From New York to Hollywood and now New Orleans, well-publicized allegations of sexual harassment have dominated the news. Click here for a recent CNN article on a recent issue. Sexual harassment is unlawful and can lead to much bigger issues than bad press. Click here for information on sex-based discrimination from the U.S. Equal Employment Opportunity Commission. These stories highlight the need for employers to communicate their stances against sexual harassment, to promulgate clear policies barring sexual harassment, to enforce those policies, and to train employees, supervisors, managers, and even executives. Training on policies is an essential component of an effective policy. Simply stating a position on an issue like sexual harassment may not be enough to ensure a work environment free from unlawful harassment. Now is the time to work with your internal human resources groups and outside counsel to evaluate your HR legal compliance on issues from harassment to wage and hour compliance. Now is the time to train employees on sexual harassment and to implement a robust training program so that your policies are not just words on a page. Now is the opportunity to prevent becoming the next headline.
A Federal District Judge in Texas struck down an Obama administration Department of Labor Wage and Hour Division rule that would have nearly doubled the salary basis requirement for some exempt employees. Had the rule remained in place, for certain exempt employees, employers would have had to roughly double the exempt employees’ salaries to maintain the employees’ exempt status, or treat the employees as eligible for the overtime premium. In November, the court issued a nationwide injunction stopping the rule from going into effect. This ruling likely moots the pending appeal of the injunction, and it seems unlikely that the Trump administration will appeal this latest ruling given that the administration has already begun laying the groundwork for a possible revision of the prior rule. Stay tuned.
Read the article here.
On Monday, a Fifth Circuit majority held that a class-action and collective action waiver was enforceable, regardless of whether or not the waiver was part of an arbitration agreement. This is good news for employers in the Fifth Circuit who do not want to have mandatory arbitration agreements with employees, but do want to have safeguards in place to prevent class and/or collective actions.
The National Labor Relations Board (“NLRB”) has consistently determined that such waivers violate the National Labor Relations Act (the “Act”), particularly an employee’s right to engage in concerted activities for the purpose of mutual aid or protection. According to the NLRB, the Act contemplates a right to participate in class and collective actions.
In this case, the NLRB determined that the employer violated the Act by requiring job applicants to sign, and then subsequently seeking to enforce, a class and collection action waiver, which was not contained in an arbitration agreement. The employer sought review of the NLRB’s decision, and the Fifth Circuit found for the employer.
The Fifth Circuit previously rejected the NLRB’s position on such waivers, holding that the use of a class or collective action is procedural, not a substantive right, and the Act does not guarantee employees a substantive right to participate in class and/or collective actions. See D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013).
On Monday, the court reaffirmed this precedent. Although the court’s prior decision considered class and collective action waivers in the context of an arbitration agreement, the Fifth Circuit held that its precedent was not limited to arbitration agreements. Thus, class action and collective actions waivers are enforceable in the Fifth Circuit, regardless of whether the waiver is contained in an arbitration agreement or other contract.
Employers with operations outside of the Fifth Circuit (Louisiana, Mississippi, and Texas) should be mindful that there are courts in other jurisdictions that may have reached different conclusions, and that the NLRB takes a position contrary to the Fifth Circuit. All employers should stay tuned on this issue, as the Supreme Court may decide an arbitration matter this year, which could force reconsideration of the Fifth Circuit’s decision.
A copy of the Fifth Circuit’s decision can be found here.
Yesterday, the Department of Labor (“DOL”) Wage and Hour Division released a preview copy of a request for information (“RFI”) before issuing revised proposed overtime exemption regulations under the Fair Labor Standards Act (“FLSA”). The RFI is scheduled for publication in the Federal Register today, July 26, 2017, which will start a 60-day public comment period.
According to the DOL’s news release, the RFI solicits feedback on questions related to the salary level test, the duties test, various cost-of-living information, inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary test for highly compensated employees, and automatic updating of the salary level test. Instructions for submitting comments and additional contact information are found in the RFI. A preview copy of the RFI, released by the DOL, is available online here.
The regulations at issue (often referred to as the “white collar” exemptions) apply to workers employed in an executive, administrative, or professional capacity that also meet certain criteria relating to salary basis, salary level, and job duties. The DOL released the RFI in contemplation of revising the final rule released by the DOL during the Obama administration (“2016 Final Rule”), which attempted to raise the minimum salary required to be exempt from the FLSA’s overtime pay requirements, from $455 per week to $913 per week. The 2016 Federal Rule was enjoined by a federal district judge in Texas in November 2016 and remains in limbo. In fact, in briefing to the Fifth Circuit Court of Appeal recently filed last month, the DOL acknowledged that it intends to undertake steps and further rulemaking to determine what the salary level should be. It is now clear that these steps include the release of the RFI. The RFI states that in light of the pending litigation, the DOL decided to issue the RFI, rather than immediately proceed to a notice of proposed rulemaking (“NRPM”), in order to gather public input and aid in the development of a NRPM. The DOL expressly recognized that it released the RFI to address stakeholder concerns, including concerns that the standard salary level set in the 2016 Final Rule was too high and to address the Rule’s potential adverse impact on low-wage regions and industries.
Some of the specific questions posed in the RFI include but are not limited to the following:
- Whether updating the prior 2004 salary level for inflation would be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used;
- Whether the regulations should contain multiple standard salary levels and, if so, how they should be set;
- Whether different standard salary levels should be set for the executive, administrative, and professional exemptions;
- Whether the standard salary level set in the 2016 Final Rule works effectively with the standard duties test;
- To what extent employers increased salaries of exempt employee to retain exempt status, or otherwise altered employees’ hours or pay, in anticipation of the 2016 Final Rule’s effective date;
- Whether small businesses or entities encountered any unique challenges in preparing for the 2016 Final Rule’s effective date;
- Whether a test for exemption relying solely on duties performed, without regard to the amount of salary paid, would be preferable;
- Whether the salary level set in the 2016 Final Rule excluded from exemption particular occupations traditionally covered by the exemption; (
- Whether there should be multiple total compensation levels for the highly compensated employee exemption; and
- Whether the standard salary level and highly compensated employee total annual compensation level should be automatically updated on a periodic basis.
Although the future of the FLSA overtime regulations is still uncertain, for employers the key takeaway is that, for the time being, nothing has changed. The RFI suggests that changes are on the horizon, but for now, the 2016 Final Rule is still enjoined, and the DOL will not issue any revised rules until after the 60-day public comment period lapses and an NRPM is issued. Until further notice, the minimum salary threshold remains at $23,660 a year ($455 per week), but it is important for employers to continually monitor this ever-changing issue.
For additional information, see the DOL’s July 25, 2017 news release, available here.
Under Louisiana law, workers’ compensation is the exclusive remedy that an employee may assert against his employer or fellow employees for work-related injury, unless he was the victim of an intentional act. That exclusive remedy also extends to statutory employers.
Workers’ compensation legislation was enacted to provide social insurance to compensate victims of industrial accidents, and it reflects a compromise between the competing interests of employers and employees: the employer gives up the defense it would otherwise enjoy in cases where it is not at fault, while the employee surrenders his or her right to full damages, accepting instead a more modest claim for essentials, payable regardless of fault and with a minimum of delay. However, due to the fear that employers would attempt to circumvent that liability by interjecting between themselves and their workers intermediary entities which would fail to meet workers’ compensation obligations, the law provides that some principals are by statute deemed, for purposes of liability for workers’ compensation benefits, the employers of employees of other entities. This is what is known as statutory employment, and it is intended to provide greater assurance of a compensation remedy to injured workers.
Under Louisiana law, there are two bases for finding statutory employment:
First Basis: The existence of a written contract recognizing the principal as the statutory employer. A “principal” is any person who undertakes to execute any work which is a part of his trade, business, or occupation in which he was engaged at the time of the injury, or which he had contracted to perform and contracts with any person for the execution thereof. Such a contractual provision creates a rebuttable presumption of a statutory employer relationship between the principal and the contractor’s employees, whether direct or statutory employees. This presumption may be overcome only by showing that the work is not an integral part of or essential to the ability of the principal to generate that individual principal’s goods, products, or services.
Second Basis: Being a principal in the middle of two contracts, referred to as the “two contract theory.” The two contract theory applies when: (1) the principal enters into a contract with a third party; (2) pursuant to that contract, work must be performed; and (3) in order for the principal to fulfill its contractual obligation to perform the work, the principal enters into a subcontract for all or part of the work performed. The two contract statutory employer status contemplates relationships among at least three entities: a general contractor who has been hired by a third party to perform a specific task, a subcontractor hired by that general contractor, and an employee of the subcontractor.
A statutory employer is liable to pay to any employee employed in the execution of the work or to his dependent, any compensation under the Louisiana Worker’s Compensation Act which the statutory employer would have been liable to pay if the employee had been immediately employed by the statutory employer. In exchange, the statutory employer enjoys the same immunity from tort claims by these employees as is enjoyed by their direct employer. Additionally, when a statutory employer is liable to pay workers’ compensation to its statutory employees, the statutory employer is entitled to indemnity from the direct employer and has a cause of action therefor.
Statutory employer status can provide very valuable protection to companies who contract for work to be performed in Louisiana; however, you should consult your attorney to make sure you meet the legal requirements, and to properly draft the necessary contractual provisions.
Under the federal Fair Labor Standard Act, employees are entitled to be paid time and a half their regular rate of pay for all hours worked over 40 in a workweek. Private employees cannot elect, nor can private employers offer, “comp time” in lieu of overtime pay. Private employers can offer (or may be able to require) time off within a single workweek to offset longer-than-normal hours or to prevent an employee from exceeding the 40-hour threshold in a single workweek, but private employers cannot not offer true comp time to employees to offset overtime. Unlike the private sector, under some circumstances, public sector employees can elect “comp time” in lieu of overtime pay. On May 2, in a vote along party lines, the U.S. House of Representatives voted to extend to private employers the ability to offer employees the option to elect comp time in lieu of overtime, something that has been in place for a number of years for public employers. The Society for Human Resource Management (SHRM) and the White House both support the bill, but the bill may face a filibuster by Democrats in the Senate. Here are links to an article from SHRM and an article from CNN on the bill and the House action.
The Louisiana Environmental Whistleblower Statute, La. R.S. 30:2027, protects employees who, in good faith, disclose, or threaten to disclose, acts they reasonably believe to be in violation of an environmental law, rule, or regulation. It also protects employees who testify or provide information to a public body about such acts. An employer may not retaliate against an employee who engages in activity protected by the statute. The statute provides for the trebling of certain damages awarded to a prevailing plaintiff.
Last week, the Louisiana First Circuit Court of Appeal reversed a $750,000 judgment against the Louisiana Department of Natural Resources (“DNR”), finding that the plaintiffs were independent contractors of the State – not employees – and, therefore, outside the scope of the statute’s protection.
Earlier in the suit, the jury found that the plaintiffs were employees of DNR; that they reported what they believed to be environmental violations; and as a result of their reports, DNR retaliated against them. The jury awarded the plaintiffs $250,000 in lost wages, which was then tripled to $750,000 by the statute’s trebling provision. On appeal, the court found that the plaintiffs were independent contractors, rather than employees of DNR. As a result of this finding, the plaintiffs were outside the scope of La. R.S. 30:2027, and the case was dismissed.
It appears that an announcement regarding the U.S. Department of Justice’s investigation into the shooting death of Alton Sterling may be forthcoming, and many employers in the Baton Rouge-area are considering how the city and their employees may react. As a general practice, employers should take steps to remind employees to treat one another with dignity and respect, both in personal interactions and social media, and remind employees regarding workplace policies that demonstrate these values. Employers should anticipate issues so that the employer places itself in a position to diffuse issues before they arise.
In charged and emotional situations, like the news related to the Sterling shooting, employees and others often flock to social media to share views and experiences, vent frustrations, or to express support for a position to which they are aligned. Employees often fail to consider that what they say or do on social media may lead to hurt feelings or spark disagreements in the workplace, or that their personal commentary can potentially negatively reflect on their employers.
An employer cannot prevent its employees from expressing personal or political views on social media during the employee’s off-duty time and when an employee uses his or her personal devices. Yet, there are countless instances in which an employee’s personal posts have come to an employer’s attention, through another employee or a member of the public urging the employer to take some kind of action in response to the post.
Depending on its substance, on-line commentary – even commentary that includes vulgar language or profanity – may (in some instances) be protected by law. Therefore, if an employee posts what could be perceived as objectionable or antagonistic content on social media regarding the Sterling investigation, employers should remain calm and must consider the substance of the post.
In instances where a member of the public complains to an employer about an employee’s post or negatively comments about an employee’s post, it may be appropriate for the employer to designate a spokesperson to respond on the employer’s behalf with a short statement acknowledging the inquiry or comment, thanking the commentator for bringing the matter to the employer’s attention, stating that the employer takes all inquiries and complaints seriously, and stating that the employer will look into the issue further. It may also be appropriate to suggest that the commentator contact the employer’s spokesperson by telephone to further discuss the matter and attempt to resolve the issue. In many instances, it is better to take the merits of the discussion off-line, rather than to prolong the on-line life of a thorny issue raised in a post.
On April 4, 2017, the Seventh Circuit Court of Appeals ruled that sexual orientation discrimination is prohibited by Title VII of the Civil Rights Act of 1964.
As previously noted, there has been much debate among the courts regarding the meaning of the term “sex” under Title VII and whether discrimination based on sexual orientation and/or transgender status falls within the scope of Title VII’s protection. With yesterday’s 8-3 ruling, the Seventh Circuit became the first appellate court to interpret Title VII’s prohibition on discrimination based on “sex” as barring discrimination based on sexual orientation. The ruling is consistent with the Equal Employment Opportunity Commission’s interpretation of Title VII and is particularly significant given that the Seventh Circuit is considered among the relatively conservative federal appellate courts. Additional information regarding the decision can be found here.
This decision is only binding on employers in the Seventh Circuit (which encompasses Illinois, Indiana, and Wisconsin). Courts in other jurisdictions have reached the opposite conclusion. For example, just a few weeks ago, a panel of the Eleventh Circuit Court of Appeals, another conservative jurisdiction, ruled that Title VII does not protect employees from discrimination on the basis of sexual orientation. The Supreme Court may ultimately weigh-in on this issue to resolve the emerging split among the appellate courts.
The Fifth Circuit (which encompasses courts in Louisiana, Mississippi, and Texas) has not held that Title VII prohibits discrimination based on sexual orientation. Nevertheless, all employers should be aware of this decision. It is likely that attorneys, advocates, and federal agencies will rely on this ruling in an effort to expand the scope of Title VII in other jurisdictions.
Social media use by employees, and employers’ social media policies, continue to appear in the legal headlines. Much of the recent news coverage has touched on action by the National Labor Relations Board (NLRB) and its assessment of employer social media policies. However, recent legal action in Pennsylvania does not address the NLRB and its actions, but returns to somewhat traditional litigation. The Charlotte Observer recently reported on a lawsuit filed by two American Airlines flight attendants who claimed they were subjected to sexual and gender harassment through social media. The plaintiffs alleged that they reported the conduct to human resources, but that American Airlines failed to take action, and failed to enforce its own social media policy. Although the allegations include the use of technology as tools of alleged abusive behavior, the underlying employee conduct appears to be typical of the kind of conduct that leads to litigation. For more on the suit, click here.