Category Archives: Wage and Hour Laws

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

Donning and Doffing Compensable – What Does Your CBA Say?

Contributed by Carlos Arévalo, June 6, 2016

On March 24, 2016, we reported on a U.S. Supreme Court’s decision involving litigation by workers at meat-processing facilities who alleged they were entitled to overtime pay and damages because they were not paid for time spent “donning and doffing” protective gear. A critical issue in that case was the plaintiff’s use of statistical data to prove their claim, which the Supreme Court found appropriate, and which ultimately resulted in a $5.8 million judgment.

Shortly after that Supreme Court’s decision, the Tenth Circuit issued a ruling on yet another “donning and doffing” case. In Castaneda v. JBS USA, LLC, the Tenth Circuit affirmed the trial court’s judgment in favor of the employer, concluding that employees failed to show that an agreed upon pre-calculated time in their compensation scheme (in a collective bargaining agreement (CBA)) did not adequately compensate them for their time changing in and out of safety clothing and equipment and walking to their job posts.

Wage-Hour2In Castaneda, the employees at a beef-processing plant were part of a CBA that incorporated set measured times to don and doff safety clothing and equipment. The so called “plug time” was the result of industrial engineering studies that calculated the time needed by employees (which were position-specific) to put on and take off safety clothing.  A subsequent agreement resulted in additional “plug time” for pre- and post- shift walking time between the locker room and the production floor. Following adoption of the CBA, the plaintiffs sought to recover retroactive unpaid wages for uncompensated work, including pre- and post-shift time spent donning and doffing clothing and protective gear, washing equipment and themselves, and walking to and from their job posts. Plaintiffs also pursued compensation for their entire meal break, or at a minimum for their time donning, doffing, washing and walking at the beginning and the end of the meal break.

In rejecting the plaintiffs’ claims, the Tenth Circuit first noted that pre- and post- time devoted to changing clothes was not compensable under  §203(o) of the Fair Labor Standards Act (FLSA) if it was so determined under the CBA. [Section 203(o) allows employers and unions to pay its unionized employees for the time they spend before and after their shifts putting on and taking off safety clothing and related items.]  Secondly, the court stated that the time to remove non-clothing items was not generally compensable if the time to do so was de minimis.  Finally, the court added that if time spent performing an activity was not compensable, it would not become a “principal activity,” and therefore compensable, simply because the employer agreed to incorporate it as part of the so-called “plug time” in the CBA.

Because JBS and the Union agreed to incorporate “plug time” compensation in the CBA, the Tenth Circuit deferred to the CBA and held that the parties should be able to govern not only whether “changing time” and “walking time” were compensable activities, but also how such activities should be compensated.

Unionized employers should examine their collective bargaining agreements to determine if they have a provision regarding donning or doffing, and if not, whether they want to add express language to minimize the possibility of future disputes. Experienced labor and employment counsel can help negotiate effective provisions into a collective bargaining agreement.

 

The U.S. Supreme Court Ruling Paves Way for Wage and Hour Plaintiffs to Win Class Action Cases

Contributed by Julie Proscia

On Tuesday March 22, 2016, the U.S. Supreme Court ruled against one of the world’s largest food processors, affirming a $5.8 million judgment.  This ruling just made it a little bit easier for wage and hour plaintiffs to win class actions.  In a 6-2 decision the Court held that plaintiff employees can use averages and other statistical analyses to establish class liability.

In 2007, workers at one of the meat-processing facilities sued the company for uncompensated wages alleging that they were entitled to overtime pay and damages because they were not paid for time spent donning and doffing (time spent putting on and taking off protective equipment and walking to work stations).

pay overtimeIn order to establish the time spent donning and doffing, plaintiffs utilized individual timesheets, as well as, an average of time spent donning and doffing. The averages were based on the timesheets and the calculations from 744 observations of employees.  The Iowa jury found in favor of the plaintiffs and awarded $2.9 million in unpaid wages. An additional 2.9 million dollars in liquidated damages was subsequently awarded. In 2014 a split 8th Circuit Appellate panel upheld the judgment.

When the case came before the U.S. Supreme Court, the defendant argued that the usage of averages in statistical data was improper. Specifically, they argued against the use of averages as the time it takes an individual to put on and remove protective gear and walk to the assigned areas varies between individuals. The majority of the Supreme Court did not agree with this argument and instead indicated that averages would not even be necessary if the defendant had maintained proper records. In doing so, the Court essentially held that there is no general rule barring the use of statistics to prove class-wide liability in a class action such as this one.

The Supreme Court decision is a reminder to not only compensate for time spent donning and doffing but to keep proper time records. The failure to do so can result not only in wage and hour damages but liquidated damages.

 

REMINDER – Chicago Minimum Wage Ordinance Requires Notices and Wage Increases Starting July 1st!

Contributed by Michael Wong and Sara Zorich

This Wednesday, July 1, 2015, Chicago’s Minimum Wage Ordinance (Chicago Municipal Code §1-24) goes into effect, increasing the minimum wage to $10.00 per hour for non-tipped employees and $5.45 for tipped employees.

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. Post Chicago’s Minimum Wage Poster by July 1st! (Click here for a Copy of the Poster)
  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)!
  3. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck of any employee hired after July 1st!

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.
  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, 2015 will be $10.00/hour, and increase as follows: July 1, 2016 to $10.50/hour; July 1, 2017 to $11.00/hour; 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. Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for tipped employees starting July 1, 2015 will be the greater of the Federal or Illinois minimum wage for tipped employees plus $0.50/hour, and increase as follows: July 1, 2016 by an additional $0.50 ($1.00 total); and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner.
  6. 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.
  7. 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.  We anticipate that there will be substantial controversies over this.

Employment Law Updates to Remember and Topics to Watch in the New Year!

Contributed by Mike Wong

Throughout 2014, we have provided updates on a variety of new laws. Below are several Illinois laws that employers should be aware are effective January 1, 2015, as well as an update on Illinois’ medical marijuana law:

  • Ban the Box – Effective January 1st, Illinois employers with 15 or more employees or employment agencies working for them are forbidden from inquiring about a job applicant’s criminal record/history prior to the applicant being selected for an interview or, if there is no interview, prior to a conditional offer of employment.
  • Pregnancy Discrimination and Accommodation – Effective January 1st, the Illinois Human Rights Act will prohibit employers with one or more employees from discriminating based on pregnancy and require reasonable accommodations for any pregnancy related condition (not just medical conditions). Employers must also provide notice to employees in their handbooks and by posting the approved Illinois Department of Human Rights Notice, which can be found here.
  • Payroll Cards – Effective January 1st, Illinois employers will be able to pay employees through payroll debit cards but must follow strict requirements regarding implementing and use, including offering other payment methods, written disclosures, voluntarily consent and limits on fees including that there must be methods to make withdraws at no cost to the employee.
  • Medical Marijuana – On September 1, 2014, Illinois started the process to license registered users, dispensaries and cultivators. Over 11,000individuals have applied to become registered users and more than 600 registered user licenseshave been approved. Licenses for cultivators and dispensariesare anticipatedto be approved within the next month or two.
    • Unemployment Implications – Employees may receive unemployment benefits, even if terminated for admitted use of marijuana while off-duty. Eastham v. Housing Authority of Jefferson County, 2014 IL App (5th) 130209. In Eastham, the Appellate Court held that an employee’s off-duty marijuana use was not “in the course of employment” and did not violate the employer’s drug policy or constitute “misconduct” under the Unemployment Insurance Act. Id. Similarly, a Michigan Court has held that absent evidence that an employee was intoxicated at work or their job performance was impaired by medical marijuana use, there was no gross misconduct and the employee was entitled to unemployment benefits. Braska v. Challenge Mfg. Co., No. 313932, 2014 WL 5393501 (Mich. Ct. App. Oct. 23, 2014).
    • Workers’ Compensation Implications – While still unknown in Illinois, a New Mexico Court held that New Mexico’s workers’ compensation law requires employers and insurers to pay for “reasonable and necessary medical care” for any work related injury and since medical marijuana is legal in New Mexico and was prescribed by a doctor for the work injury, the insured was required to pay for it. Vialpando v. Ben’s Automotive Services and Redwood Fire Casualty, 2014-NMCA-32,920 (N.M. Court of Appeals, May 19, 2014).

In 2015, employers should also be aware of the following national topics due to the increased changes in laws affecting these topics:

  • Minimum Wage – Many states and local governments, including the City of Chicago have implemented laws that will impact minimum wage in 2015.
    • States with minimum wage changes effective January 1, 2015 include: Alaska ($7.75 to $8.75 per hour), Arizona ($7.90 to $8.05 per hour), Arkansas ($6.25 to $7.50 per hour), Colorado ($8.00 to $8.23 per hour), Connecticut ($8.70 to $9.15 per hour), Delaware ($7.75 to $8.25 per hour), Florida ($7.93 to $8.05 per hour), Hawaii ($7.25 to $7.75 per hour), Maryland ($7.25 to $8.00 per hour), Massachusetts ($8.00 to $9.00 per hour), Missouri ($7.50 to $7.65 per hour), Montana ($7.90 to $8.05 per hour), Nebraska ($7.25 to $8.00 per hour), New Jersey ($8.25 to $8.38 per hour), New York ($8.00 to $8.75 per hour), Ohio ($7.95 to $8.10 per hour for workers older than 16 years old who work for employers grossing at least $297,000), Oregon ($9.10 to $9.25 per hour), Rhode Island ($8.00 to $9.00 per hour), South Dakota ($7.25 to $8.50 per hour), Vermont ($8.73 to $9.15 per hour), Washington ($9.32 to $9.47 per hour) and West Virginia ($7.25 to $8.00 per hour). (NOTE: this does not reflect changes for tipped employees, which varies by each state as well).
  • Paid Sick Leave – California, Washington D.C., Connecticut, Massachusetts, Seattle, WA, Portland, OR, New York City, Newark and Jersey City, NJ, Eugene, OR, and Oakland, CA are state and local governments that have instituted paid sick leave laws. Employers that operate in areas that have a paid sick leave law should make sure that their vacation and sick leave policies are compliant.
  • U.S. Department of Labor 2015 Targets and Changes to the FLSA – Three issues identified by the DOL as targets in 2015 are: (1) violations of federal and state minimum wage and overtime laws; (2) misclassification of workers as independent contractors instead of employees; and (3) issuance of a new proposed rule on the FLSA overtime exemption for “white collar” employees, which is anticipated as soon as February 2015.

Newsflash: Chicago Minimum Wage Increasing to $13.00/hour

Contributed by Noah A. Frank

On December 2, 2014, the Chicago City Council approved The Chicago Minimum Wage Ordinance (Chicago Municipal Code §1-24), increasing the minimum wage to $13.00 per hour.  Here are nine points you need to know now:

  1. Covered employees are those who work for at least two hours in any two-week period within Chicago’s geographic boundaries, including driving through the city (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered!).  Time commuting between home and work does not count.Wage
  2. Employers with at least one covered employee are subject to the Ordinance (excluding various City entities, local, state, and federal government, and employees during certain stages of employment and in certain subsidized programs).
  3. The City of Chicago Minimum Wage (“CCMW”) only needs to be paid for work while the employee is physically present within the geographic boundaries of Chicago (you may need to determine how long your driver was stuck in traffic).
  4. CCMW for non-tipped employees will increase: on July 1, 2015 to $10.00/hour, on July 1, 2016 to $10.50/hour, on July 1, 2017 to $11.00/hour, on July 1, 2018 to $12.00/hour, and on July 1, 2019 to $13.00/hour.  Each July 1 thereafter, the CCMW 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. For tipped employees, the CCMW will increase: on July 1, 2015 to the greater of the Federal or Illinois minimum wage for tipped employees plus $0.50/hour, and on July 1, 2016 by an additional $0.50 ($1.00 total).  Each July 1 thereafter, the CCMW will increase by an amount announced by the Commissioner.
  6. There is no grandfathering for current “in-force” collective bargaining agreements!  Unlike other municipalities’ similar recent laws, there is no exemption or safe harbor for currently in-force CBAs.  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.  We anticipate that there will be substantial controversies over this.
  7. Notice: Employers with a physical location within Chicago must post a notice; notice must also be provided with the first paycheck subject to the Ordinance.
  8. Penalties include daily fines of $500 to $1000.
  9. Damages:  Through a private cause of action, covered employees may recover three-times the underpayment, attorney fees, and costs.

The bottom line: Employers with employees working in or traveling through Chicago should start planning for wage increases now, and review CBAs as well.

Readers are encouraged to reach out to experienced LE counsel for advice and direction.

Employers Can Expect Stricter Wage & Hour Enforcement: Senate Confirms David Weil as the New Wage and Hour Administrator

Contributed by Jonathon Hoag

On April 28, 2014, the Senate voted to confirm Dr. David Weil as administrator of the U.S. Department of Labor’s Wage and Hour Division (WHD).  It has been over a decade since the Senate has confirmed a WHD administrator.  President Obama’s nomination of Dr. Weil has been controversial and his confirmation was approved on narrow margins with a vote of 51-42 in favor of the nomination.

Dr. Weil’s nomination drew scrutiny because of a report he submitted to the Department of Labor in May 2010 entitled Improving Workplace Conditions through Strategic Enforcement:  Report to the Wage and Hour Division Strategic Enforcement.  The report illustrates that Dr. Weil supports implementing a penalty policy “as a central element of deterrence.”  The report further outlines that he wants WHD to increase civil and criminal litigation efforts to deter noncompliance, and to consistently impose civil penalties and liquidated damages.  Dr. Weil recommends that WHD move to a strategic and proactive method of investigating rather than reacting to worker complaints.  He identifies the following as targeted industries:  construction, health care, landscaping, hospitality, restaurants, grocery stores, agricultural products, moving companies, logistics companies, janitorial services, and home health care services.

Dr. Weil, who has spent his career in academia, is now poised to regulate the business community through increased investigations and strict enforcement of wage and hour laws with an eye towards penalizing companies.  In addition, there are numerous comments in the report that suggest Dr. Weil attributes the need for stricter enforcement to the decline in private-sector unionization and that he would support efforts to increase unionization.

Dr. Weil’s confirmation is a further sign that employers can expect broad review and increased scrutiny of their wage and hour practices.  Employers should conduct frequent reviews and internal audits of wage and hour practices, as the DOL appears ready to hammer employers for noncompliance issues, including those that are minor and technical in nature.