By: Aaron Gelb
Hiring practices, by their nature, have the potential to impact large groups of individuals. Employers using certain screening tools such as pre-employment tests and medical questionnaires may thus find themselves having to defend their policies and procedures in litigation brought by the US Equal Employment Opportunity Commission (“EEOC”). Last year, the EEOC announced in its Strategic Enforcement Plan (“SEP”) for Fiscal Years 2017 – 2021 that it will continue to focus on “class-based recruitment and hiring practices that discriminate against racial, ethnic, and religious groups, older workers, women, and people with disabilities.” Since issuing the SEP, the agency has filed a number of lawsuits across the country against employers accused of creating barriers to employment for individuals with disabilities. These cases serve as important reminders that even the most well-intentioned employers should take a close look at the tools they are using to screen applicants for the various positions they are attempting to fill or run the risk of squaring off against the EEOC.
Two recently filed lawsuits highlight the perils associated with pre-employment drug testing and/or asking applicants about their prescription drug usage.
In EEOC v. M.G. Oil Co. d/b/a Happy Jack’s Casino, 4:16-cv-04131-KES (D. S.D.), the agency accused the defendant of discriminating against an applicant for a cashier position by revoking her conditional employment offer after learning she received a non-negative drug screen result. M.G. Oil promptly filed a third-party complaint seeking indemnity and contribution from TestPoint Paramedical, LLC, the company which administered the drug test. M.G. Oil accused TestPoint of failing to send the test results to a medical review officer to determine if there was a valid reason for the non-negative result. M.G. Oil’s gamble failed as the court dismissed the claims against TestPoint, leaving M.G. Oil to explain why it refused to reconsider its decision to revoke the applicant’s offer after she explained the non-negative drug test result was due to her lawful use of a prescription pain killer she took for back pain. The EEOC also accused M.G. Oil of violating the ADA by requiring all employees to report both prescription and non-prescription medications they are taking. Eventually, the Company entered a consent decree settling the lawsuit, agreeing to pay $45,000 and adopt company-wide policies to prevent future hiring issues under the ADA. The company also agreed to only require employees to report prescription and non-prescription medications that may affect their performance. Continue reading
On Monday, we reviewed some of the rulemaking initiatives identified by the National Labor Relations Board (“NLRB”) in the Trump Administration’s Spring 2018 Unified Regulatory and Deregulatory Actions (Agenda). In this post, we take a look at some highlights from the Agenda for the Department of Labor (“DOL”) – particularly the Wage and Hour Division – and the Equal Employment Opportunity Commission (“EEOC”).
Initiatives from the Department of Labor
The Spring 2018 Agenda also included many rulemaking initiatives from the DOL. One item of note is the DOL’s intent to issue a Notice of Proposed Rulemaking to “clarify, update, and define” the requirements for “regular rate of pay” under Section 7(e)(2) of the Fair Labor Standards Act (“FLSA”). The FLSA requires that employees who work more than 40 hours in a work week be paid overtime at a rate of time and a half their regular rate of pay. The FLSA explains that the regular rate of pay often includes more than just the employee’s hourly rate where the employee receives other types of compensation, such as bonuses or commissions. But it is not always clear exactly which types of compensation must be factored into determining the regular rate of pay and how it should be calculated. The DOL has set a proposed deadline of September 2018 to issue its Notice of Proposed Rulemaking. Continue reading
On Wednesday, the Office of Information and Regulatory Affairs released the Trump Administration’s Unified Regulatory and Deregulatory Actions (Agenda). This Agenda lays out the short-term and long-term regulatory and, pursuant to the Trump Administration’s focus on rolling back regulation, deregulatory priorities for all the different Federal Government Agencies, including the National Labor Relations Board (“NLRB”), Department of Labor (“DOL”), and Equal Employment Opportunity Commission (“EEOC”). Specifically, the Agenda identifies and briefly explains the rulemaking activities in which each Agency plans to engage over the remainder of 2018 and into the next year. Below, we have highlighted the major initiatives the NLRB has taken and intends to undertake as outlined in this Agenda. We will address highlights from the Agenda for the DOL and EEOC in Part Two of this post.
NLRB’s Intent to Establish Joint-Employer Standard
One of the initiatives that came as a surprise to many when it appeared in the Spring 2018 Agenda is a rulemaking to establish a standard to assess joint-employer status. This rulemaking has been initiated by the NLRB and is currently on the Long-term Actions list. Although agencies usually include items on the Long-term Actions list that they do not plan to act on within the next year, the press release issued by the NLRB in conjunction with the Spring 2018 Agenda indicates an intent to move on this rulemaking promptly. In the press release, Chairman John F. Ring states, “In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the [joint-employer] standard ought to be. I am committed to working with my colleagues to issue a proposed rule as soon as possible…” (emphasis added). The press release also reveals that certain members of the NLRB – Chairman Ring and Members Emanuel and Kaplan – have already begun the internal process required to consider rulemaking on the standard. Continue reading
By: Aaron Gelb
Last fall, the Seventh Circuit Court of Appeals (Illinois, Indiana and Wisconsin) handed down two decisions restricting the amount of leave employers must offer as an accommodation. (Severson v. Heartland Woodcraft, Inc. and Golden v. IHA). Management-side employment lawyers celebrated. Employers breathed a sigh of relief. The Seventh Circuit had finally given employers some much-needed certainty; a bright line, if you will. Relying on these decisions, employers in the Seventh Circuit saw little risk rejecting requests for leave extending beyond 4 weeks. Many employers, though, adopted a wait-and-see approach. The US Supreme Court might take up the issue and reverse the Seventh Circuit. To the surprise of many, the Supreme Court declined in April 2018 to weigh in on the issue. Severson (and Golden) thus remain the law of the land—in the Seventh Circuit. While these decisions are significant, employers must remain diligent when dealing with employees temporarily unable to do their jobs.
Leave as a Reasonable Accommodation
The US Equal Employment Opportunity Commission (“EEOC”) has long held that an employer must offer leave as a reasonable accommodation. Typically, the EEOC recommends that employers first explore whether a modification of the workplace, duties or policies will enable the employee to continue doing their job. If no such accommodation is available, the EEOC expects employers to offer a leave of absence for a definite amount of time so the employee can return to her position at the end of the leave. When neither option is feasible, the EEOC maintains the employer should reassign the disabled employee to a vacant position for which she is qualified. Continue reading
By: Mark Trapp
Earlier this year, the Bipartisan Budget Act of 2018 established the Joint Select Committee on the Solvency of Multiemployer Pension Plans (“Joint Select Committee”). This Committee, made up of sixteen lawmakers (eight from the House, eight from the Senate, eight Republicans and eight Democrats), is charged with preparing a report and recommended legislative language to “significantly improve the solvency” of multiemployer pension plans and the Pension Benefit Guaranty Corporation (“PBGC”). Notably, if the Joint Select Committee gets majority approval from both sides (that is five of eight Democrats and Republicans), the resulting legislation will be guaranteed an expedited vote in the Senate, with no amendments allowed. Following the passage of the Multiemployer Pension Reform Act of 2014, which is largely viewed as failing to adequately address the multiemployer funding issues, this Joint Select Committee presents the first (and maybe the last) realistic bipartisan chance to address the issue. The Committee is required to have at least five public meetings and held its first last week. The same day that the Joint Select Committee met, the U.S. Chamber of Commerce issued a two-page document titled “Multiemployer Pension Reform Principles.” This document stresses the urgent need for a solution, stating that legislation to “save” multiemployer plans “must be passed as soon as possible.” It argues that federally-backed loans are the key to any solution, and encourages Congress to consider proposals that put “skin in the game for all.” This means benefit cuts.
Although not much was accomplished at the hearing, it is worth noting a few items. Co-Chairman Senator Hatch (R-UT) set the tone when he said that “none of this process is going to be easy. There are no magic bullets, and any solutions we come up with are bound to make at least some people unhappy.” Many of the other Committee members spoke of the necessity to act in a bipartisan manner. Continue reading
On March 6, 2018, the U.S. Department of Labor (“DOL”) announced that it would soon be implementing its Payroll Audit Independent Determination (“PAID”) program, which will permit employers to self-report potential violations of the Fair Labor Standards Act (“FLSA”) without fear of exposure to liquidated damages. Although the DOL’s news release frames this program as a boon for employees as they can receive back wages without the substantial cost of litigation, the program could also be beneficial to certain employers. Indeed, the program is designed to encourage proactive resolution of potential minimum wage and overtime violations by limiting potential damages to solely the back wages owed. The DOL’s Wage and Hour Division (“WHD”) intends to employ the PAID program nationwide for 6 months, at which time it will evaluate the effectiveness of the program and its future options.
Under the FLSA, an employee may be entitled to penalties and liquidated damages if she can successfully show that her employer failed to pay the required minimum wage or make overtime payments. The FLSA establishes that liquidated damages are equal to the amount of back wages owed. In other words, an employer could be required to pay double the employee’s back pay. Courts have generally held there is a presumption in favor of liquidated damages unless the employer can show (1) it acted in good faith; and (2) it had reasonable grounds to believe it was complying with the law. This puts a burden on the employer to provide evidence that substantiates both these elements. If it cannot present such evidence, the employer faces a substantial financial burden in damages owed, particularly in the case of a collective action – a very common occurrence under the FLSA. Continue reading
By: Aaron Gelb
As many individuals turn their attention to preparing and filing their tax returns on or before April 15, there are two notable changes to the tax code of which employers should take note. These changes, tucked away in the 2017 Tax Act (also known as the Tax Cuts and Jobs Act) (the “Act”), have gone largely unnoticed while most Americans have focused on the on-again, off-again government shutdown drama. The first change involves the deductibility of settlement payments made to resolve sexual harassment/abuse claims, while the second is a tax credit available, in certain circumstances, to employers that offer paid family leave to their employees.
Sexual Harassment and/or Abuse Settlement Payments
Section 13307 of the Act prohibits employers from deducting any settlement or payment related to sexual harassment or abuse claims if the settlement or payment is made subject to the sort of nondisclosure provisions commonplace in settlement agreements. This means that if an employer insists that the complaining employee keep the terms of the agreement confidential, the monies paid in exchange for the release are not deductible. The same presumably holds true if the employer conditions said payments on the claimant agreeing not to disclose the allegations set forth in the original claim that precipitated the settlement. Continue reading