Author Archives: Holland & Hart

November 15, 2017

Faking Cancer Delivers Colorado Postal Worker A Criminal Record

By Steven T. Collis

A longtime Colorado postal worker faked a cancer diagnosis to get time off of work, and for nearly two years, she got away with it. Her charade was discovered, however, when she misspelled the name of her supposed physician in forged doctors’ notes she provided to her supervisor. An investigation by her employer revealed the extent of her ruse, and she was eventually indicted in federal court.

Although this case is an extreme example and not representative of most employees, it’s a good reminder that you should keep proper documentation and conduct a thorough investigation if you suspect an employee isn’t being honest about the need for medical leave.

Deception Begins

In 2015, Caroline Boyle of Highlands Ranch, Colorado informed her supervisor at the U.S. Postal Service (USPS) that she had recently been diagnosed with non-Hodgkins lymphoma and needed time off. Boyle, who had been employed at the USPS’s customer products and fulfillment category management center in Aurora for 25 years, had recently been denied a promotion.

Over the next 20 months, Boyle took 112 days of sick leave and was allowed to work part-time and attend frequent doctor visits. Her boss also permitted her to work from home and granted her paid administrative leave that did not count against her sick-leave balance.

Faked Doctors’ Notes Lead to Indictment

To support her need for time off and other accommodations for her claimed cancer, Boyle provided numerous doctors’ notes to her supervisor. One note stated that she was being treated for lymphoma at Anova Cancer Care in Lone Tree. That note included the purported signature of radiation oncologist Gregg Dickerson. She submitted another note purported to be from Rocky Mountain Cancer Centers in Lone Tree, signed by Dr. Ioana Hinshaw.

In June 2016, a supervisor became suspicious of Boyle’s cancer claim, prompting a USPS investigator to begin reviewing the doctors’ notes she had provided. The investigator found that Dickerson’s name was spelled incorrectly on the note.

The possible forgery caused the inspector to show the note to two Anova administrators, who stated that Boyle wasn’t a patient of the clinic or of Dickerson. They also said that the template of the note was wrong and didn’t include the doctor’s U.S. Drug Enforcement Agency (DEA) and medical license numbers. The inspector then checked with Rocky Mountain Cancer Centers and learned that Boyle wasn’t a patient of Hinshaw, either.

In March 2017, a federal grand jury indicted Boyle on felony counts of forged writings, wire fraud, and possession of false papers to defraud the United States.

Guilty Plea and Sentencing

In late April, Boyle pleaded guilty to the indictment as charged. According to the facts in her plea, after not being selected for a promotion, she decided to take some time off work by pretending to have cancer. She admitted she took substantial amounts of sick leave and received numerous other workplace accommodations despite not having non-Hodgkins lymphoma or any other type of cancer or serious illness. She also created the alleged doctors’ notes despite not being a patient of either doctor. She intended to keep up the cancer ruse until her scheduled retirement in April 2017, after which she planned to take a vacation to Hawaii. Based on the charges, she faced up to 10 years in prison and a fine of up to $250,000.

At the sentencing hearing, a former subordinate of Boyle’s, Lisa Roberts, testified that Boyle had essentially mimicked her cancer diagnosis and treatment. Roberts had worked at the Aurora postal center and reported to Boyle until 2012.

In 2010, Roberts began fighting non-Hodgkins lymphoma and needed time off for treatment. Boyle accused Roberts of faking cancer in order to take a long vacation, asking her why she didn’t lose her hair. Boyle demanded that she provide her confidential medical records, which she believed Boyle later used to fake a cancer diagnosis.

By the time Boyle claimed to have cancer, Roberts had lost her job in Aurora and moved to Texas. She returned to testify at Boyle’s sentencing hearing because she believed Boyle modeled her fake illness on her real cancer. She alleged that Boyle claimed to have the same type of cancer and to be receiving treatment at the same cancer centers, essentially using all of her medical information to create her fake illness. Roberts further stated that while Boyle was given wide-ranging accommodations for the fake cancer, she had denied similar accommodations to Roberts.

On August 22, 2017, federal judge Raymond Moore sentenced Boyle to five years’ probation with the first six months as in-home confinement wearing an electronic monitor. The judge also ordered her to pay a $10,000 fine and $20,798 in restitution. In perhaps the most fitting portion of the sentence, the judge ordered her to perform 652 hours of community service at a cancer treatment center, research facility, or hospice.

Lessons Learned

Most employees wouldn’t dream of fabricating a life-threatening illness in order to take advantage of sick leave and other employee benefits. But every once in a while, a dishonest manipulator may think he can get away with it.

If you become suspicious about an employee’s need for leave or question whether he or she really qualifies for an employee benefit, conduct an investigation. But be sure to do so within the confines of applicable law so that your investigation doesn’t result in unexpected liability – e.g., Family and Medical Leave Act (FMLA) interference, violation of privacy rights, or retaliation. In fact, if faced with a potential “fake” illness scenario, it’s best to consult with your employment counsel when you first suspect a problem.

November 6, 2017

Take Note: Benefit Plan Deadlines Approaching

By Molly Hobbs

At this time of year, important deadlines are quickly approaching for 401(k) plans and health and welfare plans. Here is a non-exhaustive list of significant employee benefit plan deadlines for the remainder of 2017 and early 2018. These deadlines are generally for calendar year plans, unless otherwise specified.

Retirement Plan Deadlines:

December 2

  • Distribute the following notices, as applicable, by December 2, 2017:
    • Traditional 401(k) Safe Harbor Notice
    • Qualified Automatic Contribution Arrangement (QACA) Notice
    • Eligible Automatic Contribution Arrangement (EACA) Notice
    • Non Safe-Harbor Automatic Contribution Arrangement Notice
    • Qualified Default Investment Alternatives (QDIA) Notice
  • Determine when the annual participant fee disclosure was last provided and timely provide the disclosure. The annual participant fee disclosure is required every 14 months. Many employers provide this disclosure on or before the end of the year along with other year end notices.

December 16

  • Provide summary annual report (SAR) to participants if the 2016 Form 5500 was filed by extension on or before October 16, 2017. For non-calendar year plans, the SAR must be provided two months after the Form 5500 was filed, including by approved extension.

December 31

  • Adopt any discretionary amendments implemented during the plan year.
  • Ensure all required minimum distributions have been paid to applicable participants.

January 2018

  • Provide non-discrimination testing census data to the record keeper or Third Party Administrator (TPA).

March 15, 2018

  • Make sure TPA has completed non-discrimination testing, and distribute any excess contributions, in order to avoid excise taxes.

April 16, 2018

  • Distribute any excess contributions and related earnings from prior year.
  • Make any employer contributions to retirement plan(s) in order to receive tax deduction (plus extensions).

Health and Welfare Plan Deadlines:

November 1

  • If the plan’s open enrollment is approaching, fix the starting and ending dates for open enrollment and prepare and distribute enrollment materials such as the Summary of Benefits and Coverage.
  • Marketplace/Exchange open enrollment begins.

November 15

  • If the plan is a self-funded health plan, submit the Transitional Reinsurance Program (TRP) Annual Enrollment and Contributions Submission Form, reporting the annual enrollment count and selecting a payment schedule. If the Plan elected in 2016 to pay the TRP fee in two installments, the second payment is also due by November 15, 2017.

December 15

  • Open enrollment for the Marketplace/Exchange coverage ends.

December 16

  • Provide summary annual report (SAR) to participants if the 2016 Form 5500 was filed by extension on or before October 16, 2017. For non-calendar year plans the SAR must be provided two months after the Form 5500 was filed, including by approved extension.

December 31

  • Provide the following annual notices, as applicable, by December 31, 2017:
    • Children’s Health Insurance Program (CHIP)
    • Women’s Health and Cancer Rights Act (WHCRA)
    • HIPAA Notice of Privacy Practices (at least every three years)
  • Many plan sponsors provide these notices with the annual open enrollment materials.

January 31, 2018

  • If the employer is subject to the ACA employer mandate, provide full-time employees with an IRS Form 1095-C documenting 2017 health coverage.

February 28 (March 31, if filing electronically)

  • If the employer is subject to the ACA employer mandate, file Form 1094-C and Forms 1095-C with the IRS.
Keep this deadline checklist handy to ensure that your plans remain compliant and as always, consult with your employee benefits counsel for additional information.

October 12, 2017

Top Five Ongoing Challenges For Collective Bargaining and Organizing

By Steve Gutierrez

Most expect that the White House and federal agencies will take a more business-friendly approach than in recent years. Employers hope that will mean they can now look forward to a potential rollback of regulations and enforcement efforts that have stymied their business objectives. Yet when it comes to responding to union organizing campaigns and negotiating collective bargaining agreements, employers still face wide-ranging challenges. Here is my list of the top five ongoing challenges. 

1. Affordable Care Act (ACA) Cadillac Tax 

Many unions, such as the Teamsters, prioritize and bargain extensively over top quality, employer-paid health insurance. They often use it as a selling point to their members. Yet, the ACA’s 40 percent excise tax on workers with comprehensive insurance plans (the so-called “Cadillac tax”), set to be implemented in 2020, is seen by the unions as an affront to their hard-fought bargaining to obtain high quality health care for their membership.

In fact, reports show that unions, including the Teamsters, have actively lobbied members of Congress for a repeal of the Cadillac tax. Because health care reform has not yet passed, it may be unlikely that relief from the Cadillac tax is forthcoming anytime soon.

This opens the door for alternate bargaining tactics over health care plans and benefits. Economics can be based on the ultimate cost to the employees/members, when factoring in the tax. This issue remains a challenge for both employers and the union and can change the overall approach to structuring the economic package during contract negotiations. 

2.  Micro-units 

In 2011, the NLRB issued its Specialty Healthcare decision permitting unions to establish bargaining units that include only a small fraction of a workforce. For example, in 2014, the Board certified a micro-unit of cosmetic and fragrance salespersons working at a Macy’s department store rather than requiring all employees at the store (or even all salespersons at the store) to make up the bargaining unit. The Board authorized the micro-unit by finding that the cosmetics and fragrances salespersons were a readily identifiable group and shared a community of interest. The Board also found that other Macy’s employees did not share an overwhelming community of interest with the cosmetics and fragrances employees, and prior NLRB cases involving the retail industry did not require a wall-to-wall unit.

These micro-units can make union organizing easier as they do not require a majority of the historical “wall-to-wall” bargaining units to vote in favor of the union. For example, a unit of only nine employees needs just five to vote “yes” and the union has its foot in the door with that employer. And organizing on that micro level can more easily go unnoticed by employers. Micro-units can also result in an employer having to negotiate with multiple unions affecting small segments of its workforce, and the headaches involved with administering varying contracts.

Numerous efforts are underway in the current administration to do away with micro-units. Current NLRB Chairman Phillip Miscimarra disagrees with the Specialty Healthcare standard for determining an appropriate bargaining unit, raising chances that the Board will abandon the approval of micro-bargaining units. However, Miscimarra has announced that he will leave the Board when his term expires in December 2017. Despite his impending departure, it is possible that a majority-Republican Board will reverse course on micro-units.

In addition, this past Spring, Senate Republicans introduced (again) the Representation Fairness Restoration Act (S. 801) which would do away with micro-units. That bill has been assigned to the Senate Health, Education, Labor, and Pensions committee where it is one of 250 bills currently being considered by the committee.

Until the law or Board precedent is changed, micro-units remain a challenge for employers. But because a more employer-friendly Board might rule against a micro-unit, it becomes vastly important to challenge proposed bargaining units and any potential outlier unit members. Increased pressure on the Board on this issue should be a continued focus. 

3.  Transparency with Employees/Members 

Unions are becoming quite savvy in communicating with their members and potential members. Union leaders are increasingly focusing on being more transparent with their members during the bargaining process. They continue to build strong communications networks centered on social media and other online platforms, with development of mobile apps and company-specific websites, Facebook pages, and Twitter accounts.

To stay ahead of and counter union communications, employers facing a union organizing campaign or in the midst of negotiating a contract should institute and invest in more robust communication strategies with their employees as well. Social media and other online communications boards are essential in getting the company’s message out, especially to millennials and other employee demographics who will seek their information from such sources. But, be aware that in late 2014, the NLRB ruled that employees may presumptively use a company’s email system for statutorily protected communications as long as it takes place during nonworking time and does not interfere with productivity. That Board decision, Purple Communications, is on appeal in the Ninth Circuit Court of Appeals but remains a challenge for employers until such time it is reversed or overturned.

4.  New Technology in the Workplace 

As more technology comes into the workplace and robots threaten to replace workers, collective bargaining will likely face these issues head on. Just as outsourcing used to be (and in many cases, still is) a sore spot for unions, workplace automation is a similar threat to jobs and future expansion.

One example involves the Teamsters who recognize that autonomous driving vehicles are becoming a reality. The Teamsters are urging lawmakers to prioritize workers and safety when crafting legislation and rules regarding autonomous vehicles. Their concerns likely spill over into their contract negotiations as well.

As workplace technology accelerates, discussions of the use of such technology will likely become key in any bargaining where robots and automation are a possibility. Anticipating that topic, and the potential impact on workers, opens the door for employers to bargain for potential gains and/or trade-offs in their favor when the union opposes or seeks to limit autonomous technology.

5.  Favorability of Unions on the Rise 

According to a January 2017 Union Favorability Survey by the Pew Research Center (PRC), 60 percent of respondents viewed labor unions favorably while only 35 percent viewed unions unfavorably. This is the highest union favorability rating compiled by the PRC since March of 2001 and only the second rating at or above 60 percent since 1985.

Employers should be aware of this rising trend, especially when communicating with employees during an organizing or bargaining campaign. Opposing and criticizing unions too strongly could backfire so communications and strategies should be formulated to focus on issues, rather than the institution of unions and union membership itself.

Responding to organizing campaigns and preparing for collective bargaining is always a challenge but thinking ahead about these top five issues, and investing in some preventative training and education for managers, can help you manage the process and achieve a favorable outcome.

October 5, 2017

ADA Does Not Mandate Multi-month Leave of Absence As Accommodation, Says Seventh Circuit Court

By Mark Wiletsky

Rarely do we receive definitive guidance on reasonable accommodations. But the Seventh Circuit Court of Appeals came very close to providing that when it recently ruled that a multi-month leave of absence is beyond the scope of a reasonable accommodation under the Americans with Disabilities Act (ADA).

Back Condition Leads to FMLA Leave

In the recent Seventh Circuit case, Raymond Severson had long suffered from back myelopathy, a condition that caused degenerative changes in his back, neck, and spinal cord and impaired his functioning. Although he usually was able to perform his duties at Heartland Woodcraft, Inc., a fabricator of retail display fixtures, at times Severson experienced flare-ups that made it difficult for him to walk, bend, lift, sit, stand, or work.

Over the course of seven years of employment with Heartland Woodcraft, Severson rose from supervisor to shop superintendent and then to operations manager. The company, however, found that he performed poorly in the operations manager position and on June 5, 2013, notified Severson that it had demoted him to a second-shift lead position, which included performing manual labor in the production area.

That same morning, Severson had wrenched his back at home and he was visibly uncomfortable. He left work early and requested leave under the Family and Medical Leave Act (FMLA). He was granted FMLA leave, and his doctor provided certificates indicated that he had multiple herniated and bulging discs in his back which would make him unable to work until further notice.

Unable To Return To Work Following FMLA Leave

While out on FMLA leave, Severson’s doctor treated him with steroid injections, but they did not improve his condition. Severson scheduled disc decompression surgery for August 27, 2013, the same day that his 12 weeks of FMLA leave would expire.

About two weeks before his surgery, Severson requested an extension of his medical leave, explaining that typical recovery time for his surgery would be at least two months. The company contacted him on August 26, the day before his scheduled surgery, and informed him that his employment with Heartland would terminate on August 27 when his FMLA leave expired.  He was told he could reapply for employment after he was medically cleared to work.

On August 27, Severson had his scheduled surgery, and on October 17, his doctor gave him a partial clearance to return to work with a 20-pound lifting restriction. On December 5, Severson’s doctor released him to work without restriction.

Leave As A Reasonable Accommodation

Severson sued the company for an ADA violation alleging that it failed to accommodate his physical disability by refusing to provide a three-month leave of absence following expiration of his FMLA leave. The federal court in Wisconsin rejected the claim as a matter of law, entering summary judgment in favor of Heartland Woodcraft, and Severson appealed.

The Seventh Circuit (whose decisions are binding on federal courts in Illinois, Wisconsin, and Indiana) affirmed judgment in favor of the employer. The Court was very clear in ruling that a long-term medical leave is not a reasonable accommodation under the ADA. Judge Sykes, writing for the three-judge panel, stated, “The ADA is an antidiscrimination statute, not a medical-leave entitlement.” The Court stated that a reasonable accommodation is intended to make it possible for the employee to perform his or her job. But a medical leave that lasts multiple months does not allow the employee to work and that inability to work removes the person from the class of “qualified individuals” protected by the ADA.

The Court stated that brief periods of time off may be an appropriate accommodation in some circumstances. For example, the Court noted that intermittent time off or a short leave of absence may be appropriate for someone with arthritis or lupus when brief periods of inflammation make it too painful for the individual to work. But the Court ruled that a multi-month leave of absence “is beyond the scope of a reasonable accommodation under the ADA.” Read more >>

September 25, 2017

Reminder: New I-9 Form Now Mandatory

By Roger Tsai

Beginning September 18, 2017, U.S. employers are required to use the revised Form I-9, Employment Eligibility Verification form. U.S. Citizenship and Immigration Services (USCIS) released the revised form on July 17, 2017 but permitted employers to continue to use the prior version until last week. The new form has an expiration date of 08/31/2019 and may be accessed from the USCIS website here.

Form I-9 Revisions 

Most of the changes in the revised I-9 Form relate to the List of Acceptable Documents that show an individual’s identity and employment authorization. In particular, the changes include:

  • Form FS-240, Consular Report of Birth Abroad, was added to List C
  • All the certifications of report of birth issued by the State Department (e.g., Forms FS-545, DS-1350, and FS-240) were combined into selection C#2 in List C
  • All List C documents (except the Social Security Card) are renumbered

Other changes include removing the phrase “the end of” from the requirement that newly hired employees complete and sign Section 1 of the Form no later “than the first day of employment.” Another revision to the instructions is the renaming of the Office of Special Counsel for Immigration-Related Unfair Employment practices to its new name, Immigrant and Employee Rights Section. USCIS updated its Handbook for Employers: Guidance for Completing Form I-9 (M-274) to reflect the changes.

Check That New Forms Are Being Used

Employers need to ensure that all new employees hired on or after September 18th have completed the revised Form I-9. If you allow individual supervisors or managers to coordinate completion of I-9 forms for new hires, be sure to alert them to the new form immediately. If you use a third-party I-9 service provider, check that it has updated its service to the new forms. Civil penalties for I-9 non-compliance can range between $216 and $2,156 per worker, even for a first violation.

September 12, 2017

Employer May Keep Tips As Long As Employees Are Paid Minimum Wage, According To 10th Circuit

By Brad Cave

By invalidating a U.S. Department of Labor (DOL) regulation that states that tips are the property of employees, the 10th Circuit Court of Appeals (whose opinions apply to Wyoming, Colorado, Utah, Kansas, Oklahoma, and New Mexico) rejected an employee’s wage claim based on her employer’s practice of keeping all tips. But employers in states with an analogous state law governing ownership of tips, such as Wyoming, need to be aware that the 10th Circuit’s ruling may not change how they handle tips.

Caterer Kept Tips But Paid More Than Minimum Wage

Relish Catering regularly receives tips from its customers in the form of a gratuity added to their final catering bill at the end of an event. Relish retains those tips for itself rather than passing them along to its employees who work at the events. However, it pays its employees at or above the federal minimum wage of $7.25 per hour as well as time and a half for overtime and does not rely on any sort of tip credit to meet the minimum wage.

Bridgette Marlow believed Relish was required to turn over her share of the catering tips under the Fair Labor Standards Act (FLSA). Despite making $12 per hour (and $18 per hour for overtime), she sued Relish and Brett Tucker, a manager and part owner of the company, alleging they violated the minimum wage provisions of the FLSA by retaining the tips.

FLSA Restrictions Apply Only When Tip Credit Taken

Marlow argued that by retaining all of the tips, Relish was essentially paying employees below minimum wage. For example, she suggested that if she received her $12 hourly wage but Relish retained $11 in tips for each hour she worked, the result was the same as if Relish turned over all of the tips to her and paid her a $1 hourly wage. In essence, she argued that the company could be paying less than the required amount for tipped employees.

The 10th Circuit didn’t bite on Marlow’s rationale. The Court stated that it doesn’t matter where the money to pay wages comes from so long as the company paid at least the minimum wage required under the FLSA. The Court rejected Marlow’s argument that the FLSA’s tip-credit provision applied to her case because Relish doesn’t take a tip credit.

The FLSA tip-credit provision allows employers of “tipped employees” to pay a reduced hourly wage of $2.13 per hour so long as employees receive sufficient tips to raise their earnings to the $7.25 hourly minimum. But this provision applies only if the employer counts tips toward the minimum wage, said the Court. The tip-credit provision does not apply if the employer doesn’t count tips toward the minimum and instead pays the full hourly minimum wage.

The Court stated that the FLSA tip-credit provision does not require that employers turn over all tips to employee in all circumstances, as Marlow urged. Instead, when an employer doesn’t take the tip credit, the tip-credit provision imposes no restrictions on what it may do with tips as long as it pays an hourly wage above the $7.25.

DOL’s Tip-Ownership Regulation Invalid

Marlow relied extensively on a 2011 DOL regulation that provides:

Tips are the property of the employee whether or not the employer has

taken a tip credit under section 3(m) of the FLSA. The employer is

prohibited from using an employee’s tips, whether or not it has taken a tip

credit, for any reason other than that which is statutorily permitted in

section 3(m): As a credit against its minimum wage obligations to the

employee, or in furtherance of a valid tip pool.

From the language of that regulation, it would seem that Marlow had a valid claim. But the 10th Circuit said not so fast and looked at whether the DOL had the authority to implement the regulation in the first place.

Relying on U.S. Supreme Court precedent, the 10th Circuit pointed out that federal agencies may create rules only to fill “ambiguities” or “gaps” in statutes. In a “friend-of-the-court” brief, the federal government argued that the FLSA is silent on the issue of who “owns” tips when an employer does not take the tip credit, and therefore, the DOL had the authority to create a tip ownership rule to fill in that gap.

Despite the Ninth Circuit’s acceptance of that argument, the 10th Circuit disagreed with it, finding that nothing in the FLSA directs the DOL to regulate the ownership of tips when the employer doesn’t take the tip credit. Because the FLSA limits the tip restrictions to employers who take the tip credit, the DOL lacked the authority to regulate otherwise.

The Court invalidated the DOL’s tip-ownership regulation, finding it was beyond the DOL’s authority, and affirmed the lower court’s judgment in favor of the employer. Marlow v. The New Food Guy, Inc., No. 16-1134 (10th Cir. June 30, 2017). Read more >>

August 31, 2017

Court Invalidates Overtime Rule That Increased Exempt Salary Levels

By Mark Wiletsky 

The Department of Labor (DOL) exceeded its authority when it doubled the minimum salary levels for exempt executive, professional, and administrative employees under the Fair Labor Standards Act (FLSA), ruled federal judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas today. Granting summary judgment in favor of the states and business plaintiffs who challenged the new overtime rule last November, Judge Mazzant determined that the DOL’s new overtime rule “effectively eliminates a consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties.”

Exempt Duties Are Part Of The Analysis

Judge Mazzant wrote that although Congress delegated authority to the DOL to define and delimit the white-collar exemptions, Congress was clear when enacting the FLSA that the exemption determination needs to involve a consideration of an employee’s duties, rather than relying on salary alone. He stated that the Obama-era overtime rule that significantly increased the minimum salary levels would result in entire categories of previously exempt employees who perform “bona fide executive, administrative, or professional capacity” duties being denied exempt status simply because they didn’t meet the salary threshold. Consequently, the elimination of an analysis of duties for those who failed to meet the new high salary level was inconsistent with Congressional intent.

A Minimum Salary Level Still Acceptable

When issuing a preliminary injunction last November, Judge Mazzant’s ruling raised the question as to whether any salary threshold could be used as part of the white-collar exemption tests. In his summary judgment order, Judge Mazzant appears to leave the salary-level part of the test stand, writing “[t]he use of a minimum salary level in this manner is consistent with Congress’s intent because salary serves as a defining characteristic when determining who, in good faith, performs actual executive, administrative, or professional capacity duties.” He notes that even though the plain meaning of Section 213(a)(1) does not provide for a salary requirement, the DOL has used a permissible minimum salary level as a test for identifying categories of employees Congress intended to exempt. Citing to a report on the proposed regulations, Judge Mazzant seems to approve of setting that salary level at “somewhere near the lower end of the range of prevailing salaries for these employees.”

No Automatic Increase Mechanism

The ruling also strikes down the mechanism in the DOL’s overtime rule that provided for automatic updates to the exemption’s salary levels every three years. In a cursory paragraph, Judge Mazzant wrote that having found the rule unlawful, the automatic updating mechanism was similarly unlawful.

Back To Square One

Now that the existing, never-implemented rule has been invalidated, the DOL is starting over with revising and updating the overtime exemption rule. The DOL recently published a request for information seeking public input on what the new salary levels should be, how updates should be made, whether duties tests should be changed, and other issues affecting the white-collar exemptions. We will have to see what new proposals the DOL puts out in the months to come. But in the meantime, employers can abandon plans to address the doubled salary thresholds under the Final Rule.

On Another Note, No Pay Data To Be Collected With EEO-1 Reports

In another development, on August 29, 2017, the Office of Management and Budget (OMB) directed the Equal Employment Opportunity Commission (EEOC) to immediately stay the requirement that certain employers provide pay data as part of a new EEO-1 report. The controversial pay-data rule would have required companies with 100 or more employees (and federal contractors with 50 or more employees), to submit the wage and hour information for employees according to race, gender, and ethnicity, with the information being used by the EEOC to analyze pay discrepancies and identify possible Equal Pay Act violations. Because of the stay, covered employers should use the previous EEO-1 form, which still collects data on employee race, ethnicity, and gender by occupational categories. Despite the reprieve for employers on the pay-data rule, EEOC Acting Chair Victoria Lipnic states that her agency remains committed to strongly enforcing federal equal pay laws.

If you have any questions about these new developments, be sure to reach out to the employment counsel with whom you typically work.

August 14, 2017

Only Certain Types of Speech Are Protected In The Workplace

By Steve Gutierrez

This past week, talk abounds over Google’s firing of a software engineer after he posted a lengthy memo criticizing the company’s diversity policy and culture on the company’s internal website. Google says he crossed a line and violated its Code of Conduct. The engineer says he engaged in protected speech and filed an unfair labor practice charge against Google with the National Labor Relations Board (NLRB). The case will be interesting to follow, especially to the extent that it resolves the dispute between Google’s conduct policy and this employee’s criticisms of his former employer.

No Free Speech Guarantee

Some discussions about the Google memo have centered around the belief that employees should have free speech protections to say whatever they like, even about their employer. U.S. workers employed by private entities, however, do not have so-called free speech rights. The First Amendment to the U.S. Constitution prohibits Congress from making any laws that abridge the freedom of speech. But it applies only to government actions and does not prohibit private employers from limiting or taking employment actions based on what an employee says or does.

NLRA Concerted Activities Are Protected

The National Labor Relations Act (NLRA) guarantees employees the right to form and join unions. But it also gives employees the right to engage in other “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” These rights under Section 7 of the NLRA extend to protecting non-union employees who discuss and/or act together to try to improve the terms and conditions of their employment, such as their pay, benefits, policies, and workplace safety issues. Employers may not threaten, discipline, or fire employees who engage in such protected activities.

When it comes to employee memos and social media posts, content generally will be protected if it relates to or grows out of group action, such as when an individual employee solicits other employees to take action to fix work-related problems or seek improvements in the workplace. But mere griping by an individual employee will not be protected as a protected concerted activity. Additionally, even communications that would be deemed concerted activities can lose NLRA protection if they express egregiously offensive, abusive, or knowingly and malicious false statements.

When Company Policies Clash With Concerted Activities

When a company policy prohibits employees from engaging in certain conduct, such as prohibiting disparagement of the company or its managers, or restricting discussion among co-workers of confidential information, the NLRB may consider whether it restricts or “chills” employees’ Section 7 rights to engage in protected concerted activities. If the NLRB finds that a policy is overly broad and potentially restricts concerted activities, the company can be found to have violated the NLRA.

Before Discipline and Discharge

Anytime your organization seeks to discipline or terminate an employee for writing emails, posting on social media, or otherwise communicating about the company, consider the following:

  • Does the communication discuss with or seek to engage co-workers in relation to the terms and conditions of their employment?
  • Could the communication be seen as an effort to form a union or another form of group action related to the workplace?
  • Is the employee reaching out to a third party, such as the media or union organizers, on behalf of multiple employees?
  • If the basis for the discipline or discharge is a company policy, is the policy narrowly defined or is it too broad so that it interferes with employees’ Section 7 rights?

Employers have a great deal of authority to discipline or get rid of at-will employees based on inappropriate or undesired communications or actions. Just make sure to evaluate whether employees are engaging in protected concerted activities prior to imposing a detrimental employment decision so as not to violate the NLRA.

August 10, 2017

New Nevada Employment Laws – Part 2: Non-competes and Domestic Violence Leave

by Dora Lane

In addition to the pregnancy accommodation law and nursing mothers law we reported on here, the Nevada legislature recently enacted changes to Nevada’s non-compete law and created a new obligation for employers to provide domestic violence leave. Here are the specifics of these new laws that Nevada employers need to know.

Non-Compete Agreements – Changes To Enforceability (AB 276) – effective June 3, 2017

Governor Sandoval recently signed into law AB 276 which enacts some important changes to existing Nevada non-compete law, requiring careful review.

To begin, AB 276 amends NRS Chapter 613 to require that a non-compete covenant: (a) be supported by valuable consideration; (b) not impose any restraint that is greater than necessary for the protection of the employer for whose benefit the restraint is imposed; (c) not impose any undue hardship on the employee; and (d) impose restrictions that are appropriate in relation to the valuable consideration supporting the non-compete covenant.

Many questions are raised by the new requirement that the restrictions be in relation to the consideration offered to the employee to support the non-compete agreement. One key question is whether continued employment of an at-will employee will be sufficient consideration to support a non-compete. We will have to see how that language plays out in future enforcement actions.

Restructuring or Reductions In Force. The new amendments state that, if an employee’s termination is the result of a reduction in force, reorganization, or “similar restructuring,” a non-compete covenant is only enforceable during the period in which the employer is paying the employee’s “salary, benefits or equivalent compensation,” such as severance pay. This restriction may vastly reduce the ability of Nevada employers to use non-compete agreements when executives, managers, or other employees are let go due to downsizing or other restructuring.

Restrictions Related to Customers. These new amendments further provide that a non-compete covenant may not restrict a former employee from providing service to a former client or customer of the employer if: (a) the former employee did not solicit the former client or customer; (b) the client or customer voluntarily chose to leave and seek services from the former employee; and (c) the former employee is otherwise complying with the limitations in the covenant as to time, geographical area, and scope of activity to be restricted, other than any limitation on providing services to a former customer or client who seeks the services of the former employee without any contact instigated by the former employee.

Confidentiality and Non-Disclosure Agreements. AB 276 additionally states that it does not prohibit agreements to protect an employer’s confidential and trade secret information if the agreement is supported by valuable consideration and is otherwise reasonable in scope and duration.

Judicial Revision Required. Notably, the new provisions state that if, during a non-compete enforcement action, a court determines that the non-compete covenant is supported by valuable consideration, but otherwise contains limitations that are unreasonable, or impose greater restraint than necessary and create undue hardship on the employee, the court “shall revise the covenant to the extent necessary and enforce the covenant as revised.” Any judicial revisions must be made to cause the limitations contained in the non-compete agreement as to time, geographical area and scope of activity to be restrained to be reasonable and to impose a restraint that is not greater than is necessary for the protection of the employer for whose benefit the restraint is imposed.

Domestic Violence Leave (SB 361) – effective January 1, 2018

Beginning in 2018, Nevada employers must provide an employee who has been employed for least 90 days and who is a victim of domestic violence, or whose family or household member is a victim of domestic violence, up to 160 hours of leave in one 12-month period, assuming the employee is not the alleged perpetrator. A “family or household member” means a spouse, domestic partner, minor child, or parent or another adult who is related within the first degree of consanguinity or affinity to the employee, or other adult person who is or was actually residing with the employee at the time the act of domestic violence was committed.

The leave allowed under this new law may be paid or unpaid, and may be used intermittently or in a single block of time. The leave must be used within 12 months after the date when the act of domestic violence occurred. If used for FMLA-qualifying purposes, the domestic violence leave will run concurrently with FMLA leave and both leave balances will be reduced accordingly.

Reasons For Leave. Eligible employees may take domestic violence leave for the following reasons:

  1. For the diagnosis, care, or treatment of a health condition related to an act of domestic violence committed against the employee or the employee’s family or household member;
  2. To obtain counseling or assistance related to an act of domestic violence committed against the employee or the employee’s family or household member;
  3. To participate in court proceedings related to an act of domestic violence committed against the employee or the employee’s family or household member; or
  4. To establish a safety plan, including any action to increase the safety of the employee or the employee’s family or household member from a future act of domestic violence.

Notice Requirements. This new leave law requires an employee who has used any leave allowed under the bill to give his or her employer at least 48 hours notice if the employee needs to use additional leave for any of the purposes outlined above.

Reasonable Accommodations. Employers are obligated to make reasonable accommodations that will not create undue hardship for an employee who is a victim of domestic violence (or whose family or household member is such a victim). These accommodations may include: (a) a transfer or reassignment; (b) a modified schedule; (c) a new telephone number for work; or (d) any other reasonable accommodation which will not create an undue hardship deemed necessary to ensure the safety of the employee, the workplace, the employer, and other employees.

Documentation. Employers may require employees to present documentation substantiating the need for leave, such as a police report, a copy of an application for a protective order, an affidavit from an organization that provides assistance to victims of domestic violence, or documentation from a physician. Any substantiating documentation provided to the employer must be treated confidentially and must be retained in a manner consistent with the FMLA requirements. In addition, employers may require an employee to provide documentation that confirms or supports the need for a reasonable accommodation under this new law.

Recordkeeping. Employers are required to keep a record of the hours taken for domestic violence leave for a 2-year period following the entry of the information in the record and make these records available to inspection by the Nevada Labor Commissioner upon request. When producing records pursuant to an inspection request, employee names must be redacted, unless a request for a record is made for investigation purposes.

Notice. Pursuant to SB 361, the Nevada Labor Commissioner has provided a bulletin setting forth the rights conferred to employees under the domestic violence leave law, available on its website. Employers must post the bulletin in a conspicuous location in the employer’s workplace. The bulletin may be included in the posting already required by NRS 608.013.

Additional Protections. The domestic violence leave law states that an otherwise eligible employee may not be denied unemployment benefits if the employee left employment to protect himself or herself (or a family or household member) from an act of domestic violence, and the person actively engaged in an effort to preserve employment.

The new law also prohibits employers from denying an employee’s right to use domestic violence leave, requiring an employee to find a replacement as a condition to using this leave, or retaliating against an employee for using such leave. It is also unlawful for employers to discharge, discipline, discriminate in any manner or deny employment or promotion to, or threaten to take any such action against an employee because:

  1. The employee sought leave under SB 361;
  2. The employee participated as a witness or interested party in court proceedings related to domestic violence, which triggered the use of leave under SB 361;
  3. The employee requested an accommodation pursuant to SB 361; or
  4. The employee was subjected to an act of domestic violence at the workplace.

Update Your Policies and Practices

Take time now to review and update your employee handbook, supervisor manuals, and other personnel policies to reflect these new Nevada laws. If you use non-compete agreements, be sure to review future agreements for compliance with the amended statute. Also, be sure to train your managers, supervisors, team leads, and human resources personnel on the requirements and restrictions imposed on employers by these laws. As always, if you have questions or need assistance, contact your Nevada employment attorney.

July 25, 2017

DOL Signals A “Do Over” For Overtime Rule

By Mark Wiletsky

The U.S. Department of Labor (DOL) announced today that it was publishing a Request for Information (RFI) asking employers and other interested parties to provide information and ideas about the overtime exemptions. The DOL’s RFI signals an interesting development in the saga of revising the overtime rule. In short, revisions to the overtime rule are not dead, but we may be back at square one.

As you likely know, the new overtime rule that was set to take effect on December 1, 2016, would have raised the minimum salary level for the executive, administrative, and professional exemptions from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). Before the rule could go into effect, however, a federal district judge in Texas issued an order stopping implementation of the rule nationwide. The judge’s order suggested that the DOL lacks the authority to set any minimum salary level for the so-called white-collar exemptions under the Fair Labor Standards Act (FLSA). Last December, the DOL under the Obama Administration appealed that order to the Fifth Circuit Court of Appeals, seeking to overturn the injunction.

After the Trump Administration took over in January, it became unclear whether the DOL would continue with its appeal of the nationwide injunction on the overtime rule before the Fifth Circuit, or if it would instead withdraw the appeal, essentially allowing the injunction to stand. However, on June 30, 2017, the DOL, under new Secretary of Labor Alexander Acosta, filed a reply brief in support of the appeal.

As explained in its June 30th reply brief, the DOL argued that it has the authority to set a minimum salary threshold for the exemptions, an issue that the federal district judge questioned in his November 22, 2016 injunction order. The DOL, however, wrote that it has “decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.”

By publishing the RFI, the DOL again seeks public comment to essentially begin anew the whole process of revising the overtime rule. Secretary Acosta has indicated in other forums that the DOL was not opposed to raising the minimum salary levels for the white-collar exemptions, just not to the high level set in the 2016 rule. With the publication of the RFI, it is clear that the DOL wants to rework the exemption tests and seeks input from businesses, employees, and interested associations and groups on what those tests should be.

This is an excellent chance for employers to be heard. This DOL will likely be more receptive to resolving the burdens and hardships expressed by businesses in implementing changes to the overtime exemptions so I would expect that the agency will seek to simplify the exemption tests and offer sufficient time for employers to implement them. That said, the DOL may need to fast track the new rulemaking process so that it is ready to implement a replacement rule when litigation over the existing rule is resolved.