Proposed Fair Scheduling Rule in Minneapolis Fails To Differentiate Between Exempt and Non-Exempt Employees

According to media reports (including here, here, here, and here), many employers in Minneapolis are upset about the proposed fair scheduling requirements under consideration by the Minneapolis City Council as part of the “Working Families Agenda.” There are a number of problems in the proposed ordinance, such as undefined terms, a number of mandates that do not include any exceptions (like requiring flexible working arrangements), and a presumption that any adverse action taken by an employer within one year is retaliatory. However, one of the most problematic aspects of the proposed ordinance is that it does not differentiate between employees who are exempt or non-exempt under the Fair Labor Standards Act.

Exempt and non-exempt employees are different in many respects, and both types of employees are well represented in Minneapolis. Among other things, exempt employees – like engineers, doctors, teachers, managers, executives, creative professionals, lawyers, etc… – often do not work fixed schedules and are paid on a salary basis, as opposed to an hourly basis. In exchange for a fixed salary, these employees are generally expected to work whatever hours are necessary to get their work done.  For this reason, many employers do not track the precise work hours of their exempt employees.  Exempt employees are also typically paid more than non-exempt employees, particularly in light of the DOL’s recent proposal to raise the minimum salary basis for many exempt jobs to $50,440 per year. In contrast, non-exempt employees – like waiters and waitresses, factory workers, receptionists, janitors, etc… – are typically paid on an hourly basis, have closely tracked work hours, and, at least in some cases, work well-defined shifts that can be scheduled somewhat in advance (though perhaps not 28 days in advance).

The fair scheduling proposal under consideration by the Minneapolis City Council appears to be clearly aimed at non-exempt employees, primarily in service industries. It requires that employees must have well-defined schedules established at least 28 days in advance. It also assumes that employees receive hourly pay by requiring “predictability pay” measured in hourly increments as well as time-and-a-half for certain work performed. But the proposed ordinance does not distinguish between exempt and non-exempt employees. Instead, it broadly states that its protections will apply to “[a]ll employees . . . unless a collective bargaining agreement waives the law in clear and unambiguous terms.”

Applying the fair scheduling requirements of the proposed ordinance to exempt employees is like trying to fit a square peg into a round hole. If a teacher who is paid a fixed salary stays up late grading papers and then teaches a class less than 11 hours later the next day, the fair scheduling ordinance would arguably require the school to pay that teacher time-and-a-half the following morning. Or if a hospital called in extra emergency room doctors due to an emergency (for example, a bridge collapse) without 28 days’ advance notice, the hospital would arguably be required to pay predictability pay to those doctors.

As currently proposed, the fair scheduling provision would arguably apply to high-ranking officials of the City of Minneapolis, including the Mayor, the Chief of Police, and the City Attorney.  These are likely not the employees that the Minneapolis City Council had in mind when it developed its proposal, but the fair scheduling ordinance does not provide any means to distinguish these exempt employees from the non-exempt employees for whom the ordinance was intended.

According to the Minneapolis St. Paul Business Journal, the only other major market in the country with a similar fair scheduling law is San Francisco, but San Francisco’s fair scheduling ordinance only applies to the retail and hospitality industries, where most of the employees are non-exempt. If the fair scheduling ordinance under consideration for Minneapolis included a similar limitation or simply excluded exempt employees, many of the difficulties described above could be avoided.

Takeaway: The fair scheduling proposal in the “Working Families Agenda” under consideration by the Minneapolis City Council does not differentiate between exempt and non-exempt employees. Employers who feel strongly about the proposal should contact their city council members and let them know their thoughts on the proposed ordinance.  Employers may also submit comments via email to at any time before October 16, 2015.

*****For employers who are interested, Minneapolis City Council members have scheduled several community forums to get feedback on the proposed ordinance.  These forums include the following: 

  • September 30, 2015, at 6:30 p.m., at the Mayflower Church, 106 E. Diamond Lake Rd, Minneapolis, MN;
  • October 1, 2015, at 10-11:30 a.m., at the City Church, Commons Room, 1501 W. 54th St., Minneapolis, MN;
  • October 1, 2015, at 6:30 p.m., at the Central Area Neighborhood Development Association, 3736 Chicago Ave S., Minneapolis, MN; and
  • October 13, at 12-1 p.m., at the Fifth Precinct Police Department, 3101 Nicollet Ave., Minneapolis, MN.

Minneapolis City Council Considers Adopting Paid Sick Leave and Fair Scheduling Requirements for Employers

According to recent reports, the Minneapolis City Council is strongly considering imposing new paid sick leave and fair scheduling requirements on all employers within the city. The proposals currently under consideration as part of the “Working Families Agenda” are very similar to the paid sick leave legislation and the fair scheduling provisions of the proposed Working Parents Act that the Minnesota Legislature considered earlier this year, but which did not pass into law. Here’s what employers need to know about the proposal under consideration:

Paid Sick Leave

All employers would be required to offer employees one hour of paid sick leave for every 30 hours worked, which employees could begin to use 90 calendar days after starting their employment. The leave would be available for: (i) mental or physical illness, injury or health condition; (ii) the need to seek medical care (including preventive care); (iii) domestic abuse, sexual assault, or stalking; (iv) care for a family member for any of the above reasons; or (v) during weather or other emergency closure of an employee’s place of employment or the employee’s child’s school or care center.

For employers with 21 or more employees, the maximum leave accrued could be capped at 72 hours. For employers with less than 21 employees, the maximum leave accrued could be capped at 40 hours. Unused hours would carry over from year to year. Employers could require at least 7 days’ notice for foreseeable leave and could request documentation to verify absences that last more than 3 consecutive days. The ordinance would allow employees to trade shifts rather than using paid leave. Also, the ordinance would prohibit employers from requiring employees to find replacements for their shifts or from retaliating against employees for using paid sick leave.

Fair Scheduling

All employers would be required to provide employees with at least 28 days’ notice of their work schedule (including on-call shifts) and to provide at least 24 hours’ notice of any changes. Employees would be allowed to decline any hours not in their original schedule without retaliation, and employers would be required to obtain an employee’s written consent to add any additional shifts or hours.

Predictability Pay Requirements: Employers would be required to pay one hour of “predictability pay” for any employer-initiated changes after the schedule is posted. In addition, if any changes are made with less than 24 hours notice, the employer would be required to pay “predictability pay” of four hours or the duration of the shift, whichever is less.

Right to Rest Requirements: Employers would be required to pay time-and-a-half and obtain employee consent for any work that involves less than 11 hours of time-off between work shifts, more than 55 hours in a week, or more than six consecutive days of work. Employers would also be required to pay time-and-a-half for any work time in excess of eight hours per shift.

Non-Discrimination Based on Hours of Work: Employers would be required to offer the same hourly wages, access to time off, and promotions to workers with similar skills and responsibilities, regardless of the hours that the employees are scheduled to work. However, employers would be allowed to pay different hourly wages based on other reasons, such as seniority, merit, job responsibilities, or production.

Right to Request Flexible Schedule: Employees would have the right to request a “flexible working arrangement” at any time, and the employer would be required to evaluate the request promptly. If the request is based on an employee’s serious health condition, caregiving obligations, educational pursuits, or a second job, the ordinance would require that the employer must grant the request, without any exceptions. The ordinance does not define “flexible working arrangement.”

Access to Full Time Work: Employers would be required to offer hours to existing employees before hiring new or temporary employees. Employers would be required to pay a “retention premium” to discourage “zero hours” schedules. The proposal does not explain what this “retention premium” would be.

Worker Protections and Presumption of Retaliation: Employers would be prohibited from firing, demoting, suspending or taking other adverse actions against employees for exercising their rights or assisting others to exercise their rights under the ordinance. If an employer takes any adverse action within one year of protected activity, the employer would bear the burden of proving that the adverse action was not retaliatory.

Exemptions: The only exemptions to the ordinance’s proposed fair scheduling requirements would be for suspension of business activity due to government recommendation, natural disaster, utility failure, or threats to property or employees. The ordinance does not differentiate between exempt or non-exempt employees. Nor does it create any exceptions for undue hardship, the employee’s ability to perform the essential requirements of the job, or business needs.

Takeaway: Employers in Minneapolis who may be impacted by the proposed Working Families Agenda should contact their Minneapolis City Council members and let them know how they feel about the proposed ordinance.

Another Federal Circuit Court Rejects The DOL’s 6-Factor Test For Unpaid Interns Under The FLSA

The Second Circuit Court of Appeals recently issued a decision rejecting the DOL’s 6-factor test for unpaid interns under the FLSA – now the Eleventh Circuit has issued a decision reaching the same result.

In Schumann v. Collier Anesthesia, P.A., the Eleventh Circuit confronted the issue of whether it should defer to the DOL’s guidance establishing a 6-part test for determining whether an intern qualifies as an employee for purposes of the FLSA. No. 14-13169 (11th Cir. Sep. 11, 2015). In deciding that the DOL’s 6-part test was not entitled to deference, the Eleventh Circuit closely followed the analysis adopted by the Second Circuit earlier this summer in Glatt v. Fox Searchlight Pictures, Inc. Like the Second Circuit, the Eleventh Circuit found that the DOL’s approach – which mandates that all 6 factors must be satisfied – was “too rigid.”

For example, the DOL’s test requires that the employer that provides the training must “not derive any immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded.” Yet, the Eleventh Circuit found that “there is nothing inherently wrong with an employer’s benefiting from an internship that also plainly benefits the interns.”

Instead of applying the DOL’s 6-factor test, the Eleventh Circuit held in Schumann that the appropriate standard was the more flexible “primary beneficiary” test adopted by the Second Circuit in Glatt. Under this standard, the focus is on ““whether the intern or the employer is the primary beneficiary of the relationship.” To aid in making this determination, courts consider a non-exhaustive list of seven factors, including:

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands‐on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Because the test is flexible, no single factor is dispositive. Rather, the court must weigh and balance all of the relevant circumstances, including potential other considerations not expressed in the seven factors.

Takeaway: The Eleventh Circuit’s decision in Schumann is another good decision for employers because it reflects a growing consensus that the determination of intern vs. employee status under the FLSA should be more flexible than the DOL’s preferred approach.

The Eighth Circuit Pushes the Supreme Court’s Hobby Lobby Decision One Step Further

The Eighth Circuit Court of Appeals recently published a decision holding that the accommodation process for religious organizations regarding the contraceptive mandate of the Affordable Care Act (ACA) may itself violate religious freedom. The decision contributes to a growing split among federal courts, which will likely end up before the U.S. Supreme Court.

In Sharpe Holdings, Inc. et al. v. U.S. Department of Health and Human Services, a number of nonprofit religious organizations argued that the accommodation process for the ACA’s contraceptive mandate violated their First Amendment religious freedoms as well as the Religious Freedom Restoration Act (RFRA). No. 14-1507 (8th Cir. Sep. 17, 2015). Under the ACA, covered employers are generally required to provide health insurance to their employees, including insurance for approved contraceptive methods. However, the ACA also creates an accommodation process, which allows religious organizations to notify the third-party administrators of their health insurance plans of their religious objections. The third-party administrator is then obligated to provide the contraceptive coverage for employees instead of the religious organization.

The intended purpose of the ACA’s contraceptive-mandate accommodation was to allow religious organizations to avoid providing contraceptive coverage in violation of their religious beliefs. But the Plaintiffs in Sharpe Holdings, Inc. argued that even the accommodation process made them complicit in providing contraception and, therefore, violated their religious beliefs.

A number of circuit courts – including the Second, Fifth, Tenth, and D.C. Circuits – have rejected the argument that complying with the ACA’s accommodation process makes a religious employer complicit in providing contraception. These courts primarily reasoned that it was federal law, rather than the accommodation process, that triggered the third-party administrator’s duty to provide contraception. These courts also determined that it was the courts’ role to determine whether the asserted burden on religious liberty was sufficiently substantial to trigger the protections of RFRA and that the challenger’s assertions were too attenuated to meet that standard.

The Eighth Circuit disagreed. Relying heavily on the U.S. Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., the Eighth Circuit reasoned that it was required to accept the sincerity of the Plaintiffs’ contention that the accommodation process would substantially violate their religious beliefs. The court explained that:

The question here is not whether CNS and HCC have correctly interpreted the law, but whether they have a sincere religious belief that their participation in the accommodation process makes them morally and spiritually complicit in providing abortifacient coverage. Their affirmative answer is not for us to dispute.

Concluding that the court had no authority to question the Plaintiffs’ conclusion that the accommodation process substantially burdened their religious beliefs, the Eighth Circuit then proceeded to analyze whether there were less restrictive alternatives to accomplishing the government’s objectives in providing contraceptive care. The Eight Circuit held that the Plaintiffs were likely to prevail on their argument that less restrictive alternatives existed.

Specifically, the Eighth Circuit agreed with the Plaintiffs’ arguments that the government could accomplish the same objectives by assuming the costs of providing contraceptive coverage itself, by providing subsidies, reimbursements, or tax credits to employees for contraceptive care, or by paying for the distribution of contraceptives at community health centers, public clinics, or hospitals with income-based support. Because less restrictive alternatives were likely available, the court held that the Plaintiffs were likely to prevail on their claims. As a result, the Eighth Circuit affirmed the lower court’s entry of an injunction prohibiting the government from imposing monetary penalties against the Plaintiffs for refusing to either provide contraceptive coverage or participate in the ACA’s accommodation process.

Takeaway: Given the split among federal circuit courts, the issue of whether the ACA’s accommodation process for the contraceptive mandate violates religious freedom is likely headed to the U.S. Supreme Court.

Five Reasons Why Employee Handbooks Benefit Employers

Here are five reasons why employers should consider adopting an Employee Handbook, if they have not already done so:

  1. Creating a Workplace Culture: Employee Handbooks can play a role in defining the culture of the workplace. For example, a Handbook can reinforce themes of openness, innovation, or respect in the workplace.
  2. Setting Expectations: Employee Handbooks can help set expectations for employees about what rules apply to their employment, how the employment relationship works, and how to address situations that may arise in the workplace.
  3. Establishing Procedures: Employee Handbooks can codify procedures that an employer and its employees can use. For example, the Handbook can explain how to update an employee’s personnel information, how to utilize employee benefits, or how to notify the Company of inappropriate workplace behavior.
  4. Supporting Terminations: In the event that an employee challenges the basis for his or her termination, a list of workplace rules in an Employee Handbook can be useful in justifying the termination.
  5. Creating Legal Defenses: In some cases, an Employee Handbook can create a legal defense for an employer. For example, if the Handbook defines employment as at-will, creates a procedure for reporting discrimination or harassment, or clearly notifies an employee not to expect privacy in his or her emails, these policies can be used to help defend an employer in subsequent litigation. For language condensing these three key policies into haiku format, click here.

Questions That Employers Should Avoid During The Hiring Process

When recruiting and interviewing new employees, there are a variety of potential landmines that employers should do their best to avoid. Here are some of the topics about which employers should not inquire during the hiring process – either because they directly reveal a protected status or may indirectly reveal a protected status:

  • Marital status
  • Maiden name
  • Spouse’s name
  • Spouse’s work
  • Sexual orientation
  • Age or date of birth
  • Sex (unless a bona fide occupational qualification (BFOQ))
  • Height or weight (unless a BFOQ)
  • Race or color
  • Color of eyes or color of hair
  • National origin or heritage
  • Citizenship (but an employer may ask if an individual is legally permitted to work in U.S.)
  • Number or age of children
  • Public assistance information
  • Physical or mental disabilities
  • Person to contact in case of emergency
  • Dates of education
  • Religion or creed (including associations/memberships)
  • Union membership or sentiments

Takeaway: During the hiring process it is important not only to ensure that a candidate has the necessary qualifications and experience, but also to avoid asking for information that could arguably lead to a discrimination claim. For more tips on the hiring process, click here.

New Executive Order Requires Paid Sick Leave for Employees of Federal Contractors

On Labor Day, President Obama issued a new executive order that will require federal contractors and subcontractors to provide paid sick leave for certain employees.  Here’s what employers need to know about the executive order:

When Will the New Requirements Take Effect?  The executive order will apply to covered contracts where the solicitation for such contract has been issued, or the contract has been awarded outside the solicitation process, on or after January 1, 2017.

Which Employees Must Receive Paid Sick Leave?  All employees who work on the performance of covered federal contracts or subcontracts.

How Much Paid Sick Leave Is Required?  Employees must earn at least one hour of paid sick leave for every 30 hours worked.  Employers cannot limit the total amount of paid sick leave accrued at less than 56 hours.  In addition, the paid sick leave must carry over from one year to the next and must be reinstated if an employee is rehired within 12 months of a job separation.

When May Paid Sick Leave Be Used?  The executive order allows paid sick leave to be used for any of the following circumstances:

  1. Physical or mental illness, injury, or medical condition;
  2. Obtaining diagnosis, care, or preventive care from a health care provider;
  3. Caring for a child, a parent, a spouse, a domestic partner, or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship who has any of the conditions or needs for diagnosis, care, or preventive care described above, or is otherwise in need of care; or
  4. Domestic violence, sexual assault, or stalking, if the time absent from work is for the purposes otherwise described above, to obtain additional counseling, to seek relocation, to seek assistance from a victim services organization, to take related legal action, including preparation for or participation in any related civil or criminal legal proceeding, or to assist an individual related to the employee as described above.

Can Paid Sick Leave Count Towards Prevailing Wage or Davis-Bacon Act Obligations?  No.

Can Existing Policies Remain In Effect?  An employer’s existing paid sick leave policy will be deemed compliant if it meets the minimum conditions established by the Executive Order.

How Much Notice Is Required From Employees?  Employees must provide at least 7 calendar days’ notice if the need for leave is foreseeable.  Otherwise, the employee must provide notice as soon as practicable.

Can Employees Be Required to Find a Replacement?  No – the use of paid sick leave cannot be made contingent on the employee finding a replacement worker.

Can Employers Require Certification of the Need For Leave?  Employers may only request certification if the absence is of 3 or more consecutive workdays.  If that condition is satisfied, employers may request certification of the “minimum necessary information establishing a need for the employee be absent from work.”

Do Employees Need To Be Paid For Unused Paid Sick Leave On Termination?  No – but the paid sick leave must be reinstated if the employee is rehired within 12 months.

Is There Anything Else That Employers Need to Know?  Employers are prohibited from interfering with paid sick leave or discriminating against employees who use paid sick leave.

Takeaway:  The new executive order requiring paid sick leave for employees of federal contractors is part of a broader trend, particularly at the state and local level, of new paid sick leave requirements for employers.

Five Things An Employer Should Do After Receiving a Charge of Discrimination

So, you’ve just received a charge of discrimination from the Equal Employment Opportunity Commission or a state agency, like the Minnesota Department of Human Rights? Now what?

Here are five steps an employer should take after receiving a charge of discrimination:

  1. Gather Relevant Documents: One of the primary sources of evidence to defend against employment claims is documentary evidence, including electronically stored information. Accordingly, employers should identify and gather relevant documents relating to the challenged decision (such as the employee’s personnel file or any relevant emails) and preserve those documents.
  2. Identify Witnesses: Apart from documentary evidence, the other primary source of evidence in an employment dispute is witness testimony. As a result, employers should identify potential witnesses who were involved in the challenged decision. These individuals will be helpful in investigating and defending against the charge of discrimination.
  3. Determine Whether to Retain Legal Counsel: After receiving a charge of discrimination, an employer should consider whether to retain legal counsel to defend against the charge.  Legal counsel can provide guidance, help develop a strategy, and either help to mediate the dispute or prepare the employer’s position statement.  Whether legal representation will be necessary will depend on a variety of factors, including the nature of the allegations, the nature of the evidence available to defend against the claim, the employer’s budget, and whether in-house staff have the availability and experience to investigate and respond to the charge.
  4. Decide Whether to Mediate or Oppose the Charge.  The agency investigating the charge will generally offer a choice to the employer of either engaging in early mediation or providing a written response disputing the allegations.  Which choice is best depends significantly on the facts of each case and what the employer wants to accomplish.
  5. Prepare a Position Statement.  If the employer decides not to mediate, it will need to provide a written position statement to the investigating agency.  In general, a good position statement affirmatively tells the employer’s side of the story and responds to the allegations made by the opposing party.  Although it’s not always necessary, there may also be a need to address legal issues or arguments raised by the charging party.

NLRB’s New Joint Employer Standard Threatens Franchisors and Employers Who Utilize Subcontracted Labor

In a recent 3-2 decision, the NLRB changed the prevailing joint employer standard under the National Labor Relations Act (NLRA) in a way that has profound implications for franchisors and employers who utilize subcontracted labor. The NLRB General Counsel first signaled its intent to change the joint employer standard last year, when it issued numerous complaints against McDonald’s as an alleged joint employer under the NLRA. Now, the NLRB has adopted that new standard.

In Browning-Ferris Industries, the NLRB addressed the question of whether Browning-Ferris Industries (“BFI”) was the joint employer of workers provided by a third-party, Leadpoint Business Services (“Leadpoint”). 362 NLRB No. 186 (NLRB Aug. 27, 2015). BFI operated a recycling facility and contracted with Leadpoint to provide workers to sort recycling materials, clean the sorting equipment, and clean the facility. The parties’ agreement specified that Leadpoint was the employer of the workers and gave Leadpoint the primary responsibility for controlling and paying the workers. Under the NLRB’s new joint employer standard, the NLRB found that BFI was a joint employer of the workers for purposes of the NLRA based on factors such as BFI’s right to reject workers provided by Leadpoint and its right to specify the tasks that need to be completed.

The Two-Part Joint Employer Standard

The NLRB’s new joint employer standard is a two-part inquiry. The first question is whether there is a common-law employment relationship with the employees in question. This question is answered by analyzing multiple common-law factors, including:

  1. The extent of control which, by the agreement, the alleged employer may exercise over the details of the work;
  2. Whether or not the one employed is engaged in a distinct occupation or business;
  3. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
  4. The skill required in the particular occupation;
  5. Whether the alleged employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
  6. The length of time for which the person is employed;
  7. The method of payment, whether by the time or by the job;
  8. Whether or not the work is part of the regular business of the alleged employer;
  9. Whether or not the parties believe they are creating the relation of master and servant; and
  10. Whether the principal is or is not in business.

If a common-law employment relationship exists, the second part of the joint employer test asks “whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.”  This factor focuses on whether recognizing a joint employment relationship will serve the purposes of the NLRA, specifically its policy to encourage the practice and procedure of collective bargaining.

What Is Different From the Old Standard?

The primary differences between the NLRB’s new joint employment standard and the old one involve the degree of control required for the NLRB to determine that a company is a joint employer. Joint employment can now be found even when the alleged employer’s control is never exercised or is exercised by an intermediary.

One of the changes in the new standard is that a joint employment relationship can be found where the alleged employer only possesses the authority to control the workers – even if the alleged employer does not actually exercise that authority. The NLRB explained that:

Where a user employer reserves a contractual right to set a specific term or condition of employment for a supplier employer’s workers, it retains the ultimate authority to ensure that the term in question is administered in accordance with its preference. Even where it appears that the user, in practice, has ceded administration of a term to the supplier, the user can still compel the supplier to conform to its expectations. In such a case, a supplier’s apparently independent control over hiring, discipline, and work direction is actually exercised subject to the user’s control.

Another change is that the NLRB abandoned its previous requirement that the alleged employer’s control over the workers must be exercised “directly and immediately” instead of in a “limited and routine manner.” Instead, the NLRB held that “direct and immediate control is not required.” With respect to this issue, the NLRB explained that:

Where the user firm owns and controls the premises, dictates the essential nature of the job, and imposes the broad, operational contours of the work, and the supplier firm, pursuant to the user’s guidance, makes specific personnel decisions and administers job performance on a day-to-day basis, employees’ working conditions are a byproduct of two layers of control.

As a result, the NLRB concluded that the requisite control necessary to support a joint employer relationship may be accomplished either “directly or through an intermediary” – i.e., the supplier employer.

What Are the Implications of the New Standard?

The new joint employer standard will make it easier for employers to be found to be joint employers for purposes of either a duty to collectively bargain with a union or liability for unfair labor practices under the NLRA. The primary targets of the new standard appear to be franchisors, who may be determined to be joint employers with their franchisees, or employers who utilize subcontracted labor, who may be found to be joint employers of either temporary employees or contract workers provided by third-parties.

According to Reuters, unions describe the new joint employer standard as a “game changer” and expect that it will have a significant impact in the areas of warehousing, cleaning services, and health care. For example, one union organizer believed that the ruling would force Google to collectively bargain with warehouse and shipping employees at Google Express.

Overall, the new joint employer standard raises the risk level significantly for joint employment relationships under the NLRA. Employers should consider reviewing their practices to see if there are changes that might reduce their risk. However, whether employers should change their practices in response to the Browning-Ferris Industries decision will depend on a variety of factors and will vary based on each employer’s unique situation.

Takeaway: The NLRB’s new joint employer standard is a significant change in the law. In particular, franchisors and employers who utilize subcontracted labor should pay close attention to the new standard and how it develops in subsequent cases.

D.C. Circuit Upholds the DOL’s New Rules Regarding the FLSA Companionship Exemption

In January of 2015, new rules issued by the U.S. Department of Labor went into effect regarding the “companionship exemption” from the FLSA’s minimum wage and overtime rules. Overall, the new rules narrowed the scope of the exemption. The D.C. Circuit Court of Appeals recently found that the new rules are valid exercises of administrative authority and overturned a lower court’s order that vacated certain portions of the rules.

In Home Care Association of America, et al. v. Weil, a group of trade associations challenged two key components of the DOL’s rules regarding the companionship exemption. No. 15-5018 (D.C. Cir. Aug. 21, 2015). First, the plaintiffs challenged the DOL’s rule that states that third-party employers of employees engaged in companionship services may not avail themselves of the exemption. 29 C.F.R. § 552.109. Second, the plaintiffs challenged the DOL’s narrower definition of “companionship services,” which defines the term to include the provision of care – such as meal preparation, driving, light housework, managing finances, assistance with medications, and arranging medical care – but only if those activities do not exceed 20% of the total hours worked. 29 C.F.R. § 552.6. Under the new rules, the remainder of the time is supposed to be devoted to “fellowship and protection” activities, such as conversation, reading, games, crafts, going on walks, running errands, and accompanying the person to appointments or social events to monitor the person’s safety and well-being.

The district court initially found that both of the challenged provisions were unlawful. The district court reasoned that excluding employees of third-party employers and limiting care activities to 20% or less of work hours contravened the plain terms of the statute.

The D.C. Circuit Court of Appeals disagreed and held that both of the provisions of the new DOL rules were entitled to Chevron deference. The court based its analysis primarily on the Supreme Court’s decision in Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007). In Coke, the Supreme Court held that the text of the FLSA does not specifically answer the third-party employment question and that the legislature had granted authority to the DOL to decide the issue. The court concluded that the Supreme Court’s decision in Coke precluded the challengers’ arguments concerning third-party employment.

With respect to the DOL’s rule limiting care activities to 20% or less of work hours, the court held that it did not have jurisdiction to decide the issue. The court reasoned that because the third-party employer exclusion was valid, none of the plaintiffs were eligible for the companionship exemption. As a result, none of the plaintiffs suffered any harm from the 20% limitation and did not have constitutional standing to address the issue.

Takeaway: Unless there is a successful appeal to the U.S. Supreme Court, the DOL’s new companionship exemption rules are valid and enforceable.

Another Federal Circuit Court Rejects Telecommuting as a Reasonable Accommodation

Another federal circuit court of appeals recently rejected the argument that telecommuting was required as a reasonable accommodation for a disabled employee.

The Sixth Circuit Court of Appeals made waves in 2014 when it concluded that telecommuting was required as a reasonable accommodation for an employee.  Then in early 2015, the Sixth Circuit reversed its previous holding through an en banc review and concluded that telecommuting was not a reasonable accommodation.  In that decision, the Sixth Circuit held that “regularly attending work on-site is essential to most jobs, especially the interactive ones.”

In Doak v. Johnson, the D.C. Circuit reached a similar conclusion to the Sixth Circuit’s en banc analysis.  No. 14-5053 (D.C. Cir. Aug. 18, 2015).  In Doak, the plaintiff worked as a program analyst, whose job duties included monitoring the budget, making procurement requests, and attending in-person meetings with her co-workers.  The plaintiff also suffered from hypothyroidism, depression, and migraines that caused her to miss a significant amount of work on an unpredictable basis.  After exhausting her FMLA leave, the plaintiff requested various accommodations, including a late start-time of 11:00 a.m. (everyone else started between 6:00 and 8:00 a.m.) and telecommuting.  The employer denied the late start-time and telecommuting requests on the grounds that the plaintiff’s position required her to interact frequently with various co-workers and that the accommodations did not allow her to perform those job functions.  Later, the employer terminated the plaintiff due to her ongoing inability to work a regular schedule, and the employee sued.

The D.C. Circuit Court of Appeals agreed with the employer that the plaintiff’s proposed accommodations would not enable her to perform the essential functions of her job – particularly, her ability to be “present in the office to participate in interactive, on-site meetings during normal business hours and on a regular basis.”  The court found that there was strong evidence that being present during regular working hours was an essential function of the plaintiff’s job and that the plaintiff did not present any evidence to the contrary.  As a result, the court upheld the dismissal of the plaintiff’s claims on summary judgment.

Takeaway:  Although telecommuting may be a reasonable accommodation for a disabled employee in certain circumstances, it is generally not a reasonable accommodation when in-person attendance is an essential function of the employee’s job.

Eighth Circuit Reverses NLRB Order Requiring Reinstatement of Employee Who Threatened a Co-Worker

The Eighth Circuit Court of Appeals recently reversed a decision by the National Labor Relations Board (NLRB), which held that an employer acted unlawfully by firing an employee who threatened a co-worker.

In Nichols Aluminum LLC v. NLRB, the employer fired an employee for making a threat to a co-worker shortly after the employee participated in a union strike. Nos. 14-3001, 14-3202 (8th Cir. Aug. 13, 2015). The employee participated in a strike that began on January 20, 2012, and lasted until April 6, 2012. After the strike was over, the employer asked the participating employees to sign a no-strike pledge and agree that they would not “strike again over the same dispute.” The employer also reviewed its longstanding “zero tolerance” workplace violence policy with the employees, which prohibited “harassing, disruptive, threatening, and/or violent situations or behavior” and warned that employees could be terminated for a first offense.

About two weeks after the strike ended, the employee made a threatening “cut throat” gesture towards another co-worker. The co-worker reported that the employee gave him a “death stare” while making the gesture and that he understood it to mean “I’m going to cut your throat.” The employer fired the employee, and the employee subsequently filed an unfair labor practice charge. The charge asserted that the employer unlawfully discriminated the employee for his participation in the strike in violation of the National Labor Relations Act (NLRA).

Initially, the administrative law judge (ALJ) found the employee’s charge to be without merit, reasoning that the employer “reasonably construed” the employee’s behavior as a serious threat. The NLRB disagreed, however, and found that the employee’s termination violated the NLRA. The NLRB emphasized that the no-strike pledge and the timing of the leave constituted evidence of anti-union animus. The NLRB further reasoned that the employer “failed to show it would have fired [the employee] regardless of his participation in the strike.”

On appeal, the Eighth Circuit reversed the NLRB’s determination on the grounds that the NLRB applied the wrong legal standard. The Court explained that under the Wright Line legal standard, the NLRB’s General Counsel must first prove that an employee’s protected conduct was a “substantial or motivating factor in the adverse action.” If and only if the General Counsel can make that showing, the burden shifts to the employer to show that it would have taken the same action for a legitimate, nondiscriminatory reason regardless of the employee’s protected activity.

The court explained that to prove anti-union animus is a “substantial or motivating factor in the adverse action,” simple animus toward the union is not enough. Although hostility towards the union is a factor that should be considered, the court stated that “general hostility toward the union does not itself supply the element of unlawful motive.” The court concluded that the NLRB misapplied the Wright Line standard and did not hold the General Counsel to its burden of providing that discriminatory animus towards the employee’s protected conduct was a “substantial or motivating factor” in the termination decision. Accordingly, the court refused to enforce the NLRB’s order.

Takeaway: The Nichols Aluminum LLC decision is a good reminder that the NLRB does not have the last word on labor law matters. When the NLRB reaches decisions that seem contrary to common sense (like this one or this one or this one), an appeal to a federal circuit court may be an effective means of recourse.