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Labor Secretary’s comments on budget proposal map out DOL enforcement strategies

March 19th, 2015  |  Pamela Wolf  |  Add a Comment

Secretary of Labor Thomas E. Perez, in testimony before the House Education and the Workforce Committee on Wednesday, March 18, to justify the President’s budget proposal for the DOL, pointed to the need to raise the minimum wage and combat overtime wage violations, among other things, and outlined the DOL’s new approach to enforcing wage and hour laws. His comments, particularly in the wage-and-hour arena, put certain employers on notice of stepped-up compliance enforcement efforts, particularly those at “the top of the chain.”

Economic recovery. Perez began his testimony by reminding lawmakers that we are now in a climate of economic recovery: “We’ve come a long way in the last six years. In the few months before President Obama took office, the economy was in free fall—we had lost roughly two million jobs. Today, we have had five years—60 consecutive uninterrupted months—of private sector job growth, to the tune of 12 million new jobs over that time. That’s the longest such streak on record, and 2014 was the best year for job creation in the United States since 1999.

“The wind is clearly at our back. The economic indicators are promising across the board. The current unemployment rate is 5.5 percent, down from 10 percent in the fall of 2009. 2014 was the first year in 30 years that the unemployment rate declined in every state in the nation. Consumer confidence is near a seven-year high. The deficit hasn’t fallen this fast since the end of World War II. We’re exporting more in American goods and services than ever before. The auto industry was almost left for dead in 2008, but today sales are high again. All of these factors are leading finally to a strengthening labor market—coming out of the Great Recession, there were nearly seven job seekers for each available position; today that ratio is less than two-to-one.”

But according to Perez, it’s not yet time to celebrate, but rather to “find the common ground to do even better” and “ensure that the fruits of this recovery are enjoyed by more people and more working families.”

Raising the minimum wage. Perez also noted that the impressive economic recovery has not “reversed a decades-long trend in wage stagnation among middle- and low-income families.” He said “we have to help more people increase their incomes and make their paychecks go further,” suggesting that it should begin with “a long-overdue increase” in the minimum wage, including for tipped workers. “The President first called on Congress to take this step more than two years ago, because he believes that no one who works full-time in the wealthiest nation on earth should have to raise their family in poverty.”

The Labor Secretary talked about the many low-wage workers who “need SNAP (formerly known as food stamps) or other forms of public assistance to get by. Often, they are one setback away from complete desperation. For you or me, car trouble and a trip to the repair shop are inconvenient; for many of them, it’s a financial catastrophe,” he observed.

Perez also applauded what he called “forward-looking employers” that are paying higher wages even though not required to do so, “as a matter of enlightened self-interest,” including Costco, the Gap, Shake Shack, and Ace Hardware. “They recognize that it translates into improved morale and greater productivity. It increases retention rates, thus cutting turnover and training costs. Besides, many of them recognize that in an economy driven by consumer demand, better paid workers mean more people with more money in their pockets to spend on all kinds of goods and services, which leads to stronger business growth and more jobs—a virtuous cycle.”

But not all employers will “do the right thing,” according to Perez, “we know that there are some who will try any way they can to raise their profits at the expense of their workers.”

Sketching out the growing wage-hike trend among the states, Perez observed: “Over the last two years, 17 states plus the District of Columbia have raised their own minimum wages, thus benefitting a total of seven million workers nationwide. On Election Day last November, Nebraska, South Dakota, Alaska, and Arkansas all passed ballot measures to increase their states’ minimum wage.”
Nonetheless, Perez urged that the federal minimum wage should be raised “because whether a full time job lifts you out of poverty shouldn’t depend on whether you’ve won the geographic lottery or not.”

Overtime pay. In addition to the Obama administration’s efforts to make headway on the wages front through the president’s executive order mandating a $10.10 minimum wage for workers on new federal construction and service contracts, Perez pointed to the Labor Department’s move “to modernize the nation’s rules on overtime pay, which have not kept up with inflation or with changes in the economy.” Those rules have not been updated since 1975.

“The basic premise of the overtime law that Congress enacted more than 75 years ago is pretty straightforward: If you work more, you should get paid more. But that basic principle is undermined in too many cases,” Perez said. “The assistant manager at a fast food restaurant who puts in 60-70 hours a week for $455 and spends almost all of their time performing the same work as the employees they supervise and who does not get overtime is getting a raw deal. We are updating the rule to prevent this situation.” In doing so, the DOL has “conducted unprecedented levels of outreach, holding multiple listening sessions with employers and workers in a wide array of industries,” he asserted.

The new wage-law enforcement approach. Perhaps the most instructive of Perez’s comments pertained to wage-hour law enforcement, which matters, he said “because the laws that you pass, and the regulations that we promulgate to implement those laws, are only as good and as meaningful as our ability to make those words on a page a reality for American workers,” and enforcement “also levels the playing field for employers who play by the rules.”

The Wage and Hour Division’s investigation force has been increased by more than one-third, Perez noted, also clarifying that the increase only brings staffing back to 1970s levels when the labor force was significantly smaller. The president’s fiscal year 2016 budget calls for more staffing increases, requesting $277 million overall for the WHD, including a $31.7-million increase for additional enforcement staff and support.

How has the WHD changed its approach to enforcement? “We have equipped our investigators with the modern tools they need to do their work. We’ve used data and evidence-based strategies to deploy them strategically,” the Labor Secretary explained. “And we’ve also shifted the focus of our enforcement efforts. Instead of a purely reactive approach where we respond to incoming complaints, we have targeted investigations in industries where we know workers are vulnerable, and where they are often reluctant to raise their voices and exercise their rights.” According to Perez, strategic enforcement yields “very real results for working families” and is also “a more efficient use of resources.”

According to Perez, the WHD has directed its resources to:

• where the data and evidence show wage violations are most likely to occur,
• where emerging business models lend themselves to such violations, and
• where workers are least likely to exercise their rights.

And Perez made clear that the WHD’s continued efforts will focus on industries with low-wage workers: “[W]age violations are pervasive, especially for low-wage workers, and so we must continue to step up our efforts and take our enforcement to the next level. We want and need to create ripple effects that impact compliance far beyond the workplaces where we are actually on the ground investigating.”

The WHD’s efforts will be targeted to employers at the top of the supply chain. “One way to leverage our enforcement resources is to identify the supply chain,” the Labor Secretary explained. “The idea is to cause those at the top of the chain to evaluate the compliance practices of those below them; and to get them to think twice about whether it is worth the risk to their good name, and possibly their bottom line, to do business with a supplier or subcontractor who skirts the law.”

Employers that fit the profile described by the Labor Secretary should consider themselves on notice of stepped-up compliance enforcement.

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Employees mocked at work may have the last laugh in court

March 17th, 2015  |  Lorene Park  |  Add a Comment

By Lorene D. Park, J.D.

You may be amused when the office comedian imitates a coworker’s accent or other unusual trait, but when it comes to mockery, the result may be no laughing matter. For example, several recent cases demonstrate that mocking an employee’s accent or physical limitation can support discrimination and harassment claims under Title VII, the ADA, and other federal laws. While courts routinely point out that Title VII is not a general civility code, it seems that personal mockery is often considered worse than incivility.

Title VII cases. In Bryant v. Wilkes-Barre Hospital, a federal court in Pennsylvania refused to dismiss an African-American employee’s Title VII and state law racial harassment claims, finding them sufficiently supported by allegations that coworkers frequently mocked her pronunciation of some words—such as “aks” instead of “ask” and “birfday” instead of “birthday”—and that one asked her if she ate chicken and watermelon. And in Rojas v. Hospital Español de Auxilio Mutuo de Puerto Rico, Inc., a Title VII national origin-based hostile work environment claim survived summary judgment based largely on evidence that an employee’s Dominican accent was often mocked by her Puerto Rican coworkers.

In both of these cases, the employees complained but the employers took no remedial action, providing a basis for employer liability. Also, both courts found that the alleged harassment was so severe that the employees could advance their claims of constructive discharge.

ADA and FMLA cases. In a case from Connecticut, human resources employees allegedly mocked an employee’s disability after she underwent finger surgery and back surgery that required placing six screws and two rods in her back. Though her doctors had released her to return to work from medical leave, the employer delayed her return and, according to the employee, an HR rep explained: “The reason why I didn’t think you should come back was because I was greatly afraid that . . . you would be looking like this.” The HR rep then stood and “grabbed the wall like an invalid” and “mimicked a person grabbing on for dear life to the walls.” The employee found this so upsetting that she asserted she will “never forget” the incident as long as she lives. The employer may not forget it either, considering that her ADA discrimination and FMLA retaliation claims will go to trial (Lewis v. Boehringer Ingelheim Pharmaceuticals, Inc.).

An ADA claim was also at issue in a case recently settled by the EEOC on behalf of a cleaning service employee who walked with an abnormal gait due to a stroke. According to the agency’s complaint, one of the company’s officers harassed her by calling her a “cripple” and mockingly imitated how she walked. A federal judge in Illinois entered a consent decree requiring that the employer pay her $15,000, train its managers and other employees on the ADA, and meet recordkeeping and reporting requirements for the duration of the three-year decree.

Lessons learned. Though the takeaways from these cases seem like common sense, mockery appears often enough in employment litigation that employers should consider including the following points in training managers and employees:

  • The workplace is not a stage and you’re not employing stand-up comics. Mockery is not funny unless you are a late-night talk show host impersonating a politician. Mockery is personal, it is mean, and it doesn’t go over well in court.
  • Nip it in the bud. Even if one employee mocks another’s accent in a poor (though clear) attempt at humor rather than harassment, it is best to stop it the first time it happens rather than chalking it up to a single instance of insensitivity. Not only could the employee repeat the error, but coworkers who overhear may think it is okay to join in. If that happens, employers may really have a problem because, even if the mockery isn’t severe in one instance, it can become bad enough to support a hostile work environment claim, if repeated. And obviously, if an employee complains, take swift action to stop the mockery, as indicated by both the Bryant and Rojas cases.
  • Actions speak louder than words. If commenting on someone’s disability in the context of taking an adverse employment action can support a discrimination claim, what do you think mimicking the disability will do in the same context? Indeed, it could be that those engaged in mockery exaggerate the effect of the disability (or other characteristic) for comedic or dramatic effect (as could have been the case in Lewis), thereby making things unforgettable, and perhaps unforgiveable in the eyes of a jury. At the very least, it would likely be considered evidence of discriminatory intent.

In addition, the usual advice applies: maintain and enforce policies prohibiting discrimination, harassment, and retaliation; adequately train all personnel on those policies; and fully investigate any complaints of violations.

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Wipe out: Prison guard can’t keep job and remain biker gang’s “enforcer”

March 12th, 2015  |  David Stephanides  |  Add a Comment

An Ohio prison corrections officer was justifiably terminated after his employer discovered that he had been secretly living a double life as a member of a criminal biker gang for the past four year. In fact, not only was he a member of the gang, he held the title of “enforcer” (State of Ohio Department of Rehabilitation & Correction, Franklin Medical Center and Ohio Civil Service Employees Association, Local 11, AFSCME, AFL-CIO, Craig A. Allen, Arbitrator).

The officer, the 14-year employee, filed a grievance contending that he was able to keep his two lives separate, as evidenced by the fact that his evaluations during the investigatory period were positive, and that he personally received no criminal convictions during his time in the gang. He also argued that his employer’s investigation and disciplinary action were fatally flawed, and he denied any knowledge that his gang was engaged in any criminal activities. To counteract these arguments, the employer pointed out that the officer knew the gang’s president had not only been convicted of a crime, but that he was also locked up in the same prison where the officer worked. It also pointed out that the officer had once been arrested in a police raid in which he was caught carrying two guns, but he was later released without the employer discovering the arrest because of his prison affiliation.

The arbitrator sustained the grievance. Every year since 2007, officers had been given training on outlaw motorcycle gangs, yet the officer never disclosed his affiliation. Furthermore, under employer rules, the officer was obligated to disclose his relationship with any prisoner, which he failed to do. His claim that the gang was simply a collection of people who wanted to ride motorcycles and have fun, rather than a criminal gang, was impossible to accept. (If for no other reason than that he held the title of “enforcer.”) Murders, assaults, and shootings were going on all around him, and gang members were going to prison. The woman who recruited him to the gang was a suspect in an attempted homicide.

The arbitrator concluded that the employee’s affiliation with this gang brought discredit to the employer and seriously compromised his ability to do his job. The fact that he received positive performance reviews did not offset the seriousness of his off-duty conduct, nor did the fact that he was not convicted of any crime. The employer’s investigation was complete and untainted, and it had just cause to terminate him.

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Supreme Court holds DOL’s reversal on loan officers’ exempt status didn’t need notice and comment

March 10th, 2015  |  Lisa Milam-Perez  |  Add a Comment

By Lisa Milam-Perez, J.D.

A DOL Wage and Hour Division “Administrator Interpretation,” which reversed the agency’s stance on whether the FLSA’s administrative exemption applied to mortgage loan officers, was a valid agency interpretation notwithstanding that it was issued without undertaking notice-and-comment procedures, the Supreme Court has ruled, in one of the most significant cases in decades for federal regulatory agencies. In a unanimous decision, the High Court rejected the Mortgage Bankers Association’s challenge to the DOL’s about-face under the Administrative Procedure Act. Concluding that the plain text of the APA does not require federal agencies to undertake notice-and-comment rulemaking when merely promulgating “interpretive rules” such as the DOL issuance in dispute here, the Court reversed the D.C. Circuit’s grant of summary judgment in the industry trade group’s favor (Perez v. Mortgage Bankers Association, March 9, 2015, Sotomayor, S.).

In so ruling, the High Court resoundingly overturned the D.C. Circuit’s decision in Paralyzed Veterans of Am. v. D.C. Arena L.P., concluding that the circuit court’s 1997 ruling was contrary to the plain text of the APA and imposed procedural obligations on the agencies that went beyond what the APA requires.

The majority opinion was authored by Justice Sotomayor; separate concurring opinions were issued by Justices Alito, Scalia, and Thomas. Read more.

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House hearing reveals divergent views on NLRB ‘quickie election’ rule

March 4th, 2015  |  Pamela Wolf  |  Add a Comment

By Pamela Wolf, J.D.

Congressional disapproval of the National Labor Relations Board’s representation case procedures rule—the so-called “quickie election” rule—is escalating. On Wednesday, March 4, using the Congressional Review Act, the Senate passed its joint resolution of disapproval, S.J. Res. 8, by a vote of 53 to 46. Meanwhile, in the House, the House Education and the Workforce Committee’s Subcommittee on Health, Employment, Labor, and Pensions held a hearing on its counterpart resolution of disapproval, H.J. Res. 29. The testimony of the panelists at the hearing revealed a sharp divide as to whether the rule unfairly tips the scales against employers and for unions, or finally levels the playing field for employees who want to get to an up-down vote on union representation.

At the hearing on “H.J. Res. 29, Providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the National Labor Relations Board relating to representation case procedures,” Bradley Byrne (R-Ala.) didn’t mince words in his opening statement, saying that “for nearly four years, the Obama National Labor Relations Board has sought to radically alter long-standing policies governing union elections, and as the Board pursued this misguided effort, House Republicans, led by this committee, have consistently fought to defend the rights of America’s workers and job creators.”

Pro-union, anti-employer action. According to Byrne, the modifications made by the Board are designed to advance union organizing: “These are by no means modest changes and they go far beyond simply ‘modernizing’ the election process. In truth, the Board’s real goal is to dramatically tilt the outcome of elections in favor of union leaders by ambushing employers and workers without allowing them to fully understand their decision. The American people are on the losing end of the Board’s extreme culture of union favoritism.”

Byrne’s sentiments were echoed by G. Roger King, Labor and Employment Counsel for the Retail Industry Leaders Association (RILA), Of Counsel with the McGinnis & Yaeger Law Firm, and Senior Labor and Employment Counsel to the Human Resource Policy Association. From his testimony, it was clear that King, on behalf of RILA, saw the new rule as both pro-union and anti-employer, among other things. He told the subcommittee that RILA fully supports the joint resolution and offered several key points about the new election rule. In his testimony, King expanded on the following objections to the new rule, presented in simplified form below:

• It is fundamentally unfair to employees and employers and is an unprecedented partisan policy initiative favoring organized labor. A union can campaign for months, or even years, file a petition with the NLRB at any time it chooses (generally when it reaches a certain level of support), carve out or gerrymander who gets to vote (including micro or fragmented voting units), and have an election as soon as 11 to 14 calendar days after it the petition is filed.
• It is a legal and procedural ‘landmine’ for employers and violates their due process rights.
• It significantly curtails the free speech rights of other employees and employers.
• It is inconsistent with the legislative history of the NLRA and violates the appropriate hearing requirement of the Act.
• It is an unwarranted intrusion into employee privacy rights—employers will be required to furnish, if available, personal email addresses, personal cell phone numbers, and personal home telephone numbers of eligible voters in Board-conducted elections.
• It will further erode the Board’s credibility as a neutral arbiter of labor relation issues in the workplace.
• It is an irresponsible rejection of Board Members’ responsibility and accountability; the new rule removes those officials who were nominated by the President and confirmed by the Senate from making important election-related decisions and places that decision-making in the hands of individuals who have virtually no public or Congressional accountability.
• It presents a dangerous precedent for future Boards; the Board’s “extraordinary policy bias in favor of unions” reflected in the new rule only invites future Boards to respond in kind.

Leveling the playing field. Brenda Crawford, a registered nurse for 27 years, saw the NLRB’s new election rule in a very different way. She has worked at Universal Health Systems, Inc. in Murrieta, California, for the last 21 years. She shared some of her experiences while participating in an organizing drive in 2013.

A majority of the RNs had signed cards supporting the United Nurses Association of California/Union of Health Care Professionals and the union filed an election petition. “All we wanted was to have a fair opportunity to vote on whether or not to form a union,” Crawford said. “However, it became clear to us that the NLRB’s election procedures were rife with opportunities for employers to create delay and uncertainty.”

“Under the NLRB’s current election procedures, employers have an unbalanced ability to demand when and how an election takes place,” Crawford observed. “In our case, the Company had the leverage of forcing a hearing on the small issue of charge nurses. To avoid the delay caused by litigating this small issue, the nurses were forced to give up the rights of those charge nurses. And that was not the only concession we had to make. The Union had to agree to the election date the Company wanted, again to avoid the need for a hearing. We had to agree to an election date that was a month and a half after the petition was filed, even though there were no longer any issues that needed to be decided for an election to take place earlier.

“The NLRB’s Final Rule will allow the parties to approach elections on a more even-footing. The new rules give Regional Directors the discretion to defer questions of individual eligibility and inclusion for small groups of workers until after the election. In our case, that means the charge nurses could have voted challenged ballots, and their status would have been resolved only if it would have affected the outcome of the election. This removes the Company’s leverage to force a pre-election hearing to unnecessarily litigate these types of small issues, and would offer greater protection for the rights of workers.”

The final rule would also improve the union’s ability to communicate with workers in a proposed bargaining unit, according to Crawford. She said that from before the election petition was even filed through the date of the election, her employer “ran a relentless anti-union campaign.” The employer communicated anti-union messages to nurses on every shift daily. Nurses were taken off patient care “constantly to attend anti-union meetings,” Crawford said. Moreover, her employer sent “anti-union propaganda emails to the nurses, and even sent anti-union text messages to the nurses’ personal cell phones on off-work time.” The employer’s anti-union campaign was very stressful for the RNs, whose main concern was patient care, Crawford explained. That stress was one of the main reasons why the organizing committee decided to concede the charge nurses in an effort to conduct an election as soon as possible.

Crawford also pointed out that the union “struggled to get accurate contact information from the Company.” Because her employer was only required to provide home addresses, the union couldn’t communicate with the nurses in the same ways the employer did. Without knowing shift times or other job information for the nurses, who work 12-hour shifts, the union had difficulty knowing when the nurses would be home, or how to avoid bothering them when they had just finished a shift.

“The NLRB’s Final Rule expands the information the Union and organizing committee would receive regarding the workers in the unit,” Crawford noted. “Had we had this information, we would have had a better opportunity to communicate with our fellow nurses, and use the same means of communication that the Company was using.”

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