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Posts Tagged ‘#employmentlaw’

Illinois Chips Away at Use of Non-Compete Agreements for Low-Wage Earners

Posted on: October 4th, 2016

By: Timothy Holdsworth

The political storm that has been brewing around the appropriate minimum wage amount now seems to have spread into the non-compete world.  Last month, Illinois enacted the Freedom to Work Act, which prohibits employers from entering into non-compete agreements with workers that earn $13 per hour or less.  Effective January 1, 2017, this law prohibits so called “low wage workers” from entering into agreements that restrict:

  1. Working for another employer for a specified period of time;
  2. Working in a specified geographic area; or
  3. Performing “similar” work for another employer.

Any non-compete agreements containing any of these provisions entered into after January 1, 2017 will be considered “illegal and void.”  The silver lining is that this law does not prohibit employers from entering into non-solicitation, non-disclosure, or confidentiality agreements with these employees.  Nonetheless, employers operating in Illinois should review and update their new-hire paperwork for employees earning $13 per hour or less to ensure they are not relying on non-compete agreements that they will not be able to enforce.

Feel free to contact counsel at Freeman Mathis & Gary if you have any questions or would like guidance on these issues.

Amendment to Labor Code Section 226 Itemized Wage Statement Requirements Provides Welcome Relief – and some hope – to California’s High Tech Industry

Posted on: August 22nd, 2016

By: Dennis Strazulo

On July 22, 2016, Governor Brown approved Assembly Bill 2535 (AB 2535) to amend California Labor Code section 226. The amendment provides much-needed narrowing of the statute’s current requirement that an employer include hours worked on itemized wage statements for all employees except those whose compensation is solely based on salary and who are exempt from payment of overtime.

A strict reading of LC section 226, as currently written, requires all exempt California employees earning a commission or a bonus to keep track of their time. Unfortunately – nothing new in the clash between employers and the many overbroad employment laws they endure in California – this requirement does not track with the common and fair practices of most California employers. The long-standing practice of California employers has been to track hours of only non-exempt, hourly employees – not exempt employees paid by salary. However, prior to AB2535, the wording of Labor Code section 226 left employers exposed to liability for penalties if a salaried-exempt employee received so much as a holiday bonus and the employee’s itemized wage statement did not reflect hours worked.

Under the amendment, only nonexempt employees and others who are paid according to hours worked are required to have their hours logged on their wage statements. AB 2535 amends Labor Code section 226 by adding section (j) which reads, in part:

“(j) An itemized wage statement furnished by an employer pursuant to subdivision (a) shall not be required to show total hours worked by the employee if any of the following apply:
(1) The employee’s compensation is solely based on salary and the employee is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission.
(2) The employee is exempt from the payment of minimum wage and overtime under any of the following:
(A) The exemption for persons employed in an executive, administrative, or professional capacity provided in any applicable order of the Industrial Welfare Commission.
(B) The exemption for outside salespersons provided in any applicable order of the Industrial Welfare Commission.
(C) The overtime exemption for computer software professionals paid on a salaried basis provided in Section 515.5…”

AB 2535 casts a wide net to adequately protect the already equitable practices of most business in California by confirming exempt employees do not have to track their time. Despite this amendment, however, thousands of high tech employees in California remain technically misclassified as exempt from overtime under state and federal law, notwithstanding their six-figure salaries. These individuals are required to clock in and out, and take timely meal and rest breaks, pursuant to antiquated laws. Silicon Valley employers, in particular, can be hopeful Assembly Bill 2525 is a step in the right direction toward modifying wage and hour exemption laws to bring them in line with current business models. At the very least, however, this amendment to Labor Code section 226 should prevent bogging down the already impacted California labor board by aligning the law with otherwise just business practices of California employers.

Ninth Circuit Issues Two Significant FDCPA Rulings To Debt Collector Law Firms

Posted on: August 18th, 2016

By: Bill Buechner

The Fair Debt Collection Practices Act requires that debt collectors send a notice to the consumer containing certain required disclosures, either in the “initial communication” with the consumer in connection with the collection of a debt or within 5 days thereafter. 15 U.S.C. § 1692g.  In this validation notice, the debt collector must provide several disclosures, including the amount of the debt owed, the name of the creditor to whom the debt is owed, and the debt collector’s obligation to provide a verification of the debt if the consumer disputes in writing all or part of the debt within 30 days of receiving the notice.    Federal courts throughout the country have been divided as to whether these disclosure requirements apply only to the initial debt collector, or whether subsequent debt collectors must also comply with these disclosure requirements.   For example, unpublished decisions issued by the Third Circuit and Tenth Circuit previously have held that the disclosure requirements set forth in § 1692g only apply to the initial debt collector.

The Ninth Circuit, however, recently issued a decision holding that subsequent debt collectors must comply with the notice provisions of § 1692g. Hernandez v. Williams, Zinman & Parham, — F.3d —, 2016 WL 3913445 (9th Cir. July 20, 2016).  The Ninth Circuit held that the language of § 1692g was ambiguous as to whether it applies to just the initial debt collector or whether it also applies to subsequent debt collectors.  However, the Ninth Circuit concluded that the overall structure and purpose of the FDCPA demonstrates that Congress intended § 1692g to apply akso to subsequent debt collectors. Id. at *3.   In particular, the Ninth Circuit expressed concern that a contrary ruling would create significant loopholes that could hinder consumers’ efforts to dispute their debts or obtain verification of their debts. Id. at *5-8.  The Ninth Circuit also concluded that requiring subsequent debt collectors to comply with § 1692g would further the remedial purpose of the FDCPA by giving consumers updated information concerning their debts and additional opportunities to verify their debts after they have changed hands. Id. at *8-9.  Significantly, the Federal Trade Commission and the Consumer Financial Protection Bureau, which have regulatory and enforcement authority under the FDCPA, submitted amicus briefs arguing that subsequent debt collectors must comply with the notice provisions of § 1692g.

The Ninth Circuit’s ruling abrogates several district court decisions within the Ninth Circuit that held that only the initial debt collector was required to comply with the notice provisions of § 1692g. Accordingly, debt collectors that contact consumers who reside within the Ninth Circuit should send notices that comply with § 1692g even if they are not the first debt collector attempting to collect on the debt at issue.

Debt collectors who contact consumers in other jurisdictions (even those where there is favorable case law) should re-assess whether they should send notices to consumers that comply with § 1692g even if they are not the first debt collector that has attempted to collect on the debt.    To the extent that the FTC and/or the CFPB decide to file amicus briefs in other cases, courts in other jurisdictions may be persuaded to follow Hernandez and hold that subsequent debt collectors must comply with the notice provisions of § 1692g.

Another Ninth Circuit panel very recently addressed the FDCPA’s requirement that debt collectors “disclose in subsequent communications that the communication is from a “debt collector.” 15 U.S.C. § 1692e(11).   In Davis v. Hollins Law, — F.3d —, 2016 WL 4174747 (9th Cir. August 8, 2016), the debt collector and the consumer had been negotiating a possible resolution of the debt in a series of phone calls and email exchanges over the course of approximately two weeks.   At that point, the debt collector left a voicemail message with the consumer that did not expressly state that the call was from a debt collector.   Instead, the voicemail message stated, “Hello, this is a call for Michael Davis from Gregory at Hollins Law.   Please call sir, it is important, my number is 866-513-5033.”

The consumer filed suit, asserting that this voicemail message violated § 1692e(11) because it did not reveal that the voicemail message was from a debt collector. The Ninth Circuit reversed the district court’s grant of summary judgment in favor of the consumer and held that the voicemail message did not violate § 1692e(11).  The Ninth Circuit held that, given the extent of prior communications between the consumer and the debt collector (and its employee in particular), the voicemail message was sufficient to disclose that the communication was from a debt collector. Id. at *4. Thus, the Ninth Circuit reiterated that § 1692e(11) does not require the debt collector to use any specific language as long as it is sufficient to disclose that the communication is from a debt collector. Id.

Davis reached a commonsense conclusion under the facts of the case.  However, the safest course of action for debt collectors is to include an explicit statement in any voicemail message left with the consumer that the communication is from a debt collector, even if the debt collector has had an ongoing dialogue with the consumer regarding the debt.

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.

Remember Your Safety P’s and Q’s – OSHA Issues New Reporting and Anti-Retaliation Regulations

Posted on: July 11th, 2016

By:  Agne Krutules

On May 12, 2016, the Occupational Safety and Health Administration (OSHA”) issued its final rules on discrimination and injury and illness reporting.  81 Fed. Reg. 29624.  The new anti-discrimination and anti-retaliation rules go into effect on August 10, 2016.  The electronic reporting requirements become effective on January 1, 2017.

I.  Electronic Reporting Requirements

Under the new rule, certain employers will be required to electronically submit to OSHA the injury and illness data contained in their various OSHA logs. The new rule applies to two categories of employers: (1) all employers with 250 or more employees; and (2) employers with 20 to 249 employees in specific “high-risk industries.” (A list of high-risk industries can be found at https://www.osha.gov/recordkeeping/NAICScodesforelectronicsubmission.pdf).

The first category of employers is required to electronically submit OSHA 300 Logs, 301 Forms, and 300A summaries annually.  The second category of employers is required to submit OSHA 300A summaries annually.  These new requirements will be phased in, whereby employers will have to electronically submit their 300A summaries on July 1, 2017, and their 300 Logs, 301 Forms and 300A summaries on July 1, 2018.  Beginning in 2019, the information will have to be submitted by March 2 each year.

The information provided to OSHA will be available to the general public on the OSHA website.  Although OSHA allegedly will remove all the personally identifiable information from the forms, such as the employee’s name, address, and work title, OSHA’s reliance on a computer system to identify every piece of identifiable information is risky and increases the potential for a possible data breach. The public access to the injury and illnesses data also could impact the unionization process, as unions could target employees at the companies with high work related injury rate.

Previously, OSHA obtained this information from employers only during inspections or as part of its annual sampling of certain employers.  Under the new rule, the companies with high incident rates will be easily identified and could become subjects of OSHA inspections.

II.  Employee Reporting Requirements and Drug Testing

The new rules also change employer obligations for ensuring that employees report all work-related injuries and illnesses.  All employers, regardless of size, must develop employee injury and illness reporting requirements that meet certain criteria.  Specifically, the final rule requires employers to inform employees of their right to report work-related injuries without fear of retaliation.  Also, employers must ensure that the method for reporting work-related injuries is reasonable and does not deter or discourage employees from reporting.  In addition, according to OSHA, a policy must allow for reporting within a reasonable time after the employee realized that he or she had suffered a work-related injury, rather than just immediately following the injury.

In addition, the new rule prohibits mandatory post-accident drug testing because such testing discriminates against employees on the basis of their injury or illness reporting.  OSHA instructs employers to limit drug testing to situations where an employee drug use was a likely factor in the incident.  OSHA explains with examples that it “would likely not be reasonable to drug test an employee who reports a bee sting, a repetitive strain injury, or an injury caused by a lack of machine guarding or a machine or tool malfunction.”  While OSHA’s reasoning that a drug test is a form of an “adverse employment action” may not be upheld in federal courts, employers should be mindful of their policies and revise them to comply with the new regulations.

These new rules become effective on August 10, 2016, for all employers.

III.  New Retaliation Investigation Rules

OSHA now takes the position that its compliance officers can issue citations to employers who discipline workers for reporting injuries and illnesses when there is insufficient evidence that a workplace safety rule has been violated.  OSHA’s interpretation overturns the agency’s longstanding statutory framework for retaliation complaints in which specialized investigators determined whether retaliation had occurred.  It is unclear whether OSHA compliance officers will be provided formal training in employment discrimination law.  It is expected this new OSHA’s direction will result in additional unfounded retaliation citations.

This new rule becomes effective on August 10, 2016, for all employers.

IV.  Legal Challenge to the New OSHA Rules

On July 8, 2016, a coalition of companies and business groups filed a lawsuit in the District Court for the Northern District of Texas, challenging the new rules that take effect on August 10, 2016.  The case is TEXO ABC/AGC v. Labor Department, Case No. 16-01998 (N.D. Tx. July 8, 2016).  The plaintiffs seek an injunction to stop their implementation pending resolution of litigation.