Feb 20, 2014
Why it matters: What was the most common type of discrimination charge filed with the Equal Employment Opportunity Commission in fiscal year 2013? According to the agency’s newly released figures, retaliation-based claims topped the list for the fifth year in a row, up 3 percent over FY 2012. The enforcement and litigation data also revealed that the EEOC bested its monetary recovery record, obtaining a total of $372.1 million between October 1, 2012, and September 30, 2013. In other employment statistics, the Bureau of Labor released its annual report on union membership, documenting an increase in the number of unionized workers in the private sector to 16 million employees. Despite this bump, the agency said the overall percentage of union membership in the workforce stayed the same (at roughly 11.3 percent) and the bulk of unionized employees in the country remain in the public sector (35.3 percent of all public workers). The numbers provide an important snapshot for employment lawyers about the state of the workforce, and document litigation trends for attorneys to keep an eye on.
Detailed DiscussionAfter releasing its Performance and Accountability Report earlier this year,the EEOC provided more details about enforcement and litigation.
The Bureau of Labor also released data for FY 2013 with information about union membership.
To read the EEOC’s FY 2013 Enforcement and Litigation Data, click here.
To read the BOL’s report, click here.
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Why it matters: President Barack Obama’s State of the Union address contained some important news for employers: a raise of the federal minimum wage to $10.10 per hour. The President already made good on his promise, issuing an Executive Order on February 6. The previous federal minimum wage of $7.25 had not been raised since 2009. In his remarks to Congress, President Obama noted that the rate hike reflects a trend in state legislatures, following the likes of Connecticut and Rhode Island. The trend is also continuing into 2014, with a new law enacted in Delaware and legislation introduced in California. President Obama encouraged other states to act in his State of the Union address: “To every mayor, governor, state legislator in America, I say, you don’t have to wait for Congress to act; Americans will support you if you take this on.” Employers should be cognizant of wage-related legislation, particularly as many of the laws use a step system to raise rates over time (up $1 each year over a period of two years, for example).
Detailed DiscussionPresident Obama issued the Executive Order on February 6 with a stated purpose to “increase efficiency and cost savings in the work performed by parties who contract with the Federal Government by increasing to $10.10 the hourly minimum wage.”
“Raising the pay of low-wage workers increases their morale and the productivity and quality of their work, lowers turnover and its accompanying costs, and reduces supervisory costs,” according to the Order. “These savings and quality improvements will lead to improved economy and efficiency in Government procurement.”
The new minimum wage will apply prospectively to federal contractors and subcontractors beginning January 1, 2015. However, contractors may see the increase sooner as the Executive Order provided that for any new contracts negotiated after February 12, “agencies are strongly encouraged to take all steps that are reasonable and legally permissible to ensure that individuals working pursuant to those contracts and contract-like instruments are paid an hourly wage of at least $10.10.”
In addition, the Order established that the federal minimum wage will be adjusted on an annual basis going forward. Beginning January 1, 2016, the Secretary of Labor shall determine the amount of the federal minimum wage each year based on the Consumer Price Index, rounded to the nearest multiple of $0.05.
The Secretary of Labor has until October 1, 2014, to promulgate regulations implementing the Order.
In addition to the federal minimum wage, state legislators are continuing the trend of raising the hourly rate.
Already in 2014, Washington, D.C., Mayor Vincent C. Gray signed the Minimum Wage Amendment Act into law. If Congress approves – or declines to act within 30 days – the law will raise the hourly rate from $8.25 to $11.50 on July 1, 2016, in three increments.
On January 30, Delaware Governor Jack Markell signed into law Senate Bill 6, a stepped increase that will push the state from its current $7.25 to $7.75 on June 1, 2014, and up again to $8.25 on June 1, 2015. The change is the state’s first rate hike since 2009.
Lawmakers in California have introduced a bill to further increase the state’s rate to $13 in 2017. Governor Jerry Brown signed an increase into law last year that provided for a scaled increase from $8 in 2013 to $9 in 2014 and $10 by January 1, 2016.
State Sen. Mark Leno (D-San Francisco)’s S.B. 935 would continue the increase in California to $11 in 2015, $12 in 2016, and $13 in 2017. Beginning in 2018, the state’s minimum wage would adjust automatically to the rate of inflation. California already has one of the nation’s highest rates; if passed, the new bill would cement its status as the state with the highest minimum wage.
To read the Executive Order, click here.
To read 20-459, or the D.C. Minimum Wage Amendment Act, click here.
To read Senate Bill 6, click here.
To read S.B. 935, click here.
Why it matters: In a cautionary tale for employers, the Seventh U.S. Circuit Court of Appeals ruled that an employee’s request for time off from work to accompany her mother on a trip to Las Vegas was covered by the Family and Medical Leave Act because the employee took the leave to “care for” her mother. The unanimous panel emphasized that the statute does not contain geographical limitations and that the same care provided by the employee – helping her mother bathe and dress, administering insulin and other medications, and cooking her meals – would have occurred at home or on a recreational trip. The decision also creates a split in the federal appellate courts, reaching a different conclusion from the First and Ninth Circuits.
Detailed DiscussionBeverly Ballard acted as the primary caregiver for her mother, Sarah, who was diagnosed with end-stage congestive heart failure. Sarah received hospice support but Ballard cooked her mother’s meals, administered insulin and other medications, drained fluids from her heart, bathed and dressed her, and prepared her for bed.
At a meeting with a hospice social worker, Sarah said she had always wanted to visit Las Vegas. With funding from the Fairygodmother Foundation (a nonprofit organization that grants wishes for adults with terminal illnesses), a six-day trip was scheduled for Sarah and Ballard.
Ballard requested unpaid leave from her job with the Chicago Park District. Although her request was denied, Ballard went on the trip. In Las Vegas, the two participated in typical tourist activities. Ballard continued to help her mother as usual and also drove her to a hospital when a fire prevented them from reaching their hotel room, where Sarah’s medication was stored.
A few months later, Ballard was terminated for unauthorized leave. She sued under the FMLA.
Under Section 2612(a)(1)(C) of the FMLA, eligible employees have a right to 12 workweeks of leave “[i]n order to care for the spouse, or a son, daughter, or parent, of the employee, if such spouse, son, daughter, or parent has a serious health condition.”
Ballard’s efforts in Las Vegas qualified as “caring for” her mother under the Act, the Seventh Circuit said.
“[T]he FMLA’s text does not restrict care to a particular place or geographic location,” the court said. “For instance, it does not say that an employee is entitled to time off ‘to care at home for’ a family member. The only limitation it places on care is that the family member must have a serious health condition. We are reluctant, without good reason, to read in another limitation that Congress has not provided.”
The panel also turned to regulations from the Department of Labor for support. Although the FMLA does not define “care” and no regulations specifically interpret Section 2612(a)(1)(C), the DOL regulations “define ‘care’ to include ‘physical and psychological care’ – again without any geographic limitation,” the court said. Further, examples found in the regulations “of what constitutes physical care use no location-specific language whatsoever.”
“Sarah’s basic medical, hygienic, and nutritional needs did not change while she was in Las Vegas, and Beverly continued to assist her with those needs during the trip,” the panel wrote. “In fact . . . [Ballard’s] presence proved quite important indeed when a fire at the hotel made it impossible to reach their room, requiring [Ballard] to find another source of insulin and pain medicine. Thus, at the very least, Ballard requested leave in order to provide physical care. That, in turn, is enough to satisfy § 2612(a)(1)(C).”
The court rejected the employer’s argument that Ballard’s “care” needed to be connected to Sarah’s ongoing medical treatment. Neither the statute nor the DOL’s regulations use the term “treatment” in the definition of care. “Rather, they speak in terms of basic medical, hygienic, and nutritional needs – needs that, as in this case, do not change merely because a person is not undergoing active medical treatment,” the court said. “And it would be odd to read an ongoing-treatment requirement into the definition of ‘care’ when the definition of ‘serious health condition’ explicitly states that active treatment is not a prerequisite.”
A floodgates argument also failed to sway the court. “[W]e note that an employer concerned about the risk that employees will abuse the FMLA’s leave provisions may of course require that requests be certified by the family member’s health care provider,” the panel wrote.
“If [Ballard] had sought leave to care for her mother in Chicago, her request would have fallen within the scope of the FMLA,” the court concluded. “So too if Sarah had lived in Las Vegas instead of with her daughter, and [Ballard] had requested leave to care for her mother there. Ultimately, other than a concern that our straightforward reading will ‘open the door to increased FMLA requests,’ the Park District gives us no reason to treat the current scenario any differently.”
To read the opinion in Ballard v. Chicago Park District, click here.
Why it matters: Are National Football League cheerleaders employees or independent contractors? According to a new complaint filed by an Oakland Raider Raiderette, the football team violates California wage orders and employment laws in a myriad of ways. A flat rate per game results in payment of less than $5 per hour, the suit alleges, and doesn’t take into account time spent rehearsing, performing at charity events, and participating in the annual swimsuit photo shoot. Raiderettes also incur work-related costs that are not reimbursed – such as false eyelashes and yoga mats – and the team neglects to pay the cheer squad at least twice a month as required by law, instead withholding pay until the end of the season. Other groups of workers have had success in establishing themselves as employees and not independent contractors – it remains to be seen if NFL cheerleaders will be next. The lawsuit gained traction when a spokesperson for the San Francisco office of the U.S. Department of Labor confirmed that the agency is investigating the plaintiff’s claims.
Detailed DiscussionLacy T. worked as a Raiderette, a member of the Oakland Raiders’ cheer squad, for the 2013-2014 football season. She signed a written employment contract that she would be paid a flat fee of $125 per home game, or $1,250 per season.
The contract set forth several requirements for all Raiderettes: they must attend all preseason, regular season, and postseason home games; they must attend and participate in all practices, rehearsals, fittings, preparations, drills, photo sessions, meetings, and workouts. Other events or functions could also have compulsory attendance; on average, the cheer squad members were expected to participate in 10 charitable appearances and one appearance for Raiders’ ticket sales.
Raiderettes were responsible for additional expenses such as travel to appearances, the purchase of yoga mats, false eyelashes, and the use of a hairstylist selected by the team.
According to Lacy’s complaint, the contract “is replete with provisions, which, on their face, violate California law.” The flat rate per game does not reflect the fact that Raiderettes work approximately nine hours on a game day nor does it include all of the other time spent at rehearsals and appearances, she charged.
State law was also violated when the team neglected to provide meal and rest breaks on game days and did not reimburse the cheerleaders for their expenses, which Lacy estimated cost her $650 over the course of the season.
Making matters worse: Raiderettes can be “fined” for infractions of squad rules – such as wearing the wrong workout clothing to rehearsals – which can decrease their compensation even more, Lacy argued.
The Raiders further violate California wage orders by withholding payment for the Raiderettes until the end of the season, according to the complaint, instead of paying the cheerleaders on an at least twice-monthly basis.
The suit, filed as a putative class action, seeks payment for unpaid expenses, minimum wage and overtime violations, and meal and rest break violations.
To read the complaint in Lacy T. v. The Oakland Raiders, click here.
Why it matters: Serving as an important reminder to employers, Target reached a $350,000 settlement with a group of almost 4,500 former employees who sued after the store allegedly took too long to send their final paychecks. The class claimed the retailer violated California Labor Code Section 201 by failing to make timely payments to terminated employees of their final wages, triggering statutory penalties under Section 203. Employers wishing to avoid litigation and a six-figure settlement would be well-served to ensure timely payment to terminated employees.
Detailed DiscussionAileen Bernardino filed a putative class action against her former employer Target, alleging in her amended complaint that the retailer violated the California Labor Code with respect to the final payment of wages to terminated employees. Labor Code Section 201 provides that “[i]f an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately.” Section 203 provides that for violations of Section 201, “the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”
After initial discovery and motions, the parties attended a settlement conference. Target had provided class data to the plaintiff that revealed the date of termination and the date the final paycheck was tendered for potential class members.
The parties were able to reach a deal totaling $350,000.
From that amount, Target agreed to pay $102,500 for class counsel, $7,500 for the class representative, $10,000 to the Labor and Workforce Development Agency, and an estimated $35,000 in settlement fees. The class would share the remaining balance, or net settlement amount.
The settlement class – California Target employees from July 9, 2009, to the present who were terminated involuntarily – will receive at least $15 each. Each of the 4,478 class members will receive a share based on the number of days his or her final payment was late (the days between the date of termination and the date the final paycheck was issued), divided by the aggregate days late for all class members, multiplied by the value of the net settlement amount.
Both sides acknowledged the risks of continuing litigation, particularly on the issue of whether Target’s violations of Section 201 were willful, which is the standard required to obtain statutory penalties under Section 203. Although the “willful” requirement does not impose a burden of “deliberate evil purpose,” a plaintiff must establish that the employer intentionally failed or refused to perform an act required by law.
The parties noted that no published decisions establish when a late final wage payment is considered “intentional,” leaving potential hurdles for both sides as an issue of first impression.
To read the joint motion for preliminary settlement approval in Bernardino v. Target Corp., click here.
Why it matters: The newest category of protected class for employees: unemployment. A new bill introduced in both the House and the Senate would ban discrimination by employers on the basis of unemployment status. The Fair Employment Opportunity Act of 2014 follows similar legislation in locations such as New Jersey, New York City, Oregon, and Washington, D.C. New Jersey’s law recently survived a constitutional challenge when a state appellate court upheld the law’s ban on employment advertisements stating that job applicants must be currently employed for their applications to be accepted, considered, or reviewed. The court found that the law – which subjects employers to a $1,000 fine for the first violation, $5,000 for the second, and $10,000 for each subsequent violation – does not infringe upon employers’ free speech rights. Employers should be on the lookout for comparable legislation in other states.
Detailed DiscussionAfter first being introduced in 2011, a bill returned to both the House and the Senate earlier this month proposing to ban discrimination on the basis of unemployment status.
The Fair Employment Opportunity Act of 2014, sponsored by Reps. Rosa DeLauro (D-Conn.) and Hank Johnson (D-Ga.) in the House and Sen. Richard Blumenthal (D-Conn.) in the Senate, would prohibit employers and employment agencies from refusing to consider or offer a job to an unemployed person or advertise using language forbidding applications by the unemployed.
The bill includes a provision creating a civil action against an employer for a violation with possible recovery of actual, compensatory, and punitive damages for plaintiffs.
The same trio of legislators introduced a similar law in 2011. That bill did not progress far despite a hearing on the issue before the Senate Committee on Health, Education, Labor and Pensions and a public hearing held by the Equal Employment Opportunity Commission, which called the exclusion of unemployed applicants an “emerging practice.”
While the prior attempt at federal legislation stalled, New Jersey enacted an analogous law the same year. Employers in the state are prohibited from using advertisements stating that job applicants must be employed in order to be considered for a position. A first violation results in a $1,000 fine, up to $5,000 for a second violation, and $10,000 for each subsequent violation.
New Jersey employer Crest Ultrasonics ran afoul of N.J.S.A. § 34:8B-1 by using an advertisement seeking to hire a manager with “current and up-to-date” technical knowledge of the ultrasonic cleaning equipment business. Among other qualifications, the ad stated that applicants “must be currently employed.”
The New Jersey Department of Labor and Workforce Development investigated after a complaint was filed and ultimately issued Crest a $1,000 fine. The employer appealed, challenging the law on constitutional grounds as a violation of the First Amendment.
But because employment advertisements are a form of commercial speech, they are entitled to less protection and subject to a less stringent form of judicial review, the court said.
Upholding the law, the panel held that the statute’s content-based restrictions were narrowly tailored to directly advance a substantial governmental interest to increase opportunities for the unemployed.
“The modest restrictions that the state has placed upon job advertising under the statute are constitutionally valid, even though employers might not consider or ultimately hire most of the unemployed applicants who respond to such job postings,” the court wrote.
To read the Fair Employment Opportunity Act of 2014, click here.
To read the opinion in New Jersey Department of Labor and Workforce Dev. v. Crest Ultrasonics, click here.
Sandi KingPractice Chair
Esra A. HudsonPartner
Andrew L. SatenbergPartner
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