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    Welcome to the Labor and Employment Law Update where attorneys from SmithAmundsen blog about management side labor and employment issues. We cover topics including addressing harassment and discrimination in the workplace, developing labor law, navigating through ADA(AA), FMLA and workers’ compensation issues, avoiding wage and hour landmines, key legislative, case law and regulatory changes and much more!
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    The Labor and Employment Law Update is provided for information purposes only, and should not be construed as legal advice on any subject matter, nor should it be construed as creating an attorney client relationship. Do not send confidential information or facts about a legal matter. The opinions of this blog's contributors do not reflect the opinions of SmithAmundsen LLC as a whole. See the disclaimer page for further information.

OFCCP: Affirmative Action Contractors Update on Compliance with Sexual Orientation and Gender Identity Obligations

Contributed by Heather Bailey

This is the first time since 1974 that the protected classes for affirmative action contractors have been modified.  The effective date for compliance is April 8, 2015 for any new or modified contracts (more than $10,000). At this time, you must begin implementing the new requirements related to sexual orientation and gender identity applicants and employees. The OFCCP held webinars in March to give contractors guidance on what they are expecting out of these new requirements.  Here is what we learned:

  • It is encouraged that all affirmative action contractors should follow these adjustments and incorporate these two protected classes in their affirmative action efforts (even if you don’t fall under the new regulations).
  • Job Advertisement Tag Lines – if it currently lists all protected statuses (e., race, national origin, sex, religion), then you must include sexual orientation and gender identity with the full list.  Alternatively, if you do not list the specific classes it is appropriate to just have Equal Employment Opportunity Employer.  One exception is if you are covered by the veteran and individuals with disabilities regulations.  If so, the OFCCP opined a sufficient tag line is “Equal Employment Opportunity Employer/Veterans/Disabled.”  Please note that the OFCCP warned that the abbreviation “LGBT” should not be used since the abbreviation does not cover all individuals identified under sexual orientation and gender identity.
  • EEO is the Law Poster – they are creating a supplement in the near future, soon after the effective date.  In the meantime, ensure the current version is posted.
  • Offered Benefits – the basic rule of thumb is if you offer the benefit to opposite sex married couples, you must offer the same to same sex married couples who are married in a state or territory that recognizes those marriages.  You are not, however, required to give those benefits to individuals in civil unions or domestic partnerships unless of course you offer the benefits to similar opposite sex unmarried couples.

What has not changed with your obligations for the addition of sexual orientation and gender identity individuals:

  • No new placement, outreach and employment goals;
  • No self-identification requirement;
  • No data collection requirement;
  • No Handbook or Affirmative Action Plan update required (OFCCP did opine it was a best practice to include these protected classes in any EEO clause);
  • No mandatory training (but still encouraged); and
  • No change to religious exemption.

Why is this important?  Not only is this a good business practice to incorporate these two classes of individuals in your equal employment opportunity efforts, but the OFCCP will share and coordinate with the EEOC with a joint investigation and/or referral if they notice any type of discriminatory impact, intent, practice, etc. for individuals and even class complaints.

It is recommended you seek counsel advisement on getting started to ensure compliance, but the OFCCP also offers resources for contractors in order to give guidance and FAQs at http://www.dol.gov/ofccp/LGBT/LGBT_resources.html.

Right-to-Work: Who’s Got Next?

Contributed by Beverly Alfon

Despite labor’s historical stronghold in the Midwest – Indiana, Michigan, Iowa, Tennessee and now, Wisconsin – have become Right-to-Work (RTW) states.  Is Illinois next?  What does this mean for employers?

RTW In a Nutshell: Money and Power

In the 25 states that have not passed RTW laws, including Illinois and Missouri, a union security clause in a collective bargaining agreement requires all employees in the bargaining unit to either be a dues/fee-paying union member – or a non-member who pays “fair share” fees.  The battle is over the non-member “fair share” fees which are used to supplement dues cash flow used for, among other things, local and international officer salaries, overhead costs and political lobbying.

In the 25 states that have passed RTW laws, a non-member at a unionized workplace is no longer required to pay any fees to the union – even if s/he is benefitting from union representation.  Financially, RTW is a major blow to unions.  From an organizing standpoint, it is equally damning.  An individual is far less likely to become or remain a union member if s/he can benefit from representation without having to pay.  After all, a union owes a legal duty of fair representation to all individuals in the bargaining unit – regardless of member status.

Proponents of RTW laws argue that they attract new business and promote expansion of existing businesses because of the likely decline of union strength and numbers.  Opponents of RTW laws argue that employee wages, benefits and protections will deteriorate as a result of lower union representation.

The Pulse 

Missouri: Even if the RTW bill before the Missouri legislature fails this year, GOP representatives are celebrating.  Last month, in a 91-64 vote, the House approved a RTW bill.  Despite the possibility of defeat in the Senate and expected veto of Gov. Jay Nixon, the RTW movement has clearly gained significant ground.  It would only take 109 votes in the House to override a veto.

Illinois:  Last month, Gov. Bruce Rauner issued an executive order allowing state employees to opt out of paying union dues.  AFSCME, Illinois AFL-CIO and 25 other unions filed suit last week challenging the executive order.  Meanwhile, Rauner has filed his own lawsuit asking the courts to confirm his position that fair share fees violate workers’ First Amendment rights.

Wisconsin:  Last week, a group of unions filed suit to challenge the recently enacted RTW law.  Notably, union challenges to the constitutionality of RTW laws in Michigan and Indiana have failed.

Kentucky:  Under home rule, in December 2014, Warren County, Ky., adopted a countywide RTW ordinance after it became clear the state legislature was not going to pass a RTW bill.  Since last year, 11 counties have passed local RTW laws, including several along the Tennessee border.

What to Expect Right Now 

Expect an uptick in union activity as unions ramp up “internal organizing” to prove that membership has its benefits.  Frontline management will also likely receive increasing questions from employees about what all of this means.  Now is the time to consider re-training your supervisors and managers about what they can say and do when these discussions arise.  Finally, stay tuned as these legal and legislative battles continue to develop.

Supreme Court Holds that Mortgage Loan Officers are Eligible for Overtime

Contributed by Michael Wong

On March 9, 2015, the U.S. Supreme Court issued a ruling in Perez v. Mortgage Bankers Association that should put all employers on notice.  In this decision, the Court held that federal agencies, specifically the Department of Labor (DOL), do not need to go through the same rulemaking procedure of providing notice to the public and soliciting input before issuing their own interpretive guidance, even if it contradicts the agency’s prior guidance.

In Perez, the DOL issued opinion letters that stated mortgage loan officers were not eligible for overtime under the administrative exemption of the Fair Labor Standards Act (FLSA). Subsequently, at the request of the Mortgage Bankers Association (MBA), the DOL issued another opinion letter reaffirming that mortgage loan officers were exempt from overtime under the administrative exemption of the FLSA. However, several years later the DOL flip flopped and reversed its prior opinion letters stating that mortgage loan officers did not fall under any of the FLSA exemptions and thus were entitled to overtime.

At issue in Perez was whether the DOL’s 2010 interpretation was procedurally invalid under the Administrative Procedure Act’s (APA) and doctrine set forth in Paralyzed Veterans of Am. v. D.C. Arena L.P., 117 F.3d 579 (D.C. Cir. 1997).  Under the Paralyzed Veterans doctrine and APA, when a federal agency was issuing an interpretation that significantly revised its prior interpretation, the federal agency had to comply with the APA notice-and-comment procedures.   The APA’s notice-and-comment procedures required that federal agencies publish a notice of the proposed rulemaking in the federal registry and allow interested persons to provide input on the proposal. Then, in finalizing the rule, the federal agency was required to take all comments into consideration and any amendments or changes would be subject to the same notice-and-comment requirements.

In Perez, the Supreme Court reversed the lower court’s decision applying the Paralyzed Veterans doctrine and held that the Paralyzed Veterans doctrine was contrary to the text of the APA and exceeded the scope of judicial review authorized by Congress.

The first takeaway for employers from the Supreme Court’s decision in Perez is that under the DOL’s opinion letter, mortgage loan officers are not exempt from overtime under the FLSA administrative exemption.  As such, mortgage loan officers must be paid overtime, unless you can show that they fit under another FLSA exemption. Additionally, it creates significant questions for employers in how much credence they should give to interpretations, opinion letters and guidance issued by federal agencies, as the agencies may be able to issue contradictory opinions or interpretations without having to go through the notice and comment procedures set by the APA.

The Cook County Wage Theft Ordinance Makes Compliance with Federal and State Wage and Hour Laws Even More Important

Contributed by Julie Proscia

The Cook County Board of Commissioners recently passed an ordinance which prohibits any company or individual who is found guilty or liable of wage theft from obtaining Cook County procurement contracts, business licenses or property tax incentives for up to five years. The ordinance is effective May 1, 2015. Cook County is now the largest municipal entity in the United States to have passed an ordinance of this nature.

Under the new Cook County Wage Theft Ordinance, businesses found to have violated the Fair Labor Standards Act (FLSA), Illinois Wage Payment and Collection Act, Illinois Worker Adjustment and Retraining Notification (WARN), Illinois Employee Classification Act, and/or any other similar state laws regarding the payment of wages may find themselves ineligible to do business with the County of Cook.  This is applicable to any person or entity who, within the prior five-year period, has admitted or has been adjudicated liable in any judicial or administrative proceeding of committing, absent a finding of “good cause,” a repeated or willful violation of federal or state wage payment laws. Under the terms of the ordinance, a business violator may:

  • become ineligible and/or disqualified from receiving or renewing business licenses in Cook County;
  • be barred from contracting with Cook County;
  • be found in default under existing Cook County contracts; and/or
  • become ineligible for property tax incentives.

As of May 1, 2015, businesses requesting tax incentives from the Cook County Assessor must certify, under oath, that for the past five years they have not been found in willful or repeated violations of federal or state wage and hour laws. Unless an express waiver is granted by the County Board, any person or business that has been found liable for a repeated or willful violation of state or federal wage payment laws will be ineligible for tax incentives. Moreover, if the County Assessor becomes aware that an employer has violated wage and hour statutes within the prior five years, the Assessor has the authority to revoke the incentive or classification unless the employer cures the violation within 45 days.

The new ordinance also requires that any person seeking to contract with the County of Cook must certify, under oath, that the applicant has not been found to have repeatedly or willfully violated federal or state wage and hour laws anywhere in the country, either by an administrative agency or a court. If a violation is deemed to have occurred, the County Chief Procurement Officer has the authority to issue a notice of default under existing contracts.

Because of the ramifications of the new Wage Theft Ordinance, it is even more important than ever that entities and individuals that do business within and with the County of Cook are in compliance with federal and state wage and hour requirements.  It is also important that, if your business has been found in violation of federal or state wage and hour laws in the prior five years, you have any applicable application to the County of Cook reviewed by counsel prior to submission to ascertain if a waiver can be sought or asserted. Lastly, it is imperative to have counsel involved in any settlement agreements that are drafted to ensure that the wording utilized does not inadvertently solve one problem while creating others.

Thinking About Hiring Interns? Tips for Doing It Right.

Contributed by Suzanne Newcomb

Despite winter-like weather across much of the country, it is March and that means college students are searching for internships. On January 30, a federal appeals court heard oral arguments on a pair of class action lawsuits in which interns in the film and publishing industries sued for unpaid wages. Although the court has yet to rule, there are steps your organization can take now to avoid this type of litigation.

Under the FLSA anyone who performs work is entitled to compensation. For non-profits, federal regulations clarify that “volunteers” who freely serve public agencies for civic, charitable or humanitarian reasons are not “employees.” In 1947, the U.S. Supreme Court carved out an exception applicable to for-profit businesses, holding that “trainees” were not “employees.” In 2010, the U.S. Department of Labor published Fact Sheet #71 which states an unpaid internship at a for-profit business is legally permissible only if:

  1. It is similar to training given in an educational environment;
  2. It primarily benefits the intern, not the organization;
  3. The intern is closely supervised by existing staff and does not displace regular employees;
  4. The employer derives no immediate advantage from the intern’s activities; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job after the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages.

Whether these factors are a rigid checklist or simply a guiding framework is at issue in the pending Second Circuit case. For now, for-profit businesses should consider this a checklist. If you fall short on any factor, the internship should be paid.

All organizations that hire unpaid interns — for-profit businesses and not-for-profit organizations alike – should:

  1. Make clear at the onset that the position is unpaid and is not likely to lead to a paid position with your organization (preferably this will be in writing signed by both parties).
  2. Coordinate with the student’s educational institution to provide credit for the internship whenever possible.
  3. Never use an unpaid intern to fill a paid position (even temporarily).
  4. Remember that internships are designed to provide educationally rich learning experiences, not a source of free labor.
  5. Recognize that while having an internship program may benefit the organization overall, the program itself will likely decrease efficiency and could negatively impact the organization’s bottom line.
  6. Follow all normal hiring protocol if you do consider a former intern for a paid position.

Non-Union Employers Should Act Now as Washington Addresses Quickie Election Rule

Contributed by Jamie Kauther

Ever since the NLRB attempted to put into effect its ambush (aka “quickie”) election rule on April 30, 2012, we have addressed its back and forth. As a reminder, this rule required employers to counter union organizing campaigns in 14-21 days versus the previous 42 day requirement.  The first action to block this new rule occurred on May 14, 2012 when a U.S. District Court ruled the rule was invalid because improper procedure had been used to pass it.   U.S. Chamber of Commerce et. Al. v. NLRB (D.C. Cir. 1:11-cv-02262).   However, the court did not clarify if the rule itself was enforceable, only that the proper procedure wasn’t followed.  On February 5, 2014, the NLRB announced that it was re-proposing the quickie rule.   In December 2014, it issued its final rule.   The rule was adopted by a 3-2 vote and is set to take effect on April 14, 2015.

On February 9, 2015, republican lawmakers moved to halt the rule and issued a resolution stating “Congress disapproves the rule……and such rule shall have no force or effect.”   The resolution was discussed on February 11th before a Senate subcommittee and was placed on the full Senate calendar on February 23rd.  It went before a congressional subcommittee on March 3, 2015 and a preliminary vote shows the resolution will pass.   If a majority of each the House and Senate pass the resolution, the President can override it with a veto.   However, such veto can then be overridden by Congress with 2/3 vote.   The President hasn’t yet publicly addressed whether he’d veto the resolution or not, but in April 2012 the White House stated it was “strongly” against any possible resolutions and the President’s advisors have recently indicated a veto is imminent.

While the political machine is churning, numerous business groups, including the U.S. Chamber of Commerce, have rigorously been challenging the rule in the courts.  On February 5th, a district court judge was asked to order the rule was illegal as a First Amendment violation and contrary to the NLRA.   The court’s decision is still pending and will likely be appealed well after the rule gets implemented.

As our various posts have explained, the quickie rule could be disastrous to employers and employees if implemented.   Under the rule, after a union petition is filed employers will likely not have the time to fully inform their employees about their rights in the workplace.   Absent such vital information, employees will not receive a full picture and will be unable to make a well-informed personal decision to vote the union in or not.   It is imperative that employers start implementing preventative measures now in the event the rule challenges are unsuccessful.

New “Place of Celebration” DOL Final Rule Increases the Availability of FMLA Leave for Same-Sex Spouses

Contributed by Steven Jados

On February 25, 2015, the U.S. Department of Labor issued a final rule modifying the definition of “spouse” under the federal Family and Medical Leave Act.

This final rule, which will take effect on March 27, 2015, is a shift from the current language of 29 C.F.R. §§ 825.102 and 825.122(b), which defines “spouse” to mean “a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized.”

As of March 27, the definition of “spouse” under the FMLA regulations will no longer depend on an employee’s state of residence.  Instead, whether someone is an according-to-the-FMLA spouse will be determined by the law of the state where the employee’s marriage occurred—the “place of celebration.”  Specifically, the new definition will be:

Spouse, as defined in the statute, means a husband or wife.  For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under state law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either:

(1) Was entered into in a State that recognizes such marriages; or

(2) If entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

Employers will note that this change still does not put parties to a civil union or domestic partnership on equal footing with married couples.

In light of the fact that not all states currently recognize same-sex marriage (or common-law marriage for that matter), this rule change may require employers may to take extra steps to determine where an employee’s marriage occurred.

As employers must now make such an inquiry, it is critically important that employers request documentation to establish the existence of a FMLA-defined marriage in a non-discriminatory matter.  Additionally, FMLA forms will need to be reviewed and updated, and those employees who administer FMLA programs or otherwise receive FMLA requests (which could mean virtually any supervisory or managerial employee), must be trained to understand that determining a spouse’s FMLA eligibility may be more complex than it has been in the past.

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