Monthly Archives: February 2016

February 23, 2016

EEOC Providing Employer Position Statements To Charging Parties

Wiletsky_MBy Mark Wiletsky

No reciprocity exists in the new nationwide procedure announced by the U.S. Equal Employment Opportunity Commission (EEOC) late last week. The EEOC now will provide employer position statements and any non-confidential attachments to a charging party during an investigation upon request. It then will permit the charging party to submit a response within 20 days. However, the EEOC will not afford employers the right to receive a copy of the charging party’s response.

As you may know, after an employee or other aggrieved individual files a charge with the EEOC, the agency begins an investigation of the allegations. As part of the investigation, the EEOC will request that the employer (the respondent) submit a position statement, responding to the allegations and providing supporting documentation of its employment decisions that allegedly affected the charging party.

Some EEOC regional offices already release employer position statements to the charging party and allow the charging party to file a response. For employers in those EEOC districts, there is little change in procedure. According to the EEOC, however, this new nationwide procedure is intended to provide a consistent approach in all of its offices.

Take note – these procedures apply to position statements you already may be drafting, or have recently submitted, as they apply to all EEOC requests for position statements made to respondents on or after January 1, 2016.

EEOC Providing Only The First Formal Document From Each Side

In justifying its policy to provide the employer’s position statement to the charging party, but not providing the charging party’s response to the employer, the EEOC states that it is releasing the first formal document received from each party. The respondent receives the Charge and the charging party may receive the respondent’s position statement. The EEOC does not intend to release other documents during the investigation process.

Does this amount to a one-sided discovery request? In other words, by requesting copies of what the respondent submitted to the EEOC, does the charging party get the unreciprocated right to learn the identification of witnesses, decision-makers, applicable company policies, internal documentation of the employment decision, and other important information? The EEOC states this new process is intended to help accelerate the investigation and allow it to better tailor its requests for additional information. But, employer respondents will likely see the procedure as requiring it to lay its cards on the table while permitting the charging party to keep its cards largely hidden.   

Use Care With Confidential Information

Respondents who rely on confidential information in their position statements should use care in segregating that information in separate attachments that are labeled “Confidential” or some similar designation. Examples of “confidential” information include birth dates, confidential commercial or financial information, trade secrets, non-relevant personally identifiable information of witnesses, comparators or third parties, references to charges filed against the respondent by other charging parties, and sensitive medical information of others (not the charging party). The EEOC states, however, that it will not accept blanket or unsupported assertions of confidentiality, so be prepared to justify why particular information must be protected.

Be careful, too, when submitting position statements and attachments through the EEOC’s online portal. Once you click “Save Upload” to submit your position statement and any attachments, you will not be able to retract them.

Will The New Procedure Change Outcomes?

It’s important to ask whether the early release of the respondent’s position statement (with supporting documents) to the charging party during the EEOC’s investigation will change the outcome of charges. As with any case, it largely depends on the facts. If you have bad facts or poor documentation on your side, the charge may result in a probable cause finding. Or, the charging party may hold out for more during settlement talks or mediation. However, if you have good policies in place, enforce them uniformly, and document your decisions properly, the release of your defense may help resolve the matter earlier in the process, short of litigation.

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February 17, 2016

Employee May Recover Colorado Wage Claim Penalty And FLSA Liquidated Damages

By Steven T. Collis

An employee may not recover double damages for the same wage claim under both state and federal law. But, an employee may be awarded both the penalty under the Colorado Wage Claim Act (CWCA) and liquidated damages under the Fair Labor Standards Act (FLSA), raising the potential liability for willful wage violations for Colorado employers.

Unpaid Wage Claims Under State and Federal Wage Law

An employee asserting a claim for unpaid wages may be able to sue his or her employer under both the CWCA and the FLSA. In a recent case decided by the Tenth Circuit Court of Appeals (whose decisions apply to Colorado employers), truck driver William Evans sought to recover unpaid wages from his employer, an auto transport company, by asserting both state and federal wage claims. Evans v. Loveland Auto. Inv., Inc., No. 15-1049 (10th Cir. Dec. 10, 2015). Because the FLSA does not preempt the CWCA, Evans was entitled to assert claims under both statutes.

Despite being properly served with the complaint, Evan’s employer failed to file a response. The district court granted Evans a default judgment in his favor on both his FLSA and CWCA claims.

No Double Damages Allowed

The issue then became what damages could be awarded to Evans under both state and federal wage law. Established law in the Tenth Circuit provides that where a federal claim and a state claim arise from the same set of operative facts, the court may not award identical damages under both laws as that would constitute double recovery.

The district court concluded that it should award damages only under the statute that provided the greater relief, which it deemed was the CWCA. The court awarded Evans $7,248.75 in unpaid wages, $12,685.31 as the CWCA penalty of 175% of the unpaid wages due to his employer’s willful violation, $1,077.18 in prejudgment and postjudgment interest, and attorney fees and costs.

FLSA Liquidated Damages Serve Different Purpose

Despite the award in his favor, Evans appealed to the Tenth Circuit arguing that he was also entitled to FLSA liquidated damages in addition to the CWCA penalty. The Tenth Circuit had not previously addressed whether the CWCA penalty and FLSA liquidated damages duplicate one another.

The CWCA imposes a penalty on an employer who fails to pay wages due to an employee within the statutory time period. That penalty begins at 125% of the amount of wages owed, but is increased to 175% if the employer’s failure to pay is willful.

FLSA liquidated damages, on the other hand, can be awarded at 100% of the amount of wages owed and are authorized unless the employer shows that it acted in good faith and had reasonable grounds for believing that it did not violate the FLSA. These liquidated damages are considered compensatory, designed to compensate the employee for the delay in receiving wages because of the employer’s FLSA violation. They are not considered a penalty.

The Tenth Circuit agreed with Evans and other jurisdictions in concluding that an award of both a state penalty and FLSA liquidated damages would not amount to a double recovery. The appellate court sent the case back to the district court to determine if FLSA liquidated damages were warranted in Evan’s case.

No Prejudgment Interest If FLSA Liquidated Damages Awarded

Because prejudgment interest is meant to compensate the employee for the delay in receiving the wages owed to him – the same purpose articulated for FLSA liquidated damages – the Tenth Circuit stated that an employee may not recover both liquidated damages and prejudgment interest under the FLSA. Consequently, if the district court grants Evans liquidated damages, it must eliminate its award of prejudgment interest to avoid the double recovery.

Increased Wage Claim Liability

Colorado employers need to consider the increased liability that may result from a single wage claim when brought under both the CWCA and the FLSA. If the employer is willful in its failure to pay wages, the combination of both the 175% CWCA penalty and the 100% FLSA liquidated damages award will raise the stakes for wage claims significantly. These two multipliers can turn a relatively small wage claim into a much larger award in a hurry. Take steps to review your payroll processes so that you pay all wages due and owing within the statutory time periods and make good faith efforts to resolve any disputes regarding the amount of wages owed.

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February 11, 2016

Medical Marijuana Need Not Be Accommodated by New Mexico Employers

West_LBy Little V. West

New Mexico employers are not required to accommodate an employee’s use of medical marijuana, according to the federal district court in New Mexico. In dismissing an employee’s discrimination lawsuit, the Court recently ruled that an employee terminated for testing positive for marijuana did not have a cause of action against his employer for failure to accommodate his use of medical marijuana to treat his HIV/AIDS. Garcia v. Tractor Supply Co., No. 15-735, (D.N.M. Jan. 7, 2016).

New Employee Terminated For Positive Drug Test 

When Rojerio Garcia interviewed for a management position at a New Mexico Tractor Supply store, he was up front about having HIV/AIDS. He also explained that he used medical marijuana under the state’s Medical Cannabis Program as a treatment for his condition upon recommendation of his doctor.

Tractor Supply hired Garcia and sent him for a drug test; Garcia tested positive for cannabis metabolites. He was terminated from employment. Garcia filed a complaint with the New Mexico Human Rights Division alleging unlawful discrimination based on Tractor Supply’s failure to accommodate his legal use of marijuana to treat his serious medical condition under New Mexico law. 

No Affirmative Accommodation Requirements in New Mexico’s Medical Marijuana Law

Garcia argued that New Mexico’s Compassionate Use Act (CUA), which permits the use of marijuana for medical purposes with a state-issued Patient Identification Card, should be considered in combination with the state Human Rights Act, which, among other things, prohibits employers from discriminating on the basis of a serious medical condition. He argued that the CUA makes medical marijuana an accommodation promoted by the public policy of New Mexico. Accordingly, Garcia asserted that employers must accommodate an employee’s use of medical marijuana under the New Mexico Human Rights Act.

The Court disagreed. It stated that, unlike a few other states whose medical marijuana laws impose an affirmative obligation on employers to accommodate medical marijuana use, New Mexico’s law did not. Consequently, Garcia did not have a claim under the CUA.

The Court then rejected Garcia’s arguments that his termination violated the Human Rights Act. The Court found that Garcia was not terminated because of, or on the basis of, his serious medical condition. He was terminated for failing a drug test. The Court stated that his use of marijuana was “not a manifestation” of his HIV/AIDS, so Tractor Supply did not unlawfully discriminate against Garcia when it terminated him for his positive drug test. 

Court Rejected Public Policy Arguments 

Garcia argued that the public policy behind the state’s legalization of medical marijuana meant that employers should be required to accommodate an employee’s legal use of marijuana. The Court rejected the argument, noting that marijuana use remains illegal for any purpose under federal law. It stated that if it accepted Garcia’s public policy position, Tractor Supply, which has stores in 49 states, would have to tailor its drug-free workplace policy for each state that permits marijuana use in some form.

The Court also relied on the fact that the CUA only provides limited state-law immunity from prosecution for individuals who comply with state medical marijuana law. However, Garcia was not seeking state-law immunity for his marijuana use. Instead, he sought to affirmatively require Tractor Supply to accommodate his marijuana use. The Court stated that to affirmatively require Tractor Supply to accommodate Garcia’s drug use would require the company to permit conduct prohibited under federal law. Therefore, the Court ruled that New Mexico employers are not required to accommodate an employee’s use of medical marijuana.

What This Means For Employers

The Tractor Supply decision is consistent with rulings from courts in other states that have similarly ruled that an employer may lawfully terminate an employee who tests positive for marijuana. Although Garcia may appeal this decision, it is difficult to imagine that an appellate court will overturn it as long as marijuana use remains illegal under federal law, and state law does not require a workplace accommodation.

In light of this decision, take time now to review your drug-free workplace and drug testing policies. Make certain that your policies apply to all controlled substances, whether illegal under state or federal law. Clearly state that a positive drug test may result in termination of employment, regardless of whether the employee uses medical marijuana during working hours or appears to be “under the influence” at work. Communicate your drug-free workplace and testing policies to employees and train your supervisors and managers on enforcing the policies in a consistent and uniform manner.

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February 3, 2016

Utah Bill Seeks To Ban Post-Employment Non-Compete Restrictions

Benard_BrBy Bryan Benard

On February 2, 2016, the Post-Employment Restrictions Act, H.B. 251, was introduced in the Utah House of Representatives. Sponsored by Representative Mike Schultz (R), the bill would prohibit most types of agreements and policies that restrict an employee’s actions after termination of employment.

Specifically, the bill would ban post-employment restrictions that restrict the employee from:

  • providing products, processes, or services that are similar to the employer's products, processes, or services;
  • working in the same industry as the employer, or
  • owning, either directly or indirectly, an interest in an entity that provides products, processes, or services that are similar to the employer's products, processes, or services.

In short, this bill would prevent Utah employers from having non-compete agreements with its employees that extend beyond the termination of the employment relationship.

We will continue to monitor this bill, with our government affairs group keeping close tabs on it. 

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February 2, 2016

DOL’s New Joint Employer Interpretation Seeks To Hold More Employers Accountable

Nugent_BBy Brian Nugent

The U.S. Department of Labor (DOL) issued a new Administrator’s Interpretation (AI) that emphasizes the agency’s intent to apply joint employer status more broadly under the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA). Even though the definition of joint employment under these acts has not changed, the DOL made it clear that it will examine dual employer relationships closely with what appears to be an intent to find joint employer status in more circumstances.

Of course, companies engaged as a “dual employer” generally seek to avoid joint employer status. Being a joint employer in the eyes of the DOL can result in liability for the acts of a client that has the primary responsibility to direct and control employees. This is not a favorable place to be. Temporary staffing agencies and PEOs do not have enough control over workers assigned to a client location to assume such liability. As a result, such companies have worked for years to maintain dual or co-employment relationships that do not constitute joint employment. It appears, however, that the DOL, through the AI, is trying to chip away at such relationships and include more dual employers within the definition of joint employer. 

All companies engaged in the business of providing employees to clients or co-employing workers are affected by this AI. As explained in more detail below, it is clear that the DOL intends to scrutinize all “dual employer” relationships more closely and focus on the degree of control over workers as a guide to determine whether a joint employer relationship exists..

The DOL identified the two most likely scenarios where joint employment typically exists. One type of joint employment, referred to as vertical joint employment, is where there is an “intermediary employer”, such as a staffing agency, PEO, or other provider of workers to a client. Where such a relationship exists, the DOL will focus on the economic realities of the relationship to determine whether a worker is economically dependent on two or more employers, and if so, will be inclined to find joint employer status. The second type of joint employment under scrutiny by the DOL is where the employee has two or more separate, but related employers, each benefitting from a person’s work during the same period of time. These scenarios are explained in more detail below.

Vertical Joint Employment

In a vertical employment relationship, it is common for the “intermediary employer” to be the W-2 employer that actually pay the wages and payroll taxes, but does not direct and control the day-to-day activities of the worker. The issue for the DOL as expressed in the AI is whether, based on the economic realities of the employment relationship shared by the intermediary and the client company, joint employment exists between the employee, the intermediary employer and the client at which the employee is assigned to work.

The economic realities test is not new to the FLSA or MSPA. What is new is that in reviewing a relationship for joint employer status, the DOL announced in the AI that it will abandon its prior practice to look only to its joint employer regulations, and focus exclusively on the economic realities factors in vertical employment scenarios. This is not necessarily bad news, but it is significant.

Under the economic realities test, the degree of control exerted by a person or entity over the workers is only one of the primary factors in a joint employer analysis, and is not definitive. Other economic realities factors the DOL will consider “in the mix” include:

  • Does the other employer direct, control, or supervise (even indirectly) the work?
  • Does the other employer have the power (even indirectly) to hire or fire the employee, change employment conditions, or determine the rate and method of pay?
  • Is the relationship between the employee and the other employer permanent or long-standing?
  • Is the employee’s work integral to the other employer’s business?
  • Is the work performed on the other employer’s premises?
  • Does the employer perform functions typically performed by employers, such as handling payroll, providing workers’ compensation insurance, tools, or equipment, or in agriculture, providing housing or transportation?
  • Does the employee perform repetitive work or work requiring little skill?

The DOL also identified industries where it believes vertical joint employment relationships are common, and as a result, under increased scrutiny. These industries include “agriculture, construction, hotels, warehouse and logistics” as well as other industries that regularly use staffing agencies or subcontracting intermediaries.

Horizontal Joint Employment

According to the DOL, the so-called horizontal joint employment relationship exists where multiple employers who are sufficiently associated with each other both benefit from the individual’s work, such as where two separate restaurants have the same ownership and jointly schedule an employee to work at both establishments. The factors to consider when analyzing this type of joint employment include:

  • Who owns or operates the possible joint employers?
  • Do they have any agreements between the employers?
  • Do the two employers share control over operations?
  • Do the employers share or have overlapping officers, directors, executives, or managers?
  • Does one employer supervise the work of the other?
  • Do the employers share supervisory authority over the employee?
  • Are their operations co-mingled?
  • Do they share clients or customers?

The DOL stresses that it is not necessary for all, or even most, of these factors to exist in order to find joint employment status between two or more related employers.

NLRB Focus On Joint Employers

The National Labor Relations Board (NLRB) has also been expanding its use of joint employment status to hold companies liable for violations of the National Labor Relations Act. Although the DOL stated in a recently issued Questions and Answers document that its joint employment analysis is different than that used by the NLRB, reports suggest that the office of the Solicitor of Labor reached out to the NLRB’s General Counsel on the issue of joint employment in advance of issuing the new Administrator’s Interpretation. It is clear that both agencies are focused on a broad application of the joint employer doctrine.

What Does This Mean For Employers

If joint employment is found, both entities may be held responsible for compliance with all applicable laws, including wage and hour and other employment protection laws. This includes making sure non-exempt employees are paid minimum wage for all hours worked and overtime pay for hours worked over 40 in a workweek. For employers covered by MSPA, both employers are liable for ensuring necessary disclosures of the terms and conditions of employment, and payment of wages are made, as well as maintaining required written payroll records. A joint employer could also find itself named as a co-defendant in a tort liability suit brought against the “primary actor” employer.

Joint employment also applies for determining eligibility and coverage under the Family and Medical Leave Act (FMLA). This is critical as smaller employers with less than 50 employees may think they are free of any FMLA obligations, only to find that they meet the coverage threshold if they are deemed to be a joint employer with another entity, such as a staffing agency that provides them with additional workers. Similarly, joint employer status could affect compliance under the Affordable Care Act.

In light of this new guidance and the emphasis by the federal government on broad application of joint employment, staffing agencies, PEOs, and their clients should examine their relationships, including but not limited to, the degree of control, supervision, termination rights, setting of pay rates, and provision of tools, training, and policies exerted by the client company. The higher the degree of control and reservation of rights over the workers, the higher the chance that a joint employment relationship will be found. This also means that clients may ask staffing agencies to provide additional information about their compliance with applicable laws so as to gauge their level of risk. In fact, compliant staffing companies that are violation-free may see that as a marketing point in the future.

In the end, if employers comply with applicable laws, joint employment need not come into play. It is only when compliance takes a back seat and government investigators arrive at the door, that companies need to worry about whether they are a joint employer.

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