By Lisa Milam-Perez
“Raising pay raises us all,” declares the noble voice-over in Walmart’s latest TV ad. Have you seen it? It left me a little verklempt. The retail behemoth, so reflexively maligned in liberal circles, is raising pay for its hourly workers, and boasting about it.
There it is, folks: I’m callin’ it. This “Fight for $15” movement is a resounding success. What other explanation could there be for Walmart’s newest campaign? “Alt” labor’s PR blitz has fixed the public’s attention on the challenges facing low-wage workers and has fostered a sense of urgency, of moral imperative, over remedying their plight. The world’s largest retailer felt the heat, responded accordingly, and is making hay of it.
After Walmart raised its wages, TJ Maxx and Marshall’s quickly followed suit. Then in April, beleaguered “joint employer” McDonald’s Corp. said it would give a raise to workers at company-owned restaurants (i.e., a small fraction of the McDonald’s restaurant universe) to more than $10 an hour by 2016. Sure, we can wonder about motive (See that, NLRB—how few McDonald’s employees actually fall under corporate’s control? We’ve made our point!), but I’m still feeling all warm and fuzzy inside, so let’s not go there.
Of course, in concrete terms, the Fight for $15 is far from won. The world’s largest employer can boost its wages and its competitors can follow suit, but the majority of low-wage workers are still left behind. The most tangible solution is a sharp increase in the lagging federal minimum wage, currently a woeful $7.25 an hour. The Obama administration has doggedly pressed the matter of late, leading the charge in his 2013 State of the Union address and raising the rate to $10.10 for federal contract workers by executive fiat. Late last month, lawmakers proposed an audacious $12 an hour federal minimum wage by 2020—$110 billion in raises for affected U.S. workers—in the form of the Raise the Wage Act. No doubt their lofty ambitions were fueled by the Fight for $15 battle cry. Given the consistent failure over the years to move the needle in far more modest increments, though, their quest seems a Quixotic one.
Yet where Congress has lollygagged, the states have stepped in, a solid majority of which have minimum wages that exceed the federal rate. A number of those jurisdictions have raised their minimums still higher since 2013. In the 2014 election, voters handily approved increases in all five states where the minimum wage was on the ballot. Meanwhile, Democratic lawmakers are taking novel approaches to boost workers’ wages even further: Connecticut is pondering legislation that would charge $1 an hour to private companies with at least 500 employees (in an alternate bill: 250 workers) for each worker who is paid $15 an hour or less. Last week, New York Governor Andrew Cuomo called upon the state’s labor commissioner to convene a wage board to enact a wage-hike for fast-food workers specifically. And city governments have begun to take action too, with still higher local wage floors in Seattle, San Francisco, and Chicago, among others.
Alas, with progress comes pushback, as Republican legislators maneuver with equal fervor to undo wage gains already won. In January, on the heels of a citizen-mandated minimum-wage jump, South Dakota passed a measure to exclude workers under age 18 from enjoying the newly enacted pay raise, and a similar initiative is currently afoot in Nebraska. Last week the Missouri Senate voted to bar municipalities in the state from enacting local wage hikes; such legislation has been floated in several other states as well. Bids to eliminate longstanding prevailing-wage laws, which typically apply to public construction and service contracts, are in play in more than a dozen states too. Living wage ordinances also face court challenges by private employers; last week, for example, an airport contractor urged the Ninth Circuit to strike down LA’s Living Wage Ordinance, enacted in 1997. Of course, at the federal level, the GOP continues to dig in its heels. Senate Republicans in 2014 blocked a minimum wage increase. And in the House? Suffice to say that John Boehner once pledged to kill himself before he’d vote for a minimum wage hike.
They’ve won the PR battle, the Fight for $15 folks. But on the political front, the wage war rages on.
A bill that would add pregnancy as a protected category under the Florida Civil Rights Act (FCRA) is waiting for Governor Rick Scott’s approval.
SB 982 would prohibit public and private employers from discriminating in employment based on pregnancy. The measure’s prohibition against discrimination based on pregnancy would extend to labor organizations, joint labor-management committees, employment agencies, and in occupational licensing, certification, and membership organizations. The bill also would protect against discrimination based on pregnancy in public lodging and food service establishments and in places of public accommodation.
According to a legislative analysis of the bill, the fact that the FCRA is modeled after Title VII but yet did not include this provision has caused divisions among federal and state courts as to whether the Florida Legislature intended to provide protection on the basis of pregnancy status. As a result, the ability to bring a claim based on pregnancy discrimination varied among jurisdictions within the state until the Florida Supreme Court recently ruled that by prohibiting discrimination based on sex, the FCRA also prohibits discrimination based on pregnancy.
The prohibition against discrimination applies to all private and public employers at the state and local level. In the public sector, the bill will apply to state agencies, counties, municipalities, political subdivisions, school districts, community colleges, and state universities.
OFCCP issues new directive on handling sexual orientation and gender identity discrimination complaints
The OFCCP has issued a new directive to establish the agency’s policy on accepting and investigating individual and systemic complaints based on gender identity or sexual orientation. Directive 2015-01, entitled “Handling individual and systemic sexual orientation and gender identity discrimination complaints” is dated April 16, 2015 and took effect on the date of issuance. Under the new policy set forth in this directive, the OFCCP will accept and investigate individual and systemic complaints that allege discrimination on the basis of sexual orientation and gender identity against a federal contractor or subcontractor. It will analyze each complaint to determine whether the alleged discrimination occurred on the basis of sexual orientation or gender identity, as well as on the basis of sex, and will coordinate with, and refer complaints to, EEOC on a case-by-case basis.
Recent amendment to EO 11246. The OFCCP enforces Executive Order (EO) 11246, as amended, which prohibits covered federal contractors and subcontractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. Sexual orientation and gender identity were expressly added to the categories protected from discrimination under EO 11246 on July 21, 2014, when President Obama signed EO 13672.
Regulations. On December 9, 2014, the OFCCP published in the Federal Register finalized regulations to implement EO 13672 (79 FR 72985-72995). On March 17, 2015, pursuant to the Paper Reduction Act, the Office of Budget and Management (OMB) approved the information collection requirements (ICR) necessary for implementation of those regulations. They took effect on April 8, 2015, and apply to federal contractors who hold contracts entered into or modified on or after that date.
Broader than LGBT. In its FAQ and webinars about these regulations, the OFCCP has explained that use of the “LGBT” abbreviation in place of “sexual orientation and gender identity” is discouraged in job advertisement tag lines “because it does not accurately reflect that people of all sexual orientations and gender identities are protected by the new regulations.” Of note, the “LGBT” abbreviation is not used anywhere in the new directive.
Enforcement. Although the OFCCP does not enforce Title VII, the directive notes that the OFCCP enforces the nondiscrimination obligations under EO 11246 by following Title VII and the case law principles that have developed interpreting Title VII. In addition, since the EEOC is the lead federal agency responsible for administering and enforcing Title VII (pursuant to EO 12067), the OFCCP generally defers to the EEOC’s interpretations of Title VII law.
Coverage differences. Title VII, unlike the amended EO 11246, does not expressly cover sexual orientation and gender identity. While violations of EO 11246 may be discovered during compliance evaluations, discrimination based on sexual orientation and gender identity may most often be found through the investigation of discrimination complaints, according to the OFCCP. Therefore, the OFCCP issued the directive to clarify that it will accept and investigate individual and systemic complaints of discrimination based on sexual orientation and gender identity under EO 11246, as amended, applying Title VII principles and case law, as appropriate. A determination about the handling of a complaint, once accepted, is made on a case-by-case basis.
These complaints may also contain a Title VII allegation of discrimination based on sex; however, not all courts have conclusively established that sex discrimination is equivalent to discrimination based on sexual orientation or gender identity, the OFCCP directive points out. In a footnote, the directive notes – citing the EEOC’s 2012 decision in Macy v Holder (CCH Employment Practices Guide ¶6881) as well as other EEOC and federal circuit court decisions – that although sexual orientation and gender identity are not explicitly protected by Title VII, the “EEOC and private litigants continue to develop sex discrimination theory.”
Coordination with EEOC. Compliance officers or others responsible for complaint processing usually make referrals of individual complaints to the EEOC pursuant to the OFCCP’s regulation at 41 CFR Part 60-1.24(a). This provision permits, but does not require, the OFCCP to make referrals to the EEOC for processing under Title VII. Previous OFCCP policy, expressed in the agency’s Federal Contract Compliance Manual (FCCM) at Section 6B states that pursuant to a Memorandum of Understanding between the OFCCP and the EEOC, the “OFCCP will generally refer individual complaints alleging employment discrimination in violation of EO 11246 to the EEOC,” but the OFCCP will retain EO 11246 class and systemic discrimination complaints. Yet, with the signing of EO 13672, the President gave the OFCCP explicit executive authority to ensure that federal contractors and subcontractors treat applicants and employees without regard to their sexual orientation or gender identity. Therefore, Section 4 of the new directive explicitly states that the directive supersedes FCCM Section 6B and other guidance “to the extent that they may be inconsistent with” the new directive.
In light of both the express protections conferred by EO 13672, the authority provided by the OFCCP’s existing provisions to retain or refer individual complaints, and the protections developed in case law under Title VII sex discrimination theory, the OFCCP will continue to coordinate and share information with the EEOC to the maximum extent possible to remedy complaints based on sexual orientation and gender identity. Such coordination will be fact-driven and occur on a case-by-case basis. The OFCCP will continue to transfer or jointly investigate complaints when the OFCCP lacks jurisdiction and in other cases when discrimination is more completely remedied by joint investigation or by the EEOC alone.
Gender identity complaints. Under EO 11246, the OFCCP has jurisdiction to investigate federal contractors or subcontractors with a contract of $10,000 or greater. For sexual orientation complaints, the contract or subcontract must be entered into or modified on or after April 8, 2015 – i.e., the effective date of the OFCCP’s regulations implementing EO 13672. For gender identity complaints, the OFCCP asserts that, pursuant to Directive 2014-02, it has jurisdiction to accept and investigate complaints even if qualifying new or modified contracts pre-date April 8, 2015. Directive 2014-02, effective as of August 19, 2014, clarified the OFCCP’s interpretation that gender identity is part of the protected category of “sex” and therefore, discrimination against federal contractor employees on the basis of gender identity was already prohibited prior to the effective date of the regulations implementing EO 13672.
The Department of Labor has unequivocally and consistently declared that additional compensation in the form of hourly overtime payment does not defeat exempt status under the salary basis test. However, a Walmart pharmacist faced a slightly different challenge—prying overtime payments out of the discount retailer that he alleged were promised if he agreed to relocate and straighten out a troubled pharmacy.
In Nightingale v. Wal-Mart Stores, Inc., a federal district court in Ohio found that the employee understood that he was being offered extra pay to address the problems at a store pharmacy in exchange for his promise to move there, and such promise was found to be clear and unambiguous. Further, a jury could find that the employee relied on the promise and reasonably expected to be paid, and that he was injured when Walmart terminated him from his job. As a consequence, the court ruled that the employee could pursue a promissory estoppel claim after the giant retailer allegedly reneged on the deal.
The employee moved to Ohio to work at a Walmart pharmacy that was apparently riddled with problems. Allegedly, he was promised overtime to straighten out those problems if he agreed to relocate, even though he was a salaried pharmacy manager. According to the employee, he was fired after he complained about not receiving additional compensation. Walmart moved for summary judgment, contending that the employee was exempt from overtime under the FLSA as a salaried professional. Importantly, it also asserted that his promissory estoppel claim failed for lack of a specific promise.
Overtime claims. There was no genuine dispute that the employee was an exempt professional employee, and to the extent that he originally pleaded he was not exempt, that contention was wrong.
Accordingly, Walmart was entitled to summary judgment on the FLSA and state-law overtime claims.
While the employee could not maintain a statutory claim for overtime under the FLSA, because he was an exempt professional, the heart of his claim was the promise to pay additional compensation. Because the employee asserted his entitlement to additional compensation based on his understanding that he was promised such compensation during the hiring process; he was not invoking his statutory rights.
Promissory estoppel. The employee’s claim for additional compensation was framed as a cause of action pursuant to the doctrine of promissory estoppel, explained the court. Such a claim requires four elements: (1) there must be a clear and unambiguous promise; (2) the party to whom the promise was made must rely on it; (3) the reliance is reasonable and foreseeable; and (4) the party relying on such promise must have been injured by the reliance.
A review of the record showed that the employee understood that it was promised that he would be entitled to extra pay for overtime hours needed to address the problems at the Walmart pharmacy in exchange for his agreement to move there. Such an alleged promise could be viewed as clear and unambiguous, the court found. Moreover, the employee met the remaining prongs of a promissory estoppel claim: a jury might find that he relied on the promise to be paid to fix the pharmacy, that he relied on such promise by moving to Ohio and working long hours, that he reasonably expected to be paid, and that he was ultimately injured when he lost both the additional pay and his job. As such, the employee’s promissory estoppel claim survived Walmart’s summary judgment challenge.
The German-style “work council” is once again drawing attention amid media reports that United Auto Workers Local 42 is either seeking or about to seek recognition as the exclusive bargaining agent of employees at the Volkswagen Plant in Chattanooga. Local 42’s president said that more than 50 percent of employees have signed authorization cards that would permit the German automaker to recognize the union as the exclusive bargaining agent of blue collar workers at the plant, according to the Times Free Press. If that happens, the first American experiment with European-style work councils may end up with a less-than stellar score.
In July 2014, following a high-profile union election defeat in an area of the country that has not taken well to unions, the UAW announced the formation of Local 42. During the election campaign there were charges that VW and the union had struck a deal in advance that would put the UAW in the bargaining seat. According to the UAW, Local 42 was organized by VW workers with the goal of giving employees a voice in the workplace through the VW works council. It collects no dues and does not operate as a traditional union.
Representative engagement. In December 2014, Local 42 garnered enough employee support to become recognized under Level 3—the highest level— of Volkswagen’s Community Organization Engagement (COE) policy.
To be eligible to engage with the company, an organization must “exist for the primary purpose of representing employees and their interests to employers consistent with the National Labor Relations Act.” Access to management depends upon levels of employee support for the organization:
- Organizations with greater than 15-percent support of employees in the relevant employee group (Level 1) may use employer-provided space once each month for internal employee meetings on nonwork time; may post announcements in company-designated locations; and employee-only organizational representatives may meet monthly with VW HR “to present topics that are of general interest to their membership.”
- Organizations with greater than 30-percent support (Level 2) may do all of the above, plus increase their meeting times on the employer’s premises to once per week; invite external representatives to meet on-site (again on nonwork time) once monthly; post materials on a “branded” or dedicated posting location; and meet quarterly with a member of the Chattanooga Executive Committee.
- Since access or engagement opportunities are cumulative, organizations with greater than 45-percent support (Level 3) may additionally meet on-site (on nonwork time) “as reasonably needed;” and meet biweekly with HR and monthly with the Chattanooga Executive Committee.
Rival union. In February 2015, the American Council of Employees (ACE) was verified at Level 1 under the COE policy. According to some media reports, ACE is a group that may have been backed by business and political interests. However, ACE calls itself “an independent employee council created to ensure that all VW Chattanooga employees have a voice on the Volkswagen Global Works Council.” The organization also says that it is a local, not national, group that has no outside influence or political agenda.
ACE officials are not happy with reports that Local 42 is seeking recognition through authorization cards instead of by secret ballot election, according to the Chattanoogan. If the reports are true, they may give new life to earlier charges of a deal between VW and the UAW.
Volkswagen’s reaction. The German automaker offered little that would shed light on these reported developments: “Volkswagen Chattanooga management have been meeting regularly with UAW Local 42 and the American Council of Employees, according to the level of support they have achieved within the workforce as determined by our Community Organization Engagement policy,” a VW representative told Employment Law Daily. “The policy has been an effective way to maintain dialog with each of the groups, and we intend to continue with the COE policy at this time.”
Because the meetings under the policy are internal, the VW representative could not comment on any of the topics discussed.
Notably, the UAW’s Local 112, undeniably similar to a German-style work council, was formed in October 2014 to provide representation for workers at a Mercedes-Benz U.S. International (MBUSI) assembly plant in Vance, Alabama, near Tuscaloosa.
The UAW declined to comment to Employment Law Daily on behalf the union or Local 42’s president.