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Proposal on president’s mandated FLSA updates may come in February

November 26th, 2014  |  Pamela Wolf  |  Add a Comment

By Pamela Wolf, J.D.

The Department of Labor expects to issue a proposed regulation in February 2015 that will reflect President Obama’s directive to modernize and streamline FLSA regulations for executive, administrative, and professional employees, according to the DOL’s Fall 2014 Agency Rule List. Among other things, the agency also expects to finalize its rule on the FMLA’s definition of “spouse” by the end of March 2015, and by the end of July 2015, to publish a final rule narrowing the advice exemption in persuader agreement reporting requirements.

Regulatory revisions to FLSA exemptions. The DOL said that it expects to publish a proposed rule by the end of February 2015 titled, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. The FLSA, in Sec. 13(a)(1), provides a minimum wage and overtime exemption for employees who are employed in a bona fide executive, administrative, professional capacity, or in the capacity of an outside salesperson. In a March 13, 2014 memorandum, President Obama directed the Secretary of Labor to modernize and streamline existing overtime regulations for executive, administrative, and professional employees. These regulations were last updated in 2004.

FMLA definition of “spouse.” The DOL has proposed to revise the FMLA’s regulatory definition of “spouse” in light of United States v. Windsor, which struck down the provision in the Definition of Marriage Act that limited the definition of “marriage” to a man-woman union. The regulation will be finalized by the end of March 2015. The comment period on the proposed regulation ended on November 14. The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had taken leave. Leave may be taken, among other reasons, to care for the employee’s spouse who has a serious health condition.

Minimum wage for federal contractors. Consistent with a final rule published by the DOL on October 7, effective December 8, workers on certain new federal contracts with be entitled to a minimum wage of $10.10 an hour. Executive Order 13658 makes that minimum wage increase and indexes the wage rate to inflation thereafter. Consistent with the Executive Order, the DOL has issued implementing regulations.

Persuader agreements. The DOL said that it expects to issue a final rule by the end of July 2015 that revises its interpretation of Sec. 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA). An extended comment period on the proposed rule ended on September 21, 2011. Section 203(c) creates an “advice” exemption from reporting requirements that apply to employers and other persons related to persuasion of employees about their rights to organize and bargain collectively. The revised interpretation would narrow the scope of the advice exemption.

The DOL also hopes to issue in July 2015 a notice and comment rulemaking that would make electronic filing mandatory for the Consultant Form LM-21, Receipts and Disbursements Report, which is required under Sec. 203(b) of LMRDA. The agency also intends to review the layout of the Form LM-21 and its instructions, including the detail required to be reported.

Both of these persuader-agreement related proposals were previously slated for action in December 2014.

Labor organization annual reports. Another DOL proposed rule slated for release in November 2015 would make electronic filing mandatory for the Form LM-3 and LM-4 Labor Organization Annual Reports. This action was previously scheduled for December 2014. Labor organizations covered by the LMRDA and similar statutes must file annual financial disclosure reports with the DOL’s Office of Labor-Management Standards (OLMS). Currently, the largest labor organizations (with $250,000 or more in total annual receipts) file the Form LM-2, which requires filers to submit the report electronically. The proposed rule would require smaller labor organizations, which file either the Form LM-3 and LM-4 Labor Organization Annual Reports, to also submit their reports electronically.

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EEOC, NLRB officials talk social media

November 24th, 2014  |  Lisa Milam-Perez  |  Add a Comment

By Lisa Milam-Perez, J.D.

When it comes to social media in the workplace—a topic of ever-growing interest to labor and employment law practitioners—what’s old is new again. That was the recurring theme at a recent social media seminar featuring key EEOC and NLRB officials. Social media isn’t breaking any new legal ground; it simply calls for an application of long-standing legal principles to the novel setting of cyberspace.

“As is frequently the case in the social media context, we address a fact pattern that essentially has very apt analogies in pre-existing law and apply it in a technologically different context,” said Richard F. Griffin, Jr., NLRB General Counsel.

“It’s not that the law is any different than what you or your clients have been applying,” EEOC Commissioner Chai R. Feldblum added. “It’s just in a different, technological context.”

The seminar, hosted by the Philadelphia office of law firm Dilworth Paxson on November 12, also featured NLRB Member Harry I. Johnson, III. Eric B. Meyer, Dilworth Paxson partner and chair of the firm’s just-launched social media practice group, questioned the panel of federal officials on how their agencies address the thorny legal issues that arise in the age of Facebook.

Far-reaching impact. Social media “has widespread implications” with regard to the National Labor Relations Act, noted Johnson. “A good 10 to 20 percent of our case load has a social media component right now—and that’s just going to increase.”

And as Meyer observed, most of the social media cases that have arisen under the NLRA involve nonunion employers. It’s long been recognized that the NLRA’s reach extends beyond the unionized setting, but the Board of late has increasingly flexed its enforcement muscle outside the union environment, much to the consternation of employers. A source of particular frustration is the agency’s close scrutiny of employer social media policies, some of which the Board has found to be unlawfully broad.

Social media policies. “We could spend quite a bit of time on this topic,” the NLRB’s Griffin said, but he summed it up with a nod to the Board’s traditional standard for scrutinizing any employer policy provisions to decide whether they interfere with employees’ rights under the Act: the relevant question is whether an employee would reasonably construe such a rule as prohibiting employees from engaging in statutorily protected conduct. If so, “then the rule is bad.”

Still, “you have to stay current with the decisions, and look at the individual cases,” his colleague Harry Johnson interjected, alluding to the Board’s growing body of case law on the issue, “because context is everything” when determining whether an employer’s rule is overly restrictive under this standard. The social media rule in question has to be considered within the larger factual circumstances, as a look at the Board’s disparate holdings will attest.

Discipline over online behavior. In addition to rulings scrutinizing social media policies, the Board has resolved cases involving the discipline or discharge of employees for critical comments about the employer on Facebook or other social media. The key inquiry, Griffin explained, is “whether there is some aspect of the way the employee’s communications were made that will cause that individual to lose the protection of the Act.” After deliberating over what legal standard to use in such cases, the Board recently adopted “a libel kind of analysis.”

“Frequently if comments are negative the company’s view is, this is disparagement; this is problematic,” Griffin said. “But very few people engage in protected and concerted activity regarding terms and conditions of employment in order to praise them,” he said. “If you’re going to say people can’t be critical, you’re going to run afoul of people’s right to be critical.”

Employers “can’t make employees chant ‘Everything is awesome’ like in The Lego Movie, added Johnson. “The disparagement that you can act on as an employer really comes down to malice: stating a knowing falsehood, or saying something with reckless disregard as to whether true or untrue. And that is a very high standard to meet.”

The proof is in the posting. It’s not that comments on social media are held to a lower prima facie standard, Johnson clarified. It’s just that social media “makes a lot of these ‘he said, she said’ cases much easier because you have a transcript of what everybody said. Social media is not Las Vegas,” he added, “in that what happens there doesn’t stay there.”

Using an analogy to underscore this point, Griffin added, “It used to be ‘he said, she said’ if a supervisor felt somebody was under the influence. But if you have testing, you have evidence in a way that you don’t when you’re going under the supervisor’s impression. In the same way, a conversation at a bar involves making credibility determinations, but if you have the transcript—someone prints out a screen shot and says ‘look at this,’— it’s a different type of proof.”

A higher standard for employers. Some employers enter the cyberspace fray themselves. But as Johnson warns, “as the employer, you have the power of hiring and firing. So you will be looked at differently than as having a conversation among equals. You’re not on the same footing as an employee when you’re participating out there.” By way of illustration, he cited a recent case in which a Jimmy John’s manager encouraged employees’ online haranguing of a union supporter. “That ruling [against the employer] went 3-0 across party lines,” noted Johnson, one of two Republicans on the Board.

Social media in hiring. “What issues arise when employers use social media to attract new talent or vet job applicants?” Meyer asked the panel. “What happens if I’m screening applicants and someone is critical of a prior employer? Or they see pro-union information on their Facebook page?”

“This is not a new phenomenon,” Johnson said, “These issues have been around for a long time.” He likened the situation to the union movement’s “long-used tactic” of “salting,” noting that the same principles would apply. Like salting, in which an employer violates the NLRA if it refuses to hire an applicant whom it knows to be a union organizer, once an employer has knowledge of an applicant’s online protected activity, an adverse hiring decision can become suspect. “If you don’t hire the person, there has to be a legitimate business justification. You’ll be stuck in a classic mixed-motive kind of defense.”

The EEOC’s Feldblum had much to say on this point, too—given that social media can reveal much more than just an applicant’s union proclivities. “It’s hard not to troll social media,” she conceded. Yet she cautioned that an employer can discover information about prospective employees that it is not permitted to use as the basis for an employment decision. “You can’t ask in a job interview: ‘Are you planning to get pregnant in the next six months?’” But that information can become known to a prospective employer via Facebook. And if the applicant can obtain evidence that you had knowledge about her that you can’t legally act upon, “that’s almost concrete information of a problem.”

Meyer recommended some best practices that employers could adopt to help alleviate this risk. “One way is to have the hiring decision-maker not do the trolling, and have the other person sanitize the information [obtained through social media] and hand the decision-maker a clean sheet to ensure that the hiring decision is made on legitimate business reasons.” Still, the approach is hardly fail-safe, he warned. And Johnson advised, “under the NLRA, there is a pretty liberal ‘imputation of knowledge’ standard. You have to be very cautious if you take that approach. You have to make sure it’s fairly hermetically sealed.”

Social media recruiting. Antidiscrimination laws also are implicated when an employer uses targeted social media recruiting. “Apparently on Facebook you can target to a particular subgroup,” Feldblum said. “Facebook captures all these demographics and advertisers can capture what it is they’re interested in. And when folks buy ads on Facebook they can target, say, women between the ages 18 and 30. Is that a problem? Well, you know you couldn’t put out a job ad saying only those women should apply. So if you’re only using social media to recruit, that could be a problem. And some companies have shifted only to social media.”

“The more interesting question comes when an organization or business feels that it isn’t getting a sufficiently diverse applicant pool, so it uses targeted social media to diversify,” Feldblum said. “That’s got a benign purpose, but it can be a problem.”

Online surveillance. Just as employers can’t undertake surveillance of employees’ protected activities in the brick-and-mortar workplace, surveilling employees’ online activities—or creating the impression that you’re doing so—is a violation of the NLRA. “You cannot spy on your employees,” Johnson stressed. Granted, he noted, it’s a bit more complicated with respect to social media because such activity “usually involves some invitation to connect at some point. But even if it’s a voluntary connection [between employer and employee], it’s good to proceed with caution. If you start dropping hints to them that you’re watching what you’re doing online in terms of conversations, that becomes a trickier issue.”

However, “there is a difference between monitoring for a business purpose and surveillance,” Griffin added. Once again using an analogy from existing law, he explained: “If you have a camera set up for security purposes, generally speaking, that’s not going to be a problem. But if you train the camera ahead of time to focus on a meeting going on in the parking lot where you know employees are going to meet to sign [union authorization] cards, that is going to be a problem. Similarly, if you want to surveil social media activity in order to gauge productivity that’s not a problem. But to target protected online activity is a different issue.”

Scoping out cyber-harassment. On the other hand, an employer can’t simply close its eyes to employees’ social media activity altogether, Feldblum stressed. And just because an employee is posting while off duty doesn’t mean the employer can wash its hands of the whole affair.

“Social media is a 24-7 world,” she said. “And when it comes to the workplace, is there ever such a thing as purely ‘off the clock’ social media? If I post a sexually harassing message at 9 o’clock at night about a coworker, an employer can’t just say ‘I don’t have to worry about that—it happened at 9 o’clock at night.’”

“For the younger generation specifically, they are using social media all the time and they might not think about privacy issues and realize that an employer can follow up on something that occurred outside the workplace. But if an employee posts a sexually harassing post, that can affect the workplace. It can contribute to a sexually harassing environment inside the workplace. As an employer, once you are told about harassment, you have to take reasonably quick efforts to stop that harassment. You do have a responsibility to track down those facts and do something about it. You may have employees asking, ‘what do you mean you want me to show you what I posted on Facebook?,’ but you do.”

“Again, this is about the basic law. You cannot post a sexually harassing cartoon in the cafeteria that clearly identifies a coworker. Nor can you post it on your private Facebook page if it’s then going to affect your workplace.”

Training and other takeaways. Feldblum urged employers to “develop clear and consistent policies and articulate those policies to employees,” adding “I think that’s a good best practice for the EEOC as well: to articulate in guidance the positions of the EEOC on hot topics. I’m constantly pushing for more guidance.”

Aside from a few EEOC federal-sector decisions (the agency acts as adjudicator in cases brought by federal workers) and written responses to letters from stakeholders inquiring about particular technologies, the Commission has yet to issue a formal guidance or informal discussion letter on the use of social media. It sought input from stakeholders in a March 2014 meeting on social media in the workplace, though—presumably with an eye to articulating a formal position on the issue. In contrast, the NLRB, particularly under former acting general counsel Lafe Solomon, has been quite proactive in articulating its evolving position on these questions, issuing a series of reports on the social media cases coming through the agency’s doors.

As Feldblum sees it, the rise of social media gives employers an opening to retrain their managers and employees about the basic rules of employment discrimination and harassment. She urged employers to use the explosion of social media as a chance to reinforce longstanding legal principles.

Johnson reiterated this sentiment. Asked to offer some “best practices” for addressing the interplay between social media and the NLRA, he said that “training is a big part.” In particular: “training on the background principles of what the Board has found lawful or unlawful.”

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Proposed Equal Pay Report would be ineffective and is not needed, according to NELI experts

November 21st, 2014  |  Cynthia L. Hackerott  |  Add a Comment

The OFCCP’s proposed Equal Pay Report will not be effective in meeting the goals stated by the agency and it is not needed, retired attorney David Copus told the audience at the National Employment Law Institute’s (NELI) Thirty-Second Annual Affirmative Action Briefing in Chicago, Illinois. Noting that compensation is the number one focus of the OFCCP, Copus, along with John C. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in San Jose, California, discussed the OFCCP’s current initiatives regarding compensation discrimination, focusing in particular on the proposed Equal Pay Report and the OFCCP’s newly revised audit scheduling letter.

Equal Pay Report proposal. Current regulations require that all employers in the private sector with 100 or more employees, and some federal contractors with 50 or more employees, annually file the EEO-1 Report with the Joint Reporting Committee (a joint committee consisting of the EEOC and the OFCCP). Under a proposed rule published in the Federal Register on August 8, 2014 (79 FR 46562- 46606) with corrections published on August 20 (79 FR 49260-49261), some covered federal contractors and subcontractors would also be required to electronically submit an annual “Equal Pay Report” on employee compensation. The OFCCP’s proposal would revise its regulations at 41 CFR Part 60-1, which set forth the reporting obligations of covered federal contractors and subcontractors under Executive Order (EO) 11246.

Coverage. The Equal Pay report would be required of prime contractors and first-tier subcontractors who file EEO-1 Reports, have more than 100 employees, and a contract, subcontract, or purchase order amounting to $50,000 or more that covers a period of at least 30 days, including modifications. The OFCCP estimates this new reporting obligation would cover about 21,251 contractors and 67,578 establishments. Copus pointed out that about 48,422 establishments – 42 percent of all establishments subject to OFCCP audit – would not be covered under the proposal. In addition, the proposal would not cover: (1) educational institutions; (2) almost all construction contractors; (3) state and local governments; and (4) possibly TRICARE subcontractors (given the five-year moratorium on enforcement of the obligations related to affirmative action programs and recordkeeping of all TRICARE subcontractors set forth in Directive 2014-01, effective May 7, 2014).

Data required. The proposal would require covered contractors to submit the following three pieces of information: (1) the total number of workers within a specific EEO-1 job category by race, ethnicity and sex; (2) total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and (3) total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex. No individual pay information would be submitted.

Reporting period. The filing period for the proposed Equal Pay Report would be January 1 to March 31 of each year. The report would cover total W-2 Wage and Tax Statement earnings and total work hours for the calendar year, January 1 – December 31, for all employees included in the contractor’s most recent EEO-1 Report(s) (which are due annually on September 30).  The number of employees would include all employees whether or not they are still employed by the contractor on December 31st.

The reasoning behind the March 31 deadline for the Equal Pay Report is that, by that time, employers will have submitted their W-2s from the previous year, Copus explained. This information would be submitted as a supplement to the employer’s most recent EEO-1 Report(s) filed the previous September.

Public comments. Public comments on this proposal are due by January 5, 2015. [WK Note: At the time of the NELI briefing, the comment deadline was November 6, 2014, but, in an October 31 announcement and subsequent Federal Register notice (79 FR 65613-65614), the OFCCP extended the comment period for an additional 60 days.] Fox noted that there is no deadline for final rule approval by OMB, and Copus said the rule may not be finalized within the time remaining for the Obama Administration. However, contractors concerned about this proposal shouldn’t just wait around for a final rule, but rather should file comments to bring those concerns to the attention of the OFCCP, both Copus and Fox suggested.

The OFCCP won’t give much weight to public comments when formulating the final rule, according to Copus, who said that public comments will be like “water off a duck’s back” to the OFCCP. Nevertheless, these comments will constitute evidence in any litigation that might challenge a final rule, Fox pointed out. Congress will be more willing to consider contractor concerns, Copus stated, recommending that contractors who are really agitated by this proposal should also voice their concerns to Congress.

Electronic submission. One concern about the proposal is that it would require contractors to submit their data electronically using a web-based data tool. The OFCCP states that the web-based portal for reporting and maintaining compensation information will be designed so that it “conforms with applicable government IT security standards.”  The agency will also establish a process for requesting an exemption to the electronic filing requirement. However, the proposal does not point out what steps the agency will take to secure the data against hackers, Copus observed, noting that this omission would be a good point to discuss in public comments.

Fox cited a 2013 report from the National Research Council (NRC) of the National Academies of Sciences (NAS), entitled “Collecting Compensation Data from Employers,” which recommends that if the OFCCP were to utilize a pay data collection instrument, it should formulate ways to mask the data submitted by contractors. Moreover, both Copus and Fox told the audience that they need to “perturbate,” – i.e. disguise – all the data submitted to the OFCCP.

One way to protect data is to code sensitive information, such as employee names, job titles, and geographic locations and provide the key to the OFCCP separately from the data files, Fox suggested. Another way to protect data is via a File Transfer Protocol (FTP) website, he added.

Other concerns. Copus and Fox detailed several other concerns about the proposal, including their assessment that the proposal won’t serve the two stated purposes cited by the OFCCP, which are to: (1) allow the agency OFCCP to target facilities most likely to have pay violations; and; (2) encourage contractors to conduct self-audits and take corrective action where appropriate. The proposal is vague on exactly how these two goals will be accomplished, Copus said.

Targeting. The OFCCP proposes to accomplish the first objective by developing an “industry standard” appropriate for each facility, that would be by NAICS primary codes. These codes are very broad, grouping together industries that encompass very disparate types of jobs, Copus explained. To illustrate his point, he cited NAICS Primary Code 11 which includes “Agriculture, Forestry, Fishing and Hunting.” Data on the average hourly compensation by race, sex, and ethnicity for each EEO-1 category would be combined with undefined external labor market data to create the “industry standard.”  But it’s unclear whether this data would be aggregated by state, metropolitan areas, or contractor size or whether national or regional aggregations would be used, he noted.

For the next step in the targeting process, the OFCCP would compare an individual contractor establishment’s compensation pattern with the “industry standard.”  However, the proposal leaves unanswered exactly what comparisons would be made, Copus noted. On this point, he questioned: (1) whether these comparisons would be made by race/sex/ethnicity for each EEO-1 category separately or for all EEO-1 categories aggregated and weighted; and (2) would there be different comparisons for different industries and different comparisons for different size companies?

In the next targeting step, the OFCCP would select establishments for audit that depart in some unspecified way and degree from the “industry standard.” Yet, the proposal is unclear as to what kind of disparity would trigger an audit, Copus said. The unanswered questions about such a disparity include whether the disparity must be statistically significant, and if so, for how many EEO-1 groups?

Moreover, the proposal fails to explain how any targeting mechanism based on the Equal Pay Report would be coordinated with any other targeting schemes for contractors not covered by the report, Copus observed. Currently, the agency has separate targeting schemes — aside from the general establishment audit targeting system for supply and service contractors — for contractors with Functional Affirmative Action Programs, construction contractors, glass ceiling compliance reviews, contractors that are educational institutions, and pre-contract award reviews. Moreover, as noted previously, about 42 percent of all establishments subject to OFCCP audits would not be covered by the Equal Pay Report.

In sum, the proposal presents more questions than answers about targeting, he said, concluding that the report will not work as a targeting mechanism because there are too many unanswered questions to be worked out.

Self-evaluations. Not only will the Equal Pay Report not work as a targeting device, but it won’t work as a self-evaluation tool, either, Copus concluded. Under the proposal, contractors could voluntarily compare their own compensation pattern with the “industry standard” according to some unspecified criteria and take corrective action where appropriate. But even if the OFCCP publishes industry standards as the proposal suggests, those standards will be summary data only with no identification of specific facilities or companies.

Moreover, what value would knowledge of the industry standards provide to contractors? Copus asked. According to the OFCCP’s preamble to the proposal, “[e]mployers do not want to be known as one of the lowest paying members of their industry, and may voluntarily change their pay structure,” but Copus said this information has nothing to do with discrimination or the pay gap that the Equal Pay Report is supposed to address. Fox suggested this information would be useful to unions as leverage in negotiating collective bargaining agreements.

Fox also pointed out that the self‐analysis suggested in the Equal Pay Report will not satisfy the current regulatory requirement for contractor’s self‐analysis on pay.

Unlawful wage gap myth. The OFCCP maintains that the purpose of the Equal Pay Report and its other compensation discrimination enforcement efforts is to eliminate the gender wage gap in the federal contractor workforce caused by widespread unlawful denial of equal pay for equal work. However, Copus disagreed with the agency’s assertion that the gender wage gap is in fact caused by unlawful actions on the part of employers.

The White House’s claim that unequal pay for equal work causes the gender wage gap is simply not true, Copus said, explaining that many legitimate factors affect an employee’s current pay. For example, seniority is impacted by family responsibilities and the fact that a disproportionate number of women take off from the workforce to raise children is not discriminatory, but a fact of life, he noted.

Although the White House maintains that women earn an average of just 77 cents for every dollar earned by men, the 77 cents figure does not refer to the same work; rather, it includes all workers regardless of job, according to Copus. The OFCCP even admits that, “occupational differences may account for about half of the gender wage gap,” he pointed out. Thus, only a tiny portion of the gender wage gap is attributable to paying women less than men for doing the same work. Instead, the gender wage gap derives largely from the fact that females, on average, tend to work in lower paying jobs while men, on average, tend to work in higher paying jobs.

Copus cited a September 2, 2014 opinion piece in Time Magazine which states that the assertion that “[w]omen earn 77 cents for every dollar a man earns—for doing the same work” is a myth. According to the piece, “[n]o matter how many times this wage gap claim is decisively refuted by economists, it always comes back. The bottom line: the 23‐cent gender pay gap is simply the difference between the average earnings of all men and women working full‐time. It does not account for differences in occupations, positions, education, job tenure or hours worked per week. When such relevant factors are considered, the wage gap narrows to the point of vanishing.”

Furthermore, the OFCCP’s own enforcement data shows that there is not widespread wage discrimination against women in federal contractor workplaces, Copus said. During the period between fiscal year (FY) 2009 and FY 2014, in which the OFCCP conducted 23,734 audits, the agency found compensation violations, including violations impacting men and minorities, in only one half of one percent of all audits. Of the cases involving gender bias, most involved less than four women, and only two of those were large enough to warrant a press release, he noted. Fox added that over the last 30 years and 10 presidential administrations, the OFCCP has simply not been able to find any evidence of widespread wage discrimination due to gender bias.

Current pay focus is erroneous. Even so, any purported wage gap in current pay is irrelevant because “any analysis of current pay is irrelevant,” Copus asserted. The OFCCP concedes, in Directive 2013-03 (previously numbered as Directive 307) and related policy statements, that it is bound by Title VII when conducting compensation enforcement under Executive Order (EO) 11246. Yet, the agency’s focus on current pay does not comport with the Supreme Court’s 2007 holding in Ledbetter v Goodyear Tire & Rubber Co (89 EPD ¶42,827) that the correct focus under Title VII is pay decisions, Copus explained. The only change the Lilly Ledbetter Fair Pay Act of 2009 made to Title VII law was to extend the charge filing period indefinitely when an employee challenges a discrete pay decision; it did not, however, change the requirement in the Ledbetter decision that Title VII claimants must identify and challenge discrete pay decisions, he emphasized. Accordingly, the OFCCP cannot claim pay discrimination under the relevant legal standard unless it identifies a specific pay decision (meaning an event that impact pay such hiring, promotions, pay freezes, bonuses, and demotions) and proves that decision is discriminatory, he said.

Even though the OFCCP’s practice of looking only at current pay is a “fatal flaw” that is “demonstratively wrong,” the agency is sticking with it because the contractor community is not contesting it, Copus said. In addition, the compensation analysis advice offered by some vendors and law firms focuses only on current pay, and ignores analyzing pay decisions, cautioned Copus.

Revised audit documents. The OFCCP’s standard practice for a conducting a compliance review begins with a desk audit in which the agency sends the contractor its standard Scheduling Letter and accompanying Itemized Listing seeking the contractor’s written Affirmative Action Program (AAP) and supporting documentation. On September 30, 2014, the Office of Management and Budget (OMB) approved revisions to these documents, and the OFCCP began using the revised versions in mid-October.

Paragraph 19. Paragraph 19 of the revised Itemized Listing requires contractors to submit “[e]mployee level compensation data for all employees (including but not limited to full-time, part-time, contract, per diem or day labor, temporary) as of the date of the workforce analysis in [the contractor establishment’s] AAP.”  Contractors are required to provide gender and race/ethnicity information and hire date for each employee as well as job title, EEO-1 Category and AAP job group in a single file.

After 35 years of trying, the OFCCP finally got one of its fondest hopes – it can now seek individual, employee-level compensation data via the Itemized Listing, rather than attempting to get this information via supplemental document requests (SDRs) after the contractor submits its response to the Itemized Listing, Fox observed. The importance of this change is that contractors cannot negotiate what information they will provide to the OFCCP in response to the Itemized Listing, whereas they can negotiate what information they will provide in response to SDRs, both Fox and Copus pointed out. They also observed that the demand for individualized pay data in Paragraph 19 differs from the proposed Equal Pay Report requirement of aggregate pay data.

Paragraph 19 also requires submission of “[d]ocumentation and policies related to compensation practices of the contractor” and it invites the contractor to submit “any additional data on factors used to determine employee compensation.” Copus advised against submitting the optional additional data, saying that doing so may constitute an admission against interest for the contractor.

Job group formulations. Contractors need to be aware of their AAP job groups and carefully review them, Fox advised, because the OFCCP will likely assert that putting jobs in the same group for AAP purposes is an admission on the part of the contractor that these jobs are similar for the purpose of compensation discrimination analysis as well. “Make your job groups equal to similarly-situated employees,” he said. Copus advised that AAP job groups should be very narrow, and he also recommended that AAPs should include a statement that job groups do not influence pay.

Responding to OFCCP data demands. Given that the OFCCP will be sticking to its erroneous focus on current pay, rather that the relevant legal standard of focusing on pay decisions, how should contractors respond to the demand for current pay data in Paragraph 19?

The decision on whether to resist the OFCCP’s demand for current pay data is a policy decision that contractors must make when they first respond to the revised Scheduling Letter and Itemized Listing, Fox stated. Attorneys should put their clients on notice that the law does not require contractors to submit current pay data because data on current pay is irrelevant under Title VII, he advised. Accordingly, attorneys need to get their clients’ permission before submitting data on current pay to the OFCCP. Even so, contractors who chose to respond by supplying current pay data to the OFCCP should note in their responses that the relevant legal standard for Title VII compensation analysis is pay decisions, both Fox and Copus agreed.

Although Paragraph 19 only requires contractors to submit current pay data, and not any analysis of that data, Fox recommended that contractors analyze their current pay data under attorney-client privilege prior to submitting that data to the OFCCP so that the contractor can identify disparities and understand why these disparities exist. Moreover, because the relevant legal standard is pay decisions, contractors should analyze their pay decisions for unlawful disparities as well. Indeed, attorneys who don’t put their clients on notice that they should analyze pay decisions are risking malpractice suits, Fox warned. Copus recommended that contractors proactively examine recent pay decisions – such as starting pay, promotional pay increases, and merit pay increases – using multiple regression analysis.

The presenters. Copus has more than 35 years of litigation and counseling experience and has regularly represented employers in OFCCP matters, including hundreds of standard OFCCP compliance evaluations and “glass ceiling” audits. He began his legal career in 1969 at the Equal Employment Opportunity Commission (EEOC), where for many years he headed the National Programs Division. In 1977, he entered private practice representing employers, and he recently retired from Ogletree Deakins in Morristown, New Jersey.

Fox is the President and a founder of Fox, Wang & Morgan P.C. in Los Gatos, California. He leads large and complex litigation matters in state and federal courts, in cases involving wage-hour and discrimination class actions, trade secret claims, employment contract disputes, wrongful termination, corporate investigations, and the use of statistics in employment matters. Fox previously served as Executive Assistant to the Director of the OFCCP, where he was responsible for all enforcement and policy matters.

NELI’s Thirty-Second Annual Affirmative Action Briefing was held in Chicago on October 16-17, 2014. For more information on NELI, including its publications and future programs, call (303) 861-5600 or go to NELI’s website at: www.neli.org.

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Employee awarded unemployment benefits because employer failed to follow drug testing protocol

November 18th, 2014  |  Ron Miller  |  Add a Comment

A South Carolina employer loss its challenge to an award of unemployment benefits to an employee discharged after a positive drug test because it failed to use a testing laboratory that was certified by a statutorily designated accrediting association. Although sympathetic to the employer’s position, the South Carolina Supreme Court held in Nucor Corp v. South Carolina Department of Employment and Workforce, that an administrative law court was correct to consider the laboratory’s lack of proper certification when deciding that the employee could receive unemployment benefits.

Employee fails drug test. The employee was fired from her job with a steel production company, after she tested positive for marijuana use and failed a random drug test in violation of the company’s drug policy. To administer the test, the company used a laboratory certified by the Department of Health and Human Services. However, the employee had an independent test performed at a different laboratory. That test came up negative. She applied for unemployment benefits, but the company argued that she was ineligible under S.C. Code Ann. sec. 41-35-120. That statute disqualified workers from receiving unemployment benefits if they were terminated for violating a company’s policies (subsection (2)), failing a drug test administered by a laboratory certified by one of three approved organizations (subsection (3)), or failing to comply with state or federal drug testing and use regulations (subsection (4)).

The case eventually made its way to an appellate panel at the Department of Employment and Workforce (DEW), which held that the employee was eligible for employment benefits because the independent drug test, which had come back negative, showed that she had not violated the company’s drug policy or any drug statutes, meaning that she did not fall under subsections (2) or (4). The company appealed that decision to an Administrative Law Court (ALC), which affirmed the decision of the DEW Panel as to subsections (2) and (4), but remanded the matter so that the Panel could rule on the applicability of subsection (3). After clearing a number of additional hurdles, the DEW Panel ruled that the employee had not run afoul of subsection (3), since the company’s chosen laboratory was not certified by any of the three organizations specified in the statute. The company did not appeal that ruling. Instead, it re-appealed the ALC’s original decision to the Supreme Court.

Appealability. Despite the employee’s protests, the court held that the company was not required to appeal the DEW Panel’s decision concerning subsection (3) before being allowed to appeal the ALC’s decision regarding subsections (2) and (4), although that probably would have been the more prudent course of action. The reason the company could not immediately appeal the ALC’s decision in the first place was because the ALC had remanded consideration of subsection (3) back to the DEW, meaning that its decision on subsections (2) and (4) was not yet final. By making a ruling on subsection (3), the DEW Panel had transformed the ALC’s decision on subsections (2) and (4) into a final, appealable decision.

Improperly certified laboratory. By appealing a decision based purely on subsections (2) and (4), the company tried to avoid consideration of its laboratory’s lack of statutorily required credentials. However, that fact still crept into the Supreme Court’s reasoning. The company argued that the ALC had been wrong to consider the employee’s off-site drug test in determining that she was not barred from receiving unemployment benefits. The company’s own drug tests, it argued, were all the ALC needed, and because neither subsections (2) nor (4) said anything about laboratory standards, the fact that its laboratory was not certified as required under subsection (3) did not matter. However, the only reason the company was relying on subsections (2) and (4) was because it knew that it could not rely on subsection (3), which made its laboratory’s lack of credentials relevant to all of the subsections. The ACL had been correct to consider that fact when making its decision that the employee could receive her unemployment benefits, a decision the Supreme Court affirmed.

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Progress report on status of people with disabilities released

November 14th, 2014  |  Deborah Hammonds  |  Add a Comment

The National Council on Disability (NCD) recently released its 2014 edition of National Disability Policy: A Progress Report which provides details on the status of people with disabilities in the United States. The annual report gives an overview of the progress this country has made promoting and protecting the rights of individuals with disabilities. The report also identifies opportunities to promote public policies that contribute to a more inclusive environment.

NCD’s report identifies six areas as being important to the wellbeing of people with disabilities: employment access and inclusion, subminimum wage, the Convention on the Rights of People with Disabilities (CRPD), education outcomes, Medicaid managed care, and mental health care. Recommendations to improve these areas are also included. For example:

“Employment is one of the most important pathways to economic self-sufficiency and independence for Americans, yet people with disabilities experience higher unemployment and lower pay rates than those without disabilities. NCD explores how such factors as transportation, workplace culture, and technology impact employment experiences and opportunities. The NCD advocates for an inclusive approach to these (and other) factors so that people with disabilities can focus on pursuing employment interests rather than on mediating obstacles that serve as barriers to employment.

Extending subminimum wage based on disability status has no place in American culture. This policy option was introduced in an era lacking protective legislation, such as the Rehabilitation Act and the ADA, and innovations in technology that now afford greater opportunity for Americans with disabilities to engage prominently throughout society. The NCD urges the U.S. Department of Labor to adopt its approach to phasing out subminimum wage provisions as they relate to people with disabilities.”

Data trends in disability policy are also highlighted in the report.

“With our 2014 Progress Report, NCD acknowledges the cultural context of the past while setting a vision for the future that is grounded in high expectations for both people with disabilities and the policymakers who are responsible for shaping an inclusive society,” said Councilmember Janice Lehrer-Stein in an agency statement.

NCD has reported on the status of people with disabilities since its inception. This year’s report takes on added significance as the agency celebrates its 30th anniversary. NCD was first established in 1978 as a small advisory Council within the Department of Education and in 1984 transitioned to its current status as a federal agency.

A copy of NCD’s 2014 Progress Report, including key findings, recommendations and objectives, is available on the agency’s website, www.ncd.gov.

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