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Archive for the ‘Employment Law Blog (US)’ Category

Employers May Need to Submit EEO-1 Pay Data As Early As May 31, 2019, Although the EEOC is Advocating for a Later Deadline of September 30, 2019

Posted on: April 15th, 2019

By: Paige Pembrook

Last month, the U.S. District Court for the District of Columbia reinstated the Equal Employment Opportunity Commission (EEOC) rule requiring employers to report pay information by race, ethnicity and sex with their EEO-1 Report. However, employers still wait for an answer on when they will have to actually file the pay data. If employee advocacy groups have their way, it could be as soon as May 31, 2019. However, the EEOC is pushing for later deadline of September 30, 2019.

The EEO-1 Report is mandatory for businesses with at least 100 employees and federal contractors with at least 50 employees and a federal government contract of $50,000. Such employers must report the number of employees who work for the business by job category, race, sex, and ethnicity on the EEO-1 Report.

In 2016, the EEOC adopted additional EEO-1 pay data collection requirements commanding employers to report employee wages and hours worked by race, ethnicity and sex. In 2017, the Office of Management and Budget (OMB) stayed the pay data requirements. Employee advocacy groups sued to challenge the stay on the basis that the OMB provided inadequate reasoning to support its decision.

On March 4, 2019, the U.S. District Court Judge agreed with the employee advocates and ordered, “the previous approval of the revised EEO-1 form shall be in effect,” including the pay data collection requirements. (National Women’s Law Center v. Office of Management and Budget, No. 17-cv-2458). The Judge also ordered the EEOC to describe when and how it will comply with the order lifting the stay on the EEO-1 pay data collection.

Employers must be aware that the ruling could take immediate effect and require employers to submit pay data as early as May 31, 2019, along with the other 2018 EEO-1 information. However, the EEOC is pushing for a later deadline of September 30, 2019, to allow employers more time to collect the required data.

On April 3, 2019, the EEOC filed court documents proposing that employers be required to submit pay data to the agency by September 30, 2019. The EEOC’s filing also proposed that employers only be required to submit pay data for 2018, rather than 2017 and 2018, and describes the EEOC’s plan to use a data and analytics contractor to develop a new reporting program to collect the data.

On April 8, 2019, the employee advocacy groups told the judge that they want the EEOC to collect employers’ pay data by the same May 31, 2019, deadline that employers must submit other EEO-1 information or show why that is impossible.

After a hearing on April 16, 2019, the Judge will have the final say on the deadline. FMG will continue to watch the EEO-1 Report developments and provide updates to keep employers informed. In the meanwhile, employers should prepare to collect and report the required pay data as soon as possible.

If you have any questions or would like more information, please contact Paige Pembrook at [email protected].

Jeff Bezos Just Challenged Amazon’s Retail Rivals To Match Its $15 Minimum Wage – Is Bezos’ Challenge Checkmate or Checkout For the Push To Increase Minimum Wage?

Posted on: April 15th, 2019

By: Brad Adler and Matthew Jones

Five months ago, in November, 2018, Amazon raised its minimum wage to $15/hour. Now, Amazon’s leader is challenging his competitors in the retail sector to do the same.  In a letter to shareholders that was submitted to the SEC on April 11, 2019, Jeff Bezos stated “Today I challenge our top retail competitors (you know who you are!) to match our employee benefits and our $15 minimum wage… Do it! Better yet, go to $16 and throw the gauntlet back at us. It’s a kind of competition that will benefit everyone.”

Bezos’ aggressive challenge comes in the midst of an undercurrent of momentum for an increase in both federal and state minimum wage laws. That momentum seems to be leading to some changes at the state level. For instance, on January 1, 2019, California’s minimum wage was increased to $12/hour for companies with 26 or more employees. Likewise, Maine increased its minimum wage from $10,00 to $11.00 in 2019 and Massachusetts raised its minimum wage rate from $11.00 to $12.00.

So what effect, if any, will Bezos’ challenge and the state movements have on the federal minimum wage? Currently, the federal minimum wage is $7.25/hour, which is significantly lower than the minimum wage rate in many states (including Arizona, Arkansas, Colorado, Connecticut, Florida, Illinois, Maryland, New York and New Jersey). Just recently, the House Education and Labor Committee passed the “Raise the Wage Act,” which proposes to increase the federal minimum wage to $15/hour over the next six years. Most commentators believe that the likelihood that this bill will become law is very low, but it nevertheless is a reminder to all of the stakeholders, including employers, that the issue of minimum wage isn’t going away anytime soon.

Of course, not everyone takes kindly to the billionaire’s $15/hour challenge. In response to the challenge, Walmart’s executive vice president of corporate affairs Dan Bartless tweeted out: “Hey retail competitors out there (you know who you are) how about paying your taxes?”

If you have any questions or would like more information, please contact Brad Adler at [email protected] or Matthew Jones at [email protected].

New Rule, Who Dis? DOL Proposes Changes to Joint Employment Regulations

Posted on: April 8th, 2019

By: Will Collins

On April 1, 2019, the U.S. Department of Labor (“DOL”) announced notice of proposed rulemaking, amending the DOL regulations addressing joint employers under the federal wage and hour law (i.e. the Fair Labor Standards Act (“FLSA”)) and providing guidance and clarification long sought by employers.

The proposed changes announced last week mark the first revision to the DOL’s joint employment regulations since originally promulgated in 1958.

The proposed changes, which seek to address the situation where an employee works for his or her employer and that work simultaneously benefits another person or entity, offer a Four-Part Test to determine if an organization is a joint-employer by assessing whether that organization:

  1. Hires or fires the employee;
  2. Supervises and controls the employee’s work schedule or conditions of employment;
  3. Determines the employee’s rate and method of payment; and
  4. Maintains the employee’s employment records.

The DOL’s proposed changes also makes clear that only actual actions taken, “rather than the theoretical ability to do so under a contract, are relevant to joint employer status.”

The proposed changes also clarify that certain business models (such as franchises), practices, and agreements do not make joint employment more likely.

Under the proposed changes, examples activities not indicative of joint employment include:

  • Providing a sample handbook or other forms as a part of a franchise agreement;
  • Allowing employer to operate a facility on its premises; or
  • Offering or participating in an association health or retirement plan.

And examples of agreements that do not indicate joint employment include contractual provisions requiring an employer to maintain:

  • workplace safety practices;
  • a wage floor;
  • sexual harassment policies; or
  • other measures to encourage compliance with the law or to promote desired business practice

Take Away

The proposed changes would provide welcome clarity for employers and, through its articulation of a Four-Part Test, examples of business models, practices, and agreements that do not indicate joint employment, and the list of illustrative hypotheticals addressing specific joint employment scenarios, the proposed changes would provide needed guidance and certainty to joint employment in the FLSA context.

Now subject to a 60-day public comment period, we will continue to monitor the DOL’s proposed changes to the joint employment regulations.

If you have any questions or would like more information, please contact Will Collins at [email protected].

City of Cincinnati Joins Growing Number of States and Local Governments To Adopt Salary History Ban

Posted on: April 1st, 2019

By: Bill Buechner, Jr.

On March 13, 2019, the City of Cincinnati, Ohio adopted an ordinance prohibiting employers within the City of Cincinnati with 15 or more employees from inquiring about an applicant’s salary history (current or prior wage, benefits or other compensation) either on an application or during an interview. The ordinance also prohibits employers from relying on the salary history of an applicant in deciding whether to offer employment to an applicant or to determine the salary, benefits or other compensation for the applicant during the hiring process. The ordinance does not apply to any unit of local, state, or federal government except for the City of Cincinnati. The ordinance becomes effective in March 2020.

The City of Cincinnati’s adoption of its salary history ban is just the latest in an emerging trend of states and local governments prohibiting inquiries into the salary history of applicants. Since the beginning of 2019 alone, bans on inquiries into an applicant’s salary history have either been adopted or taken effect in Connecticut, Hawaii, Illinois, Michigan, the City of Atlanta and now the City of Cincinnati. A total of 11 states, Puerto Rico and 12 local governments have adopted some version of a ban on inquiries into an applicant’s salary history. Some bans apply only to city or state departments or agencies (New York, New Jersey, Illinois, Michigan, Pennsylvania, Atlanta, Chicago, Louisville, New Orleans, Kansas City and Pittsburgh), whereas other bans apply to public and private employers alike (California, Connecticut, Hawaii, Massachusetts, Oregon, Vermont, Puerto Rico, San Francisco, New York City, Philadelphia, Albany County NY, Suffolk County NY and Westchester County NY). Some bans prohibit not only inquiries into salary history, but also reliance on any salary information inadvertently obtained (including information voluntarily provided by the applicant), whereas other bans only prohibit inquiries into salary history. Some bans have been adopted via statute, ordinance or resolution, whereas other bans have been adopted via an executive order. The purpose of these bans is to eliminate the cycle of pay discrimination on the basis of sex that may be perpetuated by employers’ reliance on an applicant’s salary history either in making hiring decisions or pay decisions for new hires.

Bucking the trend outlined above, Michigan and Wisconsin passed statutes that went into effect in 2018 prohibiting local governments from adopting salary history bans. Also, a federal judge issued an injunction in 2018 enjoining enforcement of Philadelphia’s ban on inquiries into the salary history of applicants on First Amendment grounds. That decision, however, upheld Philadelphia’s prohibition against employers relying on an applicant’s salary history information in making hiring and pay decisions.

Each salary history ban has its own nuances and exceptions. Accordingly, employers with operations in a jurisdiction that has adopted a salary history ban in some form should consult with their employment counsel concerning what conduct is prohibited and modify their application, interviewing, hiring and pay practices as needed. Employers with operations in multiple jurisdictions (some of which may have a salary history ban) should consider whether it is prudent to follow one set of rules in jurisdictions that have adopted a salary history ban and another set of rules in jurisdictions that have not, or whether it makes more sense to adopt a uniform practice throughout the organization not to inquire about or rely on an applicant’s salary history in making hiring and pay decisions.

If you have any questions or would like more information, please contact Bill Buechner at [email protected].

Sexual Harassment Settlements in New Jersey – Out Of The Dark But Into The Unknown

Posted on: March 28th, 2019

By: Justin Boron

Earlier this month, New Jersey joined the growing group of states that – spurred on by the #MeToo movement – have passed laws regulating settlements of sexual harassment and discrimination claims.

With an asserted purpose of improving transparency and exposing workplace harassment to public view, New Jersey and other states, including California, New York, and Washington,[1] have made confidentiality agreements and non-disclosure agreements unenforceable in sexual harassment cases.[2] Several other states have similar bills pending in their respective legislatures.[3] And Congress similarly has eliminated the tax deduction for settlement of sexual harassment cases when there is a confidentiality clause related to the sexual harassment claims that is included within the settlement agreement.[4] Notably, however, the recent amendment to the New Jersey Law Against Discrimination is broader than many of its counterparts because it encompasses – in addition to sexual harassment claims – claims based on discrimination, retaliation, and harassment involving protected classes beyond sex.

Consistent with the national conversation on this issue, the passage of the New Jersey law invigorated debate about whether the legislation is constitutional, whether it is practicable, and whether it will ultimately achieve the end that it seeks.

At this point, it is simply too early to tell. But the legislation is raising interesting issues to watch as it takes hold in the legal practice across the country.

Is a confidentiality provision important to employers?

NDAs and confidentiality agreements have become part and parcel of almost every settlement agreement. They are so standard that attorneys regularly assume they will be included in a final settlement agreement without ever mentioning them in the negotiations. But the presumption begs the question of how important confidentiality is to an employer in a settlement agreement.

The answer will likely depend on the particular case and the particular employer, but typically employers will insist on a confidentiality agreement so the chatter about the dispute does not live on in the public eye (particularly through social media) even after the matter is resolved. Having said that, confidentiality is probably more important in a particularly bad sexual harassment case against a particularly high-profile employer than in an isolated claim against a mid-sized, single-shop employer. Going forward, counsel should seek input from their client on this issue given that federal law could impact tax treatment of the settlement payment and given that state law might outright prohibit it.

Will plaintiffs actually disclose the settlement and nature of the case?

This question bears on whether the legislation will achieve the transparency that it set out to accomplish. Advocates of the legislation presumably would not want to require an alleged victim to disclose his or her claim involuntarily. Indeed, some of the state laws passed, like New Jersey’s, would allow an employee to keep a settlement confidential if he or she chose to. If prior experience is a guide, many plaintiffs are relieved to have resolved what would be a difficult case involving public testimony about a sensitive subject. In those cases, an express confidentiality agreement might not even be necessary (although typically advisable from a belt and suspenders perspective).

Will it lower the amount that an employer is willing to pay to settle a case?

Again, the data set is not there yet to answer this question. But it is a legitimate concern. If an employer expects to confront continuing publicity about sexual harassment in its workplace even after settlement, particularly for a case where the employer might question the credibility of the allegations, it might be less inclined to pay as much money to resolve a single claim. Another reason would be that a public settlement could invite “copycat” claims, and the initial settlement amount would set a precedent for the value of each claim. This risk would motivate an employer to keep publicly disclosed settlements low to avoid a run of high dollar demands.

Final Takeaway

Generally, we expect employers to view this legislation skeptically, and it will continue to stoke critics of governmental restraints on the freedom of contract. But the silver lining is that the legislation elevates confidentiality agreements from being an after-thought in settlement discussions to a topic that attorneys must discuss with their clients and each other before reaching a final resolution.

If you have any questions or would like more information, please contact Justin Boron at [email protected].

[1] See Rev. Code Wash. (ARCW) § 49.44.210; NY CLS Gen Oblig § 5-336; Cal Code Civ Proc § 1001.
[2] See N.J. Senate Bill 121 at https://legiscan.com/NJ/text/S121/2018.
[3] See https://www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/global-and-cultural-effectiveness/pages/states-take-action-against-nondisclosure-agreements.aspx.  For a full list of state legislation, see https://www.jdsupra.com/legalnews/the-sexual-harassment-legislation-watch-24212/.
[4] See 26 U.S. Code § 162.