Firm News

March 27, 2017

New DOL Overtime Rule Blocked by Federal Court in Texas (March 2017)

Filed under: Legal Updates — marybjohnson @ 12:36 pm

A federal court in Texas has put on hold (for now) nationwide implementation of the new rule by the U.S. Department of Labor (DOL) raising the salary requirement for certain types of employees to be exempt from federal overtime requirements.

The New DOL Overtime Rule

Earlier this year, the DOL issued a new rule that changed the requirements for overtime exemptions under the federal Fair Labor Standards Act (FLSA) for executive, administrative, and professional employees by raising the required salary level from about $23,660 per year to $47,476 per year.  Under the new rule, the salary threshold would automatically reset (presumably increase) every three years.  There has been a large outcry among employers and business groups since the new rule was announced.  It was scheduled to take effect on December 1, 2016.

The injunction means that the DOL’s new rule will not go into effect as of December 1 unless the court takes additional action or an appeals court issues a decision before then, there likely will be an appeal, and it is unclear whether the new rule ultimately will be invalidated in whole or in part.

The Court’s Ruling

On November 22, 2016, US. District Judge Amos Mazzant issued an order enjoining nationwide implementation of the DOL’s new rule “pending further order of this Court.”  This means that thousands of employers will not be required to meet the heightened salary threshold for FLSA overtime

Exemptions for executive, administrative, and professional employees.

The Court’s Memorandum Opinion and Order concludes that the DOL did not have authority to set a heightened salary threshold and effectively supplant the “duties test” for these exemptions.  The Court reasoned that Congress intended these exemptions to depend on the employees’ duties, not on their salary levels.

The Court also noted, but did not address, an argument that the new rule’s mechanism for automatically resetting the required salary level every three years is invalid because it would not include a separate public notice and comment process required for new administrative regulations.

What This Ruling Means For Employers

The Court’s injunction means that employers are not required to comply with the DOL’s new rule pending further ruling from the Court, which means that salary increases are not necessary at this time.  Thus, employers may decide to postpone implementing or announcing any salary increases that are being planned solely to comply with the new rule.  (If employers already have increased salaries in contemplation of the new rule, they should consider employee relations issues changes.)

Employers also may decide to postpone reclassifying salaried employees who are currently deemed exempt to non-exempt, to the extent such changes are being planned solely because of the DOL’s new rule.  However, to the extent employers have salaried employees who do not meet the duties test for an exemption (regardless of the new salary level requirement), employers should not necessarily delay reclassifying them as non-exempt (hourly or salaried) to comply with existing law, given that the new rule only relates to the salary level and not the duties requirement.

We will be glad to discuss your Company’s specific situation and how the recent ruling may affect its plans.  Please do not hesitate to contact us.

September 21, 2015

NLRB Widens the Goalposts for Labor Union Organizers (September 2015)

Filed under: Legal Updates — admin @ 7:01 pm

A recent decision by the National Labor Relations Board could have a major impact on tens of thousands of employees who never thought that they would have to worry about labor unions.  In Browning Ferris Industries of California, Inc. et al., NLRB Case No. 32-RC-109684 (August 27, 2015), a majority of the five member Board held that a company was required to recognize and bargain with a union that was elected not by its own employees but instead by the employees of a services contractor.  In so deciding (over vehement dissent by two members), the Board overturned longstanding precedent and applied a new standard for determining “joint employer” status.

For decades, joint employer status and obligations applied only to entities that exercised “direct and immediate” control over workers, which generally excluded employees of outside contractors or franchisees. Under the Board’s new interpretation, an entity could be deemed a joint employer of a contractor’s employees — and be required to recognize and bargain with a union — if it has only indirect control over working conditions or has the right to control such conditions, even if it does not actually exercise that right.

By expanding joint employer status to include entities who merely have the right to control some aspects of the workplace indirectly, it is conceivable that collective bargaining obligations could apply to entities that have no actual employees at a particular location, such as general contractors, franchisors, or even property owners who engage outside contractors for cleaning or landscaping services. The Board’s new interpretation potentially could even restrict such an entity’s rights to terminate a service contract if such a termination could be deemed to discriminate against workers for whom the entity is deemed to be a joint employer.

To discuss how to prepare for the possibility that your business could be targeted for union organizing activity, please contact one of our attorneys.

March 11, 2013

11th Circuit: Bosses Can Be Personally Liable For Unpaid Overtime Even If Workers Are Undocumented (March 2013)

Filed under: Legal Updates — admin @ 10:24 am

March 2013 – Many employers would be surprised to learn not only that undocumented workers can sue for unpaid overtime under the federal Fair Labor Standards Act (FLSA), but also that company supervisors, officers, directors, and owners can be personally liable for such damages.  In Lamonica et al. v. Safe Hurricane Shutters, Inc. et al. (No. 07-cv-61295), the federal 11th Circuit Court of Appeals (covering Georgia, Florida, and Alabama) recently held that two salaried workers were entitled to recover back pay, liquidated damages, and attorneys’ fees from their employer, a hurricane shutter installer, and two of the company’s owners.  At trial, the plaintiffs were found to be non-exempt workers who were entitled to overtime.

The Court rejected arguments by the employer and two individual owners that the workers should be precluded from recovering back pay because one or both were undocumented aliens and allegedly used false social security numbers to obtain the jobs.  Regardless of any alleged wrongdoing by the workers, the Court held, the employer still was responsible for payment of wages under the FLSA for work already performed.  The Court distinguished a previous decision by the U.S. Supreme Court, Hoffman Plastic Compounds, Inc. v. NLRB (2002), which held that undocumented workers could not recover back wages for wrongful termination because they were not entitled to the job in the first place.  In that case, the 11th Circuit observed, the workers had not already performed work for which they were seeking compensation.

Further, even though the two owners were minority shareholders and were not present in the workplace for more than a few days or weeks each month, the Court held that they had “sufficient control of the company’s financial affairs to cause the corporation to compensate or not to compensate employees in accordance with the FLSA,” and therefore they could be deemed “employers” along with the company.  As a result, the Court held that the owners/board members were individually and personally liable to the plaintiffs.

This case highlights the importance to business owners and managers alike of ensuring that all employees are properly classified (as either exempt or non-exempt from overtime requirements) and compensated under the FLSA.  Overtime pay requirements are applied rigidly and are the source of a surprisingly large amount of employment litigation.  The best way to avoid such litigation is to have a qualified employment attorney conduct a privileged audit of pay practices, including an evaluation of all positions as either exempt or non-exempt.

February 25, 2013

U.S. Supreme Court will decide standard of proof in Title VII retaliation cases (February 2013)

Filed under: Legal Updates — admin @ 1:04 pm

February 2013 – In what is likely to be one of the more important decisions in the employment law arena this year, the U.S. Supreme Court will hear a case in which it will decide whether, in a Title VII retaliation action, a plaintiff employee must prove that the employer would not have taken an adverse employment action but for the employee’s protected activity, or instead need only prove that the protected activity was just one of the motivating factors for the adverse action.

In University of Texas Southwestern Medical Center v. Nassar, 674 F.3d 448 (5th Cir. 2012), cert. granted, 81 U.S.L.W. 3234 (U.S., Jan. 18, 2013) (No. 12-484), the plaintiff was a university faculty member who alleged that he was constructively discharged as a result of workplace harassment and discrimination based on his Middle Eastern ancestry.  He also claimed that, after resigning his position, the University retaliated against him by blocking his employment at a hospital affiliated with the University.  A jury found that the university retaliated against Nassar and awarded him close to $4 million in back pay, compensatory damages, attorneys’ fees, and costs.  The trial court had instructed the jury that retaliation could be found based on a “mixed-motive” theory (i.e., that the employee’s protected activity was one of several motivating factors).  The university appealed, and the Fifth Circuit Court of Appeals affirmed, finding no error in the instruction.  Citing a split in the circuits, the Supreme Court granted certiorari.

In a “mixed motive” case, an employee may prove discrimination even if the employer simultaneously possessed a legitimate, nondiscriminatory reason for taking adverse action against the employee.  In other words, the employee need only demonstrate that retaliation was one of the motives for the adverse action.  On the other hand, if the “but for” standard applies, the employee must demonstrate that the adverse action would not have occurred but for the employer’s discriminatory motive.  In Nasser, although the University presented evidence of a legitimate, non-retaliatory reason for blocking Nasser’s subsequent job opportunity, Nasser offered evidence that the University’s action was in retaliation for asserting a claim of harassment.  Instructed on the “mixed motive” theory, the jury found that the University illegally retaliated against Nasser in violation of Title VII.

The Supreme Court’s decision will have broad implications. The Court has announced that it will consider not only whether Title VII’s retaliation provision requires “but for” causation, but also whether “other similarly worded employment statutes” (e.g., the Americans With Disabilities Act, etc.) require this level of proof.  The “but for” standard is preferred by employers, since it requires a plaintiff to demonstrate that retaliation was the only reason for the adverse action.  According to the Supreme Court’s website, oral argument in this case will be held on April 24, 2013.

January 28, 2013

Reminder from Texas That Oral Employment Agreements Can Be Enforced (December 2012)

Filed under: Legal Updates — admin @ 11:02 am

December 2012 – A recent case from Texas serves as a good reminder that promises made in the workplace can be enforced under certain circumstances, even if they are not in writing.  The Texas Court of Appeals was not persuaded by an employer’s argument that an agreement to continue providing sales commissions to its employee even after his employment ended was unenforceable simply because it was an oral agreement.  The court explained that the agreement constituted an enforceable oral employment agreement of indefinite duration.  Because the agreement could potentially be fully performed by the parties in less than a year, the agreement was not rendered void under the Statute of Frauds, which normally requires certain contracts to be in writing.  See Kalmus v. Ella Oliver and Financial Necessities Network, Inc., No. 05-11-00486-CV (Tex App., November 20, 2012).  Oral employment agreements can be enforceable in most states.  In Georgia, for example, employees have successfully enforced such oral employment agreements to obtain, among other things, the right to participate in a profit sharing plan (see Wood v. Dan P. Holl & Co., 169 Ga. App. 839 (1984)) and the right to receive three months’ notice before termination (see Parker v. Crider Poultry, Inc., 275 Ga. 361 (2002)).

September 28, 2012

Employer Wellness Program Did not Violate ADA (September 2012)

Filed under: Legal Updates — admin @ 3:42 pm

September 2012 – A decision by the U.S. Court of Appeals for the Eleventh Circuit may encourage employers to offset rising healthcare costs through the use of wellness programs and the implementation of fines for nonparticipation in such programs. According to the Eleventh Circuit, under certain circumstances the medical examinations and inquiries connected with wellness programs do not violate The Americans with Disabilities Act’s prohibition on “required” medical examinations and disability-related inquiries, even when employers charge fees for nonparticipation in such programs. Wellness programs can fall within the ADA’s “safe harbor” provision, which exempts certain insurance plans from the ADA’s general prohibitions, as was successfully argued by Broward County, Florida, in defense of a class action filed by one of its former employees after the County instituted a $20 bi-weekly nonparticipation fee. See Seff v. Broward County, Florida, No. 11-12217 (11th Cir., Aug. 20, 2012).

The former employee argued that the County’s wellness program did not qualify as a term of a “bona fide benefit plan” under the ADA, and therefore did not fall within the safe harbor provision, because the wellness program was not explicitly identified in the group health plan. The Eleventh Circuit rejected that argument, finding that the wellness program was a term of the group health plan because it was (1) part of the County’s contract with the insurer; (2) only available to group plan enrollees; and (3) presented as part of the group health plan in at least two employee handouts.

It is important to note that, while the County charged a fee for nonparticipation in its program, participation in the wellness program was not ultimately a condition for enrollment in the group health plan. Moreover, the insurer, not the County, utilized and had access to the information gathered from the examinations and inquiries. While pursuing a plan like the one utilized by Broward County may be attractive, obtain legal advice before instituting such a plan, especially if your business considers implementing the type of paycheck deductions used by Broward County, which tend to provoke litigation.

Court of Appeals Emphasizes Duty of Employer in Harassment Case (August 2012)

Filed under: Legal Updates — admin @ 3:40 pm

August 2012 — The Seventh Circuit Court of Appeals recently affirmed a finding of liability and reinstated a punitive damages award against an automobile manufacturer based on a jury’s reasonable conclusion that the employer did not promptly or adequately respond to an employee’s complaints of harassment. Although the employee was unable to identify who had left harassing and threatening notes in his toolbox and work area and vandalized his vehicles, the jury found that the employer could have done more to investigate and address the allegations. See May v. Chrysler Group, LLC, Nos. 11-3000 & 11-3109 (7th Cir., August 23, 2012). This decision highlights the need for every employer to take prompt and appropriate actions in response to employee complaints of harassment. Even in the face of egregious harassment by an employee, the employer can avoid liability by implementing reasonable policies and practices (including anti-harassment training) and by promptly investigating and taking reasonable steps to stop harassing conduct.

Georgia Non-Compete Law Effective May 11, 2011 (June 2012)

Filed under: Legal Updates — admin @ 3:36 pm

June 2012 — The Eleventh Circuit Court of Appeals has ruled that Georgia’s new covenant laws (O.C.G.A. § 13-8-51 et seq.) greatly enhancing the enforceability of employment-related restrictive covenants in Georgia do not apply to contracts entered into prior to May 11, 2011. While the ultimate authority on this question of Georgia law is the Supreme Court of Georgia, which has not ruled on this issue, for now the ruling by the Eleventh Circuit in Becham v. Crosslink Orthopaedics (June 4, 2012) should be considered definitive: covenant agreements entered into prior to May 11, 2011, will remain governed by Georgia’s traditional common law, hostile to enforceability. For covenant agreements entered into on or after May 11, 2011, Georgia’s new laws providing for greater enforceability of restrictive covenants will govern.

EEOC Issues Guidance on Criminal Records (April 2012)

Filed under: Legal Updates — admin @ 3:32 pm

April 2012 — The Equal Employment Opportunity Commission recently issued new “Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.” The Guidance addresses the use of criminal records by employers when making hiring or other employment decisions. As general rule, Title VII does not prohibit employers from seeking criminal history information from applicants and employees, so long as the use of such information does not result in unlawful disparate treatment or disparate impact on the basis of race, national origin, or other classification protected by Title VII. The new Guidance consolidates prior guidelines on these topics and incorporates various federal court decisions published in the past two decades. EEOC provides examples of policies and practices relating to the use of criminal histories that will consistently support a defense that the practice is “job-related and consistent with business necessity.” The EEOC also suggests certain “best practices” to avoid liability, such as developing a “narrowly tailored” written policy for screening applicants based on criminal conduct, limiting inquiries about criminal records to those that would be job-related for the position, and maintaining the confidentiality of criminal records.

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