Tag Archives: Jude Biggs

June 15, 2016

OFCCP’s New Sex Discrimination Rule Expands Employee Protections Based on Pregnancy, Caregiver Status, and Gender Identity

This week, the OFCCP updated its sex discrimination guidelines on topics such as accommodations for pregnant workers, gender identity bias, pay discrimination, and family caregiving discrimination. Intended to align the OFCCP’s regulations with the current interpretation of Title VII’s prohibitions against sex discrimination, the new rule will require federal contractors to examine their employment practices, even those that are facially neutral, to make sure that they do not negatively affect their employees. The new rule takes effect on August 15, 2016.

Overview of New Sex Discrimination Rule

The existing OFCCP sex discrimination guidelines date back to the 1970s. The new rule is designed to meet the realities of today’s workplaces and workforces. Today, many more women work outside the home, and many have the financial responsibility for themselves and their families. Many women have children while employed and plan to continue work after giving birth to their children. Women sometimes are also the chief caregivers in their families. The updated regulations are meant to offer women and men fair access to jobs and fair treatment while employed.

The new rule defines sex discrimination to include discrimination on the basis of sex, pregnancy (which includes childbirth or related medical conditions), gender identity, transgender status and sex stereotyping. The rule specifies that contractors must provide accommodations for pregnancy and related conditions on the same terms as are provided to other employees who are similarly able or unable to perform their job duties. For example, contractors must provide extra bathroom breaks and light-duty assignments to an employee who needs such an accommodation due to pregnancy where the contractor provides similar accommodations to other workers with disabilities or occupational injuries.

The new rule also incorporates President Obama’s July 2014 Executive Order that prohibits federal contractors from discriminating on the basis of sexual orientation and gender identity. In addition, contractors that provide health care benefits must make that coverage available for transition-related services and must not otherwise discriminate in health benefits on the basis of gender identity or transgender status.

The rule prohibits pay discrimination based on sex. It recognizes the determination of “similarly situated” employees is case-specific and depends on a number of factors, such as tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors. Notably, the OFCCP rule says that employees can be “similarly situated” where they are comparable on some of the factors, but not all of them.

Unlawful compensation discrimination can result not only from unequal pay for equal work, but also from other employer decisions. Contractors may not grant or deny opportunities for overtime work, training, apprenticeships, better pay, or higher-paying positions or opportunities that may lead to higher-paying positions because of a worker’s sex. Employees may recover lost wages for discriminatory pay any time a contractor pays compensation that violates the rule, even if the decision to discriminate was made long before that payment. Read more >>

May 18, 2016

New Overtime Rule: $47,476 Annual Salary Required For White Collar Exemptions

By Jude Biggs

Exempt white collar workers must be paid an annual salary of at least $47,476 under the Department of Labor’s (DOL’s) just-released final overtime rule. That salary threshold is more than twice the current salary requirement for the white collar exemptions under the Fair Labor Standards Act (FLSA). Highly compensated employees must be paid at least $134,004 per year (increased from $100,000) to meet that exemption. The new rule is effective December 1, 2016, so employers have about six months to decide what to do with current exempt white collar workers who do not meet the new thresholds.

Salary Level Will Automatically Adjust Every Three Years

In a change from its proposed rule, the DOL will now automatically update the salary levels once every three years. Originally proposed as an annual update, the final rule will raise the standard threshold to the 40th percentile of full-time salaried workers in the lowest-wage Census region. The first adjustment will be posted August 1, 2019, 150 days in advance of its effective date on January 1, 2020.

Duties Tests Are Unchanged

Since 2004, the duties tests for the white collar exemptions have not included a limit on the amount of time that an employee can spend on nonexempt duties before the exemption is lost. Believing that a rise in the salary level will provide an initial bright-line test for the exemptions, the DOL refrained from changing the duties tests.

Nondiscretionary Bonuses, Incentive Payments, and Commissions

In the past, the DOL has not included nondiscretionary bonuses, incentive pay, or commissions when determining whether an employee’s salary meets the white collar exemption threshold; it looked only at actual salary or fee payments made to employees. In its final rule, the DOL will allow up to 10 percent of the salary threshold for non-highly compensated employees to be met by non-discretionary bonuses, incentive pay, or commissions. Note that these types of payments must be made on at least a quarterly basis to be included as “salary.” The DOL stated that this new policy was included in response to “robust comments” received from the business community which use these forms of pay as part of overall compensation packages for managerial and other exempt employees.

Next Steps

Over the next six months, you need to decide how to address previously exempt employees who no longer meet the salary thresholds. In order to meet the December 1 effective date, use the following checklist of steps to keep your pay practices compliant.

Examine your payroll records to determine which employees are potentially affected by the changes in the white collar exemptions.
Review the tasks performed by each white collar exempt employee to determine whether each meets the duties test under an applicable exemption.
If an employee does not meet the duties tests, you must treat them as non-exempt, regardless of salary.
Review if you are paying exempt employees on a salary basis, meaning they get paid their salary without reduction due to variations in the quantity or quality of work.
If an employee otherwise meets an exemption but is not currently paid at or above the new salary levels, decide whether to raise their salary to meet the new threshold or convert them to non-exempt and pay them time and one-half for all hours worked over 40 per week.
For any employees no longer treated as exempt, inform and train the employee, supervisors, and payroll administrators on proper timekeeping and overtime obligations. If appropriate, make sure such employees work as little overtime as possible, to hold down costs.
Consider whether the base rate of pay for such employees can be adjusted, so that with overtime pay, the employees earn about the same as before.
For employees who meet the exemption, implement procedures to update salary levels every three years to keep up with the DOL’s automatic adjustments.

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March 17, 2016

New Overtime Regulations May Be Finalized Sooner Than Expected

By Jude Biggs

The U.S. Department of Labor’s (DOL’s) agenda specifies that its final overtime regulations are due to be published in July, but recent developments suggest they may be released a few months earlier. With the salary threshold for the white collar exemptions going up from the current $23,660 to over $50,000 per year, employers need to prepare now for the changes.

DOL’s Overtime Rule Sent To OMB

On March 15, 2016, the DOL sent its proposed final overtime regulations to the Office of Management and Budget (OMB) which is the final step before the rule can be published. The OMB review process typically takes one to two months, but speculation suggests that the review of this rule may be sped up to allow for publication as early as April or May.

The political environment in Washington, D.C. and fact that this is an election year may be to blame for the expedited process. The Congressional Review Act (Act) provides Congress with 60 legislative days to review any final rule issued by a federal agency. If Congress disapproves of the regulation, which current Republicans in Congress are sure to do with the overtime rule, it may pass a resolution to nullify the rule. The President can veto that resolution, but then Congress has the opportunity to override the veto by a two-thirds vote.

Because of an unusual provision in the Act, any new rule that is not submitted to Congress within 60 session days of the adjournment of the Senate or House, may be subject to a renewed review by the new Congress in the next Congressional session (with potential veto by a newly elected President). Or, if Congress’s 60-day-review period extends after the presidential inauguration, the new President may let a resolution of disapproval stand, killing the rule. The Obama Administration will not want to take the chance that a new Congress and/or President gets to review the overtime rule in 2017 so it is expected that the White House will do everything possible to get the new overtime rule to Congress prior to the cutoff date.

Salary Threshold For Exemptions Will More Than Double

The DOL’s proposed rule raises the salary threshold for the white collar exemptions from the current $455 to an expected $970 per week, more than doubling the annual salary level to more than $50,000. The salary threshold for the highly compensated employee exemption will increase from the current $100,000 to more than $122,000 per year. The DOL estimates that almost five million U.S. workers who are currently exempt will be entitled to minimum wage and overtime compensation under the new salary level requirements. In addition, the final rule will include an automatic annual adjustment provision that will require that the salary thresholds be adjusted each year to keep up with inflation.

Next Steps

With a compressed timeline for the new rule to become effective, employers need to take steps now to decide how to handle employees who no longer qualify as exempt under the new rules. Some companies may choose to increase exempt employee salaries to meet the new threshold in order to retain the exemption. Others may choose instead to change the status of some workers’ status to non-exempt and pay them overtime. Either way, employers need to get a plan in place to prevent headaches and potential wage claims when the final rule goes into effect.

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June 2, 2014

Disabled Employee Not Entitled to Additional Leave as Reasonable Accommodation

By Jude Biggs

After Kansas State University denied her request to extend a leave of absence for longer than six months, assistant professor Grace Hwang, who suffers from cancer, filed suit against the University alleging disability discrimination and retaliation under the Rehabilitation Act. The Tenth Circuit Court of Appeals ruled that the University had not violated the Rehabilitation Act because Ms. Hwang could not show that she was able to perform the essential functions of her job. In addition, the Tenth Circuit held that requiring the University to extend the six-month’s leave was not a reasonable accommodation. Hwang v. Kansas State Univ., No. 13-2070 (10th Cir. May 29, 2014).

Policy Provided Six-Month’s Paid Leave of Absence

Ms. Hwang was set to teach classes at Kansas State University under a one-year contract that covered all three academic terms — fall, spring and summer. Before the fall term, Ms. Hwang was diagnosed with cancer. She asked for a leave of absence to seek medical treatment. The University granted her a paid six-month leave under its regular policy which capped the length of a leave at six months.

As the six-month leave was coming to an end, Ms. Hwang’s doctor advised her to seek more time off of work. She asked the University to extend her leave through the end of the spring semester, intending to return before the summer term. The University refused to extend her leave but instead arranged for Ms. Hwang to receive long-term disability benefits, effectively ending her employment with the University.

Ms. Hwang sued the University in federal court alleging that the University’s denial of her request for extended leave constituted disability discrimination under the Rehabilitation Act. The Rehabilitation Act prohibits disability discrimination by entities that receive federal funds, such as Kansas State. 29 U.S.C. § 794(a). The federal district court dismissed her lawsuit on a motion to dismiss (before any discovery was done), and Ms. Hwang appealed to the Tenth Circuit Court of Appeals, which covers the states of Colorado, Utah, Wyoming, Kansas, Oklahoma and New Mexico.

Extended Leave Not A Reasonable Accommodation Under Rehabilitation Act

The University did not dispute that Ms. Hwang was a capable teacher and that her cancer rendered her disabled as defined by the Rehabilitation Act. The central issue in the appeal was whether the University was required to ignore the six-month time limit in its leave policy to extend Ms. Hwang’s leave of absence beyond six months. The Court said no. Because Ms. Hwang wasn’t able to work for an extended period of time, she was not capable of performing the essential functions of her job. In addition, requiring the University to keep her job open for that extended period of time did not qualify as a reasonable accommodation. The Court wrote: “[a]fter all, reasonable accommodations – typically things like adding ramps or allowing more flexible working hours – are all about enabling employees to work, not to not work.”

The Court noted that a “brief absence from work” for medical care may be required as a reasonable accommodation, as it likely allows the employee to continue to perform the essential functions of the job. Determining how long employers must provide for leave as a reasonable accommodation depends on factors such as the duties essential to the job in question, the nature and length of the leave sought and the impact of the leave on co-workers. That said, the Court stated that it would be difficult to find a six-month leave of absence in which the employee performs no work (e.g., no part-time hours or work from home) reasonable in any job in the national economy today. Ms. Hwang’s terrible problem, in the Court’s view, was one other forms of social security aim to address. In addition, the Court noted that the aim of the Rehabilitation Act is to prevent employers from denying reasonable accommodations that would allow disabled employees to work, not to turn employers into a “safety net” for those who cannot work.

“Inflexible” Six-Month Leave Policy Not Inherently Discriminatory

Ms. Hwang asserted that the University’s “inflexible” sick leave policy that capped the maximum length of sick leave at six months violated the Act. She cited the EEOC’s guidance manual which states that if a disabled employee needs additional unpaid leave as a reasonable accommodation, the employer must modify its “no-fault” leave policy to provide the additional leave, unless the employer can show that there is another effective accommodation that would allow the individual to perform the essential functions of her job, or that granting additional leave would cause the employer an undue hardship. The Court, however, pointed to another section of the EEOC’s guidance manual to counter Ms. Hwang’s argument, as the EEOC manual states “ . . . six months is beyond a reasonable amount of time.” In fact, the Court stated that an “inflexible” leave policy can actually help protect the rights of disabled employees rather than discriminate against them because such a policy does not permit individual requests for leave to be singled out for discriminatory treatment.

Not all leave policies will past muster, however. The Court stated that policies that provide an unreasonably short sick leave period may not provide enough accommodation for a disabled employee who would be capable of performing his or her job with just a bit more time off. Alternatively, policies that are applied inconsistently, such as where some employees are allowed more time off and others are held to a strict time limit, could be discriminatory. In this case, however, the Court found that Ms. Hwang did not allege any facts to support a claim that she was treated differently than other similarly situated employees.

Retaliation Claim Fails As Well

Ms. Hwang also asserted that she was unlawfully retaliated against for reporting disability discrimination. In particular, she based her claims on two theories : (1) the University failed to explain her COBRA health benefits before or immediately after her termination; and (2) she wasn’t hired for two other positions at the University that she applied for after losing her teaching job. The Court easily dispensed with both theories.

First, COBRA allows thirty days for an employer to provide separating employees with a COBRA notice. Consequently, the University was not required to provide Ms. Hwang with notice of her COBRA benefits before or immediately after her termination of employment. Second, although Ms. Hwang alleged that she was not hired for two other University positions for which she applied, she failed to allege any facts suggesting that the University’s decision not to hire her was because she had engaged in legally protected opposition to discrimination. She not only failed to provide facts showing that she was qualified for the two jobs, but she also failed to offer facts suggesting that the University officials who decided not to hire her knew about her disability and her complaint about disability discrimination. Without such allegations, the Court ruled that Ms. Hwang’s retaliation claim failed.

ADA Application

Although this case alleged a violation of the Rehabilitation Act, courts typically analyze such claims similarly to those alleging a violation of the Americans With Disabilities Act (ADA). Consequently, this case may prove helpful to employers defending ADA claims where the employer denies an employee’s request for an extended leave of absence. Employers should heed the Court’s warning about leave policies that may be discriminatory if they provide an unreasonably short leave or are inconsistently applied. However, lengthy leaves of six months or more, or leaves of an unlimited duration in which the disabled employee provides no work, will likely not be considered a reasonable accommodation.

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