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

U.S. SUPREME COURT HEARS ORAL ARGUMENTS IN TITLE VII SEXUAL ORIENTATION AND GENDER IDENTITY CASES

Posted on: October 11th, 2019

By: Bill Buechner

The United States Supreme Court heard oral arguments on Tuesday in three related and closely-watched Title VII cases. The question presented in the first two cases, which have been consolidated as Bostock v. Clayton County, ** is whether Title VII prohibits discrimination on the basis of sexual orientation. The third case, R.G. & G.R. Harris Funeral Homes, Inc. v. Equal Employment Opportunity Commission, et al., presents a related but different question as to whether Title VII prohibits discrimination on the basis of gender identity. A transcript of the Bostock oral argument in these cases can be reviewed here. A transcript of the Harris oral argument can be reviewed here, and audio of the oral arguments will be available by the end of the week on the Supreme Court’s website.

In Bostock, counsel for the employees argued that discrimination based upon one’s sexual orientation is a subset of sex discrimination. In an attempt to illustrate this point, counsel for the employees repeatedly cited a hypothetical example of a male employee who dates a female and is not terminated and a female employee who dates a female and is terminated. Counsel for the employers argued that sex and sexual orientation are different concepts and that the hypothetical invoked by the employees does not necessarily demonstrate sex discrimination because it changes two variables: the employee’s sex and the employee’s sexual orientation. Counsel for the employers also pointed out that the Court has always required an employee asserting a claim for sex discrimination under Title VII to demonstrate that one sex is being treated more favorably than the other sex.

The oral argument reflected what appeared to be a sharply divided Court, with justices on the liberal wing of the Court appearing to be sympathetic to the employees’ argument that discrimination based upon sexual orientation should constitute sex discrimination under Title VII. On the other hand, justices on the conservative wing of the Court appeared to agree with the employers’ argument that discrimination based upon sexual orientation is separate and distinct from sex discrimination, that it therefore is not protected by Title VII, and that its addition falls within the purview of Congress and not the Court.

In response to questions by Justice Samuel Alito, counsel for the employees conceded that if a decisionmaker decides not to hire an applicant because of the applicant’s sexual orientation and does not know the applicant’s sex at the time of that decision, then there is no viable claim for sex discrimination. Counsel for the employees also conceded that sexual orientation and sex are different concepts. These responses arguably provide further support for the employers’ contention that a ruling in favor of the employees would in effect be a judicial amendment to Title VII.

Justice Neil Gorsuch, who is generally regarded as a conservative justice, asked counsel for the employers whether sex may be at least a motivating factor along with sexual orientation, when an employer makes a decision based on sexual orientation. Counsel for the employers responded that sex is not even a motivating factor in that scenario. Justice Gorsuch later asked counsel for the employee in the Harris case whether a decision of this magnitude should be made by the legislature and not by the courts. In response, counsel for the employee asserted that there has not been any upheaval with respect to lower court rulings in favor of transgendered employees.

The arguments in Harris substantially overlapped the arguments made in Bostock, with even more focus on bathroom usage and whether (for example) prohibiting a biological male who identifies as female from using the women’s restroom violates Title VII. Counsel for the employee, Aimee Stephens, argued that the funeral home terminated her for identifying as a woman only because she was assigned the male sex at birth and for failure to comply with stereotypes about how men and women should behave. Counsel for the funeral home responded that sex and transgender status are different concepts and that a ruling in favor of the employee would invalidate all sex-specific policies based on sex, such as bathroom usage, showers, overnight facilities and dress codes.

Jeffrey M. Harris of Consovoy McCarthy in Arlington, Va. presented oral argument in Bostock on behalf of Clayton County and Altitude Express, Inc. (the employer in the second sexual orientation case). Stanford University law school professor Pamela S. Karlan presented oral argument on behalf of the employees in Bostock (Gerald Bostock and the estate of Donald Zarda). David D. Cole of the American Civil Liberties Union presented oral argument in Harris on behalf of the employee (Stephens). John J. Bursch of Alliance Defending Freedom presented oral argument in Harris on behalf of the funeral home. In addition, the U.S. Solicitor General, Noel Francisco, participated in oral argument in support of the employers in all three cases.

We anticipate that the Court will issue its ruling by the end of June.

** FMG attorneys Jack Hancock, Bill Buechner and Michael Hill represented Clayton County.

DOL Releases New Overtime Rule And Increases Minimum Salary To $35,568

Posted on: September 30th, 2019

By: Brad Adler

On Tuesday, September 24, 2019, the U.S. Department of Labor released its long-awaited new minimum salary threshold for the Fair Labor Standards Act’s white collar exemptions (i.e., executive, administrative and professional exemptions).  Under the new rule, which is set to take effect on January 1, 2020, the DOL has set the minimum salary threshold at $684 per week, or $35,568 per year (up from $23,660).  The DOL anticipates that the updated threshold will expand overtime pay obligations to an estimated 1.3 million additional workers.

Commenting on the new rule, acting U.S. Secretary of Labor Patrick Pizzella stated: “For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans. . .This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”

Here are the highlights of the new rule:

  • The minimum salary threshold will be $684 per week, which equates to $35,568 per year.
  • Employers will still be able to use a nondiscretionary bonus, incentive pay or commissions to satisfy up to 10% of the standard salary level for the white collar exemptions (and the highly compensation exemption)
    • A one-time “catch-up” payment of up to 10% of the total standard salary level may be made within one pay period falling at the end of the 52-week pay period for those employees who have not earned enough to maintain their exempt status.
  • The highly compensated employee exemption’s additional total annual compensation requirement will increase to $107,432 per year.
  • The new rule did not make any changes to the duties test of the white collar exemptions
  • There are no automatic increases included within this new rule

Finally, while it seems inevitable that employee advocate groups are going to challenge the threshold, which they wanted to see much higher, we still believe it makes sense for employers to prepare for this new rule now.  As a part of their preparation, employers should be assessing whether they have employees they are classifying as exempt, but are making less than the new $35,568 requirement.  If so, employers need to decide whether to increase the employee’s salary, convert the employee to a non-exempt employee paid on an hourly basis or consider use of the fluctuating workweek method.

Please reach out to Brad Adler (Chair of FMG’s National Labor & Employment Practice Group) at [email protected] if you have any questions or need any assistance in navigating the new overtime rule.

Arbitration and Class Action Waivers Upheld in ERISA Plans, but an Industry Shift Toward Arbitration Remains to be Seen

Posted on: September 26th, 2019

By: Justin Boron

The judicial trend in favor of arbitration and class action waivers continues—this time in employee benefit plans.

Last month, a Ninth Circuit Court of Appeals panel validated an arbitration and class action waiver agreement contained in an employee retirement plan, and in doing so, it overturned a 1984 precedent holding that fiduciary claims under the Employee Retirement Income Security Act (“ERISA”) could not be arbitrated.

In a pair of opinions issued in Dorman v. Charles Schwab Corp.,[1] the panel found that the reasoning in Amaro v. Continental Can Company,[2] was irreconcilable with recent opinions from the U.S. Supreme Court, including American Express Co. v. Italian Colors Rest., which had endorsed an arbitrator’s competence to interpret and apply federal statutes.[3]

The Dorman decision arose from a plan participant’s class action alleging a breach of fiduciary duty that resulted from the inclusion of Schwab affiliated investment funds in the 401k plan.  As yet another affirmation of arbitration and class action waiver agreements, it is sure to attract the attention of plan sponsors and plan fiduciaries.

But it might not necessarily be the game changer that previous class action waiver decisions have proven to be in the consumer and employment context, where companies have rushed to fold class action waivers into sales and employment agreements.

For one, several other circuit courts of appeal had already upheld arbitration agreements in plan documents.[4]  So at least in these circuits, plan sponsors have already been free to include arbitration agreements in employee benefit and retirement plans like the 401k plan at issue in Dorman.  Plaintiff also requested en banc rehearing earlier this month, so Amaro could still be revived.

Other reasons are more practical.  Including class action waivers in arbitration agreements might stave off a class action asserted in federal court.  But in contrast to their effect on wage-and-hour and consumer-protection class actions, class action waivers might not necessarily limit exposure on fiduciary claims under ERISA, which are themselves a kind of representative action brought on behalf of the plan for monetary relief.[5]  The Dorman and other appellate decisions have not expressly addressed whether a plan’s arbitration agreement could confine the action to individual monetary relief as opposed to plan-wide relief.  As a result, any judgment might benefit the plan and plan participants as a whole regardless of whether the action is styled as a class action.

Additionally, the cost savings attributed to arbitration of employment and consumer claims might not be present in ERISA claims, which are often decided on the papers in federal court. In contrast, arbitration likely requires the same amount of attorney time as in federal court, with the added costs of the arbitrator(s) and an arbitration hearing.  Combine the added costs with a limited standard of review, and it might not net a more favorable result than proceeding in federal court in a class action.

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

[1] Dorman v. Charles Schwab Corp., No. 18-cv-15281, 2019 U.S. App. LEXIS 24735 (9th Cir. Aug. 20, 2019), No. 18-cv-15281, 2019 U.S. App. LEXIS 24791 (9th Cir. Aug. 20, 2019).
[2] 724 F.2d 747 (9th Cir. 1984).
[3] 570 U.S. 228, 233 (2013).
[4] See, e.g., Williams v. Imhoff, 203 F.3d 758 (10th Cir. 2000); Kramer v. Smith Barney, 80 F.3d 1080 (5th Cir. 1996); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, 7 F.3d 1110 (3d Cir. 1993); Bird v. Shearson Lehman/American Express, 926 F.2d 116 (2d Cir. 1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475 (8th Cir. 1988).
[5] 29 U.S.C. § 1132(a)(2); 29 U.S.C. § 1109.

Interviewing on a Clean Slate: Employers’ Obligations Under Pennsylvania’s Newly Enacted Clean Slate Law

Posted on: August 26th, 2019

By: Sean Riley

Pennsylvania recently became the first state in the country to enact clean slate legislation, which provides for the automatic sealing of non-violent misdemeanor criminal records for those who qualify after a set period of time. The law is expected to seal approximately 30 million cases by June 2020 which corresponds to roughly half of the courts’ entire database. The Clean Slate Law prohibits employers from requesting an individual’s criminal history records that have been expunged or sealed pursuant to the new law and expressly authorizes an applicant to respond to an inquiry as if the offense did not occur. However, the law also provides immunity from liability for employers who hire an individual with an expunged or sealed criminal record in a civil action based upon damages suffered as a result of the employee’s criminal or unlawful actions and the individual’s suitability for employment. Accordingly, employers utilizing form applications requesting the disclosure of an applicant’s criminal history should now include a disclaimer on their applications that the candidate should not provide information about criminal conviction that has been expunged or sealed pursuant to law. While Pennsylvania is the first state to enact clean slate legislation, similar measures are catching on in other states such as Michigan and Colorado and similar legislation aiming to automatically clear certain federal records was introduced in Congress last year.

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

Massachusetts Paid Family and Medical Leave Law: Planning Ahead and Important Deadlines

Posted on: July 2nd, 2019

By: Jennifer Markowski and Zinnia Khan

The Massachusetts Department of Family and Medical Leave (“DFML”) recently extended certain deadlines for the Paid Family and Medical Leave Law (“PFML”), giving employers additional time to prepare for the changes ahead. The statute is anticipated to become fully effective in 2021, but the following interim deadlines are coming up this year:

  • September 30, 2019: Notice of the statute must be distributed to employees and employees must be given the opportunity to either acknowledge or decline to acknowledge receipt of the notice. Although employers may create their own, the DFML has published a template notice.
  • October 1, 2019: Employer contributions begin. Employers must begin withholding PFML contributions from employee qualifying earnings and begin making employer contributions (if applicable).
  • December 20, 2019: Employers seeking an exemption that will excuse them from all contributions must submit their private plan exemption by this date. This exemption is available to employers that offer leave benefits that are at least as generous as PFML.

Although similar in scope to the Family Medical Leave Act (“FMLA”), the PMFL provides more extensive benefits including paid leave and more leave time. It also provides for payments to eligible former employees whose employment ended within 26 weeks of the start of their leave as well as to independent contractors if they make up more than fifty percent of an employer’s staff. Moreover, the definition of a “family member” under PMLA is more expansive than under the FMLA. Leave under PFML is allowed to run concurrently with leave under FMLA.

Some of the key provisions of PFML are as follows:

  • Applies to employers of all sizes.
  • Municipalities, districts or political subdivisions may opt out.
  • Employers that already offer paid leave may also opt out, so long as the benefits they offer meet or exceed those under PFML.
  • Employees are eligible for up to 20 weeks of paid medical leave if they or a family member has a serious illness or injury, 12 weeks of paid leave to care for and bond with a new child, or 26 weeks of leave to care for an injured family servicemember.
  • Employees are permitted a maximum of 26 weeks leave per calendar year.
  • Leave under the new law will be paid based on a sliding scale of an employee’s income up to the maximum of $850 a week (which is the current cap of 64% of the average state weekly wage).
  • The first seven days of an employee’s leave are not paid, though they can be covered by sick or vacation time.
  • After returning from leave, an employee must be restored to the same or equivalent position that he or she previously held.
  • Employers with fewer than 25 workers will not have to contribute, but employees will still have to pay their portion of the tax.

In the coming months, employers should take steps to ensure timely compliance with PMFL. This is a good time to finalize the required notice form and create a plan for distribution. Also, employers should consider whether existing plans exempt them from PFML and, if so, prepare to submit a timely exemption request. Employers should speak with their payroll providers and confirm that the providers are prepared for the upcoming changes and ready to implement the required deductions. This is also a good time for employers to review their policies and handbooks to ensure that they are up to date and perhaps consider a training on responding to leave requests as they are likely to increase when the law goes into effect.

If you have any questions about this article or any other employment matter, please do not hesitate to call or email Jennifer Markowski at (617) 807-8962 [email protected] or any other attorney in Freeman Mathis & Gary, LLP’s Labor and Employment group: https://www.fmglaw.com/labor_employment_law.php