Wednesday, January 10, 2024

DOL Issues Final Rule: Employee or Independent Contractor Under the FLSA

On Tuesday, the U.S. Department of Labor announced its Final Rule: Employee or Independent Contractor Under the Fair Labor Standards Act. A quick overview:

Effective Date: 

March 11, 2024

Why it matters: 

The FLSA sets a minimum wage and requires overtime pay (time and a half for hours over 40 worked in a workweek). It also imposes certain recordkeeping requirements, and prohibits retaliation for filing complaints about violations. Simply put, this all applies to employees but not independent contractors. 

Not official use.
Shut up and tell me the test!

The final rule utilizes the "economic realities test," examining the "totality of the circumstances" where "economic dependence is the ultimate inquiry." The rule provides a non-exhaustive list of six factors, none of which is dispositive on its own:

  1. Opportunity for profit or loss depending on managerial skill;
  2. Investments by the worker and the potential employer;
  3. The degree of permanence of the work relationship; 
  4. The nature and degree of control; 
  5. The extent to which the work performed is an integral part of the potential employer’s business; and 
  6. Skill and initiative.

If you're looking for more in-depth guidance on applying these factors - great news! - the final rule is 339 pages long. Sorry, too much? Check out the FAQ page for something in between this very brief overview and the full 339-page rule. 

Wednesday, January 3, 2024

Overtime and Noncompete Regulations to Plan for in 2024

What better way to kick off the new year than with my latest article in Pennsylvania Business Central? The article addresses Overtime and Noncompete Regulations to Plan for in 2024Will they actually take effect? We don't know yet. But, employers should start planning just in case.

Friday, August 11, 2023

EEOC publishes proposed rule for Pregnant Workers Fairness Act

This week, the EEOC published a Notice of Proposed Rule Making (NPRM) for the Pregnant Workers Fairness Act (PWFA). The PWFA went into effect on June 27, 2023. In a nutshell:

Not official use.
The PWFA requires covered employers to provide reasonable accommodations to a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation will cause the employer an undue hardship.

 Employers may find the following resources helpful:

Comments are due on or before October 23, 2023, and the Final Rule will follow sometime after that. 

Thursday, August 3, 2023

NLRB swings the pendulum back on employee handbooks

Yesterday, the National Labor Relations Board (NLRB) adopted a new standard for assessing the lawfulness of work rules (press release | decision in Stericycle, Inc.). If you're stuck in the past (ya know, like two days ago), here is an overview of the overruled categorical Boeing standard (maybe bookmark it in case a Republican gets elected president). 

So, what is the "new" standard, which actually "builds on" the "old-old" (pre-Boeing) standard?

Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule. If the employer proves its defense, then the work rule will be found lawful to maintain.

If you're a fan of Con Law, this sounds a lot like "strict scrutiny." Employers may wish to review their employee handbooks with the new standard in mind to avoid NLRA challenges. 

Friday, June 30, 2023

SCOTUS clarifies "undue hardship" standard for religious accommodation under Title VII

Awe man, how embarrassing. It turns out that some of us (by which I mean basically all of us) have been getting it wrong for 46 years! You see, Title VII requires employers to reasonably accommodate an employee's sincerely held religious beliefs unless doing so would impose an "undue hardship."

Well, apparently we've been misinterpreting a 1977 Supreme Court decision (Trans World Airlines, Inc. v. Hardison) to interpret "undue hardship" as meaning "more than a de minimis cost." In fairness to us, the Supreme Court decision in question literally says, “To require TWA to bear more than a de minimis cost in order to give Hardison Saturdays off is an undue hardship.” Or, if you like ellipses to really drive it home, "more than a de minimis cost . . . . is an undue hardship."

Justice Alito
No, no, no, says SCOTUS. Yesterday, the Supreme Court issued its opinion in Groff v. DeJoy. Now, despite my sarcasm, it has always been odd that "undue hardship," meant "more than de minimis" for religious accommodations, but something far more substantial under the ADA's disability  accommodation provisions. And, as the Court noted yesterday, "de minimis" means something far less than the plain language understanding of the phrase "undue hardship."

But, hey, the past is the past. Let's cut to the chase, what does "undue hardship" really mean in the context of a religious accommodation defense? 

  • "We think it is enough to say that an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business."
  • "[C]ourts must apply the test in a manner that takes into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, “size and operating cost of [an] employer.”
The fundamentals remain unchanged: An employer must reasonably accommodate an employee's sincerely held religious beliefs unless it imposes an undue hardship. Now, however, the bar has been raised for what counts as an "undue hardship."

Wednesday, June 14, 2023

NLRB decision shifts independent contractor analysis

Yesterday. the NLRB issued its decision in The Atlanta Opera, Inc. You know it's important when they also issue a press release

It is probably easiest to explain what the new test is not: "The Board expressly rejected the holding of the SuperShuttle Board that entrepreneurial opportunity for gain or loss should be the 'animating principle' of the independent-contractor test."

So, what is the test? I know what you're thinking... "Phil, pleeease tell me that it's a nonexhaustive list of ten factors!?" You know it! The decision marks a return to "longstanding principles" and "independent-contractor analysis will be guided by a list of common-law factors." Turning to the Restatement (Second) of Agency, the Board looked at:

[T]he following matters of fact, among others, are considered: 

(a) the extent of control which, by the agreement, the master may exercise over the details of the work; 

(b) whether or not the one employed is engaged in a distinct occupation or business; 

(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; 

(d) the skill required in the particular occupation; 

(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; 

(f) the length of time for which the person is employed; 

(g) the method of payment, whether by the time or by the job; 

(h) whether or not the work is a part of the regular business of the employer; 

(i) whether or not the parties believe they are creating the relation of master and servant; and 

(j) whether the principal is or is not in business.

Notably, the new decision not only overrules prior NLRB precedent, but also seems to depart from D.C. Circuit precedent (FedEx Home Delivery v. NLRB, 563 F.3d 492 (D.C. Cir. 2009) (FedEx I)). The Board purports to rely on Supreme Court and decisions and other D.C. Circuit decisions. Time will tell whether The Atlanta Opera standard will survive. 

Wednesday, March 29, 2023

NLRB GC weighs in on nondisparagement and confidentiality clause decision

NLRB General Counsel, Jennifer Abruzzo, issued a memorandum addressing the NLRB's decision in McLaren Macomb (memo | press release | McLaren decision). You can read my analysis of that decision here: NLRB takes aim at confidentiality and nondisparagement clauses in separation agreements.

The whole memo is worth a read, but some highlights of the GC's view:

  • Even unsigned agreements violate the NLRA if they were proffered and include unlawful nondisparagement and confidentiality provisions;
  • The decision applies retroactively to separation agreements entered into even before the NLRB's decision in McLaren;
  • In a rare piece of good news, agreements with unlawful clauses are likely still enforceable as to the remaining lawful provisions;
  • The memo is less than clear as to whether a "savings clause" would work. It seems like it could work, but the GC would like the NLRB to adopt a model. 
On that last point, what might a model savings clause look like? Well, the memo states that a savings clause should:
make it clear to employees that they had rights to engage in: 

(1) organizing a union to negotiate with their employer concerning their wages, hours, and other terms and conditions of employment; 

(2) forming, joining, or assisting a union, such as by sharing employee contact information; 

Not official use.
(3) talking about or soliciting for a union during non-work time, such as before or after work or during break times, or distributing union literature during non-work time, in nonwork areas, such as parking lots or break rooms; 

(4) discussing wages and other working conditions with co-workers or a union; 

(5) taking action with one or more co-workers to improve working conditions by, among other means, raising work-related complaints directly with the employer or with a government agency, or seeking help from a union; 

(6) striking and picketing, depending on its purpose and means; 

(7) taking photographs or other recordings in the workplace, together with co-workers, to document or improve working conditions, except where an overriding employer interest is present; 

(8) wearing union hats, buttons, t-shirts, and pins in the workplace, except under special circumstances; and 

(9) choosing not to engage in any of these activities.
That's, uhhh, a lot. Keep an eye out for that model language, but I think it's going to be something like the above.