On May 8, 2019, the U.S. Seventh Circuit Court of Appeals reaffirmed its test to determine whether a worker qualifies as an “employee” as defined by and subject to Title VII protections. In this case, the plaintiff was a physician who maintained practice privileges at defendant Hospital.  Most of her revenue came from the work she performed at the Hospital, and the Hospital subjected her to peer-review proceedings.  Nevertheless, the Court ruled that she was not an “employee” of the Hospital for purposes of Title VII, but was instead an independent contractor. In its decision, the Court reaffirmed that the following factors are relevant to determining an individual’s employment status under the statute: the extent of the employer’s control and supervision over the worker, including directions on scheduling and performance of work; the kind of occupation and nature of skill required, including whether skills are obtained in the workplace; responsibility for the costs of operation, such as equipment, supplies, fees, licenses, workplace, and maintenance of operations; method and form of payment and benefits; and length of job commitment and/or expectations. The Court emphasized that the most important factor is the employer’s right to control the worker’s conduct and performance. While acknowledging that a physician who enjoys hospital staff privileges could share an indirect employer-employee relationship with a hospital sufficient to invoke Title VII protection, the Court ultimately held that subjecting the plaintiff to peer review did not meet the necessary control threshold to create an employee-employer relationship with the Hospital. The Seventh Circuit’s decision comes as welcome news for employers, as the employee/independent contractor distinction is currently in flux.  Employers with questions regarding the proper classification of its workers would do well to consult with competent counsel.

On March 28, 2019, the U.S. Department of Labor (“DOL”) announced a proposed rule to update the regular rate requirements under 29 CFR part 778 and section 7(e) of the Fair Labor Standards Act (“FLSA”). The FLSA requires employers to pay non-exempt employees overtime compensation for any time worked over 40 hours in a workweek. The overtime rate equals one and one-half times the “regular rate,” which is defined as “all remuneration for employment paid to, or on behalf of, the employee,” with some exceptions. More specifically, the regular rate must include wages, bonuses, commissions, and any other forms of compensation. Court decisions interpreting what must be included in the calculation of the “regular rate” have caused confusion for employers, who may be unsure whether offering non-exempt employees extra perks could increase the regular rate and, by extension, overtime pay. In addition, the uncertainty stemming from what must be included in the “regular rate” could lead to costly wage and hour actions by employees. When announcing the new proposed rule, the DOL opined that the current regulations “do not sufficiently reflect … developments in the 21st-century workplace,” and stated that the following forms of compensation would be excluded from an employee’s regular rate: the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services; payments for unused paid leave, including paid sick leave; reimbursed expenses, even if not incurred “solely” for the employer’s benefit; certain reimbursed travel expenses; discretionary bonuses; benefit plans, including accident, unemployment, and legal services; and tuition programs, such as reimbursement programs or repayment of educational debt. The proposed rule also seeks to clarify whether other forms of compensation, such as payments for meal periods, call-back pay, and others, must be included in the regular rate. The proposed rule will remain open to comments until May 28, 2019. Employers with questions regarding the calculation of the “regular rate” (or other compensation-related issues) would do well to consult with able counsel.

Recently, the United States Eighth Circuit Court of Appeals reaffirmed that regular and reliable attendance is an essential function of most jobs under the Americans with Disabilities Act (“ADA”).  Lipp v. Cargill Meat Solutions Corp., 911 F.3d 537 (8th Cir. 2018). In that case, the parties agreed that the employee had a disability.  Even so, the employer terminated her employment after she accumulated 195 violations of the employer’s attendance policy. The employee sued, alleging intentional discrimination and failure to accommodate under the Iowa Civil Rights Act and the ADA.  The district court granted summary judgment to the employer, and the employee appealed. The Eighth Circuit affirmed the district court’s holding, reasoning that the employee failed to establish that she was a qualified individual with a disability who was entitled to the ADA’s protection because she could not regularly and reliably attend work—an essential function of her position. Important to the decision, the employer actively maintained a written attendance policy that expressly stated “regular attendance is crucial” to its operations, and specified that excessive violations of the policy could result in termination of employment. The Eighth Circuit’s decision in Lipp aligns with several other recent decisions from the Second Circuit (Vitti v. Macy’s Inc., 2018 WL 6721091, No. 17-3493 (2d Cir. Dec. 21, 2018)), the Fifth Circuit (Credeur v. State of Louisiana, 860 F.3d 785 (5th Cir. 2017)) and the Ninth Circuit (Ogden v. Public Utility District No. 2 of Grant Cty., 722 Fed. App’x 707 (9th Cir. 2018)), which all held that individuals who are unable to regularly attend work are not qualified individuals with a disability for purposes of the ADA.  In some instances, employers may have to provide qualified workers with leave as a reasonable accommodation.  However, the ADA does not require employers to 1) provide unlimited leave; 2) allow employees to work from home indefinitely; or 3) abandon their work attendance policies when the employer determines regular work-site attendance is an essential function of a given position. These rulings counsel that employers would do well to maintain written attendance policies that provide for progressive discipline, and should also review job descriptions to ensure they reflect the employer’s need for regular, physical on-site attendance (if attendance is indeed job-related and consistent with business necessity). Employers with questions regarding the ADA and attendance policies or job descriptions should consult with competent counsel.

On Tuesday November 6, 2018, the U.S. Supreme Court unanimously ruled that the Age Discrimination in Employment Act (“ADEA”) applies to state and local government employers with fewer than 20 employees.  The Supreme Court’s decision, in Mount Lemmon Fire District v. Guido, affirmed the U.S. Ninth Circuit Court of Appeal’s ruling and resolved a Circuit Court split regarding the ADEA’s coverage of public employers. Due to budgetary shortfalls, the Mount Lemmon Fire District, a political subdivision in Arizona, terminated its two oldest full-time firefighters, John Guido and Dennis Rankin, who sued alleging discrimination under the ADEA. Mount Lemmon sought dismissal of the case on the grounds that it was not an employer as defined and  covered by the ADEA. Upon enactment in 1967, the ADEA covered only private sector employers.  However, in 1974, Congress amended the ADEA to redefine an employer as “a person engaged in an industry affecting commerce who has twenty or more employees…[t]he term also means (1) any agent of such a person, and (2) a State or political subdivision of a State…”  (emphasis added). The statutory language proved pivotal in the case, as the Supreme Court held the phrase “also means” created an entirely new, separate category of employer covered under the ADEA. The Supreme Court reasoned that because Congress did not apply the numerosity requirement of private sector employers to the political subdivisions, small state and local government subdivisions need not have 20 or more employees to fall within the ADEA’s scope. While Mount Lemmon warned that this interpretation would too broadly extend the ADEA’s scope, potentially causing increased litigation and legal costs and threatening necessary public services, the Supreme Court ultimately disagreed. Justice Ruth Bader Ginsburg, who authored the opinion, acknowledged that this interpretation would give the ADEA “a broader reach than Title VII. But this disparity is a consequence of the different language Congress chose to employ.”  The Court was further unconcerned with the risk of emergency service shrinkages, noting that the Equal Employment Opportunity Commission has followed this same interpretation for 30 years without problematic public services cuts.  The Court concluded that the ADEA’s definition of employer left “scant room for doubt” that state and local governments are employers under the ADEA, regardless of their number of employees. With its broader reach, state and local employers should be mindful of the ADEA’s coverage and requirements. The Polsinelli Labor and Employment attorneys are here to address and assist with any ADEA questions or cases.