Recent layoffs at several high profile companies, and the putative class actions filed in their wake, highlight the importance of legal compliance when making and effecting these difficult decisions. A patchwork of laws at both the federal and state level requiring advance notice of layoffs and closures to employees and state and local government officials may be implicated.  This includes the federal Worker Adjustment and Retraining Notification Act (“WARN”) and state-counter parts (often called “mini-WARN” acts). Determining whether the WARN Act will apply involves first analyzing both the number and type of employees an employer has (i.e., full-time or part-time, as defined in the statute).  Covered employers must then determine if WARN’s notice requirements are triggered, which may happen when closing facilities or conducting mass layoffs. If WARN does apply, the employer must provide 60 days advance notice to the union representative (if applicable), the employee, and state and local government officials, unless an exception applies that will shorten the period. Violations are subject to back-pay damages, attorneys fees and civil penalties.  Most state mini-WARN include similar provisions, though the triggering thresholds are often lower. Navigating these requirements is key for ensuring legal compliance and minimizing exposure to legal claims, including claims that are ripe for class treatment. Employers should consult with legal counsel early to best address any WARN implications.

The Supreme Court of Illinois recently resolved an outstanding and hotly debated question – claims brought under the Illinois Biometric Information and Privacy Act (BIPA) are subject to a five-year statute of limitations. The Court, in Tims v. Black Horse Carriers, Inc., determined that Illinois’ “catch-all” five-year limitations period applied, as opposed to the one-year statute of limitations applied to claims for libel, slander and the “publication of matters violating the right to privacy.” Prior to the decision, the trial court in Tims determined the five-year statute of limitations applied. The intermediate appellate court overturned, holding that two separate limitations periods applied BIPA claims: five years for claims under section 15(a), (b) and (e), and one year for claims under section 15(c) and (d). The Illinois Supreme Court then clarified the five-year statute of limitations would apply to all BIPA claims. It reasoned that the law favored having a uniform limitations period, the legislative intent and policy of BIPA was better served through a longer limitations period, and statutes that do not include a specific statute of limitations are subject to the five-year statute of limitations. While this decision brings clarity, it also solidifies that a longer limitations period will apply to all BIPA claims. Employers should audit their technologies for use of biometrics and also review their relevant privacy policies and procedures to ensure compliance with all of BIPA provisions, particularly because these claims are often subject to class action litigation.  The experienced employment and privacy attorneys at Polsinelli can help you navigate this review.

The first jury verdict to address violations under Illinois’ Biometric Information Privacy Act (BIPA) resulted in a $228 million judgment against BNSF Railway. The case involved a class of more than 40,000 truck drivers who had their fingerprints scanned for identity verification purposes – without the required notice and consent – when they visited BNSF railyards to pick up and drop off loads. The jury determined the statute was violated 46,500 times, an amount equal to the number of drivers who had their fingerprints scanned, and that the violations were reckless or intentional, a finding that carries a price tag of $5,000 per violation. The case presents two issues that have yet to be resolved by courts.  The first issue is whether damages should be calculated per person or each time biometric information is scanned. This issue is currently before the Illinois Supreme Court, but no ruling has been issued. The second issue is whether a company who contracts with a third-party vendor who in turn collects biometrics can be held liable for any BIPA violations. This issue is likely to be decided by the Seventh Circuit Court of Appeals if and when BNSF appeals the verdict. Regardless of the ultimate answers to these questions, this case demonstrates the importance of auditing current privacy practices to ensure compliance with applicable law, as well as ensuring third-party contracts have clear provisions regarding compliance and indemnification. This is particularly true as more states enact BIPA-like statutes. If you have questions on your privacy practices, contact your Polsinelli attorney.

The Supreme Court addressed the intersection of the First Amendment’s Establishment and Free Speech clauses as they relate to a public employee’s personal religious expression when done in the public eye. In a 6-to-3 decision, it held that public employers are not required to suppress employees’ religious expressions where the expression is not within the employee’s scope of employment, there is no evidence the employee was coercing others to join the expression and the public employer tolerates similar secular speech. The case is Kennedy v. Bremerton School District. The case involved a former high school football coach who was suspended (and ultimately his contract was not renewed) for participating in three postgame prayers on the field. His players did not join in the prayers (though members of the public and opposing team did), and, at the times the coach engaged in the prayers, other coaches were permitted to engage in private secular actions, such as checking their phones or visiting with family and friends. The coach had previously ended the practice of team-wide, pregame prayers. Importantly, the majority stated that courts no longer use the three-part test outlined in Lemon v. Kurtzman for evaluating Establishment Clause issues, and instead look to “historical practices and understandings.” For public employers—local, state and federal—the Court’s holding could make the choice to discipline or terminate an employee for religious exercise or speech feel precarious. If you have questions about how the Kennedy decision impacts your employer-employee relationship, contact your Polsinelli attorney.

On October 1, 2020, the Kansas City, Missouri City Council unanimously voted to enact the “Creating a Respectful and Open World for Natural Hair” Act (“CROWN Act”).  The CROWN Act addresses discrimination based on natural hair or particular hairstyles traditionally tied to race.  In short, the CROWN ACT sets forth that “hair discrimination targeting hairstyles associated with race is racial discrimination.” The CROWN Act, Ordinance No. 200837, modifies the definition of “Race” to include “traits historically associated with race including, but not limited to, hair texture and protective hairstyles.”  The CROWN Act further defines “protective hairstyles” to include, though not limited to, “such hairstyles as braids, locks, and twists.”  In its preamble, the CROWN Act also identifies afros, making it clear that they are a protected hairstyle as well. While Kansas City may be one of the first cities in the country to pass such an ordinance, it is just one of many jurisdictions passing similar expansions of race discrimination protections — including state laws in California, Virginia, New York, Colorado, Washington, and Maryland. The CROWN Act goes into effect on November 1, 2020.  If you have any questions regarding the CROWN Act or expanded race discrimination protections in other jurisdictions, please contact your Polsinelli attorney.

On April 1, 2019, the U.S. Department of Labor (“DOL”) announced proposed changes to its joint-employer test. Specifically, the DOL set out a four-factor balancing test, which inquires whether an entity that does not directly employ an individual employee: 1. hires or fires the employee; 2. supervises and controls the employee’s work schedule and/or conditions of employment; 3. determines the employee’s rate and method of payment; and 4. maintains the employee’s employment records The proposed changes clarify that merely having the ability, power or contractual right to affect the other employer’s employees’ terms and conditions of employment is not relevant to the analysis.  Rather, the putative joint employer must actually exercise or exert control over the other employer’s employees to be considered a joint employer.  In addition, certain business models, such as a franchisor relationship, do not make a finding of joint-employment more likely.  And if adopted, the proposed changes would also provide examples to assist with determining joint employment status. Once the proposed changes are published in the Federal Register, the public will have 60 days to submit comments. These proposed changes mark the first time since 1958 that the DOL has meaningfully revised the joint-employer regulations.  According to the DOL, the proposed changes are meant to provide courts with clear guidance when considering joint employer status and reduce litigation.  Notably, the DOL’s proposed changes to the joint-employer test come on the heels of  the National Labor Relations Board’s proposed joint employer rule, which provides that  joint employment turns, in part, on whether a putative joint employer actually exercises control over the other employer’s employees’ terms and conditions of  employment. The DOL’s proposed changes would bring welcome clarity and certainty to employers that make use of another entity’s employees or that operate under certain business models.  We will keep you posted as the proposed changes move through the notice and comment period.

The U.S. Department of Labor (DOL) recently announced a new pilot program, referred to as the Payroll Audit Independent Determination (“PAID”) program, which allows employers to conduct self-audits of its pay practices using the DOL’s compliance materials.  If an employer determines its pay practices are not in compliance with the Fair Labor Standards Act (FLSA), or if an employer believes its practices are lawful but wishes to resolve any potential claims without the need for litigation, the employer may self-report the issue to the DOL’s Wage & Hour Division and certify it has changed the practice to comply with the FLSA. The DOL will evaluate the employer’s information and confirm the amount of back wages due to employees if any.  The DOL will then issue releases of claims limited to any self-identified violations, which employees may sign to receive payment of any wages due.  Employees are not obligated to accept a payment or sign a release of claims, so participation in the PAID program may not insulate participating employers from litigation.  It is also unclear what impact participation in the PAID program might have on state-law wage and hour violations, which may have a longer statute of limitations than the FLSA.  In addition, an employer that self-reports violations pursuant to PAID may invite further investigation from the DOL or other state agencies. For employees who choose to settle the employer-identified violation, the employer must pay the back wages by the end of the next full pay period. The PAID program allows employers to avoid liquidated damages or civil monetary penalties for any self-identified violations of the FLSA.  Further, the PAID program may be used to resolve inadvertent violations of the FLSA, such as failure to pay employees for off-the-clock work, the maintenance of unlawful comp time structures, or employee misclassification issues. Employers cannot conduct self-audits via the PAID program for claims that are already being investigated, nor can employers use the PAID program for repeat-violations. The PAID program will be piloted for a six month period, so the DOL may adjust the parameters of the program at a later date.  While participation in the PAID program may be beneficial to employers with inadvertent, minor FLSA violations, it may not be right for all employers.  Employers that are interested in participating in PAID, or conducting an internal audit of payroll processes, would be wise to work with counsel.  Stay tuned for further updates on the pilot program.

Employers, take note:effective January 1, 2018, 18 states, as well as several cities across the country, increased the minimum wage. Companies with employees in Alaska, Arizona, California, Colorado, Florida, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington should review their pay practices to ensure compliance with the new state minimum wage rates. Additionally, according to the Economic Policy Institute, 39 localities across the United States have adopted a minimum wage above even their own state’s minimum wage.  Legislators in Oregon, Maryland, and Nevada have introduced bills to increase the minimum wage in their respective states in 2018. And in cities and counties in California, Illinois, Maryland, Maine, Minnesota, New Mexico, and Washington, D.C., ordinances to raise the local minimum wage rate are being considered as well. With these changes, 29 states and Washington D.C. have a higher minimum wage than the federal minimum wage rate. Thus, employers with employees in more than one state must ensure compliance with federal law, and may also have to ensure compliance with state and local law regarding minimum wage. With the constant changes in minimum wage rates coming at both the state and local level, employers would do well to audit their pay practices in the New Year.