Monthly Archives: March 2016

March 24, 2016

2016 Employment Law Update

Join Holland & Hart’s labor & employment law team and learn how to manage and solve workplace issues to minimize risk and avoid litigation.

Sessions will include:

Tricky Accommodation Issues for Today’s Diverse Workforce
Annual Update – What’s New for 2016?
Life Cycle of an EEOC Charge – From Complaint to Court
How to Get HR a Seat at the Management Table
Wage Game – Test Your Knowledge of Pay Practices
NLRB and Organizing – Real Stories from the Trenches
What To Do When OSHA Comes Knocking and Other Workplace Safety Tips
Tough Employment Decisions – You Be the Judge

Cost to attend: $99 for clients of Holland & Hart, $129 for non-clients. Includes all course materials as well as breakfast, lunch, and networking hour.

Details: May 18, 2016 8 am – 4:30 pm

Applications will be submitted for Continuing Legal Education (CLE) in Colorado, HR Certification Institute (HRCI), and Society for Human Resource Management (SHRM) credits.

Location: History Colorado Center
1200 Broadway
Denver, CO 80203

Keynote Presentation: Employee Engagement Across the Generations
Keynote speaker Buddy Bush will present an eye-opening session that takes the guesswork out of engaging employees across the generations.

To register online please click here.

Please respond by April 27th.

Questions? Please contact Jennifer McCord at 303.295.8349 jamccord@hollandhart.com.

March 23, 2016

Idaho’s Non-Compete Law Set to Enhance Employer Enforcement

By A. Dean Bennett

Idaho businesses will have an easier time enforcing non-compete agreements that restrict key employees and independent contractors from engaging in post-employment competition, thanks to a bill passed by the Idaho legislature this week. HB 487 provides that if a court finds that a key employee or key independent contractor breaches a non-compete agreement, a rebuttable presumption of irreparable harm is established. The burden of overcoming that presumption shifts to the former employee to show that he or she has no ability to adversely affect the employer’s legitimate business interests. The bill was sent on Tuesday to Governor Otter, who is expected to sign it into law.

Pro-Business Non-Compete Provision

While some neighboring states, such as Utah, have passed legislation to restrict the use of non-competes and other post-employment restrictive covenants, Idaho has strengthened its non-compete law in favor of protecting employer rights. Not without controversy, this bill reportedly grew out of a recent lawsuit filed by LeapFox Learning, a Meridian computer training company, against its former business director. LeapFox Learning’s owner, Codi Galloway, reportedly testified before the Idaho Senate and Human Resources Committee, that after her former business director left to work for a competitor, she lost customers, vendors, and contractors as a result of that ex-employee’s use of LeapFox Learning’s company’s contact lists and marketing and business strategies.

Tough Burden For Employees To Overcome

Opponents of the bill argued that it infringes on an employee’s ability to change jobs and move to a better position or even start his or her own company. In addition, by placing the burden to rebut the presumption of irreparable harm on the former employee, it essentially forces the employee to prove a negative, namely that he or she cannot harm the former employer’s business. Assistant Chief Deputy Brian Kane is quoted in the Idaho Statesman as saying, “The burden necessary to overcome this presumption may be extremely difficult, if not impossible.”

Proponents, however, reply that the presumption of irreparable harm applies only to non-competes of key employees or key independent contractors, which are defined as the highest paid five percent of employees or independent contractors. Consequently, the amendment will not change enforcement proceedings for non-competes involving lower level employees.

Review Non-Competes For Idaho Compliance

To take advantage of numerous rebuttable presumptions contained in Idaho’s non-compete law, employers should review their non-competes to make certain they do not exceed the time, geographic, and business scope parameters deemed reasonable under the law. In particular, review section 44-2704 of the Idaho Code or consult with competent legal counsel to ensure your restrictive covenants protect your business assets in the best way possible.

If you have any questions about the new bill, or your company’s non-compete agreements, contact Dean Bennett atadbennett@hollandhart.com or 208-383-3993.

March 22, 2016

Class-Action Lawsuit Permitted To Rely On Sample Data To Determine Wages Owed

By John Husband

In the absence of actual time records, time spent by employees donning and doffing protective gear may be established by representative evidence in order to establish the employer’s liability for unpaid overtime pay in a class action lawsuit, ruled the U.S. Supreme Court today. The Court rejected the company’s argument that each employees’ wage claim varied too much to be resolved on a classwide basis. Instead, the Court upheld the class certification, sending the case back to the district court to determine how to distribute to class members the $2.9 million dollar jury award. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. ___ (2016).

Pay For Donning and Doffing Protective Gear

Under the Fair Labor Standards Act (FLSA), it is well established that employers must pay employees for time spent performing preliminary or postliminary activities that are “integral and indispensable” to their regular work. In the Tyson Foods case, over 3,300 pork processing employees sued, alleging that the company failed to pay them for time spent putting on and taking off required protective gear at the start and end of their work shifts and at meal periods. The employees argued that such time was “integral and indispensable” to their work and that when added to their weekly work hours, pushed them beyond 40 hours per week resulting in unpaid overtime.

Because Tyson Foods did not keep any time records for donning and doffing time, the employees presented representative evidence of the time spend on those activities, including employee testimony, video recordings of the donning and doffing process at the plant, and a study by an industrial relations expert, Dr. Kenneth Mericle. Dr. Mericle analyzed 744 videotaped observations to determine how long various donning and doffing activities took, concluding that employees in the kill department took an estimated 21.25 minutes per day while workers in the cut and retrim departments took an estimated 18 minutes per day. Using that data, another expert added that time to each employees’ recorded work time to determine how many hours each employee worked per week.

Tyson Foods argued that because the workers did not all wear the same protective gear, each individual plaintiff spent different amounts of time donning and doffing the gear. Therefore, Tyson Foods maintained that whether and to what extent it owed overtime pay to each individual employee was a question that could not be resolved on a class-action basis. Importantly, Tyson Foods did not attack the credibility of the employees’ expert or attempt to discredit the statistical evidence through its own expert, but instead opposed class certification on the basis that the individual variances of the time spent by each employee made the lawsuit too speculative for classwide recovery.

Employee-Specific Pay Inquiries Do Not Destroy Class Action

The Court determined that the employees’ use of Dr. Mericle’s representative study was permissible to establish hours worked in order to fill the evidentiary gap created by the employer’s failure to keep time records of the donning and doffing activities. The Court refused to define a broad-reaching rule about when statistical evidence may be used to establish classwide liability, stating instead that it would depend on the purpose for which the evidence was being introduced and the elements of the underlying action. It ruled it appropriate to rely on sample evidence when each class member could have relied on that sample to establish liability if he or she had brought an individual lawsuit. In the wage and hour context, if the sample data could permit a reasonable jury to find the number of hours worked in each employees’ individual action, the “sample is a permissible means of establishing the employees’ hours worked in a class action.”

The Court, in its 6-to-2 decision, refused to rule on the issue of how the jury’s $2.9 million award would need to be dispersed among the class members and how to prevent uninjured class members (i.e., those whose donning and doffing time did not result in overtime) from recovering any part of the award. In fact, Chief Justice Roberts, writing a separate concurring opinion, expressed his concern that the district court would not be able to devise an allocation method that would award damages only to those class members who suffered an actual injury. But, because the majority found that the allocation methodology issue was not before the Court, the case gets sent back to the trial court for that determination.

Litigation Tactics To Oppose Class Certification

The Court noted numerous litigation strategies by Tyson Foods that may have proved fatal to its case. First, Tyson Foods failed to move for a hearing to challenge the admissibility of the employees’ expert study by Dr. Mericle. A so-called Daubert hearing would have offered Tyson the chance to keep the representative sample out of the trial which may have eliminated the employees’ evidence of time spent donning and doffing protective gear.

Second, the Court noted that Tyson Foods did not attempt to discredit Dr. Mericle’s sample evidence through an expert of its own. By focusing its trial strategy only on attacking the class certification issue, the jury was left without any rebuttal to the employees’ experts.

Finally, Tyson Foods rejected splitting the jury trial into two phases, a liability phase and a damages phase. Instead, it insisted on a single proceeding in which damages would be calculated in the aggregate and by the jury. The jury came back with a $2.9 million award, which was half of what the employees’ sought, but still a significant award against Tyson Foods.

Blow To Businesses Defending Class Actions

Although the Court refrained from approving the use of representative data in all class-action cases, the Court’s decision makes it more difficult for employers to object to sample data when defending a class or collective action. Noting that representative data is not an appropriate means to overcome the absence of a common employer policy that applies to all class members, per its 2011 Wal-Mart Stores, Inc. v. Dukes decision, the Court allowed representative data to fill the evidentiary gap regarding hours worked where each employee worked in the same facility, did similar work, and was paid under the same policy.

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March 17, 2016

New Overtime Regulations May Be Finalized Sooner Than Expected

By Jude Biggs

The U.S. Department of Labor’s (DOL’s) agenda specifies that its final overtime regulations are due to be published in July, but recent developments suggest they may be released a few months earlier. With the salary threshold for the white collar exemptions going up from the current $23,660 to over $50,000 per year, employers need to prepare now for the changes.

DOL’s Overtime Rule Sent To OMB

On March 15, 2016, the DOL sent its proposed final overtime regulations to the Office of Management and Budget (OMB) which is the final step before the rule can be published. The OMB review process typically takes one to two months, but speculation suggests that the review of this rule may be sped up to allow for publication as early as April or May.

The political environment in Washington, D.C. and fact that this is an election year may be to blame for the expedited process. The Congressional Review Act (Act) provides Congress with 60 legislative days to review any final rule issued by a federal agency. If Congress disapproves of the regulation, which current Republicans in Congress are sure to do with the overtime rule, it may pass a resolution to nullify the rule. The President can veto that resolution, but then Congress has the opportunity to override the veto by a two-thirds vote.

Because of an unusual provision in the Act, any new rule that is not submitted to Congress within 60 session days of the adjournment of the Senate or House, may be subject to a renewed review by the new Congress in the next Congressional session (with potential veto by a newly elected President). Or, if Congress’s 60-day-review period extends after the presidential inauguration, the new President may let a resolution of disapproval stand, killing the rule. The Obama Administration will not want to take the chance that a new Congress and/or President gets to review the overtime rule in 2017 so it is expected that the White House will do everything possible to get the new overtime rule to Congress prior to the cutoff date.

Salary Threshold For Exemptions Will More Than Double

The DOL’s proposed rule raises the salary threshold for the white collar exemptions from the current $455 to an expected $970 per week, more than doubling the annual salary level to more than $50,000. The salary threshold for the highly compensated employee exemption will increase from the current $100,000 to more than $122,000 per year. The DOL estimates that almost five million U.S. workers who are currently exempt will be entitled to minimum wage and overtime compensation under the new salary level requirements. In addition, the final rule will include an automatic annual adjustment provision that will require that the salary thresholds be adjusted each year to keep up with inflation.

Next Steps

With a compressed timeline for the new rule to become effective, employers need to take steps now to decide how to handle employees who no longer qualify as exempt under the new rules. Some companies may choose to increase exempt employee salaries to meet the new threshold in order to retain the exemption. Others may choose instead to change the status of some workers’ status to non-exempt and pay them overtime. Either way, employers need to get a plan in place to prevent headaches and potential wage claims when the final rule goes into effect.

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March 16, 2016

Muslim Teacher May Proceed With National Origin Hostile Work Environment Claim

By Emily Hobbs-Wright

A Turkish-born Muslim teacher claimed that her school had a culture of racial and ethnic hostility. The Tenth Circuit Court of Appeals (whose decisions apply to Colorado, Utah, Wyoming, Kansas, Oklahoma, and New Mexico) recently ruled that her complaints of national origin discrimination may move forward, offering lessons in how to handle cultural differences in the workplace.

School Principal Made and Allowed Insensitive Comments

Zeynep Unal worked as an elementary teacher in the school district’s gifted and talented program for about four years before the district hired Katheryn Vandenkieboom as the principal at Unal’s school. Born in Turkey, Unal spoke with a distinct Turkish accent and was the only foreign-born teacher at the school. Prior to Vandenkieboom’s arrival, Unal was considered a good teacher and received regular positive reviews.

According to Unal, Vandenkieboom made numerous hostile comments to her and allowed other school staff to do the same. When Vandenkieboom and other faculty began discussing an American movie in the faculty lounge, Vandenkieboom, in front of the staff, told Unal “You wouldn’t know about this. You are not from here.” During an after-school Christmas concert, Vandenkieboom thanked various teachers for being at the concert but then approached Unal to ask, “what are you doing here?” despite Unal’s own child participating in the concert. Vandenkieboom also would correct Unal’s pronunciation in front of staff. Another staff member once called Unal “a turkey from Turkey,” but later apologized.

Unal alleged that Vandenkieboom and her staff also made insensitive remarks about other nationalities, such as repeatedly referring to a Vietnamese family as the “little people,” and openly joking about an Asian family’s surname, Fu, by turning it into the crude insult, “F.U.” The office staff also made announcements over the school’s intercom system while faking foreign accents and then laughing about it.

Unal Alleged A Hostile Work Environment Based On National Origin

Unal sued the school district, its superintendent, and principal Vandenkieboom for, among other things, a violation of Title VII on the basis of a hostile work environment based on her national origin. The parties agreed that she was subject to some unwelcome harassment, but her employer argued that the harassment was not based on her national origin and was not sufficiently severe or pervasive to demonstrate a hostile work environment. The district court agreed with the school district, granting it summary judgment on Unal’s claims. But on appeal, the Tenth Circuit overturned that ruling, sending it back for trial.

Title VII Is Not A “General Civility Code”

The Tenth Circuit panel noted that Title VII is not a “general civility code.” In order to proceed to trial, Unal needed to show that a rational jury could find that the workplace was “permeated with discriminatory intimidation, ridicule, and insult, that is sufficiently severe or pervasive to alter the conditions of [her] employment and create an abusive working environment.”

Evidence of Harassment Supported Claim

Unal needed to show that the harassment was based on a discriminatory animus toward her national origin. Evidence of such animus directed toward Unal’s specific nationality is the strongest evidence, but the Court noted that incidents of harassment of other nationalities could also be considered in evaluating her claim.

The Court found that Unal provided evidence that some comments were directed toward her own nationality. Such comments included Vandenkieboom’s question as to why Unal would attend a school Christmas concert while thanking other teachers who attended, Vandenkieboom’s exclusion of Unal from the faculty lounge discussion of an American movie because she was “not from here,” and another staff member’s comment that Unal was a “turkey from Turkey.” Though each comment was not necessarily supportive of a hostile work environment claim, the Court found that taken together, they were intended to negatively emphasize Unal’s status as a foreigner.

The Court also determined that comments directed to other nationalities, such as the derogatory remarks made about the Vietnamese and Asian families, as well as making school announcements with feigned foreign accents, support an inference that the school’s administration permitted a culture of animus toward foreign-born individuals.

In addition, the Court gave weight to several incidents where seemingly neutral conduct resulted in Unal being treated differently than other teachers. For example, Vandenkieboom solicited negative feedback about Unal from a substitute teacher but did not do so with respect to any other teachers. Vandenkieboom also discounted Unal’s expertise in the gifted program, excused other teachers from attending Unal’s meetings while not excusing attendance at other teachers’ meetings, and letting months pass before assigning an instructional assistant to help Unal while assigning an assistant to another teacher in only a week. Even though these events were not discriminatory on their face, the Court viewed them in relation to the totality of the circumstances and determined that a reasonable jury could conclude that those events were the result of a larger environment of hostility based on national origin.

Close Case On Severity or Pervasiveness

The conduct alleged by Unal as creating a hostile work environment occurred over a three year period. While noting that there is no “mathematically precise test” to determine whether harassment is sufficiently severe or pervasive to have altered a term, condition, or privilege of employment, the Court concluded that Unal met that standard. Calling it a close case, the Court viewed the totality of the circumstances of Unal’s allegations and found that a reasonable jury could find that Unal was subjected to unwelcome harassment based on her national origin that created an abusive work environment.

Handling Diverse Employees

By allowing this case to proceed to trial, the Court sent a strong message to employers to clean up a workplace culture that excludes or segregates workers based on their national origin, or creates hostility toward employees from other countries. Jokes, name-calling, correcting pronunciations, and other conduct that treats individuals differently because of their name, accent, appearance, food or music preferences, religious observances, or traditions can lead to a hostile work environment claim.

To avoid hostile work environment claims based on national origin, take these steps to make sure your managers and staff understand what is, and is not, acceptable behavior at work:

Make sure your harassment policy prohibits unlawful conduct based on all protected characteristics, not just sexual harassment.
Provide examples of unacceptable conduct in your harassment policy, including conduct that targets workers on the basis of their national origin, religion, or ethnicity.
Require all employees to review and acknowledge your harassment policy at least annually.
Train management to recognize and stop such conduct before it becomes severe or pervasive.
Promptly investigate any complaint of workplace harassment and take steps to correct improper conduct so that it doesn’t happen again.

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March 11, 2016

Utah Non-Compete Bill Passes In Scaled-Back Form

By Bryan Benard

After six weeks of significant discussions with Utah legislators and business leaders involving numerous compromises, late Wednesday night both houses of the Utah legislature passed a significantly scaled-back bill restricting the duration of non-compete agreements in the State. The new law will apply to any post-employment restrictions created on or after May 10, 2016, but it does not affect current agreements.

One-Year Limitation on Non-Competes

While the original bill intended to ban non-compete agreements entirely, the compromised bill’s most significant impact is that it limits the length of any Utah non-compete restrictions to one year after employment ends. Any post-employment restrictions on competitive activity longer than one year will be void.

Importantly, there are exemptions from the one-year limit for non-solicitation provisions, non-disclosure and confidentiality agreements, and non-competes related to the sale of a business. The bill retains the common-law standard that restrictive covenants must be reasonable in geographic or market scope in order to be enforceable.

Employers Now Required to Pay Attorneys’ Fees if They Try To Enforce Unenforceable Non-Competes

Another significant provision of the bill is the imposition of costs: if an employer tries to enforce a post-employment restrictive covenant, through arbitration or by filing a civil action, and the restriction is found to be unenforceable under this law, the employer will be liable for the employee's costs associated with arbitration, attorney fees and court costs, and actual damages. The bill sponsors intended this provision to eliminate “bad-actor” employers who try to enforce unreasonable restrictions. Employers should revisit their post-employment restrictive covenants, ensure their reasonableness, and be wary about this attorneys’ fees penalty provision moving forward.

Compromises Led To Final Bill

This scaled-back version of the bill is vastly superior for Utah employers than the original bill introduced in early February. The original bill would have entirely prohibited most types of post-employment restrictions. We are proud of the pivotal contributions by our labor and employment attorneys, Bryan Benard and Cecilia Romero, and our government affairs team of Kate Bradshaw and Amanda Smith, in working toward the final version of the bill. Our team had daily contact with the bill sponsors, played a key role on important negotiating teams with the Chamber, the Governor's Office of Economic Development, the Business Coalition, and the Utah Technology Council, and provided valuable testimony at the committee hearings. Representative Mike Schultz, the primary sponsor, was very open to suggestions, accessible, and willing to understand and incorporate business concerns. Thanks to these efforts, Utah employers still have the ability to limit competitive activities after the termination of employment for valid reasons.

If you intend to use non-compete agreements or impose other post-employment restrictions on certain employees, take time now to review those agreements and provisions to ensure they will be enforceable under Utah’s new non-compete law. Again, this law will affect any agreements entered into after May 10, 2016. As always, if you have questions about the effect of this new law on your business, please contact me or your regular Holland & Hart attorney at 801-799-5800.

March 8, 2016

Paid Sick Leave Requirements For Federal Contractors: What To Expect

By Mark Wiletsky

An estimated 437,000 workers who do not currently receive paid sick leave will become eligible for up to seven days of annual paid sick leave under recently released proposed regulations from the Department of Labor (DOL). Last fall, President Obama issued Executive Order 13706 to require federal contractors to provide paid sick leave to employees who work on covered contracts. If you are or expect to be a federal contractor, here is what you’ll need to know about the proposed rules.

Accrual of Paid Sick Time

For every 30 hours worked on, or in connection with, a covered contract, employees must accrue a minimum of one hour of paid sick leave, with a maximum cap of at least 56 hours. Contractors must calculate each employee’s accrual at the conclusion of each workweek. Alternatively, if a contractor does not want the trouble of calculating accruals, the proposed rules allow a contractor to provide an employee with at least 56 hours of paid sick leave at the beginning of each accrual year.

Contractors must provide written notification to covered employees about the amount of paid sick leave that the employee has accrued but not used. Notifications are required at the following times:

at least monthly
each time the employee requests to use paid sick leave
upon separation of employment
upon reinstatement of paid sick leave, and
whenever the employee asks for this information (but no more than once a week).

Notifications of sick leave benefits that accompany paychecks or are accessible online will generally satisfy this requirement.

Use of Paid Sick Leave

Under the proposed rules, an employee may use paid sick leave for an absence resulting from any of the following:

the employee’s medical condition, illness or injury (physical or mental)
for the employee to obtain diagnosis, care, or preventive care from a health care provider for the above conditions
caring for the employee’s child, parent, spouse, domestic partner, or another individual in a close relationship with the employee (by blood or affinity) who has a medical condition, illness or injury (physical or mental) or the need to obtain diagnosis, care, or preventive care for the same
domestic violence, sexual assault, or stalking, that results in a medical condition, illness or injury (physical or mental), or causes the need to obtain additional counseling, seek relocation or assistance from a victim services organization, take legal action, or assist an individual in engaging in any of these activities.

Definitions for these terms are included in the proposed regulations. Contractors must permit employees to use their accrued paid sick leave in increments of no greater than one hour.

Leave Requests and Medical Certifications

Employees must be permitted to make a verbal or written request to use paid sick leave. If leave is foreseeable, the request must be made at least seven calendar days in advance. When not foreseeable, the request must be made as soon as practicable. Any denial of leave must be provided in writing to the employee, with an explanation for the denial.

Contractors may only require a medical certification issued by a health care provider (or other documentation related to domestic violence) if the employee is absent for three or more consecutive full workdays.

Carryover and Reinstatement Of Unused Leave

Contractors are permitted to cap the amount of paid sick leave that employees may accrue to 56 hours each year. But, contractors must carry over unused, accrued paid sick leave from one year to the next, with a cap of at least 56 hours of accrued paid sick leave at any one time. In addition, under the proposed regulations, contractors must reinstate an employee’s unused, accrued paid sick leave if the employee is rehired by the same contractor or a successor contractor within 12 months after a job separation. Contractors will not be required to pay out any unused, accrued paid sick time at the termination of employment.

Interaction With FMLA and Existing Company PTO Policies

Paid sick leave under these regulations may run concurrently with Family and Medical Leave Act (FMLA) leave but it does not otherwise change a contractor’s obligations to comply with the FMLA. In other words, if an employee is eligible for time off under the FMLA, the contractor must meet FMLA requirements for notices and certifications regardless of whether the employee is eligible to use accrued paid sick leave.

For contractors with an existing paid time off (PTO) policy, the policy will meet the requirements of the proposed regulations if the paid time off policy satisfies all the obligations under the proposed rules. But, if it does not meet all of the requirements under the regulations, such as not permitting an employee to use paid time off for reasons related to domestic violence, sexual assault, or stalking, then the PTO policy would not suffice. In such cases, the contractor would have to either amend its PTO policy to make it compliant, or separately provide paid sick leave under the proposed regulations in addition to its PTO.

Covered Contracts and Employees

The Executive Order applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations (or awards outside the solicitation process) issued on or after January 1, 2017. It essentially applies to four major categories of contracts:

procurement contracts for construction covered by the Davis-Bacon Act
service contracts covered by the McNamara-O-Hara Service Contract Act
concessions contracts, and
contracts in connection with federal property or lands and relating to offering services for federal employees, their dependents, or the general public.

Employees covered by the Executive Order, and therefore entitled to paid sick leave, include any person performing work on, or in connection with, a covered contract. There is a narrow exclusion for employees who perform work “in connection with” covered contracts but who spend less than 20 percent of their hours in a particular workweek in connection with such contract work.

Next Steps

Interested parties and the general public may submit comments on the proposed regulations on or before March 28, 2016. The DOL then will review the comments and decide whether to make any revisions before issuing a final rule sometime before the end of this year.

As you can see, many of the requirements of these proposed regulations differ from what we typically see in an employer’s sick leave or PTO policy. Consequently, employers who expect to seek or renew federal contracts after January 1, 2017 should review their existing sick leave and/or PTO policies to determine what changes may be required in order to comply with the proposed regulations. The devil is in the details on this one so don’t wait until the last minute to get your policies and procedures in place.

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