What Happened in Labor & Employment Law in 2018? Plenty!

By: Melanie M. Dunajeski

From #MeToo to Supreme Court limitations on union dues, 2018 was a year filled with issues, intrigue, and surprises.

            #1.       Sexual Harassment—Be a Responsible Employer in the #MeToo Era. Sexual Harassment can safely be labeled as one of the top 5 workplace legal issues of 2018; titans of entertainment, politics, and business fell, and others were haunted by allegations of inappropriate behavior.  The #MeToo movement brought both women and men forward to acknowledge that they have dealt with this issue in their workplaces. We can safely predict that we will be seeing the fallout for years to come—but there is no reason why that fallout should hurt your business if you take reasonable steps to become and stay a responsible employer. Here are five steps to get you started:            (1) Create a culture of inclusion that starts at the top and includes a real commitment by company leaders to model and support a workplace that is not undermined by negative behaviors; (2) Bring your policies up to date to include clear explanations of what behavior is prohibited, encourage  employees to report all harassing conduct, prohibit retaliation against reporting employees, and notify employees that engaging in harassing behavior is grounds for discipline up to termination; (3) Establish and protect your complaint procedures to let employees know how and to whom to make a report of harassment, give employees multiple means to make a report, and make sure that employees can by-pass one reporting avenue in favor of another; (4)        Make training an ongoing priority; (5) Use prompt and appropriate discipline in response to violations. 

            #2.       DOL Adopts More Flexible Test for Unpaid Interns. On January 8, 2018, the Department of Labor (DOL) issued a new guidance that abandoned a stricter Obama-era test for determining whether an intern must be paid as an employee under the Fair Labor Standards Act (FLSA) and adopted a less-restrictive and more employer friendly “primary beneficiary” test. This is the test that the DOL has adopted, noting that no one factor is dispositive, and that the factors are a non-exhaustive list of what the DOL may take into consideration to review the “economic realities” of an employer’s classification of an intern to determine whether the employer or the intern is the “primary beneficiary of the internship arrangement.  The new seven factors are as follows:  (1) the extent to which the intern and the employer clearly understand that there is no expectation of compensation; (2) the extent to which the internship provides training that would be similar to that which would be given in an educational environment; (3) the extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit; (4) the extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar; (5) the extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning; (6) the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; (7) the extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. The DOL emphasizes that whether an intern or a student is an employee under the FLSA depends on the unique circumstances of each case. With a flexible, non-exhaustive test, both the DOL and the Courts may also consider other circumstances that are relevant to the determination.  See DOL “Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act” (updated January 2018).

            #3.       New NLRB General Counsel Memo gives employers guidance on work rules.  On June 6, 2018, Peter Robb, General Counsel for the NLRB issued General Counsel Memorandum 18-04 “Guidance on Handbook Rules Post-Boeing” to provide specific guidance and direction to the 26 regional offices of the NLRB.  The Guidance directs the Regions that they should “…now note that ambiguities in rules are no longer interpreted against the drafter, and generalized provisions should not be interpreted as banning all activity that could conceivably be included.”  In other words, the NLRB will be returning to a more common-sense and employer-friendly interpretation of employer work rules and policies. Employers should be aware, however, that even this more relaxed interpretation has significant nuances, and an employer should always consider what legitimate business purpose is served by each rule.

            #4        Three significant U.S. Supreme Court Cases. In April, the Supreme Court held in Encino Motorcars v. Navarro that service advisors at an automobile dealership were exempt from the overtime pay requirements of the Fair Labor Standards Act, significantly rejecting prior decisions that the exemptions to FLSA (and requirements to pay overtime) should be construed narrowly against the employer.  The likely result is that we will see more successful challenges by employers seeking to broaden overtime pay exemptions. In May, the Supreme Court upheld the validity of mandatory arbitration agreements and class action waivers required by employers as a condition of continued employment in Epic Systems Corp. v. Lewis.  There may be some limitations, however, based on post-#MeToo state legislation limiting the availability of confidential arbitration.  In the June opinion issued in Janus v. AFSCME, the Supreme Court held that public sector unions may no longer require employees who elect not to join unions to pay agency fees on the basis of a violation of employee 1st Amendment rights.  The impact on private sector unions cannot be known, but the decision is likely to spark challenges relying on Janus as precedent.

            #5        LGBTQ and Title VII—an issue in flux. There is a major split in the U.S. Circuit Courts of Appeal as to whether sexual orientation, gender identity, and transgender status are protected under Title VII’s prohibitions against discrimination on the basis of sex. A trio of LGBTQ cases are briefed seeking Certiorari from the Supreme Court: The cases are R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC, U.S., No. 18-107, relisted 1/7/19 (transgender status); Altitude Express, Inc. v. Zarda, U.S., No. 17-1623, relisted 1/7/19 (sexual orientation); and Bostock v. Clayton County, Georgia, U.S., No. 17-1618, relisted 1/7/19 (sexual orientation).  Although not an employment case, in the first LGBTQ case of the Gorsuch tenure, the court considered whether a Colorado baker’s refusal to bake a wedding cake for a same sex couple was discrimination, holding that it was not because it would be a violation of the baler’s genuinely held religious beliefs under the First Amendment. Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, 138 S. Ct. 1719 (2018)

            #6        ICE enforcement. Immigrations and Customs Enforcement (ICE) opened 6,848 worksite investigations in 2018—contrast with the 1,691 investigations opened in 2017 for a whopping 400% increase in enforcement actions. It also initiated 5,981 I-9 audits in 2018 as compared to 1,360 in 2017, and made 779 criminal and 1525 administrative worksite-related arrests compared to 139 and 172 in 2017.  ICE reports increased activity in each of the three prongs of their enforcement activities:  compliance (I-9 inspections), enforcement (criminal arrest of employers and administrative arrest of unauthorized workers), and outreach (education and cooperation).  Of course, it is better to be in compliance when ICE comes knocking than to be scrambling to try to get into compliance after deficiencies are discovered.   Conduct your own “internal audit,” Are you using the most recent version of Form I-9?  Check online for the most recent version of the form and “Handbook for Employers, Guidance for Completing Form I-9.”  Make sure that the person in your organization who is responsible for completing these forms has adequate training to complete the forms and to recognize potentially fraudulent documents that employees may present.  If any of your current employees present documents that will require subsequent reverification, establish a reminder system that will allow the reverification to occur on a timely basis. Set up an I-9 file that separates the forms for current and former employees and that establishes the destruction date for the forms of former employees. Make sure that you have a completed form for every current employee.

            #7        Salary history and Equal Pay Act. The Equal Pay Act of 1963 (“EPA”) requires men and women be given equal pay for equal work—or rather substantially equal work in the same establishment. More than fifty years on, women’s pay hovers around 80 cents for each dollar that a man earns. Is this pay disparity perpetuated by using prior salary history in determining pay for incoming employees—and could the use of salary history be a violation of the EPA?  Earlier this year, the United States Court of Appeals for the Ninth Circuit (yes-that includes California) decided a case that involved a female schoolteacher who discovered that a man hired to do similar work was given a starting salary significantly higher than hers. (Rizo v. Yovino).  She complained, and her employer explained that new employee’s salaries were based on their salary history, and since the man had a higher salary at his prior job, the employer paid him more. The female teacher filed suit claiming that this was sex discrimination under the EPA. The EPA requires equal pay for equal work unless the difference in pay is justified by (1) a seniority system; (2) a merit system; (3) a system which measures earnings by quantity or quality of production; or (4) “a differential based on any factor other than sex.” The employer argued that prior salary history was a “factor other than sex” and won at the trial court level, before being reversed by the full Ninth Circuit Court of Appeals sitting en banc who held that “salary history” is not  “factor other than sex” under the EPA since it was not a legitimate, job related factor such as experience, education, ability, or performance.  The employer has now filed a Petition for Writ of Certiorari to take this matter to the U.S. Supreme Court—correctly pointing out that there is an “extreme” split among the circuits as to whether prior pay is a “factor other than sex”—for example, the Seventh Circuit (encompassing Indiana) and the Eighth Circuit have held that an employer can use prior pay—even by itself. Four other circuits have held that prior pay “sometimes” counts as a “factor other than sex,” and others adopt different styles of sometimes-you-can-sometimes-you-can’t positions.  To make matters more interesting, several states and localities (apparently not finding the federal EPA a reliable remedy for sex-based pay discrimination) have recently adopted statutes and ordinances forbidding salary history inquiries—including Connecticut, Massachusetts, Delaware, Oregon, California, New York City, and Philadelphia. 

            #8        New overtime rules—STILL waiting.  Back in 2016 employers were scrambling to prepare for the new overtime rule that would have doubled the minimum salary for the so called “white collar” exemptions from $23,660 to nearly $48,000. A Texas court struck that rule down in November 2016, and since that time the Trump-era DOL has been slowly seeking comment on a watered down version that would increase the threshold, but by a much more modest amount. Formal comment closed in September 2017 and the administration has finally announced that it will issue its “Notice of Proposed Rulemaking (NPRM)” in March 2019 on the exemption salary levels for executive, administrative, and professional employees.  No rule is expected to take effect before 2020. Stay with us each month of 2019 as we blog on the Employment Law topics in the news!