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ted schwartz

NLRB ruling says In-N-Out can’t stop Fight for $15 pins

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In-N-Out’s use of buttons on employee uniforms to wish customers Merry Christmas was one of a few reasons a judge ruled that In-N-Out can’t stop employees from wearing buttons for a different reason — promoting “Fight for $15”.

The 309-unit chain requires workers to wear “Merry Christmas” buttons during the holidays, and another in April that solicits donations to the company’s foundation. Both of those buttons are “two to three times larger” than the “Fight for $15” button.

Administrative Law Judge Keltner Locke for the National Labor Relations Board ordered the company to stop enforcing a rule preventing workers from wearing buttons or insignia that relate to wages, hours, employment conditions or labor issues.

The N:RB has ruled in the past that under most circumstances, employers cannot force employees to not wear pins supporting employee causes including but not limited to wage increases, working conditions and/or unionization. To do so, the NLRB says that the employer is stifling the employer’s right to concerted protected activities.

Should you have any questions, please contact your HR Ideas Representative.

Cash in Lieu of Benefits Must Be Included in Overtime Calculations, 9th Cir. Rules

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Employers that provide cash payments to employees who have health care coverage through a spouse or other means may find themselves thinking of the old adage that “no good deed goes unpunished” in the wake of a new appeals court ruling.

In Flores v. City of San Gabriel, the 9th Circuit Court of Appeals held that such payments can result in higher overtime payments.

Under the Fair Labor Standards Act (FLSA), nonexempt employees must be paid one and one-half times their regular rate of pay for all overtime hours (usually those beyond 40 in a workweek).

The regular rate of pay must include not just wages but also other forms of compensation, such as commissions, most bonuses, company cars and corporate housing.

There are, however, some narrow exceptions to this rule, including vacation pay, sick pay, travel expense reimbursements and other similar payments to employees that are not made as compensation for their hours of employment.

The employer in the Flores case offered a “flexible benefits plan,” through which it provided employees a certain amount of money with which to buy medical, dental and vision benefits. The employees were required to purchase dental and vision benefits, but could decline to purchase medical benefits if they could prove they had medical coverage through a spouse or some other alternative means. Employees who declined medical benefits through the city’s plan received the unused portion of their benefits allotment as a cash payment — which ranged in size from $1,037 in 2009 to $1,305 in 2012 — added to their paychecks.

Some of the employees sued their employer, claiming these payments should have been included in the regular rate of pay when calculating their overtime.

The employer claimed these payments could be excluded from the regular rate of pay because they were not tied to the hours the employees worked or the amount of services they performed, and thus qualified as other similar payments.

The 9th Circuit rejected that argument. It noted that a US Department of Labor (DOL) regulation offered the following as examples of other similar payments:

Sums paid to an employee for the rental of his truck or car;
Loans or advances made by the employer to the employee; and
The cost to the employer of conveniences furnished to the employee such as parking space, restrooms, lockers, on-the-job medical care and recreational facilities.
Under this regulation, the 9th Circuit held, a payment may not be excluded from the regular rate of pay if it is “generally understood as compensation for work, even though the payment is not directly tied to specific hours worked by an employee.”

The 9th Circuit also rejected the employer’s argument that the cash-in-lieu-of-benefits payments were covered by a clause in the FLSA statute that excludes from the regular rate any “contributions irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees” because the payments were made directly to employees and not to a trustee or third party.

The ruling will discourage employers from having similar flexible benefits programs, the employer had warned. But the 9th Circuit said its hands were tied, and that such arguments are better made to Congress or the DOL.

The Flores ruling applies to employers operating in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.

OSHA & Combustible Dust

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OSHA has issued a new Fact Sheet for Combustible Dust Explosion Hazards. The PDF is attached here.

Although OSHA has not yet issued a regulation specifically addressing combustible dust issues, it has and will continue to cite employers under a variety of other OSHA regulations and the General Duty Clause for violations related to combustible dust hazards. See this link for a list of standards under which OSHA may attempt to cite an employer – The new Fact Sheet is a good reminder to consider whether your facility or worksite may have combustible dust hazards.

View PDF Here

Los Angeles FAQs on the New Minimum Wage and Paid Sick Leave Ordinance

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On June 1, 2016, the Los Angeles City Council passed an ordinance impacting employers in the city of Los Angeles and mandating paid sick leave beyond that which is required under the recently passed California statute (Cal. Labor Code section 245, et. seq.). The ordinance, which took effect on July 1, 2016, has left many questions unanswered for employers as they set about revising their policies. With some additional insight that the City of Los Angeles’s Office of Wage Standards recently provided, we are now able to answer additional inquiries about the ordinance. The information below may assist employers in determining whether their policies will comply with the new Los Angeles ordinance.

Question: When must small employers start providing sick leave to employees?

The Los Angeles Minimum Wage Ordinance (No. 184320) states that employers with 26 or more employees must provide sick leave benefits pursuant to section 187.04 of the ordinance and pay wages according to a scale beginning on July 1, 2016. The ordinance also states that employers with 25 or fewer employees must provide sick leave benefits pursuant to section 187.04 and pay wages according to the scale beginning on July 1, 2017. Section 187.04 states that “employees” must receive paid sick leave benefits beginning July 1, 2016. What does this mean for small employers with regard to when they must begin providing additional sick leave benefits? Are “small employers” required to begin providing sick leave benefits on July 1, 2017, or do they have to provide sick leave benefits beginning in 2016?

Answer: The sick time benefits rules apply on July 1, 2017, for employers that qualify for the one-year small business deferral. Both sick time and minimum wage requirements for employers with 25 or fewer employees begin on July 1, 2017. (Note that the City of Los Angeles’s response differs from our June 2016 statement that all employers will have to begin providing the sick leave benefits on July 1, 2016.)

Question: What are the carryover obligations for employers that front-load leave?

Under the ordinance, employees are “entitled to take up to 48 hours of sick leave in each year of employment, calendar year, or 12-month period.” The ordinance also references an accrual cap of 72 hours; however, the term “accrual” is not defined or mentioned in the part of the ordinance that discusses how sick leave must be provided. Do employers that front-load the 48 hours (i.e., provide the total number of hours in a lump sum at the beginning of the year) also have to carry over any unused hours into the next year and provide additional hours up to the 72-hour cap or does the 72-hour cap apply only to those employers that choose to provide 1 hour of sick leave for every 30 hours worked?

Answer: Unused paid sick leave time accrued by an employee, regardless of front-loading or accrual method, must be carried over and may be capped at a minimum of 72 hours.

Question: What is a “large employer” under the ordinance?

To qualify as a “large employer,” does an employer need to have 26 employees working in the city or 26 total employees anywhere (i.e., nationwide)?

Answer: An “employee” means any individual who (1) “in a particular week performs at least two hours of work within the geographic boundaries of the City for an Employer”; and (2) “qualifies as an Employee entitled to payment of a minimum wage from any Employer under the California minimum wage law, as provided under section 1197 of the California Labor Code and wage orders published by the Industrial Welfare Commission.”

The size of an employer will be determined by the average number of “employees” employed during the previous calendar year. For a new business that did not operate during the previous calendar year, its size as an employer will be determined by the number of employees it employed during its first pay period. Therefore, an employer will look to the number of employees who are working or who worked in the city of Los Angeles only.

Wellness Programs’ Notice Form Provided by the EEOC

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New rules have been published by the Equal Employment Opportunity Commission (EEOC) on May 17, 2016, under the Americans with Disabilities Act (ADA) for employers that have instituted “wellness programs.” Under the rules, employers must make sure participation in those programs is voluntary, and that the programs are reasonably designed to promote employee health.

The rule requires employers to provide to covered employees a notice describing what information will be collected as part of a wellness program, who will receive it, and how it will be used. Importantly, the rules require that employee medical information solicited for such programs is kept confidential.

The required notice must be provided on the first day of a covered health plan year that begins on or after Jan. 1, 2017. Once the notice requirement becomes effective, the EEOC’s rule does not require that employees get the notice at a particular time, but mandates that employees must receive the notice before providing any health information, and with enough time to decide whether to participate in the program. Waiting until after an employee has completed a wellness program’s health risk assessment (HRA) or medical examination to provide the notice is illegal.

On June 16, 2016, the Equal Employment Opportunity Commission (EEOC) posted a sample employee notice to assist employers with wellness programs to comply with those rules, by offering a specific notice form for use by such employers, and which includes all of the required provisions, along with non-retaliation language.

The Notice is written in a fill-in-the-blank format so any employer can use it by simply adding the specific information into the form provided, and providing it to employees. Employers should note that employees with disabilities may need to have the notice provided in an alternative format (large print version, electronically formatted for screen readers, etc).

If you should need any assistance please contact your HR Ideas Representative at 925-556-4404.

View PDF Here

Updated Equal Pay Data Rule Fails To Address Employer Concerns

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Employers Now Face March 2018 Deadline For First Pay Report

The Equal Employment Opportunity Commission (EEOC) announced revisions to its planned pay data rule yesterday, but unfortunately the revisions do not address the majority of concerns employers had about the original controversial version. While the updated rule makes minor concessions to employers and provides much-needed clarity on two issues, the revisions do not sufficiently address the undue burdens that employers will face in completing required reports, and all but ignore concerns about confidentiality and the underlying utility of the rule.

Although the revised rule will still need to go through another public comment process, there appears to be sufficient momentum at the agency to push the rule forward as revised. Therefore, employers can expect to be subject to a heightened pay transparency standard for their 2017 compensation practices, with an initial reporting deadline of March 31, 2018.

This Blog answers the most commonly asked questions about this developing story.

What Was Originally Proposed?

On January 29, 2016, the Obama Administration proposed executive action through the EEOC to require certain businesses to provide detailed information about how much each of their employees is earning. Under the proposed law, affected employers would need to break down pay information by gender, as well as race and ethnicity, in order to make it very easy to identify pay gaps.

It would require any business with 100 or more workers to provide detailed information about their pay practices to the federal government through the annual EEO-1 Report. The goal of these proposed regulations is to better track pay disparities between genders so as to increase enforcement of equal pay standards. Read our full Alert here.

What Concerns Were Identified?

Many observers identified serious flaws with the EEOC’s proposed rule. Specifically, the proposed rule would cause undue burden on employers, while the utility of the data collection was deemed questionable at best. Moreover, employers had serious privacy concerns accompanying the gathering and production of this information.

On April 1, 2016, Fisher Phillips submitted comments to the EEOC regarding the proposed regulations (read more here). The firm recognized that the goal of eradicating and better identifying discriminatory pay practices was a worthy endeavor. However, the comments stated that the firm was concerned that the proposed regulations, as initially written, would not accomplish anything noteworthy.

Instead, the firm’s comments described how the proposed regulations would merely set employers up for unwarranted disparate impact claims of discrimination founded on inaccurate theories using data not sufficiently valid to withstand scrutiny. The time and expense to prove otherwise would be considerable for the nation’s employers, as would the burden to simply comply with the data-gathering efforts. Add to that the legitimate and well-founded privacy concerns that spring from these proposals, and the comments predicted a recipe for disaster.

For these reasons, the comments submitted by Fisher Phillips respectfully urged the EEOC to take action steps to address the concerns raised.

What Did The EEOC Announce In Response?
Employers were encouraged when EEOC Chair Jenny Yang announced on June 22, 2016, that the agency would soon issue a revised version of its proposed pay data collection rules in an effort to “think about how we minimize the burden on employers.” It appeared that the agency was acknowledging that the initial proposal was unduly burdensome, and we were hopeful that some of the concerns identified above would be addressed (read more here).

Unfortunately, the revised rule announced yesterday does little to assuage employer concerns. In fact, the revised rule only makes two substantive changes to the original rule.

What Change Has Been Proposed Regarding Reportable Pay Data?

Currently, all employers with 100 or more workers already complete the EEO-1 form on an annual basis, providing demographic information to the government about race, gender, and ethnicity. The original proposal will require employers to complete a revised EEO-1 form that will also require salary and pay information be included. However, the original proposal was silent on how employers were to determine the correct amount to be listed.

The revised rule clarifies that employers should use Box 1 on the employee’s W-2 form as a measure of reportable compensation on the upcoming EEO-1 Reports. Although the EEOC acknowledged that many employers argued for a “base pay” standard rather than W-2 income, the agency stated that it believes that W-2 income is a suitable measure for pay data collection. It also stated that supplemental pay (including shift differentials and overtime pay) is a critical component of compensation that should be included in the reporting because it can be influenced by discrimination.

What Change Has Been Proposed Regarding The Timing Of The Reports?

The original proposed rule included the same reporting year as the current EEO-1 Report, which means that employers would have had to produce the pay data information before September 30 of each year, starting in 2017. However, employers vigorously objected to this reporting period, as it would have required them to construct a separate compensation report spanning October 1 through September 30 for each employee.

The EEOC’s revised rule states that, beginning with the 2017 EEO-1 Report, the reporting deadline for all EEO-1 filers will be March 31 of the year following the report year. Thus, the first EEO-1 report that will need to include pay data – the 2017 EEO-1 Report – will be due by March 31, 2018. This will allow employers to use W-2 data from the preceding calendar year in order to compile their reports several months after the close of the year.

For those already required to complete the EEO-1 Report, you will still need to produce a 2016 Report by September 30, 2016. However, you will then have an 18-month period before your next report is due, this time to include pay data (March 31, 2018).

What Should Employers Do Now?

In light of these developments, affected companies should make it a priority to review current pay systems and identify and address any areas of pay disparity. It is critical to take steps now to minimize increased scrutiny once the data begins to be reported next year.

By conducting your own gender-specific audit of pay practices, you will be able to determine whether any pay gaps exist that might catch the eye of the federal government when you turn over this information beginning in 2018. You should have time to determine whether any disparities that may exist can be justified by legitimate and non-discriminatory explanations, or whether you will need to take corrective action to address troublesome pay gaps.

Should you have any questions, please contact your HR Ideas Representative.

Employers Risk Higher Penalties for Hiring Unauthorized Workers

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The U.S. Department of Justice is increasing civil monetary penalties substantially for employers who knowingly employ an unauthorized worker and for certain other immigration-related violations, according to an interim final rule the Department has published. The rule will take effect on August 1, 2016, and will apply to violations occurring after November 2, 2016. The increases come in response to the Bipartisan Budget Act of 2015, which requires agencies to adjust penalties for inflation.

Under the Immigration Reform and Control Act of 1986 (IRCA), it is unlawful for an employer to hire or continue to employ a person knowing that the person is not authorized to work in the United States. IRCA requires employers to verify employment eligibility of all employees by completing a Form I-9, and failure to comply with these rules subjects employers to substantial civil monetary penalties.

Under the interim final rule, the minimum penalty for a first offense of knowingly employing an unauthorized worker will increase from $375 to $539 per worker, and the maximum penalty will increase from $3,200 to $4,313 per worker. The largest increase raises the maximum civil penalty for multiple violations from $16,000 to $21,563 per worker. Paperwork violations can now be assessed a maximum penalty of $2,156 per relevant individual, up from $1,100. Finally, for unfair immigration-related employment practices, the maximum penalty increases from $3,200 to $3,563 per person discriminated against.

NLRB Strikes Healthcare Facility Conduct Rules

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The National Labor Relations Board (NLRB) has provided clear signals that the unique, patient-centric environments of general hospital and medical centers—and even surgical services and perianesthesia departments—will not justify any departure from its sweeping decisions striking policies, procedures, and codes of conduct under Section 8(a)(1) of the National Labor Relations Act (NLRA). An employer violates Section 8(a)(1) of the NLRA if it maintains work rules that tend to chill employees’ exercise of their Section 7 right to engage in protected, concerted activity. Even if a rule does not explicitly restrict protected activities, it will violate Section 8(a)(1) if an employee would reasonably construe the rule to prohibit Section 7 activity.

Relying on this provision, on April 13, 2016, in William Beaumont Hospital (363 NLRB No. 162), the NLRB found William Beaumont Hospital’s Code of Conduct for Surgical Services and Perianesthesia unlawful under Section 8(a)(1) to the extent it prohibited:

—conduct that “impedes harmonious interactions and relationships”;
—-“[v]erbal comments or physical gestures directed at others that exceed the bounds of fair criticism”;
—-“[n]egative or disparaging comments about the moral character or professional capabilities of an employee or physician made to employees, physicians, patients, or visitors”; and
—-“behavior that is disruptive to maintaining a safe and healing environment or that is counter to promoting teamwork.”

These are great examples of how to not construct sentences that might be considered “overly broad”.

OSHA Officially Increases Civil Penalties by 78 Percent

By | HR, Public Blogs, Safety | No Comments
On June 30, 2016, the U.S. Department of Labor (DOL) announced its interim final rule on Federal Civil Penalties Inflation Adjustment Act Catch-Up Adjustments. The rule was formally published in the Federal Register on July 1.

The increase is the result of the Bipartisan Budget Act of 2015, signed into law on November 2, 2015. The Bipartisan Budget Act was the consummation of a deal reached in Congress to avoid a default on the nation’s debt. Surprisingly, the bill also contained the Inflation Adjustment Act, a provision that allowed federal agencies to annually adjust their civil penalties for inflation beginning with a one-time adjustment this year to catch up from the last time the agency’s civil penalties were modified.

For the Occupational Safety and Health Administration (OSHA), the last time Congress increased the agency’s civil penalties was 1990. Under the interim rule, the maximum penalties for workplace safety violations issued by OSHA will spike by 78.16 percent, effective August 1, 2016, as follows:

Other-than-Serious violation: from $7,000 to $12,471;
Serious violation: from $7,000 to $12,471;
Repeat violation: from $70,000 to $124,709;
Willful violation: from $70,000 to $124,709;
Failure-to-Abate violation: from $7,000 to $12,471 per day; and
Violation of a posting requirement: from $7,000 to $12,471.

The 78.16 percent figure represents inflation from October 1990 to October 2015. This increase closely tracks the Consumer Price Index, as we predicted last year.

State Plan States must also adopt these increases, according to the DOL. The federal Occupational Safety and Health Act (OSH Act) requires State Plans to be at least “as effective as” federal OSHA. What constitutes “as effective as,” however, is the subject of ongoing debate between OSHA and its state counterparts.

Limited Retroactivity

According to the DOL, the new civil penalty amounts will apply “only to civil penalties assessed after August 1, 2016, whose associated violations occurred after November 2, 2015, the date of enactment of the Inflation Adjustment Act.” In other words, for pending inspections that occurred before August 1, 2016, OSHA may wait until after August 1 to issue any citations and apply the higher penalty caps to those inspections.