Labor and Employment

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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/

In November 2016, Washington voters approved Initiative Measure No. 1433 (“IM 1433”) which provides for an incremental increase to the state minimum wage as of January 1, 2017 and also provides for paid sick leave benefits beginning January 1, 2018.  The stated intent behind IM 1443 is expressed in the initiative as follows:

“BE IT ENACTED BY THE PEOPLE OF THE STATE OF WASHINGTON: …

It is the intent of the people to establish fair labor standards and protect the rights of workers by increasing the hourly minimum wage to $11.00 (2017), $11.50 (2018), $12.00 (2019) and $13.50 (2020), and requiring employers to provide employees with paid sick leave to care for the health of themselves and their families.”

Read the rest of this article at http://blog.hrusa.com/blog/washington-raises-minimum-wage-and-provides-paid-sick-leave/.

While the Department of Labor may have stayed any national increases to the minimum exemption salary thresholds for the time being, New York employers have not been granted the same reprieve. Effective December 31, 2016, the New York Department of Labor announced incremental increases to its minimum wage laws. With the increased minimum wages, increases were also made to the corresponding salary thresholds applicable to the executive and administrative exemptions to New York’s overtime laws. In New York, the exemption for professional employees has no salary threshold.

Read the rest of the article at http://blog.hrusa.com/blog/increases-to-new-york-minimum-wage-and-salary-thresholds/.

The United States Supreme Court decided last week to resolve a split in the lower courts as to whether the National Labor Relations Act (“Act”) preempts class-action waiver clauses in arbitration agreements between employers and their employees. This is an important development, as the use of such waivers in arbitration agreements (if permissible) can drastically reduce an employer’s exposure to costly class actions alleging overtime violations, missed meal-and-rest periods, and other types of claims. Brenden-Begley-05_web

A number of courts (including the appellate courts that hear appeals from federal courts in California and Illinois) agreed with the National Labor Relations Board (“Board”) that the Act invalidates those waivers. Meanwhile, three other federal appellate courts rejected the Board’s position. Stepping into the fray, the high court last week decided to review two decisions that agreed with the Board and one that disagreed with the Board; namely, Epic Systems Corp. v. Lewis (No. 16-285), Ernst & Young v. Morris (No. 16-300), and NLRB v. Murphy Oil USA, Inc. (No. 16-307).

The Supreme Court currently has just eight justices after the death last year of Justice Scalia, who authored a significant pro-arbitration opinion in 2011. Without a replacement for Justice Scalia being confirmed by the U.S. Senate, the high court may split 4-4 on the resolution of these three cases, which have been consolidated. Such a result most likely would create confusion rather than clarity as to the state of the law. Accordingly, the issue may not be resolved without a ninth justice on the Supreme Court’s bench.

The takeaway here for employers is that it may be too soon to discard those class-action waivers.

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

Count the Fifth Circuit among the latest to allow emotional distress damages to employees who successfully sue for retaliation under the Fair Labor Standards Act.  In a December 19, 2016 opinion, the Fifth Circuit held that the district court should have allowed the jury to receive an instruction on emotional distress damages when it was considering an employee’s FLSA retaliation claim.  In the same opinion, however, the Fifth Circuit did clarify that only employees can bring claims under the FLSA.

The Case

Plaintiffs Santiago Pineda and Maria Pena are a married couple who lived together in an apartment owned by the defendant, JTCH Apartments.  Pena leased the apartment from JTCH.  Pineda performed maintenance work around the complex.  As part of Pineda’s compensation, JTCH discounted Pena’s rent.  After Pineda brought a claim seeking unpaid overtime under the FLSA, JTCH served Pena with a notice to vacate for nonpayment of rent in the exact amount that it had discounted for Pineda’s maintenance work.  Upon receiving the notice, Pineda amended his lawsuit to assert a retaliation claim.  Pena joined the lawsuit to assert her own FLSA retaliation claim.

To read the full article, please visit the HRUSA webpage at  http://blog.hrusa.com/blog/emotional-distress-damages-allowed-under-flsa/