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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.

A Drug Testing Review – Dealing with Disability Discrimination and the Testing of Prescription Drugs

Contributed by Michael Wong

The ADA does not protect employees who are under the influence of illegal drugs. However, the ADA provides conflicting messages when drug tests include the testing for prescription drugs and how to respond if an employee in a safety sensitive position tests positive. This is further complicated by the blurring of what is an illegal drug in many states, including Illinois, which have legalized medical marijuana.

The ADA prohibits employers from inquiring whether an individual has a disability or requiring an individual to take a medical exam that would disclose a disability, unless the medical exam is job-related or consistent with business necessity. 42 U.S.C.A. § 12112 (West).  Drug tests used to determine the illegal use of drugs are not considered a medical exam under the ADA. 42 U.S.C.A. § 12114 (West). Still, while the illegality of use impacts whether an employer may invoke the drug-testing exception, the legality of a substance does not settle the medical-examination question. Bates v. Dura Auto. Sys., Inc., 11-6088, 2014 WL 4192784 (6th Cir. Aug. 26, 2014). Indeed, many prescription drugs may result in a positive test for illegal drugs.

The potential exposure from a drug testing policy is seen in Bates v. Dura Auto. Sys., Inc., where the employer terminated or placed on leave employees who tested positive for prescription drugs that would impact their ability to operate machinery. In Bates, the jury rejected the employer’s job relatedness and business necessity defense, returning an $870,000 verdict for six employees. Id. While the sixth circuit reversed the verdict, it did so only to order a new trial on whether the drug testing program was a medical exam or disability related inquiry under the ADA. Id. In doing so, the court focused on inconsistencies in the employer’s written and actual drug-testing policies, including testimony that an employee was asked about prescription medications, another employee was allowed to return to work despite testing positive, and evidence that the employer’s safety concerns were not legitimate.

Restricting an employee from working due to a positive drug test for a prescription drug is a difficult issue for employers who must balance maintaining a safe workplace with an employee’s ADA rights and right to medical privacy. In order to limit exposure, employers can do the following:

  1. Limit testing to specific illegal drugs that could pose a safety risk.
  2. Be able to support the job relatedness and business necessity of a drug test for the position(s), including evidence of individualized risk determinations of the job and relation to the drugs being tested.
  3. Consistently and equally enforce safety policies.
  4. Treat employees who test positive consistently and equally.
  5. Do not require employees to disclose prescription medications.
  6. If an employee tests positive, allow the employee an opportunity to provide an explanation for the positive test result.
  7. If an employee discloses a prescribed medication, do not ask the employee to disclose the underlying medical condition for which they are taking the medication.

While this is not an exhaustive list, following these will help limit an employer’s exposure in the event an employee challenges your drug test or the use of the results.

Ah-Choo! California Employers Will Soon Be Required to Pay Sick Leave

Contributed by John J. Lynch

Gov. Jerry Brown last week signed into law Assembly Bill 1522, the “Healthy Workplaces, Healthy Families Act of 2014.”  Under this new law, effective July 1, 2015, California employers, with few exceptions, must provide at least 24 hours (3 working days) of paid sick leave per year to their employees.

Who Is Covered?

Essentially all employers and employees (including part-time and temporary employees) are covered by the law.  Unlike other California leave laws (as well as other states and the FMLA), there is no minimum employee threshold; nor is there a minimum-hours-worked requirement.

The few exceptions are:

  • Employees covered by collective bargaining agreements (CBA’s) that expressly provide for paid sick days or paid time off (PTO) that permits employees to use sick days.  The CBA must have a final and binding arbitration provision concerning the application of the paid sick leave provisions.  Moreover, the CBA must provide a regular rate of pay at least 30% above the state minimum wage rate.
  • Employees in the construction industry covered by CBAs that provide a regular rate of pay at least 30% above the state minimum wage rate.  In addition, the construction industry CBA has to have been entered into before January 1, 2015, OR expressly waive the requirements of the new statute in clear and unambiguous terms.
  • Providers of in-home support services under specific sections of California law set out in the statute.
  • Individuals employed by air carriers as flight deck or cabin crew employees and covered by the federal Railway Labor Act.  But this exception only applies if those employees are “provided with compensated time off equal to or exceeding the amounts established in [the new statute].”

How, When and How Much Sick Leave is Accrued?

Once the act goes into effect on July 1, 2015, employees who have worked 30 or more days in California within a year of their employment will begin immediately accruing paid sick leave.  At a minimum (the law encourages greater benefits), they must accrue the 24 hours at a rate of one hour for every 30 hours worked beginning upon the commencement of employment or on the effective date of the statute. (So, employees who did not previously have sick time begin accruing it on July 1, 2015, not retroactive to when their employment began.)

For purposes of calculating accrual, overtime-exempt employees are presumed to work 40 hours per week.  Thus, they will accrue 1.333 hours per week.  If an exempt employee’s normal workweek is less than 40 hours, that employee will accrue sick leave based on the normal workweek.  (So, an exempt employee whose normal workweek is 30 hours would accrue 1 hour per week; an exempt employee whose normal workweek is 15 hours would accrue ½ hour per week.)

Employees can begin to use their accrued sick leave on the 90th day of their employment.  Employees may decide the amount of leave they need to use, although employers may set a reasonable minimum increment – but that minimum increment cannot exceed two hours.  (That is, an employer cannot have a rule that requires an employee to use at least three hours of sick leave per occurrence.)

An employer may (but is not required to) “lend” sick days to an employee in advance of accrual at the employer’s discretion and with proper documentation.

Employers must allow an employee to use no less than 24 hours (or three 8-hour work days) of paid sick leave per year.  Any unused sick time must be allowed to roll over to the following year, although employers may cap total accrual at 48 hours (six 8-hour work days).

The law allows an employer to avoid the accrual and carry-over issue if they provide at least 24 hours or three days of paid sick leave at the beginning of each year (calendar or other 12-month period).  That way, each employee is guaranteed to have sick leave available at the beginning of the year, instead of having to wait to accrue it.

If you already have a sick leave or PTO policy in place, you do not have to provide additional leave, so long as your current policy: 1) satisfies the statute’s accrual, usage, and carry over requirements; and

(2) provides no less than 24 hours of paid sick leave or PTO annually.   In essence, you need to comply with the law.

Sick Leave Rate

Sick leave must be paid at the employee’s hourly wage.  If an employee is paid on commission or a piece rate, the hourly rate is obtained by dividing total wages (not including overtime premium pay) by the employee’s total hours worked in the full pay periods in the prior 90 days of employment.

No Payout Required Upon Termination

Unlike vacation time, accrued but unused sick leave under this act need not be paid to an employee upon termination.  But, if that employee should be rehired by the employer within a year, all previously accrued and unused sick time must be reinstated.

Reasons May Sick Leave Be Used

Paid sick days may be used for the diagnosis, care, or treatment of an existing health condition of, or the preventive care for, an employee or an employee’s family member.

“Family member” means a child (including step, adopted, foster, legal ward, or a child to whom the employee stands in loco parentis, and “regardless of age or dependency status”), a parent (including step-parents, parents-in-law, legal guardians, or someone who stood in loco parentis while the employee was a minor – regardless of how long ago that was), a spouse, a registered domestic partner, a grandparent, a grandchild, or a sibling.

In addition, paid “sick days” may also be used by employees who are the victims of domestic violence, sexual assault, or stalking.

Notice Requirements

Employees must provide “reasonable advance notification” of their foreseeable need to use the leave.  If the need is unforeseeable, the employee must provide notice of the need for leave “as soon as practicable.”   Requests to use sick leave may be made orally or in writing.

An employer may not require the employee to find a worker to replace her/him during her/his sick leave.

Employers must provide employees with written notice of their available amount of paid sick leave or PTO leave provided in lieu of sick leave. This notice must be either on the employee’s itemized wage statement (i.e., their pay stub) or in a separate writing provided on the employee’s pay date at the time wages are paid.

Additionally, employee usage and accrual of sick leave must be documented and retained for at least three years. These records must be made available for employee inspection within 21 days of a written or oral request for such information.  (Just as under current Labor Code Section 226.)  If an employer does not maintain adequate records, it will be presumed that the affected employee is entitled to the maximum number of accruable hours under the law unless the employer can show otherwise by clear and convincing evidence.

Each new employee must be provided notice of their entitlement to accrue and use sick leave, that they may not be terminated for exercising their rights under the act, and that they may file a complaint for retaliation if they believe they have been retaliated against.

Employers will also be required to display a poster in a conspicuous place in each workplace.  The act requires the Labor Commissioner to create a poster and make it available to employers.

Enforcement and Penalties

In an unusual move, the act establishes a rebuttable presumption of unlawful retaliation for denying the use of sick leave, for any adverse action or threat of adverse action, or any other manner of discrimination occurring within 30 days of an employee engaging in any of the following:

1) filing a complaint with the Labor Commissioner OR alleging a violation of the act;

2) cooperating with an investigation or prosecution of a violation of the act; or

3) opposing an employer’s policy, practice, or act that  is prohibited by the act.

There is no private cause of action under the act.  The Labor Commissioner is responsible for the law’s enforcement and regulation.  If, after a hearing, the Labor Commissioner finds that a violation occurred, the Labor Commissioner may order “any appropriate relief, including reinstatement, backpay, the payment of sick days unlawfully withheld,” as well as administrative penalties.

The law also authorizes the Labor Commissioner or the Attorney General to institute a civil action for a violation of the act.

There are penalties for posting violations ($100 per offense), withholding sick leave (triple damages or $250, whichever is great, up to a maximum of $4,000), any other harm to an employee ($50 per day, up to a maximum of $4,000), or failure to promptly comply with an order of the Labor Commissioner ($50 per day).  All of those penalties are cumulative.

What Should Employers Do?

California employers should update their sick leave, PTO leave, and record-retention policies to ensure compliance.  Employers should also ensure that all managers and supervisors are trained in the application of the new law and the employer’s revised policies.

Employers must also ensure that their California employees’ wage statements or pay stubs accurately reflect accrued and used sick time.

Finally, employers should update their new hire packets, Employee Handbook and/or their existing sick leave or PTO policies to make them compliant with the new law.

Is Your Company Prepared for the U.S. Department of Labor’s Amendments to the White Collar Exemptions?

Contributed by Sara Zorich

On March 13, 2014, we reported that President Barack Obama signed a Presidential Memorandum directing his Secretary of Labor to update the regulations to expand the number of employees eligible for overtime under the Fair Labor Standards Act (FLSA).  In May 2014, the Obama Administration released its Regulatory Agenda indicating that the U.S. Department of Labor (DOL) was scheduled to release its “white collar” overtime exemption regulations proposed rules in November 2014.  We anticipate that the new proposed regulations will be significantly narrower than the current regulations with regard to the duties which qualify for exempt status and the salary level.  Most likely, no final rule making will be in effect until the spring of 2015 since the new regulations will be subject to a 30 day comment period which can be extended to 60 days.

Employers will need to pay particular attention to these new rules since employers continue to be faced with litigation over employees’ exempt status.  Recently in the matter of Rogers v. AT&T Servs., Inc., N.D. Ill., No. 1:11-cv-05550, 9/3/14, Judge St. Eve of the Northern District of Illinois denied cross-motions for summary judgment regarding the exempt status of AT&T’s Problem Determination Managers (PDMs).  PDM’s were responsible for managing outage calls regarding Middleware products.  While the court found that the PDM’s job duties directly related to AT&T’s general operations satisfying the first prong of the administrative exemption, the court denied the cross motions for summary judgment holding there was a genuine issue of fact as to whether the PDM’s exercised the requisite independent judgment and discretion to qualify for the administrative exemption.  The court held there was not enough evidence in the record to assess whether and to the extent the employees were exercising independent, discretionary decisions about “significant” matters vs. summarizing the actions of others.

Employers can be proactive and prepare for the DOL’s new regulations by (1) reviewing their current classification of employees as exempt or nonexempt under the current FLSA regulations and state law to ensure current compliance, (2) reviewing pay policies and work rules to ensure current compliance and identify any that may need to be updated, and (3) ensuring processes are in place to track hours worked.

We will continue to monitor and communicate further developments as they occur.

While Cyber Space Rules, Does It Also Make Us Liable?

Contributed by Julie Proscia

In a world where cyber space rules, employers need to ensure that their customer, business and client information is protected. While our cyber tech attorneys and IT professionals handle the tech-y details of the network configuration, on the labor & employment front, we also need to ensure that we have policies and procedures in place to govern our employees’ behavior, reduce liability, and increase accountability.

In today’s universe, work is rarely conducted 100% of the time in the office behind a desk. Our employees and our information are on the go: cell phones, laptops, iPads, etc. Although this increased accessibility may be productive and conducive to client needs, it also leaves our confidential information vulnerable.  In order to ensure that our employees are protecting our confidential information in a portable world, employers need to set policies and procedures to govern electronic information.

Does this scenario sound familiar?  Jane Doe employee has access to her email and her work product on her phone and iPad. She runs into the store for 10 minutes after work to grab her dry cleaning. In that quick 10 minutes, someone snags her briefcase which contains both her phone and iPad. Neither devices are password protected or locked.  Although she calls the police that evening, she does not inform you until the following day when she gets to work. At this point, the thief has had easy access to all of your data and confidential information for about 16 hours. Not a good scenario.

Cloud Computer, Tablet, Phone

Every employer who has any confidential information that is remotely accessible needs to have policies in place relating to electronic communications. Most already have general policies in their Employee Handbooks relating to expectations of privacy and ownership of information.  However, these policies need to go a step further and should also address the protections needed for electronic devices. Specifically, employers need to have policies that regulate who should and can have access to email and confidential information. These policies should also require that password locks be placed on all electronic devices if any confidential information can be accessed (this includes email). Moreover, employees should be required to immediately notify their employer if an electronic device is lost or stolen so the company can lock and remotely wipe the data. Employees should also be advised in the policy that the failure to safeguard the devices or promptly notify the company may result in disciplinary action up to and including termination.

We definitely cannot turn back the clock.  The work day is 24/7, and in all corners of the Earth.  However, we can minimize our exposure by implementing both tech related firewalls and access, as well as employment related policies and procedures. In an age where digital theft and data breaches are splashing headlines every day, ie. Target, Jennifer Lawrence etc., not taking these simple steps is silly if not reckless.

Chicago Tonight Covers Ban the Box

Ban the Box BlogContributed by SmithAmundsen

In July, we told you about “Ban the Box” coming to Illinois. Effective January 1, 2015, this legislation forbids employers and employment agencies from inquiring about a job applicant’s criminal record or criminal history prior to the applicant being selected for an interview or, if there is no interview, prior to a conditional offer of employment. Yesterday, WTTW Chicago Tonight covered this issue and interviewed our group chair and blog contributor Jeffrey Risch on the issue. Check out the video  here. The story runs around six and a half minutes long, you can see Jeff starting at minute five.

FedEx Drivers’ Case Delivers Lesson For All Businesses

Contributed by Suzanne S. Newcomb

Last week a federal appeals court ruled FedEx drivers are not independent contractors, but rather employees. The decision prompted many to ask, FedEx drivers are classified as independent contractors? In fact they are. According to the decision, Alexander v. FedEx, drivers provide their own vehicles (which must meet detailed specifications), pay their own operating expenses, determine their own routes, (provided they deliver the assigned packages on time) and sign an operating agreement accepting the independent contractor arrangement.

The FedEx case arose because a group of drivers challenged the independent contractor designation. However, various governmental agencies can and regularly do launch investigations on this issue even when the parties involved are happy with the independent contractor arrangement. The employee verses independent contractor distinction has potentially huge implications for payroll taxes, unemployment, social security, wage rates, overtime, benefits, exposure to liability, and applicability of various employment laws – worker’s compensation, Title VII, ADEA, ADA, FLSA, FMLA, and more.

The IRS, state taxing authorities, unemployment agencies, state and federal departments of labor, and the EEOC and its state and local counterparts all have a stake in whether an individual is an employee or an independent contractor. To complicate matters further, each agency has its own criteria for differentiating between the two, and one agency’s determination is not binding on another. There are no hard-and-fast rules; the IRS alone considers 20 factors.

Though each agency has its own means to determine when an independent contractor is actually an employee, it generally boils down to how much control you retain over the performance of the job. Referencing California law, the Alexander court stated: “The principal test of an employment relationship is whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired.” In other words, do you oversee the process or simply dictate the end result?

FedEx drivers must wear company uniforms, use company scanners, abide by the company’s appearance, service and safety standards, drive company-approved trucks, and deliver their assigned packages within a specified time window. This, the court concluded, amounts to sufficient control over the manner and means of their work to render them employees despite their written acceptance of independent contractor status.

So, what can you do to protect your business?

  1. Realize the distinction is determined by law, not choice. The parties’ agreement that an individual is an independent contractor – even if in the form of a written contract — does not make it so.
  2. If the individual performs work for your organization exclusively and/or for an extended period, it will likely be difficult to justify an independent contractor relationship.
  3. If the individual is regularly engaged in performing a service for hire and performs that service for others, independent contractor status may be appropriate. If he has formed his own business entity, your chances are likely better.
  4. Involve competent counsel at the on-set; don’t wait until problems arise. It is far more cost effective to address these issues up front than it is to defend an audit or a lawsuit and sort out back taxes, back wages, penalties and fines.

Dear Employer: Is Your Door Open?

Contributed by Steven Jados

If not, it should be.  An open door policy, (essentially a policy through which the employer makes clear to employees that they can and should bring concerns and complaints to human resources or other appropriate managers) may be the difference between substantial legal liability and a relatively prompt resolution of an employee’s lawsuit.  Certain laws, including federal wage and hour and anti-harassment statutes, provide employers at least a partial defense to claims made by employees who refuse to use internal complaint procedures before filing a lawsuit.  Even in the absence of a legal defense, an open door policy may allow the employer to resolve employee complaints much more quickly (and economically) than would otherwise be the case.

Some essential elements of an open door policy are:

  • The open door policy should be written and, like other employment policies, it should include a contract disclaimer.  If the employer has an employee handbook, the open door policy should be included.  If there is no handbook, the policy should be handed to employees at the time of hire and at regular intervals thereafter.  The employees should also sign an acknowledgment form, to be retained by the employer, each time the policy is distributed.  Employers should also consider posting the policy conspicuously in the workplace, and having it translated into languages other than English if the workforce includes individuals whose primary language is not English.
  • The policy should be broad enough to apply to most (if not all) concerns an employee may have regarding employment policies and practices, managers and supervisors, co-workers, and customers.  Ideally, the policy will be phrased as applying to perceived discrimination, harassment, compensation errors, and all other work-related concerns, and instruct employees to bring such matters to the employer’s attention.
  • The policy should designate individuals to whom complaints should be made.  This aspect of the policy should also advise employees that they can go outside “the chain of command” and complain to someone other than a direct supervisor if an employee’s complaint involves her direct supervisor.
  • Managers must be trained on the policy.  An open door policy is only as good as its implementation, and the policy on paper will have little value if the employer does not make good faith efforts to take employee complaints under the policy seriously.  As such, managers at all levels must be trained to identify that employee complaints may take many forms, and that even informal or “off the record” complaints must be taken seriously and investigated in the same way formal complaints are investigated.
  • Managers must also be trained on how to document employee complaints and ensure that such complaints are promptly communicated to the human resources department or to another member of management charged with ensuring consistent and appropriate responses.
  • Employees and managers should also be trained to ensure that they know that retaliation in response to open door policy complaints is forbidden.

An open door policy is something every employer can implement.  In our experience, despite the potential for employees to make trivial complaints, open door policies have proven invaluable to employers that have implemented them.  In fact, an open door policy is likely to pay for itself if it prevents even one employee lawsuit.

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