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OFCCP suit against Google demonstrates continued aggressive enforcement in waning days of Obama Administration

January 12th, 2017  |  Cynthia L. Hackerott  |  1 Comment

Last week’s announcement by the OFCCP of its administrative lawsuit against Google, Inc, asserting that the technology giant unlawfully refused to provide certain compensation-related information in a compliance review, has been well-publicized. Citing confidentiality and breadth of scope concerns, Google, Inc provided a statement to multiple news entities, including Employment Law Daily (ELD), asserting that its refusal to provide the information was justified. This administrative action against Google is the latest in an apparent trend of OFCCP suits against major tech companies, noted attorney and former OFCCP official John C. Fox in commentary provided to ELD on January 4.

“We are seeing OFCCP file a large number of administrative complaints in recent weeks, at least compared to OFCCP’s historical averages,” observed Fox. “It very much appears that the Obama OFCCP is ‘spiking the cannons’ as it leaves office and before the incoming Trump Administration can have a chance to see if disputes between government contractors and OFCCP in the audit pipeline are meritorious.”

Fox, currently president of the Silicon Valley area firm, Fox, Wang & Morgan P.C. in Los Gatos, California, also noted that ‘[i]n the San Francisco Regional Office, it is very clear that [OFCCP Pacific Regional Director] Janette Wipper is trying to send a message to the ‘big dogs’ in the tech industry (Microsoft, Oracle, Palantir, and now Google) that she is there and is prowling.”

Dueling narratives. Google’s federal contracts include one with the General Services Administration, awarded in June 2014, for “Advertising and Integrated Marketing Solutions,” under which Google has received over $600,000, according to the OFCCP’s complaint (DOL OALJ No 2017-OFC-4). In a January 4, 2017 press release announcing the suit, the OFCCP asserts that Google violated the laws enforced by the agency and breached its obligations as a federal contractor when it refused to provide the requested information as part of a routine compliance evaluation of the multinational company’s Mountain View, California headquarters. However, in the statement provided by a Google spokesperson to ELD, also on January 4, the company states that “the handful of OFCCP requests” which are the subject of the lawsuit by the agency “are overbroad in scope, or reveal confidential data,” and that the company has attempted to make this clear to the agency.

Information sought. The complaint asserts that the OFCCP initiated the review in September 2015, and on June 1, 2016, the agency requested the following information:

  • A compensation snapshot as of September 1, 2014;
  • Job and salary history for employees in a September 1, 2015 compensation snapshot that Google had produced and the requested September 1, 2014 snapshot, including starting salary, starting position, starting “compa-ratio,” starting job code, starting job family, starting job level, starting organization, and changes to the foregoing; and
  • The names and contact information for employees in the previously produced September 1, 2015 snapshot and the requested September 1, 2014 snapshot.

Approximately on June 17, 2016, “Google communicated its refusal to produce” the above items, among others, the complaint alleges, adding that “[i]n the months that followed, OFCCP repeatedly attempted to obtain Google’s agreement to produce” the items at issue.

On September 16, 2016, the agency issued a Notice to Show Cause regarding the items at issue, but the complaint alleges that, as of the date it was filed with the DOL’s Office of Administrative Law Judges, Google has “persisted in its refusal” to produce the items at issue.

“Like other federal contractors, Google has a legal obligation to provide relevant information requested in the course of a routine compliance evaluation,” said OFCCP Acting Director Thomas M. Dowd in the agency’s statement. “Despite many opportunities to produce this information voluntarily, Google has refused to do so. We filed this lawsuit so we can obtain the information we need to complete our evaluation.”

Google statement. Contesting these allegations in the statement provided to ELD, the Google spokesperson said the following:

“We’re very committed to our affirmative action obligations, and to improving the diversity of our workforce, and have been very vocal about the importance of these issues. As a federal contractor, we’re familiar with our obligations and have worked collaboratively with the OFCCP. We’ve worked hard to comply with the OFCCP’s current audit and have provided hundreds of thousands of records over the last year, including those related to compensation. However, the handful of OFCCP requests that are the subject of the complaint are overbroad in scope, or reveal confidential data, and we’ve made this clear to the OFCCP, to no avail. These requests include thousands of employees’ private contact information which we safeguard rigorously. We hope to continue working with OFCCP to resolve this matter.”

Complications with ‘just writing the check.’ “The question remains whether the Google filing is merely an OFCCP publicity stunt designed to test the resolve of the big tech companies to defend themselves and see whether they will simply ‘write the check’ to move on (‘fly biting the leg of the elephant’ problem),” Fox noted. “Thus far, the tech industry has shown no interest to ‘just write the check’ (other than in a recent Qualcomm compensation lawsuit unrelated to OFCCP).”

“The problem with ‘just writing the check’ in compensation cases (as opposed to hiring cases where OFCCP’s expertise lies) is that the at-issue government contractor must be fair to all employees,” he explained. “The contractor cannot just willy-nilly raise the salaries of some employees OFCCP chooses to exalt without creating both legal liability to other similarly situated employees and wreaking havoc on morale as side-by-side colleagues now rankle that others in their work group are now suddenly paid more for doing the same work based simply on their race, sex or ethnicity. Unthoughtful ‘write the check’ resolutions lacking proper technical foundations for changing the pay of some employees while not all similarly situated employees in compensation cases have often recently resulted in successful lawsuits by those employees not favored in a ‘quick and dirty’ settlement entered into to simply to appease ‘political’ and shareholder unrest.”

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Employees taking a rest period break can’t be required to remain ‘on call’

January 10th, 2017  |  Ron Miller  |  Add a Comment

ABM Security Services employs thousands of security guards at various sites, including sites in California. The guards’ primary responsibility is to provide immediate response to emergency situations, and physical security for buildings and other worksites, their tenants, and their employees. Specific duties may include patrolling sites, responding to emergencies, identifying and reporting safety issues, providing escorts to parking lots, greeting and assisting tenants and visitors, monitoring and restricting access to sites, directing vehicular traffic and parking, monitoring and occasionally either restricting or assisting in moving property into and out of sites, making reports, and hoisting and lowering flags.

“On call” during rest breaks. Guards employed by the company in California brought suit alleging that it failed “to consistently provide uninterrupted rest periods” as required by state law. During discovery, the employer acknowledged it did not relieve its guards of all duties during rest periods. Specifically, the employer required the guards to keep their pagers and radio phones on and to remain vigilant and responsive to calls when needs arose.

Ultimately, the dispute made its way to the California Supreme Court in Augustus v. ABM Security Services, Inc., after an appellate court found that “simply being on call” did not constitute performing work. The California high court ruled that during employee rest period breaks, employers must relinquish any control over how employees spend their break time, and relieve them of all duties—including the obligation that an employee remain “on call.”

On-duty rest periods. Under California law, employers are required to authorize off-duty rest periods––that is, time during which an employee is relieved from all work-related duties and free from employer control. Wage Order 4, subdivision 12, provides that “every employer shall authorize and permit all employees to take rest periods.” The state high court noted that a reasonable reader would understand “rest period” to mean an interval of time free from labor, work, or any other employment-related duties. Moreover, this reading of the wage order was also most consistent with Section 226.7 of the California Labor Code. The high court explained in Brinker Restaurant Corp v. Superior Court of San Diego County, that during meal periods, employers must “relieve the employee of all duty and relinquish any employer control over the employee and how he or she spends the time.”

Accordingly, the court concluded that an employer can not satisfy its obligation to relieve employees from duties, but nonetheless require its employees to remain on call. Thus, the practice of compelling employees to remain at the ready, tethered by time and policy to particular locations or communications devices, does not square with the requirement to relieve employees of all work duties and employer control during 10-minute rest periods.

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That was one heck of a year!

January 6th, 2017  |  Pamela Wolf  |  Add a Comment

I’ve cleaned up all the confetti and empty champagne bottles left in the wake of the annual passing from one year to another. And, with increasingly sober eyes, my colleagues and I here at Employment Law Daily have looked back on all the labor and employment developments that have legs and are still standing, as well as those that crawled, stood up, and then got knocked down—executive immigration reform and the Labor Department’s storied overtime regulation, for example.

And this was no ordinary year—the last one of the Obama Administration—with the continuing tug-of-war between President Obama and his federal agencies and a Congress battling over regulatory and legislative agendas that were miles apart. No one was surprised that the gridlock continued throughout 2016.

It seemed there were Congressional resolutions to block labor and employment regulations at every turn and no chance in sight for measures that would extend worker protections nationally, such as minimum wage increases or paid leave measures. Tired of waiting on Congress, a number of states and localities took matters into their own hands.

The Defend Trade Secrets Act made it through, though, establishing a federal civil remedy for trade secrets theft. The new law, which was effective when President Obama signed it in May, will provide one uniform federal standard for trade secret misappropriation, making it so much easier for employers—one set of nondisclosure policies will do the job, instead of trying to wade through the maze of individual state laws and protections.

On the sex discrimination front, the continuing debate over what exactly is protected under Title VII rages on as federal and state actors skirmish over the need for, or legitimacy of, protections based on sexual orientation and gender identity. Particularly heated were the moves and counter-moves directed toward would-be protections for transgender individuals who would use public restrooms and other public facilities consistent with their gender identity rather than their gender assignment at birth. Those skirmishes will no doubt continue throughout 2017.

My colleagues and I discuss these and other 2016 developments—the ones we think are most important—in a special briefing designed to fill you in on a few things you may have missed or that have slipped your mind in the midst of what we hope was a magnificent New Year’s celebration. Feel free to download 2016: Looking back on the labor and employment roller-coaster ride here, where you’ll also find a link to register for our webinar on January 25.

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Analysis: EEOC’s ADA and GINA wellness regs survive AARP’s challenge

January 3rd, 2017  |  Joy Waltemath  |  Add a Comment

By Joy P. Waltemath, J.D.

EEOC regulations under the ADA and GINA that say the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program (either a participatory or health-contingent program) that seeks the disclosure of ADA- or GINA-protected information survived a challenge by the AARP, the federal district court in the District of Columbia ruled in late December. It found that AARP had associational standing—bringing suit on behalf of its members—to challenge the regs, but AARP did not establish irreparable injury. Specifically, the potential disclosure of health information required by the regs is not public disclosure, and employers are statutorily forbidden from using it to discriminate against employees. Further, paying higher premiums is economic harm, which is not irreparable. The court also found the EEOC entitled to some deference given that “voluntary” is not defined in either the ADA or GINA, and that on this limited record (resulting from AARP’s delay in challenging the regs), the EEOC had offered an apparently reasonable explanation for its change of course to allow the use of penalties or incentives.

Wellness programs and the ADA, GINA, and HIPAA. Per the court’s analysis in AARP v. EEOC, the litigation concerns the intersection of the ADA, GINA, the Health Insurance Portability and Accountability Act (HIPAA), the Affordable Care Act (ACA), and their various implementing regulations, as applied to employer-sponsored wellness programs. In short, the ADA and GINA allow “voluntary” collection of otherwise protected health information if it is collected as part of an “employee health program” (ADA) or where it offers “health or genetic services, including wellness programs” (GINA). HIPAA bars discrimination on the basis of “any health status related factor,” but employers may offer “premium discounts or rebates modifying otherwise applicable copayments or deductibles in return for adherence to [wellness] programs.”

EEOC regs under ADA and GINA. In May 2016, the EEOC issued regulations under the ADA and GINA to address the incentives that employers may offer employees for participating in healthcare wellness programs, which may require employees to reveal information protected under either the ADA or GINA. These EEOC regs essentially would permit employers to increase premiums for employee self-only coverage by up to 30 percent if employees choose not to participate in employer-sponsored wellness programs that solicit ADA- or GINA-protected information. AARP challenged the regs in October 2016, asserting that they are arbitrary and capricious under the Administrative Procedure Act (APA) because the incentives render the disclosure of GINA- and ADA-protected information “involuntary” and permit coerced disclosure in violation of the law.

How we got here. To facilitate an understanding of the litigation, the court addressed the regulatory history surrounding wellness programs. HIPAA regs issued in 2006 capped the size of the reward that could be offered for participation in a wellness program at 20 percent of the cost of employee-only coverage; they defined “reward” to mean a discount or a penalty. These regulations divided wellness programs into two categories: “participatory” and “health-contingent,” and the 20 percent cap applied only to health-contingent wellness programs. In 2010, the ACA amended the HIPAA nondiscrimination provisions to allow for rewards of up to 30 percent of the cost of coverage in exchange for participation in a health-contingent wellness program; the HIPAA regs were amended accordingly in 2013.

EEOC changing positions. The EEOC first issued ADA enforcement guidelines in 2000 stating that employers could collect ADA-protected information as part of a wellness program as long as providing the information was not a condition of obtaining any offered reward or incentive. In 2009, EEOC signaled it was waving, first implying by letter that it would be consistent with the 2006 HIPAA regs and allow employers to provide incentives—and then it rescinded that portion of the letter. In its 2010 GINA regs, the EEOC said that providing genetic information to a wellness program must be voluntary—it could not be required, nor could an employer penalize those who chose not to provide it.

ACA confusion. But the changes made by the ACA to HIPAA regarding wellness programs explicitly permitted the use of incentives in wellness programs.  Then, in 2012 the Eleventh Circuit held in Seff v. Broward County, Florida that wellness programs that are part of a bona fide group plan fell under the “safe harbor” provision of the ADA as a term of the health plan, an interpretation that the court noted “would appear to have allowed employers to impose unlimited penalties or incentives on employees to induce them to participate in wellness programs, including those programs that required the disclosure of ADA-protected information.”

Finally, in 2016, the EEOC issued final rules applying to both participatory and health-contingent wellness programs: The final ADA rule provides that the use of a penalty or incentive of up to 30 percent of the cost of self-only coverage does not render “involuntary” a wellness program that seeks the disclosure of ADA-protected information. The final GINA rule permits employers to offer incentives, again up to 30 percent of the cost of self-only coverage, to employees to disclose information about a spouse’s (and only a spouse’s) manifestation of disease or disorder (which constitutes genetic information of the employee under GINA) as part of a health risk assessment in connection with a wellness program.

Associational standing. The court spent a good bit of time addressing the EEOC’s challenge to AARP’s standing, because the regulations that AARP challenges apply to employers, not to AARP or its members directly, and harm to the AARP from the regulations depends on the actions of third-party employers. However, where an organization itself has not suffered an injury but its members have, the organization may bring suit on behalf of its members under an associational standing theory. The court found that it had done so here, although the EEOC quibbled over the finer points of whether AARP failed to present any evidence of “traditional indicia of membership.” It also found that at least one of AARP’s members would have standing to sue in his or her own right regarding the ADA rule and the GINA rule. Finally, the court found that AARP had amply demonstrated that this suit is germane to its purpose—advocating for the rights of older individuals, who certainly have an interest in avoiding discrimination on the basis of disability or genetic information.

Irreparable harm lacking. AARP claimed that its members will suffer irreparable harm because many of them will be unable to afford the premium increase permitted under both the ADA and GINA rules, and instead will be forced to disclose confidential medical information. But the court pointed out that the disclosure here is not public disclosure; both the statutes and regulations limit the permissible disclosure of health information obtained through wellness programs in order to prevent employers from being able to use information disclosed as part of wellness programs to discriminate against employees.

More importantly, none of the declarations from members that AARP submitted indicated that irreparable harm from this disclosure was likely. Being required to pay a higher premium constitutes harm, but it is an economic harm, which typically does not constitute irreparable harm. And although one declarant alleged the coerced disclosure of ADA-protected information, the disclosure apparently had already occurred, so a preliminary injunction would serve little purpose. Also, AARP’s unexplained delay in bringing suit weighed against a finding of irreparable harm, undermining its argument that an injunction was urgently needed.

Success on the merits. AARP raised two principal arguments as to both rules: first, that EEOC’s interpretation of the term “voluntary” to permit the use of 30 percent incentives is contrary to both the ADA and GINA; second, that EEOC did not adequately explain its reversal from its previous position that incentives were not permitted under either statute. Peeved because of AARP’s delay in bringing suit and its request for expedited review, which meant the administrative record could not be prepared in time for the court to review it for the preliminary injunction, the court gave deference to the EEOC and concluded that AARP was not likely to succeed on the merits.

“Voluntary.” Neither the ADA nor GINA defines the term “voluntary” or explains what it means to conduct a “voluntary” medical examination or to voluntarily provide medical information. But nothing in either statute directly prohibits the use of incentives in connection with wellness programs either; neither statute speaks to the level of permissible incentives at all, noted the court, finding the statutes to be ambiguous on this point, leaving it to defer to the EEOC to determine the exact contours of this provision.

AARP only objected to the specific level of incentives EEOC had adopted, which it said allowed coercion: 30 percent of the cost of self-only coverage under both the ADA and GINA rules, or 60 percent of the cost of self-only coverage if the incentives/penalties are stacked. But there is nothing in either the ADA or GINA to indicate that the particular incentive level EEOC selected is not permitted, making EEOC’s choice of the permissible incentive level not irrational. “The new regulations may permit employers to offer a strong incentive to their employees to disclose health information, but ‘[a] hard choice is not the same as no choice’” concluded the court.

Reasoned explanation. As for whether AARP could succeed in arguing that EEOC failed to give a reasoned explanation as to why it reversed a long-held position that incentives were not permitted under the ADA or GINA, the court again noted the difficulty presented by the lack of a full administrative record. But based on the record it had, the court found the EEOC offered a seemingly reasonable explanation: The agency’s former interpretation prohibiting incentives undermined provisions in HIPAA and the ACA that permitted employers to offer incentives in order to promote the use of wellness programs. Employers and industry groups were concerned and confused, so EEOC chose to harmonize its regulations with HIPAA regulations that implemented the ACA’s 30 percent incentive cap in order to provide clarity to employers and to promote the ADA’s and GINA’s goal of preventing employment discrimination and effectuating the wellness provisions of the ADA, HIPAA, and GINA.

Public interest. Finally, the public interest weighed against granting injunctive relief, the court said, given AARP’s somewhat weak showing of harm, the late date for proposed injunctive relief, and the “considerable disruption for employers and insurers who designed their 2017 health plans” around the January 1 applicability date. Enjoining the rules now would cause uncertainty for employers and employees, which AARP had not shown to be warranted.

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Workplace deaths reach highest level since 2008

December 27th, 2016  |  David Stephanides  |  Add a Comment

Underscoring the need for an ever-vigilant OSHA, the Bureau of Labor Statistics (BLS) has released its annual summary of fatal occupational injuries during 2015. A total of 4,836 fatal work injuries were recorded in the United States—up slightly from the 4,821 fatal injuries reported in 2014, but also the highest number since 2008. In its release, the BLS noted that this is the first time it has published only an annual release of the Census of Fatal Occupational Injuries (CFOI). Going forward, preliminary releases historically issued in August or September will no longer be produced.

The BLS summarized the key findings:

  • Annual total of 4,836 fatal workplace injuries in 2015 was the highest since 5,214 fatal injuries in 2008.
  • The overall rate of fatal work injury for workers in 2015, at 3.38 per 100,000 full-time equivalent (FTE) workers, was lower than the 2014 rate of 3.43.
  • Hispanic or Latino workers incurred 903 fatal injuries in 2015—the most since 937 fatalities in 2007.
  • Workers age 65 years and older incurred 650 fatal injuries, the second-largest number for the group since the national census began in 1992, but decreased from the 2014 figure of 684.
  • Roadway incident fatalities were up 9 percent from 2014 totals, accounting for over one-quarter of the fatal occupational injuries in 2015.
  • Workplace suicides decreased 18 percent in 2015; homicides were up 2 percent from 2014 totals.
  • Heavy and tractor-trailer truck drivers recorded 745 fatal injuries, the most of any occupation. The 937 fatal work injuries in the private construction industry in 2015 represented the highest total since 975 cases in 2008.
  • Fatal injuries in the private oil and gas extraction industries were 38 percent lower in 2015 than 2014.
  • Seventeen percent of decedents were contracted by and performing work for another business or government entity in 2015 rather than for their direct employer at the time of the incident.

The CFOI for covering 2016 will be released in December 2017.

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