Third Circuit Allows “Subgroup” Disparate-Impact Claims to Proceed Under The ADEA

Employers are well aware of the federal Age Discrimination in Employment Act (“ADEA”), which protects individuals over the age of forty, as well as its disparate-impact provision, which makes it unlawful for an employer to adopt a facially-neutral policy that adversely affects an individual employee’s status “because of such individual’s age.” However, in a precedential opinion filed on January 10, 2017, the U.S. Court of Appeals for the Third Circuit held that the ADEA allows plaintiffs to proceed with a disparate-impact claim whereby only a “subgroup” or segment of employees over the age of forty are alleged to have been disfavored relative to younger employees.

In Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435, the defendant-employer underwent several reductions in force (“RIFs”) to offset disappointing sales during the height of the recession. Several employees who were terminated in one particular RIF, all of whom were over fifty years old, brought a putative ADEA collective action against the employer asserting, among other things, a disparate-impact claim. The district court thereafter decertified the plaintiffs’ collective action, which was “to be comprised of employees terminated by the RIF who were at least fifty years old at the time.” Additionally, the district court granted the defendant-employer’s motion for summary judgment as to the disparate-impact claim, holding that plaintiffs’ “fifty-and-older” disparate-impact claim was not permitted under the ADEA.

On appeal, the Third Circuit reversed the district court’s grant of summary judgment as to the disparate-impact claim. The court noted that disparate-impact claims may proceed under the ADEA “when a plaintiff offers evidence that a specific, facially neutral employment practice caused a significantly disproportionate adverse impact based on age.” In Karlo, the plaintiff alleged that the specific RIF disproportionately impacted only a portion of the forty-and-older employee population: employees older than fifty. The Third Circuit found that this claim was cognizable, holding that plaintiffs may demonstrate the impact of facially-neutral policy “with various forms of evidence, including forty-and-older comparisons, subgroup comparisons, or more sophisticated statistical modeling, so long as that evidence meets the usual standards for admissibility.”

The court heavily relied upon the Supreme Court’s decision in O’Connor v. Consolidated Coin Caterers Corp., which held that the ADEA “does not ban discrimination against employees because they are aged 40 or older; it bans discrimination against employees because of their age, but limits the protected class to those who are 40 or older.” Thus, the court held that ADEA claims by subgroups of those aged forty or older are cognizable because “evidence that a policy disfavors employees” of such a subgroup “is probative of the relevant statutory question: whether the policy creates a disparate impact ‘because of such individual[‘s] age” under the plain language of the ADEA. The court found that it is “utterly irrelevant” whether the employer’s policy benefits younger members of those employees over forty, so long as an employee can show that his or her subgroup was adversely affected.

Following Karlo, employers should review their policies to confirm that they are in compliance with the ADEA and do not unintentionally discriminate against employees who are in “subgroups” over forty years old. For more information on the implications of the Karlo decision, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group, at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

New York State Launches Aggressive Campaign to Enforce The New Minimum Wage Law

On December 31, 2016, the new minimum wage law in New York State took effect.  New York’s minimum wage law is among the most complicated in the country. The minimum wage will gradually increase to $15.00 in the coming years, with annual increases to take effect on December 31st. However, how quickly the minimum wage reaches $15.00 depends on where your company is located, the type of business you are in, and whether you are a small or a large employer. For example, the minimum wage in NYC will increase as follows:

New York City 10 or fewer employees 11 or more employees
December 31, 2016 $10.50 $11.00
December 31, 2017 $12.00 $13.00
December 31, 2018 $13.50 $15.00
December 31, 2019 $15.00

For Nassau, Suffolk and Westchester counties, the increments began December 31, 2016 and will conclude on December 31, 2021, with the following increases annually on December 31 no matter the size of the workforce: $10.00, $11.00, $12.00, $13.00, $14.00 and $15.00.  For the rest of New York State, the increments began December 31, 2016 and will conclude on December 31, 2020, with the following increases annually on December 31 no matter the size of the workforce: $9.70, $10.40, $11.10, $11.80, $12.50 and $15.00.

There is a special carve out for fast food companies.  By December 31, 2018, fast food companies in NYC will reach the $15.00 and by July 1, 2021 the rest of NY State’s fast food companies will reach $15.00.

The New York Department of Labor (NYDOL) plans to aggressively enforce the new law and has created a 200-investigator unit to ensure employers are appropriately increasing employee pay to at least the minimum wage. The newly formed State Minimum Wage Enforcement and Outreach Unit’s mission is to inform workers of the new minimum wage law and to ensure they are properly paid.  The State has also established a hotline for workers to report violations of the new minimum wage law. Hotline calls will initiate a NYDOL compliance audit.  If violations are found, a company is subject to a $3.00 fine for each hour the company failed to pay the required minimum wage to an employee plus back wages and liquidated damages.

If you have any questions or would like to discuss the new NYS minimum wage law and its effect on your business, please contact John Vreeland, Esq., Chair of the Wage & Hour Compliance Practice Group and a Partner in the Labor Law Practice Group at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Nicole L. Leitner, Esq., a member of the Wage & Hour Compliance and Labor Law Practice Groups at (973) 387-7897 or nleitner@nullgenovaburns.com.

Morristown Becomes New Jersey’s 13th Municipality to Mandate Paid Sick Leave

On January 11, 2017, Morristown will join the growing list of municipalities in New Jersey requiring private sector employers to provide paid sick leave to employees.  The Morristown ordinance, initially passed by a 6-1 vote in September 2016 and opposed only by Councilwoman Alison Deeb, is anticipated to impact approximately 4,600 workers. Morristown Mayor Timothy P. Dougherty issued an Executive Order on September 27, 2016 delaying implantation until January 11, 2017 explaining that more time was needed to prepare the required posters and for employers to prepare for compliance. The new law does not replace more generous sick time policies offered by employers.

Amount of Required Paid Sick Time – Covered employees will be entitled to 1 hour of paid sick time for every 30 hours worked.  Employers with 10 or more employees need only give employees 40 hours (5 days) of paid sick time per year, and those with less than 10 employees need only give employees 24 hours (3 days) of paid sick time per year.   All child care workers, home health care workers and food service workers are entitled to earn up to 40 hours (5 days) per year regardless of the size of the workforce, for public health reasons.

Who is Covered – The ordinance applies to all full-time, part-time and temporary employees of private employers in Morristown.  However, it does not apply to employees currently covered by a collective bargaining agreement until that CBA expires, unless the paid sick leave terms of the expired CBA are more generous than the town ordinance, in which case the expired CBA’s paid sick leave terms will apply.

Accrual of Paid Sick Time – Under the new ordinance, paid sick time begins accruing on an employee’s first day of the job.  Unused, accrued leave time may be carried over to the next year, but an employer will not be required to provide more than 40 hours of paid leave time in one calendar year.  Moreover, an employee will not be entitled to payment for any accrued, unused sick time at the time of his/her separation from employment.

Use of Paid Sick Time – An employee will be able to use the accrued time beginning on the 90th calendar day of his/her employment.  Qualifying reasons include personal health reasons or to care for sick children, spouse (including domestic partners and civil union partners), siblings, parents, grandparents, or grandchildren.

Anti-Retaliation – An employee may not be retaliated against for requesting to use paid sick time. Retaliation may include threats, discharge, discipline, demotion, hour reduction, demotion, or related adverse action.

Notice & Recordkeeping Requirements – Employers may require that employees provide advance notice of the intention to use sick time, but may not require that a requesting employee find a replacement before taking the sick time.  Employers will be required to provide written notice to all employees of the new mandatory paid sick time. Employer must also display a poster (in English and in any language that at least 10 percent of the workforce speaks) containing sick leave entitlement in a conspicuous place. Posters will be provided by Morristown’s Department of Administration.

Employers must ensure adequate maintenance of records as failure to do so creates a presumption that they have violated the ordinance.  The Department of Administration will be free to assert its rights to access records in order to ensure compliance.  There is no distinction amongst exempt and non-exempt employees under the ordinance in terms of record-keeping requirements.

Consequences for Non-Compliance – Employers who violate the Morristown ordinance will be subject to a fine of up to $2,000.00 per violation, plus payment of the value of sick time that was unlawfully withheld.

How Morristown Compares to Other NJ Municipalities – Though Morristown is the first town in Morris County to mandate paid sick days for private-sector employees, it is New Jersey’s thirteenth municipality to enact such a law.  The idea of federally-mandated paid sick leave backed by the Obama administration did not gain much momentum, and there are only a handful of states, often limited to a few cities, that require employers to provide paid sick leave.  New Jersey does not have a statewide mandate, but it has the highest number of local paid leave laws (including now Morristown).  The following provides a glimpse of the states and cities with similar laws:

  • Arizona
  • California (statewide & the following municipalities: Berkeley, Emeryville, Long Beach, Los Angeles, Oakland, San Diego, San Francisco, Santa Monica)
  • Connecticut
  • Washington D.C.
  • Illinois (statewide & local laws in Chicago and Cook County)
  • Louisiana (statewide & local law in New Orleans)
  • Montgomery County, Maryland
  • Massachusetts
  • Minneapolis, Minnesota
  • Paul, Minnesota
  • Bloomfield, New Jersey
  • East Orange, New Jersey
  • Elizabeth, New Jersey
  • Irvington, New Jersey
  • Jersey City, New Jersey
  • Montclair, New Jersey
  • Morristown, New Jersey
  • Newark, New Jersey
  • New Brunswick, New Jersey
  • Passaic, New Jersey
  • Paterson, New Jersey
  • Plainfield, New Jersey
  • Trenton, New Jersey
  • New York City, New York
  • Oregon
  • Philadelphia, Pennsylvania
  • Pittsburgh, Pennsylvania
  • Puerto Rico
  • Vermont
  • Washington (statewide & the following municipalities: SeaTac, Seattle, Spokane, Tacoma)

There is a counter-trend across the nation aiming to eliminate the hodgepodge of local laws and foster statewide uniformity in mandatory paid sick leave.  Some states have passed laws affirmatively banning local governments from mandating paid sick leave for private employers, including Alabama, Florida, Georgia, Indiana, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Oregon, Tennessee, and Wisconsin.  Similar legislation prohibiting local laws has been introduced in Pennsylvania and New Jersey.

Advocates of mandatory paid sick leave laws told the Morristown Town Council that providing paid sick time is good for businesses, as it will create a happier, healthier and more productive workforce, resulting in less worker turnover and leading to reduced costs incurred for potential new hiring.  However, opponents of the new law argue that small business owners will face cost-issues in order to remain in compliance.  Morristown Councilwoman Deeb, who provided the lone dissenting vote, believes the law will drive small businesses out of Morristown.

For more information on the ordinance and how the new sick leave requirements will affect your business, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practice Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Key 2017 Legal Changes that Employers and Federal Contractors Must Know About

Ready or not, 2017 is upon us and with it come many regulatory changes and important deadlines for employers and individuals. Make sure your New Year’s resolutions include compliance with the following changes and deadlines pertinent to employers and federal contractors.

Affordable Care Act

Employer Reporting. In November, the IRS extended the deadline for employers to meet their ACA reporting requirements. Employers required to furnish employees with Forms 1095 now have until March 2, 2017 to do so. The deadline to submit the Forms to the IRS remains February 28, 2017 for paper returns or March 31, 2017 for electronically-filed returns.

Marketplace Insurance. The deadline for individuals to obtain marketplace insurance coverage beginning January 1, 2017 expired on December 15, 2016. Individuals who want to enroll in marketplace insurance coverage for the balance of 2017 must do so by January 31, 2017. After the January 31 deadline, individuals may enroll in marketplace coverage only if they qualify for a Special Enrollment Period.

Required Contribution Percentages. For tax years and plan years beginning on and after January 1, 2017, the IRS increased to 9.69% of employee household income the maximum cost of coverage the employer can charge the employee for purposes of the employer mandate penalty. The IRS also increased to 8.16% of the employee’s household income the maximum cost of coverage the employer can charge the employee for purposes of determining whether the employee is eligible for an affordability exemption from the individual mandate.

IRS 2017 Contribution Limits for Retirement Plans and IRAs

The following are the IRS contribution limits for 2017:

  • 401(k) and 403(b) employee contribution limit: $18,000.
  • 401(k) and 403(b) catch-up contribution limit: $6,000.
  • IRA employee contribution limit: $5,500.
  • IRA employee catch-up contribution limit: $1,000.
  • 401(a)(17) compensation limit: $270,000.

Benefit Plan Changes

In May, the HHS Office of Civil Rights issued final rules implementing Section 1557 of ACA. Health programs must comply with these nondiscrimination rules effective January 1, 2017. Additionally, in May, the EEOC issued rules implementing Title I of the ADA and Title II of GINA as they relate to employer wellness programs. Employers must conform their wellness programs with these rules effective January 1, 2017. Plan sponsors that made material modifications to their benefit plans in the past plan year must provide participants with a Summary of Material Modifications within 210 days after the end of the plan year of the modification. For plan years ending on December 31, 2016, the SMM must be provided by July 30, 2017.

New York Minimum Wage and Overtime Salary Exemption Increase

Effective December 31, 2016, the N.Y. minimum wage and salary threshold exemption for time-and-a-half overtime pay increase based on the employer’s size and region as follows:

Minimum Wage Increase

  • New York City: Large Employer (11 or more employees): $11.00 per hour.
  • New York City: Small Employer (10 or fewer employees): $10.50 per hour.
  • Nassau, Suffolk and Westchester Counties: $10.00 per hour.
  • Remainder of New York: $9.70 per hour.

Overtime Salary Exemption Increase

  • New York City: Large Employer (11 or more employees): $825.00 per week.
  • New York City: Small Employer (10 or fewer employees): $787.50 per week.
  • Nassau, Suffolk and Westchester Counties: $750.00 per week.
  • Remainder of New York: $727.50 per week.

New Jersey Minimum Wage Increase

Effective January 1, 2017, the New Jersey minimum wage increases to $8.44 per hour.

EEO-1 Report

During 2017, no federal contractor or subcontractor is required to file an EEO-1 Report with the EEOC or DOL Office of Federal Contract Compliance Programs. The next filing date is March 31, 2018. For the March 31, 2018 filing and all future filings, EEOC and DOL will not accept paper filings. All filings must be done online. Finally, the snapshot pay period for the EEO-1 Report due on March 31, 2018 will be from October 1 to December 31, 2017 instead of July 1 to September 30.

Pay Transparency

Beginning January 1, 2017, pursuant to E.O. 13673 and the DOL Final Rule, a federal contractor or subcontractor must furnish a wage statement to each individual performing work under the federal contract if the individual is subject to the wage requirements of the FLSA, the Davis Bacon Act or the Service Contract Act. The wage statement must be provided each pay period and must include 1) the number of straight time hours worked; 2) the number of overtime hours worked; 3) the rate of pay; 4) gross pay; and 5) itemized additions to or deductions from gross pay. The federal contractor or subcontractor must inform an overtime-exempt individual in writing of the exempt status. For individuals treated as independent contractors, the federal contractor or subcontractor must provide a written notice that the individual is classified as an independent contractor.

Paid Sick Leave

Beginning January 1, 2017, pursuant to E.O. 13706 and the DOL Final Rule, a federal contractor or subcontractor must provide an employee with at least 56 hours per year of paid sick leave or permit an employee to accrue not less than one hour of paid sick leave for every 30 hours worked under a covered federal contract.

If you have any questions or would like to discuss how these changes and dates affect you or your business, please contact Patrick W. McGovern, Esq. at 973-535-7129 or pmcgovern@nullgenovaburns.com, or Nicole L. Leitner, Esq. at 973-387-7897 or nleitner@nullgenovaburns.com.

NYC Joins the Pre-Trump Push for Employee Work Schedule Protections

New York City has joined several other cities, including San Francisco and Seattle, introducing legislation that offers more predictable, stable work schedules for employees in low-wage occupations. The legislation generally offers employees more notice of schedules, more access to extra hours, additional pay for last-minute schedule changes, and a mandated period of rest between certain back-to-back shifts. If passed, the legislation would take effect 180 days after being signed into law by Mayor Bill de Blasio.

More specifically, New York City has proposed a package of five bills that would offer the following protections related to employee work schedules:

  • Employees would have the right to request a change in their work arrangements (e.g., schedule changes, location reassignments) without fear of retaliation and employers would be required to engage in an “interactive process” and provide a good faith response within two weeks of the request.
  • Employees would be afforded a right to receive certain changes to work arrangements in emergency situations, like a childcare emergency or personal health emergency.
  • Employers would be prohibited from engaging in on-call scheduling of retail employees.
  • Employers would be prohibited from providing a retail employee with less than 20 hours of work during any 14-day period.
  • Employers of fast food restaurants would be required to provide employees with an estimate of their work schedule upon hire and notice of work schedules 14 days in advance, subject to penalties for untimely notice.
  • Employers would be prohibited from making fast food employees work consecutive shifts when the first shift closes the establishment and the second shift opens it the next day (nicknamed “cloepening” shifts). Employers would be required to give fast food workers at least eleven hours off between such shifts and would pay a $100 premium to an employee every time he or she was made to work such consecutive cloepening shifts.
  • Employers of fast-food establishments would be required to offer available hours to existing employees up until the point that they would have to pay those existing employees overtime, or until all current employees have rejected such available hours, before they could hire new employees.

New York City’s efforts appear to be an attempt to prevent what many fear will be backlash against workers’ rights from the incoming Trump administration. The goal of these legislative measures is to lessen the wage gap in big cities, where the cost of living is typically higher, by offering low-wage workers the opportunity to budget in advance, plan for education or family care, and secure a second job, among other things. Those who oppose the initiatives raise several concerns. According to many business officials, the implementation of scheduling mandates on employers would result in rising costs and decreased efficiency because scheduling changes are typically initiated by employees. Another critic accused the New York City Council of acting as labor organizers, particularly in light of the penalties imposed, which are similar to collective bargaining provisions.

For more information on the pending New York City legislation and how the new requirements will affect your business, please contact John Vreeland, Esq., Chair of the firm’s Wage and Hour Compliance Group, at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

New York City Passes Trailblazing Freelancer Wage Theft Protection Law

On November 16, 2016, New York City Mayor Bill de Blasio signed into law the “Freelance Isn’t Free” Act (“the Act”).  The Act generally grants freelancers the right to a written contract, timely payment and to be free from retaliation. The Act also bars wage theft against contractors and imposes substantial penalties on businesses that fail to comply with these and other requirements surrounding the independent contractor relationship. The Act, the first of its kind in the United States, will take effect on May 15, 2017.

Covered persons – Under the Act, freelancers include individuals and organizations made up of no more than one person, who are hired as independent contractors to provide services in exchange for monetary compensation.  Excluded from the Act are most sales representatives, lawyers and doctors.

The Act’s Requirements

  1. Written Contract – The Act requires a written contract for freelance work that is valued at $800 or more (either alone or aggregated with all service contracts between the same parties over the preceding 120 days). The written contract must include the names and addresses of the hiring party and freelancer, an itemization of services to be performed with corresponding values, and the date of payment or a method of determining said date.
  2. Timely Payment – In addition, the Act requires that the agreed-upon compensation be paid to the freelancer on or before the payment date specified in the written contract. If the contract does not specify a payment date or a method by which the payment date can be determined, the freelancer is to be paid no later than 30 days after completing the services.  Notably, once a freelancer has started performing the services, the employer cannot condition timely payment on the freelancer accepting an amount of compensation that is less than that stated in the contract.
  3. No Retaliation – Finally, the Act has an anti-retaliation clause that prohibits discrimination, threats, intimation, discipline, harassment and denying future work opportunities to freelancers. Employers are also protected from penalizing a freelancer for, or acting in way that would likely deter a freelancer from, exercising his rights under the Act.

Remedies & Exposure

Freelancers whose rights have been violated under the Act may file a complaint with the Office of Labor Standards within 2 years of the alleged violation.  Aggrieved freelancers also have the option to file a civil action.  For claims based on the failure to provide a written contract, the civil action must be filed within 2 years of the alleged violation.  For claims arising out of non-payment, late payment, or retaliation, the civil action must be filed within 6 years.

Failure to enter into a written contract alone subjects an employer to payment of the freelancer’s attorneys’ fees, a statutory damages award of $250, and, if found to have also violated the timely payment and/or anti-retaliation provisions, damages could equal the value of the underlying contract.  Non-payment or late payment alone exposes the employer to double damages, injunctive relief and other damages.  Retaliation alone subjects the employer to damages equal to the value of the underlying contract.

In addition, New York City Corporation Counsel may institute an action against repeat offenders of the Act.  Employers who are found to frequently violate the Act are subject to up to $25,000.00 in civil penalties.

No Waiver – Freelancers cannot waive their rights under the Act.  The Act expressly provides that any contract provisions purporting to waive rights under the Act are void as against public policy.

Potential Impact

The purpose of the Act is to make employers accountable for paying freelancers.  The concept is respectable in theory.  Testimony was given to the New York City Council suggesting that over 70% of freelance workers reported non-payment or late payment of wages and that freelancers were being denied an average of $6,000 of owed compensation per year.

However, the Act’s practical effect may pose significant problems.  First, unlike other wage and hour laws, employers cannot avoid or diminish liability by demonstrating that they acted in good faith.  For example, employers can avoid paying liquidated damages under the Fair Labor Standards Act if they demonstrate good faith and reasonable grounds for their non-payment of wages or other unlawful conduct. Second, the Act does not require freelancers to provide invoices for completed work.  Accordingly, companies who operate on the basis of invoicing by contractors are at an elevated risk, even if they intend to pay a freelance worker for contracted services.

What To Do

Although the Act does not go into effect until May of 2017 and it will not have retroactive effect, there are certain steps that New York City companies hiring independent contractors should take to ensure they are in compliance with the Act by that time.  First, ensure that service contracts for freelancer work valued at $800 or more are in writing and that they specify the work to be done, attach a value to each itemized service, and provide for the rate, method and date of payment.  Companies who operate on the basis of invoicing by contractors may consider imposing additional requirements on the freelancer, such as the submission of invoices, although it has yet to be seen whether a clause conditioning payment upon the submission of an invoice would be enforceable under the Act.  New York City businesses that use independent contractors should also review and update their independent contractor agreements as appropriate, or speak with counsel about preparing such an agreement, to align their payment practices with the Act.

For more information on the Act and how the new requirements will affect your business, please contact John C. Petrella, Esq., Chair of the firm’s Employment Litigation Practice Group at jpetrella@nullgenovaburns.com, or Dina M. Mastellone, Esq., Chair of the firm’s Human Resources Practices Group, at dmastellone@nullgenovaburns.com, or 973-533-0777.

Meet Trump’s Pick for the U.S. Department of Labor – CEO Andrew Puzder

President-elect Donald Trump tapped Andrew Puzder to lead the U.S. Department of Labor (“USDOL”) in his administration, an appointment that could have important implications for employers in terms of the USDOL’s recent hardline enforcement policies on joint employer relationships and independent contractor status. It also may signal how vigorously the USDOL will defend certain regulatory changes made under the current administration, such as the revised Persuader Rules (which significantly hinder an employer’s ability to use law firms during a union organizing campaign) and the amendment to the Fair Labor Standard Act’s “White Collar” exemptions (which more than doubles the minimum salary an employee must be paid in order to qualify for an overtime exemption). Both of these regulatory changes were blocked by federal courts last month and remain unenforceable unless the USDOL successfully appeals the federal courts’ injunctions.

Mr. Puzder has been CEO of CKE, which owns fast food chains Hardee’s and Carl’s Jr., since September 2000. CKE has 75,000 employees in the U.S. and nearly 100,000 worldwide. Mr. Puzder was an outspoken critic of the Labor Department under the Obama administration. He wrote multiple Wall Street Journal op-eds against any increase in the minimum wage or changes in overtime rules. Mr. Puzder has advocated for employers to consider automation in the face of rising employee costs.  Concerning automation, Mr. Puzder commented, “[machines are] always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.” Mr. Puzder has written about how overregulation from Obamacare has held back the restaurant industry and has made the case for less regulation in the labor market.  In 2010, Mr. Puzder released a book with professor David Newton entitled “Job Creation: How it Really Works and Why Government Doesn’t Understand It.” Leading up to the 2012 election, Mr. Puzder was an economic advisor and spokesman for the Romney Campaign for President. This election cycle, Mr. Puzder was an advisor and fundraiser for the Trump campaign.

If you have any questions or would like to discuss how the change in the administration could affect your business, please contact John Vreeland, Esq., Chair of the firm’s Wage and Hour Compliance Group, at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at (973) 646-3275 or acarter@nullgenovaburns.com.

OSHA Whistleblower Retaliation Cases Continue to Rise

Based on the most recent statistics published by OSHA, the number of whistleblower retaliation cases being filed by employees has continued to rise.  In FY-2015, there were 3,288 cases filed, an increase of over 6% from the 3,098 cases filed in FY-2014.  This continued a long upward trend.  In fact, the number of whistleblower claims filed with OSHA has increased by over 70% since 2005, when only 1,934 cases were filed.  Along the same lines, more and more cases are being resolved in a way that is favorable to the complaining employee, either through a settlement or a finding that the whistleblower claim had merit.  In FY-2015, there were 835 cases that resulted in such a positive outcome for the complaining employee, which is more than double the 397 such cases in FY-2005.

Two recent OSHA Whistleblower cases underscore the need for Employers to be aware of these types of claims and to take precautionary measures.

  • On November 15th, OSHA announced that it had found that a Denver company, TruBlue, LLC, had unlawfully terminated an employee after the employee suggested to the company’s CEO that more safety research needed to be conducted on zip-line equipment. TruBlue develops and manufactures products used for climbing, zip-line, free-fall and other recreational activities.  OSHA has ordered TruBlue to pay the former employee $125,000 in back wages and to take other corrective actions.
  • On October 11th, OSHA announced the settlement of its lawsuit against Lear Corp. (dba Renosol Seating LLC. Lear manufactures foam seating for the automotive industry.  The lawsuit had been filed on March 4, 2016, following OSHA’s investigation had determined that employees who reported hazards from chemical exposure at the company’s Selma, AL plant suffered multiple forms of retaliation in violation of the OSH Act’s whistleblower provisions.  The settlement requires Lear to dismiss its lawsuit filed against one of the employees and to reinstate that employee to her former position.  In addition, the disciplinary records of the employees who had complained of the hazards will be purged from their personnel files, and those employees will be compensated for the work time lost due to the suspensions.  Lear also agreed to permit OSHA to provide annual training regarding protected rights under the OSH Act to all workers for a period of 3 years.

For assistance dealing with OSHA’s Whistleblower provisions or other OSHA-related issues please contact Doug E. Solomon, Esq., Chair of the Firm’s OSHA Practice Group and Partner in the Labor Law Practice Group.  Mr. Solomon can be reached at dsolomon@nullgenovaburns.com or (973) 535-7128.

Federal Judge Halts Final Overtime Rule Days Before Implementation

On November 22, U.S. District Court Judge Amos L. Mazzant III, sitting in Sherman, Texas, issued a nationwide preliminary injunction against the U.S. Department of Labor’s (“USDOL”) enforcement of its Final Overtime Rule which would have more than doubled the minimum salary employees must be paid to be treated as exempt from overtime. The USDOL estimated that the Final Overtime Rule, which was set to go into effect December 1, 2016, would capture 4.2 million workers into the overtime ranks.

The case, entitled Nevada v. U.S. Department of Labor, Civil Action No. 4:16-CV-00731, was filed by 21 states in the Eastern District of Texas. The States argued that the Department of Labor lacked the statutory authority to use a salary-level test and an automatic updating mechanism to determine overtime eligibility. Judge Mazzant agreed. Judge Mazzant found that under a plain reading of the statute, nothing in the White-Collar exemption indicates Congress intended the USDOL to define and delimit parameters for a minimum salary level. Instead, the focus is on the employee’s duties and Judge Mazzant found that the USDOL “exceed[ed] its delegated authority and ignor[ed] Congress’s intent by raising the minimum salary level such that it supplants the duties test.” While the USDOL may appeal the preliminary injunction, and the Court will eventually rule on whether to grant a permanent injunction, the Court has told the USDOL that it may not enforce the Rule.

So, what does this mean? For now, because of the nationwide preliminary injunction barring enforcement of the Overtime Rule, employers do not have to comply with the Overtime Rule’s requirements.  Right now, the current minimum salary that must be paid to qualify an executive, administrative or professional employee for an overtime exemption is $455 per week and this will remain the minimum salary on December 1st and until such time as Judge Mazzant’s decision is modified at the permanent injunction phase or successfully appealed.

Whether and when the government will appeal is unclear. The Final Overtime Rule is unpopular with employers, employer groups (like the Chamber of Commerce), and Senate and House Republicans. Whether President-elect Trump’s Department of Labor will defend the Overtime Rule in the face of State and business opposition is an issue that will be addressed in early 2017. We will keep you posted about any new developments regarding the Overtime Rule.

If you have any questions or would like to discuss the preliminary injunction against the Overtime Rule and options available to your business if it has already taken action to comply with the Overtime Rule, please contact John Vreeland in our Labor Group at (973) 535-7118 or jvreeland@nullgenovaburns.com.

 

Court Blocks Rule Requiring Federal Contractors to Disclose Labor Law Violations, But Okays Pay Transparency Rule

On October 24, 2016 the federal district court in Beaumont, Texas enjoined implementation of President Obama’s Executive Order 13673 and the enforcement of FAR Council regulations and U.S. DOL guidance requiring disclosures of labor law violations, which were scheduled to take effect on October 25, 2016.  The court found that the requirement to report labor law violations exceeded the Executive Branch’s authority and violated free speech and due process rights of federal contractors and subcontractors.  The court also halted the ban on pre-dispute arbitration agreements covering Title VII claims and tort claims relating to sex harassment.  However, on January 1, 2017 the Order’s pay transparency rules will take effect, requiring federal contractors to furnish wage statements each pay period stating hours worked, overtime hours worked, rate of pay and any additions and/or deductions from pay.

In August 2016 the FAR Council and the DOL issued a Final Rule and Guidance on E.O. 13673 titled Fair Pay and Safe Workplaces.  The Final Rule requires federal contractors and subcontractors that solicit a contract with the Federal Government estimated to exceed $500,000 to disclose all violations of 14 federal labor laws committed during a look-back period, including FLSA, OSHA, FMLA, ADA, ADEA, Title VII and the NLRA.  The Federal Government will consider these labor law violations and decide whether they are too serious, repeated, willful or pervasive to award or extend a contract.

Because this injunction is only preliminary and partial and an appeal or amended rule is likely, federal contractors and subcontractors cannot ignore E.O. 13673, the Final Rule or DOL Guidance.  If the injunction is dissolved, then contractors and subcontractors will be faced with disclosure duties covering a look-back period of one year that will gradually increase to three years.  In addition, no disclosures will be required in the six months following the Rule’s effective date for prospective contractors, and one year for prospective subcontractors.  This phase-in disclosure process is in response to the DOL’s recognition that contractors and subcontractors were not previously required to track and report federal labor law violations and need time to familiarize themselves with the Final Rule, set up protocols and create or modify internal databases to track covered labor law decisions, including administrative merits determinations, arbitral awards or decisions, and civil judgments.

As discussed above, the court did not enjoin the Executive Order’s pay transparency requirements taking effect January 1, 2017.  In addition, the DOL requires every federal contractor and subcontractor covered by E.O. 11246 to provide notice to applicants and employees that the employer will not discriminate based on questions, discussions, or disclosures about pay.  The contractor must post the Pay Transparency Nondiscrimination Provision either electronically or in conspicuous places available to the employee or applicant at the employer’s premises and include it in existing employee handbooks and manuals.  Sample DOL language is available at https://www.dol.gov/ofccp/PayTransparencyNondiscrimination.html.

On a somewhat related issue, the DOL issued its Final Rule implementing President Obama’s E.O. 13706, which mandates paid sick leave for employees of federal contractors.  Beginning January 1, 2017 the DOL will require a covered federal contractor to provide an employee with at least 56 hours per year of paid sick leave, or alternatively the contractor must permit an employee to accrue not less than one hour of paid sick leave for every 30 hours worked under a covered federal contract.  An employee may use the paid sick leave for a physical or mental illness, injury or medical condition, obtaining diagnosis, care or preventive care, caring for the employee’s child, parent, spouse, domestic partner, or to seek counseling, relocation, assistance from a victim services organization or legal action for domestic violence, sexual assault or stalking.  If a labor agreement signed before September 30, 2016 applies to an employee’s work performed under a covered contract and provides the employee with fewer than 56 hours of paid sick time each year (or fewer than seven days, if the agreement refers to days rather than hours), the contractor must provide the difference between 56 hours and the amount provided under the existing agreement.  However, if a labor agreement signed before September 30, 2016 already provides for at least 56 hours per year of paid sick leave, the other requirements of the Executive Order and Final Rule, such as recordkeeping, notice and timing of pay, will not apply to the contractor until either the agreement terminates or January 1, 2020, whichever is sooner.

For assistance in complying with the Executive Orders, Final Rules or DOL Guidance on labor law violation disclosures, pay transparency or paid sick leave, please contact Patrick W. McGovern, Esq. at 973-535-7129 or pmcgovern@nullgenovaburns.com, or Nicole L. Leitner, Esq. at 973-387-7897 or nleitner@nullgenovaburns.com.