure the FLSA is being followed to a T.

For more information about joint employer liability, contact a BrownWinick attorney.  It should be noted that joint employment can exist in all industries; this piece just focuses on construction because it’s the easiest example to understand and illustrate.  

You can also read the full Administrator’s Interpretation, and other guidance from the DOL, on the website:  http://www.dol.gov/whd/flsa/jointemployment.htm

NLRB Rules Broad Employer Rules Restricting Recordings in the Workplace Violates Employee Section 7 Rights

By BrownWinick Employment Law Practice Group

On December 24, 2015, in Whole Foods Market, Inc., 363 NLRB No. 87,  the National Labor Relations Board ruled in a 2-1 decision that two rules which prohibited employees from recording company’ meetings or conversations in the workplace violated section 8(a)(1) of the National Labor Relations Act.

The two Whole Foods’ no-recording rules had been in effect since 2001 and were implemented in the context of its open door policy. Whole Foods global vice president for team member services (human resources) testified that the rules applied “regardless of the activity that the employee is engaged in, whether protected concerted activity or not.” The rules in question provided:

Team Meetings - In order to encourage open communication, free exchange of ideas, spontaneous and honest dialogue and an atmosphere of trust, Whole Foods Market has adopted the following policy concerning the audio and/or video recording of company meetings:

It is a violation of Whole Foods Market policy to record conversations, phone calls, images or company meetings with any recording device (including but not limited to a cellular telephone, PDA, digital recording device, digital camera, etc.) unless prior approval is received from your Store/Facility Team Leader, Regional President, Global Vice President or a member of the Executive Team, or unless all parties to the conversation give their consent. Violation of this policy will result in corrective action, up to and including discharge.

Please note that while many Whole Foods Market locations may have security or surveillance cameras operating in areas where company meetings or conversations are taking place, their purposes are to protect our customers and Team Members and to discourage theft and robbery

Team Member Recordings - It is a violation of Whole Foods Market policy to record conversations with a tape recorder or other recording device (including a cell phone or any electronic device) unless prior approval is received from your store or facility leadership. The purpose of this policy is to eliminate a chilling effect on the expression of views that may exist when one person is concerned that his or her conversation with another is being secretly recorded. This concern can inhibit spontaneous and honest dialogue especially when sensitive or confidential matters are being discussed.

Previously, the ALJ held Whole Foods’ no recording rules were lawful because they did not explicitly prohibit Section 7 protected, concerted activity, were not promulgated in response to union activity, had not been applied to restrict the exercise of Section 7 rights, and could not reasonably be read as proscribing Section 7 activity.

In reversing the ALJ’s decision, the Board’s majority held the rules at issue prohibited the recording of conversations, phone calls, images or company meetings with a camera or recording device without prior approval; and that the rules would reasonably be construed by employees to prohibit Section 7 activity. The Board reasoned that photography and audio or video recording in the workplace, as well as the posting of photographs and recordings on social media, are protected by Section 7 if employees are acting in concert for their mutual aid and protection and no overriding employer interest is present.  Examples of protected activity cited by the Board included recording images of protected picketing, documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment, documenting inconsistent application of employer rules, or recording evidence to preserve it for later use in administrative or judicial forums in employment-related actions. The Board further noted its case law was replete with examples where photography or recording, often covert, was an essential element in vindicating the underlying Section 7 right.

The Board did, however, acknowledge that its ruling was not intended to bar all employer prohibitions regarding recording. “We do not hold that an employer is prohibited from maintaining any rules regulating recording in the workplace. We hold only that those rules must be narrowly drawn, so that employees will reasonably understand that Sec. 7 activity is not being restricted.”

In light of the Board’s Whole Foods ruling, it is suggested that you review your Employer handbooks and consult with a labor attorney before adopting any rules regarding workplace recording.

NLRB Overrules Bright-Line Rule Exempting the Production of Confidential Witness Statements

By BrownWinick Employment Law Practice Group

Under longstanding National Labor Relations Board (NLRB) precedent, witness statements obtained by an employer during an investigation of employee misconduct have been considered confidential and were not required to be produced to the union that represented an employee in a grievance. In holding that employers were not required to turn over confidential witness statements to union representatives, the Board reasoned that witness statements were fundamentally different from other types of information since their release carried a risk of potential witness intimidation and increased the likelihood witnesses would be reluctant to give statements without assurance from their employer they would be kept confidential See Anheuser-Busch Inc., 237 NLRB 982 (1978).

However, in American Baptist Homes of the West d/b/a Piedmont Gardens, 362 NLRB 139 (June 26, 2015), the NLRB overruled Anheuser-Busch and held that witness statements obtained during an employer investigation  were  no longer exempt from production to union representatives. Instead, the Board indicated that the Detroit Edison v. NLRB, 440 U.S. 301 (1979), balancing test should be used for all future matters involving confidential witness statements. The balancing test adopted by the Board in Piedmont Gardens requires that employers conduct a fact-specific analysis that balances a union’s need for the information against the employer’s legitimate and substantial confidentiality interests. 

Under Piedmont Garden, if an employer seeks to challenge the production of a witness’ statements in connection with an employer investigation then it must raise its confidentiality concerns to the union in a timely manner and offer the union an accommodation. Possible accommodations may include asking the union to enter into a non-disclosure agreement, redacting the witness’ names from statements or producing a list of witness names with a summary of the information obtained without attributing the information to any particular witness. Whether a particular accommodation is appropriate will depend on the facts and circumstances of each case. The proposed accommodation will be subject to good faith negotiation with the union.

If the accommodation is rejected and the union files an unfair labor practice complaint, then the employer will need to demonstrate, it has a “legitimate and substantial” confidentiality interest in the statements.  In order to establish it has a “legitimate and substantial” confidentiality interest in the statements, the employer will need show, on a case-by-case basis, that the witness needs protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated or there is a need to prevent a cover-up, and that such interest outweighs the union’s need for the statements. If an employer is able to make this showing, then the employer may lawfully refuse to disclose a witness’ statement.

The Piedmont Gardens decision does not impact the work product doctrine, which may still be raised to object to a union’s request for witness statements where such witness statements were obtained in anticipation of litigation or for trial.

Employers should seek the advice of counsel before withholding witness statements or other potentially relevant information from union representatives on confidentiality grounds.

An early Christmas gift for Employers and Unions - Congress delays Implementation of the ACA’s “Cadillac Tax”

By BrownWinick Employment Law Practice Group

On December 18, 2015, Congress passed and the President signed $1.15 trillion fiscal year 2016 appropriations omnibus bill into law, funding the government through September 30, 2016. The bill also included several policy riders related to the Affordable Care Act (ACA) which will affect how organized labor and Employers approach collective bargaining for multi-year agreements this year and next.

First, the 2016 appropriations omnibus bill provides for a two-year delay of the ACA’s, 40 percent excise tax on high-cost employer-sponsored health plans, also known as the “Cadillac Tax.” The delay changes the effective date from 2018 to 2020. The 2016 bill also allows plan sponsors to treat any “Cadillac tax” payment as a deductible business expense.  Under the original provision of the Affordable Care Act (ACA), the “Cadillac tax” was not deductible. 

The legislation also suspends temporarily both of the other ACA taxes, which already have begun. First, it delays the 2.3 percent excise tax on medical devices for two years and next suspends the ACA’s annual tax on insurers (which began in 2014) for one year in 2017.

Some organized labor groups have opposed and seek a repeal of the tax because they collectively bargained for workers to receive more compensation through health benefits instead of higher wages. They argue the likely end-result of the “Cadillac tax” is that either Employers will offer lower-cost policies to employees or they will pass along the increased cost directly to the employee. Either way, out-of-pocket expenses will increase significantly for the household, given that lower cost policies tend to have higher deductibles, which ultimately lower employees’ total compensation. Tax payer watchdog groups also oppose the “Cadillac tax” as it impacts taxpayers who pay for the healthcare benefits of government workers, teachers, firefighters and police.

By comparison, proponents of the “Cadillac tax” argue it will help to slow the growth of national health care costs by increasing the price of excess health benefits.

It is not clear whether Congress will continue to extend implementation of the “Cadillac tax” or delete it entirely.  Likely, such change will not occur until after the next presidential inauguration. Until then, plan sponsors with high value coverage and Employers negotiating multi-year collective bargaining agreements between now and 2020 should operate under the assumption that the tax will go into effect in 2020. 

A Lump of Coal or a Surprise Christmas Gift for Employers? Iowa Supreme Court Revives Pregnancy Discrimination Lawsuit, but Notes the Iowa Civil Rights Act Does Not Impose a Duty to Accommodate Temporary Disabilities

By Amanda Jansen

In a surprising Christmas Eve decision, the Iowa Supreme Court in McQuistion v. City of Clinton tackled a pregnancy discrimination case similar to Young v. UPS decided by the U.S. Supreme Court earlier this year.  The issue before the court was whether the City violated the Iowa Civil Rights Act (ICRA) or the Iowa Constitution when it denied a pregnant firefighter, Karen McQuistion, light-duty assignments while she was pregnant.  (I focus here only on the ICRA claim, because the constitutional issues are esoteric and largely only of interest to public-sector employees.)

The City denied McQuistion’s request for light duty because the City had a policy that only authorized light duty for (1) employees injured on the job, and (2) pregnant police officers, pursuant to a collective bargaining agreement between the City and the police officers’ union (the CBA with the firefighters’ union did not contain a similar provision).  In response, McQuistion retained Roxanne Conlin and sued.

The district court agreed with the City that neither the policy, nor the City’s actions in denying McQuistion light duty, discriminated on the basis of pregnancy.  Instead, ruled Judge Henry Latham, the City merely made a distinction between (a) employees injured on the job, and (b) employees needing light duty for any other reason.  (Pregnant police officers, the district court concluded, were a completely different ballgame because they had specifically negotiated the pregnancy-light-duty provision in their CBA, whereas the firefighters had not done so.)

The Iowa Supreme Court, however, reversed the lower court’s conclusion that no pregnancy discrimination occurred.  The Court, just like the Court in Young, said that a policy that excludes pregnant employees from an employment benefit (e.g., light duty) is only prima facie evidence of unlawful discrimination—that’s only the first step in the analysis.  The employer still gets to articulate a legitimate (non-anti-pregnancy) reason for denying the benefit to pregnant employees while allowing it to other, temporarily disabled employees.  Finally, the employee has a chance to rebut the employer’s reason and show the reason is just a pretext—a smokescreen—to treat pregnant employees worse than others.  Chief Justice Cady, writing for the Court, explained that what happens at this third step in the analysis is weighing of “the burden imposed on pregnant employees by exclusion from the policy and the strength of the neutral reason for the employer to justify the exclusion of pregnant employees.”  If the employer’s reason is “weighty” enough, then excluding pregnant employees is legal.  The Supreme Court had to remand the case back to the district court to make this determination, so we will have to wait and see how the weighing process comes out. 

The really interesting part of McQuistion is the Court’s (rather gratuitous) footnote 5, which provides in pertinent part:

[I]n order to eliminate discrimination against the disabled, the law generally requires an employer to provide reasonable accommodations that permit the person to perform the essential duties of the job.  We have not extended that requirement to temporary disability cases.  The extension of a duty to reasonably accommodate to include temporary disabilities, including pregnancy, is laden with policy considerations normally reserved for the legislative branch of government.  

(Emphasis added; citations omitted.) 

Why is this interesting, you ask?  Because until now, it appeared the Court was adopting the federal Americans with Disabilities Act Amendments Act (ADAAA), into Iowa law by judicial fiat—i.e., without the Iowa General Assembly amending the ICRA like Congress amended the ADA—to broaden legal protections for individuals with physical or mental impairments, and as a result, to broaden employers’ legal obligations.  For example, in Goodpaster v. Schwan’s, a case under the ICRA, the Court significantly referenced the ADAAA in concluding the employee’s multiple sclerosis was a disability.  But in McQuistion’s footnote 5, the Court sharply diverges from one of the ADAAA’s key principles:  that a condition can be a disability even if it is temporary—even if it lasts less than six months.  That is, the Court says that its old, pre-ADAAA precedent is still controlling under the ICRA.  Specifically, Vincent v. Four M Paper Corp. stands for the proposition that no legal disability exists when a “condition, although serious, [i]s only temporary and not expected to have a long term impact on [the employee’s] work capabilities.”

Now, does this mean employees should stop providing accommodations to employees with temporary medical conditions?  NO, the rule of thumb should still be “Assume Disabled Always.”  But if you are a small employer (fewer than 20 employees) and providing accommodations is taking a toll, definitely reach out to a member of BrownWinick’s Employment and Labor Law Practice Group to discuss your options.  The McQuistion decision may offer a window of relief for small businesses managing through “worker with a health problem” issues.