Category Archives: Uncategorized

UPDATED: California Bans Applicant Salary History Inquiries

Contributed by Noah A. Frank, November 8, 2017

Add salary history to the growing list of topics that may be off limits on employment applications and during interviews, depending on where your business operates.

32420632 - law gavel on a stack of american moneyCalifornia joins a growing list of jurisdictions banning salary history inquiries. On October 12, 2017, California Governor Brown signed Assembly Bill 168, which prohibits employers from seeking or relying upon applicants’ salary history and using such information as the basis for establishing compensation. The new law takes effect on January 1, 2018.

Like ban-the-box legislation (banning inquiries into criminal conviction history) and sick leave ordinances, this is likely the start of a national trend enacted on a jurisdiction-by-jurisdiction piecemeal basis.  California joins Massachusetts, Oregon, and Delaware, along with several municipalities, such as New York City, Philadelphia, Pittsburgh, and U.S. territory Puerto Rico, to enact such legislation in an emerging national trend.  Indeed, since we reported on Illinois’s forestalled HB1462 amending the Equal Pay Act in September, the Illinois House has overridden the governor’s veto, and the bill is on its way to the Illinois Senate for similar consideration.

The Basics

Like the other jurisdictions’ laws, California’s legislation is meant to remedy past gender-based compensation discrimination.  However, given the broad language, this bill will apply to all protected classes such as (and not limited to) race, religion, military status. Under AB-168, all employers in the state of California:

  1. May not inquire directly or indirectly into an applicant’s compensation and benefits (unless publicly available as provided by other laws).
  2. May not rely on salary history as a factor in determining whether to offer employment to an applicant or what salary to offer an applicant.
  3. Must provide the pay scale for the position to an applicant applying for employment “upon reasonable request.”  Note that this is a fairly unique provision in California’s law (at least for now).
  4. May not allow prior salary alone to justify any disparity in compensation.

Notably, if an applicant “voluntarily and without prompting discloses” compensation history, the employer may then consider it as a factor in determining the salary to offer an applicant.

Compliance Made Easy

In light of these trends in the workplace, employers must ensure that they are compliant with new and emerging laws as enacted, and to also perform routine audits – including employment forms, handbooks, policies, and templates.  As it relates to these salary inquiry laws, employers should (1) ensure job applications are compliant and do not include salary/wage inquiries, and (2) review interview questions, especially “scripts” used by management, and ensure that those conducting interviews are aware of the new unlawful inquiry.

What’s the Bottom Line on Salary History Inquiry Bans? Don’t Ask.

You may not ask applicants “how much do you currently make?” But you may ask: “how much would you like to earn in this position?” or “What are your compensation expectations?” or other similar future-oriented inquiries.

Court Lays Out Guidance for Ensuring Hourly Workers Are Paid for Off-Duty Work

Contributed by Steven Jados, October 11, 2017

Wage-Hour2

Addressing an employment issue of interest in an increasingly digital world, the Seventh Circuit Court of Appeals (which has jurisdiction over lower federal courts in Illinois, Indiana, and Wisconsin­­) recently upheld a prior ruling that the City of Chicago was not liable for paying wages for certain employees’ off-duty work time.

In the case of Allen v. City of Chicago, employees who alleged they were not compensated for off-duty work performed on their mobile devices were not entitled to recovery for that unscheduled, overtime work. Agreeing with the trial court’s decision that the City was not aware of the overtime work, and that the employees were not prevented or discouraged from reporting off-duty work time and seeking pay, the court ruled that the City should not be held liable.

In the decision, the court stated that the City would have been liable for unpaid wages it knew or should have known about the work at issue through the exercise of “reasonable diligence.” Under the Fair Labor Standards Act, an employer must pay for all work it knew or should have known was being performed. Moreover, an employer is considered to have knowledge of the work if it should have known about it through the exercise of reasonable diligence. The court’s decision further illustrates and offers guidance on how employers can exercise such reasonable diligence:

For instance, it is important that employers institute a method by which any time worked outside of the normal business day can be reported in order to be compensated. In this case, the court found that the City of Chicago exercised diligence by allowing employees to submit “time due slips” on which they listed their off-duty hours worked along with a brief, albeit vague, description of the work performed.

Employers should also establish a reasonable policy and process for employees to report uncompensated work time after noticing a shortfall in pay. Such a process might involve an employee handbook provision that instructs employees to carefully review their paychecks, every pay period, to ensure that the paycheck accurately reflects all time actually worked. The handbook should also instruct employees to contact human resources or another appropriate member of management if a paycheck is short.

Lastly, in order to avoid landing on the wrong side of a legal decision, employers must take employee complaints under such a policy seriously by thoroughly investigating and adjusting compensation due when it is determined that there is a shortfall in the employee’s pay.

Bottom Line: Bearing all of this in mind, especially in the modern workplace, employers that have hourly employees who check e-mail, make calls, or conduct any other work outside of normal business hours on their cell phones, must heed the Seventh Circuit’s guidance by implementing and enforcing strong and clear policies that meet the “reasonable diligence” standard to ensure that employees are properly compensated for all hours worked.

Seventh Circuit Holds that Multiple-Month Extended Leaves Are Not Reasonable Accommodations Under the ADA

Contributed by Allison P. Sues, September 27, 2017

Because not all recoveries from medical conditions come in neat twelve-week packages, employers commonly need to address employees’ requests for additional leave after they have exhausted all leave afforded under the Family Medical Leave Act (“FMLA”) or company policy.

Clock and StethoscopeThe U.S. Equal Employment Opportunity Commission has long taken the position that terminating an employee who has exhausted FMLA leave, but is still not able to return to work, may violate the Americans with Disabilities Act (“ADA”). For instance, the EEOC guidance, issued on May 9, 2016, opined that providing additional leave may be necessary as a reasonable accommodation.

The Seventh Circuit Court of Appeals recently issued a decision running contrary to this EEOC guidance and the prevailing precedent in other circuits, holding in Severson v. Heartland Woodcraft, Inc., that an employee is not entitled to extended leave as a reasonable accommodation under the ADA.

In this case, employee Severson took a twelve-week medical leave from work under the FMLA to deal with serious back pain (the statutory maximum). Shortly before this leave expired, Severson notified his employer that he was scheduled to undergo back surgery, and requested an additional two to three months of leave to recover from surgery. The company denied Severson’s request to continue his medical leave beyond the FMLA entitlement, terminated his employment, and invited him to reapply when he was medically cleared to work.  Instead, Severson sued, alleging a failure to reasonably accommodate his disability—namely, a three-month leave of absence after his FMLA leave expired.

The Seventh Circuit affirmed the district court and clarified that a medical leave spanning multiple months is beyond the scope of a reasonable accommodation. Finding that the employer did not violate the ADA by refusing to provide the additional leave, the Seventh Circuit explicitly stated that an employee, who cannot not work or perform their job’s essential functions, is not a “qualified individual” under the ADA.  Further highlighting its position, the Court distinguished between the FMLA, which it held was intended to provide long-term medical leave for those who cannot work, while the ADA is meant to require accommodation only for those “that can do the job.”

Before employers in Illinois, Wisconsin and Indiana reinstate strict Maximum Leave Policies and No-Fault Termination policies, whereby employees are automatically terminated if they cannot return to work when FMLA or other awarded leave is exhausted, several limitations to Severson should be noted.

Severson’s holding is limited to “medical leave[s] spanning multiple months.” The Court acknowledged that finite extensions of leave for shorter durations – described as “a couple of days or even a couple of weeks”, but less than multiple months – may still be deemed a reasonable accommodation.

The Court further acknowledged that intermittent leaves of short duration may constitute reasonable accommodations in the same way a part-time or modified work schedule may be a reasonable accommodation for employees dealing with medical flare-ups. Moreover, employers should be cautious about maintaining 100% Healed Policies, whereby an employer requires employees to have no medical restrictions whatsoever when their leave ends.

At any time employees have exhausted their leave, but are not fully cleared to return to work, the employer should engage in the ADA’s interactive process and consider the following before deciding to terminate employment:

  • Whether the employee’s current medical restrictions affect the employee’s ability to perform the essential functions of the position;
  • If the restrictions do impact the employee’s ability to perform the essential functions, are reasonable accommodations available that would enable the employee to perform these functions;
  • Whether vacant positions exist that the employee would be qualified to perform and could be reassigned into;
  • Whether the employer has a policy of creating light-duty positions for employees who are occupationally injured and whether this benefit could be extended to the employee without posing an undue hardship; and
  • Whether the employee’s request for additional leave is definite in time and of a short duration, and if this extended leave could be provided without posing an undue hardship.

 

Salary History Inquiry Bill Down But Far From Out

Contributed by Noah A. Frank, September 19, 2017

wage

On June 28, 2017, HB 2462, an amendment to the Illinois Equal Pay Act, passed both chambers of Illinois General Assembly. The bill would have made an employer’s inquiry into an applicants’ wage, benefits, and other compensation history an unlawful form of discrimination. Even worse for Illinois employers, the bill would allow for compensatory damages, special damages of up to $10,000, injunctive relief, and attorney fees through a private cause of action with a five (5) year statute of limitations.

On August 25, 2017, Governor Rauner vetoed the bill with a special message to the legislature that, while the gender wage gap must be eliminated, Illinois’ new law should be modeled after Massachusetts’s “best-in-the-country” law on the topic, and that he would support a bill that more closely resembled Massachusetts’ law.

The bill, which passed 91 to 24 in the House, and 35 to 18 in the Senate, could be reintroduced as new or amended legislation following the Governor’s statement, or the General Assembly could override the veto (71 votes are needed in the House, and 36 in the Senate, so this is possible) with the current language.

Why is this important?

With the Trump Administration, we have seen an increase in local regulation of labor and employment law. This means that employers located in multiple states, counties, and cities must carefully pay attention to the various laws impacting their workforces. Examples of this type of “piecemeal legislation” we have already seen in Illinois and across the country include local ordinances impacting minimum wage, paid sick leave, and other mandated leaves. Additionally, laws that go into effect in other jurisdictions may foreshadow changes at home as well (e.g., Illinois’s governor pointing towards Massachusetts’s exemplary statue).

Had it become law, this amendment would have effective required employers to keep applications and interview records (even for those they did not hire) for five years to comply with the statute of limitations for an unlawful wage inquiry (the Illinois Equal Pay Act already imposes a five year status of limitations for other discriminatory pay practices). By contrast, under Federal law, application records must be kept for only one year from the date of making the record or the personnel action involved (2 years for educational institutions and state and local governments).

What do you do now?

While the law has not gone into effect as of the date of this blog, it is likely that some form of the salary history amendment will ultimately become law in Illinois. Businesses should carefully review their job applications, interview questions, and related policies to avoid inquiries that may lead to challenges in the hiring process.

Additionally, record retention (and destruction!) policies should be reviewed for compliance with these and other statutes – as well as to ensure data integrity and security.

Finally, seek the advice of experienced employment counsel for best practices in light of national trends to remain proactive with an ounce of prevention

The Trouble with 401(k) Investment Policies

Contributed by Rebecca Dobbs Bush, September 15, 2017

If I had a dollar for every time this conversation occurred…

Lawyer: Do you have a copy of your investment policy?

                Client: Who would have been the one to write that?  Us? Our broker/advisor?

Or, this one…

Lawyer: Is your investment advisor serving as a fiduciary to your plan?

                Client: What does that mean? How would I determine that?

17800977 - an ornate clock with the words time to invest on its faceThe most common area in which 401(k) plans are being scrutinized these days is in their selection and design of investment offerings. While participants often get to direct how their funds are invested, that direction is limited to only those investment offerings that an employer/sponsor makes available as part of the 401(k) plan.

Employers typically rely on investment advisors to help design the options available to participants. In some cases, options are limited depending on the total dollars invested in the plan. In many cases, the investment advisor provides the employer with a model investment selection policy to customize and adopt.

While a model policy is a helpful starting place, in many cases the employer, not quite sure what to do with it, never customizes the model policy and instead sticks it away in a file. The policy is then often forgotten and not reviewed or even referenced each time investment offerings are scrutinized. It is impossible to ensure the selection and design of the investment offerings is in line with the policy if the policy has been completely forgotten.

Every employer that offers a 401(k) plan should ask themselves the following:

  1. What fiduciary status does the plan’s investment advisor maintain? (i.e., who really has the final say on investment option design and selection for the plan?); and
  2. What is our 401(k) investment policy and what are we doing to make sure it’s understood and being followed by decision-makers for the plan?

An employer that can’t answer these questions is not only vulnerable to potential litigation, but also risks the potential of not maximizing the invested assets of all participants.

In most cases with a 401(k) plan, an employer is supposed to serve as a trusted fiduciary maintaining a multi-million dollar investment portfolio on behalf of their employees.  With that much at stake, an employer needs to make sure it is selecting and monitoring investments, along with a skilled investment advisor, carefully and diligently.

How Will the End of the Deferred Action For Childhood Arrival (DACA) Affect Employers?

Contributed by Sara Zorich, September 14, 2017

On September 5, 2017, the Acting Secretary of Homeland Security rescinded the memorandum issued during the Obama administration that had established the Deferred Action for Childhood Arrival (DACA) program, announcing that it will be phased out over the next six months, allowing Congress time to craft a “permanent legislative solution.”

Ending DACA will affect not just the people covered under the program, but also thousands of employers nationwide. A controversial Obama-era policy, DACA has been a program where certain people who came to the United States as minors without documentation, yet met several guidelines, could request consideration of deferred removal proceedings and request authorization to live and work in the United States legally. Currently, the program shields around 800,000 young undocumented immigrants from deportation and allows them to work legally.

U.S. Citizenship and Immigration ServicesU.S. Citizenship and Immigration Services (USCIS) issued new guidance on their website as of September 5, 2017 regarding initial DACA requests and DACA renewals. Here are the key points to note:

  • DACA beneficiaries will not be affected until after March 5, 2018—six months from the date of the announcement
  • No new DACA applications will be considered, but applications filed by September 5, 2017 will still be processed
  • Current DACA recipients whose permits and or work authorization expires between now and March 5, 2018, have until October 5, 2017 to apply for renewal of these benefits

In light of this change, employers are recommended to review their Form I-9’s and identify any individual whose work authorization is going to expire on or before March 5, 2018. Employers should notify these employees of the date their work authorization will expire and remind them that the company cannot continue to employ the employee past this expiration date unless the employee is able to provide proof of continued work authorization. To reiterate, any DACA renewals must be filed no later than October 5, 2017 or USCIS will not process them. Read the USCIS announcement for details.

However, some Employment Authorization Document (EAD) categories (other than DACA) have been granted a 180 day automatic extension to the employee’s work authorization deadline. Visit the USCIS website for more information on the eligibility requirements for the Automatic Employment Authorization Document (EAD) Extension. Thus, employers must be careful to follow the applicable guidelines when addressing the proper end date of an employee’s work authorization and reauthorization requirements.

Final Takeaway: Employers must understand that they MAY NOT discriminate and cannot refuse to hire an individual solely because that individual’s employment authorization document will expire in the future.

We anticipate that Congress may now attempt to fast track some type of immigration reform related to those persons that were formerly covered under DACA, but only time will tell.

Spoliation and the Dangers of Failing to Preserve Evidence

Contributed by Carlos Arévalo, September 12, 2017

In a case pending in the U.S. District Court for the Southern District of Florida, Equal Employment Opportunity Commission v. GMRI Inc., the EEOC recently argued that a restaurant chain acted in bad faith, and should be sanctioned for “spoliation” of evidence because, the EEOC claimed, it intentionally destroyed hiring data. It argued the destruction of evidence “prejudice[d] EEOC by opening the door for GMRI to attack EEOC’s statistical and anecdotal evidence, and to rely upon otherwise impermissible [defendant] favorable proxy data.”

investigate documents

Investigate and analyze magnifying glass and stack of documents

Among the allegedly destroyed evidence are emails the EEOC claimed would have established the fact that the managers for the defendant were instructed to hire “young.” In addition, the defendants are said to have intentionally shredded paper applications and interview booklets used for new restaurant openings that would have supported the EEOC’s allegations that the company had a pattern or practice of failing to hire applications over the age of 40. In response, GMRI argued that the EEOC is looking at sanctions because it has failed to find any evidence of age discrimination.

In a different case that has been pending in Colorado since 2010, the EEOC secured sanctions against an employer for its failure to produce records it claimed had been destroyed. In Equal Employment Opportunity Commission v. JBS USA LLC, the EEOC claimed that a meat-processing company failed to reasonably accommodate Muslim workers’ requests for prayer breaks. JBS asserted an undue burden affirmative defense throughout the case, arguing production line slowdowns and downtime would have been caused by allowing prayer breaks to Muslim employees. The EEOC sought discovery from JBS about its undue burden affirmative defense, specifically, all reports or data showing all dates and times the fabrication lines on any and all shifts were stopped, as well as the speed of the lines.

After years of maintaining these records were destroyed, JBS produced a number of reports it found in a warehouse; however, more records presumably stored in boxes at the warehouse could not be located. The Court sanctioned JBS for the loss or destruction of documents directly relevant to JBS’s allegations of undue hardship. The critical problem for JBS, as the Court noted, was the fact that JBS management knew “within a year” after downtime records were created that they were relevant to the EEOC investigation, yet still failed to set them aside for use in the litigation.

What is the lesson to be learned? 

EEOC v. GMRI Inc., teaches that the EEOC may claim spoliation and pursue sanctions against a defendant, even (or perhaps particularly) where the evidence does not readily support the EEOC’s allegations of discrimination. EEOC v. JBS USA, LLC provides an important lesson for businesses regarding the preservation of documents in ongoing litigation. As noted above, the critical problem for JBS was that JBS management knew downtime records were relevant yet still failed to preserve them.

Both cases illustrate the importance of immediately implementing Litigation Holds. Employers must, as a matter of course, establish appropriate procedures and work with staff, IT professionals, and legal counsel to ensure all relevant evidence is preserved.  Failure to preserve evidence may deprive defendant of an otherwise viable defense.