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REMINDER – Chicago Minimum Wage Increases Again and Cook County Minimum Wage Begins Starting July 1st 2017

Contributed by James F. Hendricks, Jr., June 23, 2017

On July 1, 2017, Chicago’s Minimum Wage increases to $11.00 per hour for non-tipped employees and $6.10 for tipped employees (Chicago Municipal Code §1-24). Cook County’s new minimum wage is $10.00 per hour for non-tipped and $4.95 for tipped employees.

Minimum Wage

Street sign that says “Minimum Wage Increase Ahead”

IMPORTANT NOTICE REQUIREMENTS: All employers that maintain a business facility within the geographic boundaries of  Chicago AND/OR are subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago are covered by Chicago’s Minimum Wage Ordinance and MUST do the following starting July 1st:

  1. Display applicable poster(s) by July 1st
  2. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck issued after July 1st to each employee that is subject to the Ordinance (i.e. works at least 2 hours in Chicago, or at some point may work at least 2 hours in Chicago)

From our prior Chicago Minimum Wage Ordinance post, here are points that you need to know about the Chicago Minimum Wage Ordinance:

  1. Covered Employers: Any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons that has at least one employee and (1) maintains a business facility within the geographic boundaries of Chicago AND/OR (2) is subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago. Cook County: Work in the county, including compensated (sales, delivery, etc.)
  2. Covered Employees: Any employee who works for at least 2 hours in any two-week period within Chicago’s geographic boundaries, including driving through Chicago during work (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered).
  3. Hours subject to Chicago’s Minimum Wage: Chicago’s Minimum Wage only has to be paid for hours worked by the employee when he or she is physically present within the geographic boundaries of Chicago. This includes time spent driving during working hours, but does not include time commuting between home and work.
  4. Non-Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for non-tipped employees starting July 1, 2017 will be $11.00/hour; and increasing on July 1, 2018 to $12.00/hour; July 1, 2019 to $13.00/hour; and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. Penalties & Damages: A fine of $500.00 to $1,000.00 per day for each offense that is not corrected. Potential license suspension or revocations and an order to pay restitution to underpaid employees. Additionally, employees can pursue a private cause of action to recover THREE times the underpayment, attorney fees and costs.
  6. Union/CBA Issues: There is no grandfathering for current “in-force” collective bargaining agreements. This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.

Zap! It’s the Devil – No Really: Accommodating Religious Beliefs

Contributed by Beverly Alfon, June 21, 2017

Imagine that in order to increase time and attendance record accuracy and efficiency, you have invested in a new biometric time clock system. This makes good business sense and overall, it is a straightforward issue…until HR tells you that an employee has refused to use the time clock for religious reasons.

34405947 - man reading the definition of faith

Man reading the definition of faith on a computer screen

In U.S. Equal Employment Opportunity Commission v. Consol Energy, Inc., (4th Cir. June 12, 2017), a coal mine worker who was a practicing evangelical Christian, refused to use a hand scanner time clock because he believed that it would “mark” him with the sign of the Antichrist. The employee offered to verbally report his time in or out, or to use a conventional punch clock. The employer responded with a letter from the scanner manufacturer indicating that because the Bible only refers to the “Mark of the Beast” as associated only with the right hand or forehead, use of the left hand in the scanner should not be of concern. The employer told the employee to use his left hand for the scanner. In response, the employee resigned and filed an Equal Opportunity Employment Commission (EEOC) charge.

Notably, the employer was already accommodating two other employees who had hand injuries.  They were allowed to enter their employee identification numbers into a keypad – instead of using the scanner. The EEOC brought an enforcement action against the coal mine for failure to accommodate the employee’s religious beliefs in violation of Title VII and construction discharge.  At trial, the EEOC and employee won. The award was $150,000 in damages, plus $436,860 in front pay, back pay and lost benefits. The coal mine appealed the decision.

The coal mine argued that there was no conflict between the employee’s religious beliefs and the requirement that he use the hand scanner system, especially in light of the employee’s admission that even his pastor did not believe that use of the hand scanner would produce a physical mark.    However, the appellate court found it significant that the employee clearly laid out his religious objection to using the system overall and there was no dispute that his beliefs were sincere. The court reasoned that it is not the employer’s place to “question the correctness or even the plausibility of [the plaintiff’s] religious understandings,” and affirmed the lower court verdict and findings.

Bottom line:  This case serves as a reminder that an employer cannot escape the requirement to accommodate simply because it thinks that an employee’s religious belief is nonsensical or mistaken. If there is enough evidence to show that the employee sincerely holds a religious belief that contradicts job requirements, an employer should consider an accommodation.

Doing Away with Your Vacation Policies

Contributed by Rebecca Dobbs Bush, June 16, 2017

Summer is unofficially here.  Kids are out of school.  Many employees are checking their vacation balances to see how much time they can take off work.

vacation

Beach chair on white sand beach with a sunny sky in the background

For HR, vacation balances can be incredibly time-consuming. You have to worry about different accrual rates for different employees and set up tracking systems to account for those different rates. You have to make sure time off is being properly requested, approved and accounted for. After all, vacation not properly accounted for can lead to over-stated liabilities on company financials. For most companies, payroll is already the biggest operating cost as it is.

Or, maybe the real headache of your company’s vacation policy occurs every time you have to pay out unused days if an employee quits or is terminated from employment. The laws on what and when you have to pay employees at separation in regards to vacation varies state by state. However, in many cases, it can lead to significant financial liabilities.

You may have heard of the “unlimited” vacation policy. While it’s referred to as “unlimited” vacation, it’s technically a “no vacation” policy. With the right employee culture and the right managers, the vacation policy is torn up and thrown out, and employees can take as much vacation as they like – as long as they get their work done.

For companies, the “unlimited” policy can be a real game changer. No more financial liability on the company’s books. No more big vacation payouts when an employee leaves or is terminated. Also, “unlimited” vacation is a valuable benefit that can be touted when trying to attract the best talent to your organization. Granted, you do have to be cautious on how you transition from an accrual policy to an “unlimited” policy and make sure the transition complies with the state laws applicable to your organization. And generally, you won’t be able to apply the policy to your hourly / non-exempt employees.

However, the biggest issue to consider in transitioning is more likely – how will you know if employees are really getting their work done? There has to be some kind of measurable that allows you to hold employees accountable for abuse of the professional privilege of “unlimited” vacation. If there is, you also then need to make sure your managers and supervisors are properly trained and prepared on how to monitor and document when those measurables aren’t met by an employee.

If you’re not already in the small percentage of companies that offer “unlimited” vacation, you may, with the help of knowledgeable counsel, want to consider transitioning to one.

Update: Janus Files Petition for Appeal to the Supreme Court Seeking to Overrule Abood

Contributed by Carlos Arévalo, June 14, 2017

As previously reported on March 29th, the fight against the Supreme Court’s 1977 decision in Abood v. Detroit Board of Education continues. On June 6, 2017, Mark Janus, an Illinois state employee who is required to pay agency fees to AFSCME Council 31 pursuant to the Illinois Public Labor Relations Act, filed a petition for a writ of certiorari seeking review of a seventh circuit decision that affirmed the dismissal of his complaint. The petition poses the following question to the Supreme Court:  should Abood be overruled and public sector agency fee arrangements declared unconstitutional under the First Amendment?

The State of Illinois and AFSCME have 30 days to file their response to Janus’ petition for review. The Supreme Court is expected to consider the petition in late September, when the Justices return from their summer recess. If review is granted, the case would likely be argued in early 2018, with a decision due approximately a year from now.

White House Proposes Paid Family Leave Plan

Contributed by Suzanne Newcomb, June 12, 2017

The proposed budget released by the White House in May includes a plan to provide new parents with up to six weeks of paid leave to bond with a new child. Obviously the plan is far from becoming law; implementing such a plan would require congressional approval and that process has yet to start. Still, the plan is interesting for its shear breadth and its mode of funding. The plan calls for funding through each state’s unemployment insurance programs. So far at least, there are very few details.

74626995 - page with title parental leave and gavel.

Page with title Parental Leave and gavel

Though many employers choose to provide some amount of paid leave to new parents, only 3 states — California, New Jersey, and Rhode Island — currently mandate paid parental leave for both parents. New York will become the fourth in 2018. All four state plans are funded entirely by employees through mandatory payroll deductions. Paid parental leave legislation was passed in Washington State but the plan has yet to be funded or implemented.

Here is an overview of the benefits provided in each state’s plan:

California became the first state to pass paid family leave legislation in 2002. The law provides for up to six weeks of partial wage replacement to new parents. New parents currently receive 55% of their weekly earnings up to a maximum of $1,173 per week. Amendments set to take effect in 2018 will increase the benefit to 70% of pay for low wage workers and 60% for those earning up to $108,000 annually. Employees in New Jersey enjoy 2/3 of their weekly wage up to $615 per week for up to six weeks, while employees in Rhode Island enjoy up to $817 per week for up to 4 weeks.

New York will join the ranks of states which mandate paid leave for new parents in 2018. Legislation passed in 2016 calls for employees to receive a percentage of the lesser of their own average weekly wage or the NY state Average Weekly Wage. The plan will be phased in with benefits payments increasing over time as follows:

  • January 1, 2018, 8 weeks of benefits paid at 50%
  • January 1, 2019, 10 weeks of benefits paid at 55%
  • January 1, 2020, 10 weeks of benefits paid at 60%
  • January 1 2021, 12 weeks of benefits paid at 67%

In contrast to these plans, the White House plan calls for funding through the states’ unemployment compensation programs which are funded by employers in most states.

SmithAmundsen’s Labor & Employment team will continue to monitor this issue at the state and national level and will keep you apprised of any significant developments.

Cook County Final Earned Sick Leave Rules

Contributed by Noah A. Frank and Sara Zorich, June 8, 2017

sick leave 2

Stamp with the words sick leave next to a thermometer and medicine

With the Cook County Earned Sick Leave Ordinance’s July 1, 2017 effective date around the corner, the Cook County Commission on Human Relations (“CCCHR”) approved its administrative rules on May 25, 2017.

While we previously discussed the Ordinance, one of the most significant aspects of the rules is the new requirement that employers provide covered employees with a notice of their rights under the ordinance at least once per calendar year.

The CCCHR also published a model poster, which must be posted in each place of business where any covered employee works within the geographic boundaries of Cook County.

While the CCCHR has not yet published its rules on the city’s similar Ordinance, we expect the CCCHR’s rules to be instructive and may even be adopted in whole by the Chicago Commission.

Issues to Consider:

While the Ordinance is not yet in effect, the CCCHR already has posted on its website instructions to file a complaint, a complaint intake worksheet, and complaint form!

As such, employers that have not already tackled the Earned Sick Leave Ordinance should implement written policies describing accrual/fronting of leave, carryover, and interaction with other types of leave (e.g., FMLA, PTO / vacation), notice, and business locations subject to the Ordinance. Supervisors should be trained on what notice they may (and may not) require from employees, and identifying trends for abuse of leave.

Employers should also carefully consider whether their timekeeping systems and methods are equipped to appropriately and accurately account for time worked, and the total benefits that have accrued.

For Employee to Be Compelled to Pursue FLSA Claims Pursuant to Contract Grievance Procedures, Language of CBA Must be Clear and Unmistakable

Contributed by Carlos Arévalo, June 6, 2017

On May 15, 2017, the seventh circuit ruled that unless the language in a collective bargaining agreement (“CBA”) explicitly states that the employee must resolve his statutory and contractual rights through the grievance procedures in the contract, an employee is free to file suit in court to resolve his statutory claims.

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Judge holding gavel 

After being terminated from employment, Luis Vega, a seasonal employee at Forest Home Cemetery, attempted to collect unpaid wages by resorting to the grievance procedures of his CBA.  When these efforts proved futile, Vega filed a Fair Labor Standards Act (FLSA) claim in the United States District Court for the Northern District of Illinois. Vega’s employer filed a motion to dismiss based on Vega’s failure to exhaust the grievance procedures in the CBA. Judge Charles Norgle agreed with the employer’s argument and entered judgment against Vega.

On appeal before the seventh circuit, the employer asserted that the CBA, by establishing a grievance procedure to resolve disputes over pay, compelled Vega to go through said procedure to resolve his FLSA claim. This argument prompted the question of whether the terms of the CBA required Vega to resolve his FLSA wage claims through its grievance procedures, or whether Vega could pursue a FLSA claim in court even if he had not yet exhausted his contractual remedies.

Writing for the court, Judge Ilana Rovner ruled in Vega’s favor reversing the district court ruling. In the decision, the court noted that an employee has statutory as well as contractual rights and that the former are independent from any rights under the union contract. Moreover, citing 14 Penn Plaza LLC v. Pyett, a 2009 Supreme Court case, the court also stated that an agreement to arbitrate statutory claims is enforceable against an aggrieved employee if the language of the agreement to that end is “clear and unmistakable.” In Vega’s case, the court found that generalized language regarding pay disputes was insufficient and that the agreement could not be read to compel an employee to resolve his rights under FLSA through the grievance process. Accordingly, Vega did not have to exhaust his contractual remedies.

The Vega decision clearly establishes that employers looking to have statutory claims resolved through arbitration grievance procedures must pursue explicit language to that end. However, before doing so, employers should carefully consider if arbitration represents the best method for resolution of such claims. Grievance procedures may be suitable for resolution of some statutory rights, but not for others. And while arbitration may expedite claims and even limit remedies, vacating unfavorable awards can be an unsurmountable task. Bottom line, before bargaining for such language, employers should consult counsel to determine the proper course of action.