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Archive for the ‘Employment Law Blog – MA’ Category

Massachusetts Joins Jurisdictions Prohibiting Class-Wide Arbitration of Wage Claims Absent Agreement Expressly Permitting Class Actions

Posted on: May 18th, 2020

By: Kevin Kenneally, Janet Barringer and William Gildea

In a further blow to class action claimants and lawyers, a Massachusetts Superior Court Judge recently ruled a car salesman could not arbitrate Wage Act claims on behalf of coworkers absent an express provision in the employment agreement permitting such a class action.   In Grieco Enterprises, Inc. v. McNamara, the employer sought a declaratory judgment ruling that an employee could not arbitrate wage claims on behalf of a putative class of employees even if his employment contract was silent on the issue and did not expressly prohibit or allow for such a class action. This favorable outcome for employers and insurers follows a similar 2019 ruling by the Supreme Court of the United States holding an ambiguous employment agreement cannot be the basis to compel class-wide arbitration.

In the Massachusetts state court arbitration matter, the employee claimed his employer failed to pay him—and others—required overtime and Sunday-hours premium in violation of state wage laws.  He demanded arbitration on behalf of himself and other similarly-situated commission-only salespeople.  In response, the employer filed the declaratory judgment action in Massachusetts state court seeking determination whether a class action in this instance is permissible.  The Massachusetts Superior Court held class action arbitration is not permissible because the parties’ employment agreement did not expressly permit employees to arbitrate class actions.  The Court held the employee may proceed to arbitration solely on an individual basis. 

The decision in McNamara is garnering attention due to the state’s decision last year concerning commission-based salespeople, Sullivan v. Sleepy’s LLC.  In Sleepy’s, the Massachusetts Supreme Judicial Court held commission-paid retail salespeople are entitled to “time-and-a-half” overtime compensation based on the statutory minimum wage — even when their commissions always met or exceeded the state minimum.  Sleepy’s specifically held the overtime and Sunday premium wage statutes applied to commission-paid sales staff.  The McNamara claimant sought to apply this ruling to an entire class of workers rather than having each worker bring an individual claim.  The employment agreement at issue contained a general statement in the agreement it was “in conformity with” Massachusetts Rules of Civil Procedure—which claimant contended includes procedural rules for class actions, thus tacitly subjecting the employer to class arbitration.  The Superior Court rejected the argument and held the parties to the contract did not expressly agree to engage in class action arbitration.  The judge in McNamara held that if she were to permit the application of an unclear provision to authorize class actions, “unrepresented employees could be bound by an arbitration that he or she did not individually consent to participate in.  Such a result is contrary to the legal underpinnings for arbitration, specifically that it is a consensual contractual matter.”

In 2019, the U.S. Supreme Court decided Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407, 587 US __, 203 L. Ed. 2d 636  (2019), which was seen as a setback to workers’ ability to join or aggregate the individual claims of other workers who had agreed in their employment contracts to an arbitration forum.  Lamps Plus held in claims subject to the Federal Arbitration Act (“FAA”) an ambiguous agreement cannot be the necessary contractually-agreed basis to force an employer to submit to class-wide arbitration.  The high court agreed with the employer there simply was no foundational agreement to arbitrate the class action and the lower court acted contrary to the primary purpose of the FAA.  Lamps Plus held a lower court may not compel arbitration on a class-wide basis when an agreement is “silent” on the availability of such arbitration and “that private agreements to arbitrate are enforced according to their terms.”  

Employers who incorporate arbitration provisions in their employment agreements for individual basis only will benefit by the uniform application of law in both state and federal courts.  Employers in Massachusetts have certainty absent a specific provision – or even in the face of a vague arbitration provision – class-wide arbitration will not be available to employees whether the claims are based on federal or state law.

If you have questions or would like more information, please contact Kevin Kenneally at [email protected], Janet Barringer at [email protected] or William Gildea at [email protected].

U.S. Department of Education Announces Temporary Halting of Wage Garnishments

Posted on: March 30th, 2020

By: Jeffrey A. Hord

On March 25, 2020, the Department of Education (DOE) announced that it will temporarily halt seizing wages and/or withholding tax refunds from borrowers who have defaulted on their student loans held by the federal government.  As part of the Trump Administration’s multifaceted response to the COVID-19 national emergency, the DOE has suspended any wage garnishments and stopped all requests to the U.S. Treasury Department to withhold money from defaulted borrowers.  The directive is retroactive to March 13, 2020, and will last for a period of at least sixty (60) days.  The DOE also instructed private collection agencies to stop all “proactive collection activities,” including making phone calls to borrowers and issuing collection letters and billing statements.

Employers who are responsible for properly processing wage garnishments should take note of this announcement.  In its official press release, the DOE emphasized that, while borrowers whose paychecks were being garnished will now be entitled to their full wage, it is the responsibility of the employer to make the necessary change to the employee’s paycheck:

“The Department must rely on employers to make the change to borrowers’ paychecks, so it will monitor employers’ compliance with the request to stop wage garnishment. Borrowers whose wages continue to be garnished after March 13 should contact their employers’ human resources department.”

While the directive unambiguously prohibits “new” wage garnishments, Social Security offsets, and collection actions, the DOE’s announcement leaves some room for doubt as to whether garnishments and offsets put into effect prior to March 13, 2020 are similarly impacted.  However, in a contemporaneous set of FAQ published on the DOE’s official Federal Student Aid website, the Department seemed to clearly signal its intent:

If your wages continue to be garnished after the president’s March 13, 2020, announcement, you should contact your employer’s human resources department. If DOE receives funds from your paycheck that should have been stopped as a result of the March 13 announcement, we will refund your garnished wages.

The good news for employers who make payments towards their employees’ outstanding student loans as a benefit of employment is that they can now do so tax-free until January 1, 2021, for up to $5,250 annually.

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis.  On April 2, we will discuss the impact of Coronavirus on law enforcement.  Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Employers Watch Out: New DOL Rule May Limit Joint Employer Liability

Posted on: January 27th, 2020

By: Janet Barringer

New Rule

A new rule goes into effect March 16, 2020, per the Department of Labor (DOL), as to when a “joint employer” is equally liable under federal wage and hour laws.  This new rule is an attempt to limit “joint employer” liability.  The determination as to whether a scenario is one of joint employment turns on a new four-factor test.

The test asks DOES THE BUSINESS IN QUESTION:

  1. Hire or terminate the employee, which is not to be confused with the “power” to hire or fire the employee;
  2. Supervise and control the employee’s schedule or conditions of employment to a substantial degree;
  3. Determine the employee’s rates and methods of payment; and
  4. Maintain the employee’s personnel/employment records.

According to the DOL, no single factor is dispositive in determining joint-employer status.  Instead, the weight given to each of the four factors depends on the circumstances at hand.  Most likely, Courts will decide the balancing test among these four factors, as the DOL has provided little guidance on how to do so.

Beware of Catch-all Provision

Employers should be aware there is an alternative “catch-all” provision in the DOL rule which states factors not specifically included in the four-part test may be considered in the determination of whether a joint employment relationship exists.  However, this catch-all provision only applies if the potential joint employer exercises “significant control” over the terms and conditions of the employee’s work.  The practical application of this catch-all provision remains to be seen, and will likely depend on Courts’ interpretation.

Employers Excluded under New Rule

The DOL helpfully included in its guidance several common business arrangements not factored into its analysis of a potential joint employment relationship.  These include the following factors:

  1. Existence of a franchisee/franchisor relationship, including entering into a brand and supply agreement;
  2. An unexercised right to control the employee’s terms and conditions of employment. Standard contractual language reserving a right to act will not be enough to establish a joint employment arrangement under the four-factor test;
  3. The employee’s economic dependence on the potential joint employer, including whether the employee is in a specialized position or has the opportunity to make a profit or incur a loss based on performance;
  4. A potential joint employer’s contractual agreements requiring the employer to comply with specific legal obligations or meet certain standards to protect the health and safety of its employees, i.e., compliance with wage and hour laws or maintenance of sexual harassment policies;
  5. Management of quality control standards implemented by the potential joint employer, such as standards ensuring the consistent quality of products;
  6. Whether the potential joint employer provides standardized human resources forms, including employee handbook templates;
  7. A potential joint employer’s offer of health or retirement plans to the employer or participation in such plans with the employer; or
  8. Joint participation in an apprenticeship program with the employer.

Safeguards for Employers to Take Before March 16, 2020

Before the new rule for joint employer goes into effect on March 16, 2020, businesses should take account of their procedures to confirm they are protected under the rule’s four-factor test. Employers should also consider working with their counsel to determine, and create, if necessary, business changes to maximize their ability in taking advantage of the new joint employment standard.  The updated rule may provide more flexibility and certainty when it comes to employers’ wage and hour responsibilities.

If you have any questions or would like more information, please contact Janet Barringer in the National Labor & Employment Practice Section 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