Troutman Sanders will host an Employment and Privacy Law Seminar December 11th in our San Diego office and December 12th in our Orange County office. Both seminars will run from 8:00 – 10:00 a.m. and breakfast will be provided. Mark Payne, Chris Gelpi, Kristalyn Lee, and Sadia Mirza will discuss the new employment laws and developments affecting the workplace and the new California Consumer Privacy Act, including practical suggestions for compliance.

Changes coming to you for 2020 include the newly enacted CCPA’s broad privacy requirements and additional developments and risks related to independent contractor classification, wage and hour, leaves of absence, disability accommodation, immigration enforcement, harassment and discrimination, arbitration, pay equity reporting, among others.

To learn more and to register for the San Diego seminar, please click here.

To learn more and to register for the Orange County seminar, please click here.

The Trump administration’s tough stance on enforcing employer compliance continues.  Last year, there were a number of highly publicized raids, including the following:

  • Immigration and Customs Enforcement (ICE) arrested 364 individuals during 30-day enforcement visits in the following midwestern states: Illinois (134), Indiana (52), Kansas (43), Kentucky (60), Missouri (42), Wisconsin (33).
  • ICE conducted a worksite visit at a family-owned business in Texas with 500+ employees and arrested approximately 160 foreign nationals.
  • ICE served search warrants at various businesses in Nebraska and Minnesota resulting in the apprehension of 133 foreign nationals. The businesses where the warrants were served included a grocery store, restaurants, a private ranch, and a grain company.  According to ICE, these enforcement actions were part of a 15-month investigation based on evidence that these employers were knowingly employing unauthorized workers.
  • In June 2018, 200 federal officers raided an Ohio gardening and landscaping company. One hundred and fourteen foreign nationals suspected of being in the U.S. without lawful status were arrested.
  • Ninety-seven foreign nationals working at a meat processing plant in Tennessee were arrested on federal and state charges. This was a joint operation between the Homeland Security Investigations arm, the Internal Revenue Service, and the Tennessee Highway Patrol.  The government opened a case to investigate the business after the employer’s bank noticed large sums of money being withdrawn every week, supposedly to pay the unauthorized workers in cash.
  • ICE raided 98 7-Eleven stores in 17 states and the District of Columbia to issue Notices of Inspection and interview employees. The investigation led to 21 arrests.

This year, the overall trend has been consistent as in 2018.  In July, ICE issued Notices of Inspection to more than 3,000 companies.  The same month, ICE officers launched a series of raids in an effort to apprehend more than 2,000 undocumented migrants across the country.  The number of I-9 audit cases being submitted for review by the OCAHO (Office of the Chief Administrative Hearing Officer) confirms the increase in the number of audits and that the government will audit companies regardless of size, location, or industry.

  • For example, in March 2017, a cleaning services company was served with a Notice of Inspection. Of the 578 Forms I-9 produced by the employer, ICE found that 439 I-9 forms contained substantive violations, including untimely completion of 120 forms, missing I-9s for 224 employees, and failure to properly complete Section 1 and/or Section 2 of I-9 forms for 337 employees.  After taking into account the mitigating factors, the OCAHO ordered the employer to pay $1,161,143.20 in civil penalties.
  • In the case against Technical Marine Maintenance and Gulf Coast Workforce (issued December 2018), the OCAHO imposed a civil fine of $857,868 against these employers, finding that the companies engaged in unfair documentary practices against non-U.S. citizens, U.S. citizens, and lawful permanent residents. The fact that the companies were unwilling to cooperate with ICE during the audit was an aggravating factor.
  • In January 2017, a transportation service company of approximately 11 employees was selected for an audit. Based on its review of the company’s I-9’s, ICE proposed $21,506.10 in civil penalties.  The OCAHO considered the mitigating factors and reduced the amount to $4,500.
  • In December 2016, a cleaning services company was served with a Notice of Inspection. In July 2017, ICE issued a Notice of Intent to Fine in the amount of $44,315.60, and the OCAHO confirmed the monetary amount.
  • Two concrete service companies in southern California with the same owner were selected for an audit in January 2015. Company A had approximately 28 employees and Company B about 48. The OCAHO assessed a civil penalty of $5,500 against Company A and $11,325 against Company B, recognizing the fact that they are both businesses with less than 100 employees.

One of the factors considered when calculating civil fines is whether the employer acted on its own to mitigate or cure any I-9 violations prior to receiving a Notice of Inspection.  The best way to prepare for a visit from ICE is to proactively conduct internal audits of the I-9 forms, identify systematic issues leading to I-9 violations, and implement measures and educate the workforce.  Given the raids and penalties described above, these measures may be more important to many employers than ever before.

With Halloween just around the corner, many of us are preparing costumes, enjoying the fall chill in the air, and making plans for trick-or-treating.  But employers should be prepared for one “trick” announced by the federal Department of Labor a few weeks ago: on September 24, 2019, the federal Department of Labor announced a new rule under the Fair Labor Standards Act that it claims will make 1.3 million American workers “newly eligible for overtime pay.”

The DOL has been working to update this rule for quite some time. In fact, a prior attempt in May 2016 would have increased the minimum salaries required for executive, administrative and professional employees to remain exempt from overtime pay under the FLSA. But in August 2017, a federal court entered a final judgment against implementing that rule.  Not to be deterred, as we covered last year, in March 2019 the DOL tried again, releasing a version of another new rule for notice and comment.

After receiving more than 116,000 comments, the rule was finalized in late September and will go into effect January 1, 2020. The new rule increases the set thresholds for salaries applicable to employees who are exempt from the FLSA’s minimum wage and overtime pay requirements under the executive, administrative or professional employee exemptions. The new rule will also update the regulations to allow employers to count a portion of certain bonuses/commissions towards meeting the salary level. Importantly, though, the final rule does not change any of the existing job duties tests.

You can find the full text of the new rule here.  But in a nutshell: what has changed? The DOL is:

  • raising the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
  • revising the special salary levels for workers in U.S. territories and the motion picture industry.

Finally, the DOL has clarified its intent to update the earnings thresholds more regularly in the future through notice-and-comment rulemaking – so more changes, more often, appear to be on the horizon.

Classification of employees is always a great topic on which to enlist the advice of your favorite Troutman Sanders labor and employment attorney, but the new rule provides a timely reminder to confirm that your classifications (and exemptions) are in good shape to avoid more “tricks” as you head into the new year.

On September 18, 2019, California Governor Gavin Newsom signed into effect the much-anticipated AB-5 Bill, which imposes heightened standards when assessing whether to classify workers as independent contractors rather than employees. AB-5 will drastically affect California employers with workforces heavily reliant on independent contractors by forcing them to re-classify independent contractors as employees subject to most of the compliance requirements under California law, ranging from withholding laws for taxes and statutory benefits to wage and hour laws. AB-5’s statutory presumption of employee status will increase compliance costs and burdens and potentially force employers to alter their business models, or risk liability for costly misclassification lawsuits.

Before the Dynamex decision discussed below, the standard for determining independent contractor status was based on the degree of control exercised by the company in the relationship with the worker, based on several multi-factor tests. The stronger the principal’s control over the worker or the manner and means of performing the work, the more likely the worker would be classified as an employee. These tests also considered other secondary factors, such as the level of skill required, the details of payment, or the length of time for the services.

AB-5 codifies the California Supreme Court’s 2018 ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903, which established a presumption of employee status, for purposes of applying the requirements of the California Wage Orders, and gave employers the burden to prove otherwise under the “ABC” test. Under that test, a worker is presumed to be an employee unless all three of the following conditions are met to properly classify as an independent contractor:

(A) The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and

(B) The service is performed outside the usual course of the business of the employer; and

(C) The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

While the “A” and “C” factors are similar to pre-existing tests for independent contractor status, the “B” factor is expected to be particularly challenging.

AB-5 codifies this standard under the Wage Orders, but also extends it, retroactively, to the Labor Code, Unemployment Insurance Code, and Workers’ Compensation Code. AB-5 provides specific exceptions for several categories of occupations and relationships, such as doctors, licensed professionals, commercial fisherman, and estheticians. Gig economy, entertainment, and trucking industry workers are notably omitted as an exception. Importantly, the exempt occupations remain subject to the pre-existing multi-factor tests for independent contractor status, which are also difficult to satisfy.

California employers should assess and implement the appropriate changes to ensure compliance by reclassifying independent contractors to employees where appropriate. The presumption of employee status means that these workers are now presumptively subject to complex wage and hour requirements under California law (such as minimum wage, meal and rest breaks, overtime pay, reimbursement of business expenses, on-call or reporting time pay, and time-keeping and record-keeping); statutory employment benefits such as paid sick leave, disability benefits, unemployment insurance, workers’ compensation and, depending on the number of employees, health insurance benefits under the Affordable Care Act. These are just some of the issues employers are expected to face with the passing of AB-5.

AB-5 and its codification of the “ABC” test are not as easy as 1-2-3. California employers should consult with counsel to determine whether and to what extent AB-5 applies to their workforce, and assess their employment policies and practices to implement any necessary changes.

To learn more, we invite you to attend Troutman’s Labor & Employment Section’s annual seminars in Orange County on November 6, 2019 or in San Diego on November 7, 2019.

On September 12, 2019, the California Supreme Court ruled that an aggrieved employee bringing a representative action under California’s Private Attorneys General Act (PAGA) cannot recover unpaid wages. In ZB N.A. v. Superior Court, the plaintiff, Kalethia Lawson, brought a lawsuit alleging a sole cause of action under PAGA. She based her PAGA claim on several underlying allegations of Labor Code violations, including failure to provide overtime and minimum wages, meal and rest periods, timely wage payments, complete and accurate wage statements and payroll records, and reimbursement of business-related expenses. In addition to the civil penalties available under PAGA, Lawson sought unpaid wages and premium wages under Labor Code Section 558. The employer moved to compel arbitration of Lawson’s claim for unpaid wages, arguing that unpaid wages are the kind of “victim-specific relief” that Lawson had agreed to submit to binding arbitration.

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As of July 2019, the Washington Supreme Court has ruled that obesity is considered a disability protected under the Washington Law Against Discrimination (“WLAD”). The landmark ruling makes it illegal for employers in Washington to refuse to hire qualified potential employees because the employer perceives them to be obese.

The matter concerned a plaintiff who sued his prospective employer after the company made a conditional offer of employment contingent on a physical exam and medical history questionnaire. After it was determined that the plaintiff’s BMI was over 40 (considered “extremely” or “severely” obese according to the Center for Disease Control), the plaintiff was asked to complete expansive medical testing at his own expense before the company would decide if they would hire him.

In its analysis, the Court noted that the WLAD is generally broader than its federal counterpart, the Americans with Disabilities Act. The Court held that obesity is always an impairment under the WLAD and should be protected and accommodated even if it does not result from a separate disorder. Moreover, would-be plaintiffs do not need to show they actually are obese in order to make a claim under the WLAD; the showing that their actual or potential employers perceived them to be obese is enough to state a claim.

The case was before the Washington Supreme Court on a certified question from the Ninth Circuit. It will now go back to the Ninth Circuit for resolution. In the meantime, Washington employers must be aware of the new ruling and tread cautiously with their prospective and current employees. For jobs that require a certain degree of physical fitness, employers should be careful to approach the job requirements in a way that focuses on the essential job functions in technical and medical terms. Employers, particularly employers who use medical testing or require a physical exam before hiring a candidate, should reevaluate their practices to ensure compliance with the new ruling.

Employers who have any questions or concerns about Washington’s anti-discrimination laws or the new ruling on obesity should consult with a lawyer to address their concerns. Troutman Sanders has Washington-licensed attorneys available to provide guidance on the new ruling.[1]


[1] The case can be found at Taylor v. Burlington Northern Railroad Holdings, Inc., No. 96335-5 (Wash., July 11, 2019).

Partner Timothy St. George was quoted in an SHRM article titled, “FCRA’s Seven-Year Reporting Window Begins with Charge, Not Dismissal.” The article discusses a recent 9th U.S. Circuit Court of Appeals ruling that the measuring period for a criminal charge runs from the date of entry rather than the date of disposition under the Fair Credit Reporting Act (FCRA). Under this decision, criminal charges exceeding the seven-year limit shouldn’t appear in employment screens. St. George stated that, “This interpretation of the reporting rules is consumer-friendly in that it narrows the reporting window and gives specific guidelines of how to treat a non-conviction criminal charge that was ultimately dismissed.” He went on to explain that, “The court provided a lengthy analysis finding a charge is an adverse event upon entry, so it follows that the date of entry begins the reporting window. That interpretation mirrors the opinions put forward by the Federal Trade Commission and the Consumer Financial Protection Bureau.”

On June 3, 2019, the Supreme Court ruled unanimously in Fort Bend County, Texas v. Davis, No. 18-525, that while employees seeking to bring claims under Title VII of the Civil Rights Act of 1964 (“Title VII”) have a mandatory obligation to file a charge with the Equal Employment Opportunity Commission (“EEOC”) before filing suit in court, that filing obligation is procedural, not jurisdictional. That decision has certainly made headlines over the last few days – but what does it mean for employers? Practically speaking, employers should heed the Court’s ruling moving forward and scrutinize EEOC charges, with the assistance of counsel, very early in litigation in order to ensure that failure-to-exhaust defenses are identified and timely raised.

First, a little background. As most employers are aware, Title VII prohibits discrimination in employment on the basis of race, color, religion, sex, and national origin, as well as retaliation on the basis of engaging in activity protected by the statute.  An employee who wants to bring a claim under Title VII is required to first file a charge with the EEOC – the federal agency responsible for enforcing most federal employment discrimination laws. This requirement was designed to encourage the early resolution of employment discrimination disputes, without litigation. While the EEOC cannot independently adjudicate an employee’s claims, it can choose to litigate such claims on behalf of the employee. The EEOC can also investigate or try to seek resolution between the employee and the employer through mediation or other means. Additionally, the EEOC can, and most often does, choose to take no action regarding a charge. At that point, the EEOC will issue a Notice of Right to Sue to the employee, after which he or she is considered to have “exhausted administrative remedies” and may file a lawsuit in court.

The issue the Supreme Court faced (and resolved) in Fort Bend was whether the requirement that an employee file a charge with the EEOC is jurisdictional – meaning the employer can raise it as a defense at any point in the litigation – or whether it is merely procedural, meaning that an employer waives it if it is not timely asserted. The Supreme Court agreed with the majority of circuit courts that have considered this issue and held that the charge-filing requirement is not jurisdictional but instead is a procedural, claim-processing rule “that must be timely raised to come into play.”

What does this mean for employers moving forward? The safest analysis is that an employee’s failure to include a particular claim in his or her EEOC charge (or failure to file a charge at all) does not automatically deprive the court of jurisdiction to hear the case. It does not remove the requirement to file with the EEOC – but if an employer wants to challenge an employee’s claims on the basis of failure to exhaust administrative remedies, the employer must raise the defense on a “timely” basis or risk waiving the defense.  Unfortunately, the Court did not provide specific guidance regarding at what point a failure-to-exhaust argument is no longer “timely.” (Other than the fact that the employer in Fort Bend waited almost five years, which the Court found was clearly too long).  So, prudent employers will want to consult with counsel early on regarding employment suits to determine whether allegations in the lawsuit that were not specifically identified in the charge can be challenged – and if so, you must be sure to raise this defense early in the litigation to avoid waiving that defense.

The days are getting longer, the temperatures are rising, and kids everywhere are counting down the days until summer vacation begins. For many employers, the change in the season brings another big shift: the arrival of summer interns.

Internship programs are great for employers and interns alike – interns gain experience, training, and exposure to the employer’s industry, and employers gain extra help, new ideas, and, hopefully, the chance to establish a pipeline of possible future employees. But the question of whether employers could lawfully offer unpaid internships has been a bit of a moving target. Since we last covered this topic in 2012, however, the rules governing unpaid internships have changed. This year, the Department of Labor (“DOL”) rejected the six-factor test that it had previously used to determine whether an intern should be considered an employee under at least the minimum wage provisions of the Fair Labor Standards Act (meaning that they could not work without pay). Instead, the DOL adopted a new, seven factor-test known as the “primary beneficiary test.”

In good news for employers, the new primary beneficiary test is considered more flexible than the prior test. It focuses on economic realities – in other words, if the employer is the primary beneficiary, the intern must be compensated as an employee.  On the other hand, if the intern primarily benefits from the relationship, the internship can be unpaid.  The DOL indicated that it would consider the following seven factors in the analysis:

  • 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.
  • 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.
  • The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  • The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  • The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  • 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.
  • 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.

While the prior test required employers to meet all six factors, the factors outlined for consideration in the primary beneficiary test are non-exhaustive, which should allow employers a bit more breathing room in structuring unpaid internship programs, especially when students are involved.

In addition to wage and hour issues, it’s important to be alert to other requirements governing your interns.  For instance, states may impose laws more stringent than the DOL’s rules interpreting the FLSA. Also, as we’ve also covered recently, an increasing number of states are considering and passing laws aimed at curbing sexual harassment in the workplace. Some of these laws (for instance, New York City’s) even include sexual harassment training requirements for interns who work for a specified amount of time. And, note that the considerations are different for employers with paid internship programs. Such employers may need to consider additional issues, such as possible coverage under some of the state and federal laws that protect employees.

So, as you prepare to welcome this year’s crop of interns to your office, in addition to checking off orientation, work assignments and welcome packets from your to-do list, consider reaching out to your favorite Troutman Sanders employment attorney to ensure your program is in tip-top shape by before you welcome this summer’s group aboard.

The United States Supreme Court has indicated that it will finally settle the circuit-splitting issue of whether gay and transgender status falls under the protection of Title VII. The court signaled this when it agreed recently to hear three cases that have been appealed to the high court. The three cases are: Altitude Express v. Zarda; Bostock v. Clayton County, Georgia; and R.G. & G.R. Harris Funeral Homes Inc. v. EEOC.

In the Altitude Express case, Zarda (through his estate, as he perished in a BASE-jumping accident after filing his lawsuit) contends that his employer fired him because of his sexual orientation. A three-judge Second Circuit panel first ruled that Zarda had no claim for sex discrimination under Title VII because sexual orientation was not covered by the law.

Then, however, the Second Circuit reversed itself in an en banc decision (which means all of the Second Circuit judges convened to hear the case as opposed to a three-judge panel). The Second Circuit then held that that sexual orientation discrimination is discrimination “because of” sex under Title VI, ruling in Zarda’s favor. The Second Circuit’s decision aligns with the decision from the Seventh Circuit in Hively v. Ivy Tech.

Zarda’s case is also particularly noteworthy not only because of the important contemporary legal issue it presents, but also because it exposed a rare public divide between two federal agencies (the Equal Employment Opportunity Commission and the Department of Justice) while under review at the Second Circuit. . Both agencies filed supplemental briefs in the case, with the EEOC arguing that Title VII applies to sexual orientation while the DOJ argued that it does not apply. It will be particularly instructive to see whether the agencies continue to take opposing stances before the Supreme Court.

Like the Zarda case, the second case—Bostock v. Clayton County, Georgia—presents the issue of whether sexual orientation is protected under Title VII. In the Bostock case, a three-judge panel from the Eleventh Circuit held that that Title VII did not prohibit discrimination based on sexual orientation. Bostock requested that that the full court hear the case en banc as in Zarda, but the court declined to do so.

The third case, EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., is a case brought by plaintiff Aimee Stephens, a transgender woman who worked as a funeral director in Michigan. She presented as a male when she started her job, but then told her supervisor several years later that she was planning to transition to a woman and would start wearing women’s clothes to work. She was fired shortly after that.

Her supervisor said he fired her because Stephens “was no longer going to represent himself as a man.” The supervisor stated in the case that he believes gender transition “violat[es] God’s commands” since “a person’s sex is an immutable God-given fit.”

The EEOC sued on Stephens’ behalf in federal district court in Michigan, claiming discrimination in violation of Title VII. The district court held Stephens was discriminated against because it engaged in sex stereotyping, but that the employer was protected by the Religious Freedom Restoration Act. Stephens appealed.

The Sixth Circuit agreed with Stephens that Title VII bars employment discrimination against transgender people because: (1) transgender discrimination is gender stereotyping; and (2) transgender discrimination is inherently sex discrimination since such a decision must be “motivated, at least in part, by the employee’s sex.” The Sixth Circuit then held that the employer was not protected by the Religious Freedom Restoration Act, reversing the district court.

As these cases proceed before the Supreme Court, we will continue to monitor and update readers.