Supreme Court to Decide if Prohibition on Sex Discrimination covers Sexual Orientation/Identity

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The U.S. Supreme Court has announced that it will hear three cases addressing whether discrimination on the basis of sexual orientation and transgendered status constitutes discrimination “because of sex” and therefore prohibited under Title VII. 

The Court agreed to hear two of the cases together to resolve a split in the U.S. Circuit Courts as to whether discrimination based on sexual orientation is prohibited by Title VII.  In one case, Zarda v. Altitude Express, Inc., 883 F.3d 100 (2nd Cir. 2018), the Second Circuit held that such discrimination is prohibited; in the other, Bostock v. Clayton County, 723 F. App’x 964 (11th Cir. 2018), the Eleventh Circuit held that is it not.  The third case will decide whether discrimination based on gender identity is prohibited by Title VII.

The cases have been set for argument during next year’s term.  The Court will likely issue a decision by early summer, 2020. 

Employers Must Now File EEO-1 Component 2 Data By September 30, 2019

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A district court has ordered that employers covered by EEO-1 reporting requirements must submit 2018 wage and hour data for their workforces by September 30, 2019.  The EEOC has also determined that 2017 wage and hour data must also be reported by September 30, 2019.  Employers will submit these reports as “Component 2” of the EEO-1 form.  Information regarding 2018 race/ethnicity and gender data, which employers will now submit as part of “Component 1” of the EEO-1 form, must still be provided by May 31, 2019. 

An employer must file the components of an EEO-1 form if any of the following are true:

  • The employer has 100 or more employees;
  • The employer is affiliated through common ownership and/or centralized management with other entities in an enterprise with 100 or more employees; or
  • The employer or any of its establishments has 50 or more employees and a prime contract or first-tier subcontract with the federal government of at least $50,000.

The court’s decision is subject to appeal, but covered employers should nonetheless begin the process of collecting the necessary data in order to ensure that they can report on time if no appeal is taken. 

Employers Beware: Governor to Focus on Rooting Out Misclassification of Independent Contractors

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Figuring out whether you can lawfully classify a worker as an independent contractor can be complicated.  There are different standards for different laws.  In Wisconsin, worker’s compensation and unemployment compensation laws each have their own definition of “independent contractor.”  There is yet a different test for the purposes of wage and hour laws.  Employers may not be aware of all of the applicable tests and, in many instances, misclassify workers who should be considered employees as independent contractors.  However, ensuring proper classification of workers is now even more important in Wisconsin. 

On April 15, 2019, Wisconsin governor Tony Evers issued an executive order creating a joint task force of leaders from the Wisconsin Attorney General’s office, Department of Revenue and Department of Workforce Development, including that Department’s Unemployment Insurance, Equal Rights and Worker’s Compensation divisions, among others.  The task force will “facilitate coordination of investigation and enforcement of worker misclassification” by state agencies.  It is expected that this will entail the sharing of information between agencies, the development of recommendations for pooling investigative and enforcement resources and fostering cooperation and participation from district attorneys and federal agencies.  The task force will also propose potential legislative and administrative changes in its annual report to Governor Evers. 

All of this points to increased scrutiny of independent contractor relationships going forward.  Therefore, now is the time for Wisconsin businesses to review current arrangements to determine whether they are in fact properly classifying workers.

Under Federal FMLA, Employers Cannot Allow Employees to Exhaust Other Paid Leave

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Some employers voluntarily permit employees to exhaust some or all available paid leave prior to designating the leave as federal Family and Medical Leave Act (FMLA) leave, even when the leave is clearly FMLA-qualifying.  In March, 2019, the Acting Administrator of the U.S. Department of Labor’s (DOL) Wage and Hour Division issued an opinion letter stating that doing so violates the FMLA.  The FMLA regulations require an employer to provide a written designation notice to an employee within, absent extenuating circumstances, five days after the employer has enough information to determine whether the leave is being taken for a FMLA-qualifying reason.  The Acting Administrator explained that failure to follow this notice requirement may constitute an interference with, restraint of or denial of the exercise of an employee’s FMLA rights.  Once an eligible employee communicates a need to take leave for a FMLA-qualifying reason, neither the employer nor the employee may decline FMLA protection for the leave.  Rather, the employer must provide notice of the designation within the required five-business-day time period.  The leave then counts toward the employee’s 12-week FMLA leave period (or 26-week period for military caregiver leave), even if the employee substitutes paid leave for the unpaid FMLA leave.       

Note:  the DOL opinion letter applies only with respect to the federal FMLA.  It does not apply to any state family and medical leave statutes.  Employers should check to see what rule applies with respect to the state laws when designating periods of state family and medical leave.

NLRB Further Defines Concerted Activity

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The National Labor Relations Act protects employees—even those in non-union workplaces—engaged in protected concerted activity for the purposes of mutual aid and protection.  But what does “concerted” activity mean?  A recent National Labor Relations Board decision, Alstate Maintenance, 367 NLRB No. 68, helps define the contours of the term. 

In Alstate, the employer provided skycap services at an airport.  Passenger tips made up the biggest part of the skycaps’ compensation.  The issue in this case arose when a supervisor instructed a group of skycaps to assist with a soccer team’s equipment and a skycap responded—in front of other skycaps—that “we did a similar job a year prior and we didn’t get a tip for it.”  After the comment, the skycaps initially refused to assist in loading the equipment, but later did so.  Alstate fired the employee who had complained about the lack of tip. 

In its analysis, the Board reiterated the principle that an action by an employee is only concerted if the employee brings a group complaint to management or if the employee tries to induce group action.  Considering the facts before it, the Board concluded that the skycap had not engaged in concerted activity. The fact that the employee had indicated that other employees had not received a tip either did not communicate that the group had previously discussed the soccer team’s failure to tip in the prior year.  Rather, it merely described what had happened to the group.  There was no indication that the employees had discussed it amongst themselves prior to the statement.  Further, there was no evidence that the employee was trying to induce group activity.    

In reaching its decision, the court went back to the rule that the fact that a complaint is made in front of a group of employees does not in and of itself indicate that the employee was engaging in concerted activity.  In doing so, it overruled an Obama-era decision that conflicted with the prior rule. 

The court also identified factors that would tend to support drawing an inference of concerted activity.  The factors include that:

  • the statement was made in an employee meeting called by the employer to announce a decision affecting wages, hours, or some other term or condition of employment;
  • the decision affects multiple employees attending the meeting;
  • the employee who speaks up in response to the announcement did so to protest or complain about the decision, not merely to ask questions about how the decision has been or will be implemented;
  • the speaker protested or complained about the decision’s effect on the work force generally or some portion of the work force, not solely about its effect on the speaker him- or herself; and
  • the meeting presented the first opportunity employees had to address the decision, so that the speaker had no opportunity to discuss it with other employees beforehand.

The court noted that, “of course,” other factors may be relevant, such as an express call for employees to act collectively.

Workplace Civility Rules Upheld by National Labor Relations Board

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In the wake of the National Labor Relations Board’s (the Board) decision in Boeing Co., 365 NLRB No. 154 (Dec. 14, 2017), the office of the Board’s General Counsel recently released a memo finding that a company’s “Commitment to My Co-Workers” policy was a lawful workplace-civility rule.  The policy required workers to, among other things, maintain healthy relationships with co-workers and address conflicts directly.  The General Counsel concluded that the employer could require employees to sign off on the policy and could terminate those who refused to do so.  The case is a reminder to employers that they may be able to restore civility rules that would have been found to violate National Labor Relations Act rights prior to Boeing.

Words Can Hurt You – Failing to Stop Rumors Can Lead to Liability for Sexual Harassment

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Sticks and stones may break my bones but words will never hurt me?  For employers in the United States Court of Appeals for the Fourth Circuit (governing Maryland, Virginia, West Virginia, North Carolina and South Carolina), this adage may no longer be true.  In Parker v. Reema Consulting Servs., Inc., decided February 8, 2019, the court held that an employer’s failure to stop a false rumor that a female employee had a sexual relationship with her boss in order to be promoted opened it to a claim of sexual harassment by the subject of the rumor. 

In Parker, Evangeline Parker started working for her employer as a low-level clerk.  Within two years, she was promoted six times, ultimately rising to the level of Assistant Operations Manager.  Two weeks after the last promotion, a male co-worker started a rumor that Parker received the promotion because she had a sexual relationship with her boss.  A higher-ranking manager also helped to spread the rumor around.  In fact, the manager held an all-staff meeting to discuss the rumor.  Parker was late to the meeting and had the door to the meeting room slammed in her face when she tried to come in.  However, her boss—a man—had been allowed in the meeting even though he was also late. 

As the rumor spread, Parker was “treated with open resentment and disrespect” from co-workers, including those she was responsible for supervising.  She alleged that her work environment “became increasingly hostile.”  The manager blamed Parker for “bringing the situation in the workplace” and told her she could no longer advance in the company because she complained about the rumor.  After Parker filed an internal harassment complaint, the manager fired her. 

The employer argued that the rumor was not based upon Parker’s sex, but on her conduct.  The Fourth Circuit rejected this position.  It held that, assuming Parker’s allegations were true, the employer may be liable for failing to quash the rumor on the theory that it perpetuated a “deeply rooted perception” that women, but not men, use sex to advance in the workplace.  The court explained that “because traditional negative stereotypes regarding the relationship between the advancement of women in the workplace and their sexual behavior stubbornly persist in our society,’ and ‘these stereotypes may cause superiors and coworkers to treat women in the workplace differently from men,’ it is plausibly alleged that Parker suffered harassment because she was a woman.”  The court determined that the alleged harassment was severe and pervasive enough to state a claim when the harassment lasted two months, was continuous, consumed management and employees, and was at times physically threatening, e.g., the manager slamming a door in Parker’s face.  The court denied the employer’s motion to dismiss and let the claim proceed.    

Employers in the Fourth Circuit will have to tread carefully to properly react to and address rumors without infringing on employees’ rights under the National Labor Relations Act to discuss the terms and conditions of the workplace.  It remains to be seen whether the case is an outlier or whether other circuits will follow suit.    

DOL Proposed Overtime Regulations That Increase the Salary Threshold

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Employers should take note that the U.S. Department of Labor has at long last issued proposed rules regarding “white collar” exemptions from federal overtime requirements.  Currently, the exemptions may apply if certain duties tests are met and the employee is paid on a salary basis of at least $455 per week, which comes out to $23,660 annually, assuming that some work is performed in each of the 52 weeks in the year.  The proposed regulations would raise the salary threshold to $679 per week, which comes out to $35,308 annually. 

The proposed rules would replace the Obama-era rule that set the threshold salary amount to over $57,000.  A federal court permanently enjoined enforcement of that rule.  The proposed rules mark the first effort by the Trump administration to address the white collar exemptions.

The proposed rules do not address the duties tests, but do address a few other issues.  First, the salary threshold for highly compensated employees would be raised from $100,000 to $147,414, higher than the $134,004 threshold that the Obama era regulations tried to set.

Second, employees would be able to credit non-discretionary bonuses and incentive payments (e.g., commissions) toward the minimum salary level.

Third, the salary threshold would be revisited every four years.

If adopted, the final rules would go into effect in January 2020 and would result in an estimated 1,000,000 employees losing exempt status and thus becoming entitled to overtime. The Department of Labor set a 60-day comment period to give interested parties a chance to be heard on the proposed rules.  The final rules will be issued at some point after that.  Employers should pay close attention to the progress of the proposed rules because, if adopted, they will need to determine whether to increase salaries to meet the threshold or reclassify employees as non-exempt.

Keep in mind that many states have different, sometimes more favorable, salary threshold requirements.  Where there is a difference between state and federal law on wage and hour issues, the provision most favorable to the employee must be applied.

Employee Not Covered by the FMLA Gets Day in Court Due to Employer Representations

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The United States District Court for the Western District of Wisconsin recently held that an employer’s misleading statements to an employee regarding the federal Family and Medical Leave Act (FMLA) can lead to liability even if the employee is not eligible for FMLA leave.  Reif v. Assisted Living by Hillcrest LLC d/b/a Brillion West Haven.  In Reif, plaintiff Angel Reif notified her employer’s HR coordinator on January 9, 2018 that she would need surgery and that she wanted to schedule it after she became FMLA eligible.  The coordinator told Reif that Reif would be eligible for leave on January 25, 2018.  Accordingly, Reif scheduled surgery for January 31, 2018, six days after her eligibility date.  When Reif reported the date of the surgery to the coordinator, the coordinator told Reif that she should schedule surgery as soon as possible—before she was FMLA-eligible—and that the coordinator would “work” with Reif so that her FMLA leave would be approved.  The coordinator assured Reif that Reif’s job would be waiting for her when she was ready to return to work.  Based on the coordinator’s representations, Reif moved up the surgery date to a date that was eight days before her FMLA eligibility date and applied for FMLA leave. 

Despite the coordinator’s promises, the coordinator sent a letter to Reif, dated two days after the surgery, stating that the company was denying Reif’s FMLA leave request because Reif did not meet FMLA eligibility requirements.  Just eight days after her surgery, Reif informed her employer that she was able to return to work with some restrictions.  Two weeks later, the employer informed Reif that it had filled her position. 

Reif sued for interference with her FMLA rights.  Her employer asked the court to dismiss the case on the ground that Reif was not eligible for FMLA leave.  The court refused to do so, explaining that “it would be fundamentally unfair to allow an employer to force an employee to begin a non-emergency medical leave less than two weeks before she would become eligible under the FMLA, assure her that she would receive leave and her job would be waiting for her when she returned, and then fire her for taking an unauthorized leave.”  In essence, because Reif relied on her employer’s representations to her detriment, the employer would be precluded from arguing lack of eligibility. 

Reif is a reminder to employers that statements promising benefits can bind the employers even if circumstances exist where an employee would otherwise not be entitled to receipt of the benefit.  FMLA policies and procedures should be carefully constructed and scrupulously followed. 

NLRB Revises Independent Contractor Standard

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On January 25, 2019, the National Labor Relations Board (the Board) issued a decision revising the standard for determining whether a worker is an independent contractor for the purposes of the National Labor Relations Act (NLRA).  SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338, Case 16-RC-010963 [link].  The determination is important because only those workers who are employees—and not independent contractors—have rights under the NLRA. 

In SuperShuttle, the Board overruled a 2014 decision and returned to the use of the common law test to determine independent contractor status.  That test includes consideration of: 

  • The extent of control the employer may exercise over the details of the work;
  • Whether the worker is engaged in a distinct occupation or business;
  • The kind of occupation and whether the work is usually done under the direction of the employer or by a specialist without supervision;
  • The skill required in the occupation;
  • Whether the employer or the worker supplies the instrumentalities, tools and the place of work for the work to be done;
  • The length of time for which the worker is employed;
  • The method of payment—whether by the time or by the job;
  • Whether the work is a regular part of the business of the employer;
  • Whether the parties believe they are creating an independent contractor relationship;
  • Whether the employer is or is not in business.

The Board also made it clear that entrepreneurial opportunity—the worker’s opportunity for profit and loss—will be used as an overarching interpretive device in considering whether a worker is an independent contractor under the common law test.  As the majority of the Board explained, “[w]here a qualitative evaluation of common-law factors shows significant opportunity for economic gain (and, concomitantly, significant risk of loss), the Board is likely to find an independent contractor relationship.”

The Board then applied this revised test to the facts before it.  In SuperShuttle, a union filed a petition seeking to represent the SuperShuttle van drivers who transported passengers to and from area airports.  Each of the drivers had signed a franchise agreement with SuperShuttle that required the driver to pay a flat, one-time initial fee and then a flat weekly fee thereafter to maintain the franchise.  On these facts, the Board determined that the van drivers were in fact independent contractors.  The most significant factors were:

  • The drivers were required to provide their own vehicles and cover all costs of vehicle operation and maintenance;
  • The drivers were able to accept or decline trips booked by passengers;
  • The drivers paid a weekly franchise fee unconnected to the amount of the fares they collected and;
  • The drivers’ earnings were determined by how much they chose to work, how well the managed their expenses and how well they managed the process through which they selected fares.

The standard, of course, is fact-intensive and is applied on a case-by-case basis.  Nonetheless, the decision in SuperShuttle gives some guidance as to how the standard may be applied in the future. 

Employers should keep in mind that SuperShuttle articulates the standard applied by the Board with respect to independent contractor status under the NLRA.  Different laws, for example, unemployment and workers’ compensation laws, may have different standards that must be used to determine whether a worker is an independent contractor or an employee subject to that particular law.

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