Labor and Employment

Federal law has long prohibited discrimination based on a person’s sex. In recent years, several courts have held that discrimination based on failure to conform to a gender stereotype is a form of prohibited sex-based discrimination. But courts across the country have been more divided about whether those same laws preclude discrimination based on one’s sexual orientation. According to a federal court in Georgia, the answer is no. In a decision handed down on March 10, 2017, the Eleventh Circuit Court of Appeals upheld the dismissal of a former Georgia hospital worker’s claim that she was fired because of her sexual orientation. In Evans v. Georgia Regional Hospital, the court held that Title VII does not cover such claims.

To read the case, please visit the HRUSA Blog at http://blog.hrusa.com/blog/sexual-orientation-discrimination-not-recognized-under-title-vii/.

They say that everything is bigger in Texas.  That now may be true for the risk that an employer’s change to its overtime policies will result in a claim filed by an employee alleging retaliation in violation of the Fair Labor Standards Act (“FLSA”).  That increased risk stems from a ruling by the Texas Court of Appeals for the Fourteenth District in January 2017.  In that case, Tooker v. Alief Independent School District, the appellate court ruled that a change in the employer’s stated overtime policy constituted a materially adverse employment action.

To read the full article, visit the HRUSA Blog at: http://blog.hrusa.com/blog/changing-overtime-policy-may-constitute-retaliation/

For several years, California law has required that whenever an employer hires an employee and “the contemplated method of payment of the employee involves commissions … the contract shall be in writing and shall set forth the method by which the commission shall be computed and paid.

Let me rant a bit. I will say it again. Any written commission agreement must simply and clearly express the terms of the commission. It is a long established rule in California that ambiguities in employer drafted documents will be construed against the employer and in favor of the employee. Chuck-Post-07_web

Because commission plans can serve as an effective means of incentivizing employees to succeed, employers have become expert at creating specific incentives for the specific behaviors. For example, Joe works for XYZ Company. He is great at selling XYZ’s low profit margin products but the company wants to create an incentive for Joe to upsell XYZ’s more profitable products. So, it drills down and creates a commission plan that increases Joe’s earnings if: (1) the company is paid for the order within 10 days of delivery; and (2) provides increasingly higher commissions on a sliding scale based on the size of the employer’s profit. Also included are means for refunds and deductions based upon return of goods or client utilization of post-sale services from XYZ. The employer also makes clear that no commission is earned until payment is received and that the commissions are only due and payable when funds are received while the employee is still employed by the company.

A first draft of the commission plan reflecting all these details can look like a physics equation or something written in Sanskrit. The fact that you or your employee understands the commission arrangement at the time it is written is less important than it probably should be. A commission plan is a contract and the terms of that contract will be construed and understood by a later court by the same rules as any other contract. If any word or phrase can be interpreted in two legitimate way, the interpretation more favorable to the employee will almost certainly be used. This can be an expensive lesson to learn.

Takeaways?

• Ensure all commission plans are in writing, signed by the worker.
• Use clarifying examples to demonstrate how particular abstract terms within a commission plan will actually be applied.
• Expressly state when the commission is “earned” and when earned commissions shall be paid. Clearly state when commissions top accruing or being earned (upon termination of employment, for example).
• Have the commission arrangement reviewed by strangers to your business. If you find yourself defending the instrument in court, neither the judge nor jury is likely to be experienced with the way your business operates.

By Michelle Covington

Over the past several years, many municipalities have taken labor and employment matters into their own hands, passing local laws requiring a higher minimum wage or paid sick leave beyond that required by the state or federal government. Florida and Pennsylvania are pushing back on these local laws.

On February 12, 2015, Philadelphia instituted an ordinance requiring employers with 10 or more employees to provide 40 hours of paid sick leave in a calendar year. Less than a year after its implementation, on December 30, 2016, two senators of the Pennsylvania state legislature issued a memorandum announcing their intent to propose a bill that would override municipal laws of this kind. The senators cited concerns of uniformity and the burden on local businesses as their motivation. On January 25, 2017, SB 128 was introduced in the Pennsylvania legislature.

Read what this bill would preclude municipalities from at http://blog.hrusa.com/blog/push-back-on-local-minimum-wage-and-paid-sick-leave/.

Weintraub Tobin Chediak Coleman Grodin is proud to distribute our first annual Year In Review. Please click on the  icon to make the book full screen. Press “Esc.” on your keyboard to leave full screen.

In May 2016, North Carolina governor Pat McCrory signed into law a bill (HB2) that required transgender people to use restrooms corresponding to their biological sex.  On May 13, 2016, the Obama administration’s Justice Department and the Department of Education responded by sending letters to U.S. public school districts directing them to allow students to use the restrooms (and locker rooms) that matched their gender identity, even if it is different than their gender assigned at birth, and provided additional, detailed guidance on various issues including locker/bathrooms, overnight accommodations, correct gender pronouns, disclosures, and correction of records. (See https://www2.ed.gov/about/offices/list/ocr/letters/colleague-201605-title-ix-transgender.pdf)

The letter advised school districts that it interpreted Title IX regulations to require that, when a school is notified that a “student will assert a gender identity that differs from previous records or representations, the school will begin treating the student consistent with the student’s gender identity” instead of their birth-gender.  Title IX is the federal law that prohibits sex discrimination in education and education-related activities.  Tying this guidance to Title IX was important because State and local rules cannot limit or override the requirements of Federal laws (34 C.F.R. § 106.6(b)) and a violation of Title IX implicates lawsuits and a threat of loss of federal aid.  (34 C.F.R §§ 106.4 and 106.31(a).)

To read the full article, visit the HRUSA blog at: http://blog.hrusa.com/blog/trump-withdraws-transgender-bathroom-guidance/

By Jessica Schoendienst

A California appellate court ruled this week in Vaquero v. Stoneledge Furniture, LLC (No. B269657, filed February 28, 2017) that employees paid on commission are entitled to separate compensation for rest breaks.  In a decision that frustrates employers that view the employment relationship through the lens of contract law, the Vaquero Court held that Stoneledge’s commission plan that paid sales associates a percentage of sales or a guaranteed draw in excess of minimum wage against earned commissions failed to properly compensate sales associates for rest breaks and non-productive time.

In Vaquero, two former sales associates filed a class action complaint challenging Stoneledge’s commission plan. Sales associates were paid on a commission basis.  If the sales associate failed to earn at least $12.01 per hour in commissions for the week Stoneledge paid the sales associate a “draw” against future commissions equal to $12.01 per hour worked (“guaranteed minimum”).  In such circumstances, the commission paid the following week would be reduced by the difference between the commission earned and the draw paid in the prior week.  For example, if a sales associate worked 40 hours and earned $300 in commissions for the week, the sales associate would be paid $480.40 ($12.01 x 40) and would have a $180.40 ($480.40 – $300) draw against any commission earned in the following week. The trial court granted Stoneledge’s motion for summary judgment on the grounds that the commission plan paid at or above minimum wage for all hours worked, including rest breaks.

On appeal, the Vaquero Court reversed the trial court and held that the commission plan failed to adequately compensate sales associates for two reasons.  First, the commission plan did not compensate for rest breaks taken by sales associates who earned commissions instead of the guaranteed minimum because commissions cannot be earned during rest breaks.  Second, for sales associates whose commissions did not exceed the guaranteed minimum, the company clawed back (by deducting from future paychecks) the guaranteed minimum which compensated sales associates for hours worked, including rest breaks which effectively reduced the rest break compensation or the contractual commission rate.  Ultimately, the Vaquero Court rejected the commission plan because it credited the compensation earned during hours in which the sales associates could earn a commission towards rest breaks and other non-productive time, which must be separately compensated.

Employers with commissioned employees are safest providing a guaranteed minimum plus commissions, rather than a draw against commissions.  It is unclear how broadly this decision will be interpreted.  For example, it is unknown whether a commission formula that reduces the earned commissions by the guaranteed minimum would be deemed to result in the non-payment of rest breaks and non-productive time or whether such a formula is permitted when the employer provides supplemental commission compensation.

Time will tell whether this decision will restrict an employer’s ability to factor the amount of a guaranteed minimum into its commission formula.  Employers with commission compensation plans should consult with employment counsel to ensure that the plan properly compensates employees for non-productive time and rest breaks and that the plan does not constitute a forfeiture of previously earned wages.

To read more Labor & Employment articles like this, visit our L&E Blog at http://www.thelelawblog.com/

In a decision just two weeks after Valentine’s Day, the Ninth U.S. Circuit Court of Appeals (“Ninth Circuit”) has ruled that hugs and kisses may decrease, rather than increase, feelings of affection in the workplace. Specifically, the Ninth Circuit overturned a lower court decision dismissing a lawsuit filed by a county correctional officer who alleged that the county sheriff had sexually harassed her in violation of federal and California law. A copy of the decision in is available at this link.

The plaintiff in that case alleged that the sheriff had, among other things, sexually harassed her by “greeting her with unwelcome hugs on more than one hundred occasions, and a kiss at least once, during a 12-year period.” The district court agreed with the defendants “that such conduct was not objectively severe or pervasive enough to establish a hostile work environment, but merely innocuous, socially acceptable conduct.” However, the Ninth Circuit was not so enamored with that view.

The appellate court said it is wrong to think “that courts do not consider hugs and kisses on the cheek to be outside the realm of common workplace behavior.” Additionally, the Ninth Circuit ruled that the sheriff’s conduct did not have to be both “severe and pervasive’” because, for liability to attach, the conduct only had to be either severe or pervasive.

The appellate court was troubled by evidence indicating that the sheriff “hugged female employees much more often than male employees” and that he may have “hugged female employees exclusively.” Without confirming whether it would be acceptable if the sheriff had hugged men as frequently, the Ninth Circuit said that such evidence could allow “a reasonable juror” to grant a verdict in favor of the plaintiff. According to the opinion, “A reasonable juror could find, for example, from the frequency of the hugs, that [the sheriff]’s conduct was out of proportion to ‘ordinary workplace socializing’ and had, instead, become abusive.”

The take away from this is not that any hug or kiss in the workplace automatically leads to liability. Instead, the decision holds that courts must “consider whether a reasonable juror would find that hugs, in the kind, number, frequency, and persistence described by [the plaintiff] create a hostile environment.” In issuing that ruling, the Ninth Circuit did not provide any guidance as to what kind of hugs and kisses, or what number of them, or what frequency of them is across the line for purposes of sexual harassment. Thus, employers would be well advised to consult with legal counsel to determine if changes to their policies or workplace practices are recommended.

To read more Labor & Employment articles from our L&E group, visit the our blog at http://www.thelelawblog.com/.

By Michelle L. Covington

The Equal Employment Opportunity Commission (EEOC) recently reported that between fiscal years 2012 and 2015, private sector charges of harassment increased to account for 30% of all charges of discrimination received by the EEOC.  These numbers indicate that harassment liability and prevention continue to be important.  The EEOC’s most recent guidance on harassment focused primarily on sexual harassment and vicarious employer liability for harassment by supervisors, both published in the 1990’s.

Although not yet in its finalized form, the 75-page proposed guidance indicates the enforcement priorities of the EEOC and gives some helpful explanations and examples for employers.

Here are some of the highlights from the proposed guidance: http://blog.hrusa.com/blog/eeoc-harassment-guidance-receives-much-needed-update/