The Attorney Generals of four states — South Carolina, Utah, Arizona, and South Dakota — have replied to a threat by the NLRB to sue those states in order to invalidate recent constitutional amendments that would do away with voluntary employer recognition of unions, in a letter made public by the South Carolina Attorney General.
On January 14, NLRB Acting General Counsel Lafe Solomon advised the Attorney Generals that the amendments, two of which had already passed, violated federal labor law by invalidating the right of employers to voluntarily recognize a union as the exclusive bargaining representative of its employees and threatened to file lawsuits, if the states did not respond.
Speaking on behalf of the four officials, South Carolina Attorney General Alan Wilson said that their state amendments merely protected “long existing” federal rights and promised to “vigorously defend” any attacks on those laws. On behalf of his own state, Wilson mixed in some additional bravado, claiming that the ballot votes of South Carolina voters are “kept between them and their Maker—not to be influenced by union bosses.”
Utah Attorney General Mark Shurtleff also directly responded to Solomon, saying that the threatened lawsuit was premised on “the erroneous conclusion that our constitutional provisions require elections when federal law does not.” He reiterated Wilson’s claim that the amendments bolster current federal law guaranteeing a secret ballot if employers opt not to voluntarily recognize a union. That claim is certain to be contested, as each of the amendments would make it a state requirement that all political and representation elections be conducted via the secret ballot.
Neither the NLRB nor Solomon have responded to the letters.
Four recent state law amendments prohibiting employers from voluntarily recognizing unions following a showing of majority support conflict with the NLRA and, thus, are preempted by federal labor law, the NLRB contends. On Friday, January 14, it notified the attorneys general of Arizona, South Carolina, South Dakota, and Utah that it intends to enjoin those states from enforcing these provisions.
In separate letters to the state officials, the NLRB advised that it has authorized Lafe E Solomon, its Acting General Counsel, to file suit in federal court to enjoin enforcement of the preempted laws. The Board has asked the states to respond within two weeks. Absent a response, the Board said it will file the threatened lawsuits.
Under the NLRA, private-sector employees may either vote in an NLRB-conducted election or they can persuade their employer to voluntarily recognize a union that has received a showing of majority support, as demonstrated by signed authorization cards. In recent years, organized labor has pushed for passage of the Employee Free Choice Act, which would, among other things, allow the union to be certified as employees’ exclusive bargaining representative based on the signed authorization cards. The so-called card-check measure would likely have swelled the ranks of many private-sector unions. Concerns over the Employee Free Choice Act (EFCA) among employers and conservative politicians gave rise to the state amendments requiring the use of secret-ballot votes in all elections, including union representation elections. The sponsors cited the need to “protect” employers and employees from the possible effects of EFCA, in the unlikely event that it became law. According to the NLRB, because those amendments prohibit the election of unions by voluntary recognition, they “interfered with the exercise of a well-established federally-protected right” and were, therefore, preempted.
The amendments to the South Dakota and Utah constitutions have already gone into effect and the amendments to the Arizona and South Carolina constitutions are expected to go into effect shortly.
The Board also, in a fact sheet and in its letters to the states, expressed concerns about the potential ramifications of the amendments beyond the threatened NLRB lawsuits: Employers who have already voluntarily recognized unions may be forced to withdraw recognition from their employees’ designated bargaining representative, the Board warned, and employees who were unhappy with that choice may now feel free to sue their union and fellow employees in state court on the charge that the voluntary recognition violated their rights under their respective state constitutions.
President Barack Obama has resubmitted the nomination of current NLRB member Craig Becker to fill out the remainder of the five-year term of former member Dennis P. Walsh. That term is due to expire on December 16, 2014, and Becker’s recess appointment ended in December of last year, following the expiration of the 111th Congress.
The President first nominated Becker, the former chief counsel for the Service Employees International Union on July 9, 2009, but the nomination immediately ran into trouble. Political opponents and anti-labor forces rallied to thwart the nomination on several occasions through cloture votes on the nomination. Frustrated with his inability to have an up-or-down vote on Becker, the President placed him on the Board in March, 2010, through his recess appointment. Since that time, Becker has routinely joined Chairman Wilma Liebman and Member Mark Pearce. The placement of Becker and Pearce and Brian Hayes enabled the Board to have a full panel for the first time in several years.
Becker’s first year on the Board was not without controversy. Several parties, including current Chairman of the House Committee on Reform and Government Oversight, Darrell Issa, have asked the NLRB’s Inspector General to investigate whether Becker committed ethical violations by ruling on cases that affected SEIU locals; Becker had promised to recuse himself in any case involving either the SEIU International, or locals with whom he had worked. After an investigation, the Inspector General found that Becker had not committed any ethical violations.
President Barack Obama will nominate Lafe E. Solomon, currently NLRB Acting General Counsel, to serve officially as General Counsel. Solomon, who has served in his current role since June 21, 2010, has been aggressive in using his remedial powers under the NLRA. He recently announced an initiative under Sec. 10(j) to institute new timelines and procedures to accelerate review of unfair labor practice charges in which an unlawful discharge was alleged to have occurred during a union organizing campaign. (These “nip-in-the-bud” cases now receive an expedited decision by the NLRB as to whether to seek a Sec. 10(j) injunction.) Additionally, the Board has recently announced a proposed rule on the posting of violation notices, an initiative that Solomon broached at the ABA Conference in November.
Solomon, a career attorney at the NLRB, has worked for 10 Board members, including current Chairman Wilma Liebman. As General Counsel, he will be the NLRB’s top investigative and prosecutorial officer, with supervisory authority over all regional offices. Solomon also will continue to help craft policy on the issuance of complaints, injunctions, and the enforcement of Board decisions.
President Barack Obama has announced his intention to nominate Terrence F. Flynn as a member to the National Labor Relations Board. Currently the chief counsel to Member Brian Hayes, Flynn, who previously filled that role for former member Peter Schaumber, is expected to be the second pro-employer voice on the five-member NLRB. Prior to his work at the NLRB, Flynn was Counsel in Crowell & Moring’s Labor and Employment Group, from 1996 to 2003, where he worked on collective bargaining negotiations, unfair labor practice litigation, ERISA defense and wage/hour issues.
The nomination of Flynn, if quickly ratified by the US Senate, would bring the total membership of the NLRB to its full complement of five members. As recently as one year ago, only Chairman Wilma Liebman and Peter Schaumber served on the Board. That panel issued numerous decisions, a practice that the US Supreme Court recently decided was improper under the NLRA.
In 2010, the nation’s union membership rate dropped to its lowest rate in over 70 years, to 11.9 percent, down from 12.3 percent a year earlier, the Bureau of Labor Statistics reported January 21. The number of wage and salary workers belonging to unions declined by 612,000 to 14.7 million.
According to the report, the union membership rate for public sector workers (36.2 percent) was substantially higher than the rate for private sector workers (6.9 percent), while workers in education, training, and library occupations had the highest unionization rate at 37.1 percent. The BLS counted 7.6 million public sector employees belonging to a union, compared with 7.1 million union workers in the private sector.
Among states, New York had the highest union membership rate (24.2 percent) and North Carolina had the lowest rate (3.2 percent).
As to earnings, the report notes at least one positive statistic: union members had median usual weekly earnings of $917, while those who were not represented by unions had median weekly earnings of $717.
In memorandum GC 11-05, released January 20, Acting NLRB General Counsel Lafe Solomon announced his decision to urge the Board to adopt a new approach in post-arbitral deferral cases to give greater weight to safeguarding employees’ statutory rights in Section 8(a)(1) and (3) cases, and to apply a new framework in all such cases requiring post-arbitral review. Specifically, in Section 8(a)(1) and 8(a)(3) statutory rights cases, Solomon desires the Board to no longer defer to an arbitral resolution unless it is shown that the statutory rights have adequately been considered by the arbitrator. This includes not only cases involving Section 8(a)(1) and 8(a)(3) discipline and discharge, but also all other cases involving Section 8(a)(1) conduct that are subject to challenge under a contractual grievance provision.
Solomon will also urge the Board to change the allocation of the burden of proof for deferral. “We believe that the party urging deferral should have the burden of showing that the deferral standards articulated above have been met. This will ensure that the statutory issues have indeed been considered by the arbitrator, as well as encourage parties seeking deferral to establish an evidentiary record that will give the Board a sounder basis for reviewing arbitral awards and deciding whether to defer.”
Thus, the party urging deferral must demonstrate that: (1) the contract had the statutory right incorporated in it or the parties presented the statutory issue to the arbitrator; and (2) the arbitrator correctly enunciated the applicable statutory principles and applied them in deciding the issue. If the party urging deferral makes that showing, the Board should, as now, defer unless the award is clearly repugnant to the Act. The award should be considered clearly repugnant if it reached a result that is “palpably wrong,” i.e., the arbitrator’s decision or award is not susceptible to an interpretation consistent with the Act. Such a framework, states Solomon, would provide greater protection of employees’ statutory rights while, at the same time, furthering the policy of peaceful resolution of labor disputes through collective bargaining.
Tomorrow, January 11, 2011, the Office of Labor-Management Statistics (OLMS) of the Department of Labor will publish a request for information (RIF) in the Federal Register, seeking information to assist the DOL as it crafts guidelines for the use of electronic voting systems in union officer elections. According to the OLMS, while the LMRDA does establish standards for acceptable conduct in union officer elections, it does not require any particular voting method or system. Given the increasing use of electronic voting machines and systems, the DOL wanted to issue guidelines for their use before that use becomes a contentious issue. The DOL wants assistance in crafting the minimum standards for use of such systems, as well as guidance on what issues should be addressed in relation to the electronic voting systems.
The RIF makes it explicitly clear that electronic voting systems include machines used at polling sites, electronic voting from remote-site computers, and electronic voting through remote-site phones. Not included in the DOL definition are electronic tabulation systems in which votes are counted, but not cast, electronically. Comments must be received within 60 days of January 11, 2011, and can be submitted either through the http://www.regulations.gov website or, via direct mail, to the OLMS.
The International Brotherhood of Teamsters has reached a tentative agreement on a contract between UPS and its aircraft mechanics. The agreement comes after four years of negotiations involving Teamsters Local 2727, the Teamsters Airline Division, UPS, and the NMB. The tentative agreement's key components include an industry-best top rate, continued free healthcare benefits, significant retroactive pay, work rule improvements, and company concessions that will bring vendor work in-house. The proposed contract would run through November 1, 2013. UPS Airlines employs 1,200 aircraft mechanics and related employees represented by the Teamsters in the United States.
In an “ NLRB Action Alert” released January 25, the Society for Human Resource Management ( SHRM) calls on it membership to submit comments in response to the NLRB’s proposal requiring covered employers to post notices informing employees of their rights under the NLRA. SHRM notes that the proposed notice is silent regarding employee rights under the NLRA to decertify or withdraw from a union, to seek relief for a union's failure to represent employees fairly, or to object to paying union dues or fees for political purposes.
NLRB appoints two new Deputy Assistant General Counsels, as well as three Administrative Law Judges
Acting General Counsel Lafe Solomon announced that the NLRB has appointed both David A. Kelly and Rosalind E. Hill to the positions of Assistant General Counsel in its Division of Operations-Management. Both will work in Washington and will be tasked with assisting the Acting General Counsel in managing the “32 Regional Offices of the NLRB and provide programmatic support for the national enforcement and administration of the National Labor Relations Act.” Mr. Kelly was previously a Deputy Regional Attorney with the NLRB, while Mrs. Hill has served as Deputy Regional Attorney in the NLRB Regional Office in Memphis, Tennessee.
The NLRB also announced the appointment of Lauren Esposito, Robert Ringler, and Gerald Etchingham as administrative law judges for the NLRB. Each was a sitting administrative law judge within other Federal agencies, and both were transferred to “fill vacancies caused by recent retirements and to bring its number of judges to 40 nationwide,” the NLRB noted. Judge Esposito, who will take her assignments from the New York office, came from the Social Security Administration, where she has been an administrative law judge since October 2009. Judge Ringler, who will take his assignments from the Atlanta office, also came from the Social Security Administration, where he has been an administrative law judge since May 2008. Judge Etchingham, who will take his assignments from the San Francisco office, transferred to the Board from the DOL, where he has been an administrative law judge for the past eight years.
The NLRB has released its annual summary of its activities and successes in FY 2010, which ended September 30, 2010. The Board highlighted its success in holding faster elections, its settlement rate and its success in closing cases.
In FY 2010, 26,585 cases were filed with the Board, a 4.6-percent increase over the 25,413 cases that were filed in FY 2009. The majority of those charges were unfair labor practice cases, where the 23,381 filed charges marked a 3.8-percent increase over 2009. Representation cases also rose, and by a far bigger margin, as unions sought to take advantage of the presumably more labor-friendly Obama board; the 3,204 cases represented a 10-percent increase over 2009. The Board also reported an increase in certification and decertification petitions, which rose 10.1 percent over 2009 to 2,969 in FY 2010. By the end of the year, 4,063 situations remained pending, a decrease over the previous year, which ended with 4,137 situations pending.
The Board touted its success in moving election petitions along quickly. According to the summary, the Board conducted elections, in 95.1 percent of the filings, within 56 days of the filing of the petition; this was better than the Board’s goal of meeting that timeframe for at least 90 percent of the petitions. Moreover, the Board held initial elections in representation elections within 38 days from the petition filing, on average. Although this marked a one-day increase over 2009, it bettered the Board’s self-imposed goal of 42 days. Overall, the Board Regions conducted 1,790 initial representation elections in FY 2010, 92.1 percent of which were held pursuant to the mutual agreement of the involved parties. Not only did this represent a slight improvement over 2009’s 91.9 percent, it also bettered the Board’s goal of conducting at least 85 percent of the elections pursuant to a mutual agreement.
Additionally, in FY 2010, the Board had success with ULP cases. It was able to reach settlement in 95.8 percent of its ULP cases and won 91 percent of the cases that it took to an ALJ. As for complaints issued by the Board, its Regional Offices issued, in FY 2010, 1,243 complaints and took, on average, 101 days to issue those complaints. On average, 87 days lapsed between the issuance of a complaint and a ULP hearing, far longer than the 75-day span seen in FY 2009.
The Board also had overall success in closing its cases. It closed 86.3 percent of its representation cases within 100 days, 73.3 percent of its ULP cases within 120 days 84.6 percent of all meritorious unfair labor practice cases within 365 days (target 80 percent).
The Winter 2010 issue of the CCH Labor Law Journal is now available online and addresses several timely topics. Raymond Hogler and Howard Hunt, III offer a critique on retirement security for the American worker, and Tanya Marcum and Sandra J. Perry examine the current state of religious discrimination claims. Well-known west coast arbitrator Paul D. Staudohar discusses Major League Baseball's move away from a conflict model toward a cooperative approach. Finally, Todd D. Steenson highlights recent NLRB actions that suggest employers haven't dodged the unionization bullet.
The complete table of contents is reproduced below:
LEADING CASE NEWS
A supervisor’s claim that he was wrongfully terminated for refusing to discharge union supporters was preempted by the NLRA and, therefore, the district court properly ruled that it did not have subject matter jurisdiction, the Sixth Circuit ruled, affirming the court’s ruling granting the employer’s motion to dismiss ( Lewis v Whirlpool Corp, January 12, 2011, Griffin, R).
The supervisor alleged that when several employees began to wear pro-union shirts and to meet with union representatives, the supervisor was directed to “build a case” against those employees and to terminate them, or risk being fired. After he refused, he was transferred to a less-desirable work area. Several years later, he was accused of misconduct, which he denied, and was ultimately terminated.
Believing that he was terminated for refusing to fire the pro-union employees, the supervisor filed a charge with the NLRB, alleging he was terminated for his failure to commit unfair labor practices on behalf of the employer. The NLRB informally found the charge to be without merit. In a letter directed to the supervisor, the field examiner indicated he would make a formal finding of that nature unless the charge were withdrawn. The supervisor withdrew the charge, then filed suit, alleging that the employer wrongfully terminated him in violation of Ohio public policy, citing the employer’s violation of the NLRA. The district court dismissed the case for lack of subject matter jurisdiction, ruling that the claim was preempted by the NLRA.
The Sixth Circuit rejected the supervisor’s argument that his claim was not subject to the NLRA. While supervisors are not covered employees under the Act and, thus, not generally protected from unfair labor practices, the Act does cover supervisors where the ultimate result would lead to infringement upon the rights of covered employees. Therefore, supervisors have a viable claim under the NLRA for wrongful termination resulting from refusal to commit unfair labor practices, the appeals court said. Nonetheless, the supervisor did not have a viable claim here. The supervisor had erroneously relied upon the field examiner’s letter in asserting that his wrongful discharge claim was not covered by the Act. In fact, the NLRB did not conclude it lacked subject-matter jurisdiction over the claim; rather, it clearly addressed the substance of the claim and found the allegations to be without merit.
Because the appeals court agreed that the supervisor’s claim was “arguably subject” to the NLRA, it examined whether the district court properly determined whether Garmon preemption applied. Here, the appeals court found the dispositive questions raised to the NLRB and the district court were identical. Accordingly, the district court properly ruled that the supervisor’s wrongful termination claim was preempted and granted the employer’s motion to dismiss.
In a case addressing the “voluntariness” of a union-negotiated severance agreement in the WARN Act context, the Seventh Circuit found that DHL Express did not violate the Act when it negotiated and implemented severance agreements that it reached with the Teamsters union on behalf of drivers and clerical workers at five Chicago-area facilities ( Ellis v DHL Express Inc (USA), January 11, 2011, Tinder, J). DHL reached the severance agreements with the union after its German parent company, Deutsche Post AG, announced it would stop offering U.S. domestic shipping and would shutter five of its six area plants. Those employees who accepted the severance package offered and voluntarily signed a general release waived their WARN Act claims and their departures were voluntary, the appeals court held, affirming a district court’s dismissal of a putative class action WARN Act suit filed by workers who did not take the severance deal.
Background. The union negotiated several different severance packages in its agreement with DHL, offering from four to ten weeks of severance pay to workers who chose to accept the deal. Workers who accepted the union-negotiated severance package signed a general waiver and release of all claims against the company. In all, 506 workers accepted one of the severance packages, signed the release, and resigned their employment in exchange for either four or ten weeks of severance pay and benefits. (Workers who already had been laid off were covered under a separate agreement that provided no severance benefits.)
Two drivers who had refused the deal (one who had been laid off days before the discontinuation of domestic shipping was announced and another who was laid off when domestic shipping finally ceased) filed suit against DHL and its parent, Deutsche Post, alleging WARN Act violations. They sought to represent a class of former union-represented DHL employees. The lower court denied class certification and granted summary judgment to DHL, concluding the WARN Act did not apply. The layoffs did not constitute a “plant closing,” it found, because the five Chicago facilities were not a single site of employment. Further, the layoffs were not a “mass layoff” because the employment losses at the five facilities did not reach the requisite critical mass of 33 percent of the full-time workforce during the relevant statutory time period. Finally, the district court concluded the plaintiffs failed to raise a genuine issue of fact as to whether those employees who accepted the union-negotiated severance agreement were involuntarily separated — “fatally undermining their contention that the workers who left DHL pursuant to those agreements should be counted as involuntarily separated for WARN Act purposes.”
The plaintiffs appealed, contending still that the resignations, particularly those of the workers who already were laid off, were not truly voluntary because the employees resigned against a backdrop of extreme economic uncertainty and pressure exerted by DHL.
Voluntariness. The WARN Act excludes “voluntary departures” from its definition of employment losses that trigger its notification requirements. While the Seventh Circuit has addressed the question of “voluntariness” of early retirement offers, it had not previously considered the issue in the WARN Act context.
The Department of Labor maintains that “incentive programs, including incentive retirement programs and voluntary layoffs” should typically be considered voluntary departures under WARN, so long as the circumstances surrounding them comport with traditional legal notions of voluntariness. In other words, employees’ participation in an incentive program is generally considered voluntary unless the employer improperly induced workers to leave their jobs, either by creating a hostile or intolerable work environment or by applying other forms of undue pressure or coercion. The Secretary of Labor’s clarification of the agency’s position on what constitutes a voluntary departure was given significant weight by the appeals court.
Although affidavits of former DHL employees painted a picture of a wrenching decision that workers were required to make in a very short time, the plaintiffs were unable to persuade the appeals court that the workers were given incomplete information or that DHL had strong-armed them into signing the release forms and accepting the severance packages involuntarily. “While we recognize the unenviable positions in which DHL’s Chicagoland workers found themselves… we cannot conclude on the evidence before us that the workers who accepted the union-negotiated severance packages did so involuntarily,” the appeals court found. The severance agreements and the general waiver and release were negotiated by the union with the workers’ interests in mind and were written unambiguously in plain English. Although employees were given only two business days to decide whether to accept the deal, there was no evidence that DHL denied employees the opportunity to educate themselves about their options or to discuss the terms of the offers with their families, financial advisors, or attorneys.
The appeals court also rejected the plaintiffs’ assertion that the workers who already had been laid off could not have been deemed voluntary departures because they had no jobs to leave from. This contention presupposed that the laid-off workers lost their attachment to DHL the moment they were laid off. However, the record showed that laid-off workers retained their seniority status and recall rights with DHL for up to three years — rights that they voluntarily ceded when they elected to accept the severance package. “They may not have been walking away from specific positions, but they were electing to end their relationships with DHL rather than waiting around for three years to see if new opportunities came to fruition,” the appeals court reasoned.
“In offering its workers the olive branch of severance pay, DHL was hedging its bets against WARN Act liability,” the appeals court wrote. “Employers are permitted to ‘gamble’ that enough workers accept their proffered incentive packages to absolve them from potential WARN Act liability, and DHL successfully tossed the dice here.” Accordingly, the district court’s grant of summary judgment in favor of DHL was affirmed.
Precedential ruling. “This case of first impression establishes helpful WARN precedent in the Seventh Circuit and beyond,” said Seyfarth Shaw’s Richard Lapp, who led DHL’s defense, along with partners Joshua L. Ditelberg and Camille Olson. “It’s the first published decision in the Circuit to underscore that WARN claims can be released, and is now the leading circuit case anywhere on the legal concept of voluntariness.
In a case of first impression, a divided three-judge panel of the Ninth Circuit ruled that an employee who - left an employer because the business was closing has not “voluntarily departed” for WARN Act purposes ( Collins v Gee West Seattle LLC, January 21, 2011, Smith, N). Consequently, summary judgment for an employer that failed to provide 60 days’ notice of business closure to employees who later alleged WARN Act violations was reversed, even though only 30 employees reported for work on the last day of business.
The employer, an operator of several automobile franchises with approximately 150 employees, failed to give 60 days’ notice that its business was closing as required by the WARN Act. On September 26, it gave notice that it would be closing its doors on October 7, if a buyer could not be found before then. Thereafter, employees began not reporting to work; on October 5, only 30 employees reported to the employer’s various facilities. Because there were too few employees to carry out operations, the employer ceased doing business on that date. HR documents indicated that all of the employees terminated after September 26 had left because the “business closed.”
When the employees filed a lawsuit alleging that the employer violated the WARN Act by failing to provide 60 days’ notice of the closure, the employer asserted, and the district court agreed, that the employees who departed prior to the last day of business had “voluntarily departed” within the meaning of the WARN Act and, thus, had not suffered an “employment loss.” Because there were fewer than 50 employees, the minimum necessary to trigger the notice requirement, the lower court held there was no cognizable WARN Act claim and granted summary judgment to the employer.
The Ninth Circuit rejected this reasoning and result, noting at the threshold, that unless the employer gave the required 60-day notice to every employee that “reasonably expected” to be terminated, or a statutory exception applied, it had facially violated the WARN Act. The employer had focused on the statutory term “employment loss,” which did not include a discharge for voluntary departure, stressed the appeals court. Using the dictionary treatment of the term “voluntary,” the employer asserted that, because all but 30 employees left of their own free will prior to the last day of business, the closing of its business was not a “plant closure” under the WARN Act.
This argument, however, would flip the WARN Act on its head, the appeals court wrote. Instead of putting the onus on the employer to give 60 days’ notice prior to closing the plant, it would measure an employer’s liability based only on how many employees remained at the plant at the time of closure, even though employees left because of the plant closure – an interpretation inconsistent with the basic structure of the WARN Act, and one that frustrates its purposes. It would also render the “faltering business” exception superfluous.
Accordingly, the Ninth Circuit held that an employee who departs a business because that business is closing has not “voluntarily departed” within the meaning of the WARN Act. Finding there was at least some evidence that the employees left their jobs because the business was closing, the appeals court concluded that summary judgment was improper and, thus, reversed and remanded the case for further proceedings.
Chief Judge Cebull dissented, arguing that the district court correctly held that the employees’ WARN Act claim failed for lack of proof. The employees neither argued nor presented any evidence establishing that any employee was constructively discharged. The dissent observed that part of the employee’s burden was showing that they had not departed voluntarily, since an employee who voluntarily departs does not suffer an employment loss.
In order to effectuate a prior bargaining order, a three-member panel of the NLRB agreed with an administrative law judge’s recommended order that an employer should be required to bargain with a union for 16 hours a week and submit a progress report to a regional director every 30 days ( Gimrock Constr, Inc, 356 NLRB No 83, January 28, 2011). In view of the employer’s continuing refusal — over a period of years — to comply with the Board’s bargaining order, the institution of a bargaining schedule and the submission of progress reports were found necessary to ensure the employer meaningfully complied with its bargaining obligations.
The employer’s bargaining obligation arose from the NLRB’s June 2005 decision, finding that it had unlawfully refused to meet and bargain with the union, and to provide the union with requested relevant information. Following the Eleventh Circuit’s enforcement of the Board order, the employer was advised of its remedial obligations. Nonetheless, the employer failed to respond to numerous requests to bargain with the union and to furnish it with requested information. When the employer’s continuing refusal to bargain and furnish information was established in the compliance proceeding, it continued to defend its conduct by raising arguments that had previously been rejected by the Eleventh Circuit, most notably, that it was no longer required to bargain because there was no bargaining unit.
As a consequence, in order to meet the traditional requirements of an affirmative bargaining order, the employer was required to meet and bargain for a minimum of 16 hours per week until an agreement was reached, the parties agreed to a hiatus in bargaining, or an impasse was reached, and to prepare progress reports every 30 days for the regional director.
Member Hayes dissented from the majority’s adoption of the ALJ’s recommended order on the grounds that it imposed substantial new special remedies on the employer for compliance with a bargaining order. In his view, the additional remedies represented more than mere “clarification” of the Eleventh Circuit’s order. Hayes argued that the General Counsel should petition the court for a modification of the order, or that contempt proceedings should be initiated, if appropriate, to secure these additional remedies.
An employer who launched a “preemptive strike” in terminating an employee who complained about raises and threatened to organize her fellow employees over that complaint engaged in unlawful interference, violating Sec. 8(a)(1) of the NLRA, a split panel of the NLRB has ruled ( Parexel Int’l, LLC, 356 NLRB No 82, January 28, 2011).
A number of the Respondent’s employees were from South Africa. The fired employee, a nurse, had a conversation with one of the South African employees who came back to work after having left the company. The South African employee falsely stated that he had been given a raise in order to return, and that his wife would also be given a raise. This claim offended the nurse, who raised the issue of alleged favoritism with her supervisor, and suggested that all non-South African employees should quit and come back in order to get a raise. In a subsequent meeting, the employer’s HR director asked the nurse about her comments and whether she had discussed the matter with other employees. Upon learning that she had not, the HR director discharged her. An ALJ found that the employer had terminated the nurse in order to launch a “preemptive strike” that would prevent the nurse from discussing the raise issue with her fellow employees; however, the ALJ further found these initial conversations did not constitute concerted activity, and so dismissed the unlawful discharge allegation. The Board majority disagreed, finding that regardless of whether the nurse’s initial conversations were concerted activity, the Act was designed to prevent such preemptive strikes.
As an initial matter, the Board panel ruled that the employer’s due process rights had not been violated. The employer had alleged that the ALJ should not have considered the preemptive strike because the General Counsel did not include that charge in the initial complaint. The Board, however, found that the preemptive strike theory was sufficiently close to the initial theory — that the employer fired the nurse for complaining about raises — so as to put the employer on notice of the charges against it. The intent to discourage protected activities was the same, and the preemptive strike theory had been fully litigated as it hinged on the same conversations, namely those in which the nurse complained of the raises.
Turning to the merits, the Board noted that the Act makes it an unfair labor practice for employers to interfere with an employee’s Section 7 rights. Among those rights is the right to ascertain what wages the employer is paying. Further, citing numerous NLRB precedents, the Board held that even if discussions about wages do not result in union activity, any attempt to suppress those conversations violates the Act. When employees are terminated over conversations that they intend to have about wages, the termination prevents employees from comparing wages or raises and then making a decision on whether to engage in concerted action. The Board further noted that it has frequently ruled that employers who act to prevent future concerted activities violate the Act. In this case, the employer terminated the nurse in order to ensure that she would not discuss the wage and raise issue and, in so doing, violated the Act.
Member Hayes dissented, concluding the employer lacked due process. In his view, the violation turned on whether the employer terminated the nurse for her actual conversations, not for conversations that she might have. Thus, wrote Hayes, the employer was not aware that it needed to provide evidence regarding its motivations beyond the actual conversations.
An employer violated the NLRA when it refused to provide information on a contractual profit-sharing plan and the employer’s job-bidding history, ruled a three-member panel of the NLRB ( A-1 Door and Building Solutions and Millmen and Industrial Carpenters Union, Local 1618, January 11, 2011, 356 NLRB No 76). Profit-sharing information concerning non-unit employees was relevant and privacy concerns did not shield the information from the union, concluded the Board. Further, the union needed information on job bids to respond to the employer’s claim of non-competitiveness.
During negotiations on a successor agreement, the employer proposed a substantial reduction in profit-sharing and a reduction in wages. The union asked the employer to state both its net profit over the previous three years and the employees’ total profit; however, the employer only disclosed the employees’ share. Soon thereafter, the union learned that non-unit employees may have been receiving overly large profit-sharing bonuses, which would have adversely affected the amount available to the unit employees. The union asked for profit-sharing information for all employees, including non-unit employees, but the employer did not respond. The union also requested information on the employer’s bids for jobs, after the employer contended that pay cuts were necessary because it was not able to make competitive bids. The union asked for information regarding why the bid was not accepted, the amount of lower, successful bids, among other information, but the employer refused. After an administrative law judge (ALJ) found that the employer’s refusal to provide the requested information was unlawful, the employer excepted, arguing that the ALJ failed to protect the privacy rights of non-unit members and that its proposed accommodation had been acceptable.
Profit-sharing plan. The NLRB ruled that profit-sharing information as it pertained to non-unit employees was relevant and that privacy concerns did not shield the information from the union. According to the Board, while the employees had a legitimate expectation to privacy, the employer failed to demonstrate that the requested information was not already public. Moreover, no evidence was presented showing that employees did not know of their peers’ bonuses or that it had made efforts to keep the information private. As for the employer’s offered accommodation, the Board found that it did not relate to the confidentiality issue and was less than the union had requested; thus, it did not fulfill the employer’s obligations.
Job-bid information. With respect to the job-bid information, the Board observed that this type of information was not presumptively relevant. Rather, disclosure would be required only where the relevance of the information has been proven. In this case, the Board found that the information was relevant. The union needed the information to respond to the employer’s claim that it could not compete with other companies because of the profit-sharing and wage issue. The requested information was specifically chosen to assess the accuracy of the employer’s contention and did not include the employer’s general financial data. In the instant case, the requested information went to the heart of the employer’s proposals, so the Board rejected the employer’s contention that the assertions it made during bargaining did not render the job-bid information relevant.
Applicants to the U.S. Postal Service (USPS) did not have an expectation of privacy in information they provided to the USPS as part of the application process and, therefore, USPS improperly relied on that alleged expectation when it refused to provide information to a union representing its employees, ruled a three-member panel of the NLRB ( US Postal Services, January 5, 2011, 356 NLRB No. 75). Because Test 473 cautioned applicants that their information could be disclosed to federal agencies and unions, the USPS violated the Act when it refused to provide the requested information, concluded the Board.
Background. The USPS requires its applicants to take Test 473, which purportedly measures aptitude, skills, and abilities. Applicants pass the test with a score of 70 to 100, but military veterans may receive an additional five to 10 points through the USPS’ veterans’ preference. The preference also factors into an applicant’s final score, which is the sum of the test score and veterans’ preference. Test 473 contains a privacy statement that informs applicants that some of their personal information could be disclosed as required by the NLRA and that some information could be “disclosed to labor unions as a matter of law.” Once applicants completed the process, they were placed on the USPS’ hiring register by rank and, once hired, they were given an enter-on-duty (EOD) date, which the USPS later used to calculate seniority. In 2007, when the instant case arose, 22 out of more than 8,000 applicants were hired.
In July 2007, the union contacted the USPS with concerns that nonveterans had been hired earlier than veterans who had applied earlier. The union asked for the hiring register and stated that it needed to include both veteran and nonveteran employees; the request was made for all 8,000 applicants. The union contacted the USPS several more times before the employer finally answered the request, stating that the request contained confidential information. After the union filed unfair labor practice charges with the NLRB, the USPS said that it would redact applicant scores. The union demanded the scores and the USPS again declined to provide them over concerns of compromising the applicants’ confidentiality. An administrative law judge (ALJ) found that the nonhiree applicants’ test scores were not relevant, but that the union had stated its need for information on the 22 hirees. The ALJ rejected the USPS’ contention that the test scores and final ratings were confidential, and the employer appealed.
Due process. As an initial matter, the NLRB ruled that the ALJ had not violated the USPS’ due process rights when it found a violation not alleged in the General Counsel’s complaint. The employer argued that it was not placed on notice that its refusal to provide information on the 22 hirees violated the Act, but the Board ruled that the complaint provided adequate notice, in that it alleged the USPS violated the Act by refusing to provide information on all 8,000 applicants, which included the 22 hirees. Additionally, the panel found that USPS had known from the beginning of the dispute that the union was requesting information on all applicants, including the hirees. The initial request asked for information on the veteran employees, as did later communications from the union. Thus, the Board found that the USPS had adequate notice of the charges against it.
Failure to provide information. USPS’ failure to provide the requested information violated the NLRA, ruled the Board. The test scores and final ratings were “clearly relevant to the Union’s statutory duty to police the collective bargaining agreement.” Moreover, the Board noted that the CBA incorporated by reference the USPS’ practice of basing seniority on the EOD, which was affected by veterans’ status. That information was not confidential as Test 473 cautioned applicants that their information could be disclosed to federal agencies and unions. This explicit warning deprived applicants of an expectation of privacy in their information. Therefore, the NLRB ruled that the USPS violated the Act when it refused to provide the requested information.
An employer unlawfully terminated a vocal pro-union employee prior to a representation election, and unlawfully announced a mail-order prescription drug benefit prior to the election, ruled a three-member panel of the NLRB ( Austral USA and Sheet Metal Workers, December 30, 2010, 356 NLRB No 65). The Board determined that the employer’s stated reason for terminating the employee—alleged sleeping on the job—was a pretext. Further, the Board concluded that the employer failed to show that it had a legitimate business reason for the timing of its benefit announce, other than to improperly influence the election.
As an initial matter, the Board disagreed with an administrative law judge’s (ALJ) statement that a mixed-motive analysis was not necessary in this case because the evidence relied on by the employer was a total fabrication and therefore pretextual. Rather, the Board noted that it has specifically held that Wright Line is applicable in cases where there is a finding that a respondent’s purported justification for its actions is pretextual.
Turning to the disputed termination, the Board found that the General Counsel demonstrated that the employee’s protected conduct was a motivating factor in her discharge. The employee engaged in protected conduct by wearing union stickers and being vocally pro-union. Moreover, the Board determined that the employer knew of the employee’s conduct and bore animus towards her because of it. The employer’s human resources director issued a request to supervisors to report pro-union employees and told the employee that he would move her between stations to make it appear as though she had a problem with authority. The HR director also told the employee’s supervisor that the company did not want to fire all employees, but only those who were “pushing for the union.” Additionally, the employer interrogated the employee and terminated her after she distributed union T-shirts. Thus, the Board found that the termination was motivated by protected conduct and that the employer’s stated reason for the discharge—alleged sleeping on the job—was pretextual.
Timing of drug benefit. The Board also affirmed the ALJ’s finding that the drug benefit violated the NLRA. The employer objected to the finding, contending that the NLRB’s decision in Sun Mart Foods, in which the Board ruled that employers have the opportunity to rebut the inference that a grant of benefits was improperly intended to influence an election. However, in this instance, the Board held that the employer failed to establish a legitimate business reason for the timing of the benefit grant, as required by Sun Mart. The Board noted that the employer’s decision to consider the new benefit, as well as a later announcement and implementation of the benefit, occurred within the critical period before the election. Thus, when the employer decided to move forward with the new benefit, it was aware of increased union activity. Further, the effective date of the grant did not coincide with the employer’s usual date for insurance changes and the grant was announced shortly before the election. Consequently, the Board found that the drug benefit announcement during the election period was objectionable.
The Board also rejected the employer’s contention that the ALJ improperly set aside the election based on its pre-election unfair labor practices. Even if the ALJ relied on unobjected-to unfair labor practices in setting aside the election, it was not an error for him to do so. Rather, in a recent decision in Community Medical Center, the Board held that the “interests of employee free choice require that unfair labor practice allegations be considered as grounds for setting aside an election even thought not specified in the election objections.” Thus, the Board found that the conduct found to be objectionable in this instance warranted setting the election aside.
An employer’s announcement of an improved 401(k) plan during the pendency of a representation election violated the NLRA, ruled a three-member panel of the NLRB ( Grapetree Shores, Inc, 356 NLRB No 60, December 29, 2010). The Board affirmed the finding of an administrative law judge that the pension plan announcement, made two days prior to the election, was unlawful. Here, the employer argued that the NLRB’s decision in Weather Shield of Connecticut, in which it found that a pension plan announcement one day prior to an election was lawful because the pension details were already known should control. However, the Board noted that in the instant case, the employer had not made the details of the pension plan known prior to announcing it and had not decided upon an implementation date. The panel further noted that, as of the date of the hearing before the Board, the employer still had yet to announce an implementation date. Thus, the Board found that the announcement was intended to influence the outcome of the election and so violated the NLRA.
Hot topics in WAGES HOURS – FMLA
The Wage-Hour Division’s proposed rule on “Right to Know Under the Fair Labor Standards Act” is currently under review by the OMB and the agency expects to publish the proposed rule in the Federal Register in April, according to Nancy Leppink, Deputy Administrator of the Wage and Hour Division. Leppink responded to a series of questions about the pending rule, the first questions out of the gate during a live webchat on the agency’s fall regulatory agenda held on Thursday, January 6.
WHD intends to publish a proposed “Right to Know” rule updating the recordkeeping regulation issued under the FLSA in an effort to protect workers' right to earned wages and bring greater transparency to the workplace, Leppink noted. The proposed rule is expected to outline employer requirements to notify workers of their status as employees or independent contractors, and whether they have been classified as exempt or nonexempt under the FLSA — and also to articulate the employer’s rationale for the classification.
“This greater transparency will in turn better ensure compliance by regulated entities and assist the Department with its enforcement efforts,” Leppink noted, and “contributes to the Department's efforts to prevent misclassification that denies workers employment law protections to which they are entitled.”
Wage statements. The recordkeeping rule also will likely require employers to provide a wage statement to their employees at each pay period. Several attendees wanted clarification about what employers would be expected to include in the wage statements required under the proposed rule. “What would be included in the `wage statement’ that is not already provided to employees?” asked one participant. Another sought clarification of the difference between a “wage statement” and a regular paycheck.
“It is important to note that not all employers provide wage statements to employees, and those that do provide varied information,” Leppink responded. “As a general principle, DOL believes essential information about an employee’s earnings should be made available to the employee, and that this greater transparency will provide employees with essential information about their earnings. This greater transparency will in turn better ensure employer compliance with the minimum wage and overtime pay requirements and assist the Department with its enforcement efforts.”
Because the proposed rule is still under development, Leppink told participants that it would be premature to discuss in greater detail what the rule will specifically entail.
Companionship exemption concerns. As in the spring 2010 regulatory webchat, a considerable bulk of the feedback focused on the DOL’s stated intention to repeal the FLSA’s companionship services exemption. A number of commenters expressed concerns about the impact of a repeal on the industry and on seniors and individuals with disabilities, who may be unable to afford care if the caregiver exemption is lifted, they said. Several participants urged the agency to consider input from the industry and to engage in a cost analysis of its rulemaking. Leppink noted in response that the agency will address the economic impact of the proposed rule as a matter of regulatory course pursuant to Executive Order 12866. She also urged attendees to provide formal comment once the NPRM is published, which is expected in October 2011.
Other topics. Leppink also fielded several questions about the agency’s shift from opinion letters to Administrator Interpretations and its recently announced attorney referral program, forged in partnership with the American Bar Association. (When FLSA or FMLA complainants are informed that the Wage and Hour Division is declining to pursue their complaints, they may be given a toll-free number to contact the referral system. In addition, WHD will provide documents on the case to complainants and representing attorneys.) Attendees wanted to know what information will be provided to plaintiffs’ attorneys and whether employers will be given the same information. Another attendee more pointedly questioned the agency’s rationale in referring employees directly to lawyers for violations. Similarly, another questioner noted: “I don't understand WHY this unprecedented collaboration was created; what is the purpose in doing such?”
Employer pushback. Several participants shared general dismay about their obvious frustration with the DOL’s aggressive enforcement stance. The agency “talks exclusively about giving things to employees,” noted one attendee, “but says nothing about considering whether the WHD's actions are in fact helping businesses be successful in creating and maintaining jobs.” Among the other comments: “How does this administration expect us to continue employing workers?” “Which branch of government is looking out for the interests of small businesses?”
“Wage and Hour's Regulatory and Enforcement efforts provide an opportunity to level the playing field for all businesses,” wrote Leppink.
The webchat was held to answer questions on the WHD regulatory agenda and take suggestions on the agency's current regulatory priorities. Input received by the Wage-Hour Division during the course of the webchat is not part of the formal rulemaking process.
The Obama Administration has resubmitted the nomination of veteran prosecutor Leon Rodriguez to serve as the Administrator of the DOL’s Wage and Hour Division, reaffirming the tough enforcement stance that has marked the agency under Secretary of Labor Hilda Solis. Originally nominated on December 3, 2010, Rodriguez is currently the Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division of the Department of Justice, where he oversees the Division’s operations in addition to heading up its work on immigration and national origin-related civil rights matters. Prior to that position, Rodriguez was County Attorney for Montgomery County, Maryland from 2007 to 2010, overseeing all legal issues involving the Montgomery County government, and before that, worked in private practice as a shareholder of the law firm Ober, Kaler, Grimes & Shriver. From 1997 to 2001, Rodriguez was an Assistant U.S. Attorney in Pittsburgh, and later as First Assistant U.S. Attorney. His background also includes work as a trial attorney in the Criminal Section of the U.S. Department of Justice, Civil Rights Division, and as an Assistant District Attorney in the Kings County District Attorney’s Office in New York. While his credentials reflect extensive law enforcement experience, they do not suggest a particular expertise with the FLSA, FMLA, or other statutes that he will be charged with enforcing at the Wage and Hour Division.
The Wage and Hour Administrator post has been vacant for the entirety of the Obama Administration. Obama’s first nominee, Lorelei Boylan, withdrew her name from consideration after Republican opposition to the nomination of Patricia Smith as labor solicitor bogged down Boylan’s own nomination process.
The Mortgage Bankers Association (MBA) filed suit yesterday, January 12, 2011, against the U.S. Department of Labor (DOL) in an effort to set aside Wage and Hour Division Administrator’s Interpretation No. 2010-1 that MBA claims could adversely affect the entire mortgage lender industry. MBA has moved for declaratory and injunctive relief.
According to the complaint, from at least 1964 until March 24, 2010, the DOL announced its interpretations of the FLSA through opinion letters, which the DC Circuit has held constituted “final agency action subject to judicial review.” During this time period, the DOL promulgated a regulation that employees in the financial services industry presumptively fell within the administrative exemption to the FLSA, which states that employees who perform work directly related to the management of general business operations of an employer are not subject to the FLSA overtime rules. On September 8, 2006, the DOL clarified that regulation as it pertained to loan officers. Through an opinion letter, the DOL stated that officers who assisted customers in identifying and securing mortgage loans and who performed a variety of tasks in relation to that duty (including some sales-related tasks) were administrative employees for FLSA purposes. The MBA asserts that the mortgage lending industry has relied upon that ruling and that reversing it could expose mortgage lenders to unnecessary litigation.
However, in 2010, the DOL stopped issuing opinion letters and began using Administrator’s Interpretations. In the first of those, the DOL reversed its previous position and declared that loan officers who got internal leads and then contacted potential customers with whom they worked to assess loan products had a primary duty of nonadministrative exempt sales and, thus, were subject to FLSA overtime rules. The DOL acknowledged that this shift was a substantive change, one that did not merely restate the agency’s view on the law. This new interpretation has the potential to affect the entire mortgage loan industry.
“This abrupt reversal by the department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer,” argued MBA’s President and CEO John A. Courson.
MBA’s focus in its complaint is on the DOL’s alleged failure to provide an opportunity for notice or comment before issuing the interpretation. MBA alleges that once the DOL interpreted the 2006 regulation, it could only change it through the process of notice and comment rulemaking. This failure, says MBA, violated the Administrative Procedures Act.
According to Courson, “if the department wanted to reverse that opinion, it should have provided notice and an opportunity for public comment. In issuing this administrative interpretation, the department ignored that statutory requirement.”
LEADING CASE NEWS
An employee's seven-week trip to the Philippines with her husband (who indisputably suffered from a serious health condition), in part so that he could participate in a faith healing event at a Catholic “Pilgrimage of Healing” ministry, was not protected under the FMLA, the First Circuit ruled, affirming a federal district court’s grant of summary judgment to the employer on the employee’s FMLA interference and retaliation claims ( Tayag v Lahey Clinic Hosp, January 27, 2011, Boudin, M).
The employee was terminated for taking unapproved leave, and filed suit alleging FMLA interference and retaliation, among other claims. She had requested seven weeks’ leave to care for her husband, a cardiac patient who was recovering from an angioplasty. Despite being advised that the employer did not receive the FMLA certification necessary to evaluate her leave request, the employee left with her husband for the Philippines. Meanwhile, her husband's cardiologist sent the employer a medical certification stating the employee did not need to take leave to care for her husband.
At no point while in the Philippines did the employee’s husband receive conventional medical treatment or visit a health care professional. While he did spend three and a half weeks attending the healing ministry, nearly half of their stay abroad was spent not in faith healing but visiting friends, family, and local churches. Moreover, nothing in the cardiologist’s certification provided support for a seven-week FMLA leave; in fact, he disavowed the need for leave, so the employer was justified on that basis in denying approval of her leave request. This alone would render her FMLA claim meritless.
Nonetheless, the First Circuit entertained the question of whether the FMLA protects such a faith healing trip. The dispute turned on whether a “healing pilgrimage” constitutes “medical care” under the FMLA. Looking to the text of the statute and its regulations, the appeals court concluded it does not. In short, a faith healer does not fall under the FMLA’s definition of “health care provider.”
Court balks at constitutional argument. The appeals court noted that faith healing is cited in the regulation identifying others “capable of providing health care services,” but it refers to “Christian Science practitioners” subject to certain conditions. Christian Scientists reject ordinary medical care, the court observed, and so, for a Christian Scientist patient, there is no alternative care provider for purposes of FMLA leave. In contrast, the employee’s husband regularly receives conventional medical care; the employee does not claim that her husband’s religion forbids ordinary medical care. (Indeed, the employee has taken full advantage of the FMLA to provide assistance to him in connection with such care.)
The appeals court had little patience for the employee’s argument that the special carve-out for Christian Science practitioners—but not for Catholic priests—amounted to an unconstitutional distinction between religions. Both religiously affiliated healing programs are aimed at treating the illness and providing psychological comfort, she suggested. “This is hardly a serious treatment of a complex issue and is not adequate to preserve the claim on appeal,” the appeals court wrote. “Distinguishing among religions as such may well be suspect; limiting FMLA coverage for faith healing trips to those whose faith makes no other demands for medical assistance is not self-evidently an improper discrimination.”
A federal district court correctly used a 50-percent overtime premium to calculate the unpaid overtime compensation due three racing officials who were improperly classified as exempt administrative employees, ruled the Fourth Circuit ( Desmond v PNGI Charles Town Gaming, LLC, January 14, 2011, Dever, J). The appeals court found that the district court correctly concluded that Overnight Motor Transp Co v Missel provided the appropriate method for calculating the officials’ unpaid overtime compensation.
The racing officials were paid a fixed weekly salary that was intended to cover all hours worked. However, the employer erroneously believed that they were subject to the FLSA administrative exemption. Initially, the district court held that the officials were administrative employees, granting summary judgment to the employer in their overtime suit, but that ruling was reversed by the Fourth Circuit on appeal. On remand, the district court entered summary judgment in favor of the employees on the issue of FLSA liability, and then used the 50-percent overtime premium to calculate their unpaid overtime compensation. On this appeal, the employees contended that they were entitled to 150 percent of their regular rate for all hours worked more than 40 in a workweek.
The Fourth Circuit observed that the First, Fifth, Seventh, and Tenth Circuits have all determined that a 50-percent overtime premium was appropriate in calculating unpaid overtime compensation, so long as the employer and employee had a mutual understanding that the fixed weekly salary was compensation for all hours worked in each workweek, and the salary met the minimum wage requirement. Moreover, the Department of Labor also has approved using the 50-percent overtime premium to calculate unpaid overtime compensation.
Here, the district court relied on the logical implications of Overnight Motor to calculate the unpaid overtime compensation, observed the Fourth Circuit. Overnight Motor recognized that employees and employers are free to agree to a reduced hourly wage in exchange for a fixed weekly salary, provided the fixed weekly salary covers all hours worked and meets the minimum wage. Because the employees had already received straight-time pay for all hours worked in a given workweek, the “loss suffered” was the 50-percent premium for overtime hours.
Home Depot was properly granted summary judgment against an employee’s claims that it violated the FMLA and ADA after it terminated her employment for coming to work under the influence of alcohol and failing a blood alcohol test, ruled the Seventh Circuit ( Ames v Home Depot USA, Inc, January 6, 2011, Manion, D). Because the employee failed to establish that she was entitled to leave under the FMLA, her interference claim failed. Further, the employee’s ADA claims could not survive summary judgment because she failed to show that she had a disability under the Act, concluded the appeals court.
After almost five years of employment, the employee spoke with her store manager about her alcohol problem and the need for assistance under Home Depot’s Employee Assistance Program. The employee was put on paid administrative leave and undertook a treatment plan. After a one-month leave, the employee returned to work. However, the next month the employee was arrested for driving under the influence (DUI). When Home Depot learned of the arrest, it advised the employee that the DUI placed her in noncompliance with her employee assistance agreement. The following month, the employee reported to work smelling of alcohol and slurring her speech. Thereafter, the employee was given a blood-alcohol test and, when the result returned positive, Home Depot terminated her employment for violating its substance-abuse policy. The employee filed suit, claiming violations of the FMLA and ADA. A federal district court granted Home Depot’s motion for summary judgment and this appeal followed.
FMLA claims. Substance abuse can qualify as a serious health condition if treatment involves “inpatient care” or “continuing treatment by a health care provider.” However, in this instance, the employee did not receive any inpatient treatment for her condition prior to her termination. Further, because the employee was never incapacitated for more than three consecutive calendar days, she could not establish that her substance abuse was a condition requiring continuing treatment by a health care provider. Consequently, based on the record, a reasonable fact finder could not conclude that the employee was afflicted with a serious health condition within the meaning of the FMLA on the day that her employment was terminated for failing to a blood alcohol test. Because the employee could not establish that she was entitled to leave under the FMLA, her interference claim failed.
Similarly, the Seventh Circuit concluded that the district court did not err in dismissing the employee’s FMLA retaliation claim. Here, the employee presented no evidence of a causal connection between her alleged requests for FMLA leave and the adverse actions of her employer, so her retaliation claim was properly dismissed on summary judgment.
ADA claim. Additionally, the Seventh Circuit found that the employee’s ADA claims could not survive summary judgment. For either a discrimination claim or a failure-to-accommodate claim, the employee had to show that she had a disability under the Act. While alcoholism may qualify as a disability if it “substantially limits one or more major life activities,” here the record failed to show that the employee’s alcoholism substantially limited her major life activities. Additionally, the employee’s discrimination and failure-to-accommodate claims failed because the record established that Home Depot fired her because she came to work under the influence of alcohol. The employee failed to meet Home Depot’s legitimate expectations for its employees. Further, there was no evidence that the company failed to accommodate the employee’s requests to schedule her work around AA meetings. Thus, the Seventh Circuit concluded that the district court properly granted Home Depot summary judgment on the employee’s FMLA and ADA claims.
Outback Steakhouse employees who instituted a collective action against their employer under the FLSA could also litigate supplemental state law claims as a class action under FRCP Rule 23(b)(3) at the same time, ruled the Seventh Circuit ( Erwin v OS Rest Servs, Inc, January 18, 2011, Wood, D). Consequently, the appeals court held that the district court abused its discretion in denying certification of the employees’ proposed class under Rule 23.
The plaintiffs in this action were former employees of an Outback Steakhouse who alleged that the policies of the restaurant ran afoul of the FLSA, the Illinois Minimum Wage Law, and the Illinois Wage Payment and Collection Act by the manner in which the employer operated a tip pool for tipped employees. The employees moved for conditional approval of a collective action under Sec. 16(b) of the FLSA and, at the same time, sought certification under Rule 23(b)(3) of three different classes alleging state law claims. A magistrate judge recommended that the collective action proceed, but that certification of the Rule 23(b)(3) state law claims be denied. The district court adopted the magistrate’s recommendation, because it found a “clear incompatibility between the ‘opt out’ nature of a Rule 23 action and the ‘opt in’ nature of a Sec. 16(b) collective action.” The plaintiffs were permitted to move forward only on their FLSA collective action. This appeal ensued.
After examining the posture of the decision, the Seventh Circuit concluded that it need only address whether or not the district court correctly ruled that incompatibility between FLSA Sec. 16(b), and Rule 23(b)(3) meant that the plaintiffs pursuing both options in a single proceeding would never be able to demonstrate the superiority required by Rule 23(b)(3). The appeals court determined that in combined actions, the question whether a class action should be certified under Rule 23(b)(3) turns on application of criteria set forth in the rule; and there is no insurmountable tension between the FLSA and Rule 23(b)(3). Moreover, nothing in the FLSA suggests that it is not amenable to state law claims for related relief in the same federal proceeding. The opt-in procedures of the FLSA do not operate to limit a district court’s supplemental jurisdiction to only those state law claims that also involve opt-in procedures. In summary, the appeals court concluded that identity of issues, the convenience of both plaintiffs and defendants of not having to litigate in multiple forums, and the economy of resolving all claims at once suggested that the exercise of supplemental jurisdiction would normally be appropriate. Thus, the Seventh Circuit reversed the district court’s class certification determination.
8thCir: Employee did not make informal complaint; appeals court need not decide whether informal complaints are FLSA-protected activity
A discharged employee did not allege that she made an informal complaint to her employer or direct supervisor about having been told not to record any overtime, the Eighth Circuit noted; therefore, the appeals court was not required to decide the issue — as yet unaddressed in the circuit — of whether informal complaints are protected activity under the FLSA ( Ritchie v St. Louis Jewish Light, January 4, 2011, Hansen, D). The appeals court affirmed a district court’s dismissal of an FLSA retaliation claim brought by the discharged employee.
Background. The plaintiff had worked for the employer in various capacities for more than seven years. In 2009, she was asked to take on work that was previously performed by two employees — and was asked to do so without recording overtime, she alleged. In order to complete the work, however, the plaintiff had to work overtime, and she recorded the overtime hours that she worked. Again, she was instructed to perform the work without recording overtime. When she continued to record the overtime hours that she worked in carrying out the added duties, she was discharged.
The employee filed suit against the employer and her supervisor. She did not allege that she was not paid for the overtime she worked; in fact, she conceded that she was paid for all overtime work she performed. However, she contended her discharge violated FLSA, Sec. 215, in that she was terminated in retaliation for exercising her rights under the Act — i.e., insisting on recording her overtime work. The district court dismissed the complaint, finding that informal FLSA complaints to one's employer are not protected and, thus, she did not engage in statutorily protected activity. The appeals court affirmed.
No informal complaint. The Eighth Circuit has not previously addressed the question whether an oral complaint to one’s employer about the failure to pay overtime is protected activity under Sec. 215(a)(3). However, the appeals court wrote, “[e]ven assuming that informal complaints are sufficient to trigger the antiretaliation provision of the FLSA, a legal conclusion we do not make,” the employee failed to allege sufficient facts to show that she made any sort of complaint to her employer.
The employee “complained” within the meaning of the Act, she argued. When she recorded her overtime hours in writing, despite the supervisor’s orders not to do so, she gave notice that she believed his instructions not to record overtime violated the law. The appeals court rejected this assertion. “In fact, rather than constituting an affirmative complaint that would trigger the antiretaliation provision of the FLSA, her recording of her overtime could be nothing more than mere insubordination, she having been instructed to the contrary,” the appeals court noted, adding that insubordination is not FLSA-protected activity.
The employee’s supervisor could merely have been instructing the employee to finish the required work within a 40-hour workweek and to stop working overtime altogether, the appeals court reasoned in a footnote. Yet, the court wrote (quoting favorably the employer’s attorney at oral argument): “if merely recording one's overtime is a ‘complaint’ that triggers the antiretaliation provision of the FLSA, an employer would not be able to discipline an employee for working unauthorized overtime so long as the employee recorded the overtime.”
Leaving for another day the question whether informal complaints constitute protected activity under the Act, the Eighth Circuit affirmed the district court’s dismissal of the employee’s FLSA retaliation suit for failure to state a claim.
An employee’s FMLA suit was not barred because she had filed a Department of Labor complaint, since the statute did not limit her right of action, held the Eleventh Circuit in affirming a district court ruling ( Spakes v Broward County Sheriff’s Office, January 31, 2011, per curiam) Furthermore, although the jury instruction concerning the employee’s interference claim failed to properly address the employer’s defense, it was harmless error because the jury rejected the defense in its special verdict.
Employees are entitled to pursue civil actions under the FMLA, subject to limitations set forth in the statute, including the institution of a suit by the secretary of the DOL under various sections of the statute. Although neither was the case here, the employer argued that the DOL regulations allow an employee to file either an agency complaint or a civil suit, but not both. The district court correctly ruled that the employee was not barred from filing her civil complaint, the court held, because where a statute provides a right to a cause of action and lists the limitations, the regulations cannot terminate a statutory right. Furthermore, while the district court erred in instructing the jury that the causal nexus defense applied only to retaliation claims, the appeals court ruled that its failure to do so was harmless because the jury specifically rejected the defense in its special verdict.
State employment laws and regulations, wages-hours/labor relations, January update
Alabama Time Off to Vote
Law prohibiting political activities by state, county and city employees is amended to prohibit employees of the state, a county, a city, a local school board, or other governmental agency from using any agency funds, property, or time for political activities and to further prohibit payments by salary deduction, or otherwise, to a political action committee or dues for membership organizations that use funds for political activities. Also, such public employees must be on approved leave or on personal time (before or after work and on holidays) to engage in any political activities. It is further unlawful for any employee or officer to solicit political contributions from subordinate employees or to coerce any subordinate employee to work in any political campaign or cause. Section 17-17-5 is amended by Act 761 (S.B. 2), L. 2010, enacted December 20, 2010, and effective March 20, 2011. AL ¶1-60,005a.
Arizona Minimum Wage
Reminder: Effective as of January 1, 2011, the minimum wage in Arizona is $7.35 per hour (Source: The Industrial Commission of Arizona Press Release, October 14, 2010). See Section 23-363. AZ ¶3-41,001a.
Arkansas Prevailing Wages
Administrative rules and regulations of the Arkansas Department of Labor, Prevailing Wage Division, relating to prevailing wages are amended and renumbered. These rules set procedures for making and applying for prevailing wage determinations; detail the obligations of contractors, subcontractors and public bodies; set procedures for the administration and enforcement of the prevailing wage law; and set procedures or rules of practice for administrative proceedings under the prevailing wage law. Agency rules and regulations 010.14-200 through 010.14-225. AR ¶4-50,501 through 4-50,526.
Arkansas Drug and Alcohol Testing
Rules of the Arkansas Department of Labor covering medical examinations and drug tests are added. These rules provide for enforcement and administration of Section 11-3-203 of the Arkansas Code Annotated. This statute generally provides that it is unlawful for an employer to require an employee or applicant for employment, as a condition of employment or continued employment, to submit to or take a physical, medical examination, or drug test unless the examination is provided at no cost to the employee or applicant and a copy of the examiner’s report is provided free of charge to the applicant or employee upon written request. The statute also provides, with certain restrictions, that, for a positive drug test, the employer and employee may agree in writing as to who will bear the cost of future drug tests or screens required as a condition of continued employment. Agency rule 010.14.400. AR ¶4-53,501.
California Maximum Hours and Overtime
The overtime exemption rate for computer software employees will remain unchanged for year 2011. California Labor Code Section 515.5 provides that certain computer software employees are exempt from the overtime requirements stipulated in Labor code Section 510 if certain criteria are met. One of the criteria is that the employee’s rate of pay is not less than the statutorily specified rate, which is adjusted annually. For year 2011, it has been determined that the overtime exemption rate will remain unchanged from the 2009 and 2010 rates. Even though there was a California Consumer Price Index increase between August of 2009 and August 2010 of 1.1 percent, the Division of Labor Statistics and Research staff did not recommend an increase because the DLSR did not reduce the specified rate of pay last year (2008 to 2009) when the CCPI dropped by 1.4%. According to the Division, if the DLSR had reduced it last year, then there would be a basis for recognizing the CCPI increase this year. Instead, in making a determination, the DLSR looked at the California Consumer Price Index for Urban Wage Earners and Clerical Workers for the period August 2008 (Index value, 220.946) to August 2010 (Index value, 220.109), which reflects a negative 0.4% change. Therefore, in the absence of an increase, the rate will remain unchanged for the period beginning January 1, 2011. In order to be exempt from overtime requirements of California Labor Code Section 510, a computer software employee's hourly rate of pay must not be less than $37.94, or, if salaried, not less than a minimum monthly salary of $6,587.50 and an annual salary of $79,050.00 (Source: State of California Department of Industrial Relations, Memorandum from Gregory Govan, DLSR Chief, to John C. Duncan, DIR Director, on the subject of “Overtime Exemption for Computer Software Employees,” dated October 12, 2010). California Labor Code Section 515.5. CA ¶5-44,007a.
California Maximum Hours and Overtime
The overtime exemption rate for licensed physicians and surgeons will remain unchanged for year 2011. California Labor Code Section 515.6 provides that certain licensed physicians and surgeons are exempt from the overtime requirements stipulated in Labor Code Section 510 if certain criteria are met. One of the criteria is that the employee’s hourly rate of pay is not less than the statutorily specified rate, which the Division of Labor Statistics and Research is responsible for adjusting every October 1 of each year to be effective on January 1 of the following year by an amount equal to the percentage increase in the California Consumer Price Index for Urban Wage Earners and Clerical Workers. Effective January 1, 2009, the Division adjusted the rate to $69.13. However, there has been no percentage increase in the CCPI from the August 2008 to the August 2010 Index Values. Even though there was a CCPI increase of 1.1% between August of 2009 and August of 2010, the DLSR staff did not recommend an increase because the DLSR did not reduce the specified rate of pay last year (2008 to 2009) when the CCPI dropped by 1.4%. If the DLSR had reduced it last year, then there would have been a basis for recognizing the CCPI increase this year. Instead, the DLSR used data based on changes in the California Consumer Price Index for the period August 2008 (220.946 Index Value) to August 2010 (220.109 Index Value), which reflects a negative 0.4% change. Since there has been no increase in this index for the measurement period specified, the rates will remain unchanged for the period beginning January 1, 2011. In accordance with Labor Code Section 515.6(a), the Division of Labor Statistics and Research has maintained the same licensed physicians and surgeons employee’s minimum hourly rate of pay exemption of $69.13 effective January 1, 2011 (Source: State of California Department of Industrial Relations, Memorandum from Gregory Govan, DLSR Chief, to John C. Duncan, DIR Director, on the subject of “Overtime Exemption for Licensed Physicians and Surgeons Employees,” dated October 12, 2010). California Labor Code Section 515.6. CA ¶5-44,007b.
Colorado Minimum Wage
Effective January 1, 2011, Colorado's minimum wage increased to $7.36 per hour, up from the 2010 rate of $7.24 per hour. The tipped employee wage will rise to $4.34 per hour, up from the current $4.22 per hour. Article XVIII, Section 15, of the Colorado Constitution requires the Colorado minimum wage to be adjusted annually for inflation, as measured by the Consumer Price Index used for Colorado. In accordance with the constitutional inflation adjustment requirement, the Director of the Division of Labor has adopted Colorado Minimum Wage Order Number 27 to reflect the new state minimum wage. If an employee is covered by federal and Colorado state minimum wage laws, then the employer must pay the higher minimum wage. Federal minimum wage is currently $7.25 per hour, which is lower than the Colorado state minimum wage of $7.36. Therefore, based upon current information, covered employers in Colorado will have to pay their employees the higher value of $7.36 per hour under Colorado law beginning January 1, 2011. See Section 15 of Article XVIII of the Colorado Constitution and Colorado Minimum Wage Order Number 27 (2011). CO ¶6-41,001 and ¶6-41,801.
Florida Employment Verification
Florida Governor Rick Scott issued Executive Order Number 11-02 on January 4, 2011, directing all state agencies under the direction of the Governor to verify the employment eligibility of all current and prospective agency employees through the United States Department of Homeland Security's E-Verify System. These agencies are to include, as a condition of all state contracts, an express requirement that contractors utilize the E-Verify system to confirm the employment eligibility of: (a) all persons employed during the contract and (b) all persons, including subcontractors, assigned to the contractor to perform work under the contract with the state agency. Also, agencies not under the direction of the Governor are encouraged to verify the employment eligibility of their current and prospective employees utilizing the E-Verify system. E.O. No. 11-02, effective January 4, 2011. FL ¶10-49,801.
Illinois Equal Pay in Employment
Rules of the Illinois Department of Labor pertaining to the Equal Pay Act of 2003 (Public Act 93-0006 (S.B. 2); 820 ILCS 112) are amended. The rule changes implement provisions of Public Act 96-467 (H.B. 3634), L. 2009, that provide an increased time period in which complaints can be filed with the Department and an increased time period for which records must be maintained. In addition, the rulemaking streamlines the administrative process and adds confidentiality provisions for those individuals filing complaints. 56 Ill. Adm. Code 320, Sections 320.140, 320.200, 320.210, 320.220, 320.240, 320.310, 320.320, 320.330, 320.340, 320.500, 320.600, 320.610, 320.700 and 320.740 are amended effective December 3, 2010 (34 Ill. Reg. 19552; Published December 17, 2010). IL ¶14-42,505, ¶14-42,506, ¶14-42,507, ¶14-42,508, ¶14-42,510, ¶¶14-42,513, ¶14-42,514, ¶14-42,515, ¶14-42,516, ¶14-42,518, ¶14-42,521, ¶14-42,522, ¶14-42,528 and ¶14-42,532.
Illinois Victims’ Economic Security and Safety
Rules of the Illinois Department of Labor relating to the Victims’ Economic Security and Safety Act are amended. The rulemaking implements provisions of Public Act 96-635 (S.B. 1770), L. 2009, that amended the Act to cover employers with 15 or more employees (rather than 50 or more employees). The definition of “certification” is also amended in order to make it consistent with the statutory language found in Section 20(c) of the Act (820 ILCS 180/20). 56 Ill. Adm. Code 280, Sections 280.100 and 280.110 are amended effective December 3, 2010 (34 Ill. Reg. 19546). IL ¶14-59,501 and ¶14-59,502.
Illinois Employer Job References
The Illinois Personnel Record Review Act is amended to provide disclosure of performance evaluations under the Freedom of Information Act is prohibited. 820 ILCS 40/11, as amended by H.B. 5154, L. 2009, effective December 1, 2010. Amendatory veto overridden by both houses. IL ¶14-64,068.
Indiana Misclassification of Employees
Topic added. The law provides for the Department of Labor to develop guidelines and procedures for investigating questions and complaints concerning employee classification and a plan for implementation of those guidelines and procedures, including the adoption and implementation of rules before August 1, 2011. These guidelines must at least cover who is eligible to file a complaint; applicable and appropriate penalties; mechanisms to share date with appropriate state agencies to assist in determining compliance with and enforcing state laws concerning misclassified employees, and to recoup contributions owed; recordkeeping requirements for contractors; and investigative procedures. Such guidelines are to apply to public works and private works projects for the construction industry authorized to do business in Indiana and to contractors engaged in construction and authorized to do business in Indiana. The Department is to exempt from coverage (1) residential construction of a single-family home or duplex if the builder builds less than 25 units each year and (2) an owner-operator that provides a motor vehicle and the services of a driver under a written contract that is subject to IC 8-2.1-24-23, 45 IAC 16-1-13, or 49 CFR 376, to a motor carrier. Sections 22-2-15-1 to 22-2-15-6 are added by Public Law 110 (S. 23), L. 2010, which adds a new Chapter 15 to Indiana Code, effective July 1, 2010. IN ¶15-48,001 through 15-48,006.
Michigan Youth Employment Standards Act (Child Labor)
The Michigan Youth Employment Standards Act is amended to provide an exception to the work permit requirement for a minor who performs unpaid volunteer work for a charitable organization, specifically an organization that is recognized as tax-exempt under, or whose purposes, structure, or activities are exclusively those that are described in, section 501(c)(3) of the internal revenue code, 26 USC 501(c)(3). Section 409.104 is amended by Public Act 221 (S.B. 860), L. 2010, effective December 9, 2010. MI ¶23-45,004.
Michigan Wage Payment and Fringe Benefits Law
Michigan’s wage payment and fringe benefits law is amended to revise requirements for employers for issuing payroll debit card and direct deposit; provide a right for an employee to request a change in the method of receiving wages at any time; and provide the required characteristics for a payroll debit card. Section 408.476 is amended by Public Act 323 (H.B. 5821), L. 2010, effective December 21, 2010. MI ¶23-46,006.
Montana Minimum Wage
Reminder: Effective as of January 1, 2011, the minimum wage in Montana is $7.35 per hour (Source: Montana Department of Labor and Industry, Commissioner's Office, Media Release, October 1, 2010). See Section 39-3-409. MT ¶27-41,009.
New Jersey Wage and Hour Rules
The New Jersey Department of Labor and Workforce Development has adopted a new rule on the use of “time clocks” and “rounding” practices. The new rule mirrors federal requirements. The rule states that time clocks are not required. When used, employees who come in before the regular start time or remain after closing are not required to be paid, provided the employee does not engage in any work. Early or late clock punching may be disregarded. For “rounding” practices, it has been found in some industries to be the practice for many years of recording the employee’s start time and stopping time to the nearest five minutes or to the nearest 1/10 or quarter of an hour, with the presumption that the arrangement averages out and employees are fully compensated for all time actually worked; For enforcement purposes, this practice of computing time will be accepted provided that it is used in such a manner as to not result, over a period of time, in failure to compensate the employees properly for all time actually worked. N.J.A.C. 12:56-5.8 is added effective December 20, 2010. Note that this new rule, along with the Wage and Hour rules generally (N.J.A.C. 12:56-1.1 et seq.), are scheduled to expire January 26, 2011, unless readopted (42 N.J.R. 3061(b)). NJ ¶31-41,505g.
New Jersey Labor Relations
The New Jersey Employer-Employee Relations Act is amended to revise procedures for police and fire department contract disputes and to impose a “cap” on certain arbitration awards. Sections 34:13A-16 is amended and Sections 34:13A-16.7, 34:13a-16.8 and 34:13A-16.9 are added by Ch. 105 (A.B. 3393), L. 2010, effective January 1, 2011. NJ ¶31-63,053, ¶31-63,059a, ¶31-63,059b and ¶31-63,059c.
New Mexico Drug and Alcohol Testing
Rules of the State Personnel Board relating to information on drug and alcohol abuse and required drug testing of employees, applicable to state agencies in the classified service, are amended with respect to classes of drugs and cutoff concentrations. Cutoff concentrations of seven concentrations are modified for seven drugs or classes of drugs used for initial and for confirmation drug tests. 126.96.36.199 NMAC is amended in emergency rulemaking adopted effective October 1, 2010 (New Mexico Register, Vol. XXI, No. 19, October 15, 2010). NM ¶32-53,513.
New York Minimum Wage
Employer payroll recordkeeping requirements are amended, as well as penalties for violations. Employers must establish, maintain, and preserve for not less than six years contemporaneous, true, and accurate payroll records showing for each week worked the hours worked, the rates of pay and basis thereof, gross wages, deductions, allowances, if any, claimed as part of the minimum wage, and net wages for each employee, plus such other information the commissioner of labor deems material and necessary. Any employer or his or her agent, or the officer or agent of any corporation, partnership, or limited liability company, who pays or agrees to pay less than the applicable minimum wage or overtime compensation will be guilty of a misdemeanor and, upon conviction, fined not less than $500 nor more than $20,000 or imprisoned for not more than one year. A second or subsequent offense within six years of the date of conviction for the prior offense, upon conviction, is a felony subject to a fine of not less than $500 nor more than $20,000 or imprisoned for not more than one year plus one day, or both fine and imprisonment, for each offense. Each payment to any employee in any week of less than the applicable wage constitutes a separate offense. Penalties related to recordkeeping requirements offenses range from fines of $500 to $5,000 or imprisonment of one year, for a first offense, to $500 to $20,000 and/or imprisonment of one year and one day for a second or subsequent offense that occurs within six years of the date of conviction of a first offense. In the case of civil actions for underpayment of wages, employees will be able to recover the amount of such underpayments, together with costs and all reasonable attorney’s fees, prejudgment interest as required under the civil practice law and rules, and, unless the employer can prove a good faith basis to believe the underpayment of wages was in compliance with the law, an additional amount as liquidated damages equal to 100 percent of the total of such underpayments found to be due. Law relating to orders of compliance by the commissioner, along with additional civil penalties and damages is also amended. New York Labor Law Sections 661, 662 , 663 and Section 218 are amended and Section 219-c is added by Ch. 564 (S.B. 8380), L. 2010, enacted December 10, 2010, and effective April 9, 2011. NY ¶33-41,012, ¶33-41,013, ¶33-41,014, ¶33-41,017 and ¶33-41,018.
New York Minimum Wage
The New York Department of Labor has adopted a new Hospitality Wage Order effective January 1, 2011. The new rule combines the wage orders for the restaurant and hotel industries (12 NYCRR 137 and 138) into a single new Minimum Wage Order for the Hospitality Industry (12 NYCRR 146). The new Order clarifies tip requirements by consolidating the current two-tiered tip credits, which depend on the amount of
tips received, into a single tier for most employees. The Order also eliminates a separate tip credit for housekeeping employees in resort hotels, consolidating them with other tipped service employees. Certain special provisions for resort hotels only, namely a higher tip credit for non-food service employees and higher meal and lodging credits for all employees are retained, however. The new Order also consolidates two-tiered meal credits into a single tier for most employees. Housing regulations, considered unnecessary, are eliminated and instead employers are to comply with all state, county and local health and housing codes. Overtime pay requirements unique to the hotel industry are eliminated, leaving only time-and-a-half after 40 hours as the common rule for all covered workers in the hospitality industry. The Order also extends extra payments that previously applied only to employees at or near the minimum hourly rate (call-in pay, excessive spread of hours pay, uniform maintenance pay) to all covered employees. Employers must also post a new poster (LS209) in the workplace that summarizes minimum wage, maximum tip credit and overtime requirements. Effective January 1, 2011, based on the $7.25 basic hourly rate, the minimum hourly wage for food service workers is $5.00 with a maximum tip credit of $2.25 per hour; the minimum hourly wage for service employees in all establishments is $5.65 per hour with a maximum tip credit of $1.60; and the minimum hourly wage for service employees in resort hotels (if tips are at least $4.10 per hour) is $4.90 per hour with a maximum tip credit of $2.35. Employers must maintain payroll records that clearly identify the retroactive payments. 12 NYCRR Parts 137 and 138 are repealed and new Hospitality Wage Order, 12 NYCRR Part 146 (Sections 146-1.1 et seq.) is added effective January 1, 2011 (NY State Register, December 29, 2010, NYLAB-42-10-00005-A; Filing No. 1268, December 14, 2010). NY ¶33-41,808 through 33-41,810.
New York Wage Payment
The Wage Theft Prevention Act is enacted. Governor David A. Paterson signed S.B. 8380/A.B. 11726 into law to address the failure by employers to pay statutorily-mandated minimum wages and overtime by requiring annual notifications of wages, expanding notifications, enhancing available remedies for wage law violations and strengthening whistleblower protections (New York State Governor David A. Paterson Press Release, December 13, 2010). Wage payment provisions are amended with respect to notice requirements, enforcement and authority of the labor commissioner, handling of complaints, notice of process, remedies and penalties for violations. New York Labor Law Sections 195, 196, 196-a, 197, 198, 198-a, 199-a, 218 and 219 are amended, and a new Section 219-c is added, by Ch. 564 (S.B. 8380), L. 2010, enacted December 10, 2010, and effective April 9, 2011. NY ¶33-46,009, ¶33-46,010, ¶33-46,011, ¶33-46,013, ¶33-46,014, ¶33-46,015, ¶33-46,020, ¶33-46,021, ¶33-46,022 and ¶33-46,022a.
New York Whistleblower Protection
A provision of New York’s Labor Law providing for whistleblower protections is amended. Employees are protected from discrimination or retaliation where the employee makes a complaint to the employer, commissioner or the commissioner’s representative, or to the attorney general or any other person, that the employer has engaged in conduct that the employee believes, reasonably and in good faith, violates the law or order of the commissioner. Retaliation is also prohibited for such related proceedings, testimony, the exercise of the employee’s protected rights, or because the employer receives an adverse determination from the commissioner involving the employee. An employee complaint or other communication need not make explicit reference to any section or provision of the state labor law to trigger these protections. In addition to civil penalties, the commissioner may also order all appropriate relief, including enjoining the conduct of any person or employer; ordering payment of liquidated damages to the employee by the person or entity in violation; and, where the violator is an employer, ordering rehiring or reinstatement of the employee to his or her former or equivalent position, and an award of lost compensation or an award of front pay in lieu of reinstatement and an award of lost compensation. Liquidated damages will be limited to not more than $10,000. The law does not apply to municipal or state employees. New York Labor Law Section 215, is amended by Ch. 564 (S.B. 8380), L. 2010, enacted December 10, 2010, and effective April 9, 2011. NY ¶33-62,003.
Ohio Minimum Wage
Reminder: Effective January 1, 2011, the minimum wage in Ohio is $7.40 per hour for non-tipped employees and $3.70 per hour plus tips for “tipped” employees. Tipped employees are those who regularly and customarily receive more than $30 per month in tips from patrons or others (Source: Ohio Department of Commerce News Release, September 30, 2010). See Section 34a of Article II of the Ohio Constitution). OH ¶36-41,001.
Oregon Minimum Wage
Reminder: Effective as of January 1, 2011, the minimum wage in Oregon is $8.50 per hour (Source: Oregon Bureau of Labor and Industries, Commissioner Brad Avakian, Press Release, September 20, 2010). See Section 653.025. OR ¶38-41,005.
Rhode Island Employment Verification
Rhode Island Governor Lincoln D. Chafee on January 5, 2011, signed Executive Order 11-02 terminating Executive Order 08-01 on illegal immigration. This “Illegal Immigration Control Order,” which was issued by the previous Governor Donald L. Carcieri on March 27, 2008, is rescinded effective January 5, 2011. RI ¶41-49,801 and ¶41-49,802.
Tennessee Drug-free Workplace Program
Rules of the Tennessee Department of Labor and Workforce Development, Division of Workers' Compensation relating to Drug-Free Workplace Programs are amended by emergency rulemaking to be consistent with national drug-testing standards. The Commissioner of Labor and Workforce Development has adopted these rules pursuant to Tennessee Code Ann. Sections 50-6-103, 50-6-107, and 50-6-111, which require the Department to use federal regulations as an authority for drug testing requirements under the workers’ compensation laws. Currently, the test required by federal regulations detects five drugs (amphetamines, marijuana, cocaine, opiates, and PCP). Amended regulations from the United States Department of Transportation, effective October 1, 2010, require testing of MDMA (ecstasy) and 6-acetylmorphine (marker for heroin) in addition to the five drugs already covered (49 C.F.R. 40.87 and 75 F.R. 49862). In addition, the cut-off levels for amphetamines and cocaine are decreased by the federal regulations. Rules 0800-02-12-.03 (Definitions), 0800-02-12-.07 (Testing) and 0800-02-12-.08 (Collection Procedures) are amended by emergency rulemaking filed October 4, 2010, effective through April 2, 2011. TN ¶44-53,503, ¶44-53,507 and ¶44-53,508.
Vermont Minimum Wage
Effective January 1, 2011, the minimum wage in Vermont increased from $8.06 per hour to $8.15 per hour. Vermont's minimum wage increases at the same rate as the Consumer Price Index (CPI), as calculated in August, for the proceeding year. For the August 2010 calculation, the CPI increased by one and one tenth percent (1.1%). Each January 1, the basic wage rate for service and tipped employees increases at the same percentage rate as the minimum hourly wage rate. Effective January 1, 2011, “service and tipped” employees of a hotel, motel, tourist place or restaurant who regularly and customarily receives more than $120 per month in tips for direct and personal customer service must be paid a basic wage rate of not less than $3.95 per hour; If the combination of tips and basic wage do not meet the state minimum wage rate of $8.15 per hour, then employers must make up the difference. Employers are required to post the minimum wage rates. Meals and lodging allowance also increased effective January 1, 2011: Breakfast, $2.75 daily; Lunch, $3.08 daily; Dinner, $3.43 daily; Full board, $9.26 daily or $64.83 per week; Nightly lodging, $3.77 daily; Full room, $22.68 weekly; and Full room and board, $78.33 per week. Posters may be obtained from the Department of Labor’s Internet website at http://www.labor.vermont.gov or by contacting the Department of Labor, Wage and Hour program, at (802) 828-0267 (Source: State of Vermont Department of Labor News Release, October 18, 2010). See Section 384 and Minimum Wage Rule. VT ¶47-41,004 and 47-41,501.
Washington Minimum Wage
Reminder: Effective as of January 1, 2011, the minimum wage in Washington is $8.67 per hour. Also, the Washington State Department of Labor and Industries has announced that it will no longer publish a separate poster listing the new minimum wage each time the wage changes, stating that the new policy will simplify requirements for businesses and save taxpayers money. Employers will still be required to post the “Your Rights as a Worker” poster, which provides information about the minimum wage and other topics. This poster is available at no cost from the Department (Source: Washington State Department of Labor and Industries, http://www.WorkplaceRights.Lni.wa.gov , “Minimum Wage”). The Department has also issued an announcement on its Internet website of the 2011 minimum wage change that employers may print out. This announcement is not required or recommended by state law, but is merely provided for convenience (http://www.lni.wa.gov/WorkplaceRights/files/2011MinimumWageAnnouncement.pdf). See Section 49.46.020. WA ¶50-41,003.