Helsell Fetterman

2018 Employment Update

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Below are just a few of the most common Employment Law topics we are tracking and frequently speaking to our clients about.

Want to learn more? Contact one of our Employment Attorneys

FLSA Overtime Rule Status

Employers breathed a collective sigh of relief when a US District Court in Texas imposed an injunction on the about to become effective rules for determining whether a worker is exempt, or non-exempt and thus subject to being paid for overtime.  Under that now defunct rule, employees who made less than $913 per week or $47,476 per year would be categorized as non-exempt regardless of the duties of their jobs, and entitled to overtime pay.  The court found that the high level of the salary portion of the exempt/non-exempt test effectively preempted the duties test and exceeded the DOL’s authority.

But the issue is not over.  Even though the $47,476 salary level has been set aside, the DOL still intends to raise the applicable salary level to define non-exempt workers, the level will just be lower.  Many expect that the new salary threshold will be in the $30,000-35,000 per year area, and that this rule will be issued in 2018.

What about that 5^th Circuit ruling that the salary test preempts the duties test and thus exceeds DOL rulemaking authority?  Won’t that invalidate any salary test, even a lower, more employer friendly test like $30,000?  That issue of whether the DOL has the authority to impose a salary test is still before the 5^th Circuit, so that this issue may continue to be litigated for years before a new federal rule is actually imposed.

 

Immigration Enforcement Efforts that Impacted Employment

In 2017, the Trump Administration pursued stricter immigration enforcement efforts and more restrictive immigration policies than previous administrations. On April 18, President Trump signed Executive Order entitled “Buy American and Hire American” which sought to create higher wages and employment rates for U.S. workers and make changes to the H-1B visa program.

On September 5, the Trump Administration announced its plan to end Deferred Action for Childhood Arrivals (“DACA”). Since 2012, DACA allowed qualified undocumented minors protection from deportation/removal and the opportunity to obtain employment authorization.

Since October 1, the U.S. Citizenship and Immigration Services (“USCIS”) began to require that permanent residence applicants be interviewed in person for their employment-based applications. This change was based on Executive Order 13780 entitled “Protecting the Nation From Foreign Terrorist Entry Into the United States.” Formerly, these applicants were not required to have such interviews with USCIS officers. Even derivatives of said applications have been required to have an interview. However, a waiver has been available for children under 14. In addition, employers have generally not required to attend the interview.

 

Is Your Website ADA Compliant?

Title III of the Americans with Disabilities Act (ADA) was enacted in 1990 to provide equal access to “places of public accommodation” for persons with disabilities. “Places of public accommodation” are often thought of as physical places that are open to the public, such as libraries, universities, hotels, restaurants, museums, transportation services, and other commercial and physical facilities.

However, as technology continues to develop, websites are being placed in the spotlight. Are websites within the scope of “places of public accommodation” or is Title III limited to only physical places? The courts have struggled to respond to the shifting nature of businesses with the rise of the internet. Some courts interpret the ADA to only apply to actual physical places, like in Weyer v. Twentieth Century Fox Film Corp., 1982 F.3d 1104, 1114 (9th Cir.2000), where the ninth circuit ruled that a website is not a “place of public accommodation” because it is not connected to any actual physical place; therefore websites are not subject to Title III of the ADA.

However, some courts have held the ADA applies only to websites that have significant ties to a physical location. Still other courts, such as the Massachusetts district court in Nat’l Ass’n of the Deaf v. Netflix, 869 F. Supp. 2d 196 (D. Mass. 2012), ruled websites are within the scope of Title III, reasoning it was “‘irrational to conclude’” that places of public accommodation are limited to physical structures, particularly as “business is increasingly conducted online[.]” Consequently, the court ordered Netflix to caption its streaming video library to provide equal access for deaf and hearing impaired individuals by 2014 – you may have noticed this particular result in your streaming activities.

Similarly, in Nat’l Fed’n of the Blind v. Scribd Inc., 97 F. Supp. 3d 565, 575 (D. Vt. 2015), the court ruled that Scribd, a California-based digital library that provides subscription services to customers, constituted a “place of public accommodation”, reasoning in part that the “internet plays such a critical role in the personal and professional lives of Americans, excluding disabled persons from access to covered entities that use it as a principal means of reaching the public would defeat the purpose of this important civil rights legislation.”

This is still rather new and conflicted territory for the courts and the courts will certainly continue to grapple with the application of the ADA to websites in the coming years – it is foreseeable the issue may one day be heard by the Supreme Court of the United States.

 

SCOTUS: The Future of Arbitration Agreements

Legal counsel frequently advise that employers insert arbitration clauses into their employment agreements.  Citing the Federal Arbitration Act (FAA), The Supreme Court of the United States (SCOTUS) has consistently relied on an overriding presumption favoring arbitration clauses to uphold those clauses in the face of numerous challenges to the validity of an arbitration clause.  This term, the Court is considering perhaps the strongest challenge ever to an arbitration clause.

The National Labor Relations Act (NLRA) protects employees’ rights to concerted activity for their mutual aid or protection.  The Court is considering whether employment agreement arbitration clauses that waive the employee’s right to class action litigation improperly interfere with that right.  If the Court’s decision favored the employees in this matter and struck down such arbitration agreements, we can expect further similar attacks that would apply more broadly.  There are believed to be some 25,000,000 employment agreements with arbitration clauses.

Court watchers believe that the Court will issue a 5-4 decision in favor of the arbitration clause.  However, this is a close decision, and as in many matters, Justice Anthony Kennedy is the “swing” vote.  The case was argued in October 2017, and a decision may be delayed until the end of the Term, in June 2018.

 

Paid Sick Leave

As of January 1, 2018, employers with even one covered employee working in Washington are required to provide their employees with paid sick and safe leave under Washington’s Paid Sick Leave Law (RCW 49.46.200). “Covered employees” include all employees covered by the states’ Minimum Wage Age. Certain types of workers are exempt, including but not limited to salaried employees with a bona fide executive, administrative, or professional overtime exemption, as well as employees who are required to sleep at their place of employment in order to perform their job duties.

An employee can use sick leave to care for themselves or a family member, when the employee’s workplace or child’s school or place of care has been closed by a public official for any health-related reason, and for absences qualifying for leave under the state’s Domestic Violence Leave Act.

Under the new law, employees (including part-time and seasonal workers) accrue at least one hour of paid sick leave for every forty hours worked with no cap on the amount of paid sick leave accrued each year. At year end, the employer must carry over to the following year accrued, unused paid sick leave balances of 40 hours or less. Employers are not required to pay employees for accrued, unused paid sick leave balances in excess of 40 hours or for any accrued, unused paid said leave balances at the time of separation.

It is important to note that employers must also develop a written policy when they implement a shared leave program for their employees, frontload paid sick leave to employees (i.e., provide employees access to paid sick leave before it has accrued), choose a different accrual year (other than January 1st through December 31st), or create a paid time off (PTO) program for their employees. Additionally, Washington State’s Department of Labor & Industries has developed rules regarding procedures for employers to notify their employees, recordkeeping and reporting requirements, and processes to protect employees from retaliation.

If you haven’t done it already, now is the time to review your company policies and procedures to make sure you’re in compliance with this new law.

 

Washington State Paid Family and Medical Leave Program

Beginning January 1, 2019, the state will begin collecting premiums from both employers and employees to fund the Washington State Paid Family and Medical Leave program (Chapter 50A.04, RCW), which gives employees in Washington State paid time off for the birth or adoption of a child or for serious medical conditions.

The new law sets the initial premium rate at 0.4 percent of wages, with the amount of wages subject to a premium assessment capped at the maximum wage subject to social security tax. While employers may elect to pay the entire premium, employers are allowed to deduct from the employees’ wages 100% of the premiums due for family leave and up to 45% of the premiums due for the medical leave portion. Employers will be responsible for 55% of the medical leave premium and won’t be able to deduct those premiums from their employees’ wages. Employers with fewer than 50 employees will be exempt from paying the employer share of the premiums.

Employers with voluntary plans for the payment of either family leave benefits or medical leave benefits, or both, may apply for approval of their voluntary plans so long as the benefits afforded to the employees are at least equivalent to the benefits the employees will be entitled to under the program, including but not limited to the duration of leave. If a voluntary plan is approved, neither the employer nor the employees are liable for any premiums for benefits covered by the plan.

With collections beginning in less than a year, it is important that you review your company’s leave policies and determine whether you will participate in the program or seek approval of a voluntary plan. Once the program is in effect next year, delinquent employers may be sued by the state. Additionally, an employer who becomes delinquent in the payment of premiums may be enjoined from continuing business or employing workers in Washington until the delinquent payments have been paid.

 

Tipping Under the New Law

In 2011, the U.S. Department of Labor’s (“DOL”) implemented new tip credit regulations that prohibit employers from pooling tips earned by servers. Tips are considered the property of the service-facing employee (waiters, bussers, and bartenders) and untipped employees like cooks, dishwashers, and others in the back of the house do not share in the tips. The 2011 regulations instigated a number of federal lawsuits by national and regional hospitality trade groups who argued that the DOL had overstepped its authority. The federal courts issued conflicting rulings and there was a serious question of whether the clashing legal decisions would compel the Supreme Court to clear up the confusion.

However, on December 4, 2017, the DOL announced a rule change regarding the tip regulations making further court intervention potentially unnecessary. If implemented, the proposed ruled would effectively repeal the prohibition against tip-sharing but would only apply where employers pay a full minimum wage and do not take a tip credit. While workers advocates have expressed concern that the new regulations will allow employers to share in the tip pool, Washington law requires employers to pay their employees all tips and gratuities and explicitly prohibits employers from sharing in the pot. Additionally, they cannot include tips or other gratuities into their minimum wage calculation or to take a tip credit.

The DOL’s proposed rule is available for public comment until February 5, 2018.

 

Sexual Harassment

The past year was marked by egregious claims of sexual harassment.  The #MeToo movement invited people to speak out about their experiences that directly correlated to an increase in EEOC website traffic.

• On October 15th, the day after Alyssa Milano helped spread the #MeToo hashtag on Twitter, traffic tripled—from 2,595 page views to 7,832 page views
• The firing of Matt Lauer on November 29th also caused traffic to the site to more than double, from 2,676 to 6,961

At the Golden Globes, actors wore all-black, and at the Grammy’s, actors wore white roses, in a show of solidarity with Time’s UP, a legal defense fund created in response to the #MeToo movement.  Allegations against Mario Batali, Steve Wynn and Al Franken show interest has moved beyond Hollywood’s elite.  Last week, 156 accusers of Dr. Nassar, the former Olympic gymnastics doctor, addressed him for seven days at his sentencing hearing.  In response, a bipartisan congressional committee was established to investigate sexual abuse allegations within organized sports.

State legislatures are re-acting and some would say over-reacting.  Washington has proposed a bill to limit the use of confidentiality agreements. New York and South Carolina are proposing legislation to prohibit mandatory arbitration for sexual harassment claims.

Claims in the media are limited in their ability to instruct employers on issues outside of the fallen powerful leader.  However, 2017 EEOC data is instructive because it tracks filed claims.  In 2017, retaliation was the most frequently filed charge, followed by race and disability.  The EEOC made 6,696 sexual harassment charges that resulted in a recovery of $46.3 million for victims of sexual harassment.  Specifically, the claim numbers are:

• Retaliation: 41,097 (48.8 percent of all charges filed)
• Race: 28,528 (33.9 percent)
• Disability: 26,838 (31.9 percent)
• Sex: 25,605 (30.4 percent)
• Age: 18,376 (21.8 percent)
• National Origin: 8,299 (9.8 percent)
• Religion: 3,436 (4.1 percent)
• Color: 3,240 (3.8 percent)
• Equal Pay Act: 996 (1.2 percent)
• Genetic Information: 206 (.2 percent)

There is a sense that a witch hunt is a foot on one end and a continued interest in uncovering harassment on the other end.  While we do not anticipate laws prohibiting mandatory arbitration and confidentiality provisions will pass, we do believe the 2018 EEOC data will reveal an uptick in claims.  We suggest clients take proactive steps to limit liability associated with these employment claims.  We suggest our clients:

1. Use a third party to conduct investigations upon a report of harassment.
2. Use a third party to conduct a risk assessment, including but not limited to:
   1. Creating or updating your employee handbook to include effective discrimination policies;
   2. Conduct trainings, especially of managers – to clarify the appropriate behavior in the workplace;
   3. Ensure employees know harassment reporting procedures; and
   4. Keep you apprised should the state adopt new policies in response to the #metoo movement.

Our Employment Law Group conducts investigations and risk assessments.  Please contact Karen Kalzer should you need an investigation and Mary Haddad should you need a risk assessment.  While our employment group will defend you against a claim of harassment; implementing the structure for a harmonious work place is key to a thriving business and successful defense of such a claim.

 

Dealing with Opioids In the Workforce

Washington Governor Jay Inslee has asked Washington lawmakers to declare opioid use a public health crisis and President Trump declared a 90 day public health emergency (to end on January 23, 2018) in order to mobilize the federal government to tackle the opioid epidemic.  The City of Everett and the State Attorney General’s office have filed lawsuits against Purdue Pharma alleging illegal funneling of opioids into the state.  Meanwhile, employers continue to struggle with the very real impact of opioid use and addiction on the job, much of it resulting from medical treatment for physical injuries.  Impacts on the workplace include increased absenteeism, decreased work performance, and near-miss accidents and injuries.

Dealing with the use and abuse of opioids implicate a number of laws and rights of employees.  Drug prevention laws, privacy rights, disability laws and workplace safety laws can create a quagmire of legal issues for employers.  The National Safety Council recommends a four prong approach to employers for addressing the epidemic:

• partner with insurance and Employee Assistance Programs;
• re-evaluate testing and discipline policies;
• invest in management and employee education;
• and, increase and ensure confidential access to treatment.

Partnering with your legal counsel to evaluate and implement proper policies is one of the recommended means of addressing the crisis.

 

Under New Tax Act, Deduction for Sexual Harassment or Sexual Abuse Settlements That Are Subject to Nondisclosure Agreement Is Now Prohibited

Section 13307(a) of the new Tax Cuts and Jobs Act (“Act”) provides that “No deduction shall be allowed under this chapter for (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.” Codified at 26 U.S.C. § 162(q).

Prior to the Act, employers could deduct ordinary and necessary expenses paid or incurred in carrying on any trade or business, to include the cost of any settlement, payout, or attorney fees.  Under new Section 162(q), those settlements, payouts, and fees related to sexual harassment or sexual abuse that are subject to a nondisclosure agreement (“NDA”) are no longer deductible. This provision is effective for amounts paid or incurred after December 22, 2017, the date on which the bill was signed into law.

Moving forward there is likely to be much debate between parties to a negotiation involving sexual harassment or abuse claims for which an NDA is contemplated regarding what is “related to” for purposes of applying this provision.  By way of example, the vague language leaves open whether it would include, and therefore preclude deduction for, damages paid and fees incurred on a concurrent emotional distress claim or wage claim.

Also, although the provision is included in a subpart of the Tax Code addressing trade or business expense deductions, there is nothing in the language of the provision itself limiting it solely to employers and the “chapter” broadly addresses both individuals and corporations. Thus, arguably, it could apply to eliminate any deduction for settlement payments received by plaintiffs and the attorneys’ fees they may have incurred in negotiating the settlement.

Given the many implications, this provision will likely encourage structured settlements clearly designating what portion of the payment and/or fees is specific to the sexual harassment and abuse claims.  As such, we recommend discussing with your attorney before executing or preparing a settlement agreement that concerns alleged sexual misconduct and includes a non-disclosure clause.