This past term saw the Supreme Court issue four opinions in labor and employment cases.  In case you missed them, the following is a brief summary of the holdings from those cases.

EEOC v. Abercrombie & Fitch Holding that Title VII’s prohibition against refusing to hire an applicant to avoid accommodating a religious practice that could be accommodated without undue hardship does not require the applicant to have informed the employer of her need for an accommodation where the hiring manager assumed the applicant had a religious practice that would need religious accommodation by the employer.

Mach Mining, LLC v. EEOC Holding that narrow judicial review of the sufficiency of EEOC’s statutory conciliation obligation is available.  A court’s scope of review is limited to confirming that the EEOC communicated in some way with the employer (through conference, conciliation or persuasion) about the alleged unlawful employment practices and endeavored to achieve the employer’s voluntary compliance.  This will, at a minimum, include notice to the employer about the specific allegations describing what the employer has done and which employees have suffered as a result.  The Commission must also engage in some form of discussion so as to allow the employer an opportunity to remedy the alleged discriminatory practice.  The Court further noted that the EEOC can typically satisfy its burden of proving sufficient conciliation efforts via affidavit; but those allegations can be controverted by the employer.  The appropriate remedy for a failure of conciliation is an order to the EEOC to understate its statutory conciliation obligation to obtain voluntary compliance.

UPS v. Young Holding that a plaintiff in a Pregnancy Discrimination Act case can reach trial in an intentional discrimination case over a failure to accommodate by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s legitimate, nondiscriminatory reasons are not sufficiently strong to justify the burden give rise to an inference of discrimination.  A significant burden can be shown by the pregnant employee by providing admissible evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers.

Integrity Staffing Solutions, Inc. v. Busk Holding that employee time spent waiting to undergo and undergoing security screenings prior to entering and before leaving the workplace (roughly 25 minutes per day) as part of the workplace’s antitheft security protocols was noncompensable postliminary activities under the Fair Labor Standards Act because the activity was not integral and indispensable to the principal activities for which the employees were hired (i.e., picking merchandise in the warehouse).

Follow me on Twitter @RussellCawyer.

It’s a rare day with the U.S. Department of Labor is assessed attorney’s fees against it for bringing a suit against an employer in bad faith.  However, in Gate Guard v. Secretary of Labor, the Fifth Circuit Court of Appeals ordered that a trial court award attorney’s fees to a Texas employer in a claim brought against it by the DOL.  In Gate Guard, the DOL brought suit against an employer following a DOL investigation that demanded the employer make fundamental changes to the manner in which it compensated its workers and to pay back wages and overtime of $6 million (virtually its entire net worth).

Gate Guard supplies on-site gate attendants for remote oil and gas drilling sites.  The attendants typically live on-site and record the license plates of vehicles entering and leaving the drilling site twenty-four hours a day.  Gate Guard treats the attendants as independent contractors and paid them $100-175 per day.  In July 2010, a DOL investigator received a tip from a former Gate Guard worker (who was also the investigator’s drinking buddy) that he thought his pay was miscalculated.  After the investigator spoke with his buddy and two other Gate Guard workers, he formed the conclusion that the attendants were misclassified as independent contractors and not properly paid overtime.

Despite having little training or experience with independent contractor misclassification cases, the investigator opened a formal investigation into Gate Guard’s practices.  He notified the employer of the investigation and scheduled an opening conference.  A week before the opening conference, and despite knowing that Gate Guard was represented by counsel, the investigator showed up unannounced and demanded payroll information from a low-level employee.  The investigator appeared later for the opening conference and thereafter, without any additional investigation, began calculating a potential back pay penalty.  He calculated Gate Guard owed $6 million in back wages.

The investigator continued his investigation by conducting additional interviews to support this conclusion.  He conducted handwritten notes of his interviews but destroyed those notes after composing formal witness interview statements.  The Court determined that the investigator did not conduct an impartial investigation.  He discounted witness responses that contradicted his early conclusions.  Only a few months later, and after interviewing only seventeen workers, the investigator presented his conclusions to the employer; demanded the $6 million penalty in back wages and unpaid overtime; and demanded that the employer treat the workers as employees going forward (including the requirement that it pay overtime)

Prior to the DOL filing an enforcement proceeding against the employer, the investigator’s supervisor reviewed the file.  The supervisor noted several violations of internal DOL policies including that the investigator: started making back-wage computations before determining the employer violated the FLSA; failed to follow protocol when presenting the findings to the employer by demanding back pay and unpaid overtime before securing voluntary prospective compliance; and inflated the amount of the employer’s penalty by $4 million, because he miscalculated the number of hours on which the workers should have been paid if they were nonexmpet employees.

The DOL then filed an enforcement action against Gate Guard.  The Department’s litigation tactics only continued the Department’s investigatory problems.  In the Court’s opinion, the DOL attorney opposed nearly ever motion, including routine case administration motions; made improper objections during depositions; withheld witness statements underlying the prosecution as privileged even though the Department filed some of the same statements in court to support its position.  The Department ultimately lost the case on the merits and Gate Guard moved for an award of its attorney’s fees incurred in defending against the government’s claim.

The Court held that the DOL’s conduct was oppressive and the case legally frivolous.  The court concluded that “the government’s extraordinary uncivil and costly litigation tactics strongly suggest that it hoped to prevail by oppressively pursuing a very weak case.”  Because of all of the Government’s misconduct (not all detailed here), the Court ordered that the trial court calculate and award attorney’s fees to Gate Guard.

You can read the full facts of the opinion here.

Follow me on Twitter @RussellCawyer.

President Obama has announced that a soon to be released proposed rule from the U.S. Department of Labor will include an increase in the minimum salary necessary for an employee to qualify as an exempt employee. Under the proposal announced by @POTUS today, by 2016, employers will have to pay exempt employees a minimum or $921 per week ($47,892 annually) and the salary will be linked the 40th percentile of income thereby increasing automatically over time. The change is expected to increase the number of employees eligible for overtime by 5 million workers.

The DOL’s proposed rule, to be released as early as this week, will likely include additional proposed revisions making fewer employees qualify as exempt and requiring overtime for more employees. Stay tuned for more updates.

Follow me on Twitter @RussellCawyer.

The National Labor Relations Act protects employees’ right to form unions, collectively bargain and otherwise engage in collective activities for their mutual aid and protection.  Collective activities for mutual aid and protection usually relate to wages, hours, working conditions and other terms and conditions of employment.  These activities apply to union and nonunion employers.  In recent years, the National Labor Relations Board and the Board’s General Counsel have made taken legal positions to expand the scope of the NLRA and its affect on nonunion employers.  The Board and General Counsel have also taken a variety of steps to educate employees about their NRLA rights.

My partner, Henry Robinson, is publishing an article this summer in the Labor Law Journal that analyzes the Board’s latest enforcement positions and how those positions affect common policies found in most employer handbooks.  You can download a full copy of Applying NLRA Section 7 to Company Policies and Related Discipline at the link.

Follow me on Twitter @RussellCawyer.

Beginning in 2016, licensed individuals can openly carry handguns on their person. Prior to the implantation of the law, Texas law required that license holders carry their handguns in a concealed manner.  HB 910 authorizes individuals with a license to carry a handgun to openly carry their handguns in all locations that allow the licensed carrying of a concealed handgun.
Employers and private property owners can still prohibit firearms in the workplace so long as they display specific, statutorily required notices.  To provide effective notice, the disclosure requires a card or other document (e.g., employee handbook policy for employees) on which is written language identical to the following:
Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.
Employers and private property owners can also comply with their notice obligation that they prohibit the open carriage of handguns using signs posted on the property that includes the preceding language in both English and Spanish.  The posting must appear in contrasting colors with block letters at least one inch in height.  The posting must be displayed in a conspicuous manner clearly visible to the public at each entrance to the property.

Employers desiring to prohibit the open carrying of handguns should consider taking the following steps.

  • Prepare and post proper signing meeting the statute’s requirements;
  • Revise, distribute and communicate changes in the employer’s policies to employees;
  • Educate and train employees on the revisions to the employer’s policy.

Open carry is set to take effect Jan. 1, 2016.  You can review HB 910 here.

Follow me on Twitter @RussellCawyer.

Last week the Texas Supreme Court reversed a $1 million jury verdict in a retaliation case arising under state law. In San Antonio Water Systems v. Nichols, the court held that the former employee’s confrontation of a male executive about his repeated lunch invitations to other female coworkers occurring three years before the plaintiff’s termination could not reasonably be construed as protected activity and no reasonable person would believe that the invitations constituted actionable sexual harassment.  Therefore, the retaliation claim failed as a matter of law.

There is really nothing new or novel about the court’s holding and the Nichols’ opinion does not alter or amend the state of law as it applies to retaliation claims in Texas. It should remind employers, however, that they should not necessarily concede that the actions taken by a plaintiff constitute protected activity.

You read the full opinion in SAWS v Nichols here.

Follow me on Twitter @RussellCawyer.

Diane Sawyer’s primetime interview with Bruce Jenner where he confirmed that he is transgender, and more closely identifies with the female rather than male gender, has raised awareness on the issues that affect these individuals. An estimated 19 million people watched the two hour interview.  There are an estimated 700,000 transgender individuals in the United States (about .3 percent of the population).  The State of Texas does not identify transgender individuals as protected class for employment discrimination law purposes (although some local governments in Texas have).  However, because the EEOC has expressed and shown its EEOC’s willingness to use existing civil rights laws (Title VII) to advocate and litigate for transgender rights, employers must educate themselves about on the three most common situations likely to arise in the workplace that has a transgender employees in it (i.e., restrooms, dress codes and treatment from supervisors and co-workers).

  • Consider establishing single occupancy toilet facilities, unisex restrooms or allow transgender employees to use the restroom facilities of the gender with which they identify.  Single occupancy restrooms can be used by both transgender employees or those employees uncomfortable sharing common restrooms with transgender employees.
  • Educate managers and supervisor about using the gender pronouns and names that are appropriate for the employee’s new gender and all employees about proper treatment of transgender employees (including anti-harassment and non-retaliation obligations).
  • Allow transgender employees to dress like and apply employer dress codes that apply to the transgender employee’s preferred gender.

While the population of transgender individuals is very small, human resources personnel who have transgender employees in their workplace should educate themselves on the issues that can commonly arise as well as how existing legal obligations in their jurisdiction might cause the employer to modify its existing policies and practices.  Employers looking for guidance on how to deal with transgender employees or an employee transitioning can look to other employers that have published their policies online.  Chevron and Ernst & Young have published guidance that is available on the web.

Follow me on Twitter @RussellCawyer

The price of oil has dropped significantly from its 2014 highs and the effect of this drop is trickling down to the oil field service providers.  Energy exploration and production companies are drastically cutting their capital expenditure budgets for the coming fiscal year.  Today, Schlumberger announced that it was laying off 11,000 employees in addition to the 9,000 previously announced.  Noble Energy announced a 10 percent reduction in force earlier this week.

In the list of newly filed cases I receive, I noticed a new case filed against an oilfield service provider for alleged violations of the federal Worker Adjustment and Retraining Notification Act.  WARN is the federal law that requires certain employers to provide up to 60 days of advance notice.  Many service providers are mid-sized companies where WARN may not apply.  However, prior to making any layoff decisions, the company should consider whether the 60 advance notice requirements of federal law are required.

WARN requires an employer to provide at least 60-day advance notice to employees and governmental officers of a plant closing or mass layoff.  A plant closing is a shutdown of an employment site (or one or more facilities or operating units within an employment site) that will result in an employment loss for 50 or more employees during any 30-day period. This does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer although these employees are entitled to notice.  A mass layoff is a  layoff not resulting from a plant closing but which will result in an employment loss at the employment site during any 30-day period for: a) 500 or more employees; or b) for 50-499 employees if they make up at least 33% of the employer’s active workforce. Again, this does not count employees who have worked less than 6 months in the last 12 months or employees who work an average of less than 20 hours a week for that employer.

One exception to WARN’s advance notice requirement exists when the employer orders a mass layoff or plant closing before the conclusion of the 60-day period when the closing is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.

Employers that fail to provide the 60-day advance notice can be required to pay employees back pay to each of the employees that should have received notice but did not (up to 60 days); benefits during the required notice period; civil penalties, court costs, and attorney’s fees.

Texas does not have a state law equivalent to the WARN Act, but service providers operating in other states should also determine whether those states may impose additional notice obligations in addition to the WARN Act.  Any employer considering a reduction in force or mass layoff should consider partnering with its labor and employment counsel at the early stages of planning to reduce the likelihood of missteps in the planning and implementation process.

Follow me on Twitter @RussellCawyer

 

Last month the Fifth Circuit resolved an intra-Circuit split on the appropriate prima face case that should be used in a discrimination case under the Americans with Disabilities Act.  In EEOC v. LHC Group, Inc., the EEOC brought suit on behalf of a home health field nurse who was terminated after she was rendered unable to drive after she suffered an epileptic seizure.

Of significance in the LHC Group opinion is the prima facie case the Court articulated that applies to a case of disability discrimination under the ADA.  The panel held that the ADA prima facie case requires the plaintiff to show that: 1) she has a disability; 2) she is qualified for the job; 3) that she was subject to an adverse employment decision on account of her disability.  The opinion eliminated a fourth requirement found in some cases that required a showing that the plaintiff was replaced by someone outside the protected category or treated less favorably than non-disabled employees.

The court of appeal affirmed the trial court’s summary judgment as to the nurses inability to perform essential job function of the field nurse position (which clearly required the ability to drive) but reversed the summary judgment on issues related to whether the nurse could have performed the essential job functions of a Team Leader position which allowed employee travel commitments to be accomplished by car or public transportation.

You can read the entire opinion in EEOC v. LHC Group here.

As we get to the end of the year, management committees and corporate boards are in the process of approving year-end bonuses for employees.  A frequently overlooked wage and hour mistake is failing to include non-discretionary bonuses in the regular rate of pay for non-exempt employees.

In calculating the regular rate of pay on which employer’s must pay overtime, the employer must generally include all remuneration paid to the employer.  Excluded from the regular rate of pay are, among a few other things, discretionary bonuses, gifts, Christmas and special occasion bonuses.

Discretionary bonuses are those where the employer retains the discretion over the payment and amount of the bonus until a time near the end of the period over which the bonus is paid.  If the bonus is promised to employees or is made pursuant to an agreement or contract, the bonus is not discretionary and must be included in the regular rate of pay for overtime purposes.  Gifts, Christmas and special occasion bonuses are those bonuses that are paid as a reward for service and the amounts are not measured by or dependent on hours worked, production or efficiency.

If a year-end bonus is one that must be included in the regular rate of pay, the employer must pro-rate the bonus over the prior year when it was earned and then recalculate the overtime due to employees as a result of the higher regular rate of pay.  This rarely results in significant overtime adjustments but such payments are required, nonetheless, to be in full compliance with the law.

For example, if an employer pays a $2,000 year end, non-discretionary bonus to a non-exempt employee, the employer allocates 1/52 of the bonus into each workweek over the prior year (i.e., $38.46 per week).  Assuming an employee worked 50 hours in a workweek, the employer would have to recalculate the overtime that was due during that workweek based on the increase in earnings caused by the bonus payment. 

$38.46 ÷ 50 hours = $0.77 (increase in the regular rate)

$0.77 x ½ = $0.39 (increase in the additional half-time premium)

$0.39 x 10 hours of overtime worked = $3.90 (increase in overtime earnings due to the bonus)

The resulting additional overtime that would be required to be paid because of the $2,000 bonus payment is $3.90 for that workweek.

If you have questions about whether your year-end bonuses should be included in the regular rate of pay, be sure and call you labor and employment lawyer.  Or better yet, call me.

Follow me on Twitter @RussellCawyer