November 4, 2015

2016 Colorado Minimum Wage Going Up To $8.31 Per Hour

Minimum wage workers in Colorado will see a one percent increase in their hourly wage in 2016. The Colorado Division of Labor has proposed to increase the minimum wage from the current $8.23 per hour to $8.31 per hour beginning January 1, 2016. The minimum wage for tipped employees will increase from $5.21 to $5.29 per hour.

The Colorado Constitution mandates that the state minimum wage rates be automatically adjusted for inflation each year. The new wage rates for 2016 reflect that the consumer price index (CPI) for the Denver-Boulder-Greeley urban area for the first half of 2015 went up overall by one percent from the first half of 2014. The Bureau of Labor Statistics noted that higher costs for housing, up 5.5%, were largely responsible for the overall increase. Food prices rose 1.5 percent and other items were up 3.2%. Despite a 21.7% decrease in energy costs, the overall CPI for urban consumers was up one percent.

Proposed Minimum Wage Order Number 32 will be up for comment at a public hearing on November 9, 2015, after which the Division of Labor will issue its final rule. Information about the hearing and submitting written comments is available on the Division’s website.

As a reminder, Colorado’s state minimum wage rates apply if either of the following two situations applies to an employee:

1. The employee is covered by the minimum wage provisions of Colorado Minimum Wage Order Number 32; or

2. The employee is covered by the minimum wage provisions of the Fair Labor Standards Act.

If in doubt about the application of Colorado’s wage laws, be sure to consult with your employment counsel.

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October 29, 2015

NLRB To Revisit Whether Graduate Teaching Assistants May Collectively Bargain

By Steve Gutierrez

Seeking to overturn long-standing precedent, the National Labor Relations Board (NLRB or Board) recently agreed to review whether graduate students who work as teaching or research assistants at universities are “employees” for purposes of voting for a union. The United Auto Workers (UAW) is seeking to represent student employees at The New School, a not-for-profit operator of higher education institutions in New York. Like a dog with a bone, the current NLRB is unwilling to give up on finding coverage for grad student assistants, despite two rejections of the representation petition by the Regional Director.

Is It Work or Educational?

The UAW petitioned to represent all student employees who provide teaching or research services at The New School. The proposed bargaining unit includes teaching assistants, fellows and tutors, as well as research assistants and associates.

The facts related to these positions are as follows:

About 350 individuals work in the proposed bargaining unit
The positions typically require between 10 and 20 hours of work per week
Each graduate assistant position typically lasts for one 15-week semester, but many graduate assistants are renewed for multiple semesters
The New School provides approximately $5 million annually to grad students in these positions
Each faculty member is allotted up to $5,100 per year to be used for student assistants
Teaching assistants are paid $4,500 per semester; teaching fellows receive $5,500 per semester, and tutors are paid an hourly rate, typically $17.00 per hour
Research associates can receive stipends of up to $40,000 per year due to grants from the federal government
Graduate assistants must provide I-9 forms to be eligible for the positions
Payments to the graduate assistants are made through a payroll account and taxes are withheld
Payments are disbursed biweekly but do not vary based on the number of hours worked (except for tutors)
Graduate assistants are not required to track, and the university does not monitor the amount of time spent on their duties
Applicants for these positions must maintain a minimum GPA
Some are selected using a formal process of interviews and appointment letters from the Human Resources department while others are offered positions more informally directly from a professor
Selection for the position is not dependent on financial need

When the UAW first petitioned to represent this group of student employees in December 2014, the Regional Director for the New York region dismissed the petition based on the NLRB’s 2004 decision in Brown University, which held that graduate student assistants were not “employees” under the National Labor Relations Act, and therefore, could not be unionized. The 2004 Board had decided that the graduate assistants had a primarily academic relationship with their school, not an economic, work-related one. Case closed, right? Wrong.

Will Graduate Assistant Precedent Be Overturned?

In March 2015, the Board reviewed the initial dismissal of the petition and sent it back to the region for a hearing. The Hearing Officer heard testimony and received evidence during a seven-day hearing, but in late July, the Regional Director found that Brown University still controlled, and dismissed the petition again.

The UAW requested (again) that the Board review the dismissal of its representation petition. On October 21, 2015, on a 3-1 vote, the Board granted the request for review, finding that it “raises substantial issues warranting review.”

The vote goes along political lines, with the three democratic members voting to review the graduate assistant issue and the sole republican member dissenting. (Note: the Board is currently short one member.) In his dissent, member Philip Miscimarra wrote that the sole basis for the UAW to seek review is its desire to have the Board overrule Brown University. Miscimarra believes there is no reason to overturn Brown University, pointing, in part, to the prevailing view for more than 40 years that graduate student assistants are not statutory employees, except for a four-year period from 2000-2004 when the ruling flip-flopped in favor of finding they were employees.

Is another flip-flop likely? It very well could be, given that the current majority of the Board continues to look to expand the reach of the NLRA. But even if the Board should find that graduate student assistants are statutory employees, it will need to address an argument by The New School that they are “casual” or “temporary” employees which would still deny them union representation.

We will continue to follow this case and pass along any developments as they occur.

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October 20, 2015

Colorado Vacation Policies: Use-It-Or-Lose-It Policy Hinges On When Vacation Is “Earned”

In recent weeks, the Colorado Division of Labor indicated that it was taking a new position when enforcing wage claims based on an employer’s vacation policy. The specific issue has revolved around whether a use-it-or-lose-it vacation policy—i.e., a policy where an employee cannot roll-over some or all earned vacation from year to year—is lawful in Colorado.

In response to inquiries about its position on such policies, the Division recently posted FAQs on its website stating that a use-it-or-lose-it vacation policy does not necessarily run afoul of the Colorado Wage Protection Act. But if an employee challenges the validity of the policy, the determining factor will focus on when the vacation pay is earned.

Division of Labor Leaves Many Questions Unanswered

According to Colorado’s Wage Protection Act, vacation pay “earned in accordance with the terms of any agreement” are “wages.” As a result, many Colorado employers have in place use-it-or-lose-it vacation policies, in which an employee may accrue a certain amount of vacation or paid time off (PTO) each year, but some or all of that vacation time will not roll-over into the following calendar year. The reason for such policies is simple: it avoids employees banking large sums of vacation or PTO, which is typically paid out upon separation from employment. Until recently, the Division had not taken a formal position on such policies.

However, given the recent changes to the Wage Protection Act, the Division is responsible for adjudicating wage claims, albeit the jurisdiction is limited to claims for $7,500 or less. In light of that change, and as many people likely saw, the Division issued guidance informally in recent weeks concerning use-it-or-lose-it vacation policies. After numerous legal alerts were sent out, the Division took a step back, as reflected in a Denver Post article.

Earlier this week, in an effort to clear up the confusion, the Division issued two FAQ’s, as noted above. Those FAQs specifically address whether Colorado employers may have use-it-or-lose-it provisions in their vacation policies. The Division answered that question yes, as long as any such policy is included in the terms of an agreement between the employer and employee. That clarification seems helpful, as it states that use-it-or-lose-it vacation policies are permissible under the Wage Protection Act.

The first FAQ, however, goes on to state that a use-it-or-lose-it policy may not deprive an employee of earned vacation time and/or the wages associated with that time. It also states that any vacation pay that is “earned and determinable” must be paid upon separation of employment. The terms of an agreement between the employer and employee will determine when vacation pay is earned.

This part of the FAQ is less helpful. It raises many questions about how an employer may structure a use-it-or-lose-it vacation policy in a way that will not deprive employees of any earned vacation. The Division’s position appears to be that once vacation is “earned,” it cannot be lost.

The second FAQ addresses what factors the Division will use to determine whether a specific use-it-or-lose-it policy is permissible. The Division first will look to whether the policy states when vacation pay is earned. If the policy does not state or is ambiguous as to when vacation pay is earned, the Division will consider the following factors in determining whether the use-it-or-lose-it policy is permissible:

The employer’s historical practices
Industry norms and standards
The subjective understandings of the employer and employee
Any other factual considerations which may shed light on when vacation time becomes “earned” under the agreement in question.

Take Aways For Use-It-Or-Lose-It Vacation Policies

Because of the many unanswered questions related to the validity of use-it-or-lose-it vacation policies, Colorado employers should exercise caution. Points to consider include:

The Division’s jurisdiction is limited to claims of $7,500 or less
The Division’s interpretation of the Wage Protection Act and vacation policies may or may not be accepted by courts, and
To avoid any potential challenge, consider a maximum accrual policy instead of a use-it-or-lose-it policy (e.g., once an employee hits a certain accrual, the employee will not earn more vacation or PTO until the employee falls below the maximum)

The best practice if you want to maintain a use-it-or-lose-it vacation or PTO policy is to review your policy with experienced employment counsel to determine if/how to revise your policies in light of the new guidance from the Division.

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September 23, 2015

HHS Proposes To Ban Discrimination in Health Programs

By Patricia Dean

Under a newly proposed rule from the Department of Health and Human Services (HHS), consumers cannot be discriminated against or denied health services or health coverage because of their race, color, national origin, sex, age, or disability. The proposed rule is called Nondiscrimination in Health Programs and Activities and is intended to provide equal access to health care services to individuals who historically have been vulnerable to discrimination, including discrimination based on gender identity. The new rule would also require language assistance for people with limited proficiency in the English language.

The proposed rule applies to any health program administered by HHS, that receives funding in any part from HHS, such as providers who treat Medicare patients, and to all plans offered through the Marketplaces. Read our full alert about this proposed rule here.

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September 15, 2015

Wyoming Discrimination Charges: A Look at the Numbers

By Brad Cave

Mark Twain is credited with saying that “facts are stubborn things, but statistics are more pliable.” The Wyoming Labor Standards Division and the EEOC both keep statistics of the types of discrimination charges the agencies receive from Wyoming employees. When it comes to discrimination charges, the allegations are almost always pliable, but the statistics show us some interesting things for employers to ponder.

Wyoming Labor Standards Charges

The Wyoming Fair Employment Practices Act makes it unlawful for employers to discriminate on the basis of age, sex, race, creed, color, national origin, ancestry, pregnancy or disability. The Wyoming Department of Workforce Services’ Labor Standards Division is the state agency that processes and investigates most complaints of employment discrimination filed by Wyoming workers.

In 2014, the Wyoming Labor Standards Division received a total of 203 discrimination charges. It processed 182 of those charges and deferred the remaining 21 charges to the federal Equal Employment Opportunity Commission (EEOC) because they were either untimely under state law or contained allegations of Equal Pay Act violations. The Division reports the breakdown of 2014 charges by allegation as follows:

Type	No. of Charges	Percentage of Total Charges
Retaliation	76	41.8%
Sex	55	31.2%
Disability	46	25.3%
Age	33	18.1%
National Origin	27	14.8%
Race	21	11.5%
Religion	7	3.8%

You math wizzes in the audience have already exclaimed that the percentages exceed 100%, and the author must be numerically challenged. But, many charges include allegations of multiple types of discrimination. Indeed, charges often include an allegation of discrimination on the basis of protected class, and an allegation of retaliation in response to complaints about the discrimination. As you can see, Wyoming had more retaliation charges than any other type of charge. That mirrors the nationwide statistics where retaliation charges lead the list of most-filed charges. Not far behind are sex discrimination charges, with disability charges as the third most-frequently filed.

EEOC Charge Statistics for Wyoming Charges

The EEOC also maintains charge statistics for each type of discrimination that is alleged under the federal discrimination laws that it enforces, and annually publishes those statistics on a state-by-state basis.The EEOC count includes charges under Title VII, which prohibits discrimination on the basis of sex, race, color, religion and national origin, as well as charges under other federal discrimination laws such as the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Genetic Information Nondiscrimination Act.

The EEOC’s most recent data for fiscal year 2014 (Oct. 1, 2013 through Sept. 30, 2014) shows that the federal discrimination charges for Wyoming received by that agency track the Labor Standards Division’s statistics, with retaliation charges leading the list. With a total of 69 discrimination charges filed with the EEOC by Wyoming workers in FY2014, here are the numbers by type:

Type	No. of Charges	Percentage of Total Charges
Retaliation	30	43.5%
Sex	29	42%
Disability	25	36.2%
Age	20	29%
Race	14	20.3%
National Origin	6	8.7%
Color	4	5.8%
Equal Pay Act	3	4.3%
Religion	2	2.9%

Wyoming employers received significantly more sex discrimination charges in 2014 than compared to 2013. The percentage of sex discrimination charges filed with the EEOC went up from 29.2% in FY 2013 to 42% in FY2014. Retaliation charges topped the list in both FY2013 and FY2014. The full list of EEOC charge receipts for Wyoming for the last five years may be viewed on the EEOC’s website at http://www1.eeoc.gov/eeoc/statistics/enforcement/charges_by_state.cfm#centercol.

Lessons Learned

The charge statistics from the Wyoming Labor Standards Office and the EEOC reflect discrimination complaints filed by applicants and employees, not cases in which discrimination was determined to exist. Even so, the charge numbers for Wyoming suggest a number of action items for employers who want to avoid being included in next year’s statistics.

First, retaliation gets a lot less attention from employers than it should, as these numbers show. Whenever an employee complains about something at work that implicates a statutory right, like the right to be free from discrimination or harassment, or requests an accommodation or FMLA leave, the employee has engaged in protected activity. Most discrimination laws prohibit adverse actions because an employee has engaged in protected activity. And, it makes little difference whether the employee’s underlying complaint or request was valid – the employee is still protected against retaliation.

Employers need a strong, stand-alone anti-retaliation policy, not just a couple of sentences at the end of the policy prohibiting discrimination. Employers also need to train supervisors and managers about the significance of employee complaints, and how the law protects employees. And careful consideration should be given to any adverse employment action for an employee who has opposed discrimination in the workplace, been interviewed as part of an investigation, or participated in a discrimination proceeding.

Second, the prevalence of sex discrimination charges, which includes harassment charges, suggests that employers should review and update their discrimination and harassment policies, and continue periodic harassment prevention training. A strong harassment prevention policy, with understandable definitions and examples and multiple reporting options, is usually the best defense against a charge of sexual harassment. Of course, any observed or reported harassment must be investigated and any behavior which violates your policies must be stopped.

Finally, adopt a policy that guides employees who wish to request an accommodation, and train supervisors how to recognize employee requests that could be interpreted as a request for accommodation. Once a request is made, follow a thorough interactive process to explore reasonable accommodations that do not place an undue burden on your organization but will allow the person to perform their job. Only when you are absolutely sure that no reasonable accommodation is available should you terminate a disabled employee.

These action items will go a long way toward keeping you from becoming a statistic!

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September 11, 2015

Broader Joint-Employer Test Leads to Teamsters Win At Browning-Ferris

By Steve Gutierrez

In a previous article, we noted that the NLRB’s recent Browning-Ferris ruling was significant for those employers who use temporary or staffing agencies to provide workers. The Board set a new, broader test for joint-employer status that does not require the purported joint employer to exercise control over the workers in question. Instead, if the company has the right to exercise control over the terms and conditions of certain workers, it can be deemed a joint employer even if it never actually exercises that control. Now we can see the significance of the impact.

Based upon the joint-employer determination, the impounded ballots of the workers of Leadpoint Business Services, the entity that staffed Browning-Ferris’s California recycling plant, were counted as part of the bargaining unit, which provided a 73-17 margin in favor of representation by the Teamsters. Depending on the outcome of any objections filed by the company, the NLRB will certify the union as the collective bargaining representative for the recycling center’s workers. This allows the unit to collectively bargain over the terms and conditions of employment at that facility.

Bargaining Over Terms Of Contingent Workers

Think about this: Browning-Ferris does not “employ” the workers placed at its facility by staffing agency, Leadpoint. It doesn’t hire, pay, provide benefits to, or fire them. Yet, it will be required to sit down at the bargaining table across from the Teamsters to negotiate the terms and conditions of employment of those contingent workers over which it retains authority to control. That is the result of being found a joint employer of the bargaining-unit workers.

Extension of Joint-Employer Test to Other Contexts?

Joint-employer status is a critical determination for companies that use contingent workers as well as for franchises. And, it can apply not only in the union context, but also in other employment law contexts, such as for pay purposes under the Fair Labor Standards Act or for discrimination under Title VII. Even though the standards and policy behind a joint-employer relationship under other employment laws may differ from those behind the National Labor Relations Act, this new, broader test will likely be asserted in these other contexts in order to bring in franchisors and companies that use contingent workers as potentially liable parties.

Appeal Over Joint-Employer Test Coming?

Because of the high stakes involved in this ruling, it would not be surprising if Browning-Ferris (which is part of Republic Services, Inc.) appealed the NLRB’s ruling, taking its case to the applicable court of appeals. Another option is that after the union is certified, Browning-Ferris could refuse to bargain with the Teamsters which would lead to more proceedings before the Board, and ultimately, the courts. Given that the Board has already ruled in favor of the union on this matter, the company will likely have a better chance seeking review by circuit judges. Either way, this matter is probably not over.

Stay tuned and we will let you know what develops further. What we do know, is the NLRB will not sit idle and we should expect it to use its power to push the envelope in favor of the nation’s unions.

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September 8, 2015

Colorado’s Parental Leave For Academic Activities Ended September 1

By Emily Hobbs-Wright

The school year is upon us and working parents will once again find themselves juggling job duties and school functions. The juggling may be a bit more difficult for some parents this year, as those that work for larger Colorado employers are no longer guaranteed time off to attend their kid’s school activities. As of September 1st, Colorado employers with 50 or more employees are no longer required by law to provide parents time off to attend academic activities for their school children. The Parental Involvement in K-12 Education Act (Academic Leave Act) automatically repealed on that date, relieving covered employers of providing that leave.

Colorado Senate Committee Shot Down Extension of Academic Leave Act

In effect since 2009, the Academic Leave Act required employers with 50 or more employees to provide its full-time employees up to 6 hours in any one-month period, and up to 18 hours per academic year, of unpaid leave from work to attend a child's academic activities. C.R.S. §8-13.3-101 et seq. Part-time workers were entitled to pro-rated leave based on the amount of hours worked. Covered academic activities included attending parent-teacher conferences, and meetings related to special education needs, truancy, dropout prevention and disciplinary concerns.

The 2009 law specified that it would repeal on September 1, 2015. This past legislative session, Representatives John Buckner and Rhonda Fields introduced a bill that sought to extend the Academic Leave Act indefinitely. House Bill 1221 also attempted to expand the law to:

include pre-school activities, rather than just K-12;
add more covered activities to include attending meetings with a school counselor and attending academic achievement ceremonies; and
require school districts and charter schools to post on their websites and include in their district/school-wide communications information to parents and the community at large about the leave requirement.

The bill passed the House and was sent to the Senate. The Senate committee to which it was assigned voted 3-2 to kill the bill. By doing so, the bill never got to a vote in the full Senate and died. The result is that the Academic Leave Act was not extended and the original repeal date of September 1, 2015 remains.

Action Items

With the repeal of the Academic Leave Act and no federal law mandating this type of leave, Colorado employers with more than 50 employees no longer need to offer parents of school-age children leave to attend covered school functions. You may, of course, choose to voluntarily continue to offer parents time off to attend their child’s school functions. If you do, decide whether you will continue to offer it under the same terms as was mandated by law or if you wish to set your own parameters about eligibility, amount of leave, notice requirements, whether documentation of the activity is required, etc. Then, update your policies and let employees know about any changes.

If you choose not to offer parents time off to attend their child’s academic activities, update your policies and procedures to delete that type of leave. Revise your employee handbook and any intranet policies to reflect that academic leave is no longer available. Inform supervisors and managers so that they know how to handle any requests or questions. Importantly, communicate to employees that the academic leave provision was repealed and let them know about any other time off policies, if any, that may apply to allow them to attend school functions.

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September 2, 2015

Utah Supreme Court: Misappropriation of Trade Secrets Presumes Irreparable Harm

By Bryan Benard

A Utah employer has dodged a $229,482 fee award and can continue its lawsuit against a former employee for misappropriation of company trade secrets and violation of a non-disclosure agreement. The Utah Supreme Court recently revived InnoSys, Inc.’s claims against a former engineer, Amanda Mercer, holding that the company established a prima facie case of trade secret misappropriation that gave rise to a rebuttable presumption of irreparable harm. The divided Court reversed the grant of Mercer’s summary judgment motion, allowing the company to take its claims to trial. InnoSys, Inc. v. Mercer, 2015 UT 80.

Employee Copied Sensitive Company Information to Thumb Drive and Personal Email Account

During her employment as an engineer for InnoSys, Mercer forwarded confidential company emails to her personal Gmail account. On the day that she was terminated for poor performance, Mercer copied the company’s confidential business plan onto a thumb drive.

Following her termination, Mercer filed a claim for unemployment benefits with the Utah Department of Workforce Services. After her claim was denied, she appealed, submitting a number of protected documents, including the confidential business plan and protected emails, into the administrative record. At that point, InnoSys began asking for details as to when and how she gained access to the confidential materials. Mercer then deleted all of the emails and InnoSys files. InnoSys filed a complaint in court, alleging that Mercer had breached her non-disclosure agreement (NDA), misappropriated company trade secrets in violation of the Uniform Trade Secrets Act (UTSA) and breached her fiduciary duty to the company.

Employee Changed Her Story But Still Won Judgment From Lower Court

Throughout discovery, Mercer changed her story regarding the use of her Gmail account and the timing of her acquisition of the company’s confidential business plan. Despite first claiming that she had IT’s permission to transfer company emails to her personal Gmail account, Mercer later admitted that she did not have anyone’s permission to do so. As to the business plan, Mercer initially testified in her deposition that she had copied the business plan onto a thumb drive because she had been asked to review the plan the day before her termination and was unable to access it via the company’s secure remote network. She later admitted that she copied it on the day of her termination and did not have it in her possession the day before she was fired.

Despite Mercer’s inconsistent statements regarding how she obtained the company’s confidential information, the district court ruled in Mercer’s favor on all of InnoSys’s claims. It did so after concluding that “there was no objectively reasonable basis to believe that Mercer had harmed InnoSys or was threatening to do so.” In addition to dismissing all of InnoSys’s claims against Mercer, the lower court also granted Mercer’s motion for sanctions against InnoSys and to collect attorneys’ fees as the prevailing party. The court ordered InnoSys to pay Mercer $229,481.58. InnoSys appealed.

Evidence of Harm

At the crux of the appeal was whether InnoSys needed to provide sufficient evidence of harm or threatened harm as a result of Mercer’s misappropriation and/or disclosure of company trade secrets to avoid summary judgment and proceed to trial. The lower court had found that InnoSys had not presented sufficient evidence that it had been harmed by Mercer’s admitted taking and disclosure of confidential company information and therefore, could not support its claims.

The Utah Supreme Court disagreed, holding that where a company establishes a prima facie case of misappropriation of trade secrets under the UTSA, it is entitled to a presumption of irreparable harm. The company was not required to produce evidence of financial damages as it also sought an injunction to prevent Mercer from further disclosing or using its confidential information.

The presumption of irreparable harm, as well as affirmative evidence of threatened harm, was also enough to keep alive the company’s claim for breach of the NDA. By reversing the grant of summary judgment in Mercer’s favor, the Court overturned the award of sanctions and attorneys’ fees against InnoSys.

Lessons Learned

First, put procedures in place to retain all signed employee agreements and documents. InnoSys initially could not find the NDA that Mercer had signed when her employment began. The lower court was hard on the company for that failure, and did not want to accept a copy of its standard NDA as evidence of what Mercer signed. The company eventually found the NDA signed by Mercer but the turmoil caused by its absence highlights the importance of strict record keeping for important employee agreements. Be certain to keep your signed agreements and acknowledgments in a secure location. You never know when you might need to enforce them.

Second, when employment ends for any reason, take steps to ensure that the departing employee returns all company information and property without retaining any copies. It is unclear from the opinion whether InnoSys asked Mercer for the return of any company materials when she was fired but it appears that it learned she had confidential company information after she submitted the company documents as part of her unemployment appeal. Don’t wait until after there has been a disclosure or further misappropriation but instead, proactively cut off access to company materials and seek the return of all company property. And remind departing employees of their continued obligations under confidentiality policies and NDAs.

Finally, enforce your NDAs to ensure continued protection of your company trade secrets and other proprietary information. Allowing a former employee to retain or disclose confidential information will undermine your future chances of arguing that such information is indeed a trade secret. You must continually guard that information or it will lose its protected status.

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August 28, 2015

NLRB Throws Out Years of Joint-Employer Precedent – Adopts Two-Part Test For Joint-Employer Status

By Brian Mumaugh

The National Labor Relations Board (NLRB or Board) has thrown employers a curve by overruling 30 years of long-standing decisions that narrowed the circumstances under which a joint-employer relationship could be found to exist. In a closely-watched decision, the Board revised its joint-employer standard, dictating a broader two-step test that will result in entities that use contingent workers more likely being deemed joint employers for union representation purposes. Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015).

Two-Part Joint Employer Test

In its 3-to-2 decision, the Board reaffirmed a 1982 joint-employer standard under which the Board will find that two or more statutory employers are joint employers of the same employees if they share or codetermine the essential terms and conditions of employment. First, the Board will determine whether the putative employer has a common-law employment relationship with the employees in question. If that relationship exists, the Board then will determine whether the employer possesses sufficient control over the employees’ essential terms and conditions of employment to permit meaningful collective bargaining.

Employer Need Not Exercise Control Over Employees

Over the past 30 years, joint-employer cases have defined the degree of control that an employer must assert over the workers to be deemed a joint employer. Those cases, including Laerco and TLI, required that the putative employer actually exercise control over the terms and conditions of employment to be deemed a joint employer. In addition, exercising that control had to be direct and immediate, not of a limited and routing nature. Simply possessing the authority to exercise control, without actually exercising that control, was not enough under long-standing Board law.

That requirement is now gone. The Board ruled, in Browning-Ferris, it will no longer require that a joint employer exercise its authority to control the terms and conditions of the employees’ employment. The proper inquiry will be whether the statutory employer “possesses sufficient control over the work of the employees to qualify as a joint employer with” another employer. In addition, control exercised indirectly, such as through an agent or intermediary, may be sufficient to establish joint-employer status.

BFI Deemed A Joint Employer With Temp Agency

After articulating its revised test, the Board applied it to the BFI case at hand. The case arose after a union sought to include certain workers at the BFI Newby Island Recyclery in a bargaining unit during a union election. The workers were employed by Leadpoint Business Services, a temporary labor services agency, and were assigned to work at BFI’s recycling plant as sorters, screen cleaners and housekeepers. The contract between BFI and Leadpoint specifically stated that Leadpoint was the sole employer of the workers and there was no employment relationship between BFI and those workers.

The Board concluded that BFI was a joint employer of the workers with Leadpoint. Contributing factors leading the Board to determine that BFI is a common-law employer and shares or codetermines essential terms and conditions of employment include:

BFI retained the right to require that Leadpoint meet or exceed BFI’s own standard selection procedures and tests, requires drug tests and prohibits Leadpoint from hiring workers deemed to be ineligible for rehire by BFI;
BFI retained the right to reject any worker that Leadpoint refers to its facility “for any or no reason” and to discontinue the use of any personnel that Leadpoint assigned to it;
BFI managers had requested the immediate dismissal of certain workers due to misconduct and Leadpoint dismissed them from BFI’s facility shortly afterward;
BFI controlled the speed of the material streams and specific productivity standards for sorting;
BFI managers assigned specific tasks that need to be completed, determined where workers are to be positions and exercised near-constant oversight of workers’ performance;
BFI identified the number of workers it needs, the timing of the shifts and when overtime is necessary, even though Leadpoint selects the specific employees who will do the work;
Despite Leadpoint determining pay rates, administering payroll and benefits and retaining payroll records, BFI prevented Leadpoint from paying employees more than BFI employees in comparable jobs and used a cost-plus model under the contract;
After a new minimum wage law went into effect, BFI and Leadpoint entered into an agreement for BFI to pay a higher rate for the services of Leadpoint employees.

As a result of finding that BFI was a joint employer of these workers, the Board ordered the Regional Director to open and count the impounded ballots cast by the employees in the petitioned-for unit. If the employees voted for union representation, BFI will have to collectively bargain over the terms and conditions of employment over which it retains the right to control.

Implications For Employers

The Board seeks to prevent companies from insulating themselves from the application of labor laws by using temporary or other contingent workforces and this new standard will further their goal. This new, broader standard for joint-employer status will make it easier for unions to include contingent workers into bargaining units at the facilities for which they are providing services. In addition, as pointed out by the dissent, this change “will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts and picketing.”

If your organization uses contingent workers, you should review your existing labor services agreements and, to the extent possible, renegotiate any terms that reserve your right to control the terms and conditions of the contingent workers’ employment. You also should attempt to eliminate any functional oversight and decision-making to ensure that you are not exercising any control, whether directly or indirectly, over the contingent workers. The reservation of the right to dictate any terms or conditions of employment, or the actual exercise of that control in any way, is likely to lead you to be deemed a joint employer of those workers.

We will keep you posted of further developments, including any appeals of this decision.

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August 24, 2015

Home Care Workers Entitled to Minimum Wage and Overtime

By Mark Wiletsky

Agencies that provide companionship or live-in care services for the elderly, ill or disabled will now have to pay their home care workers minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). Reversing a lower court decision, the Court of Appeals for the District of Columbia upheld the Department of Labor’s (DOL’s) new regulations that removed those employees from the “domestic service” exemption. The Court also struck down the challenge to the DOL’s revised definition of companionship services that now places a duty restriction on workers who may be considered exempt.

Extension of FLSA Protections Is Reasonable

For years, individuals who provide companionship or live-in care services were exempt from the minimum wage and overtime rules under the FLSA, even if those individuals were employed by a third party. In 2013, however, the DOL reversed its prior interpretation of the domestic service exemption, adopting new regulations stating that third-party employers of companionship-services and live-in employees could no longer use the exemption to avoid paying minimum wage and overtime pay to their home care workers. The new regulations also narrowed the definition of companionship services: a worker providing exempt services can spend no more than 20 percent of his or her total hours worked on the provision of care, including meal preparation, driving, light housework, managing finances, assistance with the physical taking of medications, and arranging medical care.

Before the new rules went into effect, trade associations representing third-party agencies that employ home care workers challenged the DOL’s new regulations in court and the district judge declared them invalid. The lower court ruled that the DOL’s decision to exclude a class of employees from the exemption because they were employed by a third-party agency contravened the plain terms of the FLSA. The court also threw out the DOL’s revised definition of companionship services, with its 20 percent limit on care-related tasks, as contrary to both the text and intent of the statutory exemption.

On August 21, 2015, the Circuit Court of Appeals for the District of Columbia disagreed and upheld the new regulations. The appellate court found that the FLSA exemption did not specifically address the third-party employment question and therefore, the DOL had the authority to create rules and regulations to fill in the gap.

The court also determined that the DOL’s new interpretation was “entirely reasonable.” The DOL explained that its change in policy was due to the change in the market for home health care. In the 1970’s, professional care for the elderly and disabled was primarily provided in hospitals and nursing homes so that services in the home were largely that of an “elder sitter” or companion. More recently, however, individuals needing a significant amount of care were now receiving that care in their own homes, provided by professionals employed by third-party agencies rather than by workers hired directly by care recipients or their families. These changes, as well as Congress’s intent to bring more workers within the FLSA’s protections, convinced the court that the DOL’s changed interpretation was reasonable.

Potential Adverse Effects of FLSA Coverage Unfounded

The third-party agencies challenging the DOL’s regulations argued that requiring minimum wage and overtime pay for home care workers would raise the cost of their services, making home care less affordable and creating a “perverse incentive for re-institutionalization of the elderly and disabled.” The DOL countered by pointing to fifteen states where minimum wage and overtime protections already extend to most third-party-employed home care workers and noted that there was no reliable data that these pay protections led either to increased institutionalization or a decline in the continuity of care. The DOL also cited the industry’s own survey that indicated that home care agencies operating in those fifteen states had a similar percentage of consumers receiving 24-hour care as those agencies in non-overtime states.

The DOL further argued that the new rules would improve the quality of home care services, thus benefitting consumers, because the revised regulations would result in better qualified employees and lower turnover. It would also reflect the reality that home care workers employed by third-party agencies are professional caregivers, many of whom have training or certifications, who work for agencies that profit from their employees’ services. The appellate court found the DOL’s position reasonable, upholding its regulations.

No Standing to Challenge Narrowed Definition of Companionship Services

By ruling that the third-party agencies could not use the domestic services exemption, the court removed the ability of those agencies to use the companionship services definition to exempt home care workers from minimum wage and overtime protections. As a result, the trade associations’ members challenging the new, narrowed definition of companionship services would not be directly harmed by the revised definition. Because they would not suffer any injury from the narrowed definition, the challengers lacked standing to oppose the revision, denying the court of jurisdiction to resolve that issue. Consequently, the court ordered that judgment be entered in favor of the DOL.

Practical Effect for Home Care Employers

Pending any appeals, the DOL’s new regulations removing the ability of third-party home care agencies to exempt their home care workers from FLSA minimum wage and overtime pay will go into effect. Employers of home care workers should take steps now to ensure that they comply with the FLSA minimum wage requirement for all hours worked as well as paying an overtime premium for all hours worked over 40 per week. In addition to updating your pay practices, be sure to revise any affected policies and statements in your employee handbook, operational manual, timekeeping procedures, job advertisements and recruiting materials.

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