What does it all mean and who does it mean it for? An Eligible Employee under the FMLA, Part 1.

Well now we know who a covered employer is under the FMLA.  So who gets leave?  Every employee?  No, only “eligible employees.”

(a) An eligible employee is an employee of a covered employer who:

(1) Has been employed by the employer for at least 12 months, and

(2) Has been employed for at least 1,250 hours of service during the 12-month period immediately preceding the commencement of the leave (see §825.801 for special hours of service requirements for airline flight crew employees), and

(3) Is employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite. See §825.105(b) regarding employees who work outside the U.S.

29 CFR §825.110(a).

So let’s start with the 12 months.  The first requirement for an employee to be an eligible employee is they have to work for you for at least 12 months.  But that 12 months does not have to be consecutive:

(b) The 12 months an employee must have been employed by the employer need not be consecutive months, provided

(1) Subject to the exceptions provided in paragraph (b)(2) of this section, employment periods prior to a break in service of seven years or more need not be counted in determining whether the employee has been employed by the employer for at least 12 months.

(2) Employment periods preceding a break in service of more than seven years must be counted in determining whether the employee has been employed by the employer for at least 12 months where:

(i) The employee’s break in service is occasioned by the fulfillment of his or her Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. 4301, et seq., covered service obligation. The period of absence from work due to or necessitated by USERRA-covered service must be also counted in determining whether the employee has been employed for at least 12 months by the employer. However, this section does not provide any greater entitlement to the employee than would be available under the USERRA; or

(ii) A written agreement, including a collective bargaining agreement, exists concerning the employer’s intention to rehire the employee after the break in service (e.g., for purposes of the employee furthering his or her education or for childrearing purposes).

(3) If an employee is maintained on the payroll for any part of a week, including any periods of paid or unpaid leave (sick, vacation) during which other benefits or compensation are provided by the employer (e.g., workers’ compensation, group health plan benefits, etc.), the week counts as a week of employment. For purposes of determining whether intermittent/occasional/casual employment qualifies as at least 12 months, 52 weeks is deemed to be equal to 12 months.

(4) Nothing in this section prevents employers from considering employment prior to a continuous break in service of more than seven years when determining whether an employee has met the 12-month employment requirement. However, if an employer chooses to recognize such prior employment, the employer must do so uniformly, with respect to all employees with similar breaks in service.

29 CFR §825.110(b).

And there are a bunch of little rules that apply to this whole 12 month thing.  For example, if there is a break in service – in other words, if the 12 months are not consecutive – the break in service has to be 7 years long before the 12 months resets. Or, if the time off is because the employee is in the military and covered by USERRA, the time spent in the USERRA-covered service is counted as time worked.  Of, if there is a CBA (or other written agreement) concerning the employer’s intention to rehire, that governs.

Also, any time that the employee is on the payroll, including time on paid or unpaid leave, for a part of a week, that part of the week counts as a full week toward the 12 months.  And finally, if the employee is employed intermittently or occasionally or casually (for example, say, seasonally) then 52 weeks equals 12 months.

Oh, and you can also choose to recognize periods of employment that occurred longer than seven years ago, but if you do you have to do it uniformly.


So just what is a “Successor in Interest”?

Last time we talked about joint employers and you will remember that this occurs when two separate and distinct employers can be considered a single employer for purposes of the FMLA.  This time we are going to talk about when an employer is considered a successor of the prior employer for purposes of the FMLA.  This generally occurs when one company buys another company, to put it really simply.

And generally this is only an issue when one company buys the assets of the other company, not the stock.  Why is that?  Because if you buy the stock of a company, that company, which is a legal “person”, continues to exist and continues to employ its employees.  So it is not really a successor, it is simply the same company with new owners.  So let’s go back and look at the definitions:

Person means an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons, and includes a public agency for purposes of this part.

29 CFR §825.102.

See, a “person” under the FMLA includes a “corporation” and other business entities.

So what is this successor in interest thing and why is it important?  Well, often when you buy a business, you don’t actually buy the business – instead you buy the assets of the business.  Things like buildings and machines and customer lists and goodwill.  When that happens, that is where the successor in interest analysis comes in.

(c) When an employer is a successor in interest, employees’ entitlements are the same as if the employment by the predecessor and successor were continuous employment by a single employer. For example, the successor, whether or not it meets FMLA coverage criteria, must grant leave for eligible employees who had provided appropriate notice to the predecessor, or continue leave begun while employed by the predecessor, including maintenance of group health benefits during the leave and job restoration at the conclusion of the leave. A successor which meets FMLA’s coverage criteria must count periods of employment and hours of service with the predecessor for purposes of determining employee eligibility for FMLA leave.

29 CFR §825.107(c).

As you can see, this can be important.  If I start a brand new company from scratch and go right out and hire 50 employees, I am automatically a covered employer because I have 50 employees, but I don’t have any eligible employees because none of my employees have worked for me for a year nor have they worked 1,250 hours in the last 12 months.  I have not existed for 12 months. But if I buy the assets of a company and put those assets into a new company, even though it is a new company, that might not be the case.  As you can see, if I am a successor in interest I have to grant leave for eligible employees who had provided appropriate notice to the predecessor or continue leave that began while the employee was employed by the predecessor.  In other words, the employees get credit for the time worked for the predecessor when they come to work for me.

OK, so if I buy the assets of a company, am I automatically a successor in interest?  Well no, not necessarily.

First, there is no bright line test for when a successor in interest exits:

(b) A determination of whether or not a successor in interest exists is not determined by the application of any single criterion, but rather the entire circumstances are to be viewed in their totality.

29 CFR §825.107(b).

But there is some guidance about what the DOL will look at when determining if a buyer is a successor in interest.

(a) For purposes of FMLA, in determining whether an employer is covered because it is a ‘successor in interest’ to a covered employer, the factors used under Title VII of the Civil Rights Act and the Vietnam Era Veterans’ Adjustment Act will be considered. However, unlike Title VII, whether the successor has notice of the employee’s claim is not a consideration. Notice may be relevant, however, in determining successor liability for violations of the predecessor. The factors to be considered include:

(1) Substantial continuity of the same business operations;

(2) Use of the same plant;

(3) Continuity of the work force;

(4) Similarity of jobs and working conditions;

(5) Similarity of supervisory personnel;

(6) Similarity in machinery, equipment, and production methods;

(7) Similarity of products or services; and

(8) The ability of the predecessor to provide relief.

29 CFR §825.107(a).

Seems a bit complicated, but as you can see, this is the same basic test used for Title VII so there is a body of case law that helps us determine when a company is a successor in interest.  So, if you are considering buying the assets of a company, keep in mind that you may also be buying obligations under the FMLA.

When does 1 + 1 = 1? . . . Joint Employer Coverage under the FMLA.

Think back a couple of posts ago to when we talked about a covered employer under the FMLA. I told you then that generally a single entity will be considered the employer under the FMLA unless it meets the joint employer test at § 825.106.  I also said we would talk about joint employers in a couple of weeks.  It has been a couple of weeks.

What, you say, is a joint employer?

(a) Where two or more businesses exercise some control over the work or working conditions of the employee, the businesses may be joint employers under FMLA. Joint employers may be separate and distinct entities with separate owners, managers, and facilities. Where the employee performs work which simultaneously benefits two or more employers, or works for two or more employers at different times during the workweek, a joint employment relationship generally will be considered to exist in situations such as:

(1) Where there is an arrangement between employers to share an employee’s services or to interchange employees;

(2) Where one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or,

(3) Where the employers are not completely disassociated with respect to the employee’s employment and may be deemed to share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer.

29 CFR §825.106(a).

Now we are going to cut right through all of the mumbo jumbo and get right to the meat of the matter, because the most common joint employer relationship occurs when you retain a temporary employment agency to provide you with temporary employees.  Not a PEO, mind you, or a vendor or contractor that provides so-called turnkey services, but a real live temporary agency.

First thing you need to know is this:  You have to count your temps when determining if you have 50 employees and are a covered employer.   That’s right, temps count, for both you and the temporary agency.

(d) Employees jointly employed by two employers must be counted by both employers, whether or not maintained on one of the employer’s payroll, in determining employer coverage and employee eligibility. For example, an employer who jointly employs 15 workers from a temporary placement agency and 40 permanent workers is covered by FMLA.

29 CFR §825.106(d).

Here is the second thing you need to know.  The temp agency has to give all the required notices and do the paperwork and provide the leave and maintain benefits.  (All things we will talk about later.)

(c) In joint employment relationships, only the primary employer is responsible for giving required notices to its employees, providing FMLA leave, and maintenance of health benefits. Factors considered in determining which is the primary employer include authority/responsibility to hire and fire, assign/place the employee, make payroll, and provide employment benefits. For employees of temporary placement agencies, for example, the placement agency most commonly would be the primary employer.

29 CFR §825.106(c).

Now you may be thinking that is great, nothing for me to do and you would be wrong.  Less for you to do, but not nothing.  You have to give the temp their job with you back when they are ready to come back from leave.

(e) Job restoration is the primary responsibility of the primary employer. The secondary employer is responsible for accepting the employee returning from FMLA leave in place of the replacement employee if the secondary employer continues to utilize an employee from the temporary placement agency, and the agency chooses to place the employee with the secondary employer. A secondary employer is also responsible for compliance with the prohibited acts provisions with respect to its jointly employed employees, whether or not the secondary employer is covered by FMLA. See §825.220(a). The prohibited acts include prohibitions against interfering with an employee’s attempt to exercise rights under the Act, or discharging or discriminating against an employee for opposing a practice which is unlawful under FMLA. A covered secondary employer will be responsible for compliance with all the provisions of the FMLA with respect to its regular, permanent workforce.

29 CFR §825.106(e).

And that, my friend, is what a joint employer is – now you know.

“One, Two, Buckle my Shoe. . . .” Counting Employees under the FMLA

Last time we talked about who was a “covered employer” .  You remember:

(a) An employer covered by FMLA is any person engaged in commerce or in any industry or activity affecting commerce, who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year.

29 CFR §825.104(a).

And we talked about who a person was and what a single integrated employer was and what interstate commerce meant.  But we left something out.  What about the 50 employee thing?  You know . . . “who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year.”  Id.

OK, there is a Reg for this too, but you knew that already or I would not be writing about it, right?

29 CFR §825.105 deals with counting employees.  Which is much like counting sheep only it is way more confusing and will put you to sleep much faster.  We have to start with “employ” – what does that mean?  Well, same meaning as under the FLSA.  You can see it here, but to avoid a “click”

By statutory definition the term ‘employ’ includes (section 3(g)) ‘to suffer or permit to work’.  The act, however, contains no definition of ‘work’.  Section 3(o) of the Fair Labor Standards Act contains a partial definition of ‘hours worked’ in the form of a limited exception for clothes-changing and wash-up time.

29 CFR § 785.6.

Helpful, don’t you think?  Look at it this way – it is basically anybody you pay to work for you that is not an independent contractor.  And we all know that virtually no one qualifies as an independent contractor anymore, right?  So when are you “employing” someone?  How about when:

(a) The definition of employ for purposes of FMLA is taken from the Fair Labor Standards Act, §3(g), 29 U.S.C. 203(g). The courts have made it clear that the employment relationship under the FLSA is broader than the traditional common law concept of master and servant. The difference between the employment relationship under the FLSA and that under the common law arises from the fact that the term ‘employ’ as defined in the Act includes ‘to suffer or permit to work.’ The courts have indicated that, while ‘to permit’ requires a more positive action than ‘to suffer,’ both terms imply much less positive action than required by the common law. Mere knowledge by an employer of work done for the employer by another is sufficient to create the employment relationship under the Act.

29 CFR §825.105(a).

That’s right – if you know someone is doing work for you, that is enough to create an employment relationship under that Act.  But we need more than that, so the DOL gives us more:

(b) Any employee whose name appears on the employer’s payroll will be considered employed each working day of the calendar week, and must be counted whether or not any compensation is received for the week.

29 CFR §825.105(b).

So any employee on the payroll is covered, right?  Well sort of, but only in the good old USA (or its territories).  Not employees who are employed in a foreign country.  Employees in Canada?  Don’t count.  Employees in Mexico?  Don’t count.  Employees in China?  Don’t count.  (And this does not mean employees on a business trip, they still count, presumably they are on the US payroll.)

But what about employees who are on the payroll but are not working?  Someone, say, on a leave of absence?  Yes, they count too, assuming that they have a reasonable expectation of coming back to work.

(c) Employees on paid or unpaid leave, including FMLA leave, leaves of absence, disciplinary suspension, etc., are counted as long as the employer has a reasonable expectation that the employee will later return to active employment. If there is no employer/employee relationship (as when an employee is laid off, whether temporarily or permanently) such individual is not counted. Part-time employees, like full-time employees, are considered to be employed each working day of the calendar week, as long as they are maintained on the payroll.

29 CFR §825.105(c).

And then there is this whole “each working day of the calendar week thing.”  What is that all about?  Well, section (b) really takes care of that when it tells us that any employee on the payroll will be considered to have employed “each working day of the calendar week and must be counted whether or not any compensation is received for the week.”  With one exception – of course, there is always an exception:

(d) An employee who does not begin to work for an employer until after the first working day of a calendar week, or who terminates employment before the last working day of a calendar week, is not considered employed on each working day of that calendar week.

29 CFR §825.105(d).

And that gets us to the heart of the matter:

(e) A private employer is covered if it maintained 50 or more employees on the payroll during 20 or more calendar workweeks (not necessarily consecutive workweeks) in either the current or the preceding calendar year.

29 CFR §825.105(e).  Man, all the way to (e) before we actually got to the count.

So what does all of this mean?  When am I actually a covered employer?  Let’s say today I have 49 employees and tomorrow number 50 starts, am I covered?  NO!  You have to have 50 for 20 or more workweeks in the current or preceding year.  So once you get to 50 you won’t actually be a covered employee until you have 50 for 20 or more weeks.  Now, weeks do not need to be consecutive, so if you have 50 for 10 weeks and then someone quits and you are down to 49 for 5 weeks and then you hire one more and you are back to 50, once you get back to 50 for 10 more weeks (and assuming the year has not changed) you are covered.

And once you are covered, you are going to be covered for a while:

(f) Once a private employer meets the 50 employees/20 workweeks threshold, the employer remains covered until it reaches a future point where it no longer has employed 50 employees for 20 (nonconsecutive) workweeks in the current and preceding calendar year. For example, if an employer who met the 50 employees/20 workweeks test in the calendar year as of September 1, 2008, subsequently dropped below 50 employees before the end of 2008 and continued to employ fewer than 50 employees in all workweeks throughout calendar year 2009, the employer would continue to be covered throughout calendar year 2009 because it met the coverage criteria for 20 workweeks of the preceding (i.e., 2008) calendar year.

29 CFR §825.105(e).

Clear?  As mud, right?  See you next time.

What does it all mean and who does it mean it for? Part 1 – A Covered Employer Under the FMLA.

Last week we started with the first of the FMLA Regulations.  Today you are going to skip down the Regulations a bit.  Skip already, you say?  Yes, but relax, it’s not really anything that’s important and the important stuff we will come back to.  We started with 29 CFR §825.100 which just explains what the FMLA is in broad terms.  We are going to skip 101 which is the “Purpose of the Act”, 102 which are the definitions, and 103 which is nothing, it’s reserved.  Why are we skipping the definitions?  We aren’t really, we will come back to them as we need them.   So that gets us to 29 CFR §825.104, Covered Employer.

So who is covered by the FMLA?

(a) An employer covered by FMLA is any person engaged in commerce or in any industry or activity affecting commerce, who employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year.

29 CFR §825.104(a).

That seems pretty simple, doesn’t it?  If you, and by you I mean a “person”, are a “person” who engages in interstate commerce or an activity affecting commerce and you employ 50 or more employees for each working day for 20 or more calendar workweeks either this year or last, you are a “covered employer.”

So who, or what rather, is a “person”?  Simple – a person is what a person always is under the law:

Person means an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons, and includes a public agency for purposes of this part.

29 CFR §825.102.  (See, I told you we would get back to the definitions.)

It also means any person acting in the interest of an employer.  So corporate officers may be a “person” for purposes of the FMLA.  See § 825.104(d).

And interstate commerce is just as simple.   The FMLA uses the NLRA’s definition of interstate commerce:

Commerce and industry or activity affecting commerce mean any activity, business, or industry in commerce or in which a labor dispute would hinder or obstruct commerce or the free flow of commerce, and include ‘commerce’ and any ‘industry affecting commerce’ as defined in sections 501(1) and 501(3) of the Labor Management Relations Act of 1947, 29 U.S.C. 142(1) and (3).

29 CFR §§ 825.104(b) and 102.

Now generally, a single entity will be considered the employer under the FMLA.  For example, a corporation that employs employees will be considered the employer and not the various divisions or establishments of the corporation.  See § 825.104(c).  And where one corporation owns another corporation it is generally a separate employer unless it meets the joint employer test at § 825.106 (which we will talk about in a couple of weeks) or the integrated employer test that we will talk about now.  See § 825.104(c)(1).

Sometimes two or more entities might be considered a single integrated entity for determining who the employer is.  That way a really crafty “person” can’t set up, say, 5 different LLCs and have each of them have, say, 25 employees so that none of them are covered by the FMLA.  When that happens the DOL might just call those 5 different LLCs a “single integrated employer.”

(2) Separate entities will be deemed to be parts of a single employer for purposes of FMLA if they meet the integrated employer test. Where this test is met, the employees of all entities making up the integrated employer will be counted in determining employer coverage and employee eligibility. A determination of whether or not separate entities are an integrated employer is not determined by the application of any single criterion, but rather the entire relationship is to be reviewed in its totality. Factors considered in determining whether two or more entities are an integrated employer include:

(i) Common management;

(ii) Interrelation between operations;

(iii) Centralized control of labor relations; and

(iv) Degree of common ownership/financial control.

29 CFR §825.104(c)(2).  If one or more of those things is present, then two nominally separate entities might just be considered a single employer under the FMLA.

Pretty straight forward.  That is a covered employer under the FMLA.  Got 50 employees?  You are going to want to keep reading as we go along then.

It’s Time to Start Over Again . . . Again. . . The FMLA Edition.

So once again I have been terribly negligent in keeping up on this blog.  In fact I have not posted since . . . man, since November of last year.  My only excuse is I have been a bit busy.  And busy is good, but it does mean the old blog has been neglected.  So I am going to go back to what we did before.  We will start another series on another statute.  This time I think we will focus on the Family and Medical Leave Act.  I don’t know about you, but I can use a bit of a refresher.  And we are going to do it the same way we did the FLSA series, using the Regulations as our road map.  So here we go . . .

A little bit of history to start.  For those of you that don’t know, the Family and Medical Leave Act (or as we are going to call it, the FMLA) was enacted by the 103rd Congress and signed into law by President Clinton on February 5, 1993.  That is right about the time I was just getting into this law thing (actually I graduated from law school in 1992 for those of you that are interested).  The FMLA is administered by our old friend the Wage and Hour Division of the United States Department of Labor.  Recognizing the increased number of single parent households and households in which both parents work, the purpose of the FMLA is “to balance the demands of the workplace with the needs of families to promote the stability and economic security of families, and to promote national interests in preserving family integrity.” See https://www.dol.gov/whd/regs/statutes/fmla.htm#SEC_2_FINDINGS_AND_PURPOSES

So what does it do?

(a) The Family and Medical Leave Act of 1993, as amended, (FMLA or Act) allows eligible employees of a covered employer to take job-protected, unpaid leave, or to substitute appropriate paid leave if the employee has earned or accrued it, for up to a total of 12 workweeks in any 12 months (see §825.200(b)) because of the birth of a child and to care for the newborn child, because of the placement of a child with the employee for adoption or foster care, because the employee is needed to care for a family member (child, spouse, or parent) with a serious health condition, because the employee’s own serious health condition makes the employee unable to perform the functions of his or her job, or because of any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a military member on active duty or call to covered active duty status (or has been notified of an impending call or order to covered active duty). In addition, eligible employees of a covered employer may take job-protected, unpaid leave, or substitute appropriate paid leave if the employee has earned or accrued it, for up to a total of 26 workweeks in a single 12-month period to care for a covered servicemember with a serious injury or illness. In certain cases, FMLA leave may be taken on an intermittent basis rather than all at once, or the employee may work a part-time schedule.

29 CFR §825.100

Now that is a lot of stuff!  “Eligible employees” and “covered employers” and “workweeks” and “serious health conditions” and “ qualifying exigencies.”  And next time we will start digging into what all that means.

For the two of you that still read this thing, thanks for sticking with me.  See you next time, and it won’t be 9 months, I promise.

Hold it, hold it, FLSA Regulations on Hold

I’m not having a very good month.  I have been just flat out wrong twice this month.  The first time was on the 8th.  And now last night.

U.S. District Court Judge Amos Mazzant last night issued a nationwide preliminary injunction blocking the Department of Labor’s new overtime regulations from taking effect on December 1. In order to get a preliminary injunction, a plaintiff must prove certain things–including that the plaintiff has a substantial likelihood of success on the merits. Without getting into all of the legal analysis, here is what matters to most of you.

Judge Mazzant found that the language of the statute was clear and that “The plain meanings of the terms in Section 213(a)(1), as well as Supreme Court precedent, affirms the Court’s conclusion that Congress intended the EAP exemption to depend on an employee’s duties rather than an employee’s salary.” As such the judge found, “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” But the Court did not stop there. Anticipating that some could argue that the language of the statute was not clear, the Court noted: “The Department has admitted that it cannot create an evaluation “based on salary alone.” Id. at 23. But this significant increase to the salary level creates essentially a de facto salary-only test.” The Court then went on to say that because the DOL had, in the Court’s opinion, exceeded its authority, the Court would not even discuss the automatic updating mechanism contained in the Final Rules.

There are a couple of things for you to remember First, this is a preliminary injunction, so at this point it is just a delay in implementation and not a final decision regarding the legality of the Final Rule. And secondly, the DOL is not likely to let this go unchallenged. In fact they issued the following statement shortly after the judge published his order: “We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.” Also, given the procedural posture of this case, it could be argued that Judge Mazzant’s order only applies to public sector employers, but by our reading, it appears to apply to ALL employers – both public and private sector – who were going to be impacted by the new regulations.

So what should you do now? We see the following options:

If you have not done anything to prepare for these changes, it looks like your procrastination has paid off (at least for now). We would still encourage you to create an implementation plan should this injunction be overturned at some point.

If you have an implementation plan that you were preparing to roll out on December 1, you can: 1) go forward with your plan since it would keep you in compliance with both current and the potential future regulations; or 2) delay your plan pending the outcome of these lawsuits. If you choose Option 2, you should consider sending a message to any and all individuals who would have been impacted by the change. We suggest something like this:

A Federal court in Texas has issued an injunction preventing the new salary rules from going into effect. This has created uncertainty as to what changes, if any, will need to be made in the future. In order to ensure that we follow the law and avoid unnecessary disruption, we are delaying the implementation of our salary changes until we have more clarity on this issue. If you have any questions, you should contact the Human Resources Department.

Now What?

I am not a political pundit and I am certainly not going to use this blog to share my political views, but I think it is safe to say that none of us, no matter which way we voted, saw that coming. But come it did, and on January 20th we are going to have a new President and a new House and a new Senate and they are all controlled by a single party.

So now, we are all asking, what comes next? Now what?

In an effort to stay out of trouble and stick to what I know, I’m going to limit my “now what” to “now what” for those of us that work in labor and employment law and human resources. So what can we expect from Mr. Trump’s Presidency in those areas?

I have no idea. And neither does anyone else, and anyone telling you they do is kidding themselves.

So that’s it, nice talking to you, see you next time . . .

I’m kidding, because we can make some pretty good guesses, at least in some of the bigger areas.

The NLRB: Let’s start with something easy. There is nothing new here. Every time we get a change in party in the White House, we get a sea change in the composition of the Board. That is because the President gets to appoint the members of the NLRB and Republicans tend to appoint more employer-friendly Boards, Democrats tend to lean the other way and at least one member of the Board changes over every year. The NLRB has five members and currently three of those seats are filled – two by Democrats and one by a Republican. With Congress on his side, it is pretty clear President-elect Trump will fill the vacant seats with members that will tend to lean toward management. But again, nothing new there as this happens every time we get a new party in the White House. What is new is that we may, for the first time in a long time, and because we have a Congress and President of the same party, get a full Board. All five seats filled.

The DOL: We are going to have a new Secretary of Labor. What does that mean for the DOL’s pet project, the new FLSA regulations? We don’t know. But before you get all excited, don’t expect not to have to comply with these regulations. Don’t forget, they go into effect December 1, and Mr. Trump won’t be the President on December 1. There is no way Congress can act that fast, and even if they do, President Obama will veto any attempt to stop implementation. But who knows what will really happen next year. Do they get rolled back? Are they phased in or out? I don’t know and neither does anyone else, but don’t forget, every state that had a minimum wage issue on the ballot in this election voted to increase the minimum wage. So, maybe President Trump will leave it up to the states to decide. I just don’t know.

The EEOC: The current Chair of the EEOC is Jenny Yang. Chairperson Yang’s term expires in 2017. President Trump will then appoint a successor. The Chairperson of the EEOC sets the EEOC’s enforcement agenda, which in recent years has focused on pay equity, sexual orientation and transgender issues. With a new and more conservative Chair, and with the impending departure of the EEOC’s General Counsel who announced that he would be leaving the EEOC in December, it is likely that the EEOC’s enforcement focus will change dramatically. And the first place we might see that is in the EEOC’s new requirement regarding the EEO-1 form. As you know, last February the EEOC issued proposed regulations that would require employers to report certain pay data on the EEO-1 beginning in March of 2018. I would not bet on that happening now. But again, we are just going to have to wait and see. And what else might change? For example, at least for the last couple of years, the EEOC has been pretty aggressive in bringing complaints against employers for what it calls systemic violations. In short, the current EEOC likes the big splashy case. Will that trend continue, or will the EEOC be less aggressive in its enforcement and focus more on specific individual complaints?

And just to show you exactly how much we don’t really know about what President Trump will do, I’m going to leave you with this . . . what about paid leave? As you know, there has been a bunch of noise out of Congress lately about making at least some of the FMLA paid. I know what you are saying, “not anymore.” But not so fast. During his campaign Mr. Trump actually supported paid leave, at least for working mothers. Here is a quote: “We need working mothers to be fairly compensated for their work, and to have access to affordable, quality child care for their kids.” This initiative is championed by Mr. Trump’s oldest daughter, Ivanka Trump. You can read the full story in the Washington Post.

So there you go. Helpful, right? OK, not so much, but stay tuned. Time will tell.

Everything is bigger in Texas . . . . Even when it is in Ohio.

You have heard the old saying “Everything is bigger in Texas,” right? Seems that’s true for settlement amounts, even when they aren’t really in Texas. Yesterday, the EEOC issued a press release announcing that the owners and operators of a Texas Roadhouse Restaurant in Columbus, Ohio, had agreed to pay $1.4 million to settle a class-action sexual harassment suit filed by the Equal Employment Opportunity Commission (EEOC) against the owners and the management company of this particular restaurant. The settlement also included mandatory reporting and training among other affirmative relief for the victims.

“So what,” you say? I mean really, apart from the fact that $1.4 million is a lot of money, what’s the news, why should you care? Well, let me tell you. First, occasionally I get the impression that we think this sort of thing surely doesn’t happen anymore. After all, we are grown and are more sophisticated (can you read the sarcasm dripping from my fingers?) and surely we are beyond such behavior. If the facts the EEOC alleges are true, you can see that is not the case. And second, if you look at the facts the EEOC alleges, you get a really nice example of why you should take allegations of harassment seriously and make sure you investigate them fully.

Here is what the EEOC alleged in its complaint:

According to EEOC’s lawsuit, the manager of the restaurant . . . harassed women and teen girls working in server, hostess and other front-of-the-house positions. In the suit, EEOC identified 12 victims of his abuse who suffered unwelcome touching, humiliating remarks about their and other females’ bodies and sexuality, and pressure for sexual favors in exchange for employment benefits or as a condition of avoiding adverse employment action. EEOC charged that the harassment began in 2007, continued for over three and a half years until the manager was fired in May 2011, and was coupled with retaliation against employees who opposed the abuse.

Although the companies’ owners and individuals with high-level authority received multiple complaints about the manager’s abusive conduct throughout his employment, they failed to take prompt, effective action to put a stop to the abuse, EEOC said. [The manager] was not fired until May 2011, when he was seen on a surveillance video touching a 17-year-old female employee in his office at the restaurant during work hours, the agency charged.

Get the picture? Not your run-of-the-mill he said, she said hostile environment case—twelve victims, multiple complaints over three and a half years. And the company apparently did nothing about it. In fact, the EEOC thought the conduct was so bad the company had to agree as part of the settlement never to hire the manager back.

So what is the lesson, I mean besides not hiring people like this? The lesson is to take these kinds of allegations seriously, especially if you happen to be in a business that hires kids. When somebody complains, you need to investigate, and by investigate I don’t mean talk to one or two people, I mean investigate.

But before you even get to that point, you need to make sure you are creating a culture where people feel free to approach you when they have an issue—an atmosphere that encourages people to speak up. And that goes way beyond just complaining.. It means creating a work environment that encourages questions and maybe even dissent. It won’t just help when something like this comes up; it might make your workplace a better place to work.

If you want to read the entire EEOC press release, you can find it here. If you need help with training or investigation, give us a call.

Leave it to the DOL to publish the regulations when I’m out – the Final Overtime Regs are here.

Well, leave it to the Department of Labor. They wait until I’m out of the office to issue new Regulations. That’s right, yesterday afternoon, the Department of Labor announced that the long awaited final Regulations under the FLSA will be issued today. I’m not going to read them today because I’m going to a baseball game. So let me give you the highlights that the DOL provided yesterday.

We all knew the salary level test was going up. The big question was how much. Would it be the 40th percentile/$970 per week that was in the proposed regulations or something else? How about a little of both. The Department of Labor stuck to its 40th percentile measure, but to throw a small bone to employers the final Regulations set the 40th percentile based on earnings of full-time salaried workers in the lowest wage census region instead of the 40th percentile of full-time salaried workers in the US. And that means . . . . drum roll please . . . the new salary level test is $913 per workweek. Annualized that’s $47, 476 per year.

The highly compensated test remains the same as in the proposed Regulations. It’s set at 90th percentile of full-time salaried workers in the country and comes out to $134,004 annually.

There is also an automatic updating provision in the Regulations. Beginning on January 1, 2020. the salary level tests will be reset every three years. The final Regulations also allow employers to include non-discretionary bonuses and other incentive payments including commissions to satisfy up to 10% of the salary level as long as the bonuses and incentive payments are paid at least quarterly.

The new Regulations go into effect December 1, 2016. So if you haven’t started thinking about what you’re going to do already, now is the time to do it.

You can find the DOL Fact Sheet here and the Q & A here. Or you can give us a call.

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