Employment Law Alert

Employment Law Alert

News and Updates on Employment Law

Federal Judge Imposes Nationwide Preliminary Injunction on DOL’s New “Persuader” Rule

Posted in Labor

On June 27, 2016, in National Federation of Independent Business v. Perez, Judge Sam R. Cummings of the United States District Court for the Northern District of Texas issued a nationwide preliminary injunction precluding the United States Department of Labor (“DOL”) from enforcing its recently introduced rule interpreting the Labor-Management Reporting and Disclosure Act’s (“LMRDA”) “advice” exemption. 81 Fed. Reg. 15,924 et seq.

Background
As discussed in our previous blog, the LMRDA requires employers and labor relations consultants, often referred to as “persuaders,” to file reports with the government detailing expenditures, activities, agreements, and arrangements undertaken to persuade employees regarding their rights to join or refrain from joining unions, but these requirements are waived if the consultants do nothing more than “giv[e] or agree[] to give advice to [the] employer.” Under the DOL’s previous interpretation of this “advice” exemption, employers and their consultants were not required to publicly disclose their arrangements unless a “persuader” made direct contact with company employees. The new rule reinterprets the meaning of “advice” so that employers and consultants must file reports whenever “[a] consultant undertakes, or agrees to undertake, ‘persuader activities’” – even if the consultant “has no face-to-face contact with employees” and has limited his or her engagement to “indirect persuasion.”

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U.S. Supreme Court Clarifies Statute of Limitations for Constructive Discharge Claims

Posted in Discrimination

On May 23, 2016, the U.S. Supreme Court, in Green v. Brennan, held that the statute of limitations for a constructive discharge claim begins to run when the employee gives notice of his or her resignation, not at the time of the employer’s last allegedly discriminatory act giving rise to the resignation. The “constructive discharge” doctrine refers to a situation in which an employer discriminates against an employee to the point that the employee’s working conditions become so intolerable that a reasonable person in the employee’s position would feel compelled to resign.

The Court’s decision in Green resolves a split in authority between federal appeals courts and provides greater certainty regarding when an employee’s constructive discharge claim accrues. Although the Green case arose in the context of a federal employee, its holding applies equally to public and private sector employment.

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N.J. Supreme Court Invalidates Agreements to Shorten the LAD’s Statute of Limitations

Posted in Discrimination

On June 15, 2016, the New Jersey Supreme Court, in Rodriguez v. Raymours Furniture Company, Inc., held that an agreement by an employee to bring claims against his employer within six months of the allegedly wrongful employment action was unenforceable insofar as the agreement applied to claims brought under the New Jersey Law Against Discrimination (“the LAD”). In 1993, the Court had held that New Jersey’s general two-year statute of limitations for personal injury actions provides the appropriate limitations period for LAD claims. In Raymours, the Court ruled that the employer’s attempt to reduce this limitations period to six months undermined the LAD’s specific enforcement scheme for the elimination of discrimination and thus, for public policy reasons, could not be judicially sanctioned. In addition, the Court found that the particular agreement at issue, set forth as part of the boilerplate in the employer’s standard employment application form, constituted an unenforceable contract of adhesion.

Background

When plaintiff, Sergio Rodriguez, applied for a job with defendant, Raymour & Flanigan, he was required to complete an employment application form that contained the following provision:

I AGREE THAT ANY CLAIM OR LAWSUIT RELATING TO MY SERVICE WITH RAYMOUR & FLANIGAN MUST BE FILED NO MORE THAN SIX (6) MONTHS AFTER THE DATE OF THE EMPLOYMENT ACTION THAT IS THE SUBJECT OF THE CLAIM OR LAWSUIT. I WAIVE ANY STATUTE OF LIMITATIONS TO THE CONTRARY.

After working for Raymour & Flanigan for several years, Rodriguez left work due to a work-related injury. Within a few days after being cleared to return to work, he was terminated, ostensibly as part of a reduction-in force. More than six months after his termination, Rodriguez filed suit in New Jersey Superior Court, alleging that his employment with Raymour & Flanigan was terminated because of his disability or perceived disability in violation of the LAD. Raymour & Flanigan moved for summary judgment, arguing that the LAD claim was barred by the six-month limitations period to which Rodriguez had agreed. The trial court granted the motion, and its decision was affirmed by the Appellate Division. Both courts concluded that: (1) the agreement to limit the limitations period was not unconscionable and (2) the contractual shortening of the limitations period did not violate public policy.

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Seventh Circuit Creates Circuit Split, Striking Down Agreement to Arbitrate Employment Claims on an Individual Basis

Posted in Alternative Dispute Resolution

On May 26, 2016, the United States Court of Appeals for the Seventh Circuit issued its decision in Lewis v. Epic Systems Corp., becoming the first federal court of appeals to decide that an agreement between an employer and an employee to arbitrate wage-and-hour claims only on an individual basis, as opposed to a class action basis, is unenforceable. The court’s opinion has created a circuit split, as the Second, Fifth, and Eighth Circuits have enforced similar agreements.

Background

The plaintiff, Jacob Lewis, worked as a “technical writer” for Epic Systems, a healthcare software company. In 2014, he agreed to settle any future wage-and-hour disputes with the company through an arbitration process, rather than in court. He also agreed that he could not pursue any such claim through a class or collective action.

Despite that agreement, Lewis filed a collective action complaint in the Western District of Wisconsin alleging that Epic had deprived him and other employees of overtime pay in violation of the Fair Labor Standards Act (“the FLSA”) and Wisconsin law. Epic filed a motion to dismiss the complaint and to compel individual arbitration, citing the parties’ agreement. Lewis argued that the agreement was unenforceable because it interfered with his right to engage in protected, concerted activity under Section 7 of the National Labor Relations Act (“the NLRA”). Section 7 provides that employees “shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 Lewis argued and the District Court agreed, that Lewis’ collective action FLSA claim constituted a “concerted activity” under Section 7 and, thus, that his agreement to assert a claim only on an individual basis was illegal. Accordingly, the District Court denied Epic’s motion to dismiss the lawsuit.

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Department of Labor Final Overtime Rule

Posted in Wage & Hour

The United States Department of Labor (“the DOL”) has finally issued the long-awaited rules dramatically increasing the minimum salary level for the overtime-exempt classifications under the Fair Labor Standards Act (“the FLSA”). The new rules also incorporate mechanisms to adjust this salary level in the future. The effect of future adjustments will require an employer to pay wage increases unrelated to the employer’s financial condition or employee performance. The new rules will have the greatest impact on those employees currently classified as exempt but who will not meet the new minimum salary threshold. These rules go into effect December 1, 2016, a date later than DOL originally communicated, which gives employers an opportunity to conduct a self-analysis to prepare for these changes.

In 2014, President Obama directed the DOL to update and modernize regulations under the Fair Labor Standards Act governing overtime exemptions for “white collar” employees (i.e., executive, administrative and professional employees). On July 6, 2015, the DOL published a notice of proposed rule making to which it received more than 270,000 comments representing differing viewpoints. On May 18, 2016, the DOL issued the final rule updating the regulations. Under the final rule, the annual salary level for these exemptions will more than double from $23,660 ($455 per week) to $47,476 ($913 per week) beginning on December 1, 2016. (The increase will equal the salary level of the 40th percentile of weekly earnings for full-time salaried workers in the South, which is currently the lowest-wage Census region). These salary levels were last updated in 2004, and the DOL has stated that this new rule will “automatically extend” overtime to an estimated 4.2 million employees who are currently classified as exempt. The increase is less than that originally proposed by the DOL ($50,440 per year or $970 per week).

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Legal Issues to Consider as Intern Season Approaches

Posted in Wage & Hour

With summer around the corner, it is a good time for a refresher on legal implications when hiring interns. Specifically, when must interns be paid and what other legal protections do interns have?

Wage and Hour Issues

As has been widely publicized in recent years, a number of companies who utilize unpaid interns have found themselves the object of lawsuits. It is thus important for companies to make an informed decision on the compensation issue before the hiring process begins.

Federal Law

According to a Fact Sheet issued by the U.S. Department of Labor (DOL) under the Fair Labor Standards Act (FLSA), interns must be paid unless each of the following six conditions are present: (1) the internship benefits the intern; (2) the employer derives no immediate advantage from the intern’s activities; (3) the employer provides the intern training similar to that given in an educational environment; (4) the intern’s work does not displace the work of paid employees; (5) the intern is not entitled to a job at the conclusion of the internship; and (6) the employer and the intern understand that the internship is unpaid.

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New York State Enacts a New Paid Family Leave Law

Posted in Family Leave

New York State recently passed the Paid Family Leave Benefits Law, which is among the strongest and most comprehensive leave statutes in the country. The new law amends the State’s current disability law, and imposes obligations on employers beginning in 2018. Unlike the federal Family and Medical Leave Act (“FMLA”), the NY law will provide both protected leave and paid benefits during the leave. The new law covers employers in the for-profit sector, with at least one employee, along with certain other employers in the public and not-for-profit sectors.

Beginning on January 1, 2018, employers will be required to provide employees, who have worked for the employer for at least 26 weeks, initially with up to eight weeks of paid family leave, for the following purposes: (a) provide care (physical or psychological) to a family member (i.e., employee’s child, spouse, domestic partner, parent (including step-parent or legal guardian), parent-in-law, sibling, grandchild, or grandparent; (b) bond with a child during the first twelve months after birth or after the placement of the child for adoption or foster care with the employee; (c) to handle certain qualified exigencies arising from an employee’s spouse, domestic partner, child, or parent being on or called to active duty in the U.S. armed forces. In comparison to the eligibility requirements of the FMLA, which protects individuals who have completed at least one year of employment and 1,250 hours of work prior to taking leave, employees under the NY law would become eligible in approximately half the time.

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Supreme Court Accepts Use of Representative Sample To Prove Classwide Liability

Posted in Labor

In Tyson Foods, Inc. v. Bouaphakeo, the Supreme Court of the United States definitively answered the question of whether statistical “representative evidence” may be used in class actions to establish that “questions of law or fact common to class members predominate over any questions affecting only individual members” pursuant to Rule 23(b)(3). According to the Court’s much-anticipated opinion, the answer is yes: “Its permissibility turns not on the form a proceeding takes – be it a class or individual action – but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”

In Tyson, employees had filed a class action suit against their employer, Tyson Foods, Inc., alleging violations of the Fair Labor Standards Act of 1938 based on the failure to pay required overtime compensation for the donning and doffing of protective gear necessary for their hazardous work. Because Tyson Foods did not maintain records of donning and doffing time, the employees relied on representative evidence, which included testimony, video recordings, and an expert study, to show the average amount of donning and doffing time for each employee. The jury awarded the class approximately $2.9 million for unpaid wages, and the judgment and award was affirmed by the Court of Appeals for the Eighth Circuit.

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EEOC to Release Respondent Position Statement to Charging Party Upon Request

Posted in Policies/Handbooks

The Equal Employment Opportunity Commission (“EEOC”) has issued new, nationwide procedures allowing a Charging Party or his/her representative to request copies of Respondent employer’s position statement and non-confidential attachments during the investigation of his/her charge of discrimination. The new procedures apply to all position statements submitted after January 1, 2016. Employers must be cognizant of this new rule and strategically craft positions statements with an eye towards disclosure. Specifically, employers need to carefully separate confidential information into separately labeled attachments to avoid inadvertent disclosure to the Charging Party.

Procedure
The EEOC has prepared a “Questions and Answers for Respondents on EEOC’s New Position Statement Procedures” which explains the new procedures. To summarize, in order to comply with the new rules, Respondents must submit a position statement within thirty (30) days that explains its “version of the facts” and identifies the “specific documents and evidence supporting its position.” If the Respondent refers to confidential information in the position statement, it should note the exhibit as “confidential.” For instance, “Confidential Exhibit A.” It must then create separate labeled attachments titled, as applicable, either: “Sensitive Medical Information,” “Confidential Commercial Information,” “Confidential Financial Information,” or “Trade Secret Information.”

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Department of Labor’s New “Persuader” Rule Requires Employers and Labor Relations Consultants to Publicly Disclose Arrangements

Posted in Labor

On March 24, the United States Department of Labor (“DOL”) published a final rule imposing new reporting requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”) that could impede employers’ communications with their workers about unions. The rule will take effect on April 25, and will cover arrangements, agreements, and payments between employers and their labor relations consultants – including their attorneys – beginning July 1, 2016.

The law already requires employers and labor relations consultants to file reports with the government detailing expenditures, activities, agreements, and arrangements undertaken to persuade employees regarding their rights to join or refrain from joining unions, but the reporting requirement is waived if the consultants do nothing more than “giv[e] or agree[] to give advice to [the] employer.” Accordingly, businesses and their consultants are not required to publicly disclose their arrangements unless a consultant makes direct contact with company employees under the existing rule.

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