Tag Archives: Mark Wiletsky

October 19, 2016

Firing Employee On FMLA Leave Is Risky, But Not Always Unlawful

Terminating an employee out on Family and Medical Leave Act (FMLA) leave is risky business. After all, the major tenet behind the FMLA is to permit employees to take job-protected time off when serious health or family concerns arise.

But does that mean that an employer may never terminate an employee out on leave? No, but you better have well-supported business reasons for your termination decision, and be prepared to defend your decision in court. A recent decision by Tenth Circuit Court of Appeals offers a useful look at how a Colorado employer did it right and avoided liability for an FMLA-interference lawsuit.

Twelve-Year Employee Struggles After Promotion

Hired in 2002, Kris Olson began working for Penske Logistics, LLC as a dispatcher. Over the next ten years, he was promoted three times, including his 2013 promotion to Operations Manager of Penske’s Denver warehouse. In that role, Olson supervised over 30 employees and was responsible for hiring, financial records, moving and tracking inventory, conducting regular inventory audits, and other managerial tasks.

In his first year as Operations Manager, Olson appeared to be performing adequately, but not exceptionally, scoring mostly “2” and “3” grades on a 5-point scale on his 2013 performance review. He was told he needed to continue to train in his position. In January 2014, however, Penske issued a written warning to Olson for failing to fire an employee who had violated safety rules. Olson was told that any future failure to follow procedures would result in more severe discipline, up to and including termination. In June (about five months later), Olson’s supervisor, Rick Elliott, put Olson on a 60-day “action plan” that instructed Olson to hire more workers, process inventory more quickly, and respond promptly to phone calls and emails. The “action plan” concluded with a warning that failure to meet all requirements would result in Olson’s immediate termination. Olson appeared to follow the instructions in his “action plan.”

On July 9, 2014, Olson requested FMLA leave, which was approved. Olson’s last day at the warehouse before going out on leave was Friday, July 18, 2014.

Employer Discovers Employee’s Misconduct

July 18th proved to be a pivotal day for Olson. On that day, Elliott received a monthly grade that primary client, Whirlpool, gave the warehouse for June – a “D.” With Olson out on leave, Elliott asked a supervisor at another Penske warehouse, Nicki Brurs, to come to Denver to investigate why Whirlpool rated the Denver warehouse so low. Brurs found that there were at least 152 discrepancies between the warehouse’s inventory records and its actual inventory. In addition, Brurs learned that the warehouse was 567 audits behind schedule, having done only 37 random audits over the preceding few months.

At that same time, Elliott also discovered that over the previous few months, Olson had not billed Whirlpool for extra work performed by the warehouse. Earlier, Elliott had asked Olson why he had not billed Whirlpool for extra work and Olson answered that there had not been any extra work for which to bill. On July 28, however, Elliott learned that there had been several instances of extra work for Whirlpool, meaning Olson had lied to him.

By August 1, Elliott had made up his mind that Olson had to go. He sent a report to human resources summarizing the problems he had discovered with Olson, including his dishonesty. He detailed that Olson had hidden inventory losses by creating records for an imaginary storage location – a “ghost stow” – that allowed Olson to hide inventory losses for four years. He also reported that Olson had instructed his staff not to tell Whirlpool when inventory was missing, but instead, to report the missing units as damages. Elliott told HR that he wanted to bring in a temporary replacement as Operations Manager while Olson was out on FMLA leave and fire Olson on his first day back to work. HR agreed that Olson should be fired.

Despite its decision, Penske continued its investigation into Olson’s misconduct. Over the next couple of weeks, Penske discovered additional inventory errors and “ghost stows,” resulting in more than $120,000 of errors in the warehouse’s records. It also concluded that Olson had failed to train his employees, failed to enforce attendance policies, failed to return damaged items, and other lesser performance issues. Read more >>

September 22, 2016

Minimum Wage For Federal Contractors Going Up In 2017

By Mark Wiletsky

On January 1, 2017, the new minimum wage for employees working on covered federal contracts will be $10.20 per hour, up five cents from the current hourly minimum of $10.15. An even bigger increase will go into effect for tipped employees working on or in connection with covered contracts as the tipped-employee minimum cash wage goes up from $5.85 to $6.80 per hour.

Inflation-Based Increases

According to President Obama’s 2014 Executive Order establishing a minimum wage for employees working on federal contracts, and the Department of Labor’s (DOL’s) corresponding regulations, the annual minimum wage for non-tipped employees increases based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics, rounded to the nearest five cents. The annual percentage increase in the CPI-W over the past year was 0.287% which would raise the minimum wage rate to $10.18. Because the hourly rate must be rounded to the nearest multiple of five cents, the new rate beginning January 1, 2017 will be $10.20.

For tipped employees, the Executive Order requires that the minimum cash wage increase by $0.95 (or a lesser amount, if necessary) until it reaches 70% of the contractor minimum wage for non-tipped employees. For 2017, the hourly cash wage for tipped employees will go up by $0.95 cents to $6.80 per hour. Employers must remember that at all times, the amount of tips received by the employee must equal at least the difference between the cash wage paid and the Executive Order minimum wage. If the employee does not receive sufficient tips, the contractor must increase the cash wage paid so that the cash wage in combination with the tips received equals the Executive Order minimum wage.

Required Minimum Wage Notice

Covered federal contractors are required to inform all workers performing on or in connection with a covered contract of the applicable minimum wage rate under the Executive Order. The required notice may be met by posting the free poster on Federal Minimum Wage for Contractors provided on the Wage and Hour Division’s website. As with all employment law posters, this notice should be displayed in a conspicuous place at the worksite.

September 20, 2016

Overtime Rule Lawsuit Seeks To Stop December 1st Changes

By Mark Wiletsky

Twenty-one states have sued the federal Department of Labor (DOL) seeking to prevent the new overtime exemption salary boost from going into effect on December 1, 2016. In a lawsuit filed in the Eastern District of Texas, the states argue that the DOL exceeded its authority when it issued its final rule increasing the salary level for exempt employees to $47,476 per year, with automatic updates to the salary threshold every three years.

Legal Challenge To The Overtime Rule

In the states’ complaint against the DOL, the states argue that the new rule is unlawful. One of their primary arguments is that enforcing the Fair Labor Standards Act (FLSA) and the new overtime rule against the states infringes upon state sovereignty in violation of the Tenth Amendment. The complaint cites the increased payroll costs to the states that would result from having to comply with the new exempt salary levels.

The states argue numerous other reasons why the new overtime rule should be stopped, including that the DOL exceeded the authority granted to it by Congress when it focused on the salary level as the litmus test for exempt status rather than on the duties of white collar workers. The states argue that exempt status should apply to any “bona fide executive, administrative, or professional” employee, even if their salary falls below the new threshold.

The states also take issue with the automatic increases in the new rule through which the DOL will index the salary thresholds every three years. The states assert that the DOL should have to go through the normal notice and comment period in order to make future changes to the salary levels. Read more >>

May 4, 2016

New Federal Trade Secret Act: What Employers Need to Know

By Mark Wiletsky

In a rare bipartisan effort, Congress passed the Defend Trade Secrets Act (DTSA) that will allow an owner of a trade secret to bring a misappropriation action in federal court. For the first time, companies seeking to protect their trade secrets will be able to file civil lawsuits for misappropriation under the federal Economic Espionage Act. The new law will apply to trade secrets related to a product or service used in, or intended for use in, interstate or foreign commerce. President Obama is expected to sign the bill into law very soon.

Protection of Trade Secrets

Many companies rely on a secret formula, process, or technique for their success. Consider, where would Coca-Cola or Kentucky Fried Chicken be without their secret recipes? Under current law, companies seeking to sue for misappropriation of a trade secret must rely on each state’s trade secret law and pursue their lawsuits in state court. Prosecutors may file criminal actions under the federal Economic Espionage Act for theft of trade secrets, but that statute did not provide a mechanism for filing a private federal civil suit – until now.

The DTSA amends the Economic Espionage Act to permit private parties to bring a civil lawsuit in federal court alleging trade secret misappropriation. It provides certain remedies, including injunctions, damages, and an unusual provision allowing for the civil seizure of property in extraordinary circumstances. Although the DTSA does not replace state trade secret laws, it offers an additional enforcement venue for the protection of trade secrets.

DTSA Provides Access To Federal Courts, Injunctions, Damages, and Seizure of Property

Employers need to understand the primary components of the DTSA in order to take advantage of this new avenue to protect valuable proprietary information. First, the DTSA opens the doors of federal courthouses to those alleging an actual or threatened trade secret misappropriation. As with other areas of employment law where there is an overlap of state and federal law, plaintiffs may choose whether to bring a misappropriation claim in state or federal court, depending on which law offers the most protection, more favorable discovery and motion practice, and greater damages. Federal protection for trade secrets should lead to a more consistent approach on what is protected as a “trade secret,” what constitutes a misappropriation, and what remedies are available. More predictable discovery and motion practice under federal court rules should help streamline costs while offering more uniformity in litigation across jurisdictions.

Second, the DTSA tries to balance the need to bolster protection of valuable trade secrets against the right of employee mobility by allowing for injunctions, but only in limited circumstances. Employers can seek an injunction to prevent actual or threatened misappropriation of a trade secret by an employee on terms that the court deems reasonable, as long as it does not prevent a person from entering into an employment relationship or circumvent state laws regarding restraints on employment, such as state non-compete laws. An injunction will not be granted based “merely on the information the person knows” but instead, must be based on evidence of threatened misappropriation.

Third, federal courts may award damages caused by the misappropriation of a trade secret, to include damages for actual loss, for any unjust enrichment not addressed in the damages for actual loss, or the imposition of a reasonable royalty for the misappropriator’s unauthorized disclosure or use of the trade secret. For a willful and malicious misappropriation, federal courts may award double damages and reasonable attorney’s fees. Courts also may award reasonable attorney’s fees to the prevailing party if a claim of misappropriation is made in bad faith, or a motion to terminate an injunction is made or opposed in bad faith.

In a unique provision, the DTSA allows the right to seek a civil seizure of property, but only in extraordinary circumstances. In such cases, a court may order the seizure of property when necessary to prevent the use or dissemination of the trade secret. If, however, the seizure is wrongful or excessive, the DTSA allows the individual whose property has been seized to sue for damages suffered as a result of the unlawful seizure. My colleague, Teague Donahey, provided an excellent summary of the DTSA and its seizure provisions in a recent article.

Safe Harbor For Whistleblower Disclosure of Trade Secrets

The DTSA offers safe harbor to individuals who disclose trade secrets to the government to investigate potentially illegal activity. Whistleblowers are granted civil and criminal immunity if they disclose a trade secret in confidence to a federal, state, or local government official, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or as part of a lawsuit or other proceeding when the disclosure is made under seal.

The new law also protects limited disclosure of trade secrets when an employee files a retaliation claim based on reporting a suspected violation of law against an employer. The employee must make such disclosures under seal and must not disclose the trade secret except pursuant to court order. Note that an “employee” is defined under the whistleblower immunity provision to include “any individual performing work as a contractor or consultant for an employer,” a broader definition than most other employment laws.

This immunity for use of trade secret information in an anti-retaliation lawsuit must be included in any contract or agreement that governs the use of trade secrets and other confidential information. Alternatively, employers may provide a cross-reference to a policy document that is provided to the employee that specifies the employer’s reporting policy for a suspected violation of law. Failure to comply with the notice requirement will result in the employer losing the ability to recover double damages and attorneys’ fees against the employee that might otherwise be available.

What You Should Do Now

If you use confidentiality or non-disclosure agreements that are designed to protect company trade secrets, review and revise future agreements to incorporate the DTSA’s whistleblower immunity notice. You’ll also want to consider expanding the venue language in your agreements to be sure you don’t exclude pursuing enforcement of the agreement in federal court.

If faced with a potential misappropriation of trade secrets, discuss with your legal counsel whether your state’s trade secret law or the new federal law (assuming it is signed into law) would provide the best enforcement mechanism. The DTSA provides an important avenue for increased protection of trade secrets but in some circumstances, state court may remain your best option.

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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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February 23, 2016

EEOC Providing Employer Position Statements To Charging Parties

By Mark Wiletsky

No reciprocity exists in the new nationwide procedure announced by the U.S. Equal Employment Opportunity Commission (EEOC) late last week. The EEOC now will provide employer position statements and any non-confidential attachments to a charging party during an investigation upon request. It then will permit the charging party to submit a response within 20 days. However, the EEOC will not afford employers the right to receive a copy of the charging party’s response.

As you may know, after an employee or other aggrieved individual files a charge with the EEOC, the agency begins an investigation of the allegations. As part of the investigation, the EEOC will request that the employer (the respondent) submit a position statement, responding to the allegations and providing supporting documentation of its employment decisions that allegedly affected the charging party.

Some EEOC regional offices already release employer position statements to the charging party and allow the charging party to file a response. For employers in those EEOC districts, there is little change in procedure. According to the EEOC, however, this new nationwide procedure is intended to provide a consistent approach in all of its offices.

Take note – these procedures apply to position statements you already may be drafting, or have recently submitted, as they apply to all EEOC requests for position statements made to respondents on or after January 1, 2016.

EEOC Providing Only The First Formal Document From Each Side

In justifying its policy to provide the employer’s position statement to the charging party, but not providing the charging party’s response to the employer, the EEOC states that it is releasing the first formal document received from each party. The respondent receives the Charge and the charging party may receive the respondent’s position statement. The EEOC does not intend to release other documents during the investigation process.

Does this amount to a one-sided discovery request? In other words, by requesting copies of what the respondent submitted to the EEOC, does the charging party get the unreciprocated right to learn the identification of witnesses, decision-makers, applicable company policies, internal documentation of the employment decision, and other important information? The EEOC states this new process is intended to help accelerate the investigation and allow it to better tailor its requests for additional information. But, employer respondents will likely see the procedure as requiring it to lay its cards on the table while permitting the charging party to keep its cards largely hidden.

Use Care With Confidential Information

Respondents who rely on confidential information in their position statements should use care in segregating that information in separate attachments that are labeled “Confidential” or some similar designation. Examples of “confidential” information include birth dates, confidential commercial or financial information, trade secrets, non-relevant personally identifiable information of witnesses, comparators or third parties, references to charges filed against the respondent by other charging parties, and sensitive medical information of others (not the charging party). The EEOC states, however, that it will not accept blanket or unsupported assertions of confidentiality, so be prepared to justify why particular information must be protected.

Be careful, too, when submitting position statements and attachments through the EEOC’s online portal. Once you click “Save Upload” to submit your position statement and any attachments, you will not be able to retract them.

Will The New Procedure Change Outcomes?

It’s important to ask whether the early release of the respondent’s position statement (with supporting documents) to the charging party during the EEOC’s investigation will change the outcome of charges. As with any case, it largely depends on the facts. If you have bad facts or poor documentation on your side, the charge may result in a probable cause finding. Or, the charging party may hold out for more during settlement talks or mediation. However, if you have good policies in place, enforce them uniformly, and document your decisions properly, the release of your defense may help resolve the matter earlier in the process, short of litigation.

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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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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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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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August 24, 2015

Home Care Workers Entitled to Minimum Wage and Overtime

By Mark Wiletsky

Agencies that provide companionship or live-in care services for the elderly, ill or disabled will now have to pay their home care workers minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). Reversing a lower court decision, the Court of Appeals for the District of Columbia upheld the Department of Labor’s (DOL’s) new regulations that removed those employees from the “domestic service” exemption. The Court also struck down the challenge to the DOL’s revised definition of companionship services that now places a duty restriction on workers who may be considered exempt.

Extension of FLSA Protections Is Reasonable

For years, individuals who provide companionship or live-in care services were exempt from the minimum wage and overtime rules under the FLSA, even if those individuals were employed by a third party. In 2013, however, the DOL reversed its prior interpretation of the domestic service exemption, adopting new regulations stating that third-party employers of companionship-services and live-in employees could no longer use the exemption to avoid paying minimum wage and overtime pay to their home care workers. The new regulations also narrowed the definition of companionship services: a worker providing exempt services can spend no more than 20 percent of his or her total hours worked on the provision of care, including meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care.

Before the new rules went into effect, trade associations representing third-party agencies that employ home care workers challenged the DOL’s new regulations in court and the district judge declared them invalid. The lower court ruled that the DOL’s decision to exclude a class of employees from the exemption because they were employed by a third-party agency contravened the plain terms of the FLSA. The court also threw out the DOL’s revised definition of companionship services, with its 20 percent limit on care-related tasks, as contrary to both the text and intent of the statutory exemption.

On August 21, 2015, the Circuit Court of Appeals for the District of Columbia disagreed and upheld the new regulations. The appellate court found that the FLSA exemption did not specifically address the third-party employment question and therefore, the DOL had the authority to create rules and regulations to fill in the gap.

The court also determined that the DOL’s new interpretation was “entirely reasonable.” The DOL explained that its change in policy was due to the change in the market for home health care. In the 1970’s, professional care for the elderly and disabled was primarily provided in hospitals and nursing homes so that services in the home were largely that of an “elder sitter” or companion. More recently, however, individuals needing a significant amount of care were now receiving that care in their own homes, provided by professionals employed by third-party agencies rather than by workers hired directly by care recipients or their families. These changes, as well as Congress’s intent to bring more workers within the FLSA’s protections, convinced the court that the DOL’s changed interpretation was reasonable.

Potential Adverse Effects of FLSA Coverage Unfounded

The third-party agencies challenging the DOL’s regulations argued that requiring minimum wage and overtime pay for home care workers would raise the cost of their services, making home care less affordable and creating a “perverse incentive for re-institutionalization of the elderly and disabled.” The DOL countered by pointing to fifteen states where minimum wage and overtime protections already extend to most third-party-employed home care workers and noted that there was no reliable data that these pay protections led either to increased institutionalization or a decline in the continuity of care. The DOL also cited the industry’s own survey that indicated that home care agencies operating in those fifteen states had a similar percentage of consumers receiving 24-hour care as those agencies in non-overtime states.

The DOL further argued that the new rules would improve the quality of home care services, thus benefitting consumers, because the revised regulations would result in better qualified employees and lower turnover. It would also reflect the reality that home care workers employed by third-party agencies are professional caregivers, many of whom have training or certifications, who work for agencies that profit from their employees’ services. The appellate court found the DOL’s position reasonable, upholding its regulations.

No Standing to Challenge Narrowed Definition of Companionship Services

By ruling that the third-party agencies could not use the domestic services exemption, the court removed the ability of those agencies to use the companionship services definition to exempt home care workers from minimum wage and overtime protections. As a result, the trade associations’ members challenging the new, narrowed definition of companionship services would not be directly harmed by the revised definition. Because they would not suffer any injury from the narrowed definition, the challengers lacked standing to oppose the revision, denying the court of jurisdiction to resolve that issue. Consequently, the court ordered that judgment be entered in favor of the DOL.

Practical Effect for Home Care Employers

Pending any appeals, the DOL’s new regulations removing the ability of third-party home care agencies to exempt their home care workers from FLSA minimum wage and overtime pay will go into effect. Employers of home care workers should take steps now to ensure that they comply with the FLSA minimum wage requirement for all hours worked as well as paying an overtime premium for all hours worked over 40 per week. In addition to updating your pay practices, be sure to revise any affected policies and statements in your employee handbook, operational manual, timekeeping procedures, job advertisements and recruiting materials.

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