Monday, January 13, 2020

New FLSA joint employer final rule from DOL

The Department of Labor (DOL) published its final rule regarding joint employer status under the Fair Labor Standards Act (FLSA) (press release | actual final rule). I suppose the headliner is the 4-factor test for analyzing whether a putative joint employer is actually deemed a joint employer.
Not official use.
[T]he Department is adopting a four-factor balancing test derived from Bonnette v. California Health & Welfare Agency to assess whether the other person: 
(1) hires or fires the employee; 
(2) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; 
(3) determines the employee’s rate and method of payment; and 
(4) maintains the employee’s employment records. 
No single factor is dispositive in determining joint employer status, and the appropriate weight to give each factor will vary depending on the circumstances.
The remainder of the rule is worth perusing for some additional helpful tidbits, including:
  • A joint employer must actually exercise (directly or indirectly) one of the "four control factors" - the ability, power, or reserved right is not enough;
  • "[W]hether the employee is economically dependent on the potential joint employer is not relevant for determining the potential joint employer’s liability under the Act";
  • "The Department’s proposal identified certain business models (such as a franchise model), certain business practices (such as allowing the operation of a store on one’s premises), and certain contractual agreements (such as requiring a party in a contract to institute sexual harassment policies) as not making joint employer status more or less likely under the Act."
The final rule becomes effective on March 16, 2020. 

Friday, December 27, 2019

SCOTUS will take another crack at ministerial exception to employment discrimination claims

Almost 8 years ago, a unanimous Supreme Court recognized that the First Amendment's Religion Clauses create a ministerial exception to the ADA in Hosanna-Tabor v. EEOC. The Court held that a "called" teacher, who performed "important religious functions" could not file a lawsuit under the ADA.

Welp, get ready for round 2, because the Supreme Court just granted certiorari and will hear two consolidated cases:

Our Lady of Guadalupe School v. Morrisey-Berru - A Catholic school teacher filed an ADEA lawsuit, and the Ninth Circuit refused to apply the ministerial exception, in part because she did not hold a religious title. Hosanna-Tabor clearly held that a title is "relevant" but not determinative. The school argues that the plaintiff taught daily religious education classes through prayer, worship, and instruction, and "modeled" Catholic behavior. She had some other religious activities too, like directing an annual performance of The Passion.

St. James School v. Biel -  Another appeal from - you guessed it! - the Ninth Circuit. It's another case involving a Catholic school teacher. The Ninth Circuit applied something like a 4-factor test, looking at serving important religious functions, title, training, and tax benefits. The teacher only met the first factor, and so the Ninth Circuit held that the ministerial exception did not apply. Reading Hosana-Tabor, I think this is likely wrong. While all of those things are relevant, they are not equal or necessary elements.

I'm not a betting man, but I suspect the Ninth Circuit will not fare well here. The case has not yet been scheduled for argument, but will presumably be heard sometime in the next few months.

Thursday, December 19, 2019

NLRB changes course on employee right to use employer's email system for NLRA-protected activity

Folks, you're not gonna believe this . . . the Trump administration NLRB just issued an opinion overturning an Obama administration NLRB decision (which itself had overturned a Bush administration NLRB decision). I'll give you a second to catch your breath and recover from the shock . . .

The new decision is Caesars Entertainment, which overruled Purple Communications, which overruled Register Guard.
Not official use.
The issue before us is whether the National Labor Relations Act requires the [employer] to permit employees to use its email and other information-technology (IT) resources for the purpose of engaging in activities protected by Section 7 of the Act.
The NLRB emphasized that the analysis requires balancing the employer's property rights with the employees' NLRA rights. Purple Communications had established a presumptive right to use an employer's email system for NLRA-protected activities unless it interfered with production or discipline. No surprise, Caesars Entertainment cuts the opposite way:
Accordingly, we shall overrule Purple Communications and return to the standard announced in Register Guard. Under that standard, employees have no statutory right to use employer equipment, including IT resources, for Section 7 purposes. However, we shall recognize an exception to the Register Guard rule in those rare cases where an employer’s email system furnishes the only reasonable means for employees to communicate with one another.
I hate to say I told you so . . . but my post on Purple Communications concluded with "And now, the law is settled . . . until at least 2016." But, this time it is really settled . . . until at leas 2020.

Wednesday, December 11, 2019

SCOPA: Fluctuating Work Week method of overtime pay does not comply with PA Minimum Wage Act

How do simple concepts get so complicated? Both the federal Fair Labor Standards Act (FLSA) and the Pennsylvania Minimum Wage Act (PMWA) require employers to pay non-exempt employees time-and-a-half for hours over 40 worked in a workweek. So, if an employee makes $10/hour and works 50 hours, they get $550: $400 ($10 * 40 hours) + $150 ($15 * 10 hours). Easy, right?

But, wait! What about non-exempt employees who earn a salary? First, you need to calculate their regular rate, by taking their weekly salary and dividing it by the number of hours worked. For salaried employees, the regular rate will therefore vary depending on how many hours they worked that week. Now, the big question - how much do they get for overtime?

Under the FLSA, it is very clear that the employee's salary covers the base amount of regular pay for all hours worked. The employer must only pay the employer the extra 50% of the regular rate for hours over 40. There's a regula29 CFR § 778.114:
tion directly on point,
If during the course of 4 weeks this employee works 40, 37.5, 50, and 48 hours, the regular hourly rate of pay in each of these weeks is $15.00, $16.00, $12.00, and $12.50, respectively. Since the employee has already received straight-time compensation on a salary basis for all hours worked, only additional half-time pay is due. For the first week the employee is entitled to be paid $600; for the second week $600.00; for the third week $660 ($600 plus 10 hours at $6.00 or 40 hours at $12.00 plus 10 hours at $18.00); for the fourth week $650 ($600 plus 8 hours at $6.25, or 40 hours at $12.50 plus 8 hours at $18.75).
In other words, the employer must pay the regular salary and then add the regular rate, times a multiplier of 0.5, times the number of hours over 40 worked in the workweek. We call this the "Fluctuating Work Week (FWW)" method. 

Unfortunately, Pennsylvania has no such regulation addressing the FWW. In Chevalier v. General Nutrition Centers, Inc., the Pennsylvania Supreme Court held that the FWW method does not comply with the PMWA. Instead, employers must use a multiplier of 1.5. 

Monday, December 9, 2019

Pennsylvania compromise minimum wage and overtime legislation pending

The past couple of months have been very hectic on the wage and hour front in Pennsylvania:

I will continue to monitor this issue. 

Tuesday, December 3, 2019

PA court recognizes private cause of action under Medical Marijuana Act

Under Pennsylvania's Medical Marijuana Act (MMA):
No employer may discharge . . . an employee . . . solely on the basis of such employee's status as an individual who is certified to use medical marijuana. 
35 P.S. §  10231.2103(b)(1). But, can a fired employee sue their employer? According to the Lackawanna Court of Common Pleas in Palmiter v. Commonwealth Health Systems, Inc., the answer is YES!

This is apparently the first decision (state or federal) to address this issue. The Court held that the MMA grants employees an implied right of action against their employers. The MMA's "anti-discrimination provisions would be rendered meaningless if an aggrieved employee could not pursue a private cause of action and seek to recover compensatory damages from an employer that violates Section 2103(b)."

It's still possible that appellate courts (or other jurisdictions within PA) will see this differently. For now, employers should proceed with caution in this area while we get some of these legal issues sorted out.

HT: Tort Talk, Case of First Impression Decided by Judge Nealon on Medical Marijuana Issue in Civil Litigation Context.

Thursday, November 21, 2019

New DOL overtime regulations: Non-discretionary bonuses and commissions

One area of the new U.S. DOL overtime regulations that has not received a lot of attention is the new rule regarding non-discretionary bonuses and commission payments. Like the proposed Obama-era rule, the new rule likewise allows employers to cover up to 10% of the minimum salary threshold for exempt employees.

The new threshold is $684/week. Employers may pay as little as 90% of that ($615.50), so long as they cover the difference with non-discretionary bonuses or commissions. What happens if the employee does not earn enough to make up the 10%?
Not official use.
The final rule permits employers to meet the salary level requirement by making a catch-up payment within one pay period of the end of the 52-week period. In plain terms, each pay period an employer must pay the [exempt] employee on a salary basis at least 90 percent of the standard salary level and, if at the end of the 52-week period the sum of the salary paid plus the nondiscretionary bonuses and incentive payments (including commissions) paid does not equal the standard salary level for the 52-week period, the employer has one pay period to make up for the shortfall (up to 10 percent of the required salary level). Any such catch-up payment will count only toward the previous 52-week period's salary amount and not toward the salary amount in the 52-week period in which it was paid.
This is different from the Obama-era rule, which required employers to catch up or pay the bonuses at least quarterly.