In any merger and acquisition or other business reorganization, one critical piece should not be MIA: the consideration of immigration issues. If a purchaser ignores or postpones immigration issues until after closing, it can result in very serious consequences, ranging from losing critical employees to visits, fines or penalties from the USCIS (United States Citizenship and Immigration Service) or worse, from ICE (Immigration and Customs Enforcement). Immigration related issues should be addressed before closing, with time to correct any problems. A purchaser’s due diligence should include: Understanding the type of transaction and the difference it makes in certain types of visas. Reviewing the acquired company’s I-9s to find out if it has been complying with the  law, if it has any foreign national employees and, if so, their immigration status. If the acquiring company is assuming the liabilities for I-9 violations it must know, at a minimum, if there is an I-9 for each employee and if the I-9s are completed correctly. So-called “paperwork” I-9 violations, which can occur even if the acquired company never employed a foreign national, carry penalties ranging from $110 - $1,100 for each employee. There are also significant civil and criminal penalties for unauthorized employment of foreign nationals. Identifying the immigration status of every foreign national the acquired company employs to determine what needs to be done to keep them employed by the new company. For example, a common visa, the H-1B, requires that the employee only work for the sponsoring employer. Even if the new company qualifies as a successor in interest -- and under some types of reorganization it may not -- there are steps to be taken to protect the right of a foreign national to work for the new employer and to easily travel. Another visa, the L, is used for the transfer of international company employees and only continues to be valid if the overseas company from which the employee came is part of the acquisition. If not, the new company cannot employ that person. In addition, some foreign national employees may be at various stages of the permanent resident process, the green card, and are being sponsored by the company to be acquired. It is critical that the issues surrounding that process be identified and addressed before the closing. Considering whether the issues of successor in interest and/or the assumption of immigration liabilities, to maintain the immigration status and employment authorization of the acquired employees, require inclusion in the terms of the controlling document. Immigration issues are not second-class or post-closing issues. They need to be identified early in the acquisition process to assure that the new employer, on day one, post-closing, is not saddled with potential liabilities or does not lose valuable employees.

Congress passed the Multiemployer Pension Plan Reform Act of 2014 (MPRA) in an effort to aid the many failing multiemployer pension plans. At the time of its passage, the MPRA was regarded as the most significant legislation in decades. Importantly, the MPRA permits trustees to reduce the pension benefits of plan participants, including benefits for some retirees who are already in pay-status, if the fund is projected to become insolvent within a specified number of years. However, the MPRA requires that proposed benefit cuts be submitted to the Treasury Department for approval. The first large multiemployer pension plan to submit an application to the Treasury Department for benefit cuts was the Teamsters Central States, Southeast and Southwest Areas Pension Fund (“Central States”). Because of Central States’ financial problems (it was projected to be insolvent by 2026), the union and management trustees agreed to submit a plan calling for benefit cuts to the Department of Treasury pursuant to the MPRA. On May 6, 2016, the Treasury Department denied Central States’ application and cast doubt upon the viability of pension reform under the MPRA. Treasury officials found that the plan submitted by Central States would not avoid insolvency. Among other things, the Treasury Department found that Central States’ presumed rate of investment return, the entry age of its participants, and its demographic assumptions were too optimistic. Accordingly, the Treasury Department rejected the application submitted by Central States, and Central States is still facing insolvency by 2026 and $35 billion dollars in unfunded liability. One unfortunate consequence of the Treasury Department’s rejection of Central States’ application appears to be that many other under-funded multiemployer plans may be reluctant to expend the financial and political resources necessary to reach an internal agreement between employer and union trustees that would result in approval  of the benefit reductions needed to avoid insolvency in the future. If one of the most useful tools provided by the MPRA has been stymied because the Treasury Department is unprepared to accept what it views as overly optimistic actuarial assumptions, what is the future of multiemployer pension plan reform? One proposal that was not included in the final version of the MPRA involved the use of so-called hybrid composite plans. While there are different types of hybrid composite plans, the basic concept is the combination of a traditional defined benefit plan with a defined contribution plan. As an example, an employer under a hybrid composite plan could contribute a fixed amount, and the trustees could be required to determine benefit levels based on actuarial calculations that provided assurances that the contributions would cover 120% of the promised defined benefit level. If the investments of the trustees performed better than expected, then the employees would be eligible for greater benefits. In any event, employees would be assured of receiving at least some fixed benefits because of the very conservative assumptions underlying the defined benefit portion of the plan. The proposals involving hybrid composite plans were originally eliminated from the MPRA because of the perception by some in Congress that many unions, in 2014, would oppose hybrid plans. In light of the Treasury Department’s rejection of Central States’ application, the assumption that many unions will oppose hybrid composite plans may no longer be accurate. Government reports have estimated that up to 15% of multiemployer plans are at risk of becoming insolvent over the next 20 years and that up to 1.5 million participants are at risk from those insolvencies. In addition, many other plans remain underfunded and employers who cease doing business or sell their businesses to buyers who do not assume their pension obligations face withdrawal liability for their shares of the unfunded portions of the plans. Until such time as Congress enacts hybrid composite plans or other solutions to multiemployer pension plan underfunding, employers who contribute to multiemployer pension plans and those companies considering purchasing businesses that contribute to such plans must continue to carefully scrutinize their potential liability.

Litigation challenging the new DOL regulations that, among other things, set a minimum salary threshold of $47,476 for exempt status, white-collar workers, was recently filed in U.S. District Court for the Eastern District of Texas. A group of 21 states filed suit: Alabama, Arizona, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah, and Wisconsin. The states claim that the new salary threshold rule will force local and state governments to unfairly increase the costs of employment. The chief argument appears to be that the new rule, by more than doubling the previous minimum of $455 per week to $913 per week (or $23,660 changed to $47,476, annualized), will wreak havoc on State budgets and is in violation of the Tenth Amendment to the U.S. Constitution. (The Tenth Amendment reserves for the States all powers not specifically delegated to the federal government.) The lawsuit claims that the new DOL rule constitutes an effort to “commandeer, coerce, and subvert the States.” Although the more than doubling of the salary minimum also certainly impacts the bottom line for private businesses, this Tenth Amendment argument does not offer much of anything, at least on paper, to private employers. Most commentators are not optimistic about this argument’s impact on governmental employers, either. Governmental employers also generally have the option to provide compensatory time in lieu of time and one-half pay for non-exempt workers, an option that is not available to private employers. In 2014, President Obama directed the Department of Labor to update its regulations concerning the so-called “white collar” exemptions to overtime under the Fair Labor Standards Act. In July of 2015, proposed regulations were made public for notice and comment. More than 270,000 comments were filed. The new regulations’ impact has generated heated debate.   Despite the current litigation, it is not advisable for employers to stop their current efforts geared to December 1, 2016 compliance (or budget reviews and other planning for compliance purposes). As previously noted in blog posts on March 17, 2016, April 21, 2016, and July 5, 2016, the new salary minimum for exempt status deserves some significant thought and planning for most employers. The rule is still scheduled to go into effect on December 1, 2016, and most commentators believe that this litigation will not impact implementation of the new salary threshold for exempt status. There is some hope, however, that the litigation may alleviate the regulation’s current automatic adjustments that are slated to occur every three years, starting in January 2020. The automatic adjustments are pegged to the fortieth percentile of salaried workers in the lowest-wage Census region. The DOL has estimated that the initial increase in 2020 will be set the minimum salary amount for the white-collar exemptions at approximately $51,168. Although some employers may have been holding out hope for litigation efforts to “ride to the rescue” and save the day by December 1, 2016, this litigation is not generally anticipated to override the new $47,476 minimum rule for white collar workers. Employers should continue to prepare for the new regulations.

In recent guidance, the IRS advised that policies implemented by employers to prevent part-time and seasonal employees from working 30 hours or more per week may not be sufficient to prevent liability under the Affordable Care Act (ACA) employer mandate.   If an employer is an applicable large employer (ALE), minimum essential health coverage must be offered to at least 95 percent of full-time (30 hours per week) employees (FTEs). An employer becomes an ALE when the company employs at least 50 employees (computed by aggregating part-time employees and determining full-time equivalents) who work on average a minimum of 30 hours per week. The ACA penalizes employers who fail to provide minimum essential coverage to their FTEs through a penalty tax structure.   To prevent such penalties, some employers have implemented policies to restrict part-time and seasonal employees (non-FTEs) from working an average of 30 or more hours per week. However, the IRS recently specified that these policies are not enough to avoid liability.  Actual hours count – even if performed in violation of an employer’s policy. In Information Letter 2016-0030, the IRS responded to an employee’s inquiry (yes, it was really the employee asking the question!) regarding whether an employer’s policy against non-FTEs working more than 29 hours per week could prevent the employer from being liable for penalty taxes. The IRS stated that the employer could still be liable for failing to provide minimum essential coverage if it did not offer coverage to an employee who violates the policy and works on average more than 30 hours per week in any given month. Thus, it is essential that employers closely monitor employee hours and adherence to these policies. Should a part-time or seasonal employee subject to the restricted hours policy average 30 or more hours per week in any given month, the employer still may be able to avoid the penalty.  First, if minimum essential coverage that is affordable and provides minimum value is offered to at least 95 percent of the employer’s FTEs (including any who are FTEs as a result of violation of the restricted hours policy), no penalty will apply. Further, if the employer offers minimum essential coverage (but it either is not affordable or does not provide minimum value), if the employee does not obtain coverage on the Marketplace for which the employee receives tax credit, no penalty is due with respect to that employee. As a result of the guidance, ALEs should: Implement, monitor and enforce policies against non-FTEs working in excess of 30 hours per week and reduce work schedules as necessary to avoid violations; Instruct supervisors not to approve additional hours for employees subject to the policy; Include employees that violate the policy and work on average 30 hours or more per week in the ALE computation and offer such employees coverage if necessary to comply with the ACA; and Carefully determine whether employees may be excluded from employer provided coverage, e.g., where they do not have Marketplace coverage or are not eligible for the tax credit.

In the past few years, Democratic members of Congress have introduced several decidedly pro-employee bills, none of which have yet passed, but which may be impacted by the elections in November. Such bills were first introduced in the 113th Congress when Republicans controlled the House of Representatives and Democrats controlled the Senate. Versions of these bills were reintroduced in the 114th Congress, although Republicans control both the House and the Senate. The November election not only will decide the next President, but also may change the balance of power in both houses of Congress. Healthy Families Act Would allow employees of an employer with 15 or more employees to earn 7 days of sick time per year after 60 days of employment. 113th Congress: Introduced to the House and Senate on March 20, 2013. Co-sponsored by 134 Democrats in the House and 23 Democrats in the Senate. 114th Congress: Introduced to the House and Senate on February 12, 2015. Co-sponsored by 145 Democrats in the House and 31 Democrats and 2 Independents in the Senate. Family and Medical Insurance Leave Act Would create a trust fund within Social Security to collect fees and provide compensation to employees on FMLA. 113th Congress: Introduced to the House and Senate on December 12, 2013. Co-Sponsored by 101 Democrats in the House and 6 Democrats in the Senate. 114th Congress: Introduced to the House and Senate on March 18, 2015 with 134 Democrats co-sponsoring in the House and 20 Democrats and 1 Independent co-sponsoring in the Senate. Family and Medical Leave Enhancement Act Most recent version of this Act would extend FMLA coverage to employees at worksites with 15-49 employees, including part-time workers. The Act would also protect (1) parental involvement leave to participate in school activities or programs for children or grandchildren and (2) parental involvement leave to care for routine medical needs including: (a) medical and dental appointments of an employee’s spouse, child, or grandchild, and (b) needs related to elderly individuals, such as nursing and group home visits. A version of this bill has been introduced to Congress each session since 1997. The most recent version was introduced to the House on June 16, 2016 with 7 Democrats co-sponsoring. Following the elections later this year, employers should be on the lookout for versions of these bills being reintroduced, potentially in a political climate where they have a stronger chance of passing.

On August 1, 2016, Massachusetts became the latest State to pass a so-called “pay equity” law. Massachusetts’ new law, which is modeled after pay equity statutes already implemented in other states, also amends the Massachusetts Equal Pay Act (MEPA). Even though this new legislation only applies to employers with employees working in Massachusetts, all employers should take notice, as “pay equity” legislation is being enacted in an increasing minority of states. Below are three key takeaways for employers with respect to Massachusetts’ new law, which goes into effect in July 2018. 1.    Equal Pay For “Comparable Work” The currently-drafted version of MEPA prohibits employers from paying employees of a given gender less than employees of another gender for “comparable work,” which  term was not previously defined. Massachusetts’ new pay equity law fills in this gap, defining “comparable work” to include “work that is substantially similar” with respect to “skill, effort and responsibility” that is performed under similar working conditions. Whether two employees perform “comparable work” under the new statute will be based upon the facts and circumstances of a given case. 2.    No More “Pay Secrecy” Rules The new law also prohibits employers from enacting or enforcing “pay secrecy” rules, which typically prohibit employees from discussing their compensation with each other. However, companies will not be forced to reveal salary information to an employee who asks about another employee’s salary. Furthermore, an employee is not required to divulge her or his salary to another employee if asked. 3.    No More Questions About “Past Salaries” Once this legislation is effective, employers in Massachusetts will be prohibited from asking job candidates about their salary history. Massachusetts is the first state in the country to pass such a law, which is purportedly designed to “end the wage gap.” Note that employers can still ask a job candidate how much money they are hoping or expecting to earn if they receive an offer, but an employer cannot ask a prospective employee about their previous salaries. This provision creates a new limitation for Massachusetts employers, and employers should train interviewers and hiring managers to avoid impermissible inquiries about past salaries. Employers with employees in Massachusetts should review their hiring, pay, and confidentiality policies and should make any necessary changes in order to comply with the new law prior to its implementation in July 2018. Other employers should also take notice, as these provisions are popping up in state legislative sessions across the country.

On July 6, 2016, Pokémon Go was released in the United States. Almost overnight, the location-based, augmented reality game became a national, if not global, phenomenon. You cannot turn on the television, listen to the radio, read news headlines, or even walk out your front door without hearing about the game or seeing individuals using their smartphones and tablets to “find” and “capture” digital creatures that virtually appear at specific locations. While Pokémon Go may sound like a harmless, albeit distracting, “video game,” it poses a risk to cyber security and raises concerns about data vulnerability in company databases and systems. Games like Pokémon Go require users to download and install an application on the users’ phones or tablets. Users are not always aware if they have downloaded an infected version of the application, which may allow hackers to spy on the victim’s phones and gain access to their data. Some infected versions of the Pokémon Go application have contained a backdoor called DroidJack. DroidJack gives attackers complete access to mobile devices, including user text messaging, GPS data, phone calls, camera—and any business network resources they access.    Even if an employee does not download an infected version of an application, there are still cyber security concerns. Individuals are often quick to download the latest application to access or share data for games like Pokémon Go, without scrutinizing what they are granting the application access to. In the event of a hack targeting a popular application like Pokémon Go, attackers have the potential to access all the data of application users who have not limited the application’s access to their data, including proprietary business information.   In light of the popularity of games like Pokémon Go and the inevitability that similar games or social media applications will become widespread, employers should take measures to deal with how and where business mobile devices can be used to ensure their proprietary information is not being captured by third parties. Electronic device policies can be very effective in limiting an employer’s cyber security risk where the policy requires employees to refrain from downloading and accessing smartphone apps, websites, programs and files that may pose a security risk if the electronic device is used to connect to sensitive corporate information. Employers should also consider updating electronic device policies to require employees to install company encryption software for protecting sensitive data with an agreement signed by employees to not modify the software.

Employers with nonexempt employees are familiar with the concept of regular rate of pay when calculating overtime for these employees. The regular rate of pay is more than just an employee’s hourly rate. Rather, the regular rate of pay includes the employee’s total pay for the pay period plus any additional compensation the employee earned over the total number of hours the employee works. The pitfall when conducting this analysis often occurs in determining what counts as “additional compensation.” Even if the employer has a policy to pay overtime, issues still arise when determining how to properly calculate and pay overtime. Here are four types of compensation that should be included when calculating the regular rate of pay: Nondiscretionary Bonuses.Nondiscretionary bonuses include all bonuses other than those that are truly at the discretion of the employer. The nondiscretionary bonus must be included in the regular rate of pay calculation over the entire period for which it is earned, whether weekly, monthly, quarterly, or annually. The “Gift Card” Bonus.Sometimes employers compensate employees with a gift card, or other goods, as a “good job” or “thank you.” However, if that gift card is provided based on the performance of the employee, it will be considered a bonus payment and must be included in the regular rate of pay calculation. Goods or Facilities.When non-cash payments are made to employees in the form of goods or facilities, the reasonable cost to the employer or fair value of such goods or facilities must be included in the regular rate. For example, if the employee’s wages include lodging provided by the company, the reasonable cost or the fair value of that lodging over the time period during which the lodging is provided must be added to the employee’s earnings before determining his/her regular rate. Non-overtime Premium Payments.Specific additional compensation, including premium pay for duties required by the job, such as night shift pay differentials and premiums paid for hazardous or dirty work, must be included when determining the regular rate. If you have questions about regular rate of pay compensation, please contact your Polsinelli attorney.

When employees are absent from work for an extended period of time due to injury, illness, or other reason, a common question that arises is whether employers must continue providing health insurance during the absence. The answer depends upon the circumstances, including the reason for the employee’s absence, the size of the employer, the terms of the health plan, and the applicability of one or more federal laws, including FMLA and COBRA. In many cases, the issue is resolved by answering three questions: 1. Does the FMLA apply? For employers with more than 50 employees, the Family and Medical Leave Act applies to eligible employees who have been employed for at least 12 months, who have accumulated at least 1,250 hours of service in the past 12 months, and who work where the employer has at least 50 employees within 75 miles. Eligible employees who have a serious health condition, or who take leave to care for a qualifying family member, are entitled to continue employer-sponsored health care during FMLA leave. The employer must continue to pay its share of health care premiums for the employee during FMLA leave. If an employee exhausts FMLA leave or is otherwise not eligible or entitled to FMLA leave, the employer’s obligation to continue paying its share of health insurance premiums stops. But there may remain an obligation to continue health care coverage under COBRA or analogous state law. 2. If the FMLA does not apply, is COBRA or a similar state law triggered? COBRA gives employees and their qualified beneficiaries the opportunity to continue health insurance coverage under the company’s health plan at the employee’s expense when a “qualifying event” would normally result in the loss of eligibility. “Qualifying events” include not only resignation and termination of employment, but also reduction of an employee’s hours or a leave of absence causing the employee to lose coverage under the terms of the employer’s health plan. The threshold for reduced hours or absences disqualifying an employee from plan coverage depends upon the terms of the particular health insurance plan. Where the employee loses coverage under the terms of the plan, COBRA provides an opportunity for the employee to purchase continuation coverage at the employee’s expense. Employers with fewer than 20 full and part-time employees are not subject to federal COBRA, but may be subject to state COBRA laws for small employers. 3. Is there another source of payment? Whether or not an employer must continue health coverage under the FMLA or provide continuation coverage under COBRA or a similar state law, the reason for the employee’s absence could trigger other obligations or sources for payment of medical expenses and insurance premiums. For example, if an employee is unable to work due to a workplace injury, workers’ compensation may cover injury-related medical expenses and lost wages. At the same time, the terms of the employer’s health plan may require coverage to continue during a workers’ compensation leave of absence. Finally, even where the employer’s coverage obligations cease, short- and long-term disability policies may provide an employee a source of funding for payment of insurance premiums.

OSHA’s recently announced rulemaking changes have major implications for employers.  Effective January 1, 2017, certain employers will be required to electronically submit injury and illness data to OSHA, which will then be posted to the OSHA website. Currently, employers are expected to log the data on OSHA Injury and Illness forms, which remain with the employer until OSHA requests that the logs be produced in the course of an inspection or investigation. Another major change is OSHA’s heightened emphasis on injury reporting and anti-retaliation protections. There are four things that you need to know about these changes. 1. Employers Must Establish Procedures To Report Work-Related Injuries And Illness And Inform Employees Of The Right To Use These Procedures Without Fear Of Retaliation. Under the new rule, an employer must specifically inform employees (i) of the procedure to promptly and accurately report work-related injuries and illnesses; (ii) that employees have the right to report work-related injuries and illnesses; and (iii) that employers are prohibited from discharging or in any manner discriminating against employees for reporting work-related injuries or illnesses. 2. Employers Must Carefully Review Their Drug Testing and Safety Incentive Programs to Determine if the Programs Interfere with Reporting Injuries and Illnesses. Many employers have implemented mandatory post-incident drug testing programs. OSHA will take a close look at these programs to ensure that the testing requirement is reasonable and is not implemented for the purpose of dissuading an employee from reporting an injury or illness.  OSHA appears to sanction drug-testing when an employee’s drug use is likely to have contributed to the accident and the drug test can accurately identify impairment from drug use. However, an automatic rule for drug testing in all work-related accidents, regardless of whether it appears that drug use contributed to the accident, will most likely not be approved by OSHA unless the program is implemented to comply with the requirements of a state or federal law or regulation. Along the same lines, safety incentive programs which provide monetary rewards to employees for “accident free” months could give rise to a record keeping violation if OSHA determines that the program discourages the reporting of workplace injuries without improving workplace safety. 3. OSHA Can Now Issue Citations And Penalties For Retaliation Claims, Even Where There Is No Complaint From An Employee. Currently, OSHA can investigate a complaint of retaliation under Section 11(c) of the OSHAct upon receipt of a complaint from an employee. The new rule gives OSHA a new regulatory enforcement mechanism which allows OSHA to cite an employer for retaliation if evidence is found during a routine OSHA inspection or OSHA investigation arising out of an injury or accident. As a result, the new rules will allow OSHA to assess statutory penalties for retaliatory conduct – which could be as high as $121,710.00 if a willful violation is found – in addition to the effected employee filing a complaint under Section 11(c). 4. Employers Must Take Action Now. Although the new requirements concerning anti-retaliation protection become effective on August 10, 2016, OSHA recently announced that it would not enforce the new rules until November 1, 2016. In the meantime, employers are well-advised to conduct a self-audit of their reporting procedures, drug testing and safety incentive programs to ensure compliance with the expanded obligations imposed under the new rule.

The Colorado General Assembly recently enacted a statute that gives employees the right to review and copy their personnel file at least annually and at least one time after the termination of employment. House Bill 16-1432 passed the legislature by a 22 to 13 vote, and was signed into law by the governor on June 10, 2016. The law becomes effective on January 1, 2017. A similar bill died in the General Assembly last year, but this year opponents and proponents worked out a compromise. The bill received bipartisan support, including from small business groups like the National Federation of Independent Business. Colorado employers should become familiar with the main provisions of the new law and take note of several exceptions and limitations. The new Colorado law does not require employers to create or keep a personnel file for current or former employees. Moreover, it does not require that an employer keep any particular type of document in the personnel file, or maintain the file for a specified period. However, when a personnel file exists, it must be accessible to the employee at least one time annually and at least one time after the termination of employment. A personnel file is defined by the legislation as "the personnel records of an employee, in the manner maintained by the employer and using reasonable efforts by the employer to collect, that are used or have been used to determine the employee's qualifications or employment, promotion, additional compensation, or employment termination or other disciplinary action."  The definition is broad, and includes documents that employers might not generally consider to be part of the personnel file, such as desk files maintained by supervisors. The statute provides that the employee’s personnel file may be inspected at a mutually convenient time inside the employer's office. The employer may have a manager present during the inspection. The employee is allowed to ask the employer to copy all or part of the file, which is to be done at a reasonable cost to be paid by the employee. The statute contains several exceptions from its coverage. The following are excepted from the disclosure requirements: Documents required by federal or state law to be placed or maintained in a separate file from the regular personnel file; Records pertaining to confidential reports from previous employers; Active criminal or disciplinary investigations or active investigation by regulatory agencies; Information which identifies another person who made a confidential accusation against the requesting employee; and Personnel files maintained by financial institutions, including banks and credit unions. The law does not create a private right of action or create any new record retention policies. Next Steps for Employers Before the law goes into effect on January 1, 2017, employers should consider taking several steps.  First, employers should consider segregating those documents from the personnel file that are not required to be disclosed under the law. Employers should also create a standardized process and train human resources professionals on how to administer employee access.

The U.S. Equal Employment Opportunity Commission (EEOC) and several other federal agencies recently participated in a series of roundtable meetings through the Combating Religious Discrimination Today initiative. In July, the initiative released a report containing several recommendations which may impact employers. The roundtable participants’ recommendations in the report include: Improving education and awareness for employees. The agencies suggest outreach to employees about the process of filing charges with the EEOC and other government agencies; ensuring that posters in the workplace notifying employees about their rights are prominently displayed, and the use of multi-media platforms. Improving education and awareness for employers. Ideas included outreach by the EEOC to employers with additional materials to ensure that employers fully understand their obligation to comply with existing non-discrimination and civil rights laws. Improving processing times for EEOC charges and increasing transparency. Following the report, the EEOC released a new resource document to assist workers in better understanding their rights and responsibilities under laws prohibiting religious discrimination in the workplace and announced its plans to improve data collection and outreach on religious discrimination.  The EEOC announced that it will implement changes to its collection of demographic data from individuals who file charges of religious discrimination to collect more precise identification data about the religion of such individuals. In an online press release on July 22, 2016, the EEOC also referenced its historical guidelines to educate employers, employees, and the public about religious discrimination, including Questions and Answers: Religious Discrimination in the Workplace and Best Practices for Eradicating Religious Discrimination in the Workplace. It also reiterated its guidance for employees and employers focusing on discrimination against people who are or are perceived to be Muslim or Middle Eastern and reminded readers of its technical assistance publications regarding the proper handling of religious garb and grooming in the workplace. With the EEOC’s renewed interest and emphasis on religious discrimination in the workplace, employers would be well-served to review their training materials and policies to ensure that they conform with the applicable law. Employers should also ensure that posters outlining employees’ rights are properly displayed.

On July 11, 2016, a combination punch thrown by the National Labor Relations Board (“NLRB”) scored a technical knockout of a decades old joint employer relationship test. The uppercut landed against employers who use temporary/contracted employees and, combined with the left cross of last year’s Browning Ferris decision, may leave some employers in pain. In  Miller & Anderson, Inc., 364 NLRB No. 39 (2016), the NLRB held that a Union seeking to organize employees of a primary (or user) employer and employees from a staffing/ contracting firm, in the same bargaining unit, does not need employer consent before an election is conducted. By doing so, it overturned its 2004 decision in Oakwood Care Center, 343 NLRB 659 (2004), which held that unions seeking to represent employees in bargaining units that combine traditional employees with contracted employees must first obtain consent from both the employer and the staffing agency before an election can be conducted. The primary beneficiaries are temporary/contracted workers, who now may have an easier time seeking union representation. Monday’s decision aligns with last year’s decision inBrowning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), where the NLRB held that joint employer status can be conferred where an employer exercises indirect control or incidental collaboration. Whereas Browning Ferris lowered the bar for joint employer status and made it easier for a company to be a joint employer with temp agencies, contracting firms, or franchisees, Miller & Anderson makes it easier for Unions to organize temporary workers. Under the old standard, the primary/user employer could withhold consent, which would end the organizing effort. With this decision, primary/user employers can be stuck with a collective bargaining agreement and relationship, even if the temporary employees who pushed for union representation no longer work for them. Perhaps the greatest potential problem is that primary/user employers could be liable for actions solely attributable to the temp agency/contracting firm. For example, if the staffing agency fails to pay several of its employees overtime, by virtue of being parties to the same collective bargaining agreement, primary employers now run the risk of being jointly liable for the payment, even though they may have paid the staffing company and ordinarily would not have any duty to pay compensation directly to the temporary employees. Likewise, a primary employer may risk liability for any unfair labor practices committed by the staffing company. While Miller & Anderson was remanded to the local NLRB office for further proceedings, there likely will be an appeal. In the interim, employers that currently use staffing firms may want to reconsider the contracts under which they use them. Should temporary employees be necessary, consider the organization of the workforce such that the temporary employees perform separate and distinct duties from the primary employees (so that they do not share the same community of interests). Using a legal professional to avoid the effects of Miller & Anderson and Browning Ferris is advisable.

In an April 13, 2015 blog post, we discussed a Ninth Circuit ruling holding that the FLSA’s Dealership Exemption did not apply to individuals employed as service advisors. In Navarro v. Encino Motor Cars, LLC, the Ninth Circuit validated the Department of Labor’s 2011 regulations redefining the words “salesman,” “partsman” and “mechanic” to remove service advisors from the overtime pay exemption. The matter was appealed and heard by the United States Supreme Court earlier this year. On June 20, 2016, the Supreme Court held that the DOL’s 2011 redefinitions did not follow the basic procedural requirements of administrative rule-making and, thus, should not be considered when determining whether service advisors are exempt under the FLSA’s dealership exemption. In its decision, the Supreme Court recognized that when an agency is authorized by Congress to issue regulations and does so to interpret a statute, the interpretation receives deference if the statute is ambiguous and the agency’s interpretation is reliable. However, deference is not warranted when the regulation is “procedurally defective”—in other words, where the agency err by failing to follow the correct procedures in issuing the regulation. One procedural requirement is that an agency must give adequate reasons for its decision to change an interpretation. The Court stated that where an agency has failed to provide even a minimal level of analysis, its action is arbitrary and capricious and cannot carry the force of law. Agencies are free to change their existing policies and interpretations, but they must explain their changed position and must be cognizant of long-standing policies that have created reliance by various industries. In this case, the DOL’s 2011 regulation removing service advisors from the Dealership Exemption was issued without any reasoned explanation for the change. Before 2011, and since 1978, service advisors had been included in the exemption by the DOL. The DOL did not provide a reasoned explanation for change in an almost 30-year-old regulation, the Supreme Court held that the 2011 regulation did not receive deference and should not be considered by courts when determining if service advisors meet the Dealership Exemption. This ruling is important because the Supreme Court is explicitly requiring the DOL to provide detailed explanations when it changes its interpretations of the FLSA – interpretations that have been long relied upon by numerous industries. While dealerships may have a won this round, it may be short-lived. As the Court acknowledged, the DOL still has an opportunity to issue another regulation removing service advisors from the Dealership Exemption – and such a regulation may be given full deference if the DOL provides a sufficient rationale for the change. We will continue to monitor DOL actions following the Supreme Court’s ruling.

In January 2016, the U.S. Equal Employment Opportunity Commission (EEOC) proposed revising the Employer Information Report EEO-1 (otherwise known as the EEO-1 Report) to require all employers with 100 or more employees, including federal contractors, to also provide a summary of data on wages paid to their employees, categorized by gender, race and ethnicity beginning with the September 2017 report. The January 2016 proposal involved reporting this information across 10 job categories and by 12 pay bands. Based upon comments submitted on the EEOC’s proposed changes, on July 13, 2016, the EEOC amended its proposed revisions to the EEO-1 Report. As revised, the EEOC has proposed a calendar year reporting schedule and moved the 2017 EEO-1 reporting due date from September 30, 2107 to March 31, 2018. This change will allow employers to use annual W-2 wage data, already compiled for tax purposes, which would reduce costs for employers to compile the reportable pay data, and would provide a full 18 months for the transition to the new reporting requirements. Employers would provide this data through an online form. The revised proposal will be subject to a 30-day comment period that ends on August 15, 2016.  As the EEOC may not issue a final proposal until this winter and the new deadline a few months to follow, it may be advisable for covered employers to review and become familiar with the sample EEO-1 form to anticipate the pay data that may need to be gathered.

Although no federal statute explicitly prohibits employment discrimination based on gender identity, the Equal Employment Opportunity Commission has actively sought out opportunities to ensure coverage for transgender individuals under Title VII’s sex discrimination provisions under its Strategic Plan for Fiscal Years 2012-2016. After the EEOC issued its groundbreaking administrative ruling in Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 012012081 (April 23, 2012), where it held that transgendered employees may state a claim for sex discrimination under Title VII, some courts have trended to support Title VII coverage for transgendered employees. To address potential challenges and lawsuits that may arise, employers should consider updating codes of conduct as well as non-discrimination and harassment policies. While policies may differ based on an employer’s business, there are some key features to consider: Include “gender identity” or “gender expression” in non-discrimination and anti-harassment policies. Gender identity refers to the gender a person identifies with internally whereas gender expression refers to how an employee expresses their gender—i.e.how an employee dresses. The way an employee expresses their gender may not line up with how they identify their gender.  Establish gender transition guidelines and plans. A document should be established and available to all members of human resources and/or managers to eliminate mismanaging an employee who is transitioning. The guidelines may identify a specific contact for employees, the general procedure for updating personnel records, as well as restroom and/or locker room use.  Announcements. After management is informed, and with the employee’s permission, management should disseminate the employee’s new name to coworkers and everyone should begin using the correct name and pronoun of the employee. Misuse of a name or pronouns may create an unwelcome environment which could lead to a lawsuit.  Training and compliance. Employers should review harassment and diversity training programs and modules to ensure coverage of LGBTQ issues. All employees should be trained regarding appropriate workplace behavior and consequences for failing to comply with an organization’s rules. In addition to the potential liability under federal law, some state laws provide a right of action for transgendered employees who are discriminated against at work; therefore, employers should review the laws of the jurisdictions in which they operate to ensure compliance.

On June 27, 2016, Governor Jerry Brown signed the California budget for the upcoming fiscal year. This budget, approved by the legislature on June 15, 2016, makes a number of significant changes to the California Labor Code’s Private Attorneys General Act (PAGA) of 2004. Since the early months of 2016, Governor Brown emphasized publicly that he intended to use his budget proposal to “stabilize and improve the handling of PAGA cases,” in light of a recent surge in such actions. According to the Governor’s administration, Brown hoped to expand the Labor and Workforce Development Agency’s (LWDA) oversight of PAGA claims in order to “reduce unnecessary litigation” and lower “the costs of doing business” in the state. Of course, ensuring that California receives its fair share of any settlement may also be of interest to the state. California employers should take note of the changes to PAGA. Although the Legislature ultimately whittled down many of Brown’s more wide-reaching PAGA-related budget proposals, the following changes survived and will be in effect for all PAGA cases filed prospectively: An aggrieved employee must now submit his or her PAGA claim online rather than by certified mail, and must also submit a $75 filing fee with each claim. A copy of the claim is to be sent by certified mail to the employer. All employer cure notices or other responses to PAGA claims must be filed online, with a copy sent by certified mail to the aggrieved employee or the employee’s representative. An aggrieved employee cannot file a civil PAGA action until 65 days after providing online notice to the LWDA, rather than the current 33 days. The LWDA will have 60 days, rather than 30, to review PAGA notices and to inform parties that it is not planning to investigate an alleged violation. The LWDA may extend its time to investigate by an additional 60 days if the agency deems this additional time necessary, effectively giving the agency 180 days (previously 120 days) to investigate PAGA claims. Where a PAGA complaint is filed in court, the LWDA must be provided with a copy of the filed-stamped copy of complaint (applies only to cases in which the initial PAGA claim notice was filed on or after July 1, 2016). Parties must now provide a copy of a proposed settlement to the LWDA at the same time they provide it to the court for the court’s approval. A court must approve any settlement of a PAGA action, whether or not the settlement includes PAGA penalties. Any approved settlement must be provided to the LWDA through its online system within 10 days after the entry of judgment. A prevailing employee may be entitled to recover filing fees in certain circumstances. Employers must now submit PAGA cure notices to the LWDA online. Whether these changes ultimately affect the scope and volume of litigated PAGA claims is still uncertain. However, it is likely that the amendments will lead to heightened LWDA involvement in PAGA claims from initial filings through final, court-approved settlements. The extent to which the LWDA utilizes its newfound powers of review also remains to be seen, but will certainly add a new layer of administrative oversight and bureaucratic red tape to the investigation and resolution of a PAGA claim. In the meantime, employers should be prepared that these changes may increase the lifetime of a PAGA claim and potentially lead to increased complications and litigation costs.

Now that the DOL has released its salary threshold for “white collar” overtime exempt employees (from $23,660 to $47,476 annually, effective December 1, 2016), employers may be faced with decisions to change the pay classification of employees under the Fair Labor Standards Act. For example, will an employee who is currently classified as exempt from overtime receive a pay raise to meet the new salaried threshold, or will the employee be re-classified as nonexempt? The numbers are important. But, in addition to crunching the numbers – which typically involves weighing the economics of a salary increase versus having the employee on the clock at an hourly rate (and at time and one- half for potential overtime) - there is another, equally important issue to review for exempt employees: the job duties tests. The DOL did not change the job duties tests for white collar exemptions at this time. That said, it would be short-sighted to focus exclusively on numbers for decision making. Before any money is spent on a significant salary increase, employers should audit whether the employees being considered for potential pay increases actually are assigned and perform job duties that qualify them for the white collar exempt job they currently occupy. Job titles are not determinative. As companies transition to the new DOL regulation, they should not automatically assume that an exempt employee who was originally correctly classified continues to be. Unfortunately, sometimes, employees are just assumed to be continuously correctly classified because “we’ve always done it this way.” The “big three” white collar exemption categories are: the professional, the executive, and the administrative exemptions. The highly-compensated employee, the outside sales exemption, and the computer professional also have exempt status, but for the sake of space, this post focuses on these three categories, which can be challenging to analyze. Generally speaking, the professional exemption requires that the employee perform work that is predominantly intellectual and that required him or her to pursue lengthy, specialized instruction in an advanced field of science or learning. This type of work requires consistent exercise of professional skills and judgment. The executive exemption generally requires that the employee manage an enterprise or a department and that s/he direct the work of at least two or more employees, as well as have significant input into, or the authority to, hire and fire. To be within the administrative exemption, the employee should perform office or non-manual work that is directly related to the management of, or the general business operations of, the employer or the employer’s customers. This employee should exercise discretion and independent judgment over “matters of significance.” There are many other fine points that the DOL regulations fill in, but the above concepts can help determine whether an employee being considered for a salary increase was actually an exempt employee in the first place. If it is not an exempt position, paying an increased salary just to meet the new DOL salary threshold may not be the best step, economically speaking. For employees who meet the job duties tests and that the employer continues to treat as exempt, the new minimum salary amount must be met. Otherwise, the employee will be entitled to overtime pay for hours worked over 40 in each week.

Earlier this year, the United States Supreme Court, in Campbell-Ewald Co. v. Gomez, applied contract principles to hold that an unaccepted Rule 68 offer of judgment did not moot an individual’s claims or class or collective actions claims. The Court reasoned that an unaccepted offer remained a mere proposal with no binding effect on either party. However, the Court still has employers guessing. In April 2013, in Genesis Healthcare Corp. v. Symczyk, the U.S. Supreme Court was faced with a Rule 68 offer of judgment rejected before the plaintiff filed a motion for conditional certification in a putative FLSA collective action. The Court assumed that the Rule 68 offer mooted the individual’s claims, and then held that, absent a plaintiff with a live individual case (and absent any claimants opting in), the action could not be maintained. This left open the question of whether a Rule 68 offer really can moot an individual’s FLSA action. It also begged the question of what happens in a Rule 23 class action. The Supreme Court attempted to answer these questions in January 2016 in Campbell-Ewald Co. v. Gomez. The court was faced with a rejected offer of judgment in a Rule 23 class action. The majority applied contract principles to hold that a rejected offer is merely a proposal with no binding effect on either party. Therefore the parties remained adverse and the individual claims were not mooted by the rejected offer.  Thus, the class could also proceed. The Court in Gomezleft open two critical questions. Would the result be different if a defendant deposits the full amount of a plaintiff’s individual claim in an account payable to the plaintiff, and the court then enters judgment for the plaintiff in that amount? If the individual’s claims were so mooted, what about Rule 23 class claims? Since Gomez, employers have tried a number of different ways to moot individual claims, and thereby moot Rule 23 claims. Such efforts have included requesting permission under Rule 67 to deposit the amount of an earlier Rule 68 offer into the court’s registry, delivering a certified check and making an offer to deposit funds with the court, depositing money into an escrow account for the plaintiff’s benefit, and tendering a simple check. District courts’ reactions are all over the board. Some have held that these actions are still insufficient to moot even an individual’s claim because the conduct is still a mere offer or because the plaintiff must be provided, under Gomez, “a fair opportunity to show that certification is warranted.” Some, courts, however, have mooted individual claims and even expanded Genesis to moot Rule 23 actions. Employers seeking to utilize Rule 68 to moot claims should survey cases in the applicable jurisdiction, but they still may be left guessing about the appropriate procedure and outcome.  Cutting off putative class and collective actions early through Rule 68 is not as clear as it used to be, if it ever was, in many jurisdictions. The future of Rule 68 offers may very well depend on the future composition of our Supreme Court bench.

A few ambitious lawyers in Arizona have been hitting commercial property owners and tenants with lawsuits for not complying with the Americans with Disabilities Act (ADA), specifically alleging that the properties have certain barriers that restrict access for disabled individuals. Something as seemingly inconspicuous as the height of a parking lot handicap accessibility sign could constitute a violation and form the basis of a lawsuit. In the past few months alone, more than 500 Arizona businesses have been sued under the ADA for an assortment of accessibility violations, most commonly for lack of compliance with the ADA’s standards for parking lots and bathrooms. One particular firm has been filing lawsuits against Arizona companies for parking lot violations. In most instances, the lawsuits focus on whether the business has sufficient handicapped designated parking spaces, and whether the location, dimension, and signage for those spaces are up to the ADA’s accessibility standards. In many of these lawsuits, the only violation alleged is that one or more of the parking lot signs is posted a few inches lower than what is set forth in the statute. Two particular individuals are most often bringing lawsuits against Arizona restaurants and bars for bathroom accessibility and other violations. In most instances, the lawsuits focus on the height and placement of urinals, mirrors, soap and toilet paper dispensers, and grab bars. The plaintiffs also commonly object to the height of service counters and lack of seating for those with disabilities. Arizona businesses with facilities not meeting ADA accessibility requirements, risk an ADA claim by affected patrons. While there is a “safe harbor” provision in the ADA for businesses complying with earlier ADA standards, it seldom applies. Businesses in doubt about ADA accessibility compliance should consider hiring an ADA compliance specialist or attorney to inspect the premises and promptly make any necessary changes.

As many employers are keenly aware, misclassification claims under the Fair Labor Standards Act (“FLSA”) are becoming more prevalent. Employers may face a number of pitfalls that can expose them to potential liability. First, whether or not an employee is “exempt” from overtime payments under the FLSA can be difficult to determine factually, and classification errors can subject employers to wage and hour claims to collect unpaid overtime. Employers of home care workers face an additional hazard under the FLSA: the uncertainty of the law. On October 1, 2013, the Department of Labor (“DOL”) issued the Home Care Final Rule (“Final Rule”) to extend minimum wage and overtime protections to almost 2 million home care workers, by revising the regulations defining companionship services so that many direct care workers are subject to the overtime pay provisions of the FLSA. The Final Rule also revised the DOL’s regulations concerning live-in domestic services workers. The Final Rule had an effective date of January 1, 2015. In June 2014, associations of home care companies filed a lawsuit in federal court challenging the Final Rule. In December 2014 and January 2015, the U.S. District Court for the District of Columbia issued orders vacating and revising certain portions of the Final Rule, thus affecting the applicability of the Final Rule to many employers. The DOL filed an appeal of the orders to the U.S. Court of Appeals for the District of Columbia Circuit. On August 21, 2015, the Court of Appeals issued a unanimous opinion affirming the validity of the Final Rule and reversing the District Court’s orders.  On October 13, 2015, the Court of Appeals’ opinion upholding the Final Rule became effective when the Court of Appeals issued its mandate. On November 24, 2015, the home care associations filed a petition for certiorariwith the U.S. Supreme Court. Given the effect of the pendency of the Final Rule on the DOL’s ability to enforce the Final Rule from the original “effective date” of January 1, 2015 to October 13, 2015, the date the Court of Appeals’ opinion became effective, there is a question as to whether employers affected by the Final Rule were required to follow the Final Rule during that interim period. In Beltran v. InterExchange, Inc., 2016 WL 1253622, No. 14-cv-03074-CMA-KMT (D. Col. Mar. 31, 2016), the U.S. District Court of the District of Colorado recently ruled that domestic service workers had viable claims for overtime for any work performed after January 1, 2015 due to the Final Rule. In contrast, in Foster v. Americare Healthcare Svcs, Inc., 2015 WL 8675518, No. 2:13-cv-658 (S.D. Ohio Dec. 11, 2015),  the U.S. District Court for the Southern District of Ohio held that the Final Rule was not effective until October 13, 2015. Despite the uncertainty of whether the Final Rule was effective as of January 1, 2015 or October 13, 2015, employers with home health workers should take steps to comply with the Final Rule. The DOL has increased its efforts to address wage and hour violations, including the development of a smartphone app to help employees track hours worked. Accordingly, if an employee is considered “non-exempt” in the wake of the Final Rule, it is critical that employers accurately record their time worked to ensure that they are paid overtime for all hours worked over 40 hours in a workweek.

On Monday, June 27, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction barring the U.S. Department of Labor from implementing the revised Persuader Rule that was scheduled to become effective on July 1, 2016. Designed to amend certain provisions of the Labor Management Reporting and Disclosure Act (LMRDA), the now-enjoined Persuader Rule sought to impose onerous reporting obligations upon employers and threaten to disrupt the attorney/client relationship relating to union organization activities. The Court held that “the new rule is defective to its core because it entirely eliminates the LMRDA’s advice exemption.”  Further finding that DOL’s rule “nullifies” the exemption for advice, and fails to provide notice to employers, lawyers and consultants of what activities relating to persuasion are covered by the advice exemption, which means those impacted have to “guess what activities with an object to persuade fall within the LMRDA’s advice exemption.” However, this likely is not the final word on the Persuader Rule.  The Department of Labor may appeal this ruling and there are similar lawsuits pending in federal courts in Arkansas and Minnesota (where the district court found similar problems with the Final Rule, but refused to issue a preliminary injunction). Therefore, employers should give consideration to entering into agreements—before July 1, 2016—with their lawyers (and consultants) regarding the provision of indirect persuader activities, as the impact and status of the Persuader Rule is uncertain.

Both federal and California agencies have long permitted employers to round employees’ start and stop work times to the nearest quarter-hour, so long as such policies are applied in a neutral manner.   Despite the widespread use of rounding, the legality of this practice in the Ninth Circuit remained unsettled.   On May 2, 2016 the Ninth Circuit addressed the issue in Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership, affirming that neutral rounding practices are lawful. In Corbin, the plaintiff employee claimed that the employer’s timekeeping system, which rounded time entries up or down to the nearest quarter hour, unlawfully denied him compensation for all time  worked.  The court held that Time Warner’s timekeeping policy and use of rounding were valid methods of tracking employee time.  Although the plaintiff suffered a small net loss due to rounding, the evidence indicated he had actually gained compensation during other time periods, and this pattern of gains and losses proved that Time Warner’s method was neutral both facially and as applied. Dismissing the suit, the court took a common-sense stance towards rounding and emphasized that the primary issue is not whether an individual employee loses or gains time in a discrete time period, but rather whether the employer’s policy is intended to average out all employees’ gains and losses in the long-term.   The court made clear that the purpose of rounding is to allow employers a practical and neutral method of recording time without turning to tortuous timekeeping and accounting calculations.   However, a rounding policy which, for instance, solely rounded time punches down would likely be invalid. In light of the Ninth Circuit’s decision, employers currently utilizing timekeeping methods which round employees’ punch times may breathe a collective sigh of release.   We recommend that employers routinely audit their timekeeping methods to ensure that such practices are neutral in theory and in application.  Towards that end, rounding policies must round both up and down and must not serve to consistently benefit the employer over a period of time.

Several large employers announced the adoption of paid family leave policies in 2015. Some employers have implemented these policies as “good ideas” and others because several states have passed legislation that mandates paid family leave. Since California enacted the first paid leave mandate in 2004, several states have passed similar laws, including Rhode Island, New Jersey, Connecticut and New York. Additionally, Maryland has proposed a paid leave mandate. As more states mandate paid leave, employers should understand the implications these laws can have on the workplace. State mandated paid family leave allows employees to take time away from work to: 1) provide care for and bond with newborn or recently adopted children, and/or; 2) act as a caregiver to a family member suffering from a “serious illness.” The period of paid time granted varies from state-to-state, with a range of 4 to 12 weeks. However, some legislative measures, such as a new ordinance in San Francisco, include a threshold minimum number of employees before an employer is subject to the mandate. During paid family leave, employees are generally entitled to receive a percentage of their regular compensation, capped at a fixed amount. In California, employees will transition from an entitlement of 55% to 70% of their wages during their leave in 2018. The increase will be capped at one third of the State’s average weekly wage of $1,121. Similarly, New York’s newly enacted law will entitle employees to 50% of their weekly wage, capped at 50% of the statewide average weekly wage of $1,300. Additionally, some mandates require protection of an employee’s job security. In New York, New Jersey and Rhode Island, the law requires employee to be restored to the position they previously held or a position that provides equivalent seniority, status, benefits and pay. The mandates do not increase, reduce or modify the employee’s current benefits. Key questions to consider regarding the impact of mandated paid family leave on the workplace include: What percentage of compensation has your state’s law mandated be paid? How long does your state’s law provide for a leave of absence? Does your state’s law require job protection? Does your state’s law provide a cap on benefits? If so, what is the cap? How does your state’s law define a “family member” for the purpose of providing care for a family member with a serious illness? Does your state’s law require a threshold number of employees before paid leave becomes mandatory? If you have employees in multiple states, will you adopt a uniform policy for all employees, only provide state mandated benefits, or adopt a policy somewhere in between? How will you manage the additional cost incurred by complying with these laws, particularly with laws increasing minimum wages? As paid family leave laws gain national attention, additional states may begin to consider implementing similar laws. We will continue to follow changes and monitor how the changes affect employers and benefit plans. Please contact us if you would like assistance drafting a paid family leave policy.

Now that the two major parties have presumptive presidential nominees, the heated discussions and press coverage of the primary season will turn to conventions and the general election.  Divisive political discourse may continue to escalate.  While many employees will heed the familiar adage not to discuss politics and religion in public, political discussions may enter the workplace and invite debates, arguments, and tension.  Consequently, Employers should understand what political conduct can be regulated or prohibited in the workplace, and what political conversations must be allowed. Some employees may presume they have a First Amendment right to free speech, unaware that those guarantees apply only in the public sector.  While most private employers have considerable leeway when crafting workplace rules about whether politics can be discussed during working time, laws vary from state to state.  For example, laws in states such as California, New York, and Washington DC (and some cities) prohibit employers from taking job related action based on political affiliation.  Other states and municipalities, such as Colorado and North Dakota, have laws limiting an employer's ability to take action based on off-duty activities (which could include political activity).  And, given the nature of some of the key issues in this year's national elections (such as immigration reform and the proper division between church and state), all employers still have an obligation to ensure compliance with the various federal laws against discrimination, as well as with Section 7 of the NLRA, given the NLRB's continued aggressive enforcement of that provision of the law. Earlier this month, the EEOC published proposed revisions to its Enforcement Guidance on National Origin Discrimination, signaling an emphasis on enforcement in areas such as immigration status, "English only" or accent policies, and discrimination against foreign nationals.  When this emphasis is coupled with the public debate on the issue of immigration reform and national security, employers will walk a thin line when determining what political discussion is appropriate in the workplace and what discussion could violate anti-harassment and anti-discrimination policies.  Similarly, the continued emphasis of the National Labor Relations Board on Section 7 concerted activity will affect policies employers may institute or enforce.  For example, it may be appropriate and lawful to enforce a "no political buttons" or “no political speech on t-shirts” rule (assuming the employer is not subject to a state law to the contrary).  The employer must recognize, however, that a difference may exist between a union worker wearing a button enforcing a particular candidate and wearing a button stating that the union supports that same candidate. Thus, as the conventions and general elections approach, employers should consider the following: Remind employees of all anti-harassment and anti-discrimination policies; Remind employees that a discussion of politics does not give license to bully or harass other employees, notwithstanding what is reported on the news; Private employers in many states (but not all) can ban political discussions among employees or between employees and customers, vendors or other third parties (but if this choice is made, the policy must be enforced consistently); Review and update dress code policies if the employer wants to prohibit political speech on clothing, buttons, etc.; and If the company maintains a "non-solicitation" policy, make sure that it is enforced consistently.

Unpaid internships can present perils for the unwary employer. Many employers are hesitant to establish unpaid internship programs for fear that they will be found to be in violation of the Fair Labor Standards Act. Conversely, students are eager to learn practical skills in an actual work setting and are motivated to seek internships. In the past, employers could simply look at the Department of Labor Wage and Hour Division’s Fact Sheet #71 for guidance on how to establish a program. Recently, numerous federal courts, including the 2nd and 11th Circuits and district courts in Illinois and California, have muddied the waters by implementing a new test for unpaid internships to comply with the FLSA. Despite the various tests, employers can still structure an unpaid internship program that is legally compliant. Here are the top 5 factors your unpaid internship program should have: The intern is the primary beneficiary of the internship, not the employer. Determine if the internship is more about the employer getting free labor or for the intern learning about his/her chosen field of study outside of the classroom. An internship must benefit the intern, it is not for the benefit of the employer.    Provide the intern with training that could be found in an academic setting that accommodates the intern’s academic work and schedule. Savvy employers may partner with the intern’s academic institution to mold a fixed-duration internship that is specifically tied to the intern’s area of study. Avoid providing tasks to the intern that are unrelated to academic training – such as making copies and sorting mail. Provide the intern with a mentor appropriate to the intern’s studies. This mentor will provide guidance, assign relevant projects, and allow the intern to shadow him/her. The intern’s work should not replace or be exactly the same as a paid employee. An unpaid intern’s work cannot displace the regular work of paid employees.  Do not promise a job at the conclusion of the fixed internship period. Instead, focus on providing practical and relevant experience to the intern during the internship.     Clearly articulate all of the expectations of the internship to the intern, including that it is unpaid. Leave no room to the imagination about all of the expectations of the unpaid internship. Unpaid internships can be rewarding to both the employer and the intern. With some careful planning, an employer can greatly reduce the legal risk associated with an unpaid intern.

On June 2, 2016, Los Angeles Mayor Eric Garcetti signed an ordinance into law that will entitle eligible employees in L.A. to up to 48 hours of paid sick leave per year. On June 7, San Diego voters approved a similar ordinance that will provide eligible employees with up to 40 hours of paid sick leave per year. Both cities’ new laws will require employers operating there to provide more paid sick leave than is required—24 hours per year—under current California state law. (Polsinelli’s coverage of California’s paid sick leave law is available here, here, and here.) Both ordinances also increased the minimum wage to $10.50 per hour in 2016, and to increase annually thereafter. L.A. Ordinance No. 184320 For employers with 26 or more employees, the ordinance takes effect on July 1, 2016, at which point employees must begin accruing or be granted paid sick leave. For employers with 25 or fewer employees, the ordinance takes effect on July 1, 2017. Eligible employees are employees who work 30 or more hours in L.A. within a year of starting their employment. And unlike state law, there are no exceptions for specific classes of employees. Employees will be eligible to use accrued sick leave after their 90th day of employment or July 1, 2016, whichever is later. Employers may either grant employees all 48 hours of paid sick leave every 12 months or have it accrue in increments of one hour for every 30 hours worked. Accrued but unused paid sick leave must be allowed to carry over to the following year up to 72 hours. Employers do not have to pay out accrued, unused sick leave when an employee separates from the company.  But employers do have to reinstate the accrued, unused leave if the employee is rehired within a year. San Diego Ordinance No. O-20390 San Diego employers must also provide employees with one hour of paid sick leave for every 30 hours worked in the City. The paid sick leave component of the ordinance takes effect July 11, 2016. In addition, while limited to 40 hours per year, employers must allow employees to carry over accrued, unused leave and the ordinance does not currently include an accrual cap. Employees will be eligible to use accrued sick leave after their 90th day of employment. An employer who provides an amount of paid leave, including paid time off, paid vacation, or paid personal days off sufficient to meet the paid sick leave requirements, and who allows that paid leave to be used for the same purposes, and under the same conditions as sick leave, is not required to provide additional paid sick leave to employees. Employers are not required to pay out accrued, unused sick leave at termination. However, they must reinstate the accrued, unused leave if the employee is rehired within six months. This post provides only a brief, selective overview of the cities’ new laws. Employers with employees in Los Angeles, San Diego, and other states and cities with paid sick leave ordinances should act now to ensure they are in compliance. We encourage employers to contact their Polsinelli employment attorneys for assistance to create or revise their sick leave policies and procedures as appropriate and to further discuss the details of these new laws.

On May 11, 2016, President Obama signed into law the federal Defend Trade Secrets Act (DTSA), which now provides a federal claim for misappropriation of trade secrets. Under the new law, owners of trade secrets may seek remedies, including damages, for any loss incurred by the misappropriation; court orders allowing civil seizure to recover stolen trade secrets; injunctive relief forbidding additional misappropriation; and, in certain cases, double damages and attorneys’ fees. The DTSA also provides immunity to whistleblowers from liability for confidential disclosure of a trade secret to the government or in a court filing. To have the full range of remedies available under the DTSA, employers must give notice of the whistle blower immunity to employees in “any contract or agreement with the employee that governs the use of trade secret or other confidential information,” including existing contracts that were updated on or after May 12, 2016. Employers must also advise employees that an individual who has filed suit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret under certain conditions. Thus, employers should begin taking action now to preserve rights and remedies under the DTSA. The terms and phrases “contract or agreement” and “trade secret or other confidential information” suggest that the notice requirement is not limited to just employment contracts or trade secrets as defined by the statute. The DTSA defines an employer’s “employees” broadly to include any individual performing work as a contractor or consultant, hence employers will need to be sure those individuals receive notice of the whistleblower immunity under the DTSA. Where the contractors or consultants performing the work are companies, employers should determine whether notice has been received by the individuals doing the work on behalf of those companies acting as contractors or consultants. The DTSA expressly prohibits employers from recovering double damages or attorneys’ fees where they have failed to comply with the notice requirements. The DTSA does not, however, prescribe prohibition as the sole penalty – which may give rise to unintended causes of action against non-compliant employers in the future. One could also imagine efforts to introduce evidence of an employer’s non-compliance by an employee who has filed suit for retaliation, in the same manner that the employee might attack a non-existent or inadequate conventional anti-retaliation policy (i.e. “the employer was just trying to keep me in the dark so I wouldn’t know my rights”). Thus, employers should take the following steps with regard to notice of the whistleblower immunity required by the DTSA to avoid the loss of remedies and prevent other unintended consequences of failing to comply with the new law: Update employee handbooks to include notice of the DTSA’s immunity exceptions to all employees. Supply notice of the whistleblower immunity under the DTSA in any contract entered into or updated as of and after May 12, 2016. Evaluate contracts or agreements with independent contractors and consultants to ensure all individuals providing the work receive statutory notice.

On April 29, 2016, the National Labor Relations Board deemed several handbook policies overbroad because employees could “reasonably construe the language [of the policy] to prohibit Section 7 rights” under the National Labor Relations Act. Most notably, the Board took exception to a “Positivity Policy” in an employment handbook stating: "The Company expects all employees to behave in a professional manner that promotes efficiency, productivity, and cooperation. Employees are expected to maintain a positive work environment by communicating in a manner that is conducive to effective working relationships with internal and external customers, clients, co-workers, and management." In light of this ruling, employers should consider revising any “positivity” provisions in employment handbooks. The Board ruled the undefined phrases "positive work environment" and "communicating in a manner that is conducive to effective working relationships" violate the Act to the extent they are ambiguous and vague, and reasonably chill employees’ exercise of Section 7 rights. In support of its decision, the Board stated: "Because labor disputes and union organizing efforts frequently involve controversy, criticism of the employer, arguments, and less-than-'positive' statements about terms and conditions of employment, employees reading the rule here would reasonably steer clear of a range of potentially controversial but protected communication in the workplace for fear of running afoul of the rule." Additionally, the Board deemed overbroad a rule prohibiting employees from recording “people or confidential information using cameras, camera phones/devices, or recording devices (audio or video) in the workplace” and (with the exception of calls that the company records for quality purposes) prohibiting employees from making “sound recordings of work-related or workplace discussions.” The Board determined the workplace recording rule failed to distinguish between recordings protected by Section 7 and those that are not; and did not exclude recordings made on nonworking time, in nonworking areas. Employee recording policies must be carefully drawn to survive present NLRB scrutiny. The NLRB continues to scrutinize and strike down handbook policies it considers “overbroad.” Accordingly, union and non-union employers should audit their policies to ensure that they are not setting vague standards of a “positive work environment” or requiring only “positive attitudes and communications.”

In a unanimous decision on May 26, 2016, in Lewis v. Epic Systems Corporation, the United States Court of Appeals for the Seventh Circuit invalidated an individual arbitration agreement waiving class and/or collective actions and held that if such agreements are required by the employer as a condition of continued employment, then they necessarily interfere with employees’ exercise of their Section 7 rights under the National Labor Relations Act to engage in protected concerted activity, irrespective of whether the employees are represented by a union. The Seventh Circuit’s holding directly conflicts with the rulings of the Fifth, Eighth, and Eleventh Circuits on this issue, potentially setting up review by the United States Supreme Court. It is common today for employers to enter into individual arbitration agreements with their employees that require the company and the employee to arbitrate wage and hour (and other employment) claims rather than litigate those claims in court. The agreements also commonly prohibit employees from bringing those claims, even in arbitration, on a class or collective – rather than individual – basis. Although the Lewisdecision does not invalidate all individual arbitration agreements in the employment context, the decision applies to employers within the 7th Circuit’s jurisdiction and that have made entering into such agreements a condition of continued employment. Individual arbitration agreements can be valuable to an employer in that they discourage the filing of class and collective actions. In such actions, plaintiffs’ attorneys sometimes demand inflated and unsupportable damages on behalf of employees and former employees who have no intention of suing their employer. Those employers who have adopted individual arbitration agreements should understand that they may not be enforced in the 7th Circuit if they are conditioned on continued employment. For the past few years, the NLRB has invalidated individual arbitration agreements on the same rationale of the Seventh Circuit, although those rulings are not binding to other employers, and one such ruling was reversed by the Fifth Circuit. Given that other Circuits have disagreed with the Seventh Circuit and have affirmed individual arbitration agreements, the Supreme Court is likely to take up the issue in the 2016-2017 term. The ultimate resolution of the issue may hinge upon who fills the seat of the late Justice Scalia.

On August 10, 2016, a new pregnancy provision of the Colorado Anti-Discrimination Act (“CADA”) will take effect. While the CADA had previously been interpreted as prohibiting pregnancy discrimination and requiring accommodations for pregnancy, the new provision strengthens and clarifies those protections. Indeed, the amendment will require more of employers and will make it easier for plaintiffs to prevail than federal anti-discrimination law. This greater pregnancy protection, combined with the fact that the CADA was amended in 2013 to allow successful plaintiffs to collect compensatory and punitive damages (remedies previously unavailable under the CADA), make it more likely that employers will face lawsuits under the CADA. Accordingly, employers need to be especially careful to comply with the new amendment. Accommodation The bill requires an employer to provide reasonable accommodations to an applicant or employee for health conditions related to pregnancy or the physical recovery from childbirth under the following conditions: (1) an accommodation is necessary to perform the essential functions of the job, (2) the employee has requested an accommodation, and (3) the accommodation would not impose an undue hardship on the employer. As in the disability context, once an employee requests an accommodation, the employee and employer are required to engage in an interactive process. Importantly, an employer may also require a note from a licensed health care provider before providing an accommodation. While accommodations are to be tailored to the employee, the bill does give examples of reasonable accommodations, including, more frequent or longer break periods, more frequent restroom and refreshment breaks, limitations on lifting, light duty, and modified work schedule. An employer is not required to create a new position or hire additional employees to provide a requested pregnancy accommodation. However, if an employer provides or is required to provide a particular accommodation to another group of employees, the bill creates a rebuttable presumption that the same accommodations for a pregnant employee would not impose an undue hardship on the employer. Employers should also note that to preserve a pregnant employee’s ability to work, the bill prohibits an employer from requiring an employee to accept an accommodation that has not been requested or is not necessary. Similarly, the bill prohibits an employer from requiring an employee to take leave if the employer can provide another reasonable accommodation. Adverse Action The bill also prohibits taking adverse action against an employee who requests or uses a pregnancy accommodation. Significantly, the bill prohibits more employment practices than other sections of the CADA. Other sections of the CADA specifically make it improper to “refuse to hire, to discharge, to promote or demote, to harass during the course of employment, or to discriminate in matters of compensation, terms, conditions, or privileges of employment . . . ” For pregnancy, adverse action is defined as “an action where a reasonable employee would have found the action materially adverse, such that it might have dissuaded a reasonable worker from making or supporting a charge of discrimination.” Accordingly, the bill likely covers a broader range of conduct than the other sections of the CADA. Notice To help educate employees about their rights under the new law, the bill requires employers to give new employees notice of their rights under this section at the start of employment. Further, employers are required to give current employees notice by December 8, 2016. Moreover, employers are required to post a notice in the workplace (along with the other employment law posters). Although the bill does not provide a remedy for an employer’s failure to provide notice to existing or new employees, employers should comply with those provisions. Remedies Before filing a lawsuit, an employee who believes she has suffered an adverse action or improperly denied an accommodation under the new bill must file a charge with the Colorado Civil Rights Commission within six months of the conduct. Once the employee has exhausted the administrative remedies, she may sue for back pay (up to two years reduced by what the employee could have earned with reasonable diligence), front pay, compensatory damages, and punitive damages. Action Plan In anticipation of the new bill taking effect on August 10, 2016, employers should: Review all job descriptions to ensure that they clearly identify the essential functions of each job. Review handbooks and policies to ensure that they clearly define the procedures for an employee to request a pregnancy-related accommodation. Draft the required notice of rights for distribution to current employees on or before December 8, 2016. Draft the required notice of rights for distribution to new employees. Update on-boarding policies and procedures to include providing the required notice of rights. Review the accommodations provided to other classes of employees to understand the accommodations that may be presumed reasonable for pregnancy-related accommodations. Train the employee or employees who will respond to pregnancy-related accommodation requests on the requirements of the bill. Train managers on the requirements of the new bill, including the prohibitions on taking adverse actions against employees who request or use accommodations and the prohibitions on requiring employees to accept accommodations that are unwanted or unnecessary. Update employment law postings to include a notice of rights under the bill.

The United States Supreme Court may have finally offered employers some cover in their ongoing battle against Fair Credit Reporting Act (“FCRA”) class actions. On May 16, 2016, the Court handed down its decision in Spokeo, Inc. v. Robins, which vacated and reversed a Ninth Circuit ruling on the grounds that the lower court did not properly analyze both elements of the “injury-in-fact” required to confer Article III standing on a plaintiff. Spokeo operates a “people search engine” that aggregates information on individuals from a broad range of internet databases. Named Plaintiff Thomas Robins’ class action complaint alleged that Spokeo’s business model makes it a “consumer reporting agency” and thus subject to the FCRA’s detailed compliance procedures. The FCRA requires, among other things, that consumer reporting agencies “follow reasonable procedures to assure maximum possible accuracy of consumer reports” and also that “users” of consumer reports (e.g. employers who utilize background checks to determine eligibility for employment): (1) disclose that fact to individuals prior to obtaining such a report and (2) gain the individuals’ prior authorization to do so. Robins claimed that Spokeo willfully violated the FCRA when it disseminated inaccurate information regarding him – namely, that he held a graduate degree, was married with children, and was in his 50s. The Court’s opinion, authored by Justice Alito, noted that an injury-in-fact must be both “concrete” and “particularized,” and held that the Ninth Circuit’s decision properly considered the latter while neglecting to address whether plaintiffs adequately alleged “concreteness.” Though plaintiffs’ attorneys will rush to point out that the Court merely remanded back to the Ninth Circuit with instructions to analyze the concrete injury, employers can read the tea leaves and be heartened by the Court’s seeming disapproval of lawsuits based on “harmless” procedural violations: “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm.” “In addition, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.” In the past few years, employers have seen a rise in situations where plaintiffs point out an alleged technical deficiency in an employer’s FCRA compliance procedure and claim a class populated by every individual who applied for employment in a given timeframe, regardless of whether even a single individual actually suffered an adverse employment action as a result. Although it is too early to tell whether Spokeowill have broad implications for cases of this type, it is a safe bet that both employers and plaintiffs’ attorneys will be closely watching the Ninth Circuit’s response in wake of the remand.

On May 4, 2016, U.S. Citizenship and Immigration Services published a notice of proposed rulemaking regarding changes to the USCIS filing fee schedule. USCIS is proposing to raise immigration benefit application filing fees by an average of over 20%. USCIS is primarily funded by immigration benefit request fees charged to the applicants, and these filing fees comprise 94% of USCIS’s annual budget of $3 billion. USCIS last raised immigration filing fees in 2010, and the agency has justified the increase as necessary to fully recover the costs of services, to maintain an adequate service level, and to allow for processing and technological improvements. Over the last six years, USCIS has seen a significant increase in the number of benefits applications filed. While applications filed by employers have remained steady, applications filed by individuals for naturalization have increased 25%, applications for permanent residence by 15%, and applications to replace expiring permanent resident cards by almost 50%. USCIS’s proposal would raise the base filing fees on employers sponsoring work visas between 20-40%. Foreign nationals filing for permanent residence will see the application fee rise to $1,140 from its current $985, a 16% increase. Those seeking US citizenship will pay an additional 8%, from $595 to $640. At the other end of the spectrum, high net worth investors seeking permanent residence through the EB-5 visa program will see the filing fee increase from $1,500 to $3,675, while the fee for entities seeking designation as EB-5 Regional Centers will skyrocket from $6,230 to $17,795, a raise of 186%! The rule increasing the fees is expected to become final later this summer. In this case, time really is money, and we strongly suggest employers and foreign nationals file their benefits applications quickly to avoid the coming price hikes.

Employees are developing a new, alternative income market, and it poses a direct security threat to employers. A recent Sailpoint survey found 20% of employees, or 1 in every 5, would sell their work-related passwords to an outsider. This is up from 1 in 7 a year ago. SailPoint, an identity and access management provider, surveyed 1,000 private office workers and found, among those willing to sell their company passwords, a striking 44% would sell for less than $1,000. Another IT and security challenge for employers: 26% admitted to uploading sensitive information to cloud apps with the specific intent to share data outside their companies. The troublesome news doesn’t stop there: 65% admitted using a single password among applications, and 33% reportedly shared passwords with co-workers. One-third of respondents admitted to purchasing subscription-based, on-demand software for company computers without their IT department’s knowledge. Finally, brace yourselves employers; more than 40% reported having access to a former employers’ corporate accounts. These, and other, security challenges keep employer IT managers awake at night and can cause some to break out in cold sweats. So, how can employers fight back? Let’s review four employer security challenges, and strategies to combat them. Challenge No. 1: The Disgruntled Employee Mass and business media are ripe with reports of internal attacks creating risks to companies’ data and IT systems. So-called “rogue” employees – particularly IT employees – who possess insider knowledge of, and access to, employer computer networks, data centers, server farms and administrator accounts can, without question, wreak havoc on an employer’s computer resources and networks. Strategy:Foremost, identify all privileged accounts and credentials. Immediately terminate those no longer in use or affiliated with former employees. Secondarily, closely monitor, control and manage privileged log-in/access credentials to prevent exploitation. Employers should also implement necessary protocols and infrastructure to track, log and record privileged account activity as well as create alerts to allow for rapid response to any suspected malicious or unauthorized activity and quickly mitigate potential damage. Challenge No. 2: The Careless or Under-Informed Employee An employee who jumps out of an Uber or taxi and forgets the unlocked work iPhone presents as much of a security risk as a disgruntled employee intentionally leaking information to a competitor. Similarly, employees not trained, or not timely trained, in security best practices and who may have weak passwords, visit unauthorized websites or click on hyperlinks in suspicious emails or open email attachments from unknown senders pose great challenges to employers’ systems and data. Strategy: Train; train; train. Train employees on security best practices and offer ongoing support and supplemental training. Such training should include password management and avoiding hacking via such improper, and sometimes criminal, activity such as phishing and keylogger scams. Require employees to use strong passwords on all work-related devices (or any device used for work-related reasons). Other password requirements could include requiring a separate password for each registered site that must be changed within a defined time period and implementing an automated password management system. Further, an employer could deploy validated encryption for company data that would allow its IT department to execute a selective wipe by revoking the necessary decryption keys specifically used for employer data when an employee’s work-related device is lost or stolen. Other lines of defense could be found in multifactor authorization identification apps such as a One Time Password, RFID, smart card, fingerprint reader or retina scanning. Even if a password becomes compromised, such apps could mitigate the risk of a breach. Challenge No. 3: The Bring-Your-Own-Device (BYOD) Employers face a heightened vulnerability when employees use mobile devices, particularly their own, to share data, access the employer’s information or neglect to change their mobile passwords. One recent study reports mobile security breaches affected more than 66 % of global organizations in the last year. As more employers embrace BYOD, they risk exposure when employees use such devices on the company network, behind a firewall (including via a virtual private network), where an app on the device could install malware or other Trojan software to access the device’s network connection. Strategy:Develop and implement a specific BYOD policy. Such a policy could better educate employees on device expectations, and employers can better monitor email and documents being downloaded to employer- or employee-owned devices. Challenge No. 4: The Cloud Strategy:The best strategy to combat a cloud-based threat is to utilize strong data level cloud encryption and retain the keys exclusively to prevent any unauthorized third party from accessing employer data, even if it resides on a public cloud. Overall Strategic Plan: For most employers today, a security or data breach is no longer a matter of “if” but “when.” To minimize any resulting impacts from a security breach and leak, employers should conduct a risk assessment to identify where valuable data resides and what controls or procedures are in place to protect it. Then, employers should build out a comprehensive incident response (including disaster recovery/business continuity) plan, identify who will be involved (IT, legal, HR, public relations, executive management) and test it.

American workers are increasingly turning away from union representation. According to the U.S. Bureau of Labor Statistics, between 2011 and 2015, the rate for union membership, which is the percent of wage and salary workers who were members of unions, fell from 11.8 to 11.1. In 1983, the first year for which comparable union data is available, the union membership rate was 20.1 percent. In what would be a major reversal of long established NLRB case law, the NLRB General Counsel announced on May 9, 2016 that he will seek to have the NLRB overrule Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001). In Levitz, the NLRB reaffirmed that an employer need not await the outcome of an NLRB election to withdraw recognition from a union. The General Counsel now wants to place before the NLRB the proposition that, absent an agreement between the parties, an employer may lawfully withdraw recognition from a union representative based only on the results of an RM election (one requested by the employer) or RD election (one requested by employees). Under the General Counsel’s proposal, no longer would employees be able to circulate their own petition and present it to the employer—employees could resort to only those mechanisms approved and provided by the federal government.   Under Levitz, the NLRB held that an employer could unilaterally withdraw recognition from an incumbent union only on a showing that the union has actually lost the support of a majority of the bargaining unit employees. The NLRB overruled earlier decisions that allowed employers to withdraw recognition merely by establishing an objectively based, good-faith reasonable doubt as to unions' majority support. In the NLRB’s view at the time of Levitz, the good-faith reasonable doubt standard was flawed because it allowed employers to withdraw recognition from unions that had not, in fact, lost majority support. Accordingly, the NLRB held that an employer that unilaterally withdraws recognition violates Section 8(a)(5) unless it can show that, at the time it withdrew recognition, the union had actually lost majority support. Further, under Levitz, an employer could obtain an RM election by demonstrating an objectively based, good-faith reasonable uncertaintyas to the union's majority status, rather than by demonstrating a good-faith doubt or disbelief. The General Counsel maintains that abandoning Levitzis warranted because experience has shown that employers have not always acted where evidence “clearly indicates” a loss of majority support and this in turn has led to protracted litigation, which has interfered with the right of employees to choose a bargaining representative. In the General Counsel’s view, an NLRB election is the best means of ascertaining employee sentiment. However, the General Counsel does not take into account that unions will likely respond to an RM or RD petition by filing blocking charges, which will delay the conduct of an election and frustrate employee free choice. Importantly, under Levitz, an employer only may rebut the continuing presumption of an incumbent union’s majority status and withdraw recognition only on a showing that the union has in fact lost the support of a majority of employees in the bargaining unit. An employer acts at its peril in withdrawing recognition. The change now sought by the General Counsel would limit the means by which employees may seek to remove an incumbent union, force employers and employees to be more dependent on the federal bureaucracy as the arbiter of their work place, and more tightly bind a union upon employees and their employers – perhaps, forever.

In Medtronic, Inc. v. Amanda Ernst and Nevro Corporation, a state court forum selection clause in an employment agreement was not enforced, and remand to state court was denied. Because the former employer served the new employer, and the new employer removed the case before the former employee bound by the forum selection clause was served, the court ruled that the employee’s consent to removal was unnecessary and the forum selection clause was not triggered. Further, the court determined that the new employer was not a closely related party that could be bound by the employee’s contractual agreement to the forum selection clause. This case has four important lessons for employers seeking to enforce forum selection clauses in employment agreements. Parties  For many companies, the immediate impulse upon learning that a former employee has violated an employment agreement or restrictive covenant is to sue the former employee andthe new employer. Sometimes the new employer is a necessary party to stop theft and anti-competitive tactics. Other times naming the new employer is simply a matter of principle (or reflex). As the Medtronicorder demonstrates, suing a non-party to the employment agreement, such as a former employee’s new employer, can defeat enforcement of a forum selection clause and should be considered anew for each case. Joint Representation For former employees and new employers defending against lawsuits brought by former employers, sharing counsel can be efficient and cost-effective. As the Medtronicorder demonstrates, although joint representation is just one part of the closely related party analysis, it should be considered when analyzing the enforceability of a forum selection clause.   Service Especially in cases where the former employee and new employer are outside of the contractually selected forum, the same process server may not be engaged to serve the former employee and the new employer. As the Medtronicorder illustrates, it is important to coordinate service on the former employee and the new employer in cases where there is a chance of removal. Choice of Law Because of variations in state employment laws, there may be times when a company could improve its chances of enforcing one clause in a contract (e.g., forum selection and choice of law) by waiving its rights under the other clause. As this blog has pointed out before, getting too greedy can be costly – especially when it comes to enforcing restrictive covenants. Accordingly, companies should make decisions about whether to enforce a forum selection clause on a case-by-case basis. Further, a company should consult employment counsel when hiring in a new state to analyze whether to modify its existing forum selection and choice of law clauses.

As anticipated, the United States Department of Labor issued publicly this morning its final regulations amending the so-called “white collar exemptions.” The key features of the final regulations are: Increase in the minimum salary level to meet the white collar exemptions from $455 per week (approximately $23,660 annually) to $913 per week (approximately $47,476 annually). Increase in the total annual compensation level for highly compensated employees from $100,000 to $134,004. Installs an automatic update procedure, which will update the salary thresholds every three years (beginning January 1, 2020). The update will raise the minimum salaries required to meet the white collar and highly compensated exemptions to the 40th percentile of full-time salaried workers nationally. No changes to the current “duties” tests. The salary increases go into effect December 1, 2016. As we have previously discussed on this blog, Congressional Republicans have introduced legislation aimed at derailing the final regulations. Today’s DOL announcement, combined with the White House’s professed commitment to the new regulations, suggests that the legislative maneuvering will be useful for only perceived political gain, rather than a realistic chance of halting the regulations. For employers, the only good news today is that the DOL has given employers about six months to finalize their preparations for the salary increases (or re-classification, as the case may be). Stay tuned on this blog for more in-depth analysis of the final regulations and their impact on employers.

These are difficult times for employers to craft lawful policies regarding employee conduct, behavior and communications. Over the past six years, the National Labor Relations Board (Board) has issued many decisions striking down employer conduct and behavior policies because they could be read by employees to prohibit them from engaging in activities that are protected by the National Labor Relations Act (Act). For example, is it unlawful for an employer to prohibit employees from engaging in conduct that is “offensive” to customers or coworkers? In a recent decision, the Board said the answer to that question is: “It depends.” In Valley Health System LLC, 363 NLRB No. 178 (May 6, 2016), the following statement in the employee handbook was alleged to be unlawful: Certain rules and regulations regarding employee behavior are necessary for the efficient operation of the System and the Facility and for the benefit and protection of the rights and safety of all. Conduct that interferes with System or Facility operations, brings discredit on the System or Facility, or is offensive to patients or fellow employees will not be tolerated. The issue in this case was whether employees would read the rule to prohibit permissible conduct under the Act, such as discussions of unionization, wages, and working conditions with other employees. The Administrative Law Judge (ALJ) found that the ban on conduct that “brings discredit on the System or Facility” was overbroad, and the Board agreed. The ALJ ruled that the bar on “offensive” conduct was not unlawful, but the Board disagreed. The Board stated that whether the ban on “offensive” conduct is unlawful requires an evaluation of the contextin which the word it used. According to the Board, “the rule’s restriction on conduct that is ‘offensive’…appears in the same sentence as, and immediately follows, the [illegal] prohibition on conduct that ‘brings discredit on the System or Facility,’” and the ‘discredit’ phrase is impermissibly overbroad. The Board cited its decision in Palms Hotel & Casino, 344 NLRB 1363 (2005) in which it approved the employer’s ban on “offensive” conduct.  In that case, the rule was “clearly directed at egregious and unprotected misconduct—it prohibited conduct that is ‘injurious, offensive, threatening, intimidating, coercing, or interfering with’” employees or patrons. Some could argue that these adjectives individually could be found unlawful as “offensive” was in the instant case. The take-away from Valley Health System may well be that an employer can ban conduct or behavior that is “injurious, offensive, threatening, intimidating, coercing, or interfering with” customers or coworkers, but other limitations in other contexts may violate the Act. Is the Palms Hotel work rule a safe harbor for employers’ conduct and behavior policies? Time will tell.

The EEOC continues to provide protections from discrimination for the LGBT community. Last week the EEOC issued a new fact sheet on bathroom access rights for transgender employees under Title VII of the Civil Rights Act of 1964 (“Title VII”). The EEOC’s fact sheet follows guidance from the Occupational Safety and Health Commission on this issue, which we addressed last year. The new fact sheet reminds employers of the EEOC’s position that discrimination against a person based on their transgender status violates Title VII, and further, that denying an employee equal access to a common restroom corresponding to the employee’s gender identity is sex discrimination. The fact sheet also states that contrary state law is not a defense under Title VII. While the EEOC’s fact sheet is a statement of the EEOC’s position (not a regulation or statute), employers should consider the EEOC’s position when making policy decisions on restroom availability for transgender employees. The EEOC has filed a number of lawsuitsseeking to protect transgender employees from discrimination, and this new fact sheet indicates the EEOC will continue to enforce such protections. The issuance of the EEOC fact sheet follows passage of a North Carolina law, known as H.B. 2, that limits transgender people’s access to public restrooms. The state law was enacted to invalidate a Charlotte city ordinance that, as of April 1, 2016, would have extended anti-discrimination protections to LGBT individuals and allowed transgender people to use the bathroom of their choice. The battle over this North Carolina law continues to heat up. On Monday, May 9, 2016, the state of North Carolina filed a lawsuit against the federal government seeking a declaratory judgment that H.B. 2 is not discriminatory. That same day, as promised, the U.S. Department of Justice filed a lawsuit alleging that H.B. 2 violates Title VII. You can find a copy of the EEOC’s fact sheet here and further information from the EEOC on enforcement protections for LGBT workers here.

It's that time of year for parents. School is out, the kids are home, and you still have to go to work. For many households, this means it is time to consider hiring summer childcare, e.g., nannies, babysitters, or au pairs to watch the kids during the workday. Because the era of paying the teenager across the street or down the block $10 an hour for eight hours a day is gone, we offer the following reminders to parents who go the route of hiring summer help directly. Determine whether you have a household employee. The general rule is that if you directly hire someone to work in your home and you control when, where, and how his or her work is done, you are most likely an employer (at least part-time). For example, if you hire a nanny to come to your house, be there from 9am-5pm, and feed breakfast at 10am and lunch at 1pm, the government will likely consider you a household employer. If you are a household employer, you may need to pay employment taxes, including social security, Medicare, and federal/state unemployment taxes. For 2016, if you pay cash wages of $2,000 or more to a household employee, you must withhold and pay social security and Medicare taxes. If you pay total cash wages of $1,000 or more in any calendar quarter of 2015 or 2016 to household employees, you must pay federal unemployment tax (depending on where you live, you may also be required to pay state unemployment tax). To pay your household employee and the applicable taxes, you will need to obtain an Employer Identification Number (EIN). This number is issued by the IRS and will be the number you put on forms to show you paid employee taxes. It is easy to apply for and can be done at www.irs.gov. If you make an international hire, verify the applicable immigration documents and confirm that the individual is eligible to work in the United States (and for how long). Alternatively, consider hiring through an agency with responsibility for confirming immigration status, paying the employee, and paying applicable employment taxes. For more information and guidance on hiring household employees, consult your Polsinelli employment lawyers. The 2016 IRS Household Employer’s Tax Guide is also excellent resource for information on this issue. Have a great Summer!