Category Archives: Nevada

February 2, 2016

DOL’s New Joint Employer Interpretation Seeks To Hold More Employers Accountable

The U.S. Department of Labor (DOL) issued a new Administrator’s Interpretation (AI) that emphasizes the agency’s intent to apply joint employer status more broadly under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Even though the definition of joint employment under these acts has not changed, the DOL made it clear that it will examine dual employer relationships closely with what appears to be an intent to find joint employer status in more circumstances.

Of course, companies engaged as a “dual employer” generally seek to avoid joint employer status. Being a joint employer in the eyes of the DOL can result in liability for the acts of a client that has the primary responsibility to direct and control employees. This is not a favorable place to be. Temporary staffing agencies and PEOs do not have enough control over workers assigned to a client location to assume such liability. As a result, such companies have worked for years to maintain dual or co-employment relationships that do not constitute joint employment. It appears, however, that the DOL, through the AI, is trying to chip away at such relationships and include more dual employers within the definition of joint employer.

All companies engaged in the business of providing employees to clients or co-employing workers are affected by this AI. As explained in more detail below, it is clear that the DOL intends to scrutinize all “dual employer” relationships more closely and focus on the degree of control over workers as a guide to determine whether a joint employer relationship exists..

The DOL identified the two most likely scenarios where joint employment typically exists. One type of joint employment, referred to as vertical joint employment, is where there is an “intermediary employer”, such as a staffing agency, PEO, or other provider of workers to a client. Where such a relationship exists, the DOL will focus on the economic realities of the relationship to determine whether a worker is economically dependent on two or more employers, and if so, will be inclined to find joint employer status. The second type of joint employment under scrutiny by the DOL is where the employee has two or more separate, but related employers, each benefitting from a person’s work during the same period of time. These scenarios are explained in more detail below.

Vertical Joint Employment

In a vertical employment relationship, it is common for the “intermediary employer” to be the W-2 employer that actually pay the wages and payroll taxes, but does not direct and control the day-to-day activities of the worker. The issue for the DOL as expressed in the AI is whether, based on the economic realities of the employment relationship shared by the intermediary and the client company, joint employment exists between the employee, the intermediary employer and the client at which the employee is assigned to work.

The economic realities test is not new to the FLSA or MSPA. What is new is that in reviewing a relationship for joint employer status, the DOL announced in the AI that it will abandon its prior practice to look only to its joint employer regulations, and focus exclusively on the economic realities factors in vertical employment scenarios. This is not necessarily bad news, but it is significant.

Under the economic realities test, the degree of control exerted by a person or entity over the workers is only one of the primary factors in a joint employer analysis, and is not definitive. Other economic realities factors the DOL will consider “in the mix” include:

Does the other employer direct, control, or supervise (even indirectly) the work?
Does the other employer have the power (even indirectly) to hire or fire the employee, change employment conditions, or determine the rate and method of pay?
Is the relationship between the employee and the other employer permanent or long-standing?
Is the employee’s work integral to the other employer’s business?
Is the work performed on the other employer’s premises?
Does the employer perform functions typically performed by employers, such as handling payroll, providing workers’ compensation insurance, tools, or equipment, or in agriculture, providing housing or transportation?
Does the employee perform repetitive work or work requiring little skill?

The DOL also identified industries where it believes vertical joint employment relationships are common, and as a result, under increased scrutiny. These industries include “agriculture, construction, hotels, warehouse and logistics” as well as other industries that regularly use staffing agencies or subcontracting intermediaries.

Horizontal Joint Employment

According to the DOL, the so-called horizontal joint employment relationship exists where multiple employers who are sufficiently associated with each other both benefit from the individual’s work, such as where two separate restaurants have the same ownership and jointly schedule an employee to work at both establishments. The factors to consider when analyzing this type of joint employment include:

Who owns or operates the possible joint employers?
Do they have any agreements between the employers?
Do the two employers share control over operations?
Do the employers share or have overlapping officers, directors, executives, or managers?
Does one employer supervise the work of the other?
Do the employers share supervisory authority over the employee?
Are their operations co-mingled?
Do they share clients or customers?

The DOL stresses that it is not necessary for all, or even most, of these factors to exist in order to find joint employment status between two or more related employers.

NLRB Focus On Joint Employers

The National Labor Relations Board (NLRB) has also been expanding its use of joint employment status to hold companies liable for violations of the National Labor Relations Act. Although the DOL stated in a recently issued Questions and Answers document that its joint employment analysis is different than that used by the NLRB, reports suggest that the office of the Solicitor of Labor reached out to the NLRB’s General Counsel on the issue of joint employment in advance of issuing the new Administrator’s Interpretation. It is clear that both agencies are focused on a broad application of the joint employer doctrine.

What Does This Mean For Employers

If joint employment is found, both entities may be held responsible for compliance with all applicable laws, including wage and hour and other employment protection laws. This includes making sure non-exempt employees are paid minimum wage for all hours worked and overtime pay for hours worked over 40 in a workweek. For employers covered by MSPA, both employers are liable for ensuring necessary disclosures of the terms and conditions of employment, and payment of wages are made, as well as maintaining required written payroll records. A joint employer could also find itself named as a co-defendant in a tort liability suit brought against the “primary actor” employer.

Joint employment also applies for determining eligibility and coverage under the Family and Medical Leave Act (FMLA). This is critical as smaller employers with less than 50 employees may think they are free of any FMLA obligations, only to find that they meet the coverage threshold if they are deemed to be a joint employer with another entity, such as a staffing agency that provides them with additional workers. Similarly, joint employer status could affect compliance under the Affordable Care Act.

In light of this new guidance and the emphasis by the federal government on broad application of joint employment, staffing agencies, PEOs, and their clients should examine their relationships, including but not limited to, the degree of control, supervision, termination rights, setting of pay rates, and provision of tools, training, and policies exerted by the client company. The higher the degree of control and reservation of rights over the workers, the higher the chance that a joint employment relationship will be found. This also means that clients may ask staffing agencies to provide additional information about their compliance with applicable laws so as to gauge their level of risk. In fact, compliant staffing companies that are violation-free may see that as a marketing point in the future.

In the end, if employers comply with applicable laws, joint employment need not come into play. It is only when compliance takes a back seat and government investigators arrive at the door, that companies need to worry about whether they are a joint employer.

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January 29, 2016

EEOC Proposes To Collect Pay Data From Employers

By Mark Wiletsky

The U.S. Equal Employment Opportunity Commission (EEOC) plans to collect pay data from employers with more than 100 employees in order to reveal potentially discriminatory pay practices. Through a proposed revision to the Employer Information Report (EEO-1), large employers will report the number of employees by race, gender, and ethnicity that are paid within each of 12 pay bands. The revision is expected to apply to the September 30, 2017 EEO-1 reports.

By gathering this new pay data by race, gender, and ethnicity, the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) intends to identify pay disparities across industries and occupational categories. These federal agencies plan to use the pay data “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.” The agencies also believe the data will assist employers in promoting equal pay in their workplaces.

Employers To Be Covered By Revised EEO-1

Employers with 100 or more employees, including federal contractors, would be required to submit pay data on the revised EEO-1. Federal contractors with 50-99 employees would not be required to report pay data, but still would be required to report sex, race, and ethnicity, as is currently required.

Pay Bands For Proposed EEO-1 Reporting

Under the EEOC’s proposal, employers would use employees' total W-2 earnings for a 12-month period looking back from a pay period between July 1st and September 30th. For each of the EEO-1 job categories, the proposed EEO-1 would have 12 pay bands. Employers would tabulate and report the number of employees whose W-2 earnings for the prior 12 months fell within each pay band.

The proposed pay bands mirror the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics survey:

(1) $19,239 and under;

(2) $19,240 – $24,439;

(3) $24,440 – $30,679;

(4) $30,680 – $38,999;

(5) $39,000 – $49,919;

(6) $49,920 – $62,919;

(7) $62,920 – $80,079;

(8) $80,080 – $101,919;

(9) $101,920 – $128,959;

(10) $128,960 – $163,799;

(11) $163,800 – $207,999; and

(12) $208,000 and over.

The EEOC published a Question & Answer page on its website to help explain how the pay data would be reported.

Comment Period to Follow

The EEOC’s announcement of the pay data collection on the revised EEO-1 coincides with a White House commemoration of the seventh anniversary of the Lilly Ledbetter Fair Pay Act. The proposed changes will be officially published in the Federal Register on February 1, 2016. Interested parties and members of the public may submit comments for the 60-day period ending April 1, 2016.

We expect that a significant number of employers, business organizations, and industry associations will submit comments, opposing this additional reporting requirement. Groups also may challenge the changes in court. We will keep you posted as this proposal goes forward.

In the meantime, if your organization has concerns about its pay practices, now is a good time to review those practices and proactively address any troubling issues.

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January 20, 2016

Unaccepted Settlement Offer of Complete Relief Does Not Moot Plaintiff’s Case

By Sarah Wisor

In a 6-to-3 decision, the U.S. Supreme Court decided that a plaintiff who rejects a settlement offer or an offer of judgment of complete relief may continue litigating the case. Relying on principles of contract law, the Court ruled that once a settlement offer is rejected by the plaintiff, it has no continuing effect. Because the plaintiff remains empty-handed, he may continue to pursue all available remedies in court, on both an individual basis and on behalf of a class. Campbell-Ewald Co. v. Gomez, 577 U.S. ___ (2016).

Resolving Circuit Court Split on Whether Offer Moots Claim

The dilemma is this: if a defendant offers the plaintiff complete monetary and all other relief that he is entitled to recover on his claims, what is left to be decided or awarded? If there is no case or controversy, a federal court must dismiss the case as moot pursuant to Article III of the Constitution.

The Supreme Court agreed to hear this case because the Circuit Courts of Appeals did not agree on this issue. The First, Second, Fifth, Seventh, and Eleventh Circuit Courts of Appeals had previously ruled that an unaccepted offer does not render a plaintiff’s claim moot. However, the Third, Fourth, and Sixth Circuits had ruled oppositely, holding that an unaccepted offer of complete relief can moot a plaintiff’s claim.

Justice Ginsburg, writing for the majority, pointed to Justice Kagan’s words from her dissent in an earlier case: “When a plaintiff rejects such an offer – however good the terms – [the plaintiff’s] interest in the lawsuit remains just what it was before. And so too does the court’s ability to grant her relief.” Therefore, the Court reasoned, a case is not rendered moot by an unaccepted offer to satisfy the plaintiff’s individual claim.

Chief Justice Roberts Dissents

Chief Justice Roberts dissented, joined by Justices Scalia and Alito. (Justice Thomas concurred with the majority in its holding, but not its reasoning, writing a separate concurrence.) The dissenting justices stated that the “federal courts exist to resolve real disputes, not to rule on a plaintiff’s entitlement to relief already there for the taking.” The dissent would have rendered the case moot on the basis that there is no case or controversy after a defendant agrees to fully redress the injury alleged by a plaintiff.

Can Defendants Still “Pick Off” Named Plaintiffs?

Settling a named plaintiff’s individual claim prior to class certification is appealing to defendants who want to avoid the greater liability and cost of a class action. While this “picking off” strategy may have been undermined, in part, by the Supreme Court’s decision, the Court did not decide whether payment of complete relief would render the case moot.

This case arose when Jose Gomez sued a marketing firm, Campbell-Ewald, for sending him text messages without his permission. Gomez filed a nationwide class action, alleging violations of the Telephone Consumer Protection Act (“TCPA”), which permits consumers to recover treble damages of $1,500 per call/text message, plus litigation costs. Gomez sought the maximum statutory damages, costs, attorney’s fees, and an injunction against Campbell-Ewald barring further unsolicited messaging.

Before Gomez could file a motion for class certification, Campbell-Ewald offered to settle Gomez’s individual claim and filed an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure. Campbell-Ewald offered to pay Gomez $1,503 per unsolicited message and his court costs, but not attorney’s fees, which Campbell-Ewald argued were not available under the TCPA. Campbell-Ewald also offered to stipulate to an injunction that would bar it from sending text messages in violation of the TCPA. Gomez rejected the settlement offer and allowed the Rule 68 offer of judgment to lapse. Campbell-Ewald then sought dismissal of Gomez’s case, arguing that its offer of complete relief rendered his claim moot. The Supreme Court disagreed.

However, the Court did not decide whether the result would be different if a defendant actually deposits the full amount resolving the plaintiff’s individual claim in an account payable to the plaintiff, with the court then entering judgment in that amount. As Chief Justice Roberts stated in his dissent, the good news is that this case is limited to its facts, and that issue has been left for a future case.

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January 12, 2016

Anticipating Revisions To The “Persuader Rules” – What You Need To Know

By Brian Mumaugh

As early as March, the U.S. Department of Labor (DOL) plans to issue its final rules that will significantly narrow the type of union-avoidance activities that employers and their labor attorneys and relations consultants may engage in without having to report those activities to the government. The tightening of the so-call “persuader rules” will mean that employers who utilize labor relations consultants, including lawyers, to help with union-avoidance or collective bargaining activities will need to disclose many more of those activities, and the fees paid for them.

Evolution of the “Persuader Rules”

In the late 1950’s, because of perceived questionable conduct by both unions and employers involved in union organizing and collective bargaining campaigns, Congress enacted the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). The LMRDA seeks to make labor-management relations more transparent by imposing reporting and disclosure requirements on labor organizations and their officials, employers, and labor relations consultants.

Under the LMRDA, the reporting requirements for employers and their labor consultants are triggered when they undertake activities intended to directly or indirectly persuade employees to exercise (or not to exercise) the employees’ right to organize and bargain collectively through representatives of their own choosing. Employers must file a Form LM-10 (Employer Report) that discloses all payments made to unions and union officials, persuader payments made to employees and employee committees, persuader agreements/arrangements made with labor relations consultants, including lawyers, which includes the amount and dates of payments made to such consultants, and any expenditures made to interfere with, restrain or coerce employees, or otherwise obtain information concerning employees or a labor organization. Labor relations consultants must file a Form LM-20 specifying, among other things, information about the consultant and the nature of the “persuader activities” to be performed. Under the LMRDA, the DOL must make all such forms available for public inspection.

The “Advice” Exemption

The LMRDA contains an exemption from the reporting requirements for persuader activities for services that give “advice” to the employer. Except for brief periods when the LMRDA was first enacted and again in 2001, the DOL has interpreted this “advice” exemption to apply to activities where a consultant or lawyer prepares a speech or documents for use by the employer, or revises materials initially drafted by the employer. In other words, as long as the consultant or lawyer did not directly deliver or disseminate speeches or materials to employees for the purpose of persuading them with respect to their organizational or bargaining rights, behind-the-scenes activities where the consultant/lawyer drafts materials for use by the employer would not trigger a reporting obligation. Under the proposed rules, that is about to change.

Expanded Proposed Interpretation of “Advice” Exemption

Believing its long-standing interpretation of the “advice” exemption to be overly broad, the DOL proposed a narrower interpretation that would require reporting in any case in which the agreement or arrangement with a labor consultant/lawyer in any way calls for the consultant to engage in persuader activities, regardless of whether or not advice is also given. The revised interpretation would define reportable “persuader activity” to include activities where a lawyer or consultant provides material or communications to, or engages in other actions, conduct, or communications on behalf of an employer that at least in part, has the objective of persuading employees concerning their rights to organize or bargain collectively. Exempt “advice” would be limited to recommendations, verbal or written, regarding an employer’s decision or course of conduct.

Stated examples of covered persuader activities that would require disclosure include:

drafting, revising, or providing written materials for presentation, dissemination, or distribution to employees
drafting, revising, or providing a speech, video, or multi-media presentation to be presented, shown or distributed to employees
drafting, revising, or providing website content for employees
planning or conducting individual or group employee meetings, and training supervisors or employer representatives to do the same
coordinating or directing the activities of supervisors or employer representatives
establishing or facilitating employee committees
developing personnel policies or practices
deciding which employees to target for persuader activity or disciplinary action
conducting a seminar for supervisors or employer representatives

The DOL justifies this expansion of the reporting circumstances, in part, because the role of outside consultants and law firms in managing employers’ anti-union efforts has grown substantially over the years, citing reports that somewhere between 71% and 87% of employers facing organizing drives hire third-party consultants to assist in their counter-organizing efforts. The DOL also states that underreporting of persuader activities is a problem as “employees are not receiving the information that Congress intended they receive.” Regardless of its reasoning, the DOL’s proposed change of its 50-year old interpretation will result in significant burdens on both employers and their consultants.

March 2016 Is New Target Date for Final Rule

Almost five years has passed since the DOL published its proposed rule changing the “persuader rules.” After numerous delays in publishing its final rules, the DOL’s regulatory agenda indicates that it expects to issue the final “persuader rules” this March. We will let you know when the final rules are published, or if the timeline changes. In the meantime, you might want to take advantage of the next few months before the new rules kick in to obtain union-avoidance materials and training from your consultants now. At a minimum, talk to your labor relations consultant/labor lawyer about the upcoming changes so that you are aware of how they may impact your labor strategies in the future.

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December 28, 2015

Workplace Safety Violations Could Lead to Felony Convictions and Stiffer Penalties Under New Initiative

Looking to send a strong message to employers who fail to provide a safe workplace, the Departments of Labor and Justice (DOL and DOJ respectively) are teaming up to investigate and prosecute worker endangerment violations, namely, violations of the Occupational Safety and Health Act (OSH Act), the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), and the Mine Safety and Health Act (MINE Act). Under a new Worker Endangerment Initiative announced on December 17, 2015, federal investigators and prosecutors will look to possible environmental crimes committed by companies in conjunction with workplace safety violations in order to seek felony convictions and enhanced penalties available under federal environmental laws. With the DOJ’s additional focus on holding individual corporate wrongdoers accountable, corporate executives could find themselves criminally and civilly liable for their role in such crimes.

It’s All About Imposing Bigger Penalties

The three federal worker safety statutes emphasized in the Endangerment Initiative generally only provide for misdemeanor penalties and monetary penalties that are significantly lower than various environmental statutes. By looking for environmental offenses to add to workplace safety violations, prosecutors will be able to seek felony convictions and enhanced penalties under Title 18 of the U.S. Code and the federal environmental laws. The stated intent is to “remove the profit from these crimes by vigorously prosecuting employers who break safety and environmental laws at the expense of American workers.”

In addition to prosecuting environmental crimes, the Environment and Natural Resources Division looks to strengthen its pursuit of civil cases that involve worker safety violations. The division believes that violations of the Clean Air Act, Resource Conservation and Recovery Act and the Toxic Substances Control Act can have a direct impact on workers who must handle dangerous chemicals and other materials as part of their work duties.

Linking Safety Violations With Environmental Crimes

If an organization skimps on safety protections for its workers, will it also ignore environmental protections? The DOJ and DOL think so. The government points to statistics of workplace deaths and injuries, including 13 worker deaths on average in the U.S. each day, due in part to exposure to toxic and hazardous substances at work. According to John C. Cruden, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, “employers who are willing to cut corners on worker safety laws to maximize production and profit, will also turn a blind eye to environmental laws.”

In essence, this initiative provides the government with a mechanism to turn a workplace safety investigation into an examination of a company’s environmental compliance. The plan is for the DOJ’s Environment and Natural Resources Division and the U.S. Attorneys’ Offices to work in conjunction with the DOL’s Occupational Safety and Health Administration, Mine Safety and Health Administration, and Wage and Hour Division to increase the frequency and effectiveness of criminal prosecutions of worker endangerment violations.

Individual Accountability For Corporate Wrongdoers

The new Worker Endangerment Initiative will target companies who have committed workplace safety and environmental violations. However, due to a recent push by the DOJ to focus on holding individuals accountable for corporate wrongdoing, company executives and decision-makers could be the target of increased scrutiny during the government’s investigation.

In September 2015, Deputy Attorney General Sally Quillian Yates issued a memorandum outlining the steps that DOJ attorneys should take in investigating corporate misconduct in order to hold more executives and managers accountable for corporate wrongdoing. The steps, some of which represent policy shifts, are:

Corporations must provide to the government all relevant facts relating to the individuals responsible for the misconduct in order to qualify for any cooperation credit;
Criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
Criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
Absent extraordinary circumstances or approved departmental policy, the DOJ will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
DOJ attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should memorialize any declinations as to individuals in such cases; and
Civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual’s ability to pay.

The DOJ believes holding individuals accountable for corporate wrongdoing will be effective in reducing corporate misconduct because it will deter future illegal activity, incentivize changes in corporate behavior, hold the proper parties responsible for their actions, and promote the public’s confidence in our justice system.

What This Means For Employers

Companies subject to a workplace safety investigation can expect that their environmental compliance will also be investigated. If federal prosecutors find that a company violated environmental laws, they will pursue the stiffer criminal and civil penalties provided by those environmental statutes. In addition, because the DOJ’s renewed focus on individual accountability, employers should expect that future safety and environmental investigations will focus on individual corporate actors who engaged in or authorized the wrongdoing in order to hold such individuals criminally and civilly liable.

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December 14, 2015

Employee Handbook Versus Procedures Manual: Keeping Policies Consistent

By Cecilia Romero

Should your employee handbook contain every HR policy and procedure used by your organization, or should it only contain policies that employees need to know? Should you maintain a separate procedures manual describing how HR and supervisors enact those policies? Here are the key considerations to help you decide what to include in your handbook versus a procedures manual.

Goals of Your Employee Handbook

Your employee handbook should contain your employment policies and be written with your employees as the intended audience. It is meant to inform employees of what they may expect from the company, and what is expected of them. It does not need to include the “how” or “why” behind the policies but instead, sets forth the essential terms and conditions that govern the employment relationship.

Although there is no legal requirement that you have an employee handbook, a well-written handbook can play an important role in reducing your employment law risks. Specifically, your handbook should:

reinforce an employment-at-will relationship between the company and its employees through proper disclaimers and a description of the at-will relationship in your “Acknowledgment of Receipt of Handbook” form signed by each employee
show your company’s intended compliance with applicable laws (e.g., equal opportunity employer, pay will be in compliance with the Fair Labor Standards Act, reasonable accommodations will be offered, etc.)
offer grounds or support for your employment decisions (e.g., policy indicated that violation of work rules could result in termination, etc.)
provide affirmative defenses when faced with an employee charge or lawsuit (e.g., policy informed employees on how to report harassment but charging party failed to report it, pay policy indicated how to report payroll errors, etc.)
comply with applicable state and federal laws that mandate notification of employee rights, such as an FMLA policy.

In addition to the legal benefits of an employee handbook, you may use your handbook to inform employees about discretionary benefits (i.e., those that are not mandated by law), such as breaks, vacation, sick time, tuition reimbursement, discounts or other perks. Your policies on these types of benefits should set forth eligibility requirements, accrual amounts, scheduling, call-in or request procedures, etc. Make sure your policies comply with applicable state laws as some states regulate pay issues associated with breaks, vacation time and other employer-provided benefits.

Separate Procedures Manual

A procedures or operations manual, on the other hand, is intended for use by HR, managers, and/or supervisors, not your employees at large. Typically, a procedures manual will describe how your policies are implemented and enforced. It may include forms, checklists, and sample documents to show administrators and managers how to handle specific workplace policies and situations. For example, it may detail the procedures for sending out an offer letter, how to complete the Form I-9, or how to handle a request for jury duty leave. It also may include references to specific laws, rules or regulations should management or HR need to look those up.

Just as you are not required to have an employee handbook, you are not legally required to have a procedures manual. One advantage to having a more detailed document is that it may serve as a reference tool for frontline supervisors, helping to make sure management is consistent in the way it handles employee matters and policy enforcement. It also can be useful in ensuring procedural continuity so that institutional knowledge is not limited to the memories of a few, select individuals in HR.

Avoid Discrepancies Between Policies And Procedures

A distinct disadvantage of having a separate procedures manual, however, is that it could contain or reveal discrepancies between the “management” policy and the policy communicated to employees in the handbook. You do not want two or more “policies” on the same topic as that can lead to inconsistent treatment of workers — with potentially discriminatory consequences. Discrepancies and inconsistent policies not only confuse administrators and supervisors but they also can result in a “smoking gun” that can be used against you when an employee raises a claim.

Deciding whether to have a separate procedures manual often depends on how much guidance your internal folks need in order to manage their workforce in a consistent, uniform and non-discriminatory manner. If you decide a more detailed document would be useful, take great care to ensure that the separate management document is consistent with the policies in your employee handbook.

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December 9, 2015

Holiday Party Checklist—Plan Ahead to Minimize Employer Risks

By Mark Wiletsky

Delicious food, fine wines, music, camaraderie, laughter – all ingredients for a great holiday get-together. What could go wrong? Too much, unfortunately. Employees may drink too much, act inappropriately, offend co-workers or guests, hurt themselves or others, or even start a brawl. Depending on the circumstances, your company may find itself potentially liable for the inappropriate or unlawful actions of your employees at company-sponsored parties. You can help minimize the risks associated with holiday parties by following these five tips.

Avoid or Limit Alcohol

Employers face potential liability when providing alcohol at a company holiday event when someone gets hurt due to drunk driving, falling down, etc., or when inappropriate behavior crosses the line from embarrassing to unlawful, such as sexual harassment or violence during an argument. You can limit your company’s exposure for such conduct by either banning alcohol entirely (we know that may not be well-received in some situations), or limiting each person’s consumption through the use of drink tickets or a 2-drink limit. If you choose to allow alcohol at your events, don’t allow free access to the alcohol (e.g., open bar, self-serve beer or unlimited wine bottles). Instead have a professional, licensed bartender serve the alcohol as they are trained not to over-serve patrons. Be sure to offer plenty of food and non-alcoholic beverages. Arrange for taxis or hotel stays if someone over-indulges. Schedule the event during the week so folks are less inclined to get carried away. Set an end time for the party and shut down the bar at least a half hour before the event closes. Do not authorize or condone “after parties.” Finally, designate some supervisors or managers to refrain from drinking alcohol to make sure things don’t get out of hand.

Keep Harassing Behavior in Check

Make sure that your sexual harassment policy is up-to-date and that it applies to company parties, even if held off company premises. Send out a reminder to employees in advance of the party that all company policies, including those prohibiting harassment and other inappropriate conduct, apply to the party. Consider making the event a family party where employees may bring their spouse, significant other, or children as the presence of family members and children often deters inappropriate behavior which could give rise to a harassment complaint. Make sure that supervisors and managers watch out for potentially harassing conduct and are trained to intervene as necessary.

Respect Religious Differences and Keep the Party Neutral

Although many holidays toward the end of the year are religious in nature, be sensitive to your employees’ varying religious beliefs and avoid any conduct that could be construed as favoring one religious group over another. Refrain from calling your party a “Christmas Party” and stick with the neutral “Holiday Party” instead. Do not make attendance at the company-sponsored events such as parties, volunteer activities, food drives or other holiday outings mandatory. Make sure the timing of the company party does not exclude any employees for religious reasons. For example, because the Jewish Sabbath starts on Friday night, a party on a Friday evening may exclude Jewish employees. Avoid decorating with religious symbols, such as nativity scenes, menorahs or angels. There are plenty of neutral decorations, such as snowflakes, holly and reindeer, that can be used instead.

Be Wary of Gift Exchanges

Gift exchanges between employees may seem innocuous enough, but consider the potential issues a gift exchange may cause. Employees may not be able to afford to participate, even within a recommended cost guideline. Other employees may give sexy or “funny” gifts that end up offending others. The best practice is to avoid a company or department sponsored gift exchange altogether. If you decide to allow one among your employees, make sure it is entirely voluntary and no one is pressured or made to feel uncomfortable for not participating. Set cost guidelines and remind participants that gifts must be appropriate for the workplace.

Remember Wage and Hour Laws

If you assign any non-exempt employees to plan, prepare for and staff the party, their hours are likely work hours for which they must be paid. For example, if your office receptionist is required to be at the door of your holiday party to greet guests and hand out name tags, that individual is likely working and you need to include those hours in his or her weekly work hours when determining regular and overtime wages. You do not need to pay employees who are attending the party if their attendance is voluntary and they are not expected to provide services that benefit your organization.

Follow this checklist and you’ll avoid last minute holiday headaches and keep your organization out of trouble.

(Note: This is a re-post of this author's article that previously appeared on this blog.)

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December 4, 2015

Court Upholds NLRB Ruling On Overly Broad Employment Policies

By Steven M. Gutierrez

The National Labor Relations Board (NLRB or Board) may feel emboldened after a recent ruling by the District of Columbia Circuit Court of Appeals, which upheld the Board’s decision that an employer’s policies on investigation confidentiality, electronic communications, and work hours were overly broad, potentially chilling employees’ rights to engage in protected concerted activities. As a result, employers should expect the further onslaught of NLRB attacks on seemingly neutral employment policies to continue, or worse, escalate.

NLRB’s Attack on Handbook Policies

In recent years, the Board has scrutinized many handbook policies, including those of non-union employers. As we’ve written in a past post, the NLRB attacks those policies that it believes interferes with, or chills, employees’ §7 rights to form labor organizations, bargain collectively, and engage in similar concerted activities. If the employer’s policy or rule would reasonably tend to chill employees in the exercise of their statutory rights, then the employer violates §8(a)(1) of the National Labor Relations Act, committing an unfair labor practice.

Analysis of Whether Policies Violate NLRA

The D.C. Court of Appeals set forth the proper analysis for determining whether an employment policy or work rule can amount to an unfair labor practice under the National Labor Relations Act (NLRA). Hyundai Am. Shipping Agency, Inc. v. NLRB, No. 11-1351 (D.C.Cir. Nov. 6, 2015). First, the Board must determine whether the policy explicitly restricts §7 rights, such as by restricting employees from discussing or forming a union. An explicit restriction on employees’ rights will invalidate the policy, amounting to an unfair labor practice.

In the absence of an explicit restriction on §7 rights, the Board must ask whether the rule:

could be reasonably construed by employees to restrict §7 activity;
was adopted in response to such activity; or
has been used to restrict such activity.

If the answer is “yes” to any of these three questions, then the employer must show an adequate justification for the restrictive language to avoid it constituting an unfair labor practice.

Court Upholds Board Order On Three Policies

The Court reviewed the Board’s order regarding four policies maintained by employer Hyundai America Shipping Agency in its employee handbook, namely its policies on investigation confidentiality, electronic communications, work hours, and complaint provisions. Here is how the Court analyzed whether the Board correctly concluded that each of the policies was restrictive of employees’ §7 rights:

Investigative Confidentiality Rule: Hyundai had an oral rule that prohibited employees from discussing information about matters under investigation. The Court stated that “this blanket confidentiality rule clearly limited employees’ §7 rights to discuss their employment.” The Court then looked at whether Hyundai had offered a legitimate and substantial business justification for the rule that outweighed the adverse effect on its employees’ rights. While acknowledging that there may be a legitimate business justification for mandating confidentiality for particular types of investigations, such as sexual harassment investigations, the Court found that those concerns did not justify a ban on discussion of all investigations. Because the confidentiality rule was overly broad, the Court upheld the Board’s determination that it violated the NLRA.

Electronic Communications Rule: The electronic communications policy in Hyundai’s employee handbook stated that employees should only disclose information or messages from the company’s electronic communications systems to authorized persons. The Court stated that the key to determining the validity of this policy was whether the prohibition was limited to confidential information. Because Hyundai’s rule was not limited to the disclosure of confidential information, a reasonable reader could conclude that it applied to information about the terms and conditions of employment and therefore, it was overly broad and invalid.

Working Hours Rule: Hyundai maintained a handbook policy that allowed for employees to be disciplined, including termination, for “[p]erforming activities other than Company work during working hours.” Here, the key distinction is the use of the phrase “working hours” rather than “working time.” “Working time” excludes break periods so restrictions on union activity during working time is acceptable. On the other hand, “working hours” describes the period from the beginning of a shift to its end, including breaks. Because restrictions on union activity during working hours (sg., including break time) is presumptively invalid, the Court upheld the Board’s conclusion that Hyundai’s rule was invalid.

Complaint Provision: Hyundai’s handbook provided that employees should voice complaints directly to their immediate supervisor or to Human Resources, rather than complaining to fellow employees which would not resolve the problem. Although the Board had ruled this provision invalid, believing it prohibited employees from complaining about the terms or conditions of work among themselves, the Court disagreed. It stated that although the rule urged employees to voice complaints to a supervisor or to Human Resources, it was not mandatory, did not preclude alternative discussions, and did not provide penalties if an employee complained to fellow employees. Therefore, the Court found that the language would not be read to prohibit complaints protected by §7.

Court Rejects NLRB’s Investigation Confidentiality Rule Standard Affirmed in Banner Health

Interestingly, while discussing Hyundai’s investigation confidentiality rule, the Court rejected the ALJ’s opinion that in order to show a legitimate and substantial justification for an investigation confidentiality policy, the employer must determine whether any “investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated and there is a need to prevent a cover up.” The NLRB had reaffirmed that standard in its widely cited Banner Health ruling on confidential investigation policies.

The D.C. Court of Appeals stated that it “need not and do[es] not endorse the ALJ’s novel view” on how employer’s must show a legitimate justification for an investigation confidentiality rule. The Court instead simply held that Hyundai’s confidentiality rule was “so broad and undifferentiated that the Board reasonably concluded that Hyundai did not present a legitimate business justification for it.”

Review and Narrow Your Policies

To help avoid NLRB scrutiny, review your employee handbook and other employment policies to determine whether any language could potentially chill employees’ §7 rights. If possible, narrow any restrictions that may infringe on employees’ rights and make certain that your organization can articulate a legitimate and substantial justification for your restrictions. Because these issues are continually evolving, discuss any questionable policy wording with your employment counsel.

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November 30, 2015

Unlimited Vacation Policy: Is It Right For Your Company?

By Mark Wiletsky and Emily Hobbs-Wright

Paid vacation time is a perk that can attract and retain the best and brightest employees. It can also impact your balance sheet, as earned but unused vacation days remain a liability until used or paid out. A small, but growing number of companies are trying a new approach, offering unlimited vacation to certain segments of their workforce. Netflix, Best Buy, Virgin America, LinkedIn, General Electric, and others have adopted unlimited vacation policies, or “discretionary time off (DTO),” as it is sometimes called.

Colorado employers, along with organizations in other states, may be wondering whether to scrap existing paid time off or vacation policies and replace them with unlimited vacation. That is especially true given the recent—and sometimes conflicting—information from the Colorado Department of Labor and Employment concerning “use-it-or-lose-it” policies. To help you decide whether unlimited vacation policies are right for your organization, we’ll highlight the pros and cons. But first, some background.

Legal Implications For Vacation Pay

Generally, employers are not required by law to provide paid vacation time to employees. If you choose to provide paid time off for vacation purposes, you get to decide what your vacation policy will be. This includes specifying how much paid vacation you’ll provide, any eligibility requirements, which categories of employees are entitled to it, when it accrues or is “earned,” in what increments it may be taken, the request and approval procedures, whether it carries over from year to year, and other vacation procedures.

That said, state laws will factor into the implementation of your vacation policy. For example, many states classify accrued vacation as compensation or wages and will specify that earned vacation pay may not be forfeited. Such provisions mean that unused, earned vacation must be paid out upon separation of employment. These state laws also can prohibit “use-it-or-lose-it” vacation policies where an employee who fails to use his or her accrued vacation time within a specified time frame loses the accrual of paid time.

By way of example, Colorado wage law states that vacation pay earned in accordance with the terms of any agreement is considered “wages” or “compensation.” Colorado employers who provide paid vacation to employees must pay all vacation “earned and determinable” upon separation of employment. Although the Colorado Department of Labor and Employment recently indicated that a “use-it-or-lose-it” vacation policy is permissible, the Department also noted that such a policy may not operate to deprive an employee of earned vacation time. The Department will look to the terms of the agreement between the employer and employee to determine when vacation pay is “earned.”

Pros – Why Unlimited Vacation May Make Sense

Some organizations have implemented a single paid time off (PTO) policy, allowing employees to accrue a set amount of paid time off to be used for virtually any purpose, such as vacation, sick time, attending kid’s school events, going to appointments, etc. Getting away from traditional (and separate) vacation and sick time policies is believed to offer employees more flexibility while cutting down on administrative headaches for employers. Unlimited vacation, or DTO, goes even further. Here are the potential benefits of an unlimited vacation policy:

More Flexible Work Schedules – employees can take advantage of more flexibility to manage their work and personal time; often a great recruiting and retention tool
Avoid Keeping Accrued Vacation On Your Books – in many states, because vacation time is no longer “earned,” you arguably will no longer need to pay out any unused vacation time upon separation of employment, effectively eliminating the liability of carrying accrued vacation time on your balance sheet
No Cost/Little Cost Perk – if employees take about the same amount of time off under an unlimited vacation policy as under a traditional accrued vacation and sick time policy, employers do not experience any additional cost for the program; as long as the perk is not abused, there may be little financial cost to the company
Increased Productivity – reports suggest that employees become more efficient and productive while at work in order to ensure that they suffer no ramifications when utilizing their time off under the unlimited vacation policy
Morale Booster – trusting that employees can properly manage their time on and off the job can build morale and loyalty; it can shift the focus from putting in hours to getting results
Streamlining of Record Keeping Practices – by eliminating the need to track vacation accruals and usage, you may cut down on the administrative headaches associating with a traditional vacation policy

Cons – Why Unlimited Vacation May Not Work

An unlimited vacation policy may not be appropriate for all organizations. Depending on the nature of your business and the make-up of your workforce, you may determine that the following risks negate any good that could come from an unlimited vacation policy:

Perception That Unlimited Vacation Means No Vacation – some employees may feel that taking away a specific accrual for vacation means that they’ve lost an important perk, especially if they believe that the company or their supervisor will not truly allow them time off when they want it
Additional Cost If Abused – if overall time off exceeds previous accrual amounts, and that additional time off is not offset by increased productivity, the perk may cost you more and be less predictable than an accrual-based vacation policy
Less Black and White – whether an employee is “abusing” unlimited vacation can be rather subjective; one employee may produce excellent work product while taking six weeks off per year while another employee fails to meet expected output taking only three weeks of vacation; as a result, supervisors may struggle with how to handle discipline and performance issues and create a perception of unfair or, even worse, discriminatory treatment
Not Tested, So Liabilities Unknown – it is unclear how state agencies and courts will handle potential wage claims based on an unlimited vacation policy
Scheduling Uncertainties – it can be difficult to cover shifts, schedule projects and meet production deadlines when employees have greater flexibility to use unlimited time off
Pay Issues For Non-Exempt Workers – an unlimited vacation policy would be difficult to apply to non-exempt hourly employees (e., employees who are eligible for overtime pay) as you need to track all hours worked and ensure that you pay minimum wage and an overtime premium according to applicable state and federal law

Bottom Line: Use Caution

If your workforce utilizes exempt employees (i.e., employees who are not eligible for overtime) who have a great deal of autonomy, such as in technology and creative fields, an unlimited vacation policy may attract and incentivize your employees. If you employ mostly non-exempt hourly workers, have a lot of turnover, or need more predictability in covering shifts and positions, an unlimited vacation policy may not work for you. Your best bet is to compare the pros and cons with the nature of your business to evaluate whether this new type of employee perk is appropriate for your organization. If in doubt, it’s always a good idea to consult with your employment counsel.

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November 16, 2015

Overtime Pay Changes May Be Delayed Until Mid-to-Late 2016

By Mark Wiletsky

The Department of Labor (DOL) does not expect to issue its final rule changing the overtime exemptions until mid-to-late 2016, according to a recent report in the Wall Street Journal. The report states that Solicitor of Labor, Patricia Smith, provided the new timeline at an American Bar Association Labor and Employment Law conference in Philadelphia last week. The final rule is expected to greatly expand the number of employees who are eligible for minimum wage and overtime pay. If the final rule is delayed until mid-to-late next year, the changes probably won’t go into effect until sometime in 2017.

Why The Delay?

In March 2014, President Obama directed the DOL to update its regulations defining which white collar employees are exempt from the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA). It took over a year – until July 6, 2015 – for the DOL to issue its proposed changes. The proposed rules raise the salary threshold for white collar exemptions to the 40th percentile of weekly earnings for full-time salaried workers nationwide, or an estimated $970 per week/$50,440 per year. The salary threshold for highly compensated exempt employees would go up from $100,000 to about $122,148 per year. The proposed rules include a mechanism for automatic annual increases to the salary thresholds. See an earlier blog post for a more detailed explanation of the proposed changes.

After the proposed rules came out in July, businesses and organizations flooded the DOL with an estimated 290,000 comments. Solicitor Smith reportedly told the ABA conference attendees that the large volume of comments and the complex nature of the changes were the cause of the delay in issuing the final rules. Another explanation could be politics and the desire to wait to issue the new rules until after next year’s presidential election.

Next Steps

Employers may have more time to prepare for the expected overtime pay changes, but the timing remains uncertain despite the Solicitor’s comments. Plan to review the employees you currently consider to be exempt and note those positions and persons that are being paid close to the salary threshold. Those will be the ones who may no longer be exempt after the salary thresholds go up. Although no changes to the duties requirements were part of July’s proposed rule, the DOL asked for comments on the duty rules. Accordingly, the FLSA white collar exemption duty requirements could change after the final rules come out. We will keep you posted on any new developments.

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