Category Archives: Employment

Families First Coronavirus Response Act: What It Means For Employers

Contributed by SmithAmundsen’s COVID-19 Task Force (Kelly Haab-Tallitsch, Rebecca Dobbs Bush, Suzannah Overholt, and Jeff Risch), March 15, 2020

On March 14, 2020, the U.S. House of Representatives passed House Bill 6201 (HR6201). The legislation seeks to protect private sector workers and government employees during the COVID-19 pandemic. However, the legislation does not apply to any private sector employer with 500 or more employees. To be clear, the current legislation will regulate only those private sector employers who employ less than 500 employees. The Senate is expected to take up the bill early this week. The legislation would take effect within 15 days of enactment and expire on December 31, 2020.

HR6201 contains major changes to the FMLA as it seeks to provide job protected paid leave to any employee who has been on the job for at least 30 days – for up to 12 weeks – related to the COVID-19 pandemic. The legislation also mandates up to 80-hours of paid sick leave for reasons related to COVID-19. It also provides $1 billion in additional funding to the Unemployment Insurance (UI) System and encourages states to relax UI eligibility requirements. Tax credits are provided to employers to help offset the financial cost of the paid leave.

Highlights of the legislation include:

PAID TIME OFF:

Emergency Paid Sick Leave – up to 80-hours for ALL employees working for a private employer with less than 500 employees or any public sector employer

HR6201 requires employers with fewer than 500 employees and all government employers to provide all employees up to 80-hours of paid sick leave, paid at the employee’s regular rate of pay in order to:

  1. self-quarantine if diagnosed with COVID-19;
  2. seek a diagnosis or care for symptoms of COVID-19; or
  3. comply with an order or recommendation by a public health official or health care provider to self-isolate due to exposure to or symptoms of COVID-19.

Additionally, this paid sick leave entitlement must also be available – at two-thirds the employee’s regular rate of pay – for employees to care for a family member for such purposes or to care for a child (under 18 years of age) whose school has closed or paid child care provider is unavailable due to the coronavirus.

Full-time employees are entitled to 2 weeks (80 hours) of paid leave and part-time employees are entitled to the average number of hours that they work in a typical two-week period. Paid sick leave under HR6201 must be provided in addition to any paid time off provided under an employer’s existing policies and employers may not require employees exhaust existing accrued paid time off prior to using emergency paid sick leave. The bill ensures employees who work under a multiemployer collective agreement are also provided such benefits that meet the requirements of the Act.

EXPANDED COVERAGE FOR FMLA:

Paid Family and Medical Leave — up to 12 weeks for employees employed for 30 or more days by a private employer with less than 500 employees or any public sector employer

Employees of employers with fewer than 500 employees or government employers, who have been on the job for at least 30 calendar days, have the right to take up to 12 weeks of job-protected leave under the Family and Medical Leave Act to be used for any of the following reasons:

  • To comply with a requirement or recommendation by a public health official or health care provider that the presence of the employee in the workplace would jeopardize the health of others due to the employee’s exposure to or symptoms of coronavirus;
  • To care for a family member who is adhering to a requirement or recommendation by a public health official or health care provider to quarantine due to exposure to or symptoms of coronavirus; and
  • To care for a child (under 18 years of age) of an employee if the child’s school or place of care has been closed, or the child-care provider is unavailable, due to coronavirus

The first 2-weeks of time off for the above reasons are unpaid under the FMLA, but the Emergency Paid Sick Leave Law requires that an employee is paid during that time period, as described above.  After the first 2-weeks of leave under the FMLA, employees will be entitled to receive a benefit from their employers that will be no less than two-thirds (2/3rd) of the employee’s usual pay. The bill ensures employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan are provided with leave.

Certain small employers can be exempt from this expanded FMLA coverage if they meet a “viability” exception.  While we can assume the general intent behind the exception, the precise mechanism and process for such an exception is subject to US DOL regulation yet to be published.

The Act also clarifies that individuals that are subject to a multiemployer collectively bargained agreement and whose employers pay into a multiemployer plan must be provided with leave and benefits on par with the benefits provided under the Act.

PAYROLL CREDIT FOR PAID LEAVE

HR6201 provides a refundable tax credit applied to the employer portion of the Social Security payroll tax equal to 100 percent of paid sick leave and family leave wages paid by an employer for each calendar quarter, subject to the following caps: Sick leave wages paid with respect to employees who must self-quarantine, obtain a diagnosis or care for symptoms, or comply with a self-isolation recommendation or order from a public health official or health care provider are capped at $511 per day for purposes of the payroll tax credit; Sick leave wages paid to employees caring for a family member or for a child whose school or place of care has been closed, are capped at $200 per day; and  Family leave wages under the expanded FMLA taken into account for each employee are capped at $200 per day and $10,000 for all calendar quarters.

If the credit exceeds the employer’s total Social Security payroll tax liability for any calendar quarter, the excess credit is refundable to the employer. Employers may elect to not have the credit apply. A similar refundable tax credit is available for self-employed individuals.

SmithAmundsen’s Labor & Employment COVID-19 Task Force is continuing to monitor all local, state and federal orders and legislative initiatives in these unprecedented times. Be assured that we will continue to provide updates where and when warranted. We will also be providing ongoing webinars on the subject to try and help employers operate as effectively and safely as possible. With that in mind, please do not hesitate to contact your SA relationship attorney in the days and weeks ahead for direct guidance. We are here 24/7.

BREAKING NEWS: Illinois Recreational Cannabis Law Protections for Employers & the Workplace Clarified!

Contributed by Jeffrey A. Risch, November 15, 2019As Illinois set out to become the first state to legalize recreational cannabis through statutory authority, the legislative intent for protections for employers and the workplace were intended to include some of the strongest in the nation. However, when the dust settled and the statutory framework was analyzed, there appeared to be room for reasonable minds to have differing opinions on what the law actually meant for the workplace.

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On one hand, could employers lawfully implement reasonable, non-discriminatory drug testing policies aimed at prohibiting applicants and employees from lawfully using recreational cannabis and gaining or maintaining employment? On the other hand, would employers be violating the law if they did not hire someone who tested positive for THC or if they could not ultimately demonstrate that an employee was actually impaired while on the job? These sorts of questions lingered. A quick online search trying to find answers would only frustrate HR professionals, safety managers, and business owners further. Clarity was needed.Therefore, through the efforts of several business groups and trade associations (including the Illinois Chamber of Commerce) working across both political aisles, SB1557 passed the Illinois General Assembly on November 14, 2019. While SB1557 includes wrinkles for the licensing, manufacturing and distribution of recreational cannabis in Illinois, it also contains language found below designed to protect employers from litigation.In essence, the language attempts to clear up concern that an employer may have been required to show actual impairment in the workplace vs. simply being able to implement and follow a reasonable, non-discriminatory drug testing policy.   Specifically, Section 10-50 of the law will now read as follows (changes in bold):

(410 ILCS 705/10-50) Sec. 10-50. Employment; employer liability.(a) Nothing in this Act shall prohibit an employer from adopting reasonable zero tolerance or drug free workplace policies, or employment policies concerning drug testing, smoking, consumption, storage, or use of cannabis in the workplace or while on call provided that the policy is applied in a nondiscriminatory manner.(b) Nothing in this Act shall require an employer to permit an employee to be under the influence of or use cannabis in the employer’s workplace or while performing the employee’s job duties or while on call.(c) Nothing in this Act shall limit or prevent an employer from disciplining an employee or terminating employment of an employee for violating an employer’s employment policies or workplace drug policy.(d) An employer may consider an employee to be impaired or under the influence of cannabis if the employer has a good faith belief that an employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance of the duties or tasks of the employee’s job position, including symptoms of the employee’s speech, physical dexterity, agility, coordination, demeanor, irrational or unusual behavior, or negligence or carelessness in operating equipment or machinery; disregard for the safety of the employee or others, or involvement in any accident that results in serious damage to equipment or property; disruption of a production or manufacturing process; or carelessness that results in any injury to the employee or others. If an employer elects to discipline an employee on the basis that the employee is under the influence or impaired by cannabis, the employer must afford the employee a reasonable opportunity to contest the basis of the determination.(e) Nothing in this Act shall be construed to create or imply a cause of action for any person against an employer for:

  1. actions taken pursuant to an employer’s reasonable workplace drug policy, including but not limited to subjecting an employee or applicant to reasonable drug and alcohol testing, reasonable and nondiscriminatory random drug testing, and discipline, termination of employment, or withdrawal of a job offer due to a failure of a drug test; , including but not limited to subjecting an employee or applicant to reasonable drug and alcohol testing under the employer’s workplace drug policy, including an employee’s refusal to be tested or to cooperate in testing procedures or disciplining or termination of employment;actions based on the employer’s good faith belief that an employee used or possessed cannabis in the employer’s workplace or while performing the employee’s job duties or while on call in violation of the employer’s employment policies;actions, including discipline or termination of employment, based on the employer’s good faith belief that an employee was impaired as a result of the use of cannabis, or under the influence of cannabis, while at the employer’s workplace or while performing the employee’s job duties or while on call in violation of the employer’s workplace drug policy; orinjury, loss, or liability to a third party if the employer neither knew nor had reason to know that the employee was impaired.

(f) Nothing in this Act shall be construed to enhance or diminish protections afforded by any other law, including but not limited to the Compassionate Use of Medical Cannabis Pilot Program Act or the Opioid Alternative Pilot Program.(g) Nothing in this Act shall be construed to interfere with any federal, state, or local restrictions on employment including, but not limited to, the United States Department of Transportation regulation 49 CFR 40.151(e) or impact an employer’s ability to comply with federal or state law or cause it to lose a federal or state contract or funding.(h) As used in this Section, “workplace” means the employer’s premises, including any building, real property, and parking area under the control of the employer or area used by an employee while in the performance of the employee’s job duties, and vehicles, whether leased, rented, or owned. “Workplace” may be further defined by the employer’s written employment policy, provided that the policy is consistent with this Section.(i) For purposes of this Section, an employee is deemed “on call” when such employee is scheduled with at least 24 hours’ notice by his or her employer to be on standby or otherwise responsible for performing tasks related to his or her employment either at the employer’s premises or other previously designated location by his or her employer or supervisor to perform a work-related task.

Additionally, much needed clarification for public employers was also included concerning how off duty use of cannabis by certain emergency personnel should be administered. The following was added to Section 10-35. Limitations and penalties:

(410 ILCS 705/10-35)(8) the use of cannabis by a law enforcement officer, corrections officer, probation officer, or firefighter while on duty; nothing in this Act prevents a public employer of law enforcement officers, corrections officers, probation officers, paramedics, or firefighters from prohibiting or taking disciplinary action for the consumption, possession, sales, purchase, or delivery of cannabis or cannabis-infused substances while on or off duty, unless provided for in the employer’s policies. However, an employer may not take adverse employment action against an employee based solely on the lawful possession or consumption of cannabis or cannabis-infused substances by members of the employee’s household. To the extent that this Section conflicts with any applicable collective bargaining agreement, the provisions of the collective bargaining agreement shall prevail. Further, nothing in this Act shall be construed to limit in any way the right to collectively bargain over the subject matters contained in this Act;

These changes help to better assure employers that they have the ability to implement fair, reasonable drug testing policies designed to protect their employees and the public. Recreational consumers will certainly have the legal right to use cannabis, but the employer should have the legal right to say “you better not have THC in your system to become or remain employed here.” Of course, any drug testing policy must be carefully vetted, designed, and implemented. After all, lawyers will be lawyers. 

While many questions still remain and medicinal usage requires a different analysis (for now) it appears employers can take better comfort and be more confident in creating policy designed to maintain a safe and healthy workplace through reasonable drug testing policies. However, employers must continue to carefully examine their own unique industry, risks and risk tolerances, together with their geographic footprint and applicant pool. The drug testing policy and drug-free workplace program for the “widget manufacturer” in Peoria is likely to be vastly different than that of the “accounting firm” in Schaumburg.

Recent Decision Highlights Risk of Post-Employment Retaliation Claims

Contributed by Suzanne Newcomb, July 30, 2019

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A federal court in Pennsylvania recently ruled that a former employee presented sufficient evidence to warrant a jury trial on a claim she was retaliated against after she resigned. The decision serves as a good reminder that anti-retaliation protections extend beyond the end of the employment relationship to protect former employees.

Cherie Leese complained of sexual harassment while employed by a state agency. She later filed a charge alleging she was issued discipline in retaliation for her report. The parties eventually settled. As part of that settlement, Leese resigned and agreed not to apply for or accept employment within a subset of state agencies. Leese expressly retained the right to seek employment in other areas of state government. When her numerous attempts to secure another position failed, Leese filed a new charge, this time claiming her former employer retaliated against her after she resigned by hindering her attempts to get a new job.

The state, like many large employers, coded former employees based on the circumstances of their separation. Leese was assigned an unusual code, “voluntary resignation contact former agency.” Inquiries regarding Leese were directed to the agency’s general counsel, who responded by stating, “I can make no comment regarding Ms. Leese’s separation.” Leese presented evidence to suggest the code and response were atypical and that they “raised a red flag” which took her out of the running for various positions. 

A well-drafted release protects against claims stemming from conduct occurring before the agreement is signed, but individuals generally cannot waive their rights with respect to future events. As some courts have put it, “an employer cannot purchase a license to discriminate.”

So what steps can an employer take to protect against post-employment retaliation claims?

First, establish a protocol for responding to requests for information regarding former employees, train all supervisors on the protocol, and insist they follow it, regardless of the circumstances underlying an employee’s departure. To better control what information is released, consider directing all requests to a designated individual or department (usually HR). To prove retaliation – whether post-employment or otherwise – a plaintiff must link her protected activity to an adverse action. Leese’s claim was bolstered by evidence that the agency deviated from its usual practice when responding to requests for information about her. The ability to prove that the plaintiff was treated in exactly the same manner as everyone else often allows an employer to avoid trial by defeating a retaliation claim on summary judgment. 

Second, when negotiating severance or a settlement, expressly discuss whether the individual is eligible for rehire and what information the employer will provide in response to reference requests and other inquiries about the individual (** be mindful of restrictions in your local jurisdiction and/or industry – in Vermont, for example, including a no-rehire provision may invalidate a sexual harassment settlement). Incorporating the parties’ agreement on these items into the formal agreement provides certainty for both parties and avoids surprises down the road.

United States Supreme Court Confirms and Limits Court’s Deference to Agency Guidance

Contributed by Allison P. Sues, July 11, 2019

Judge’s Supreme Court gavel with law books

On June 26, 2019, the U.S. Supreme Court confirmed the continued viability of Auer deference, an interpretive doctrine that requires courts to defer to an agency’s reasonable reading of a genuinely ambiguous regulation. In confirming the use of Auer deference, the Supreme Court also narrowed its scope, setting out clear limits to courts’ use of this doctrine. This decision came in the case Kisor v. Wilkie, which involved an ambiguous regulation of a Department of Veteran Affairs rule.  

In affirming Auer deference as a viable interpretive tool for courts to employ when deciding on two readings of a genuinely ambiguous rule, the Court reasoned that Congress generally wants agencies to play the primary role in resolving these questions. As the body that promulgated the rule at issue, the agency is in the best position to know the regulation’s original meaning and possess the expertise needed to interpret rules on specific subject matters. Determining the meaning of an ambiguous rule often requires policy-based judgment calls – a job more appropriate for politically accountable agencies than appointed judges. Finally, deferring to an agency’s interpretation of a rule promotes consistent application of those rules as an agency’s guidance has greater cover than a single district court. 

In confirming the use of Auer deference, the Court was also insistent on its limits. There are several instances in which Auer deference is not warranted. First, the regulation in question must be genuinely ambiguous even after a court has exhausted all of its traditional tools of construction. Second, the agency’s interpretation must be reasonable. Third, the agency’s interpretation must be an “official” or “authoritative” position taken by the agency rather than an ad hoc statement by an agency employee that does not necessarily reflect the agency’s official views. Fourth, the agency’s interpretation must rely on its specific expertise. Finally, the agency’s interpretation must reflect fair, considered, and consistent judgment. 

The Court’s decision in Kisor is a significant one for employers because the DOL and EEOC have issued detailed regulations bearing on various employment statutes, and Courts often look to these regulations in deciphering employment law claims. When the regulation itself does not answer the question, parties may ask the Court to defer to the agency’s guidance on its regulations, be it in the form of a regulatory appendix, compliance manual, or other policy guidance documents or statements. The Supreme Court’s decision in Kisor allows this – but with clear limits. 

Take the Seventh Circuit’s recent decision in Richardson v. Chicago Transit Authority (decided just prior to Kisor but consistent with Kisor’s holdings), which held that obesity is not a disability under the ADA if there is no evidence of an underlying physiological condition. In arguing that his obesity should constitute a disability, the plaintiff pointed to EEOC interpretive guidance that, he contended, indicated that a person has an ADA impairment if his weight is outside of a normal range. The Seventh Circuit held that even if the EEOC guidance did state this, the Court would not defer to the agency’s guidance because it was inconsistent with the text of the regulation. The regulation defined impairment as a “physiological disorder or condition.”  Determining that this regulation was not truly ambiguous, Auer deference was not justified.

So what should employers take away for the Kisor case? Agency guidance, appendixes, and other policy statements should not be ignored. While there are strict limits to the application of Auer deference, courts will continue to defer to an agency’s interpretations of its own rules in certain situations.

U.S. Citizenship and Immigration Services Policy Challenged on Third-Party Worksites

Contributed by Jacqueline Lentini McCullough, June 7, 2019

A U.S. Citizenship and Immigration Services (USCIS) memorandum-issued policy is at the heart of a court case challenging recent H-1B visa denials.

The “Contracts and Itineraries Requirements for H-1B Petitions Involving Third-Party Worksites” memo was issued on February 20, 2018 without any notice or comment period required by the Administrative Procedure Act (APA). The memo directs adjudicators to ensure a contractor has actual and exclusive “control” of the contractor’s employees at the third-party site as a criterion for visa approval. This requirement comes from a rigid interpretation of the Department of Labor’s definition of “employer” which reads: “Has an employer-employee relationship with respect to employees under this part, as indicated by the fact that it may hire, pay, fire, supervise, or otherwise control the work of any such employee….” Instead of considering any one of these circumstances as qualifying, USCIS effectively changed the “or” to an “and,” requiring all of them.

H-1B visa denial rates skyrocketed the past two years, especially for contractors working at third-party worksites. Denial rates for initial H-1B petitions in Fiscal Year (FY) 2018 were 1 % for large technology companies but 34%-80% for companies that put H-1B visa holders at third-party sites. Third-party site work factors highly in IT consulting.

Visa Stamp

After having many H-1B visas denied or issued for short validity periods, several IT consulting firms filed lawsuits against USCIS. Those lawsuits have been consolidated into one under the aegis of the IT industry trade association ITServe Alliance.

Judge Rosemary Collyer presided over a court hearing of ITServe Alliance v. USCIS on 05/09/2019. Plaintiff attorneys produced data showing from FY 2012 to FY 2017, USCIS approved 94 % of their client’s ERP analysts’ H-1B petitions. During FY 2018 to FY 2019, the approval rate dropped to 19%.

Judge Collyer has taken issue with the disparate visa approval rates between different industries and USCIS’s requirement that contractors show three years’ worth of specific work assignments for H-1B petitioners when they are allowed “nonproductive” time as long as they are paid.

As Judge Collyer considers the case, she will rule on whether discovery is warranted to find out what has caused the different adjudications of H-1B petitions. Not only are H-1B approval rates markedly down for the IT industry, but requests for evidence and H-1B petition processing times have ballooned.

Requests for evidence (RFE) for all H-1B petitions have jumped from below 30% in first quarter FY 2017 to 60% in first quarter FY 2019. Meanwhile the number of petitions approved with a completed RFE has sunk from 80 % to just over 60 %.

Stay tuned as we will continue to provide updates as new information emerges.

Gig Workers: An Evolving Trend or a Class Action Waiting to Happen?

Contributed by Rebecca Dobbs Bush, June 4, 2019

The workplace is changing: Millennials, Generation Z-ers, and Baby Boomers looking to supplement their retirement income. These individuals are more interested in autonomy and avoiding bad managers, office politics and lengthy, non-productive staff meetings. Plus, the tax-savvy individual knows the economic advantage of having access to traditional business deductions through a Schedule C, rather than being limited to the standard deduction or itemizing as a W-2 employee would be.

Business concept. Isolated on white

More and more businesses also seem to be interested in the advantages of a gig workforce, also called freelancers, subcontractors, contingent workforce, and more. After all, it allows a business to gain access to skills and talent without having to commit to hiring an individual as a full-time employee. According to Deloitte’s 2018 Global Human Capital Trends study, more than 40% of workers in the U.S. are employed in “alternative work arrangements.” These arrangements include contingent, part-time, or gig work.

So, is it a win-win for all involved? The problem is that current employment laws are simply not evolving at the pace required to keep up with this modern-day independent contractor. With this, a minefield is created for the unwary business. 

Under the Obama administration, the DOL had issued broad guidance suggesting that gig workers were likely to be considered “employees.” That guidance was rescinded with the change in administration. Then, on April 29, 2019, the DOL issued an atypical, 10-page opinion letter on the subject. The opinion letter lays out a detailed analysis of all the relevant factors for independent contractor status and then comes to the conclusion that the gig workers at issue are not employees.

For now, if your business is participating in the trend of the gig worker, you want to make sure the relevant factors are met. Those factors and the analysis change depending on which law the issue is being examined under. Some of the more common factors are: control, permanency of the relationship, integrality to business operations, ability to sustain a profit or loss, accountability for operating expenses, etc. In other words, is the individual truly operating as a stand-alone business? 

If you choose to engage gig workers, make sure to avoid these common mistakes:

  • Do not treat the individuals as employees. Do not even use the word “hire.” Instead, you are “engaging” their services, or “contracting” with them. And, commit to the arrangement in writing.
  • Do not be tempted to offer them benefits. Putting them in your health plan or letting them participate in a 401(k) will jeopardize any argument that they are not otherwise an employee. If it walks like a duck, quacks like a duck….
  • Do not make them sign a non-compete agreement. A critical factor in most cases is whether the individual is free to take on work from others or whether they are completely dependent on your business for work. If the individual is subject to a non-compete agreement and effectively being prevented from working for others, you will not win on this factor.

Because of the amount of exposure involved with a misclassification lawsuit, it is worthwhile to have competent employment counsel review your situation and any independent contractor agreement or contracts that you are using to help you make sure it’s being handled in the best possible manner to strengthen the individual’s status as an independent contractor.

U.S. District Court Looks at Change of Employment Terms Sent by Email

Contributed by Michael Faley, November 15, 2018

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Email mailing the world SMS messaging Laptop

The U.S. District Court in Connecticut recently issued an instructive decision on the ever-increasing practice of emailing employees to notify them of changes to the terms of their employment. Financial services giant Morgan Stanley sent employees an email detailing its new mandatory Convenient Access to Resolutions for Employees (CARE) arbitration program. It reflected an effort by Morgan Stanley to expand mandatory arbitration to all employee disputes including previously exempted statutory discrimination claims. After one employee filed a federal lawsuit for age discrimination, Morgan Stanley moved to compel arbitration.

The employee fought back. What was her defense? Well, the employee simply denied that she read her email. She argued that she couldn’t have accepted contract terms she hadn’t even read.

However, the court disagreed and noted that as an at-will employee her employment and its conditions are subject to change. The court found that the former employee had sufficient notice of the change and that her failure to read her email didn’t provide a valid excuse. The court also found it significant that Morgan Stanley provided additional opportunity to review the change by posting it on the company’s intranet. These days, it is “established business practice and expectation for employees both to routinely check email and internal business sites for important updates concerning the business, their employment, or changes in operations or procedures,” the court observed.

Notably, the email stated that employees had a month to opt-out by completing a CARE Arbitration Program Opt-Out Form. By giving an opt-out choice, Morgan Stanley avoided “the condemned practice of ‘unilaterally thrusting’ these changes” on their employees.

In the end, the court found that Morgan Stanley’s CARE program represented a binding and enforceable change to its employee arbitration policy. The case of Antollino v. Morgan Stanley, Case No. 17-cv-1777 (D. Conn. May 11, 2018) is currently under consideration by the U.S. Court of Appeals for the Second Circuit.

Tips for Employers:

  • Conspicuously label employment changes sent by email
  • Post the changes somewhere else too making them accessible to all employees
  • Consider opt-out options
  • Be sure to create a standardized process for notifying employees of changes