Human Resources Compliance

On August 31, 2017, Judge Amos Mazzant in the Eastern District of Texas issued a final ruling invalidating the Obama Department of Labor’s increase in the minimum salary for exempt employees under the Fair Labor Standards Act.  This is the same judge that issued the preliminary injunction on November 22, 2016 that prevented the rule from going into effect as scheduled on December 1, 2016.  Even though the DOL appealed the preliminary injunction to the Fifth Circuit, the Court of Appeals did not stay the proceedings in the trial court while the appeal was pending.  Thus, Judge Mazzant issued his final ruling before the Court of Appeals had the opportunity to weigh in on the validity of his preliminary injunction.

You may recall the Trump DOL took the surprising position on appeal that Judge Mazzant erred in issuing the preliminary injunction, and requested that it be reversed.  If the DOL had succeeded it obtaining the relief it requested, the new overtime rules could have gone into effect, which would have caused all kinds of havoc.  Fortunately, on September 5, after Judge Mazzant’s ruling, the Department withdrew its appeal of the preliminary injunction.  At least for the moment, the uncertainty surrounding the status of the minimum salary has been settled.    The fanfare with which the DOL announced the rule last year, the thousands of lawyers hours spent educating our clients about it, and the dread with which employers anticipated its effective date, ended with a relative whimper.

For now, the minimum salary an employer must pay to exempt employees remains $455 per week.   But, it may not stay that way for very long.   The Department of Labor recently requested comments from the public whether it should raise the minimum salary to something more than $455 per week, but less than $913 per week in the now invalid rule.  As of today, the DOL has received over 138,000 comments in response to its request, so there is obviously significant interest in further changes.  The comment period remains open until September 25, so you still have the chance to weigh in if you haven’t already.

All the controversy about the new overtime rule raised an important question that warrants more attention:  that is, should there even be a minimum salary as part of the test for determining whether an employee is exempt from overtime?    In the ruling on the preliminary injunction, Judge Mazzant questioned whether the DOL has the legal authority to establish a salary basis test.   He reasoned the FLSA itself defines Executive, Administrative, and Professional exemptions only with respect to duties, and says nothing about the employee’s salary.  Therefore, he ruled, Congress did not intend that the amount of an employee’s salary be a factor in determining whether the employee was exempt; only the duties are relevant.   By including a salary basis test in addition to a duties test, Judge Mazzant concluded, at least preliminarily, that the DOL likely exceeded its statutory authority.

In his final ruling, Judge Mazzant again cited Congress’ intent that only duties matter.  But, he backed off his preliminary ruling that the DOL lacked legal authority to use salary test at all.  Instead, he concluded merely that the minimum salary in the Obama era rule was too high because it likely would have the effect in many cases of eclipsing the duties test, essentially rendering the duties irrelevant.   In other words, the salary was so high that many employees who satisfied the duties test for one of the executive, administrative, or professional exemptions would still be classified as non-exempt because their salary was less than $913 per week.    So, in the end, the concept of some minimum salary apparently satisfies Congress’ intent, but the amount must still pass Judge Mazzant’s (or some other judge’s) sensibilities to be valid.

Notably, the reason the Department requested the Court of Appeals to reverse Judge Mazzant’s preliminary injunction was this very issue: the DOL did not want to lose the right to establish a minimum salary as part of the test for determining who is an exempt employee.   It appears Judge Mazzant read the Department’s brief and perhaps decided to back off of what seemed to be the logical conclusion of his preliminary injunction ruling.   On the other hand, it appears the Department may still be open to an exemption test that does not include a minimum salary.   One of the questions (No. 7) on which the DOL is seeking public comment is whether an exemption test that relies solely on duties without regard to the employee’s salary be preferable to the current test, and if so, what elements should be included in such a test.

What do you think?  Would exempt employees be harmed if there was no minimum salary as part of the test for determining who is exempt from overtime?   If a minimum salary is essential, what should it be, who should make the determination, and by what criteria?   Is it appropriate that federal judges are the final arbiter of what is or is not an acceptable minimum salary?  Hopefully the Department will be thoughtful in its considerations of these important questions.  Stay tuned…

While “joint employment” is not a new legal concept, federal agencies such as the Department of Labor and National Labor Relations Board have aggressively sought to expand its application in recent years.

A joint employment situation typically occurs when an employer uses an independent contractor or vendor for certain services, or relies upon a staffing agency to supply workers.   The employer relying upon the vendor probably does not consider the vendor’s employees to be its employees as well.  Indeed one of the reasons to use vendors, contractors, or staffing agencies is to delegate to others certain obligations that come with having employees, such as payroll administration, wage and hour compliance, collective bargaining, or workplace safety.     But, if an employer is not careful in how it structures and administers its vendor and contractor relationships, it may unwittingly find itself saddled with legal obligations it thought had been assumed by others.

A recent opinion issued by the U.S. Court of Appeals for the Fourth Circuit (Salinas v. Commercial Interiors, Inc. , No. 15-1915, 1/25/2017) highlights this very risk.  The Fourth Circuit’s opinion purports to clarify the test for determining when a “joint employer” relationship exists under the Fair Labor Standards Act (FLSA).   While this opinion applies only in Maryland, Virginia, and North Carolina, it would not be surprising if other circuits adopted the Fourth Circuit’s new test, which in many cases will make it easier to prove the existence of joint employment.

Summary of the Case

03The plaintiffs in Salinas were employees hired by a company known as J.I. General Contractors, Inc.   J.I. worked almost exclusively on projects for another contractor, Commercial Interiors.  Commercial Interiors offered general contracting and interior finishing services, including drywall installation, carpentry, framing, and hardware installation.    The J.I. employees filed a collective action against both J.I. and Commercial, alleging they were not paid wages, including overtime wages.   The plaintiffs obtained a judgment for unpaid wages and attorneys’ fees against J.I..  But, the district court dismissed the claim against Commercial, finding Commercial had a legitimate independent contractor relationship with J.I. that was not entered into for the purpose of evading its legal wage and hour obligations.

The Court of Appeals reversed, finding the district court incorrectly ruled in Commercial’s favor on the joint employment question.  In a lengthy opinion, the Court of Appeals criticized the trial court for focusing on the legitimacy of the contractual relationship and the good faith of the parties’ intent to comply with the wage and hour laws.  But, the Court also found the existing precedent for FLSA joint employment cases, both in the Fourth and other circuits, unsatisfactory and confusing.   As such, the Court decided to “set forth our own test for determining whether two persons or entities constitute joint employers for purposes of the FLSA,”  guided by the principle that the law “must not be interpreted or applied in a narrow, grudging manner.”

The Court framed the “fundamental threshold question” in these cases as, “whether a purported joint employer shares or co-determines the essential terms and conditions of a worker’s employment.”  In answering the question whether joint employment exists, the Court of Appeals said courts should consider the following, non-exhaustive, list of factors:

  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;
  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to—directly or indirectly—hire or fire the worker or modify the terms or conditions of the worker’s employment;
  • The degree of permanency and duration of the relationship between the putative joint employers;
  • Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;
  • Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and
  • Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary to complete the work.

Applying the six factors to the Commercial-J.I. relationship, the Court found the following facts were important in finding that Commercial jointly employed J.I.’s employees:

  • The Plaintiffs performed nearly all of their work on Commercial job sites and for Commercial’s benefit;
  • Commercial provided the tools, materials, and equipment necessary for Plaintiffs’ work, with Plaintiffs providing only small, handheld tools;
  • On at least one occasion, Commercial rented a house near the job site for J.I. employees to stay in during a project;
  • Commercial actively supervised Plaintiffs’ work on a daily basis by having foremen walk the job site and check Plaintiffs’ progress;
  • Commercial required Plaintiffs to attend frequent meetings regarding their assigned tasks and safety protocols;
  • Commercial required Plaintiffs to sign in and out with Commercial foremen upon reporting to and leaving the job site each day;
  • Commercial foremen frequently directed Plaintiffs to redo deficient work, communicating problems to J.I. supervisors who translated the information to Plaintiffs
  • Commercial foremen told certain Plaintiffs to work additional hours or additional days;
  • Commercial communicated its staffing needs to J.I., and J.I. based Plaintiffs’ jobsite assignments on Commercial’s needs;
  • When J.I. performed certain “time and materials” work for Commercial and was paid on an hourly, rather than lump-sum, basis, Commercial told J.I. how many of its employees to send to the project and how many hours those employees were permitted to work;
  • Commercial provided Plaintiffs with stickers bearing the Commercial logo to wear on their hardhats and vests bearing Commercial logos to don while working on Commercial jobsites;
  • I. supervisors instructed Plaintiffs to tell anyone who asked that they worked for Commercial;
  • Commercial provided J.I. supervisors with Commercial-branded sweatshirts to wear while working on Commercial projects;
  • On at least one occasion, Commercial required J.I. employees to apply for employment with Commercial and directly hired those employees.

Employer Takeaways

It’s typically in the details of doing the job that the relationship get blurred between an employer’s own employees, and those of a contractor or vendor.    The company principals sign an agreement that sets forth the relationship, usually with good intentions.  But, in the effort to get the project or job done, the administration of the relationship does not comport with what it may say in the written agreement.   The following are a few reminders that should help keep the lines between the employer and contractor/vendor more clear:

  • Provide clothing or logos for your employee’s, but not the employees of a contractor/vendor;
  • Do not provide equipment or tools for the contractor/vendor’s employees;
  • You are allowed to exercise quality control over a contractor/vendor’s finished product, but do not instruct a contractor/vendor’s employees about the details of the work;
  • Communication about unsatisfactory work should be to a designated liason with the contractor/vendor, not the employees themselves;
  • Do not discipline or threaten to terminate a contractor/vendor’s employee; issues of conduct or performance of a particular employee should be addressed with the liason;
  • Contractor/vendor employees should comply with general safety protocols of the work site; but, if there are safety protocols unique to the contractor/vendor’s work (e.g., if they use certain chemicals), the contractor/vendor should enforce those rules.
  • Do not directly keep track of contractor/vendor employee hours, or direct those employees when to work, or insist they work overtime.
  • Train supervisors about these rules;
  • Closely following these rules is most important if the employer is the exclusive or nearly exclusive firm that uses the contractor/vendor; even if the contractors has many other customers, the employer should endeavor to follow these practices, but there may be more flexibility.

Image Credit from Google, Creative Commons license, Contractors Plant and Machinery.

 

Employee abuse of intermittent FMLA leave is a common employer complaint.   An example of intermittent leave is when an employee occasionally has to take off work because of an ongoing or chronic medical condition.    What happens if the employer suspects the employee uses FMLA covered leave to miss work for non-covered reasons, but does not know for sure?  What kind of evidence is needed to take action?

The U.S. Court of Appeals for the Third Circuit addressed that question in a recent decision.  (Capps v. Mondelez Global, LLC, (No. 15-3839, 1/30/2017).  Fredrick Capps worked for the company that makes Oreos and other Nabisco snacks.   He suffered from a condition known as avascular necrosis, which causes a loss of blood flow to the bones and tissues, resulting is the death of those cells.   In Capps’ case, he developed arthritis in his hips and frequently experienced severe pain in the pelvic region, hips, and thighs, sometimes lasting for days at a time.   Capps’ doctor certified he needed full bed rest to recover from these periodic pain episodes, and thus recommended he be completely off work when they occurred.  The company granted him the intermittent leave he requested.

One Thursday, February 14, 2013, Capps was scheduled to start work at 1:00 p.m., but called in and said he would be late to work because of leg pain.  He called later in the day stating that he was taking a full day off because the pain had not subsided.  That same evening, about 6:30 p.m., Capps went to a local pub to get dinner because his wife was out of town and he “didn’t know how to cook.”   It so happened some his friend were there, and he ended up staying for 2 ½ hours.   Naturally, he had a few beers…and then a few shots.   Unfortunately for Capps, a few too many.  The police stopped him on the way home.  His blood alcohol concentration was more than four times the legal limit.   Capps was arrested and put in jail that night, but released the next morning, February 15, 2013.   He was scheduled to start work at 1:00 p.m. that day, but called in again, stating that he would be using FMLA leave because of his ongoing leg pain.

By the following Monday, everything was back to normal; Capps reported to work as ususal.  He did not report his arrest to the company, nor was he required to do so.    He later plead guilty to DUI and was sentenced to three days in jail, which he served in August 2013.

Almost one year after the arrest, in early 2014, an HR Manager at the company learned from a newspaper article about Capp’s DUI conviction and jail sentence.   He decided to investigate Capps’ attendance record to determine if he had been absent during the time frame of the arrest and conviction.

The HR Manager reviewed the criminal court docket to try and determine the dates Capps’ had court dates, and compared them to dates he used FMLA leave.   The HR Manager was not an attorney and did not understand the meaning of all the docket entries.  But, he concluded Capps had used FMLA leave on the date of his arrest and the day after, as well as two dates he appeared in court.    When confronted with this information, Capps denied he had improperly used FMLA leave.  Capps later produced a undated notes from his doctor stating that he had taken time off on the days in question because of hip and leg pain.  Capps claimed he waived his right to appear in court on the dates the docket showed he had court dates, because he was actually at home suffering from pain flare ups.   The company was suspicious about the authenticity of the doctor’s letters.  The employer terminated Capps for FMLA abuse and dishonesty in reporting about his FMLA leave, all of which violated company policy.

2846903064_6077c22df2_zCapps sued for FMLA interference and retaliation, as well as failure to accommodate a disability under the ADA.    One of the key issues in the case was whether the employer had enough evidence to terminate in light of Capps’ claim there was a medical need for using leave on the dates in question, and his denial he appeared in court on the dates the docket showed he had court dates.    Noting that FMLA retaliation requires proof of the employer’s retaliatory intent, the court found that the employer’s honest belief the employee was misusing FMLA leave was a legitimate, non-retaliatory justification for the discharge.   Even if the employer was wrong in its belief, so long as it was honest, it is enough to defeat the claim.   In this case, Capps did not have enough evidence to show the company’s belief about his FMLA abuse was not an honest belief, and so his claim was dismissed.

The Capps case is a good reminder that absolute certainty the employee is abusing FMLA is not required before taking action.    It is also important to remember, however, that simply having a hunch or subjective belief abuse is occurring is not good enough to prove the belief was honest.    Rather, the employer should rely upon facts:  facts to support your belief, but also facts indicating the employee’s position is not believable.    In this case, it was enough that the HR Manager relied on the court docket showing when Capps was supposed to be in court, and that the employee produced a doctor’s note that was suspicious because it was undated and contained information that normally wouldn’t be expected from a doctor.

Image Credits: from Google, Creative Commons license, Oreo Two Cookies; Honesty is the Best Policy, Rick Harrison

An employee commits an offense that would justify termination.  But, she asks for another chance because the misconduct was not intentional; it was caused by a diabetes induced severe drop in blood sugar that caused confusion and memory loss.    Must the employer be more lenient on an employee with a disability as a form of reasonable accommodation?

This very question the subject of a recent decision from the U.S. Court of Appeals for the Tenth Circuit.   In DeWitt v. Southwestern Bell Telephone Co. (1/18/2017), the plaintiff was a customer service representative at SWBT’s Wichita, Kansas call center.    She suffered from insulin dependent Type I diabetes.  Whenever her blood sugar was low, DeWitt could experience various symptoms, including shakiness, fatigue, lethargy, confusion, and poor coordination.   She told her employer about the condition, and the company allowed her to take breaks to eat or drink as needed to raise her blood sugar.

At the time of her termination, DeWitt was already on a last chance agreement, which meant that any incident of poor performance or misconduct could lead to termination.     One day she suffered a severe drop in blood sugar that she was not able to stabilize even after eating food and drinking juice.   She experienced lethargy, disorientation, and confusion, and was “unable to communicate with anyone.”    While experiencing this condition, she “dropped” two calls, which meant she hung up on two different customers.

The company had recordings of the two dropped calls, but DeWitt claimed to have no memory of them because of her diabetic induced condition.    SWBT terminated her employment because DeWitt’s supervisor believed she intentionally hung up on the customers, and it was not a result of her diabetic induced low blood sugar.  DeWitt sued under the ADA, claiming she was terminated because of a disability, and that the company should have excused the dropped calls as a reasonable accommodation.Call center

Court’s Analysis of ADA Issues

This case presented two important ADA issues.   First, what if the supervisor was wrong in concluding the plaintiff intentionally hung up the customers, and thereby unfairly discounted the potential the disability played a role?  In granting summary judgment to SWBT on this question, the court relied upon a rule known as the “honest belief” doctrine.  That means, if the decision maker honestly holds a belief and acts on it in good faith, it does not matter whether in the end the belief is actually true.  In this case, the court found many objective reasons to confirm the supervisor’s belief the plaintiff acted intentionally.  They included the fact that it is very difficult for a customer service representative to accidentally hang up on a customer because terminating a phone call is a two-step process that required two separate mouse clicks.   The supervisor also found the plaintiff operated successfully the rest of the day, and did not take a break from accepting calls, which she was permitted to do if she felt ill.  No fellow employee witnessed the plaintiff’s disoriented condition despite being in close proximity to her.  Finally, the supervisor concluded the last chance agreement motivated her to not be completely forthright about what happened with the dropped calls.

The second issue involves the employer’s obligation to accommodate.   DeWitt argued the company should have accommodated her disability by excusing the disability related misconduct.   The court concluded, however, that an employer’s obligation to accommodate a disability is prospective; there is no requirement to overlook past misconduct as an accommodation, even if disability related.    The employer’s duty to provide a reasonable accommodation is triggered by an employee’s adequate request for accommodation.   Although the plaintiff had alerted the employer to her diabetes, that was not sufficient because she did not request an accommodation concerning the specific behavior at issue, namely, the possibility of dropped calls.

Takeaways

Despite the favorable employer outcome in DeWitt, discipline or termination for misconduct or performance that is potentially disability related is still a risky proposition.    There are several important things to keep in mind when presented with this situation:

  • The employer should not speculate about whether a disability contributed to the misconduct or poor performance; only if the employee raises the issue should the employer consider it.
  • If the first time the employer learns about a disability is during the discipline or termination process, there is no need to accommodate for what happened in the past; but, if the employee remains employed, the employer should discuss the need for future accommodations.
  • If the employer is already accommodating the employee’s disability is some way, the employer must consider whether the parties contemplated that the disability would cause or contribute to the specific misconduct or performance issues.
  • The employer must carefully consider whether the misconduct or performance issue is actually related to the disability. But, you cannot rely upon speculation; there must be objective facts on which you rely to make this determination

Image Credit: from Google, Creative Commons license, Call Center, Phone, Service, Help, Call

Most employers know they are obligated under the ADA to accommodate mental as well as physical disabilities.  In theory that seems easy enough, but in practice mental health conditions are much more difficult to deal with than physical disabilities.   For example, a common problem is that the employer often lacks specific information about the nature of the employee’s condition.   Sometimes that is because the employee himself does not disclose the condition (or perhaps does not even recognize it himself), but co-workers or a supervisor observe behavior changes or a performance decline.   While the employer may ask the employee general questions about how the employee is feeling, the law allows a more specific inquiry about a medical condition only under limited circumstances.   A disability related inquiry or medical exam is permitted only if the employer has a reasonable belief, based upon objective evidence, that the employee’s ability to perform the essential job functions is impaired by a medical condition, or the medical condition poses a threat to the employee or others.   Unfortunately, it is not always easy for an employer to judge whether there is sufficient reliable information to justify a disability inquiry.

Even in those cases where the employee discloses a mental health condition and requests accommodation, the employer often lacks sufficient information about the nature of the condition or proposed accommodations.  This is particularly true in cases of stress or anxiety.   Medical providers have been known to impose vague restrictions for stressed or anxious employees, including some of the following:  the employee should “avoid working in an environment she finds stressful; “keep stress levels as low as possible;” the supervisor should stop having “hostile confrontations” and instead provide the employee with “calm, non-confrontational treatment.”   By its nature work is often stressful, and employees sometimes have to deal with unpleasant tasks or people.   To demand a stress free work environments in neither helpful for reasonable.

dreamstime13812115What is an employer to do when presented with these types of vague restrictions?  Although I am not often a big fan of EEOC’s work, last month the agency published a resource document that is likely to be helpful.    Entitled “The Mental Health Provider’s Role in a Client’s Request for a Reasonable Accommodation at Work”, the document is targeted at the mental health professional and not the employer.    Presented in a question and answer format, the document provides useful information about the ADA and how the provider can help her patient obtain an accommodation from the employer.  Most useful in question 9, which describes the type of documentation that would be helpful for the employer to assess nature of the employee’s condition, the functional limitations, and proposed accommodations that are specific to the functional limitations.    Employers should consider giving this resource document to the employee and asking the employee to present it to the medical provider.   An employer could also develop its own questionnaire for the provider based upon question No. 9 in the document.

A medical provider who responds to the information listed in question No. 9 would not only help her patient, but also assist the patient’s employer in evaluating appropriate reasonable accommodations for a mental disability.

Image Credit: from Google, Creative Commons license, Man Suffering Stress and Anxiety.

It’s an all too common situation: an employee’s medical condition results in permanent restrictions that prevent the employee from performing essential job functions that she used to be able to do.   It is not reasonable to modify the job so the employee can keep the position.   There is a vacancy in another department for which the employee is qualified, and she wants the job.  But, the employer has another candidate who is more qualified for the vacant position, but does not have a disability.    Does the ADA require the employer to reassign the employee with a disability in favor of hiring someone else more qualified?

What Does the Law Require?

In its published Enforcement Guidance, EEOC takes the position that the ADA requires the employer to do just that.    But, in a recent opinion, the U.S. Court of Appeals for the Eleventh Circuit rejected the EEOC’s position.  (EEOC v. St. Joseph’s Hospital, Inc., 11th Cir. 12/7/2016).     The Court ruled the ADA indexdoes not require non-competitive reassignment as a reasonable accommodation for a disability.  In other words, it is legal to choose a more qualified, non-disabled employee over a less qualified employee with a disability.   The Eleventh Circuit (which covers Alabama, Florida, and Georgia) cited previous opinions from courts in the Fifth and Eighth Circuits (which includes Iowa) that already followed this rule.

In theory the rule is simple, but like many decisions involving the employment discrimination laws, it is more complicated in practice.    The EEOC v. St. Joseph’s Hospital case shows why.  The plaintiff was a nurse who had worked various jobs in the psychiatric unit for more than 20 years.    She developed back pain from spinal stenosis, which ultimately made it difficult for her to walk more than short distances without stopping.  The Plaintiff obtained a doctor’s note recommending she use a cane, which would provide support and allow her to walk longer distances.  But, the hospital was concerned the cane presented a safety risk in the psychiatric unit because patients could use it as a weapon.

Despite the doctor’s recommendation, the hospital told the Plaintiff she could no longer use the cane because of the safety risk.     Rather than immediately terminate her employment, the hospital offered Plaintiff 30 days to apply for other, open positions.    Technically, Plaintiff was not eligible for a transfer because she had been in her existing position for less than six months and was working under a final written warning.   But, the hospital waived those requirements as an accommodation.

The Plaintiff applied for three other jobs.   The hospital hired other, non-disabled candidates for two of them.  The third job was not actually available and was posted in error.    In the end, because plaintiff was not able to find another position, she was terminated.

Here is where it got complicated.  Even though the court ruled the hospital was not required by law to favor Plaintiff over other more qualified candidates, the question of who was the more qualified candidate was left for the jury to resolve.   The jury found the hospital failed to provide a reasonable accommodation for the Plaintiff by not reassigning her to one of the jobs for which she applied.     The hospital still won the case because the jury also concluded the hospital made good faith efforts to find a reasonable accommodation.  But, it is important to note the good faith defense eliminated the liability in this case because of some technical issues relating to the form of the jury instructions.     An employer’s good faith defense in most cases will protect only from damages, but not equitable relief or attorney’s fees.

What Should Employers Do?

The good news is, the the St. Joseph’s case reaffirms principle that an employer may hire the best candidate for the position, with or without a disability.  On the other hand, it remains a significant litigation risk to fill a vacant position with someone other than an employee with a disability, when the disabled employee will be terminated if not selected.   This is especially true for long term employees.   There is a very good chance a jury will be second guess the employer’s decision about which candidate is really the most qualified.

There are a number of policies or practices employers should consider that will make these types of  claims more defensible:  1)  employers should have a stated policy or demonstrated practice of hiring the best candidate for the job;  2) the stated qualifications for a position should match as much as possible the actual job duties; 3) the stated qualifications should emphasize criteria that are more objective (e.g., education, years of experience); 4)  subjective factors, such as the “right fit,” positive attitude, etc. are relevant but should be subordinate to objective criteria  4) identify and document the specific reasons the chosen candidate is more qualified than other candidates, especially if it is not obvious based upon the objective criteria.

Image Credit: from Google, Creative Commons license, Handicapped sign.

We posted on November 23 about the surprising temporary injunction issued to stop the new overtime rules from going into effect on December 1.    Many employers breathed a sigh of relief, but still wondered if this injunction was only a short term reprieve that could be taken away next year.  Here are a few things that have happened since the injunction that might shed some light on the future over the new rules:

  • On December 1, the Department of Labor filed an appeal of the district court’s injunction to the U.S. Court of Appeals for the Fifth Circuit.   The court of appeals granted the DOL’s request to fast-track the appeal, which means all briefs must be submitted by January 31, 2017.  That is about 60-90 days sooner than would occur with a normal schedule.   It is likely the court will schedule an argument in February and could have a ruling soon thereafter.
  • On December 8,  President-elect Trump announced Andy Puzder as his nominee for Secretary of Labor.  Puzder is the CEO of the company that owns the Hardee’s and Carls, Jr. restaurant chains, and has been a vocal critic of the DOL’s new rules.
  • The new overtime rules are on the list of 200 regulations that many members of Congress propose eliminating during the first 100 days of the Trump administration.

Dept of LaborWhile we are not making a prediction, employers have every reason to be optimistic the new rules will at least be modified if not eliminated altogether.   It is quite possible the DOL’s appeal will never see the light of day; once Trump is sworn in as president, he can order the DOL to withdraw its appeal and stop defending the underlying litigation, which would effectively make the injunction permanent.   As noted previously, Congress may pass a law to overturn the rule.    If neither of those occur, the new Secretary of Labor could start the process to rescind or rewrite the rule.   The last option would take the longest, as it would first require the Senate to confirm the new Labor Secretary, and then he would have to start the rule-making process.    Whatever course the process takes, if you have not taken action to implement the new overtime rules, there is no reason to do so now.

On November 22, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction prohibiting the Department of Labor from implementing and enforcing the new overtime rule as scheduled on December 1, 2016.

The new rule more than doubled the minimum salary an employee needed to qualify as exempt from overtime under the so-called “white collar” or EAP exemptions (Executive, Administrative, Professional).    The existing minimum salary is $413 per week ($23,460 per year); the new rule increased the minimum to $913 per week ($47,476 per year).    Employers have been scrambling in recent weeks to decide how best to comply with the new rule: whether to increase exempt employees’ salaries to the new minimum or reclassify formerly exempt employees and pay overtime for hours worked over forty per week.    Two lawsuits were filed September 20 challenging the rule but few expected the court to actually stop the rule from going into effect.

What are the practical effects of this ruling?   Most importantly, employers do not have to give raises or re-classify your employees by December 1.   Unfortunately, for many it may be too late.   Some employers have already communicated raises or re-classifications to employees.   There is nothing in the law that prevents those changes from being reversed, but it is difficult to take back what has just been given.

For employers who have not communicated or implemented the changes, the court’s injunction provides some immediate relief.  But, there is still quite a bit of uncertainty about what will happen next.    The future of the overtime rule will be impacted not just by legal but also by political considerations.

On the legal side, it is important to remember this is a preliminary injunction.  That means the court has not entered a final ruling, and it possible (although doubtful) in the end the court will allow the rule to go into effect.     It’s also likely the DOL will appeal this ruling to the U.S. Court of Appeals for the Fifth Circuit, which could result in the decision being reversed.     Neither of those outcomes is likely to occur for many months.   But, if the injunction is dissolved and the rule goes into effect, a thorny question arises: does the preliminary injunction preclude liability under the new rule between December 1, 2016 and the date the injunction is dissolved?   Common sense tells you an employer would not be liable, but that might not prevent employee lawsuits claiming they are entitled to either unpaid overtime or additional salary.

The election of Donald Trump along with a Republican controlled Congress may result in the political branches pulling the plug on the new rule.   That could occur in several ways, some of which take longer than others.    Congress could pass and the president could sign a law repealing the new rule.    The president could direct the Department of Labor to drop an appeal of the injunction and simply let the injunction remain in place.    Finally, the DOL under a new administration could issue rule repealing the new overtime rule.    The first two actions could occur fairly soon after January 20, 2017, while the third is a much longer and more difficult process.

We will continue to monitor the rule and keep you posted.

Iowa law has fairly strict limits on an employer’s right to conduct drug and alcohol testing.  One area in which testing is allowed, however, is when there is a workplace accident.  An employer may require an employee to undergo post-accident drug or alcohol testing if the employee is injured and requires medical treatment, or if there is property damage over $1,000.

Many Iowa employers have concluded mandatory post-accident drug and alcohol testing improves workplace safety.  It may deter employees from using illegal drugs or alcohol in the first place if they know an accident will be followed by a mandatory drug screen.   Employers have to give notice to their employees of this practice, so it should not be a surprise to employees.  A positive drug test also allows an employer in many circumstances to impose discipline or terminate an employee who presents a safety risk because of drug or alcohol use.   Lastly, if a drug or alcohol test reveals the employee was intoxicated, it provides a defense to the payment of workers’ compensation benefits if the intoxication was a substantial factor causing the injury.1999_219_safety-zone

But, Iowa employers that use mandatory post-accident drug testing should take note of November 1, 2016.    That is the date a new OSHA rule concerning post-accident drug testing takes effect.   Contrary to the rationale underlying Iowa’s drug testing law, OSHA contends such testing actually makes the workplace less safe because it deters employees from reporting workplace injuries or illnesses.   While the new rule does not contain a blanket prohibition against post-accident testing, an employer who uses drug testing or the threat of testing as a form of retaliation is subject to an OSHA citation and fine.   Adding insult to injury, OSHA has increased its fines by 78%.   The fine for a first serious citation will be in the range of $7,000-$12,740.   Deliberate or willful violations could result in fines up to $70,000-127,400.

So, how does OSHA decide if your mandatory drug testing procedure has a retaliatory motive?

Testing required by state or federal law or regulation is safe (such as the federal motor carrier safety rules).  OSHA has declared in advance that such programs are not implemented with retaliation in mind.

On the other hand, mandatory testing for every accident that causes serious injury or property damage is not safe from scrutiny for retaliatory motive.   The agency is likely to approve of post-accident drug testing only if it is done in specific, narrow circumstances.  For example, the Agency comments to the final rule state such testing should be limited “to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.”

What are the practical implications of this new rule?  For one, to avoid conflicts with OSHA, employers should no longer rely on blanket policies allowing post-accident testing.  Each and every decision to test will have to be justified based upon the facts of the particular accident.  As a practical matter, only if an employer has reasonable suspicion of impairment based upon the employee’s behavior or the circumstances of the accident should testing be used.  Unfortunately, it is very difficult for employers to make such judgments, particularly under the threat of an OSHA citation and fine if you are wrong.

It is also important to remember that a positive drug test, in and of itself, is not necessarily evidence the employee was impaired.   Taking adverse action based upon a positive screen, absent other evidence of impairment, exposes the employer to a higher risk of citations and fines.

The new OSHA rules are one more example of a federal agency imposing its view on states that have already developed balanced approaches for dealing with workplace safety.   It is hard to conceive how restricting post-accident drug testing will improve workplaces for Iowa employe

The headline was Fox News agreed to pay $20 million to its former anchor Gretchen Carlson to settle a sexual harassment lawsuit against its former CEO Roger Ailes.   This is an extraordinary settlement, and not just because of the amount.   Fox News agreed to a public settlement (usually they are confidential); publicly apologized to Ms. Carlson (usually the employer denies the settlement is an admission of liability); agreed to pay only two months after the suit was filed; and paid even though Fox News itself was not a defendant in the case (Ms. Carlson sued only Ailes personally).

Ailes adamantly denied the allegations when the lawsuit was filed, and still maintains his innocence.   But, in forcing Ailes out as CEO, followed by a settlement of this magnitude, Fox News is essentially admitting Ms. Carlson’s allegations about the culture of sexual harassment and retaliation at the network were true.1

As is often the case with big money settlements in high profile cases, there has been lots of commentary about its broader significance.  One prominent employment law blogger opined the settlement heralds a new era of sexual harassment claims, as aggrieved employees will expect big money for their claims as well.   Others are concerned Fox’s admission it had a problem in its workplace culture is evidence that sexual harassment remains pervasive despite years of awareness and anti-harassment training.

I’m not convinced the Fox News settlement is so consequential, at least for most employers.   The facts that make this case so noteworthy are unique–a former Miss American turned news anchor against a media icon who ran a right leaning and popular news network.

Nonetheless, there is a lesson here that is not necessarily new, but bears reminding.   That is, clear policies, effective procedures, and regular training are important to prevent harassment and protect the company from claims.  But, they make no difference if not followed when the alleged perpetrator is powerful, popular, or influential in the organization.   A common temptation for other managers and even boards of directors is to look the other way, deny, or cover it up when a figure like Ailes is accused of sexual harassment or other misconduct.   Since the Carlson lawsuit was filed, two former employees disclosed they received six and seven figure settlements years before from Fox for sexual harassment claims allegedly involving Ailes.   Yet, he continued as CEO apparently without consequence.   Even if Ailes could be given the benefit of the doubt after one such claim, two (and perhaps more) should have raised red flags there was a ticking time bomb in the CEO’s office.

Contrast the Ailes case with Hewlett Packard’s quick ouster of its prominent CEO after an investigation revealed he had engaged in an inappropriate relationship with an outside contractor.    HP’s stock fell over 8% the day after, but in the end the company maintained its integrity.   Whether Fox News can do so remains to be seen.

Image Credits: from Shutterstock, Creative Commons license, Young Business Woman Counting Money