On April 24, 2019, the United States Supreme Court held that under the Federal Arbitration Act (“FAA”), an ambiguous agreement cannot provide the necessary contractual basis for concluding that the parties agreed to submit to class arbitration. The Supreme Court considered whether the FAA bars an order requiring class arbitration when an agreement is not silent, but rather ambiguous about the availability of such arbitration. In a 5-4 decision, the Court overturned the Ninth Circuit’s ruling that allowed a worker’s data breach class arbitration to move forward.

Background

In 2016, Frank Varela (“Varela”) filed a putative class action against his employer, Lamps Plus, Inc. (“Lamps Plus”), in federal district court on behalf of about 1,300 employees whose tax information had been compromised by a hacker. Relying on the arbitration agreement in Varela’s employment contract, Lamps Plus sought to compel arbitration—on an individual rather than a classwide basis—and to dismiss the suit. The district court rejected the individual arbitration request, but authorized class arbitration and dismissed Varela’s claims. Lamps Plus appealed, arguing that the district court erred by compelling class arbitration, but the Ninth Circuit affirmed. Even though the Supreme Court ruled in Stolt-Nielson S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (“Stolt-Nielson”), that a court may not compel arbitration on a classwide basis when an agreement is silent on the availability of such arbitration, the Ninth Circuit ruled that Stolt-Nielson was not controlling because the agreement in the case was ambiguous rather than silent on the issue of class arbitration. The Ninth Circuit’s contrary conclusion was based on the state law contra proferentem doctrine, which requires contractual ambiguities to be construed against the drafter. The Supreme Court disagreed.

Supreme Court Decision

The Supreme Court reasoned that the Ninth Circuit’s contrary conclusion based on the state law contra proferentem doctrine, is based on public policy considerations rather than on the intent of the parties. The Supreme Court found that such an approach is flatly inconsistent with the foundational FAA principle that arbitration is a matter of consent and that the task of the courts and arbitrators is to give effect to the intent of the parties.

The Supreme Court also highlighted the importance of recognizing the fundamental difference between class arbitration and the individualized form of arbitration envisioned by the FAA. Individual arbitration is, the Court noted, cheaper and quicker, while class arbitration takes longer, costs more, and is procedurally more complex. Similar to its reasoning in Stolt-Nielson, the Supreme Court reasoned that, like silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to sacrifice the principal advantage of arbitration.

Takeaway for Employers

Employers should keep in mind that if they intend to permit class arbitration, it must be explicitly authorized in arbitration agreements. Employers are cautioned however that in incorporating by reference the rules of various arbitration forums, which permit class-wide arbitration, they may unwittingly be consenting to class-wide arbitration. Employers are encouraged therefore to make explicit that they are agreeing only to individual, rather than class-wide arbitration.

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If you have any questions regarding the Supreme Court’s ruling in Lamps Plus, Inc., et al., v. Varela, Case No. 27-988, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

The EEOC previously informed employers that it would not be seeking pay data for the 2018 EEO-1 reporting period despite the reinstatement of the pay data collection rule. The Hon. Tanya S. Chutkan of the United States District Court for the District of Columbia issued an order today requiring the EEOC to collect 2018 pay data by September 30, 2019. For further information on the pay data collection requirement, see our prior alerts: https://putneylaw.com/client-news/eeoc-pay-data-collection-eeo-1-reports-reinstated and https://putneylaw.com/client-news/pay-data-not-required-2018-eeo-1-cycle-according-eeo.

In addition to setting a September 30th deadline, Judge Chutkan ordered the EEOC to collect a second year of pay data. The EEOC has until May 3, 2019 to decide whether it will collect 2017 pay data or 2019 data in the 2020 reporting period. Additionally, a statement must be issued on the EEOC website informing employers of the Court’s decision no later than April 29, 2019.

Takeaway for Employers

Large employers with 100 or more employees are now required to provide data on wage information and hours worked for all employees by race, ethnicity, and sex by job category for 2018. Employers should begin to collect pay and hours worked data as soon as possible in order to comply with the September 30, 2019 deadline. Employers are still required to submit their 2018 EEO-1 reports, which include employees’ race, ethnicity, and sex by job category by May 31, 2019. As always, we encourage you to contact us for assistance in complying with your EEO-1 reporting requirements.

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If you have any questions regarding your EEO-1 reporting obligations, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

The New York City Council has passed a bill that would prevent employers from requiring pre-employment marijuana testing during the hiring process. The legislation, Intro. No. 1445-A, which was passed on April 9, 2019 on a 41-4 vote, prohibits employers from requiring a job candidate to submit to testing for tetrahydrocannabinols (THC), the active ingredient in marijuana, as a condition of employment. Exceptions are provided for jobs that are safety and security sensitive, and those tied to a federal or state contract or grant.

The law, which currently awaits the mayor’s signature, will take effect one year after enactment. Upon enactment, the law would amend the New York City Human Rights Law (“NYCHRL”).

Background

In a Committee Report on the bill, Council members cited to the history of disparate impact based on race in the enforcement of marijuana prohibition. The report explained that positive results of THC can occur weeks after use and do not necessarily indicate that a person is impaired at the moment of testing. According to the report, as New York City residents freely travel to the 34 states that have some form of marijuana legalization, those who engage in legal marijuana consumption should not be penalized for legal use of a product in another state.

Although the possession and sale of recreational marijuana is currently illegal under New York State Penal Law Article 221, there has been a push by Governor Andrew Cuomo, Mayor Bill De Blasio, and state legislators to legalize recreational marijuana. Medical marijuana has been legal in New York since the enactment of the Compassionate Care Act in 2014.

Exceptions

The bill would not apply to a job candidate applying to work in the following positions:

  • police officer or peace officer;
  • positions with a law enforcement or investigative function at the department of investigation;
  • certain positions in the construction industry;
  • positions requiring a commercial driver’s license;
  • positions requiring the supervision or care of children, medical patients or certain vulnerable persons;
  • positions that impact the health or safety of employees or the public;
  • positions tied to a contract entered into between the federal government;
  • positions in which testing is required by the departments of transportation of the federal, state, or city government; or
  • positions that require drugs testing for purposes of safety or security under federal or state statute, regulation, or order.

Additionally, the ban on pre-employment marijuana testing would not apply to any position with the potential to significantly impact the health or safety of employees or the public, as determined by the commissioner of citywide administrative services or the chairperson. The bill also would not apply to drug testing required by a collective bargaining agreement between an employer and a union.

Takeaway for Employers

As a reminder, the NYCHRL currently prohibits most employers, labor organizations, and employment agencies from inquiring about or considering the criminal history of job applicants, including prior convictions related to marijuana possession, until after a conditional offer of employment is extended. If this new bill is enacted, New York City employers would be further prohibited from submitting job applicants to a drug test for marijuana use as a condition of employment. Once enacted, employers will have one year to modify any existing hiring practices to comply with the law. Employers should stay tuned to whether the bill is signed and the effective date of compliance.

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If you have any questions regarding the new legislation or pre-employment practices, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

Effective immediately, employees in New York who are registered to vote may take up to three hours of paid time off to vote in any election. The 2019-2020 New York State budget amended New York Election Law §3-110 to read as follows:

A registered voter may, without loss of pay for up to three hours, take off so much working time as will enable him or her to vote at any election.

Unless otherwise mutually agreed, an employer may designate that such time be taken at the beginning or end of an employee’s shift. Under the new law, an employee must notify his or her employer not less than two working days before the day of the election that he or she requires time off to vote. There is no language in the law allowing an employer to deny a request.

Employers remain obligated to post notice of this law at least ten working days before any election and may only remove the notice when the polls close on the day of the election.

Takeaway for Employers

Under the new law, employees are no longer required to vote before or after their shifts. Employers should designate the paid time off to be taken at the beginning or end of employees’ shifts to decrease the interruption in the work day.

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If you have any questions regarding the new election law, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

New Jersey Governor Phil Murphy recently approved legislation that represents the nation’s first state-wide requirement to offer commuter benefits to employees. The law, Senate Bill No. 1567 (“New Jersey Transit Benefits Law” or the “Law”), requires New Jersey employers that employ 20 or more employees to offer pre-tax transportation fringe benefits to employees. Employers must implement these benefits by March 1, 2020, or the effective date of the New Jersey Department of Labor and Workforce regulations, whichever occurs first.

Various cities have enacted similar pre-tax transportation fringe benefits laws at a local level, including New York City, Washington, D.C., San Francisco, and Seattle.

Covered Employees

Under the New Jersey Transit Benefits Law, an employee is one who is hired or employed by the employer and who reports to the employer’s work location. Such definition mirrors the one used in New Jersey’s unemployment compensation law. Employers are not required to provide transit benefits to employees who are currently covered under a collective bargaining agreement until the expiration of the agreement. For federal government employees, if the employee is eligible for a transit benefit due to employment with the government, then the federal government will not be required to provide pre-tax transportation fringe benefits.

Commuter Benefits

Employers must offer a pre-tax election transportation fringe benefit that provides commuter highway vehicle and transit benefits, consistent with the provisions of the federal tax code, Internal Revenue Code (“IRC”) § 132(f)). The benefits must be provided at the maximum benefit levels permitted under federal law, to be deducted for those programs from an employee’s gross income under IRC § 132(f). For the 2019 taxable year, the maximum benefit levels are $265 per month for commuter highway vehicle benefits and any transit pass, and $265 per month for qualified parking.

No Tax Deduction Permitted for Employers

Employers will not be permitted to deduct the expense of the pre-tax transportation benefits from federal corporate income taxes. The 2017 Tax Cuts and Jobs Act, PL 115-19, amended Section 274 of the IRC to eliminate the employer deductions for qualified transportation fringe benefits that are excluded from employees’ taxable income.

Compliance Deadline

Although the New Jersey Transit Benefits Law takes effect immediately, the legislation specifies that it is “inoperative” for 365 days following the date of enactment, or upon the effective date of the rules and regulations adopted by the New Jersey Department of Labor and Workforce regulations, whichever occurs first. As such, the Law will not be enforced until March 1, 2020, unless final regulations are adopted on an earlier date.

Penalties for Noncompliance

Pursuant to the Law, any employer who fails to provide pre-tax transportation fringe benefits will be liable for a civil penalty between $100 and $250 for a first violation. Employers will have 90 days to offer commuter benefits before the civil penalty is imposed. After 90 days, each additional 30-day period in which an employer fails to offer the commuter benefits will be considered a subsequent violation, incurring a penalty of $250 for each violation. Any penalties incurred may be recovered with costs and interest charges, if applicable, in a summary proceeding.

Takeaway for Employers

New Jersey employers that do not currently offer pre-tax transportation fringe benefits will need to offer a transit benefits program. Employers should consider adopting such a program as soon as possible, instead of waiting until March 1, 2020, as the implementing regulations may be adopted earlier. Employers may also want to discuss the tax implications of a transit benefit program with their tax advisors.

As a reminder, New York City employers are required to comply with New York City’s Commuter Benefits Law, which requires private employers with 20 or more full-time, non-union employees in New York City to offer covered employees the opportunity to enroll in commuter benefits programs to pay for mass transit costs with pre-tax earnings.

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If you have any questions regarding the transit benefit programs and requirements, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

On March 14, 2019, the United States Department of Labor (“DOL”) issued an opinion letter concerning whether an employee’s time spent participating in an employer’s optional volunteer program, which awards a bonus to certain participating employees, is hours worked under the Fair Labor Standards Act (“FLSA”). The DOL determined that participation in the program does not count as hours worked under the FLSA, so long as the employer does not unduly pressure its employees to participate. The DOL also determined that the employer may use a mobile device application to track a participating employee’s time spent volunteering, so long as the employer does not use the application to direct or control the employee’s activities.

The Optional Volunteer Program

The opinion letter concerns an employer that provides an optional community service program for its employees. Under the program, employees engage in certain volunteer activities that either the employer sponsors or the employees themselves select. The employer compensates employees for the time they spend on volunteer activities during working hours or while they are required to be on the employer’s premises. However, many of the hours that these employees spend on volunteer activities are outside normal working hours. At the end of the year, the employer rewards the group of employees with the greatest community impact with a monetary award. The winning group’s supervisor decides how to distribute the award among the employees. In making this decision, the supervisor may consider how many hours each employee volunteered. The employer does not require employees to participate in the program, or direct or control their participation. The employer is considering using a mobile device application to track each participating employee’s volunteer hours.

Legal Principles

Citing to several of its own opinion letters, the DOL outlines the following general legal principles:

  • The FLSA recognizes the generosity and public benefits of volunteering and allows people to freely volunteer time for religious, charitable, civic, humanitarian, or similar public services;
  • A person is ordinarily not an employee under the FLSA if the individual volunteers without contemplation or receipt of compensation;
  • A volunteer must offer his or her services “freely without coercion or undue pressure,” direct or implied, from an employer;
  • An employer may notify employees of volunteer activities and ask for assistance with them as long as there are “no ramifications if an employee chooses not to participate”; and
  • The practice of compensating employees when they participate in volunteer activities during normal working hours does not jeopardize their status as volunteers when they participate in volunteer activities outside of normal work hours.

Additionally, an employer may use an employee’s time spent volunteering as a factor in calculating whether to pay the employee a bonus, without incurring an obligation to treat that time as hours worked, so long as: (1) volunteering is optional, (2) not volunteering will have no adverse effect on the employee’s working conditions or employment prospects, and (3) the employee is not guaranteed a bonus for volunteering.

DOL’s Opinion

It is the DOL’s opinion that employee participation in the employer’s program is charitable and voluntary. The employer does not require participation in the program and does not control or direct volunteer work. The DOL stated that it did not appear that the employees suffer adverse consequences in their working conditions or employment prospects if they do not participate in the volunteer activities. Moreover, the employer does not guarantee participating employees a bonus for their volunteer work. Instead, the employer only awards the group with the most community impact and gives the winning group’s supervisor discretion to determine what amount of bonus, if any, to award to individual employees in the group.

Takeaway for Employers

Employers should remember that the FLSA is not intended to discourage or impede volunteer activities, but rather to prevent manipulation or abuse of minimum wage or overtime requirements through coercion or undue pressure on individuals to “volunteer” for their services. Thus, great care should be taken to ensure that volunteering is optional. Similarly, not volunteering should have no adverse effect on employees. Under no circumstances should employees be guaranteed a bonus for volunteering.

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If you have any questions regarding the DOL’s opinion letter, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

As we reported, on October 17, 2018, New York City passed two laws concerning workplace lactation accommodations. City of New York Local Laws 185 and 186 require New York City employers to provide their employees with reasonable unpaid or paid break time and a private space to express milk. They also require that employers provide employees with a written policy on lactation accommodations.

 

These laws went into effect on March 17, 2019. With the laws in effect, the City of New York has now clarified that the laws are greater in scope than legislators initially intended, and apply to all employers with four or more employees. To provide employers with further guidance, the New York City Commission on Human Rights has created three model policies. The model policies correspond to the type of accommodation an employer can provide its employees based on the design of its facility. They provide guidance to employers who supply their employees with dedicated lactation rooms, multi-purpose spaces that may be used as lactation rooms, and those employers who do not have the requisite space available for a lactation room.

Each of the three policies provides information about:

  • the lactation accommodation process,
  • the reasonable time an employee has to express breast milk,
  • circumstances in which providing accommodations may pose an undue hardship on an employer and the dialogue that must take place in those scenarios.

On top of this information, each of the individual policies corresponds to and includes recommendations specific to the type of accommodation an employer can provide.

Takeaway for Employers

Employers should compare their existing policy to the model policy that most closely resembles their work environment. After review, employers should take care to make sure that their policies incorporate all of the information in the model policies and that they are in compliance with applicable New York City, New York State, and federal law.

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We are of course available to assist in drafting and reviewing such policies, and in advising employers on the new lactation accommodation process.

Putney, Twombly, Hall & Hirson LLP

On March 14, 2019, the United States Department of Labor (“DOL”) issued an opinion letter addressing whether employers may delay designating paid leave as Family and Medical Leave Act (FMLA) leave. The opinion letter also addressed whether employers can permit employees to expand their FMLA leave beyond the statutory 12-week entitlement.

The FMLA enables eligible employees of covered employers to take unpaid, job protected leave of up to 12 weeks in a 12-month period for qualifying reasons. According to the DOL, employers must provide a written designation to an employee within 5 business days after determining whether the employee’s leave is being taken for FMLA qualifying reasons. Employers may not delay designating leave as FMLA leave because an employee is seeking to exhaust his or her paid sick leave. Employees seeking to substitute paid leave for unpaid FMLA leave will have the paid leave count toward their FMLA entitlement. While employers are not prevented from adopting leave policies which are more generous than FMLA, leave greater than the statutory 12 weeks may not be designated as FMLA protected leave.

Takeaway for Employers

Employers should designate employee leave as FMLA within five (5) days of determining that the leave is for a FMLA qualifying reason and may not delay such designation because an employee is exhausting other paid leave. Employers should also be cognizant of the fact that use of an employee’s sick leave does not expand the length of FMLA entitlement beyond the statutory 12 weeks.

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If you have any questions regarding the DOL opinion letter or your obligations under the FMLA, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

On March 14, 2019, the United States Department of Labor (“DOL”) issued an opinion letter concerning minimum wage and overtime pay requirements for residential janitors, or live-in superintendents (i.e., “supers”), under the Fair Labor Standards Act (“FLSA”) and state law. Specifically, the opinion letter addresses: (1) whether the FLSA guarantees minimum wage and overtime pay to residential janitors despite their exemption from similar state law requirements; (2) whether an employer’s noncompliance with the FLSA in reliance on this state law exemption demonstrates “good faith,” allowing the employer to avoid liquidated damages or the FLSA’s three-year back wage liability period; and (3) how an employer may track and record a residential janitor’s hours worked.

Even though New York State law exempts residential janitors from state minimum wage and overtime requirements, it is the DOL’s opinion that residential janitors are not exempt from the FLSA’s minimum wage and overtime requirements because the FLSA does not include an exemption for residential janitors or similar employees. Moreover, the DOL opines that relying on a state law exemption from state law minimum wage and overtime requirements is not a good faith defense to noncompliance with the FLSA. Lastly, the DOL states that employers may reach a reasonable agreement with residential janitors to establish which hours they are and are not working. Accordingly, employer time records need not be precise, but they should reasonably coincide with that agreement.

When a federal, state, or local minimum wage or overtime law differs from the FLSA, the employer must comply with both laws and meet the standard of whichever law gives the employee the greater protection. Thus, although New York expressly provides a limited exemption from its overtime laws for residential superintendents, employers must nevertheless comply with the FLSA in compensating such employees.

Takeaway for Employers

Employers should remember that compliance with state law does not excuse noncompliance with the FLSA. Additionally, an employee who resides on an employer’s premises on a permanent basis or for extended periods of time is not considered as working all the time he is on the premises.

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If you have any questions regarding the DOL opinion letter or exemptions under state or federal wage and hour laws, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

The EEOC has confirmed that pay data will NOT be required for the 2018 Equal Employer Information Report (“EEO-1 Report”) due by May 31, 2019.

As we previously reported, the federal Office of Management and Budget’s stay of the pay data reporting requirement was lifted by the Hon. Tanya S. Chutkan of the United States District Court for the District of Columbia. For further information on the reinstatement of the pay date collection rule, see our prior alert: https://putneylaw.com/client-news/eeoc-pay-data-collection-eeo-1-reports-reinstated.

Judge Chutkan’s Order held that affected employers were on notice that the stay could be lifted at any time, and were aware of the pay data collection requirement for at least a year before the stay. Despite the immediate effect of the reinstatement of the pay data collection requirement, the EEOC is informing employers that the pay data information does not need to be included in the 2018 EEO-1 Reports. As in years past, at this time Employers will need only to provide information on employee race, ethnicity, and sex by job category.

 

Takeaway for Employers

Employers should file EEO-1 Reports which include their employees’ race, ethnicity, and sex by job category by May 31, 2019. Employers should begin to collect pay and hours worked data by race, ethnicity, and sex for the next reporting period. We encourage you to contact us for assistance in complying with your EEO-1 reporting requirements.

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If you have any questions regarding your EEO-1 reporting obligations, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

In a decision that will directly impact how colleges and universities deal with faculty organizing drives, the United States Court of Appeals for the District of Columbia held today that the test developed by the National Labor Relations Board (the “NLRB” or the “Board”) to determine whether faculty members are managers was – with one notable exception – enforceable. University of Southern California v. NLRB, Case No. 17-1149 (D.C. Cir. March 12, 2019).

Background on Faculty Managerial Status

In 1980, the United States Supreme Court ruled that faculty members at Yeshiva University were managers under the National Labor Relations Act (the “NLRA” or “the Act”) and therefore exempt from the Act’s coverage. NLRB v. Yeshiva, 444 U.S. 672 (1980). Following the Yeshiva decision, the Board adopted a totality of circumstances approach to determine whether the faculty at a particular institution were managerial. This case-by-case approach was later criticized by the D.C. Circuit for lacking clarity and seemingly turning on the whim of the NLRB. LeMoyne-Owen College v. N.L.R.B., 357 F.3d 55 (D.C. Cir. 2004) and Point Park University, 457 F.3d 42 (D.C. Cir. 2006).

In late 2014, the NLRB announced a new test for determining the managerial status of faculty. Pacific Lutheran University, 361 NLRB No. 157 (2014). The NLRB announced it would look to three primary and two secondary areas to determine faculty managerial status.

Primary Areas

  1. Academic Programs. This area includes curriculum, research, offering of majors, minors and certificates and the requirements necessary to satisfy those offerings. These areas are akin to the school’s “product” and the terms upon which that product is offered to students.
  2. Enrollment Management. This area relates to the size, scope and make-up of the student body. These are essentially the school’s customers who will be served by the university.
  3. Finances. This area relates to the power to control or make effective recommendations as to expenditures. The NLRB cited in particular the determination of net tuition (tuition less financial assistance) because it sets the “price point” for the student-customers and plays a significant role in determining which university a student will attend.

Secondary Areas

  1. Academic Policy. This covers a broad area including teaching and research methods, grading policy, academic integrity policy, syllabus policy, research policy and course content policy.
  2. Personnel Policy and Decisions. This area includes hiring, firing, promotion, tenure, leave and dismissal. The NLRB admits that this area “potentially implicates the divided loyalty concern that underlies the managerial exception,” but this decision-making only indirectly implicates the product to be produced, the terms in which it is offered, and the customers sought.

Actual Control or Effective Recommendation

The NLRB not only re-cast the Yeshiva factors but went on to require the party asserting managerial status to demonstrate that the faculty actually exercise control or make effective recommendations. That test itself – actual control or effective recommendation – was not new and was routinely used in determining managerial status in the commercial context. What was different however was that the NLRB had significantly narrowed the circumstances where it would find control or effective recommendation. Specifically, the Board found that where a committee controls or effectively recommends action in a particular area, it must be shown that the petitioned for faculty group constitutes a majority of the committee. The Board also held that it would require that faculty recommendations “must almost always” be followed by the administration and must become operative “without independent review by the administration.”

While the NLRB’s new test was clearly set out, its application was far from obvious and left many unanswered questions:

  • Why, for example, were the issues of academic policy and of personnel policy relegated to secondary status? Questions of academic and personnel policy arguably directly impact all of the ‘primary’ factors. Using the commercial analogy adopted by the NLRB, one could argue that academic and personnel policies speak to the “quality” of the product produced by the University. The NLRB’s analysis appears to relegate the quality of the institution’s ‘product’ to secondary importance.
  • How did the factors – both primary and secondary – interrelate? Is proof of all five factors required? At least one primary and two secondary? All primary and at least one secondary?
  • How would the NLRB interpret and apply its requirement that the faculty exercise “actual control or effective recommendation” authority in the primary and secondary areas? What, for example, did the Board mean by “must almost always” be followed? What did the NLRB mean when it stated that faculty recommendations are effective if they become operative “without independent review by the administration”? What is ‘independent review’ and what level is required for the faculty’s recommendation to be discounted?

The USC Decision

The USC decision marks the first appellate court ruling addressing the enforceability of the Pacific Lutheran standards for determining faculty managerial status. Significantly, the appellate court enforced the vast majority of the Pacific Lutheran test. For example, the Court endorsed the primary/second criteria adopted by the Board and swept aside arguments that the test was unworkable because it relegated academic and personnel decisions to secondary status and because the Board did not answer how the criteria interrelate. “Although we can imagine different groupings of these factors, nothing in Yeshiva dictates the outcome one way or the other, and the Board’s categorization falls well within its discretion under the NLRA.”

The Court also rejected the school’s argument that the Board’s actual control or effective recommendation standard was inconsistent with Yeshiva. “We see nothing in the Board’s two-part standard for “effective” control that runs afoul of Yeshiva.” The Court noted that the terms “almost always” and “routine” left room for effective administrative review. In other words, a school could demonstrate that its faculty actually met these admittedly high standards for managerial status.

The D.C. Circuit rejected only one portion of the Pacific Lutheran test. Specifically, the Court rejected the Board’s requirement that for the faculty to exercise effective control, the committee itself must be comprised not only of a faculty majority, but that the petitioned-for faculty subgroup must constitute a majority of that committee. The petitioned for unit at issue in the USC case was a unit of non-tenure track faculty. As the non-tenure track faculty did not constitute a majority of the committee in question, the Regional Director and the Board itself discounted the committee’s role as demonstrating effective control. This, according to the D.C. Circuit, was an error. “In our view, the Board’s subgroup majority status rule rests on a fundamental misunderstanding of Yeshiva.” The Board’s interpretation failed to adequately consider faculty governance and collegiality both of which were mentioned prominently in Yeshiva. The Court also added a re-formulation of the standard for effective control and suggested that “[t]he Board should instead, as required by Yeshiva, think of this analysis as having two distinct inquiries: whether a faculty body exercises effective control and, if so, whether, based on the faculty’s structure and operations, the petitioning subgroup in included in that managerial faculty body.”

The Board also commented on the recent trend placing the running of the institutions in the hands of administrators rather than faculty. It noted, but side-stepped, the debate as to whether universities are in fact led by administrators or are based instead on shared governance. The Court ruled “the Board must not lose sight of the fact that the question before it in any case in which a faculty subgroup seeks recognition is whether that university has delegated managerial authority to a faculty body and, if so, whether the petitioning faculty subgroup is part of that body.” (emphasis in the original)

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Only time will tell whether other appellate courts or ultimately the Supreme Court will share the D.C. Circuit’s view of the Board’s latest iteration of the test for managerial status in the faculty setting. In the meantime, colleges and universities are advised to fully consider Pacific Lutheran’s primary/secondary areas of faculty involvement and to consider the extent of faculty involvement in committee assignments to determine whether the actions of those committees demonstrate “actual control or effective recommendation” of matters concerning academic programs, enrollment, finances, academic policy and personnel and policy decisions.

 

Putney, Twombly, Hall & Hirson LLP

The New York State Department of Labor (“NYSDOL”) has announced that after receiving extensive feedback, it will no longer proceed with implementing regulations concerning “call-in” or “on-call” pay. The proposed regulations were primarily geared towards the retail industry, and sought to alleviate the scheduling uncertainty that workers purport to experience. However, most employers found that the proposed regulations were too broad and unworkable for their businesses. Employers voiced these concerns throughout the comment period, which prompted the NYSDOL to reverse course.

The Regulations Proposed in December 2018

As we previously reported, in December 2018 the NYSDOL released proposed regulations that revised and expanded employers’ obligations concerning pay for employees covered by the Miscellaneous Wage Order. The Miscellaneous Wage Order applies to all New York employees, unless an employee is covered by the New York Hospitality Industry Wage Order or the New York Minimum Wage Order for the Building Service Industry.

Specifically, the December 2018 proposed regulations set forth new standards for reporting to work pay, cancelled shift pay, on-call pay, and the call-for schedule. Following the publication of the proposed regulations, there was an extensive comment period in which employers informed the NYSDOL of how the proposed regulations would affect their businesses.

New York City Call-In Pay Requirements Remain Intact

While the State’s decision not to pursue call-in pay regulations at this time is a welcome relief to many employers, employers in New York City must continue to comply with the City’s Fair Workweek Law and Temporary Schedule Change Law. The Fair Workweek Law, which is aimed at retail establishments, generally requires employers to provide two weeks’ notice before schedule changes. The Temporary Schedule Change Law permits most employees to take up to two personal days per calendar year for “personal events” including care for a minor or disabled person, to attend a legal proceeding or for any reason that would qualify under New York City’s Paid Safe and Sick Leave Law.

Takeaway for Employers

While the proposed regulations will not be implemented at this time, the NYSDOL indicated that the topic of call-in pay will be revisited by the New York State Legislature. We will keep you informed of any new developments.

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We are of course available to assist in drafting and reviewing posters and policies compliant with these wage requirements.

Putney, Twombly, Hall & Hirson LLP

On March 7, 2019, the U.S. Department of Labor (“DOL”) issued a proposed rule regarding overtime (the “Proposed Rule”), which will raise the minimum salary threshold required for workers to qualify for the “white collar” exemptions of the Fair Labor Standards Act (“FLSA”) to $35,308 per year or $679 per week.

The Proposed Rule replaces the DOL’s 2016 rule, which was enjoined by a Texas federal judge before it took effect. The enjoined rule had doubled the minimum salary required to qualify for the exemptions from $23,660 to $47,476. It had also increased the overtime eligibility threshold for highly compensated workers from $100,000 to $134,004 and created an index for future increases.

The Proposed Rule calls for a less drastic increase of the minimum salary level, which has been in place since 2004. The DOL also proposed regular increases of that threshold every four years after notice-and-comment periods preceding those increases. For highly compensated workers, the DOL raised the salary threshold from $100,000 to $147,414, which is about $13,000 higher than the enjoined rule.

The Proposed Rule will also allow employers to count certain nondiscretionary bonuses and incentive payments, like commissions, that workers receive for up to 10% of a worker’s salary level. The Proposed Rule does not make any changes to the duties test, which helps identify individuals who are legitimate executive, administrative, and professional employees who are FLSA-exempt. The DOL estimates the Proposed Rule will take effect in January 2020.

The New York Minimum Wage Act and applicable regulations require significantly higher thresholds. To qualify for the executive and administrative exemptions (New York does not require a minimum salary for professional employees) employees must meet the following salary thresholds, among other things:

New York City Large Employers (11 or more employees)

  • Minimum salary threshold is currently $1,125 per week ($58,500 annually), as of 12/31/18.

New York City Small Employers (10 or fewer employees)

  • Minimum salary threshold is currently $1,012.50 per week ($52,650 annually), as of 12/31/18; and
  • $1,125.50 per week ($58,500) on and after 12/31/19.

Nassau, Suffolk, and Westchester Counties

  • Minimum salary threshold is currently $900 per week ($46,800 annually), as of 12/31/18;
  • $975 per week ($50,700 annually) on and after 12/31/19;
  • $1,050 per week ($54,600 annually) on and after 12/31/20; and
  • $1,125 per week ($58,500 annually) on and after 12/31/21.

Remainder of New York State

  • Minimum salary threshold is currently $832 per week ($43,264 annually), as of 12/31/18;
  • $885 per week ($46,020 annually) on and after 12/31/19; and
  • $937.50 per week ($48,750 annually) on and after 12/31/20.

 

Takeaway for Employers

Employers should review their existing payroll practices to determine whether employees who are classified as exempt under the executive, administrative, or professional exemptions meet the new minimum salary requirements. If these employees do not meet the minimum salary requirements, employers should determine whether the employees’ salaries should be increased or whether their positions should be reclassified as nonexempt. As a reminder, employers should track the hours of nonexempt employees for overtime purposes.

In additions, as the exemption status of an employee depends on meeting the salary threshold and a duties test, employers are encouraged to regularly review the duties test for executive, administrative, and professional exemptions to ensure proper classifications.

While the Proposed Rule will have a significant impact around the country, employers in New York are already dealing with substantially higher thresholds.

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If you have any questions employee classifications or exemptions under state or federal wage and hour laws, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

In August 2017, the federal Office of Management and Budget (“OMB”) implemented a stay and review of the effectiveness of the pay data collection aspects of the EEOC’s revised Equal Employer Information Report (“EEO-1 Report”). For further information on the stay, see our prior alert: https://putneylaw.com/client-news/eeocs-pay-data-collection-requirements-for-large-employers-suspended.

On March 4, 2019, the Hon. Tanya S. Chutkan of the United States District Court for the District of Columbia ruled that the OMB’s stay of the pay data reporting requirement was improper, reasoning that the OMB failed to show justification for the stay. Accordingly, Judge Chutkan reinstated the pay data collection requirement.

The revised EEO-1 Report requires federal contractors and employers with 100 or more employees to provide data on pay ranges and hours worked in addition to providing information on employee race, ethnicity, and sex by job category. Employers who are required to file EEO-1 Reports will now need to report W-2 wage information and total hours worked for all employees by race, ethnicity and sex. That information must be provided within 12 pay bands that range from $19,239 and under to $208,000 and over.

Judge Chutkan’s Order held that vacating the stay on pay data reporting would not be disruptive to the current expectation of filers “because affected entities were on notice that the stay could be withdrawn at any time” and “the revised pay data collection had in place for almost a year by the time it was stayed.” The EEOC has announced that the EEO-1 website will open on March 18, 2019 to permit the filing of the revised EEO-1 Reports. Accordingly, unless Judge Chutkan’s ruling is itself stayed pending an appeal, employers will need to include pay data in their 2018 EEO-1 Report by May 31, 2019.

Takeaway for Employers

Employers should begin to collect data on pay and hours worked. We encourage you to contact us for assistance in complying with your EEO-1 reporting requirements in advance of the May 31, 2019 deadline.

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If you have any questions regarding your EEO-1 reporting obligations, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP

This week, the NYC Commission on Human Rights (the “Commission”) issued legal enforcement guidance on race discrimination on the basis of hair. The legal enforcement guidance states that the New York City Human Rights Law (“NYCHRL”) protects the rights of New Yorkers to maintain natural hair or hairstyles that are closely associated with their racial, ethnic, or cultural identities, and focuses on policies addressing natural hair or hairstyles most commonly associated with Black people. These hairstyles include “treated or untreated hairstyles such as locs, cornrows, twists, braids, Bantu knots, fades, Afros, and/or the right to keep hair in an uncut or untrimmed state.” The Commission defines “Black people” to include those who identify as African, African American, Afro-Caribbean, Afro-Latin-x/a/o or otherwise having African or Black ancestry.

The Commission affirms that grooming or appearance policies that ban, limit, or otherwise restrict natural hair or hairstyles associated with Black people generally violate the NYCHRL’s anti-discrimination provisions. Black hairstyles are protected racial characteristics under the NYCHRL because they are an inherent part of Black identity. Covered employers that enact grooming or appearance policies that ban or require the alteration of natural hair or hairstyles associated with Black communities may face liability under the NYCHRL because these policies subject Black employees to disparate treatment. Discrimination can also come in the form of facially neutral grooming policies related to characteristics that may not necessarily be associated with a protected class but that are discriminatorily applied.

Finally, employers may not ban, limit, or otherwise restrict natural hair or hairstyles associated with Black communities to promote a certain corporate image, because of customer preference, or under the guise of speculative health or safety concerns. Where an employer does have a legitimate health or safety concern, it must consider alternative ways to meet that concern prior to imposing a ban or restriction on employees’ hairstyles. The Commission states that a number of options exist that may address such concerns related to hair, including the use of hair ties, hair nets, head coverings, as well as alternative safety equipment that can accommodate various hair textures and hair styles.

Examples of Violations

  • A grooming policy requiring employees to alter the state of their hair to conform to the company’s appearance standards, including having to straighten or relax hair (i.e., use chemical or heat);
  • A grooming policy banning hair that extends a certain number of inches from the scalp, thereby limiting Afros;
  • Forcing Black people to obtain supervisory approval prior to changing hairstyles, but not imposing the same requirement on other people; and
  • Refusing to hire a Black applicant with cornrows because her hairstyle does not fit the “image” the employer is trying to project for sales representatives.

 

Takeaway for Employers

New York City covered employers should proactively take steps to ensure their existing grooming and appearance policies comply with the legal enforcement guidance.

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If you have any questions regarding the legal enforcement guidance, please do not hesitate to contact us.

Putney, Twombly, Hall & Hirson LLP