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Archive for July, 2016

EEOC Modifies Proposed Rule that Would Require Many Employers to Report Pay Data

Posted on: July 27th, 2016

By:  Bill Buechner

On February 1, 2016, the EEOC published in the Federal Register notice of a proposed rule that would require employers with 100 or more employees to provide pay data for their employees on a revised EE0-1 form.  The revised EEO-1 form would require employers to identify the number of employees by race, gender and ethnicity who fall within one of 12 specified pay bands ranging from $19,239 to $208,000 and over.  These employees would continue to be classified in the 10 existing job categories (executive, professional, laborers, etc.).  The EEOC asserted that pay discrimination remains a significant problem, and that gathering this pay information would assist it in investigating charges of pay discrimination.    The proposal provided for a 60-day comment period, and the EEOC also conducted a public hearing on the proposed rule in March.

As a result of concerns raised by employers, employer associations, human resources organizations and other groups, on July 13, 2016, the EEOC published in the Federal Register a revised proposed rule.  The EEOC has provided a summary of the revised proposed rule on its website, including a link to the revised proposed rule.  (See here).  The revised proposed rule addresses some concerns expressed by employers, but many additional concerns remain.

Proposed Deadline For Submitting Pay Information

Whereas the initial proposed rule would have required employers to provide the pay data by September 30 beginning in 2017, the revised proposed rule moved the due date back to March 31, 2018 and March 31 of every year thereafter.  Thus, there would be an 18-month “break” after employers submit their EEO-1 information in its current form (without pay data) by September 30, 2016 before they would be required to submit the proposed revised EEO-1 form (with pay data and hours worked) by March 31, 2018.  The EEOC made this change so that employers could use the W-2 information that they already collect for tax purposes and thereby ease the burden on employers.

Proposed Pay Period That Employers Could Select To Submit Pay Information

The revised proposed rule would allow employers to select any pay period between October 1 and December 31, whereas the initial proposed rule would have required employers to pick a pay period between July 1 and September 30.  This proposed change to the “snapshot period” is intended to respond to employer concerns that a “snapshot period” earlier in the calendar year would not capture promotions or pay increases later in the calendar year that could move employees into higher pay bands.

Source of Pay Information

The EEOC also clarified in the revised proposed rule that employers would be required to report the pay information set forth in Box 1 of the W-2 form.    In doing so, the EEOC rejected requests that employers be allowed to provide base pay because the EEOC believes that certain types of supplemental pay such as overtime, performance-based bonuses, shift differentials and incentive pay are significant areas where pay discrimination can occur, and only W-2 information would encompass such supplemental pay.

Hours Worked Information

The revised proposed rule reiterates that employers must also provide aggregate information regarding hours worked because this information will be useful in explaining pay disparities in at least some instances.   The EEOC reiterated that employers already must keep records concerning hours worked for non-exempt employees in order to satisfy their FLSA obligations.   As to exempt employees, the revised proposed rule provides that employers may either (1) use a “proxy” of 40 hours per week for full-time exempt employees and 20 hours per week for part-time exempt employees; or (2) provide actual hours worked for exempt employees if the employer already maintains accurate records of this information.

Estimated Cost To Employers

The EEOC estimate that the average annual cost for providing the pay and hours worked information set forth in the revised proposed rule is approximately $416 per employer.

Remaining Employer Concerns

The EEOC clearly attempted to address at least some employer concerns in its revised proposed rule, but it rejected many other concerns raised by employers, such as the overall utility of the pay information that would be required, as well as privacy and confidentiality concerns.   Another primary concern for employers is that the EEOC will rely on the aggregate pay information provided by employers on the revised EEO-1 form to determine that pay discrimination is taking place when the detected pay disparities are the result of non-discriminatory factors such as employee choices, education, experience and other permissible factors.  One concrete example of employee choices skewing pay data is employee decisions regarding how much of his or her pay to contribute to a retirement plan, which impacts the pay reported in Box 1 of the W-2 form for that employee.

Employers have until August 15, 2016 to submit comments regarding the revised proposed rule.  Although additional minor modifications are possible, it appears likely that the EEOC will issue a final rule substantially similar to the proposed revised rule.    Accordingly, employers should carefully review their pay practices, identify any potential problematic pay disparities that could be scrutinized by the EEOC with the pay data that will be available to the EEOC and take any corrective action necessary.

NLRB Reverses Standard for Multi-Employer Bargaining Units

Posted on: July 19th, 2016

By: Timothy Holdsworth

Once again, the NLRB has overturned precedent in their quest to dramatically expand employer liability.  For over a decade, the NLRB has held that multi-employer bargaining units that include temporary employees from a staffing employer (“supplier employer”) and regular employees of a company that jointly employs temporary workers (“user employer”) require the consent of both employers.  Last week, in Miller & Anderson, the NLRB overturned that precedent by ruling that a union may now organize this type of mixed-employee unit without employer consent.  Instead, the employees need only share a community of interest.  In doing so, the NLRB returned to the union-friendly standard from M.B. Sturgis, Inc., 331 NLRB 1298 (2000).

The standard creates numerous problems.  Most importantly, a user employer will have to bargain with a mixed-employee unit even when the majority of its regular employees vote against unionization.  In addition, the rule would also force supplier employers to bargain with unions that represent full time workers of user employers with which the supplier employer has absolutely no employment relationship.

In a previous blog, we discussed how the NLRB in Browning-Ferris reversed precedent to greatly expand its standard for determining whether an employer is a “joint employer,” finding that employers may now be joint employers if they have even the potential to control working conditions.  In light of that ruling, Miller & Anderson takes on greater meaning as companies will more likely be found to be joint employers, thereby creating the types of multi-employer bargaining unit problems discussed above.

Employers should examine business relationships where they have authority to exercise control over employees, and therefore could be found to be joint employers of some of their workforce.  As Board Member Miscimarra has noted regarding joint employment, Browning-Ferris “has already created an analytical grab bag from which any scrap of evidence regarding indirect control or incidental collaboration may result in joint employer status.”

The Hearsay Exception for Market Reports

Posted on: July 15th, 2016

By:  Ryan Babcock

The hearsay exception for “compiled information” or market reports is an important tool that allows for the admission of such evidence notwithstanding the hearsay rule, but it is generally strictly applied by the courts. For that reason, counsel must carefully consider whether the rule permits the admission of such evidence in developing a trial strategy with respect to the admissibility of certain exhibits.

The hearsay exception for market reports and other compilations is defined as follows by Rule 803(17) of the Federal Rules of Evidence:

Market Reports and Similar Commercial Publications. Market quotations, lists, directories, or other compilations that are generally relied on by the public or by persons in particular occupations.

Most courts find these compilations reliable, and admissible, provided that they are used by the public or a particular profession or occupation (and thus reliability is supported by market forces). In weighing the admissibility of such evidence, courts usually also consider whether the evidence is “necessary,” such as whether it is the only way to determine the truth of the matter at issue, and whether locating the person who made the report would be impossible. Recent state cases in the criminal context drive home this point: People v. Hard, 342 P.3d 572, 575–79 (Colo. App. 2014) (no necessity to rely on for evidence that the defendant possessed a particular unprescribed pharmaceutical drug because the state could, but did not, have the drug tested); Hardy v. Florida, 140 So. 3d 1016, 1019–21 (Fla. Dist. Ct. App. 2014) (finding that evidence from the E-FORCSE database should not have been admitted because it was not published—as required by Florida’s evidence rules—and noting that there was no evidence that the information in the database was “reliable,” rather than simply being an investigative

tool); People v. Franzen, 210 Cal. App. 4th 1193, 1209 n.6, 1213–14 (Cal. Ct. App. 2012) (no necessity for database evidence because the state could have subpoenaed the telephone company, and the Entersect website was not shown to be accurate).

Certain statements in a publication or “compilations” would clearly not qualify under the rule. See Danner v. Int’l Freight Sys., 855 F. Supp. 2d 433, 472 & n.53 (D. Md. 2012) (noting that a quote from a popular magazine, without citation, regarding the “increased trophy fee” for a lion obtained in an overseas safari is inadmissible). A federal district court in Texas has rejected efforts to use a LinkedIn profile to determine a person’s location, finding the requisites of reliability and necessity clearly unsatisfied. Personal Audio, LLC v. CBS Corp., No. 2:13-CV-270-JRG-RSP, 2014 U.S. Dist. LEXIS 37089, at *15–16 (E.D. Tex. Mar. 20 2014) (Payne, Mag. J.). And the Fourth Circuit has recently explained that statements in a material safety data sheet would not be sufficiently reliable to be admitted under this exception, inasmuch as the statements were opinion statements, or warnings, made in an effort to limit liability, not factual compilations as such. In re C.R. Bard, Inc., Pelvic Repair Sys. Prods. Liab. Litig., MDL No. 2187, 810 F.3d 913, 923–24 (2016) (such evidence was admissible as non-hearsay to show notice).

In another case, a plaintiff’s attempt to admit certain industry publications and stock analyst reports, in wholesale form, as exhibits was rejected by a federal district court, which explained that courts take a narrow view of the exception, applying it to true compilations, not documents containing narrative and potentially subjective opinion. The court did note that properly redacted exhibits might be admitted at a later date. Bianco v. Globus Med., Inc., No. 2:12-CV-00147-WCB, 2014 U.S. Dist. LEXIS 3430, at *2–7 (E.D. Tex. Jan. 12, 2014).

Counsel should also bear in mind authentication, when there is any question concerning the authenticity of the evidence. In such circumstances, counsel must be prepared to lay a foundation, through live witness testimony or otherwise, that the compilation or market report is properly authenticated. See, e.g., Skyline Potato Co. v. Hi-Land Potato Co., No. CIV 10-0698 JB/RHS, 2013 U.S. Dist. LEXIS 10670, at *21–22 (D.N.M. Jan. 18, 2013) (authentication required as to a document purporting to show the great decline of the price of potatoes). And while the evidence from the compilation may properly get into evidence, that evidence alone may not suffice to overcome summary judgment, especially where the figures given are in the form of a range and the proponent of the compilation offers no additional evidence regarding the fact at issue. See Colvin v. Ameri-National Corp., No. 1 CA-CV 10-0528, 2011 Ariz. App. Unpub. LEXIS 1240, at *9–11 (Ariz. Ct. App. Oct. 4, 2011) (finding Kelley Blue Book admissible but insufficient to establish the valuation of the plaintiff’s Honda, as there was no particular evidence regarding the vehicle’s condition). Alternatively, counsel should consider whether the court might take judicial notice of the compilation at issue. Hines v. Shineski, No. 10-3973, 2012 U.S. App. Vet. Claims LEXIS 1385, at *9 (Vet. Claims App. July 5, 2012) (taking judicial notice of a city directory for 1967–68).

“Originally published in the Spring 2016 Newsletter of the American Bar Association’s Trial Evidence Committee.”

Hearsay Exception for Recorded Recollections: Pitfalls to Avoid

Posted on: July 15th, 2016

By:  Ryan Babcock

Rule 803(5) of the Federal Rules of Evidence operates as an exception to the hearsay rule, provided the requirements governing the rule as to the “recorded recollection” are satisfied. The rule is as follows

Recorded Recollection. A record that: (A) is on a matter the witness once knew about but now cannot recall well enough to testify fully and accurately; (B) was made or adopted by the witness when the matter was fresh in the witness’s memory; and (C) accurately reflects the witness’s knowledge.

If admitted, the record may be read into evidence but may be received as an exhibit only if offered by an adverse party.

While the literal text of the rule might prompt philosophical reflection regarding whether the record complies with subpart (c), and how one might go about proving “accuracy” when the witness does not remember enough about the matter to testify fully and accurately, courts have taken a pragmatic approach in applying the rule. See Priester v. Texas, No. 08-13-00278-CR, 2015 Tex. App. LEXIS 10165, *28–*29 (Tex. Ct. App. 8th Dist. Sept. 30, 2015) (even where a witness displayed an inconsistent or spotty memory, the court allowed the state to read the witness’s prior grand jury testimony into the record, as the witness’s recollection would only be partial).

Still, counsel will not be able to establish a proper foundation when the witness cannot vouch for the accuracy of the statement because she does not remember making it, meaning that it cannot be shown to “accurately reflect[] the witness’s knowledge” at the time the witness offers her testimony. Kubsch v. Neal, 800 F.3d 783, 793–94 (7th Cir. 2015) (applying Indiana law, but describing outcome as consistent with federal evidentiary rules and those applicable in other states).

What about a situation where the witness made a statement to another person, and that other person was the one who took notes of the conversation? Even if it was not contemporaneously “adopted by” the witness, courts have found that it is admissible, provided that the witness testifies that the record is accurate. Bostwick v. Watertown Unified School District, Case No. 13­C-1036, 2015 U.S. Dist. LEXIS 46495 (E.D. Wis. April 9, 2015); see also United States v. Williams, 951 F.2d 853 (7th Cir. 1993). This result appears to be at odds with the express terms of the rule, but many courts have permitted this evidence nonetheless. If the witness is not present to testify at all, however, this hearsay exception will not apply. Arizona v. Havatone, No. 1 CA-CR 14-0223, 2015 Ariz. App. Unpub. LEXIS 1298 at *27 n.7 (Ariz. Ct. App. Oct. 27, 2015) (statement from a deceased witness not admissible).

Counsel should also consult Rule 612 when considering this type of evidence. That rule gives an adverse party certain rights when a writing has been used by a witness to refresh his memory, at or before the party offers the testimony into evidence. For example, counsel can demand to inspect the writing, may cross-examine the witness about it, and may introduce in evidence any other portion that relates to the witness’s testimony.

Notwithstanding the exception to the hearsay rule provided for recorded recollections, another common problem in these types of documents is hearsay within hearsay. This can be important because the really objectionable (or critically important, depending on your circumstances) evidence might still be kept out of trial altogether under that rationale.

“Originally published in the Spring 2016 Newsletter of the American Bar Association’s Trial Evidence Committee.”

Supreme Court Slams the Door on Homecare Employers

Posted on: July 15th, 2016

By:  Agne Krutules

Much to the dismay of employers who employ home healthcare workers, on June 27, 2016, the Supreme Court declined to hear Home Care Association of America v. Weil, a case challenging the Department of Labor (DOL) regulations that entitle home care workers employed by third party employers to overtime for all hours worked over forty in a workweek.  In short, this means that the Department of Labor’s final regulations extending overtime protections to nearly all home healthcare workers who are not self-employed is final, unless Congress steps in with intervening legislation.

The legal saga began on October 23, 2013, when the DOL published a new rule, extending the Fair Labor Standards Act (FLSA) protections to home care workers who are employed by companies (rather than employed directly with the individual needing care).  This was a distinct change to the previous interpretation of the Fair Labor Standards Act home care exemption, which provided that all home care workers were exempt from overtime laws.

Home care industry associations challenged the new rule and won in a federal district court.  However, on October 13, 2015, U.S. Court of Appeals for the District of Columbia Circuit reversed the district court’s ruling, and reinstated the DOL’s expansion of coverage.  The Supreme Court’s refusal to grant certiorari in this case means that the Court of Appeals decision in this case is, at least for now, the final word.