Not all OFCCP conciliation agreements lead to agency press releases. The OFCCP’s “Class Member Locator” webpage and online “FOIA Reading Room” reveal several conciliation agreements entered into by the OFCCP in fiscal year (FY) 2016 regarding which the agency did not issue a corresponding press release. In all of the cases listed below, the contractor did not admit liability.
Class Member Locator. Currently, there are four conciliation agreements listed on the Class Member Locator webpage where no corresponding OFCCP press release was issued:
Alsco Inc. In June 2016, Alsco Inc, a linen and uniform services company, agreed to pay $7,758.00 to resolve OFCCP allegations that the contractor discriminated against 22 qualified women who were hired into lower paying “Operative” positions at its Charlotte, North Carolina facility. The period of alleged discrimination was April 1, 2012 through September 5, 2013. The employer also agreed to extend five job opportunities.
Murray Guard Inc. Also in June 2016, Murray Guard, Inc, a security services company, agreed to pay $200,000, and extend 16 job opportunities, to resolve allegations that it discriminated against 114 qualified women who applied, but were not hired, for “Security Officer” positions the contractor’s Atlanta, Georgia facility. The period of alleged discrimination was January l, 2013 through December 31, 2013.
Folgers Coffee Company. In September 2016, Folgers Coffee Company, a producer of retail-packaged coffee products, agreed in September 2016 to pay $200,000 to resolve OFCCP allegations that it discriminated against 677 blacks who applied for “Entry Level Technician” positions at its New Orleans, Louisiana facility but were not hired. The period of alleged discrimination was September 23, 2006 through September 22, 2008. The contractor also agreed to extend 21 job opportunities, and give each eligible class member hired a one-time payment of $500, less legal deductions required by law (such as federal, state and/or local taxes and FICA), in lieu of retroactive seniority. Accordingly, $10,500 was designated to be set aside from the total monetary settlement for this purpose.
Sears, Roebuck and Co. Sears, Roebuck and Co (Sears), agreed in September 2016 to pay $107,500 to resolve allegations that it discriminated against 1,064 qualified black applicants who were not hired for sales positions at its now-closed Mobile, Alabama facility. Sears also agreed to extend 12 job opportunities at other stores in the Mobile metropolitan area and revise its selection procedures. The period of alleged discrimination was May 1, 2010 to through April 30, 2011.
FOIA Reading Room. The OFCCP’s FOIA Reading Room includes links to financial conciliation agreements from FY 2010 to FY 2017. In addition to the agreements listed above, the FOIA Reading Room contains the following FY 2016 conciliation agreements for which the OFCCP did not issue a corresponding press release:
Baker & Taylor, LLC. In December 2015, Baker & Taylor, LLC (formerly Baker & Taylor, Inc) agreed to pay $181,000 to settle claims that, from January 1, 2012 through June 30, 2013, the employer discriminated against 64 qualified male applicants as well as against six qualified white, and eleven qualified black, applicants (apparently in favor of Hispanics applicants) for “General Warehouse Associate” positions at the contractor’s facility in Bridgewater, New Jersey. Under the agreement, the contractor also promised to revise its selection procedures and offer 22 positions to eligible class members, including 12 to male applicants, three to whites applicants, and seven to black applicants.
Bechtel Marine Propulsion Corporation. Based on a complaint investigation, the OFCCP charged that Bechtel Marine Propulsion Corporation failed to engage in the interactive process to determine whether a worker’s disability (the specific impairment was redacted from the online document) could be reasonably accommodated in his position as a crane operator at the contractor’s Naval Reactors facility in Idaho Falls, Idaho. The agency further alleged the Bechtel failed to discuss, offer or place, this worker in any other positions for which he might have been qualified. In December 2015, the contractor agreed to pay over $38,000 to the complainant and to offer him a position, equivalent or greater in pay and equivalent in benefits and geographic location, for which he was qualified. The worker accepted the offer, which included back benefits and an additional lump sum amount of just under $22,000 in back pay. In addition, the company agreed to revise its reasonable accommodation policies and procedures.
C&S Wholesale Grocers, Inc. Also in December 2015, C&S Wholesale Grocers, Inc agreed to pay $85,000 to 100 eligible class members to settle OFCCP claims that it discriminated against 100 female applicants for full case “Selector” positions in the freezer, perishable, and grocery warehouses at the company’s facility in Greenville, South Carolina from January 1, 2006 through June 30, 2007. The employer further agreed to extended employment offers to 26 eligible class members. In addition, the contractor agreed to revise its hiring procedures, remedy other specified recordkeeping violations, and correct its failure to comply with VEVRAA job listing requirements, which it had already begun to do.
Schwan’s Global Supply Chain, Inc. Alleged hiring shortfalls based on race and gender in certain production positions at the Schwan’s Global Supply Chain, Inc facility in Deer Park, Texas were addressed in yet another December 2015 agreement. The OFCCP asserted that during the period from October 1, 2008 through September 30, 2010: (1) male, African-Americans, and white applicants were disadvantaged in the hiring of “Food Assembler” and “Packager Manual” positions and there were statistically significant shortfalls in the hiring of African-American and white applicants for the “Sanitation Associate” position. Additionally, the agency alleged that during the one-year period from October 1, 2008 through September 30, 2009, African Americans and whites were disadvantaged when applying for “Forklift Operator,” “Machine Operator,” and “Produce Supplier” positions. The OFCCP further found the contractor violated certain record retention requirements and failed to conduct an adverse impact analysis by racial and ethnic group in accordance the applicable regulations. Specifically, the agency determined that Schwan’s conducted an adverse impact analysis comparing non-minorities to minorities and males to females, but did not conduct adverse impact analyses on each racial and ethnic group that constituted at least two percent of the labor force in the relevant labor area or two percent of the applicable workforce. On top of a $310,000 monetary settlement, the contractor agreed to extend job offers to a specified number of eligible class members in the identified production positions as vacancies occur and to remedy to other regulatory violations cited.
Reynolds Consumer Products, LLC. In February 2016, Reynolds Consumer Products, LLC agreed to pay $86,000 to resolve OFCCP hiring discrimination claims resulting from a blanket policy implemented at a Louisville, Kentucky facility to reject candidates based on criminal history without an individualized assessment. This policy was used only by the predecessor employer at the plant and never by Reynolds and ended in 2008 when Reynolds acquired the plant. Under this policy, from the period of March 1, 2007 through February 28, 2008, black applicants were hired for “Production Worker” positions at a statistically significant lower rate than white applicants, leading to a shortfall of seven black hires. According to the agency, it thoroughly reviewed all the documents, data and information collected and did not find any legitimate non-discriminatory reasons that fully justified these disparities. The problematic policy was a blanket exclusion without any individualized assessment of the nature and gravity of the crimes, the ages of the convictions, or the nature of the production worker position. Moreover, the employer could not show that the policy was job related and consistent with business necessity, and could not produce a validity study for this test or any other evidence demonstrating its validity in accordance with the Uniform Guidelines on Employee Selection Procedures (UGESP). Reynolds agreed to ensure all stages of the selection process for production worker positions are in compliance with the UGESP. Because the policy of concern had an adverse impact on black applicants, Reynolds agreed to be proactive in its outreach efforts to avoid any chilling effect of the past policy, including developing relationships with and contacts at specified agencies to solicit, on an ongoing basis, referrals of black applicants for open positions in all of its job groups at the facility. Additionally, the employer agreed to extend job offers to seven qualified and otherwise eligible class members, as vacancies occur in the production worker job group.
Angelica Textile Services, Inc. According to the OFCCP, Angelica Textile Services Inc required female employees at its Fresno, California facility to submit written verification of pregnancy and terminated two employees based on pregnancy on August 18, 2010 and September 25, 2010. In addition, the agency alleged that the contractor discriminated against employees with pregnancy-related disabilities and violated specified recordkeeping requirements. The OFCCP further alleged that from June 1, 2009 to March 26, 2011, Angelica failed to meet outreach and recruitment regulatory requirements regarding workers with disabilities and covered veterans. In March 2016, the contractor agreed to pay over $65,000 to the impacted women and to modify specified policies.
Coca Cola Bottling Co. In June 2016, the Coca Cola Bottling Co settled OFCCP allegations based on the complaints of two employees at its Charlotte, North Carolina facility who were hired pursuant to September 20, 2010 consent decree. Stating that each of the complainants participated in protected activity as a class member under the consent decree, the OFCCP asserted that, in retaliation for this protected activity, the contractor administered its training and disciplinary processes differently for one of the complainants compared to similarly situated not hired pursuant to the consent decree, and that this allegedly different treatment resulted in termination. The agency also found that the company failed to provide this employee the seniority granted by the consent decree. Coca Cola agreed to pay over $75,300 in back pay and interest to this worker. The OFCCP also claimed that the company retaliated against, failed to provide seniority to, and failed to hire or promote into a full-time position the other complainant. Coca Cola agreed to pay $11,000 in back pay and interest to that worker, and extend to him a bona fide, written offer of full-time employment into a position comparable in pay and opportunity to the full-time “Merchandiser” position. Further, the contractor agreed to revise its EEO policies and practices, train the relevant decisionmakers, and remedy alleged recordkeeping violations.
Pacific Seafood. Also in June 2016, Pacific Seafood agreed to pay over $82,000 to settle OFCCP allegations that, for specified laborer positions at its Clackamas, Oregon facility, the company hired Hispanic applicants at a rate significantly greater than their white, black, Asian, and Native American/Alaskan Native counterparts who were equally or more qualified. The period of alleged discrimination was from May 1, 2011 through April 30, 2013. In addition, the company agreed that vacancies not filled pursuant to the company’s recall or other rehire procedures, would be offered to eligible class members. The agreement states that the company no longer had any federal contracts as of the date of the agreement, and that, therefore, the provisions of the agreement requiring the company to remedy specified recordkeeping and retention violations applied only to the extent the company is a covered contractor or subcontractor under Executive Order 11246.
This week, Division One college football set its playoff schedule, and basketball is already in full swing. College sports generate significant revenue for their schools and big-time college coaches enjoy lucrative financial packages. But what do student athletes get out of the deal? The NCAA has been criticized from a number of quarters about the disparity of the current system which limits the types of compensation that athletes can receive. However, regardless of what changes that the NCAA ultimately may make, it seems clear that student athletes will not be regarded as employees by the courts.
In Berger v. National Athletic Collegiate Association, the Seventh Circuit affirmed the judgment of a district court that former members of the University of Pennsylvania’s women’s track team were not employees of the university under the FLSA, and so were not entitled to be paid minimum wage for their work performed as student athletes Applying the economic realities test, and taking into the account the tradition of amateurism in college sports, and eligibility rules that define what it means to be a student-athlete, the appeals court concluded that student athletes participate in their sports for reasons wholly unrelated to immediate compensation. Moreover, the court observed that student participation in collegiate athletics is entirely voluntary, and so concluded that the plaintiffs in this case had not alleged that the activities they pursued as student athletes qualified as “work” sufficient to trigger the minimum wage requirements of the FLSA.
Collegiate athletic teams are regulated by the NCAA. In this case, the former student athletes sued Penn, the NCAA and more than 120 other universities and colleges alleging that student athletes are employees who are entitled to a minimum wage under the FLSA. According to the students, the NCAA and its member schools violated the FLSA by not paying their athletes a minimum wage. On motions to dismiss filed by the defendants, the district court held that the students lacked standing to sue any of the defendants other than Penn, and that they failed to state a claim against Penn because student athletes are not employees under the FLSA. This appeal followed.
Standing. As an initial matter, the Seventh Circuit agreed with the district court that the students lacked standing to sue any of the defendants other than Penn. Here, the appeals court found that the students’ connection to the other schools and the NCAA was far too tenuous to be considered an employment relationship. Thus, they did not plausibly allege any injury traceable to, or redressable by, any defendant other than Penn.
Economic reality test. Next, the appeals court turned to consider the merits of the students’ claim with regard to Penn. To survive the motion to dismiss, the students had to allege facts, which taken as true, established that they were employees and performed work for Penn. The court first observed that because status as an “employee” for purposes of the FLSA depends on the totality of circumstances, courts must examine the “economic reality” of the working relationship between the alleged employee and the alleged employer to decide whether to apply the FLSA to that particular relationship.
Amateur tradition. In determining whether the students were employees in this instance, the Seventh Circuit rejected application of the Second Circuit’s test set forth in Glatt v. Fox Searchlight Pictures, Inc. Rather, relying on its decision in Vanskike v. Peters, the Seventh Circuit has declined to apply multifactor tests in the employment setting when they “fail to capture the true nature of the relationship” between the alleged employee and the alleged employer.
Accordingly, the Seventh Circuit agreed with the district court’s decision to follow the reasoning of Vanskike. The appeals court observed that there exists a tradition of amateurism in college sports, and that long-standing tradition defines the economic reality of the relationship between student athletes and their schools. The eligibility rules devised by the NCAA and its member institutions “define what it means to be an amateur or a student-athlete, and are therefore essential to the very existence of” collegiate athletics. The multifactor test does not take into account this tradition of amateurism or the reality of the student-athlete experience.
Student-athlete experience. Further, the appeals court noted that the Department of Labor, through its Field Operations Handbook (FOH), has also indicated that student athletes are not employees under the FLSA. The court rejected the students’ attempt to compare NCAA-regulated athletes to the work-study participants of Sec. 10b24(b) in the FOH. The court pointed out that Section 10b24(a) categorically states that students who participate in “extracurricular” activities are generally not considered employees. Moreover, Sec. 10b03(e) includes “interscholastic athletics” in a list of activities that do not constitute “work.” Thus, the court found the FOH’s interpretation of the student-athlete experience to be persuasive.
Clearly, the Seventh Circuit is deeply struggling with the question of whether Title VII covers sexual orientation discrimination—a question that has already been answered in the affirmative by the federal government and a legal concept steadily growing stronger as a sign of the times. In July, the majority of a three-judge Seventh Circuit panel, in Hively v. Ivy Tech Community College, ruled that sexual orientation is not a protected category under Title VII. But that holding was vacated on October 11 to permit en banc consideration of the question and the case that brought it to the appeals court—a move largely taken as tipping in favor of the plaintiff and some likelihood that the Seventh Circuit would reverse course. In oral arguments on November 30, the full Seventh Circuit panel and the parties were confronted by the legal and practical contradictions surrounding the question.
Is it time for a change? Even the July panel majority that excluded sexual orientation from Title VII’s shield could not avoid gazing into a crystal ball, conceding, “perhaps the writing is on the wall” but also stressing that “[u]ntil the writing comes in the form of a Supreme Court opinion or new legislation,” sexual orientation is beyond the current scope of Title VII.
And of course, the question of whether the scope of Title VII must be expanded by either judicial or legislative fiat before discrimination based on sexual orientation is made unlawful is at the heart of the issue in this case and many others. Describing the case in human terms, Greg Nevins, Counsel and Workplace Fairness Program Director for Lambda Legal, who argued on behalf of the plaintiff, told Employment Law Daily, “We represent … a math instructor who was denied advancement and ultimately fired from her job at Ivy Tech Community College in South Bend, Indiana, after she had been seen kissing her girlfriend in the parking lot.”
Should employers be able to fire a woman for kissing another woman? The question presented in the case represents a legal conundrum fully vetted in the earlier Seventh Circuit ruling, with consideration of the Supreme Court’s June 2015 decision in Obergefell v. Hodges, finding that same-sex couples have the fundamental right to marry and states may not refuse to recognize a lawful same-sex marriage. The panel also considered the High Court’s 1998 ruling in Oncale v. Sundowner Offshore Servs., Inc., holding that a sexual harassment claim is cognizable under Title VII regardless of the sexual orientation of the parties involved.
That a same-sex couple is guaranteed the right to marry, but a woman seen kissing another women can be lawfully fired from her job for doing so, produces at the very least cognitive dissonance, if not legal hypocrisy. That Title VII protects against sexual harassment, regardless of sexual orientation, but offers no protection for a woman kissing a woman, is perplexing at best.
“It seems unlikely that our society can continue to condone a legal structure in which employees can be fired, harassed, demeaned, singled out for undesirable tasks, paid lower wages, demoted, passed over for promotions, and otherwise discriminated against solely based on who they date, love, or marry,” the Seventh Circuit panel majority observed in July. “The agency tasked with enforcing Title VII does not condone it; many of the federal courts to consider the matter have stated that they do not condone it; and this court undoubtedly does not condone it.”
But what about precedent? The July panel majority also referenced two cases, released two months apart in 2000, in which the Seventh Circuit held that Title VII offers no protection from, nor remedies for, discrimination based on sexual orientation. These cases—Hamner v. St. Vincent Hosp. & Health Care Ctr., Inc. and Spearman v. Ford Motor Co.—held that harassment based solely upon a person’s sexual preference or orientation is not an unlawful employment practice under Title VII. The Seventh Circuit has cited those cases in ruling, “without exception,” that the Title VII prohibition on discrimination based on “sex” extends only to discrimination based on a person’s gender and not that aimed at a person’s sexual orientation.
The appeals court also observed that the Seventh Circuit was in line with all the other circuit courts that have decided or opined about the matter and acknowledged the EEOC’s July 2015 decision in Baldwin v. Foxx, where the Commission concluded, for the first time, that sexual orientation is inherently a “sex-based consideration,” and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII.
What is “sex” under Title VII? The appeal of this case is clearly aimed at undoing the existing legal hypocrisy, at least to the extent it exists within the territory of the Seventh Circuit. And at the center of the battle is the question of what exactly is “sex,” the basis upon which employers may not discriminate under Title VII. “[W]e asked all eleven judges of the Seventh Circuit to clarify that the protections under Title VII of the Civil Rights Act which prohibit discrimination on the basis of sex, also protect gay and lesbian employees because sexual orientation discrimination is a form of sex discrimination,” Nivens said, framing his client’s position neatly—the same contention that has been advanced by the EEOC.
Early in oral argument, Niven was faced with the what is “sex” question, put by one of the Seventh Circuit judges, who queried whether in his view there is there one broad category “sex discrimination” that manifests itself in various ways that include discrimination based on sexual orientation, or whether sexual orientation is somehow different from sex?
“The Supreme Court has said if you’re being treated differently because of your sex then it qualifies as sex discrimination, even if there is a colloquial phrase that might be more familiar to people,” Nevins replied. He pointed to the example of male-on-female sexual harassment, saying that the usual target may not come home and tell her closest friend, “I’ve just been discriminated against because of my sex.” In fact, there may be many other reasons why the woman was targeted by the harasser, such as she conveniently worked the same hours, was more attractive, or was considered more “interested.” The fact is that she was a woman, and that’s why she was discriminated against, Nevin said. The same is true here, he continued. The fact that there is the colloquial expression, “sexual orientation discrimination,” that is more familiar in describing it, doesn’t change the basic truth that it was his client’s attraction to women that was held against her as a woman and wasn’t held against any men who worked for Ivy Tech.
But for sex. Niven confirmed that he sees it as a “but-for” sex test. He also pointed out that one of the often-cited purposes of Title VII is to strike at the entire spectrum of disparate treatment of men and women, noting there is also gender stereotypes—he saw his client’s case clearly aligned with that purpose.
Niven’s take on the hearing: “The judges clearly understood our arguments, they asked great questions, and I am feeling hopeful.”
By Lorene D. Park, J.D.
There are plenty of discussions concerning the costs and benefits of telecommuting (a.k.a. telework, flexiplace, or working remotely) in terms of productivity, communication, and career advancement, as well as discussions on substantive legal issues, such as whether telecommuting is a reasonable accommodation for a disability, or whether taking away permission to telework would be an adverse action. But recent cases suggest that other procedural and substantive questions also should be examined as courts apply existing law to what is still a relatively new work arrangement.
Personal jurisdiction over telecommuters. For example, a Delaware multi-media production service company with its principal office in New York filed suit in New York against its former chief information officer, who left to join a competitor and allegedly misappropriated the employer’s trade secrets in the process. Both the employee and the competitor, which was also a defendant, were New Jersey residents, and the question was whether they could be haled into court in New York. Finding that they could, the federal court explained that even though the employee worked from his home in New Jersey, he traveled to New York frequently, routinely accessed the New York-based employer’s email and web-based software applications remotely, and had continuous communication with his New York colleagues. The court reached a similar conclusion as to the competitor, finding that constitutional due process was satisfied for personal jurisdiction (Peeq Media, LLC v. Buccheri).
Counting employees near “worksite” to reach statutory minimum—which office? Another threshold question that could be impacted by telecommuter status is the number of employees an employer has for purposes of being subject to a particular statute. The FMLA excludes from the definition of “eligible” employees anyone at a “worksite” at which the employer has fewer than 50 employees, also counting employees within a 75-mile radius of the “worksite.” Department of Labor regulations clarify that for employees “who work at home, as under the concept of flexiplace or telecommuting,” the worksite is not their personal residence. Instead, it is “the office to which they report and from which assignments are made.” With this in mind, a federal court in Louisiana found that an employee who reported to a Tampa, Florida, office, which she attested had more than 50 employees, raised a triable issue on whether she was eligible for FMLA protection (Donahoe-Bohne v. Brinkmann Instruments).
Employee versus independent contractor status. Telecommuter status can also affect the analysis of whether someone is an “employee” under the FLSA. In some cases, the refusal to let someone work remotely could weigh in favor of finding that an individual is an “employee” rather than an independent contractor under a right-to-control analysis. For example, a federal court in Florida denied summary judgment on the issue of employee status because it could not answer the question as a matter of law. As to the nature and degree of the defendants’ control over the manner in which he performed his work, the only relevant evidence was the defendants’ statement that he did not have to work a set schedule, and the plaintiff’s opposing statement that he was forbidden from working remotely and had to work during store hours. The record also showed the defendants set his hourly wage and commission, and provided his equipment (Bourhis v. My Trade LLC). (Note the jury later returned a verdict finding the plaintiff was not an employee, so judgment was entered for the defendants.)
Blurring lines between personal and work equipment. What happens if a telecommuting employee is given the choice to use his home computer, which may be a lot nicer than, for example, a cost-effective employer-provided laptop? In such cases, employers need to make it very clear that being able to use your own computer does not mean putting confidential information at risk. For example, a federal court in Michigan recently held that Quicken Loans had a legitimate reason to fire a telecommuting employee who was allowed to work from home using the company’s secure network. He had violated company policy by sending over 900 company emails to personal email accounts, including over 100 containing confidential client information. Though an NLRB law judge had found some of the employer’s confidentiality rules overbroad, the court found that of “no moment” to the question of whether the reason for firing him was discriminatory. Summary judgment was granted against his federal and state-law discrimination claims (MacEachern v. Quicken Loans, Inc.).
Adverse actions and accommodations—the typical cases. Based on the foregoing, it is clear that telecommuting arrangements present a wide variety of legal issues that employers must consider. That said, it bears mentioning that telecommuting is more typically discussed in the context of deciding: (1) in discrimination or retaliation suits, whether an employee suffered an adverse employment action when denied the chance to telecommute; or (2) in an ADA case, if an employer unlawfully failed to accommodate an employee’s disability by denying an employee’s request to work remotely. In both instances, employees are usually on the losing side.
First, denying telecommuting privileges is not usually an adverse employment action. In one case, even under the more lenient pro se plaintiff standard, a federal court in Maryland dismissed an employee’s retaliation claim because suspending a telework arrangement was not a materially adverse action. It noted that other federal courts have concluded that limiting or terminating such an arrangement is not materially adverse unless an employee’s schedule is significantly modified (Dailey v. Lew). In another case, a federal court in the District of Columbia found that the denial of an EPA scientist’s “unusual and extraordinary request” to work remotely for two years to care for his mother was not an adverse action. It noted that the employer’s “Flexiplace Program” only covered certain arrangements, was not an employee “right or entitlement,” and telework had only ever been granted for a maximum of six months at a time (Walker v. McCarthy).
Second, allowing an employee to work from home could be a reasonable accommodation under the ADA, but that does not mean that refusing to allow it would violate the Act. It will depend on the circumstances, including the essential functions of the job, whether there are alternative accommodations, and whether it would be an undue hardship for the employer to allow it. In a case out of Pennsylvania, an employer was denied summary judgment because a federal court found triable questions on whether it was essential for a disabled project attorney to come to the office considering project attorneys usually worked on teams and reviewed documents that were often accessible online, and they rarely had face-to-face contact with clients (Fischer v. Pepper Hamilton LLP). Likewise, a federal court in Massachusetts found triable questions on whether a senior network engineer suffering from severe depression could perform his duties at home and whether that would have been a reasonable accommodation (Moebius v. TharpeRobbins Co.).
A final thought. Having covered the typical bases, here’s a bit of food for thought. What is the effect of having a formal telecommuting policy and/or telecommuter agreement versus informal arrangements? It would seem that having a neutral policy and applying it fairly would make sense, in particular: Having an employee acknowledge that workplace policies apply even when working from home, including those requiring that confidential information be kept secure and private, that the employer’s equipment be used only for work purposes, that working hours be spent actually working, and that hours be accurately reported. But some agreements go further.
Having come across a “telecommuter agreement” that reserved to an employer the right to enter an employee’s house and inspect his or her workspace and equipment, I wondered if that wasn’t a little risky. Would a court, for example, find that employers who require access to the homes of telecommuters find that the employer could be liable, say, for failing to provide a safe working environment if it didn’t inspect for smoke detectors and the equipment (e.g., smart phone or computer) it provided started a fire? Is there an argument in a premises liability scenario that an employer exerted enough control to be liable? And what about privacy considerations? Given that this is still an emerging area of law, employers are well-advised to tread carefully in crafting telecommuter agreements. Seeking the advice of experienced employment lawyers is a good idea.
Late on November 22, a federal district court in Texas enjoined nationwide implementation of the Labor Department’s final overtime rule. The rule was to go into effect on December 1. Judge Amos Mazzant, ruling on a consolidated lawsuit brought by 21 states and a business coalition, concluded that the executive, administrative, or professional employee exemption contained in FLSA Sec. 13(a)(1) does not grant the Department the authority to utilize a salary-level test or an automatic salary updating mechanism under the rule. “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test. Consequently, the Final Rule does not meet [step one of the] Chevron [deference test] and is unlawful,” the court ruled (State of Nevada, et al v. Dept. of Labor, et al, Dkt. No. 4:16-CV-00731, Nov. 22, 2016).
In 2014, President Obama urged the Labor Department to review severely outdated regulations related to exempt employees. In response, on May 18, 2016, the DOL released the final rule updating overtime eligibility that will automatically extend protection to over four million workers.
Background. The FLSA, passed in 1938, provided equity and fairness to workers by establishing the required minimum wage and overtime regulations. In general, the regulations applied to most employees. However, the FLSA also provided an exemption from these regulations for executives, administrative, and professional employees, commonly referred to as white collar workers. Exempt employees are not entitled to overtime wages. To qualify as exempt, the employees must meet certain tests regarding their job duties (duties test) and must be paid on a salary basis at not less than a “minimum specified amount” (salary level test).
The white-collar exemption was originally intended to apply to highly compensated individuals. But due to inflation, the salary threshold failed to provide protection to an increasing number of workers over the years. In 2004, the weekly salary amount was raised for the first time since the 1970’s, when it was set at $455 ($23,660 annually). The test for exemption was also modified. However, critics argued that even for 2004 standards, the adjustment to the exemption rules remained too low to provide adequate coverage for low-income workers.
Updated rule. The final rule updated the executive, administrative, and professional workers salary and compensation levels as follows:
- The standard salary level was set at the 40th percentile of earnings of full time salaried workers in the lowest-wage Census Region, currently the south ($913 per week; $47,476 annually for a full-time worker).
- The total annual compensation requirement for highly compensated employees subject to the minimal duties test was set to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004); and
- In order to ensure useful and effective tests for exemption and continued worker protection, the salary and compensation levels were to be updated every three years at the above percentile levels.
The final rule also amended the salary basis test to allow employers to satisfy up to 10 percent of the standard salary level with nondiscretionary bonuses and incentive payments such as commissions.