Employment Law in the United States: A Year in Review

February 4, 2019

Steve Hirschfeld - ModeratorFounding PartnerHirschfeld Kraemer, LLPCalifornia; Alaska

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Panelists

Steve HirschfeldFounding PartnerHirschfeld Kraemer, LLPCalifornia; Alaska

Teresa TearePartnerShawe RosenthalMaryland

Liesel StevensShareholderRay Quinney & NebekerUtah

Joseph U. LeonoroMemberSteptoe & Johnson, PLLCWest Virginia

John HolmesShareholderMaynard Cooper & GaleAlabama

Wrongful Termination

Liesel StevensShareholder

Ray Quinney & NebekerUtah

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AT-WILL EMPLOYMENT -- OVERVIEW

• Presumption of At-Will Employment (where there is no express contract to the contrary)

An employer may terminate an employee at any time for any or no reason, except an unlawful one. Likewise, an employee may leave a job at any time for any or no reason.

• Common law exceptions:

(1) violation of public policy

(2) implied contract

(3) implied covenant of good faith and fair dealing

• Statutory exceptions

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INCREASE IN RETALIATION CLAIMS

• In 2007, the EEOC received 18,198 retaliation charges. By

2017, the number of retaliation charges had risen to

41,097, nearly half (49%) of all charges filed.

• Elements: (1) protected activity (opposition to an illegal

employment practice or participation in filing a claim); (2)

subsequent adverse action; (3) causation.

• Opposition protected if based on reasonable belief that

conduct is unlawful, even if conduct is not found to be

unlawful.

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WHISTLEBLOWING DEVELOPMENTS

• In fiscal 2018, SEC received record number of whistleblower tips. SEC’s whistleblower program includes: anti-retaliation protections for whistleblowing activity; and awards for whistleblowing tips that lead to successful SEC enforcement actions.

• Digital Realty Trust v. Somers, 138 S.Ct. 767 (2018): struck down the SEC’s expansive definition of “whistleblower” under the Dodd-Frank Wall Street Reform and Consumer Protection Act. In order to qualify as a whistleblower, an individual must make a complaint directly to the SEC. Internal reports are insufficient.

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EXHAUSTION OF ADMINISTRATIVE REMEDIES

• Under Title VII, ADA and ADEA, employee is required to timely file an EEOC charge and receive a right-to-sue letter before filing suit.

• Similar requirements under most state discrimination laws.

• Failure to exhaust administrative remedies --jurisdictional defect or affirmative defense? Circuit split which U.S. Supreme Court has agreed to resolve in Fort Bend County v. Davis.

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DEVELOPMENTS REGARDING ARBITRATION AGREEMENTS

• In Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018), the Court rejected the NLRB’s position that arbitration agreements with class or collective action waivers illegally restrain employees in their exercise of concerted protected activity under the NLRA. Held: employers could require that employees arbitrate disputes individually and waive their right to class or collective actions.

• In New Prime, Inc. v. Oliveira, – S. Ct. – (2019), the Court held that exclusion under the Federal Arbitration Act (FAA) applies to both employees and independent contractors in the transportation industry.

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AVOIDING WRONGFUL TERMINATION CLAIMS

•Maintain clear employment policies

•Document performance issues

• Investigate complaints

•Objectively review termination decisions

Wage & Hour

Joseph U. LeonoroMember

Steptoe & Johnson, PLLCWest Virginia

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FLSA Update

Encino Motorcars, LLC v. Navarro

• Service advisors at an auto dealership are exempt fromovertime.

• The Supreme Court rejected the long-standing rule thatexemptions must be narrowly construed.

• The Supreme Court held that exemptions should be given a “fair reading.”

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FLSA Update

• Dissent argues that this “unsettles more than half a century of our precedent.”

• This will have significant impact on employers, especially in close cases.

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FLSA Update

New Division of Labor Opinion Letters

• Compensability of Travel Time

• Compensability of Frequent Rest Breaks Due to Medical Condition

• Compensability of Time at Employer-Sponsored Benefits Fairs

• Retail or Service Establishment Exemption

• Volunteer Status

• Motion Picture Theater Exemption

• Privately-Owned, Volunteer Fire Departments

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FLSA Update

• Reasonable Relationship Between Salary Paid and Actual Earnings

• Ministerial Exemption to Members of Religious Commune

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FLSA Update

Re-issued Division of Labor Opinion Letters

• Tipped Employees and Dual Jobs

• Administrative Exemption for Specific Job Positions

• Client Service Managers

• Out-of-Town Coordinators

• Field Information Agents

• Supervisory Special Agents

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FLSA Update

• Clinical Coordinators

• Business Development Managers

• Project Supervisors

• Calculations of Deductions From Salaried Exempt Employees

• Salary Deductions for Full-Day Absences Based on Hours Missed

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FLSA Update

• Bonuses and Calculating the Regular Rate of Pay

• Job Bonus

• Non-Discretionary, Year-End Bonus

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FLSA Update

• The Consolidated Appropriations Act of 2018

• Amends the FLSA

• Section 203(m) re: Tipped Employees

• Prohibits employers, including managers and supervisors, from keeping any portion of employee tips, regardless of whether the employer uses the tip credit.

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FLSA Update

• Creates a private cause of action against employers.

• Significant implications for employers with tipped employees.

• Section 213 (a)(19)

• Creates a new exemption for minor league baseball players.

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FLSA Update

• Department of Labor’s Fall 2018 Unified Regulatory Agenda

• Tipped Employees

• DOL will issue new rules to comply with the recent FLSA amendments.

• White Collar Overtime Exemption

• DOL is to release new rules for white collar exemptions in March 2019.

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FLSA Update

• Regular Rate of Pay

• DOL intends to issue a new rule “to clarify, update, and define basic rate and regular rate requirements.”

• Joint Employers

• DOL intends to issue a new rule “to clarify the contours of the joint employment relationship to assist.”

EEOC / Discrimination Update

John HolmesShareholder

Maynard Cooper & GaleAlabama

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EEOC 2018 Year in Review – Statistics

• The EEOC’s legal team resolved 141 lawsuits andfiled an additional 199 on behalf of plaintiffs –which includes an increase in sexual harassment-related lawsuits by more than 50%.

• The EEOC facilitated recovery of $505 million forapproximately 68,000 individuals.

• In addition to its consideration of charges of discrimination, the EEOC was also active in filing amicus briefs in 29 employment discrimination cases.

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EEOC 2018 Year in Review – Statistics

• Significant reduction in backlog of cases—private sector employment charges reduced by approximately 20% in 2018.

• EEOC’s launch of a national web-based inquiry/appointment component of its public portal in 2018 has led to a 30% increase in employee inquiries – over 40,000 intake interviews.

• Other outreach and education efforts were successful, with the agency conducting over 300 Respectful Workplace training programs.

• Takeaway: the EEOC is ramping up across the board, taking meaningful steps to further its goals of efficiency and reaching new, targeted audiences via emerging technologies in order to educate and prevent on the front-end in an effort to avoid harms and litigation on the back-end.

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Pregnancy Discrimination

• In December 2018, the EEOC announced a $3.5 million settlement with Cato Corporation over allegations that Cato failed to offer pregnant workers reasonable accommodations, forced them to take unpaid leave, and unlawfully discharged workers due to pregnancy or related disabilities.

• This is consistent with the EEOC’s Strategic Enforcement Plan from 2017, which sought to emphasize accommodations for pregnancy-related limitations.

• Employers should expect continued, stringent enforcement on this front from the EEOC and ensure they do not treat pregnant employees differently from other workers absent the most compelling circumstances.

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Sexual Orientation & Title VII

• Circuit split has recently deepened as to the applicability of Title VII to sexual orientation discrimination.

• Compare Evans v. Ga. Reg’l Hosp., 850 F.3d 1248 (11th Cir. 2017) with Zarda v. Altitude Express, 883 F.3d 100 (2d Cir. 2018) (en banc); Hivley v. Ivy Tech Community College, 853 F.3d 339 (7th Cir. 2017) (en banc)

• Federal Agencies that enforce Title VII remain divided.

• EEOC → Sexual orientation is protected by Title VII.

• DOJ → Sexual orientation is not protected by Title VII.

• Two petitions for writ of certiorari are currently pending before SCOTUS to conclusively decide the issue.

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Gender Identity & Title VII

• EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., 884 F.3d 560 (6th Cir. 2018)

• Sixth Circuit held Title VII’s prohibition on sex discrimination extends to gender identity and transgender status.

• Courts have been more open to extend Title VII’s protections to gender identity/gender-transition situations than for pure sexual orientation discrimination.

• Though, there also is a circuit split on this issue.

• The Supreme Court currently has a cert petition pending to resolve this issue, as well.

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Physical Ability Tests

• EEOC has increased enforcement efforts against employers’ pre-employment physical ability testing programs.

• Multiple lawsuits that employers are improperly screening out applicants on the basis of disability.

• Multi-million dollar recoveries for plaintiffs alleging strength and fitness tests disparately impact female applicants.

• Make sure your PATs are properly validated and truly test physical abilities that workers really need on the job – and then reexamine.

Workplace Leave Laws

Teresa TearePartner

Shawe RosenthalMaryland

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Leave Laws: Federal Law Update

•Unpaid Leave: FMLA Forms Updated ➢New forms expire Aug. 31, 2021➢Essentially unchanged, but still should use the updated ones

• Paid Leave: Attempts at Federal Legislation ➢President Trump’s 2018 Budget included paid family leave ➢Economic Security Act for New Parents (2018) ➢What’s in store for 2019?

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Leave Laws: State Law Update

•Many States have enacted paid leave laws

• In 2018, the following states joined the trend:

➢Maryland

➢New Jersey

➢Rhode Island

➢Washington

➢Michigan

➢Vermont

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Leave Laws: State Law Update (continued)

• Examples

•Differences➢What employers are covered?

➢Which employees are covered?

➢For what purposes can the leave be used?

➢Amount of leave

➢Accrual rates

➢Caps on amount

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Leave Laws: Local Law Update

• Counties and Cities have passed laws providing paid leave.

• Preemption Issue➢22 states have passed preemption laws which prohibit localities from passing paid leave requirements.

• Examples

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Leave Laws: Tips for Employers

• Paid leave is obviously a benefit to attract and retain individuals

• Determine laws that apply to your organization. • Decide what leave benefits to offer and how to offer it to comply with any paid leave laws➢E.g., PTO banks versus separate banks for vacation,

sick, other leave ➢Some employer experimenting with unlimited leave

• Be prepared for continued developments in this area (e.g., federal law, additional states, and additional leave entitlements like Pawternity leave!)

Harassment / #MeToo Update

Steve HirschfeldFounding Partner

Hirschfeld Kraemer, LLPCalifornia; Alaska

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Impact on the Workplace

• Divisiveness within the work environment• Negatively impacts effective communication• Creates loss of respect for peers and those in a position of authority

• Creates fear• Reduces productivity and morale• Absenteeism and turnover• Tarnishes the company’s brand• Results in costly and unnecessary administrative and legal proceedings

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Expanding Role of States in Regulating Harassment California Leading the Way…

ALL EMPLOYERS, large and small:

• SB 1300: Harassment redefined and expanded (adds CA Gov’t Code 12923)

• The Legislature hereby declares its intent…harassment creates a hostile, offensive, oppressive, or intimidating work environment…when the harassing conduct sufficiently offends, humiliates, distresses, or intrudes upon its victim, so as to disrupt the victim’s emotional tranquility in the workplace, affect the victim’s ability to perform the job as usual, or otherwise interfere with and undermine the victim’s personal sense of well-being.

• Incorporate this language in your policies

• AB 2770: Protections from defamation claims made against sexual harassment claimants and employers

• Complaint statements and former employer responses w/o malice protected

• Under the radar, but powerful resonance

• SB 820:

• Claimants “own” their story - limiting settlement “gag” provisions

• SB 1343: Anti-abusive conduct training now mandated for all employees of small and large employers

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Re-Defining Sexual Harassment California Again Leading the Way…

• SB 1300 – Sweeping changes to the Fair Employment and Housing Act (FEHA) signed by Brown and effective January 1

• New Standard:• Harassment is unlawful if it disrupts the victim’s emotional tranquility

in the workplace, affects the victim’s ability to perform the job as usual, or otherwise interferes with and undermines the victim’s personal sense of well-being

• The law clarifies that there is no requirement to show that productivity declined, only that it alters the working conditions sufficient to make it more difficult for the victim to perform their job.

• A single instance of harassment can constitute sexual harassment

• The law expressly declines the stray remark doctrine.

• **Update Policies and Handbooks to reflect new standard

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Impact of #MeToo Movement on Harassment Investigations

• Is HR sufficiently neutral or must third party investigators be used?

• Employers feeling pressure to terminate perpetrators• What does zero tolerance mean?

• Employers feeling pressure to publicly release results of investigation and discipline taken

• Importance of preparing written report of findings

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More jurisdictions are requiring harassment trainings

Canada:

• Alberta (also for employees)

• British Columbia (also for employees)

• Manitoba (also for employees)

• Newfoundland & Labrador (also for employees)

• New Brunswick (also for employees) *goes into effect April 1, 2019

• Ontario (also for employees)

• Saskatchewan (also for employees)

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More United States jurisdictions are requiring harassment trainings

United States:

• California (also for employees)

• Connecticut

• Delaware (also for employees)

• District of Columbia (also for employees) *for businesses that have tipping

• Maine (also for employees)

• New York (also for employees)

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Should nondiscriminatory harassment aka bullying be addressed in your policy and training?

Thank you!

Steve HirschfeldFounding PartnerHirschfeld Kraemer, LLPCalifornia; Alaska

Teresa TearePartnerShawe RosenthalMaryland

Liesel StevensShareholderRay Quinney & NebekerUtah

Joseph U. LeonoroMemberSteptoe & Johnson, PLLCWest Virginia

John HolmesShareholderMaynard Cooper & GaleAlabama

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