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Required But Not Integral: Why The Supreme Court Held Security Screening Time Is Unpaid

Determining what is or is not paid time under the Fair Labor Standards Act (FLSA) is no easy undertaking for employers.  Whether the time involves preparatory tasks, or activities performed after the conclusion of a shift, employers face a difficult assignment in drawing the line between what activities should and should not be compensated.  Fortunately, the U.S. Supreme Court handed down a unanimous decision yesterday that provides the guidance employers need.

The decision, Integrity Staffing Solutions v. Busk, is being lauded as a major victory for employers.  Integrity Staffing is a warehousing contractor that companies such as Amazon.com hire to fulfill product orders.  In an effort to prevent employee theft, Integrity Staffing requires its employees to undergo a security screening process at the end of their shifts.  This screening process takes up to 25 minutes to complete – and is unpaid.  Two Integrity Staffing employees filed a collective action alleging that they were owed compensation under the FLSA for this screening process time.  The Ninth Circuit Court of Appeals agreed with the employees’ theory and found that the security screenings were an integral part of the warehousing job which must be paid.

In a unanimous decision, however, the Supreme Court reversed and held that the employees were not entitled to compensation for time spent going through the security process after their shifts.  Ultimately, the Court found that the screening process was not a “principal activity” of the workers’ jobs under the FLSA.  Key to this determination was the finding that the screening process was not “integral and indispensable” to the activities that the employees were hired to perform because the screening process did not constitute an “intrinsic element” of the workers’ principal activities.  The Court found it critical that the screening process could have been eliminated without impairing the employees’ ability to perform their work.

The key take-away from the Supreme Court’s decision is that to be compensable an activity must be “an intrinsic element” of the job―meaning an activity “with which the employee cannot dispense if he is to perform his principal activities.”  Perhaps as important as the legal test adopted by the Supreme Court is the legal test that it rejected.  Namely, Integrity Staffing’s employees urged the Court to hold that because the screening process is required by the employer, and the employer benefits from the security process, it is a principal activity of the job.  Sensibly, the Supreme Court rejected this argument and expressly stated that the inquiry regarding whether compensation is required does not turn on whether an employer mandates a particular activity.  Had the Supreme Court been persuaded by this reasoning it is difficult to fathom how expansive the flood of accompanying litigation would have been.  Thankfully for employers faced with the unenviable task of determining what exactly constitutes work time, the Supreme Court opted to go in a more sensible direction and provide all of us some much needed guidance going forward.

 

December 10, 2014   No Comments

Remember “5/11″

Georgia’s new statutory law of restrictive covenants became effective more than three years ago, on May 11, 2011.  The significance of the new law cannot be overstated.  Prior to the new law, Georgia Courts were required to follow sometimes arcane rules of construction that frequently resulted in covenants being invalidated in their entirety based on what seemed to be trivial defects.

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Within the first year or two following May 11, 2011, several court decisions established that the shelter offered to employers by the new law was available only for agreements that were executed on or after the effective date of the new statute.  Older agreements remained subject to the “old” law, and were no easier to enforce than before the new law went into effect.

One of the many remaining unanswered questions was whether an amendment executed on or after 5/11/11 to a pre-5/11/11 agreement made the new, enforcement-friendly law applicable to the whole agreement.  A decision by the U.S. District Court sitting in Macon earlier this month decided that the answer to that question was “no.” Lowe Electric Supply Co. and Edward Spell v. Rexel, Inc., (M.D. Ga. 2014).

Spell, a salesperson, signed a restrictive covenant agreement with his then-employer, Rexel, on January 12, 2011.   The non-compete provision in this agreement was unenforceable on its face under the “old” Georgia law.  Spell became dissatisfied with his employment and, in an effort to retain him, Rexel proposed a letter agreement modifying his compensation.  The letter agreement expressly incorporated by reference Spell’s January 12, 2011 restrictive covenant agreement.  Spell signed the letter agreement on May 14, 2014.

A few months later, Spell remained dissatisfied with his employment with Rexel and resigned to go to work for Lowe Electric Supply, a competitor of Rexel.  Following threats by Rexel to enforce the restrictive covenants contained in the January 12, 2011 agreement, Lowe Electrical Supply and Spell sued Rexel to enjoin it from seeking to enforce the non-competition and non-solicitation covenants.  The court granted the injunction, finding that the amendment of the 2011 agreement in 2014 did not save the restrictive covenants in the older agreement from being found invalid under the “old” Georgia law.

The message for Georgia employers (or any company with employees in Georgia) is clear – if you have any pre-5/11/11 agreements, have those affected employees execute comprehensive new contracts.   A post-5/11/11 “amendment” will not solve the problem.

 

November 18, 2014   No Comments

“You Can’t Order Safety”

I recently read a brief article regarding the former Captain of “The Best Damn Ship in the Navy.”  The article, an interview with Capt. D. Michael Abrashoff, formerly Captain of the USS Benfold (shown below), specifically focuses on his view that safety must be a top priority in any workplace.  As he says, even on a ship safety is something that you cannot just “order.” Rather, safety is something that has to be part of every individual’s daily thinking — from the Captain all the way down to the lowest ranking sailor.

The U.S. Navy announced today that the ballistic missile defense (BMD)-capable guided missile destroyer USS Benfold (DDG 65) and USS Milius (DDG 69) will become part of the Forward Deployed Naval Forces (FDNF) based at Commander Fleet Activities Yokosuka, Japan.

Captain Abrashoff’s perspective is useful for any workplace leader or any HR professional with responsibilities for workplace safety — and his point would be that every leader and HR professional has that responsibility.  The Captain offers some points worth considering and taking to heart in creating or reviewing your own safety program:

  • Creating a culture of safety is a must.

As he notes, even the Captain of a ship cannot “order” safety.  A belief in the importance of safety becomes a “culture of safety” when it permates everything.  Everyone has to feel the importance of doing every task safely.

  • When employees are injured, they don’t feel safe and that affects performance, not just medical costs.

Safety affects the success of the organization as a whole.  It cannot be compartmentalized or just made a facet of certain actions or obviously dangerous situations; it must be considered in everything that is done and recognized in everything that is not done too.  Safety impacts the bottom line in more than just lost work time, medical costs and workers’ compensation claims.

  • A safety culture takes actions, not just words.

Captain Abrashoff not only scheduled training on safe practices and improvements, but he attended the training and participated in the initatives right along side everyone else on the ship.  By sending the message that safety considerations applied to everyone, he helped communicate the right message.  As he says, “Every sailor knew that I felt their safety was a top priority of mine and not just lip service.”

  • Any sailor could stop any process if they thought safety was being impaired.
  • Any sailor had a direct line to me if they thought their chain of command wasn’t sufficiently concerned or didn’t see what they were seeing.

These two concepts are key to an effective safety program.  Employees will not believe there is a real commitment to safety if they have no role in it or if they are required to proceed with any action they consider unsafe.  Knowing they have the right to say “stop” and that they can go to the top if they need to — even in a super-heirarchical organization such as a branch of the military — underscored that the Captain was serious about safety.  That made the workplace safer.

While a Navy ship is not your regular “workplace,” the lessons of Captain Abrashoff’s experience offer great guidance to HR professionals and leaders in any workplace.

 

October 28, 2014   No Comments

Ebola Alert: OSHA Releases Guidance on Employer and Employee Obligations

The Occupational Safety & Health Administration (“OSHA”) recently released an advisory addressing employer and employee obligations “in the event of possible worker exposure to the Ebola virus.” Employers who believe that there is possible worker exposure to Ebola virus must implement various OSHA standards as part of a comprehensive worker protection program. The question many employers now face is: when does our workforce meet the threshold of “possible worker exposure” that would trigger implementation of these standards?

For many industries, it is more likely that there is possible worker exposure, as OSHA explains:

“Exposure to the virus or someone with Ebola may be more likely in certain sectors, including the healthcare, mortuary/death care, and airline servicing industries. Workers who interact with people, animals, goods, and equipment arriving in the U.S. from foreign countries with current Ebola outbreaks are at the greatest risk for exposure.

Precautionary measures for preventing exposure to the Ebola virus depend on the type of work, potential for Ebola-virus contamination of the work environment, and what is known about other potential exposure hazards.”

More specific guidance is provided for workers in some of these specific industries, including healthcare workers, airline and other travel industry personnel, mortuary and death care workers, laboratory workers, borders customs and quarantine workers, emergency responders, and workers in critical sectors (e.g. transportation, bus drivers, subways, pharmacists). Employers in these industries will need to quickly become versed in this guidance.

More generally, OSHA has clarified that, “Employers should educate workers about the hazards to which they are exposed and to provide reasonable means by which to abate those hazards.” In this respect, OSHA has released guidance to workers who believe they may have been exposed:

“If you think you have been exposed…

Any worker who thinks he or she may have been exposed to Ebola virus, including through travel, assisting an ill traveler or other person, handling a contaminated object, or cleaning a contaminated environment (such as an aircraft) should take the following precautions: 

  • Notify your employer immediately.
  • Monitor your health for 21 days. Watch for fever (temperature of 101°F/38.3°C or higher), muscle pain, headache, sore throat, diarrhea, vomiting, rash, and other symptoms consistent with Ebola.
  • Seek medical attention if you develop any of these symptoms.
  • Before visiting a health care provider, alert the clinic or emergency room in advance about your possible exposure to Ebola virus so that arrangements can be made to prevent spreading it to others.
  • When traveling to a health care provider, limit contact with other people. Avoid all other travel.”

In light of this new guidance, employers who do not fit within one of the industries likely to be affected by Ebola should also consider releasing some communication to their workforce regarding Ebola precautions, including the information shared by OSHA above. Employers may also consider establishing guidelines that require employees to notify their employer if they think they may have been exposed to Ebola by traveling to one of the affected areas or by another means (e.g. caring for family member) and provide a confidential mechanism for doing so. At the same time, employers will want to be careful to abide by the mandates of the Americans with Disabilities Act, including providing reasonable accommodations and keeping any medical information shared confidential.

For more information on these issues, please contact Richard Gerakitis or Jim McCabe.

October 17, 2014   No Comments

Healthy Workplaces, Healthy Families Act of 2014 Provides Paid Sick Leave For California Employees

Governor Jerry Brown recently signed legislation that compels California employers to provide sick leave for their employees. The law, AB 1522 – also known as the Healthy Workplaces, Healthy Families Act of 2014 (“HWHFA”) – provides that employees will be entitled to earn at least three paid days of sick leave per year and will go into effect on July 1, 2015.

California employers should be aware of the provisions of AB 1522 and start planning for design and implementation of sick leave programs that comply with the law’s requirements. The law is designed to cover all California employers regardless of size, and there are only a few exceptions in place for employees covered by collective bargaining agreements, certain in-home health care workers, or airline employees. AB 1522 also carries with it notice and record keeping requirements that will compel employers to be proactive to avoid fines and penalties available under the statute.

Key provisions of HWHFA include the following:

  • Full or part-time employees who work more than 30 days per year in California may accrue and take paid sick days
  • Employees must accrue at least one hour of paid sick time off for every 30 hours worked; alternatively, employers may implement a policy that provides at least 24 hours (or three days) of paid sick leave for employee use each year.
  • Accrued sick days carry over from year to year, but do not need to be paid out at time of termination of employment
  • If an employee separates from employment and is rehired within one year, any previously accrued and unused paid sick days must be reinstated
  • Employees must be allowed to use sick time for their own or a family member’s illness or preventative care
  • Employees must also be allowed to use accrued sick time for time off related to an employee’s status as a victim of domestic abuse, stalking, or sexual assault
  • Employers are required to display a posting explaining employees’ rights to mandatory sick time pay
  • Records regarding hours worked, paid sick time accrued and paid sick time used must be maintained for three years

There are a number of other provisions in HWHFA that can catch unsuspecting employers. It is recommended that all employers with California-based employees or employees who may spend more than 30 days in California in a 12-month period review their policies and procedures for accrual and use of sick pay to ensure compliance with HWHFA. Violations of the Act can result in penalties ranging from $50 to $4,000 per violation, with authority for enforcement of the Act resting with the California Labor Commissioner. While HWHFA does not expressly include a private right of action for employees, employers may see such claims brought under the Private Attorney General’s Act (“PAGA”), where employees may attempt to collect penalties on behalf of the state plus attorneys’ fees and costs.

September 30, 2014   No Comments

Virginia Governor Creates Task Force on Worker Misclassification and Payroll Fraud

The following information was sent out yesterday (August 21, 2014) by members of our Labor & Employment team in Virginia.  If you have employees in Virginia, you need to read this and consider how it may affect your company.

Virginia Governor Terry McAuliffe signed Executive Order 24 on August 14, 2014, to establish an interagency task force on worker misclassification and payroll fraud.

The Executive Order is a response to a 2012 finding (by the Joint Legislative Audit and Review Commission (JLARC) of the Virginia General Assembly) that one-third of audited employers in certain industries misclassify employees, resulting in a failure to provide workers’ compensation insurance and unemployment insurance, to pay payroll taxes, and to comply with minimum wage and overtime laws.  These employers are able to save up to 40 percent in costs, giving them a competitive advantage over complying employers.  JLARC found that worker misclassification also lowers state income tax collections by up to $28 million each year.

The task force will be made up of representatives from the Virginia Employment Commission, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, and the Workers’ Compensation Commission, and will be chaired by the Secretary of Commerce and Trade.  The task force is aimed at better coordinating the efforts of these agencies and developing a comprehensive plan to reduce worker misclassification and payroll fraud in Virginia.

The Executive Order provides seven specific roles for the task force:

  1. Reviewing statutes and regulations related to worker misclassification and payroll fraud;
  2. Evaluating current enforcement practices of the agencies involved;
  3. Developing procedures for more effective inter-agency cooperation and joint enforcement;
  4. Implementing a pilot project for joint enforcement;
  5. Developing educational materials for and an outreach strategy to employers;
  6. Advising on any technological improvements in worker misclassification and payroll fraud detection; and
  7. Recommending any appropriate changes to relevant legislation or administrative rules.

The task force will develop a plan and present a progress report to the governor by December 1, 2014.

Governor McAuliff’s Executive Order follows a 2013 attempt by the legislature to create a task force with similar responsibilities. Although a bill was introduced in the Senate, it never made it out of the House of Delegates.

Virginia is not the only state to operate a task force focused on worker misclassification and fraud.  In 2009, Maryland created a Workplace Fraud Task Force, which was given similar responsibilities.

Governor McAuliffe’s action – and action by other states – should prompt employers to conduct self-audits of worker classifications, to ensure that they do not become the subject of government scrutiny.

August 21, 2014   No Comments

Have You Begun Updating Your Affirmative Action Plans? Step Six of Seven Towards Full Compliance with the New OFCCP Regulations

As we have discussed in our prior blog posts in this series on the new OFCCP Regulations (which became effective on March 24, 2014), most of the new Regulations do not go into effect until the beginning of the contractor’s first plan year following March 24, 2014.  Many contractors have delayed implementing these new requirements because their new plan year has not yet begun.  The time for delaying is quickly coming to an end!

In this post, we continue with Step Six towards full compliance with the new Regulations.  This step must be implemented by the beginning of your first new affirmative action plan after March 24, 2014.

Step 6.    Disseminate Your Affirmative Action Program Internally 

There has always been a requirement to engage in efforts to disseminate information about the affirmative action policy within the workplace.  For example, it has always been “recommended” that contractors put their affirmative action policy in their handbook and notify any union that represents company employees of such affirmative action policy.  Also, it has always been a requirement to provide notification to the union of the minorities/females affirmative action policy (and to post that notification).  However, that notification has not been required for veterans/disabled persons affirmative action policy.

Under the new Regulations, contractors are now specifically required to include their affirmative action policy in their employee handbook or (if there is no handbook) to otherwise make it available to employees and to provide their employees’ union(s) with notice of their affirmative action policy and request their cooperation.  However, it is not entirely clear what specific “policy” language must be published in the employee handbook.  The safest course is to include the entire “Policy Statement” referred to in 60-741.44(a) and 60-300.44(a).  However, a contractor might choose, instead, to include a simpler policy that states that the contractor has an obligation to engage in affirmative action efforts to employ and advance in employment qualified individuals with disabilities and veterans (as well as minorities and women).  Whether the OFCCP would find this shorter policy statement fully compliant remains to be seen.

This is also a good time for contractors to review the list of recommended steps in the Regulations for internal dissemination of the policy to determine which of those steps would also be appropriate.  These recommended steps include:

(i) Inform all employees and prospective employees of its commitment to engage in affirmative action to increase employment opportunities for individuals with disabilities and protected veterans.  The contractor should periodically schedule special meetings with all employees to discuss policy and explain individual employee responsibilities;

(ii) Publicize it in the company newspaper, magazine, annual report and other media;

(iii) Conduct special meetings with executive, management, and supervisory personnel to explain the intent of the policy and individual responsibility for effective implementation making clear the chief executive officer’s support for the affirmative action policy;

(iv) Discuss the policy thoroughly in both employee orientation and management training programs;

(v) Include articles on accomplishments of individuals with disabilities in company publications; and

(vi) When employees are featured in employee handbooks or similar publications for employees, include individuals with disabilities and disabled veterans.

Finally, remember that contractors are required to train all personnel involved with selection and recruitment in the affirmative action program.  If employment decision-makers do not understand the policy, it is not likely there will be proper compliance.

August 1, 2014   No Comments

Labor Unions Want Your Email System Too!

– Re-published from Information Intersection blog site.

If you have a union in your workplace, or if unions have tried to organize workers in your workplace, you know that unions need ways to communicate with your employees.  Before the current digital age, unions relied primarily on communicating through informational picketing and leafleting, posters and mailings, and individual and group meeting to encourage unionization or to communicate with members and represented employees.  Today, with the modern workplace and internet-connected workers, communications can be conducted far more quickly, efficiently, cheaply and often more effectively through electronic means, such as email.  But historically, unions have not been permitted access to company email systems.  The current rule is that “employees have no statutory right to use the[ir] Employer’s e-mail system” for non-work-related purposes. If unions and the current Presidential administration get their way, that all might change.

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July 29, 2014   No Comments

The Risky Business of Background Checks, Online and Otherwise

We recently posted on one of our firm’s other blogs, Information Intersection, about the joint guidance that was recently issued by the EEOC and FTC on employment background checks.  While much of the content of both the employer and employee directed guidance is not new or surprising, these publications further confirm the gist of our previous publishing on these topics.

The complete blog post is available at this link.

May 13, 2014   No Comments

President Employs More Executive Measures to Press Equal Pay Agenda

Yesterday, President Obama signed an executive order and issued a presidential memorandum pressing his equal pay agenda.  The executive order establishes that workers cannot be prevented from discussing their pay with other employees or applicants.  Its declared target is to support efforts to eradicate gender-based pay disparities.  Its aim though is probably more akin to using a hand-held mirror to shoot over your shoulder at the target.

Protecting an employee or applicant because they’ve “inquired about, discussed or disclosed the compensation of the employee or applicant or another employee or applicant” will have only a minimal effect, if any, on pay equity.  Its greater effect will be to offer employees a means to claim retaliation if, for instance, no pay raise results or any similar adverse job action occurs after the employee was known to have discussed his pay.  This executive order will at least spur employers to redouble their efforts to keep comprehensive HRIS data and use vigorous disposition codes for documenting all types of workplace results for applicants and employees alike.

The presidential memorandum mandates that the Department of Labor create a rule requiring federal contractors and subcontractors to submit summary data on the compensation paid to their employees, including data by sex and race.  Obviously, such a rule would normally include classifying the compensation by not only sex and race, but by job title, job grade or some measure differentiating the types of jobs involved.  However, this summary data is likely going to be calculated merely by dividing the total compensation for all employees of a particular sex or race by the number of employees of that race or sex.  Federal contractors already compile comprehensive information examining their compensation practices annually as part of their affirmative action obligations, but now they will be required to submit a snapshot of that data to the Department of Labor each year.  The federal government claims it needs this information because of a “lack of data as a barrier to closing the persistent pay gap for women and minorities.”  However, if the Department of Labor’s past practices are any indication, the compensation data will be collected in such a summary fashion that it is virtually worthless as a statistical indicator of pay discrimination.  Soon the Department of Labor will be able to claim that overall disparities in compensation between genders or races (which could be driven by one or two highly-paid individuals or which could be the result of perfectly defensible pay decisions) justifies launching a widespread investigation of the employer.  How this new data ends up being used against employers in the future will determine whether underpaid workers are benefited or instead whether employers are bludgeoned by submitting unreliable data that will supposedly reveal unlawful pay practices.

So the new federal executive order and presidential memorandum are not nearly as precise as the President intends.  At least the approach of requiring a wage disclosure notice (as New York and California have done) where new employees are alerted to the wage rate for each position protects workers from being shortchanged in straight-time and overtime pay.  These new orders are not nearly so precise nor useful to the workplace.

April 9, 2014   No Comments