Unions Want Exemption from $15 Minimum Wage

<a href="http://www.shutterstock.com/gallery-940660p1.html?cr=00&pl=edit-00">a katz</a> / <a href="http://www.shutterstock.com/editorial?cr=00&pl=edit-00">Shutterstock.com</a>

Apparently, Unions in Los Angeles are big believers in “Do What I say, Not What I Do.” Los Angeles recently joined a number of liberal cities in passing a bill that would raise minimum wage to $15 by 2020. Now, Unions are clamoring for an exemption from the legislation for employers who are unionized. An article on the subject can be found here.

The takeaway from this article is that everyone knows an artificially high minimum wage is bad for the economy, including the unions and other groups who are pushing for the legislation. Organized labor want to make sure that the employees they represent don’t lose their jobs when employers look to move operations, automate, and reduce headcount when the increased minimum wage takes effect. More importantly, this exception, if passed, would penalize non-union employers through a higher mandatory wage scale and discourage employers from fighting against unionization.

Photo by a katz/shutterstock

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Posted in Labor & Employment, Wage and Hour

Department of Labor Issues Proposed Rule on Overtime


As we have noted for months on this blog, the Department of Labor (DOL) has been hard at work on proposed changes to the overtime regulations. Everyone knew the minimum salary threshold for exempt status was going to be raised, but no one knew by how much. Well, the DOL apparently believes in the “go big or go home” method of rule-making and has proposed that the threshold be increased from $23,000 to approximately $50,000 next year. The measure will also be indexed to the Bureau of Labor Statistics (BLS)’s 40th percentile of full-time salaried workers, and be increased annually.

The proposed rule also plans to increase the highly compensated employee exemption from $100,000 to $122,000 and index this threshold to the 90th BLS percentile of full-time salaried workers. The hidden gem in the proposed rule is the request for comment on changes to the duties tests for the white collar exemptions. Among other things, the DOL is looking at putting limits on the percent of time that an exempt worker can perform non-exempt work. This is already the case under California state law, and the DOL specifically invites comments on whether the California standard should be adopted nationwide. Suffice it to say, adopting a California rule is almost never going to make it simpler for employers, or reduce the risk of litigation.

Our firm’s client alert on the development can be found here.

Posted in Uncategorized

Colorado Allows Firing of Employee Who Used Medical Marijuana

As more states jump on the medical marijuana bandwagon, employers are faced with increasing questions about how these changes in the law affect drug testing policies. The conventional wisdom has been that medical marijuana use, like alcohol, may be lawful for personal use, but employers can still terminate employees who show up for work under the influence.

WUIOn June 15, employers received some guidance from Colorado, one of the early adopters of legal marijuana use. The Colorado Supreme Court affirmed the dismissal of a wrongful termination case filed by a quadriplegic who worked for Dish Network. The employee was paralyzed in a car crash and used medical marijuana as a pain medicine. He tested positive in a random drug test in 2010 and was terminated. He filed suit claiming that the discharge violated Colorado state law, which makes it illegal to terminate an employee for engaging in a “lawful activity” outside of work.

The Colorado Supreme court noted that marijuana is still a controlled substance under federal law, therefore marijuana use is not a “lawful” action in an unrestricted sense. This rationale is troubling since there is a move afoot to change federal law to conform with the growing state court trend to allow marijuana. This holding suggests that if federal law was changed, the result would have been different, and the employee would have been protected from termination.

Our firm’s alert on the case can be found here, and this is an important read for all HR professionals in states where medical marijuana has been legalized.

Posted in Uncategorized

Weather Events Create Difficult HR Issues

In the last month, Houston employers have faced catastrophic rains, flooding, and now a tropical storm. We thought it would be a good time to dust off the Firm’s HR Guide for hurricaneHurricane and Disaster Preparation, which can be found here

The highlights of this guide include the following important legal points:

  1. Chapter 22 of the Texas Labor Code broadly prohibits discrimination against employees who miss work to participate in a public evacuation order. There are exceptions, which are described in the Guide.
  2. If an hourly non-exempt employee misses work because of weather, the employer has no obligation to pay the employee. The employer can allow (or even require) the use of vacation or PTO time to cover the absence.
  3. Exempt salaried employees must generally be paid their full salary for the week if they are absent on a day the office or site of employment is closed because of weather. If the office is open, and the employee cannot make it to work because of weather, the employee may be docked only in full day increments – not a partial day. As a practical matter, this means that the employee must be paid if the exempt employee performs any work from home, including responding to emails or returning phone calls. For that reason, we don’t recommend docking exempt employees for weather related absences but instead requiring the employee to make up the time elsewhere (which is always allowed).
  4. Employees who must stay home to care for a sick or disabled family member during a weather emergency may be protected under the Family and Medical Leave Act. We recommend extreme caution in disciplining employees in these circumstances without first obtaining relevant documentation to determine whether FMLA is applicable. 

Weather events in Houston can be stressful times for the workplace, and HR professionals are often caught in the middle between operational needs and employees seeking to stay safe and protect their families.  It is critical that companies understand the boundaries that cannot be crossed and the applicable laws in this area.

Posted in Uncategorized

Uber and Other Startups Facing Independent Contractor Disputes

taxisPerhaps the blurriest line in employment law is the difference between an independent contractor and employee. Companies prefer contractor status because it is cheaper and offers more flexibility. Contractors don’t receive benefits, can be relieved at any time with little to no liability, and the employer pays far less in employment taxes. In recent years, however, companies who use this model have faced increased litigation from workers looking for overtime and governments looking for unpaid taxes. 

The front line of these battles has historically been in the construction and delivery industries, but now that battlefront is shifting. Uber and similar technology start-ups are increasingly relying on a business model of “matching” workers with customers looking for a service. In Uber’s case, an “App” matches a driver with a customer needing a ride. Uber has enjoyed great success, and is now facing increasing litigation over whether its army of contractors who accept driving assignments using their personal vehicles are really employees. A Reuter’s story on the lawsuits can be found here.

This is a good example of how legal issues never really go away, they just morph and adapt to changes in the workplace. As a takeaway, every employer who uses contractors should remember that it is important that such relationships meet the legal test for contractor status, and that all contractors (preferably) sign a comprehensive agreement. Simply calling a worker an independent contractor is inadequate. Generally, the worker must retain control over the details of the work, be free to work for other parties, and not be engaged in the same type of work performed by employees.

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Posted in Labor & Employment, Wage and Hour

NLRB Looking to Undermine State Right to Work Laws

nlrbOn April 16, 2015, the National Labor Relations Board (NLRB) quietly issued a request for amicus briefing in a case it is currently waiting to decide on appeal. The case involves the question of whether a union can charge dues to employees in a “right to work” state who choose not to join the union. In recent years, Michigan and Wisconsin, two formally pro-union states, have passed Right to Work laws under Republican governors (bringing the total to 25 states), and the trend threatens to severely weaken unions across the country. 

The legal question arises out of the conflict between the union’s duty of fair representation and the state right to work laws. In a right to work state, an employee can choose not to join a union, but the union is nonetheless bound to represent the employee under the National Labor Relations Act. Unions claim it is unfair for employees to refuse to pay dues, then expect the union to represent them for free in an arbitration, for example, if they are terminated.

A link to the NLRB’s request for briefing on this issue can be found here.  Obviously, given the leanings of the current NLRB, it would appear that a new rule is coming, which would allow unions to require some form of payment in exchange for representation.  The big question is whether that rule will mandate full-blown dues (which would defeat the right to work law altogether) or some sort of “pay as you go” fee in exchange for union representation in grievances or arbitration.  If the NLRB chooses to change the decades old federal precedent in this area, it will certainly have a huge fight on its hands in the form of an appeal to federal court.

Posted in Uncategorized

Brace Yourselves: Major Overtime Regulations Coming Soon

The Department of Labor has been promising an overhaul of the white collar exemption regulations for over a year. The regulations were originally planned to be released in the Fall of 2014, but were pushed back to February 2015.  We are now in April, and the regulations have not yet been issued. All has been quiet recently, which probably means that the regulations will be coming any day. 


What to look for in the new regulations:

1)      Increased salary threshold:  Currently, the minimum salary for an employee to be exempt from overtime is $455 per week or $23,660 per year. The Department of Labor is expected to raise this threshold to $40,000 or even $50,000. Other ideas being considered include geographic thresholds (to account for different costs of living) and indexing the salary threshold to inflation.

2)      Changes to Duties Tests:  The white collar exemption regulations last received an overhaul under the George W Bush administration in 2004. The Obama administration is expected to undo some of these positions, and make it harder to satisfy the exemptions from overtime. One expected change would be to add a “percentage of duties” test, which would require the exempt employee to spend a majority of his or her time on exempt tasks. Currently, federal law only requires that the employee’s primary, or most important,  duties be exempt.

Depending on your company’s geographic location, and the nature of your business, an increase in the salary threshold could mean a significant shock to your company’s payroll costs. After all, if the minimum salary moves upward, this tends to have an inflationary ripple effect throughout the pay scale as companies strive to retain the differences in relative pay between workers.

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Posted in Federal Government, Labor & Employment, Wage and Hour

New FMLA Regulations Will Affect Texas Employers

Tex200px-US-DeptOfLabor-Seal_svgas does not recognize same sex marriage, so the natural thought would be to deny a request for an employee to take FMLA leave to care for his or her same sex “spouse” from a marriage in another state.  According to the Department of Labor (“DOL”), such a refusal would be against the law, starting March 27, 2015.

Specifically, DOL issued a final rule last month amending the definition of spouse from a “place of residence” test to a “place of celebration” rule.  For Texas, the old rule would mean no same sex spouses under the FMLA for employees who reside in the state.  Under the new rule, a Texas employee who flies away to another state for a lawfully recognized same sex wedding, and returns to Texas, has a “spouse” under federal law and is entitled to FMLA leave to care for that spouse, or a stepchild for example.

The big decision for employers going forward will be what level of documentation will be required of employees seeking FMLA leave in such instances.  Certainly, the employer would have a right to require documentation of a lawful wedding ceremony (i.e. a marriage certificate from the other state)  to confirm that a legitimate relationship exists.  Of course, such requests may be perceived negatively, and employers should make sure any requests for documentation are reasonable and not aimed at harassment or interference with an employee’s right to take the federally protected leave.  For more information about the rule change, please take a look at the firm’s update on the subject, which can be found here.

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Posted in Discrimination, Federal Government, Labor & Employment, Wage and Hour

EEOC Loses Another Background Check Case

The EEOC h200px-US-EEOC-Seal_svgas taken a lot of heat on its controversial stance of aggressively litigating adverse impact cases involving background checks.  In April, 2012, the EEOC issued a new enforcement guidance seeking to curtail the uses of criminal background checks in employment. That guidance resulted in the State of Texas filing a federal lawsuit challenging the EEOC’s authority over state agency hiring practices, and a series of EEOC initiated actions against large employers across the country.

On Friday, February 20, a panel of judges from the United States Court of Appeals for the Fourth Circuit, hammered the EEOC in a case involving an employer’s use of both a credit check and criminal background check during its hiring process. The lower court dismissed the case, and the appeals court agreed, noting that the EEOC’s statistics expert was “utterly unreliable” and “made a mind-boggling number of errors.” Remarkably, the court rebuked the EEOC’s continued use of this expert (who has been found to be biased in earlier cases) as “not serving the public interest well.” A copy of the decision can be found here.

This case is important because the EEOC’s enforcement position on the use of background checks rests almost exclusively on statistics. If the EEOC is willing to rely upon a biased manipulation of statistics, it is hard to imagine how  an employer will get a fair shake during the charge process. This case is also a bell-weather of how the EEOC’s aggressive position on background checks will be received by the courts. Thus far, the EEOC has enjoyed very little success on these types of claims.

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If You Are Planning Layoffs – Here Are Five Things You Need to Know

Unfortunately, when the price of oil goes down, the employment numbers also move downward in Houston. Many clients in the oil and gas industry are either planning or considering downsizing measures, which means that it is a good time to review your policies and procedures to make sure you adequately protect your business.

  1. Get to know the OWBPA:   The Older Workers Benefits and Protection Act has a number of special requirements for a severance agreement which contains a release of an age discrimination claim. If you are terminating a single employee over 40 (not part of a broader layoff)  an employer must: advise the employee tlayoffso seek advice of counsel, provide up to 21 days to review the agreement, and allow up to 7 days to revoke the agreement after it is signed. For a layoff package offered to more than one person, the 21 day period is extended to 45 days. With a group layoff, the employer must also provide, in writing, detailed information about the persons being laid off, including their age and job titles. The purpose of this information is so employees over 40 can have all the facts and make a knowing waiver of a potential ADEA claim.
  2. Use Objective Criteria:  If you have 5 employees in a department and one of them has to go, you should expect the laid-off employee to ask, “Why me?” If that employee happens to be in a protected class, and all of the retained employees are not, the employer will have some explaining to do (especially if there is a pattern of such choices).  Using seniority is an easy way out of this conundrum, but most employers prefer to make selections on merit, not longevity. There is no law against using such a criteria, but it helps to formalize what “merit” means.  Does it mean good attendance, management reviews, or tangible work production? To avoid discrimination claims, it is best to formalize the selection process and not just rely on supervisor discretion on who should stay or leave.
  3. Beware Disparate Impact:  Even if you formalize your selection process and make good documented decisions, it is advisable to check your math. If the results have a clear bias against women, older workers, or a particular minority group, you should review your criteria and ensure that it is fair. Keep in mind that the law allows for employees to bring a case for discrimination where a facially neutral employment process has a disparate impact on a protected class.
  4. Don’t Forget Confidentiality:  Although most severance agreements insist upon the confidentiality of the amount paid to the employee, this agreement is also a good opportunity to include a broader confidentiality agreement governing trade secrets obtained during employment (if you don’t already have one). That employee will likely be getting a new job soon, and it might be with your company’s most bitter rival. This is your last opportunity to lock down your trade secrets and make sure the employee does not take things out the door to a competitor.
  5. Close Out Wage and Hour Suits:  Wage and hour claims are the prevailing type of class action plaguing employers. The law makes it difficult to obtain a release of a Fair Labor Standards Act claim in a severance agreement, but an employer can include a statement in a severance agreement noting that the employee has reported all of his or her time and been paid in full for all known overtime, bonuses, etc. This acknowledgment can be used against the ex-employee if he or she decides to later join a class action.
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Posted in Discrimination, Labor & Employment, Wage and Hour
About HR Headaches
HR Headaches is a blog for Human Resources professionals, business owners, and in-house counsel to get the latest news, analysis and tips in the area of labor and employment law. Every day there are new court decisions, agency interpretations, and regulations which affect the workplace, making it difficult, if not impossible, for many employers to keep current. HR Headaches is dedicated to providing information in a practical, no-nonsense manner to help employers avoid legal disputes and keep policies up to date.
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The Editor

David L. Barron is a Board Certified labor and employment attorney from the law firm of Cozen O’Connor and part of the firm’s national labor and employment practice group. David brings a practical approach to solving workplace problems and is a sought after speaker by business and industry associations, media outlets and companies looking to provide training for its managers and supervisors.