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

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

EEO-1 Portal for Pay and Hours Data to Open July 15, 2019

Posted on: July 2nd, 2019

By: Brent Bean

The EEOC reported last week that its Portal for receiving Component 2 information, employee pay and hours worked data, will open on July 15, 2019. The deadline for submission of this information by covered entities is September 30 of this year. Companies with 100 or more employees, along with federal contractors who employ 50 or more employees, are covered and are required to submit to the EEOC annual Employer Information Reports, so-called EEO-1 reports. These reports disclose information concerning the number of employees a company employs broken down by job category, race, sex, and ethnicity, known as Component 1 information. Following a recent ruling in National Women’s Law Center v. Office of Management and Budget, 2019 U.S. Dist. LEXIS 33828 (D.D.C. Mar. 4, 2019), the Commission will now begin collecting pay and hours worked data, Component 2 information.

FMG will keep you updated on activity by the Commission and the Courts.  Employers should prepare now with a thorough review of their pay structures in order to identify not only any disparities that may draw increased scrutiny, but also to discern the legitimate, non-discriminatory reasons which exist for their present pay practices. Again, the deadline for submission of Component 2 information is September 30.

If you have any questions or would like more information, please contact Brent Bean in the Labor & Employment Practice Section at [email protected].

Employers Beware: Payroll Mistakes Are Costly and Self-Audits Will Help Minimize Risk

Posted on: July 1st, 2019

By: Janet Barringer

A six-figure fine recently imposed on an employer by the Massachusetts Attorney General’s Office for wage & hour violation is an eye-opener for a few reasons. First, the financial penalty underscores employers must regularly examine their payroll systems to ensure all employees are coded with the correct rate of pay. Second, employers must communicate with their payroll providers on a regular basis to ensure all employees are coded with the correct rate of pay in compliance with all federal and state wage & hour laws. Third, errors by a payroll company are not necessarily defenses to the employer for inaccurate pay. Regularly conducting a self-audit is an important measure for the employer to help eliminate the risk of a wage & hour violation. A summary of the circumstances leading to one employer’s recent six-figure fine for wage & hour violation is as follows.

On May 23, 2019, Massachusetts Attorney General’s Office (the Commonwealth) imposed a fine of $250,000 on Eversource Energy Service Co. (“Eversource”) after concluding the company violated Massachusetts’ Wage & Hour Law. The Commonwealth determined Eversource underpaid approximately 3,000 of its workers. The Commonwealth’s investigation revealed Eversource paid many workers the incorrect rates for hourly, overtime, Sunday, nighttime, and emergency work. Eversource failed to enter codes for the differing rates in its payroll system, resulting in errors in processing the various hour and pay rates. Eversource discovered issues with its payroll system prior to the start of the Commonwealth’s investigation and had already undertaken efforts to fully compensate its employees when the investigation began. Such corrective measures did not absolve Eversource of liability.

Moreover, as a result of the Commonwealth’s investigation, Eversource conducted a comprehensive self-audit to determine the amount of underpayment, the number of employees impacted and whether wages remained outstanding. The audit revealed Eversource underpaid workers at least $828,000 from June to December 2016. The company paid back all amounts owed and allowed workers overpaid as a result of the payroll system errors to keep those funds. Eversource also agreed to pay the $250,000 fine to resolve the Commonwealth’s investigation.

Eversource’s implemented what turned out to be a faulty payroll system in 2016. The company claimed complexities of the software’s coding system caused errors in assigning rates of pay. Though Eversource made efforts to swiftly compensate employees incorrectly paid and cooperated with the Commonwealth’s investigation, Eversource nonetheless incurred a hefty fine. Moving forward, Eversource will work with its payroll technology provider to prevent this issue from reoccurring.

The recent investigation of Eversource and resulting financial penalty reveal employers must regularly examine their payroll systems to ensure all employees are coded with the correct rate of pay.  Even if employees are coded incorrectly due to an error on the part of the payroll provider, the employer is not necessarily shielded from liability. Accordingly, employers must communicate with their payroll providers on a regular basis in order to remain compliant with all federal and state wage & hour laws. Conducting regular self-audits should help the employer eliminate wage and hour violations.

If you have any questions or would like more information, please contact Janet Barringer in the National Labor & Employment Practice Section at [email protected].

Discrimination Without A Difference: Supreme Court To Decide Whether Section 1981 Requires “But For” Causation Or Whether Same-Decision Defense Applies

Posted on: June 24th, 2019

By: Michael Hill

The U.S. Supreme Court is poised to answer the question of where to draw the line when a decision is motivated in part by race discrimination. Must the plaintiff show the decision would not have been made but for his or her race, or is it sufficient to show that race was one factor behind the decision, even if the same decision would have been made for other, race-neutral reasons?

The case at issue, Comcast Corp. v. National Assoc. of African American-Owned Media, is not actually an employment discrimination case, but the Supreme Court’s decision will impact the realm of employment law because of the statute at issue, 42 U.S.C. § 1981 (“Section 1981”), prohibits race discrimination in making and enforcing contracts (which includes employment contracts).

The issue is whether Section 1981 requires “but for” causation, or whether a “mixed motive” analysis can be used. In Comcast, an African American-owned television network operator sued the cable company, alleging Comcast’s refusal to contract with the networks was racially motivated. The federal district court in California dismissed the case three times at the pleading stage, holding the complaints failed to allege facts to show Comcast had no legitimate business reasons for its decision not to contract with the networks. On appeal, a three-judge panel at the Ninth Circuit Court of Appeals unanimously reversed, holding a Section 1981 claim can proceed as long as race is alleged to have been one factor in the contract decision, even if there were other, race-neutral factors that would have led to the same decision.

The Supreme Court’s decision in Comcast will have a significant impact on the amount of damages available in cases alleges race discrimination in employment. Race discrimination claims under Section 1981 frequently are pled in tandem with Title VII of the Civil Rights Act. Title VII was amended in 1991 expressly to allow for “mixed motive” claims, but the only forms of relief available under a Title VII “mixed motive” claim are declaratory relief and attorney’s fees – no damages, back pay, or right to reinstatement. The language of Section 1981, however, contains no such limitation. Also, unlike Title VII, damages under Section 1981 are not capped; the statute of limitations is longer; and there is no requirement to submit the claim to the EEOC before suing in court. Thus, if the Supreme Court rules that Section 1981 covers “mixed motive” claims (and not just claims of “but for” discrimination), then claims alleging “mixed motive” race discrimination could become more valuable (and thus more costly to defend).

If you have questions or would like more information, please contact Michael Hill at [email protected].

Dear California Legislature the Constitution Prohibits Ex Post Facto Laws

Posted on: June 10th, 2019

By: David Molinari

If you have practiced law in the State of California for an appreciable period of time you become numb to warnings from out-of-state clients and counsel bemoaning enactments by the state’s legislature that will doom business and cause exodus of industries from the state. We are a resilient people, capable of prospering despite the “well-intentioned” actions of the state’s governing bodies.  However, did the State Assembly really intend to draft a bill that violates California Constitution Article 1, Section 9 prohibiting ex post facto laws with California Assembly Bill 5, adding Labor Code 2750.3?

Assembly Bill 5 seeks to codify the recent California Supreme Court decision of Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018.). In the Dynamex case, the State Supreme Court virtually eliminated the status of independent contractor. The California Supreme Court adopted an “ABC” test for determining whether workers are employees under California Wage Order laws. The test requires the hiring entity establish three elements to disprove employment status: (A) That the worker is free from control of the hiring entity in connection with work performance-both under the contract and in fact; (B) That the worker performs work outside the hiring entity’s usual business; and (C) That the worker is customarily engaged in an independent business of the same nature as the work performed.

Under Assembly Bill 5, the legislature seized on the ability to expand the categories of individuals eligible to receive benefits by creating a legislative instrument that would result in additional monies being deposited into the state via continuously appropriated funding from an expanded pool of employers. The Bill seeks to codify the Dynamex decision. But the legislature simply adopted the Supreme Court’s opinion which includes retroactive application. The legislative findings clearly show a financial purpose behind codifying Dynamex: The loss to the state of revenues from companies that use “misclassified” workers to avoid payment of payroll taxes, premiums for workers’ compensation, Social Security, unemployment and disability insurances. The Assembly clearly did not overlook or ignore retroactive application of Dynamex may subject this new pool of employers to criminal penalties they currently are not exposed to suffering. The Assembly in its findings concluded: Assembly Bill 5 “Would expand the definition of a crime.”

The Supreme Court held applying Dynamex retroactively was consistent with due process because the Court was “merely extending” principles previously stated in S.G. Borello & Sons, Inc v. Department of Industrial Relations, 48 Cal.3rd 341 (1989) and represented “no greater surprise than tort decisions that routinely apply retroactively.” The holding has been cited for authority for retroactive application by the 9th Circuit in Vasquez v. Jan-Pro Franchising as well as the State Courts of Appeal including the 4th District, Division 1 in Garcia v. Border Transportation Group, LLC, 28 Cal. App. 5th 558.

Codification of Dynamex threatens to create an ex post facto law that expands exposure to criminal penalties. Thus, it would seem to be in violation of California Constitution, Article 1, Section 9 that the legislature shall not pass ex post facto laws.  For example, the new pool of employers will be immediately subject to prosecution under California Labor Code Section 3700.5. Labor Code Section 3700.5 makes it a crime, punishable by imprisonment in the county jail for up to one year, or by a fine of not less than $10,000.00 or both, for any entity that fails to secure workers’ compensation insurance. A second or subsequent conviction is punishable by imprisonment for up to a year and a fine of not less than $50,000.00.

Article 1, Section 9 has been applied to past employment-related legislation; but only with respect to the Article’s prohibition against laws impairing the obligation of contract. The language of Article 1, Section 9 appears unambiguous and absolute. However, prior challenges have run into judicial interpretation that the Article may not be read literally and the prohibitions of Article 1, Section 9 may not be absolute; at least with respect to the impairment of contracts. The clause “is not to be read with literal exactness like a mathematical formula.” Torrance v. Workers’ Compensation Appeals Board, 32 Cal.3rd 371 (1982).

The guidelines for determining the constitutionality of a statute imposing an ex post facto criminal penalty applies a presumption against retrospective application unless the legislature expresses such specific intent. The legislature’s findings expressly stated Assembly Bill 5 “would expand the definition of a crime.” Is that enough of a legislative expression of intent even though the State Supreme Court only referenced civil “tort decisions” to justify retroactive application? Maybe we shouldn’t be numb to those warnings any longer.

For more information, please contact David Molinari at [email protected].