U.S. DEPARTMENT OF LABOR CLARIFIES FMLA LEAVE ISSUE

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By: Carol G. Schley, Clark Hill PLC

 

 

U.S. DEPARTMENT OF LABOR CLARIFIES FMLA LEAVE ISSUE

 

            It is a familiar situation:  an employee needs to take time off for a reason that qualifies under the Family and Medical Leave Act (“FMLA”), but he asks if he can just use his accrued vacation time and “save” his FMLA leave for later use.  In the past, employers faced with this situation might have granted the employee’s request.  However, a recent Opinion Letter from the U.S. Department of Labor (“DOL”) clarifies that under these circumstances, the employer must deem the leave as FMLA-qualifying and start the FMLA clock, regardless of the employee’s desires.

            Opinion Letters are issued by the DOL in response to queries it receives about various federal laws.  While Opinion Letters are not binding like court decisions, they can be used as persuasive authority on statutory interpretation and reasonably relied upon by employers in complying with the law.  The March 14, 2019 Opinion Letter addressed “whether an employer may delay designating paid leave as Family and Medical Leave Act (FMLA) leave or permit employees to expand their FMLA leave beyond the statutory 12-week entitlement.”  In response, the DOL opined that when information is presented to an employer that indicates an employee is requesting leave that is FMLA-qualifying, the FMLA is triggered.  According to the DOL, there is no flexibility in the FMLA to allow an employee to choose whether to take FMLA leave:

            Once an eligible employee communications a need to take leave for an FMLA-qualifying reason, neither the employee nor the employer may decline FMLA protection for that leave… [T]he employer may not delay designating leave as FMLA-qualifying, even if the employee would prefer that the employer delay the designation.

            The DOL also clarified in the Opinion Letter that an employer may not provide employees with more than 12 weeks of FMLA-qualifying leave (or 26 weeks of military caregiver leave) per year.  While the DOL recognized that employers can provide employees with more generous leave benefits, “such additional leave outside of the FMLA cannot expand the employee’s 12-week (or 26-week) entitlement under the FMLA.”  As a result, “[i]f an employee substitutes paid leave for unpaid FMLA leave, the employee’s paid leave counts toward his or her 12-week (or 26-week) FMLA entitlement and does not expand that entitlement.”

            In summary, the Opinion Letter clarifies an employer’s response to a request by an employee to “save” their FMLA leave.  The response, simply, is “no.”  Further, per the Opinion Letter, if an employee wants to take any accrued paid leave for a reason that is also FMLA-qualifying, the paid leave and the FMLA must run concurrently.

            It is interesting to note that the Opinion Letter directly conflicts with a 2014 decision from the federal Ninth Circuit Court of Appeal, Escriba v. Foster Poultry Farms, Inc., in which the court held that an employee “can affirmatively decline to use FLMA leave, even if the underlying reason for seeking the leave would have invoked FMLA protection.”  The DOL referenced the Escriba case in its Opinion Letter and said that it disagrees with its holding.  Since Michigan is part of the federal Sixth Circuit, the Escriba decision is not controlling over Michigan employers and, therefore, they should follow the DOL’s recent Opinion Letter on FMLA leave designation, pending any further developments in the courts.

            The Opinion Letter is a reminder that FMLA leave issues can be tricky, as evidenced by the situation here where the DOL and a Circuit Court of Appeals came to completely opposite conclusions on the same issue.  When you are in doubt on how to deal with time off requests from an employee, which may not only implicate the FMLA, but also other laws such as the ADA and Michigan’s new Paid Medical Leave Act, it is always best to consult with legal counsel.

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.                                  

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  April 2019

Let Me Tell You What I Just Heard…

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By: Claudia D. Orr, Attorney, Plunkett Cooney 

 

Let Me Tell You What I Just Heard…

Can a rumor form the basis of a sexual harassment claim? That was the issue that everyone seemed excited about in Parker v Reema Consulting Services, a new opinion out of the United States Court of Appeals, Fourth Circuit.

While not binding on us (since we are located in the Sixth Circuit), it drew a lot of attention with amicus curiae briefs by the EEOC, the National Women’s Law Center, AFSCME, AFL-CIO, National Organization for Women Foundation, and over forty other groups. Amicus curiae briefs are filed by non-parties who have a strong interest in the subject matter and outcome and who wish to inform the court on how issues should be decided. So what caused the entire brew ha? Let’s look at the case.

Evangeline Parker worked for Reema Consulting Services, Inc. (RCS) beginning in December 2014 until May 2016. During her short, 18 month tenure, Parker went from a low-level clerk position to Assistant Operations Manager of the facility. She received six promotions, averaging one every three months! Quite the all-star, right? Or was it something else?

Well, as you might expect, a rumor was started by another RCS employee, Donte Jennings (who was hired at the same time and in the same position as Parker). He began telling other employees that Parker was having a sexual relationship with Demarcus Pickett (a high ranking manager) in order to get promoted. As fate would have it, Parker’s promotions made her Jennings boss. Kismet.

The highest-ranking manager at that warehouse facility was Larry Moppins. He helped spread the rumor by asking Pickett, “hey, you sure your wife ain’t divorcing you because you’re f—ing [Parker]”? As the rumor continued to spread, partly with the help of Moppins, employees, including those who worked for Parker, began to resent and disrespect her.

In late April 2016 (the month before she was fired), a mandatory meeting was called to discuss the rumors.  Parker and Pickett both arrived a few minutes late, together. Moppins let Pickett in, but, in front of all of her coworkers, he slammed the door in Parker’s face and locked the door.

The next day Parker arranged to meet with Moppins to discuss the rumor. Moppins blamed Parker for “bringing the situation to the workplace” and that while he had “great things” planned for her, “he could no longer recommend [Parker] for promotions” because of the rumor. He would not “allow her to advance any further within the company.” [Query, how much higher could she have gone at a warehouse after six promotions?] A few days later Moppins told Parker that he should have fired her when she started “huffing and puffing about this BS rumor” and he began screaming at Parker in anger.

Parker filed a sexual harassment complaint with RCS’s Human Resources Manger against Moppins and Jennings. Not long after that, Jennings (who started the rumor) filed a hostile work environment complaint with the Human Resources Manager against Parker. While Parker was told to have no contact with Jennings, he would go into Parker’s area and chat with her subordinates and laugh, stare and smirk at her. Parker complained about this to the Human Resources Manager, who promptly resigned. Just kidding, but what a mess she had with dueling harassment complaints, right? Let me suggest that this might have been a good time to have an employment attorney investigate the complaints.

On May 18, 2016, Parker was called into a meeting with Moppins, the Human Resources Manager, and RCS’s in-house counsel. She was issued a written warning based on Jennings’ complaint and another one for being insubordinate to Moppins and for having poor management abilities. Parker was then fired. It made me wonder why she would have received six promotions in eighteen months if, in fact, she had such poor management skills. Something certainly was amiss with this whole scenario.

Parker filed a three count complaint in federal district court alleging a hostile work environment based on sex under Title VII, retaliatory discharge for having exercised her rights under Title VII and discrimination based on sex since she was fired without having first received three warnings as required under RCS’s policies.

The federal district court dismissed the complaint, stating in part: “Clearly, this woman is entitled to the dignity of her merit-based promotion and not to have it sullied by somebody suggesting that it was because she had sexual relations with a supervisor who promoted her. But that is not a harassment based upon gender. It’s based upon false allegations of conduct by her.”

The court determined that the harassment was neither severe nor pervasive. And, since the harassment was not based on her sex, her belief that she complained about a violation of Title VII was not objectively reasonable. Thus, the retaliation claim failed as well. Finally, the discrimination claim was dismissed because, as to this claim, Parker had failed to exhaust her administrative remedies at the EEOC since it was not mentioned in the charge.

On appeal, RCS argued that the rumor was started by a coworker because he was jealous of Parker’s success, not because she is a woman. Therefore, the rumor was based on conduct, not sex. The appellate court was not buying this for one minute, stating:

[The rumor implied] that Parker used her womanhood, rather than merit, to obtain from a man, so seduced, a promotion. She plausibly invokes a deeply rooted perception – one that unfortunately still persists – that generally women, not men, use sex to achieve success. And with this double standard, women, but not men, are susceptible to being labelled as ‘sluts’ or worse, prostitutes selling their bodies for gain.

***

… [T]raditional negative stereotypes regarding the relationship between the advancement of women in the workplace and their sexual behavior stubbornly persist in our society…

Thus, the appellate court found the “conduct” alleged in this case to be gender-based.

The court also highlighted how only Parker was banned from the all-staff meeting when both she and Pickett were both late. Also, only Parker was ordered to stay away from Jennings when he complained, but he was allowed to enter Parker’s workspace and jeer and mock her. Finally, only Parker, the female member of the alleged sexual relationship, was disciplined while Pickett, the alleged male participant, was not.

Thus, the appellate court reinstated the hostile work environment claim. Because Parker’s complaint alleged a plausible hostile work environment, the retaliation claim was also reinstated. However, the dismissal of the discrimination claim was affirmed because it was not raised in the EEOC charge. The dissenting judge would have also reinstated this claim.

So, now you understand why there were nearly fifty amicus briefs filed in this case. Parker’s harassment was severe or pervasive and it had consequences. She did not simply endure a “few slights” as characterized by the lower court. Parker was fired. A jealous male co-worker started the rumor that Parker was “sleeping her way to the top” and it was perpetuated by other males, including Moppins, the highest ranking male in the facility. Parker had a door slammed in her face and was screamed at by Moppins. This rumor was humiliating, going “right to the core of somebody’s merit as a human being…”

I wonder if the Human Resources Manager was inexperienced, blind to the facts, or powerless to take the right action. Often it is the latter. Having a trusted relationship with an experienced employment attorney can often make the difference. An outside attorney can weigh in and support the advice being given by Human Resources and prevent an injustice such as the one that may have occurred here.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association. She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. April 2019.

March Madness DOL-style Follow the flurry of activity at the Dept. of Labor

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By: Miriam L. Rosen, McDonald Hopkins PLC

 

March Madness DOL-style

Follow the flurry of activity at the Dept. of Labor

             While the rest of us were busy filling out our NCAA tournament brackets, the U.S. Department of Labor (“DOL”) was engaged in another kind of March Madness.  In a flurry of activity during the month of March, the DOL issued two notices of significant FLSA rulemaking along with three new Opinion Letters on FMLA and FLSA issues.

            If you were otherwise distracted by your – now busted – bracket, here’s a look at the DOL’s March 2019 activity.

  • Salary Level Threshold Rulemaking

            The DOL started the tournament….ah, rulemaking activity with a big announcement on March 7, 2019 proposing to modify the salary threshold for FLSA white-collar exempt status from the current level of $23,660 per year to $35,308 annually.  Here are the rule’s “highlights” from the DOL’s website:

  • The proposal increases the minimum salary required for an employee to qualify for exemption from the currently-enforced level of $455 to $679 per week (equivalent to $35,308 per year).
  • The proposal increases the total annual compensation requirement for “highly compensated employees” from the currently-enforced level of $100,000 to $147,414 per year.
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid annually or more frequently to satisfy up to 10 percent of the standard salary level.
  • No changes to the job duties test.
  • No automatic adjustments to the salary threshold.

The public comment period for the proposed salary threshold rule is now open and runs until May 2019.

  • Regular Rate Rulemaking

            On March 28, 2019, the DOL advanced its agenda to the next round by announcing a proposed rule intended to clarify and update the FLSA’s “regular rate” requirements.

            The FLSA requires that nonexempt employees receive overtime pay at 1½ times their “regular rate of pay” for all hours worked over 40 in a workweek.  In a twist that often confuses employers, the “regular rate” is not always the same thing as an employee’s “hourly rate.”

            The difference between the “hourly” and the “regular rate” can occur because the regular rate actually includes “all remuneration for employment paid to, or on behalf of, the employee,” except specific  payments excluded by the FLSA.  The FLSA’s regulations on the regular rate spell out the types of payments employers must include in the “time and one-half” calculation when determining workers’ overtime rates. These include things like shift differentials and non-discretionary bonuses.  So, for example, an employee’s hourly rate will vary from the regular rate because additional pay from a non-discretionary attendance bonus is included in calculating the regular rate.

            Because determining what should be included in calculating the regular rate is sometimes difficult for employers, the DOL’s proposed rule on the regular rate is intended as clarification.  The proposed rule provides that employers may exclude the following types of payments from an employee’s regular rate of pay:

  • The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • Payments for unused paid leave, including paid sick leave;
  • Reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  • Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
  • Discretionary bonuses;
  • Benefit plans, including accident, unemployment, and legal services; and
  • Tuition programs, such as reimbursement programs or repayment of educational debt.

The proposed rule also includes additional clarification about other forms of compensation, including payments for meal periods, “call back” pay, and others.  The public comment period for the proposed regular rate rule is also open and runs for a 60 day period.

  • DOL Opinion Letters

            In between its rulemaking announcements, the DOL also found time to dispense some practical advice for employers looking for a little protection in the paint.   The DOL issued three new Opinion Letters on March 14, 2019.

  • FMLA Designation

            The DOL’s FMLA Opinion Letter addresses whether an employer can delay designating FMLA leave time when it learns that an employee’s absence qualifies for FMLA protection.  This situation may arise, for example, when an employer allows an employee to use accrued paid leave time before using FMLA leave time.

            The DOL called foul on delayed designation.  The Opinion Letter makes clear that employers cannot “delay the designation of FMLA-qualifying leave or designate more than 12 weeks of leave (or 26 weeks of military caregiver leave) as FMLA leave.”  Rather, employers must start the clock on employees’ FMLA leave once they learn that an absence qualifies for federal protection.

  • FLSA and state law conflicts

            In this Opinion Letter, the DOL addressed which law applies when the FLSA conflicts with state or local wage and hour laws.  The DOL made its point by using a New York law as an example.  Under NY state law, residential janitors are excluded from state minimum wage and overtime requirements, but the FLSA does not have a similar exemption.

            After reviewing the tape, the DOL concluded that when a federal, state, or local minimum wage or overtime law differs from the FLSA, the employer must comply with both laws and meet the standard of whichever law gives the employee the greatest protection.   In the example, New York requirements do not cover residential janitors, but the FLSA does. Accordingly, a New York employer must adhere to the FLSA’s minimum wage and overtime requirements because it provides the employee the greatest protection.

  • Employer-Sponsored Volunteering

In the third Opinion Letter issued on March 14th, the DOL addressed employer compensation practices for employees who participate in employer-sponsored volunteer programs. Because the FLSA is intended to protect employee pay, employer-sponsored volunteer programs are subject to scrutiny to ensure that the “volunteer” hours are not really a form of uncompensated hours worked.  The DOL recognized that hours spent on volunteer programs that are both charitable and truly voluntary are noncompensable.   The DOL concluded, however, that programs that are required or where the employer directs or controls the “volunteer work” are not truly charitable and voluntary. In those situations, the employee must be compensated for the “volunteer” time.

To avoid making volunteer work compensable, employers should have a solid game plan in place based on comments in the Opinion Letter:  Participation should be truly voluntary, not required (make it clear in writing); the employer should not direct and control the volunteer work; and employees who do not volunteer should not suffer adverse consequences.

  • The Tournament and the DOL’s Activity Continue

            As we head into April, four teams have “punched their tickets” to the Final Four and the DOL still appears to be caught up in the frenzy.  On April 1, 2019, the DOL issued new proposed rulemaking on the joint employer standard.    Then, on April 2, 2019, the DOL issued three more Opinion Letters.

            Talk about March Madness DOL-style!    And…Go Green!

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. April 2019.

The Clash of the Titans Results in Published Sexual Harassment Case

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By: Claudia D. Orr, Attorney, Plunkett Cooney 

 

The Clash of the Titans Results in Published Sexual Harassment Case

 

I don’t know about you, but I have to chuckle at all of the television ads by lawyers. None is more entertaining than the battle of the ads between Michael Morse and Geoffrey Fieger complete with snarky comments towards each other.

Morse, whose ads (and phone number) brand him as “Mike Wins”, was counter-punched by Fieger who is now using “a winner” as part of his phone number. Fieger, who brought sexual harassment cases against Mike, was then pictured from behind in an ad by Morse in which Morse proclaims he takes on the “big mouths”. Ok, so I am easily entertained.

But this time, Fieger is doing a victory lap having had his clients’ sexual assault claims reinstated by the Michigan Court of Appeals in a new published opinion that combined the cases brought by Samantha Lichon and Jordan Smits against Michael Morse and Michael J. Morse, PC. Let’s look at what the Court of Appeals said because it is not that often it publishes one of its opinions.

Lichon, who worked as a receptionist at the law firm, claims that Morse not only made unwelcome comments, but also sexually assaulted her “during work hours by physically touching her in a sexual manner without her permission.  The unwanted touching included groping Lichon’s breasts and groin area, while audibly commenting things like, ‘you make me so hard,’ and ‘I want to take you into my office.’” Lichon complained to human resources and was thereafter terminated for poor professional performance.

Lichon, represented by Fieger, filed a four-count complaint in the Oakland County Circuit Court alleging sexual harassment under the Elliott-Larsen Civil Rights Act (“ELCRA”), sexual assault and battery against Mike Morse individually, negligent and intentional infliction of emotional distress, and negligence/gross negligence and wanton and willful misconduct. A fifth count was added thereafter alleging a civil conspiracy between Morse and his firm to intimidate, pressure or coerce Lichon not to file the lawsuit.

Deborah Gordon, who is a well-known plaintiffs’ attorney, a titan in her own right and famous for championing women’s rights (and very successfully), is defending Morse and his firm in the Lichon case. I found this fascinating that she would switch sides and represent defendants in a sexual harassment case. Morse, like some employers, has the employees of his firm enter arbitration agreements. One of the primary benefits of an arbitration agreement is supposed to be privacy. Well, apparently not so much for this case which has been splashed about in the news. In lieu of answering the complaint, Gordon filed a motion for dismissal pointing to the arbitration agreement that Lichon signed on September 29, 2015. The civil lawsuit was dismissed on this basis and the parties were ordered to arbitration.

Smits’ claims are based on an identical fact pattern and arise out of the alleged sexual assault that occurred while she was employed as a paralegal. Smits claims that during the firm’s 2015 Christmas party, Morse approached Smits from behind and grabbed both of her breasts in front of two attorneys. Smits complained to human resources and was told “her number one priority [was] to protect Morse’s reputation.” Smits also complained to one of the attorneys to no avail. Smits tendered her resignation indicating she was not comfortable working at the firm after the incident at the Christmas party.

After leaving the firm, Smits was offered two weeks severance in exchange for a non-disclosure agreement.  Smits also alleges that, after she declined, Morse contacted her personally and said “be careful’ because given his connections in the legal community, he could make it difficult for Smits to find work”.

Smits, also represented by Fieger, filed the same claims, but in the Wayne County Circuit Court (“Smits I”). Instead of answering the complaint, Morse and his firm filed a motion for dismissal because of the arbitration agreement Smits signed and because Smits had also agreed to a six month contractual limitations period. This case was also dismissed and the parties were ordered to arbitration.

In response, Smits filed a second lawsuit against Morse only (“Smits II”). While Smits argued there was no arbitration agreement between her and Morse, the court found that this case should also be sent to arbitration under “res judicata” and the “compulsory joinder rule”. Thus, this case would not be tried in a public forum either.

Without going into all of the nuisances, this case is interesting not just because of the drama surrounding these well-known lawyers, but because the arbitration clause was written in such a way as to limit the claims it covered. Specifically, it stated:

This [arbitration agreement] shall apply to all concerns you have over the application or interpretation of the Firm’s Policies and Procedures relative to your employment, including, but not limited to, any disagreements regarding discipline, termination, discrimination or violation of other state or federal employment or labor laws. This includes any claim over the denial of hire.  This Procedure includes any claim against another employee of the Firm for violation of the Firm’s Policies, discriminatory conduct or other state or federal employment of labor laws. Similarly, should the Firm have any claims against you arising out of the employment relationship, the Firm also agrees to submit them to final and binding arbitration pursuant to this Procedure.

The plaintiffs argued that the scope of the agreement was limited “to only those claims that are ‘related to’ plaintiffs’ employment, and because sexual assault at the hands of an employer or supervisor cannot be related to their employment,” it is inapplicable to the claims now brought against Morse and his firm.

The Court of Appeals framed the issue as follows: “whether the sexual assault and battery of an employee at the hands of a superior is conduct related to employment.” The court concluded that it is not. “Despite the fact that the sexual assaults may not have happened but for plaintiffs’ employment with the Morse firm, we conclude that claims of sexual assault cannot be related to employment. The fact that the sexual assaults would not have occurred but for Lichon’s and Smits’ employment with the Morse firm does not provide a sufficient nexus between the terms of the [arbitration agreement] and the sexual assaults perpetrated by Morse. … Under no circumstances could sexual assault be a foreseeable consequence of employment in a law firm.” Therefore, the trial courts erred in dismissing the complaints and compelling arbitration.

The appellate court noted that the issue of whether sexual assault at the hands of a superior is conduct related to employment was an issue of first impression in Michigan. Central to its conclusion is “the strong public policy that no individual should be forced to arbitrate his or her claims of sexual assault. …the idea that two parties would knowingly and voluntarily agree to arbitrate a dispute over such an egregious and possibly criminal act is unimaginable. The effect of allowing defendants to enforce [the arbitration agreement] under the facts of this case would effectively perpetuate a culture that silences victims of sexual assault and allows abusers to quietly settle these claims behind an arbitrator’s closed door. Such a result has no place in Michigan law.” [citations omitted] The court then limited its ruling to the specific facts of the case, noting that Morse and his firm are essentially the same and any recovery comes out of the same pocket.

What struck me is how the court seems to conclude that Morse did what he was accused of doing without any proceedings or findings below on the merits. Not once during the rendition of “facts” did the court use the word “alleged.” What also struck me is that there was a case in 1993 [Radtke v Everett] in which one of the owners of a veterinary practice sexually assaulted an employee and that act was found to be sexual harassment under ELCRA. I thought it strange that the court never mentioned this Supreme Court decision.

Then I read the dissent by Judge Colleen O’Brien. She cited Radtke, noting she would hold that sexual assault is sexual harassment, a form of discrimination under the ELCRA which the parties agreed to arbitrate. Thus based on the clear language of the arbitration agreement, and the strong public policy favoring arbitration, she would have affirmed the decision of the lower courts to require the claims to be arbitrated. However, while Judge O’Brien felt constrained to reach that result, she does not believe that an employee should be required to arbitrate sexual assault claims. But the Legislature is the proper forum for addressing such policy matters, not the courts.

While I am intrigued by the legal battle that looms, the lesson to remember is that if an arbitration agreement is limited in its scope (connected to employment, for example), then other claims may not be covered. That clearly happened in this case.

Well, stay tuned. Unless these cases get dismissed on another basis, or eventually settled, there will be lots of drama as the clash of the titans continues!

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association.  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2019.

 

 

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The Yin and the Yang of Federal Law These Days

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By: Claudia D. Orr, Attorney, Plunkett Cooney 

 

The Yin and the Yang of Federal Law These Days

 

While the National Labor Relations Board (NLRB) seems more employer-friendly under the Republican administration, some of the federal appellate courts, including our own Sixth Circuit Court of Appeals, remain pro-employee.

Let’s start with some good news from the NLRB. In SuperShuttle DFW, Inc, the NLRB returned to its long-standing practice of relying on the common-law test for determining independent contractor status. In so doing, it overruled FedEx Home Delivery which had significantly diminished the importance of finding the worker had an entrepreneurial opportunity for financial gain.

In SuperShuttle DFW, the NLRB found that the franchisees that ran airport shuttle services had significant entrepreneur opportunity as a result of their leasing or ownership of vehicles, methods of compensation, and unfettered control over their daily work schedules and working conditions.  All of these factors together resulted in a significant opportunity for economic gain. By increasing the significance of this factor, the NLRB made it easier to show workers are independent contractors, rather than employees.

By comparison, the Sixth Circuit recently decided that workers who performed security services were employees of Off Duty Police Services, Inc. (ODPS) and not independent contractors in a case under the Fair Labor Standards Act (FLSA). Acosta v Off Duty Police Services, Inc.

In this case, ODPS provided security services and traffic control (such as sitting in a car with lights flashing near a construction zone) around Louisville, Kentucky.  Some of the workers were off-duty police officers who were paid more than those who were not. Many of the workers had provided services for ODPS for years.

When a customer had an assignment, workers with the right experience were called and they could accept or decline the job. If a worker declined, he/she might be “punished” by not being offered assignments for a period of time.

Off-duty police officers used their police cruisers, and those workers who were not were required to buy police style vehicles such as a Crown Victoria, which they could also use when not working. The non-police officers’ average investment ranged between $3000 and $5000.

Off-duty police officers wore their police uniforms and those who were not wore police-style uniforms with ODPS brand patches. All were required to comply with specific grooming standards.

When a worker accepted a job, they were told where and when to report and to whom and they were provided with equipment such as stop/go signs, reflective jackets, etc.  It was rare, however, that any of the workers were supervised while on duty.

When the assignment was over, the workers submitted invoices that reflected the number of hours they worked. Sometimes, workers were paid “by the job”.  ODPS claimed all of its workers were independent contractors. Because of this, none received overtime pay under the FLSA. Hence the lawsuit.  The lower court found that the police officers were independent contractors, but the non-sworn were employees and entitled to overtime pay.

When the appellate court’s analysis begins by saying:  “The FLSA is ‘a broadly remedial and humanitarian statute…designed to correct ‘labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers” you pretty much know how the court is going to rule.

Under the FLSA, the test to determine employment status is one of economic reality and not the common law control test as applied by the NLRB.

The economic reality test looks at (1) the permanency of the relationship; (2) the degree of skill required for the work; (3) the worker’s investment in equipment, etc.; (4) the worker’s opportunity for profit and loss based on his skill (similar to the entrepreneur factor used by the NLRB); (5) the alleged employer’s right to control how the work is performed; and (6) whether the service rendered is integral to the alleged employer’s business.

The appellate court found the following (and not in this order): (1) many of the workers had been with ODPS for years, even decades; (2) very little skill and training was required for the specific tasks; (3) ODPS provided workers with basic equipment, and although non-police officers had a limited investment of up to $5,000 (and the off-duty police officers even less), that paled in comparison to the ODPS annual business expenses; (4) while working more hours would increase the pay, the worker’s exercise of managerial skill would not increase (or decrease) their pay because the worker earned a set hourly wage regardless of the skills exercised; (5) ODPS had policies, procedures, grooming standards and conduct rules, told workers when, where and to whom they would report and exercised some supervision (although more so over the non-police officers than the off-duty officers); and (6) ODPS could not function without the officers and so the work was integral to its business.

While many of the workers were not economically dependent on their ODPS work and held other employment, that fact was not decisive. The relationship was not “the kind of itinerant work that independent contractors ordinarily perform.” The court indicated that “[t]he weight of these factors must be balanced in light of the FLSA’s ‘strikingly broad’ definition of ‘employee’…Taking all these factors into consideration with an eye on the ultimate question of economic dependence, ODPS’ workers…were employees entitled to overtime wages under the FLSA.”

When an employer, such as ODPS, has inadequate recordkeeping of hours worked, the employee has the initial burden of showing he in fact performed work for which he was not properly compensated. This is satisfied if he “produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”

Then the burden shifts to the employer to come forward with evidence “of the precise amount of work performed or with evidence to negative [sic] the reasonableness of the inference to be drawn from the employee’s evidence.” This is often difficult if not impossible to do without accurate time records, as ODPS discovered. Simply put, “[c]ourts will not punish employees for their employer’s failure to comply with the FLSA’s recordkeeping requirements.”

Does your company have any “independent contractors” who have worked for it for years? Does it provide equipment or an office for the work?  Does it tell the worker when to work and how the work should be performed?  If so, that worker may be misclassified. If you need assistance with determining whether a worker is an employee or independent contractor, consult an experienced employment attorney, such as the author.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association.  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2019.

DOL Discloses Proposed New FLSA Salary-Level Threshold of $35,308

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By: Miriam L. Rosen, McDonald Hopkins PLC

 

DOL Discloses Proposed New FLSA Salary-Level Threshold of $35,308                   

            After months of speculation, on March 7, 2019 the U.S. Department of Labor (DOL) announced its proposed new rule on the salary threshold for FLSA white-collar exempt status.  Under the DOL’s proposal, the exempt status salary threshold will increase to $35,308 annually ($679 per week) from the current level of $23,660 per year.

                    Exempt Status Requirements

            The Fair Labor Standards Act requires employers to pay employees at least time and one-half their regular pay rate for all hours worked over 40 in a workweek. However, the FLSA exempts certain positions from the overtime pay requirement if they satisfy two criteria or “tests”:

  1. The Duties Test:  Employees whose primary duties involve executive, professional, and administrative functions (among others) typically meet the exempt status duties test; and
  2.  The Salary Basis Test:  Employee who are (generally) paid a guaranteed salary each week regardless of the quality or quantity (hours) of work performed and are paid at least the specified salary threshold will typically meet the exempt status salary basis test.

The FLSA regulations currently set the salary threshold of pay at $23,660 annually, which a salary of $455 per week.  That salary threshold has been in place since 2004.

The 2016 Proposal to Increase Salary Threshold  

As many employers will recall, in 2016 the DOL issued a new rule modifying the FLSA regulations to increase the salary threshold from $23,660 to $47,476 annually ($913 per week).  That increase, which would have more than doubled the salary threshold, was met with outrage by employers who said it would harm, not help, employees as cuts to hours and even job loss would ensue.   The 2016 final rule faced legal challenges by business groups and was eventually blocked by a federal judge just a week before its December 1, 2016 effective date.

The 2019 Salary Threshold Proposal and Next Steps

Although the DOL did not succeed in implementing the increased salary threshold in 2016, it has been generally recognized that, at 15 years old, the current $455 per week salary level is outdated.  Secretary of Labor Alex Acosta made clear at his 2017 Senate confirmation hearing that he was looking to set a new annual salary level threshold at a mid-point between the $23,660 level and the $47,476 level set by the DOL under the Obama Administration.  The DOL found that mid-point at $35,308 annually after receiving extensive public input including in-person listening sessions and more than 200,000 written comments. According to reports, the new salary threshold is expected to affect the exempt status classification of just over one million employees.

In its salary threshold proposal, the DOL also revealed that it would not seek automatic salary adjustments as included in the 2016 final rule.  However, the DOL did indicate that it would seek periodic reviews to update the salary threshold every four years. An update would continue to require notice-and-comment rulemaking.

The DOL revealed the new salary threshold and other details in a Notice of Proposed Rulemaking on March 7, 2019. Once the proposed regulations are published in the Federal Register the week on March 12, 2019, the public will then have a 60 day public comment period.   Barring any significant changes, the DOL would then be expected to release the final rule on the new salary threshold later this year with a likely effective date in late 2019 or early 2020.

And, like the 2016 salary threshold rule, challenges are likely.  In fact, at least one worker advocacy group has already said that it will contest the proposed rule because the DOL has not adequately justified moving away from the higher 2016 salary threshold.

Apparently, the baseball saying, “it ain’t over till its over,” also applies to DOL regulations.

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2019.

Medical Marijuana User’s Employment Claims Go Up in Smoke

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By: Miriam L. Rosen

 

 

Medical Marijuana User’s Employment Claims Go Up in Smoke

            Employers sometimes struggle with what actions to take when an applicant or employee with a valid medical marijuana card tests positive.  It can seem counter-initiative to deny or terminate employment for a positive drug test when the applicant or employee is legally using the product.  In a February 19, 2019 unpublished opinion, the Michigan Court of Appeals cleared the air, ah…so to speak, for employers on this issue.  The court held that an employer does not violate the Michigan Medical Marihuana Act (“MMMA”) by rescinding a conditional offer of employment based upon a positive drug test. Eplee v City of Lansing, Mich. Court of Appeals (unpublished opinion per curiam Feb. 19, 2019).

The Facts.

            Angela Eplee applied for a position with the Lansing Board of Water and Light (“BWL”).  After Eplee received a conditional job offer that included a required drug screen, she informed BWL that she held a valid state-issued medical marijuana card.   Several days later, BWL notified Eplee that she had tested positive for tetrahydrocannabinol (“THC”).  Although BWL initially discussed adjusting its drug testing policy, two days later BWL notified Eplee that it was rescinding the conditional job offer.

            Several months later, Eplee filed a two-count complaint against BWL for violation of the MMMA and breach of contract.  Eplee alleged that BWL violated Section 4 of the MMMA, which protects the holder of a valid medical marijuana card from “arrest, prosecution or penalty in any manner or [denial of] any right or privilege” by a business or occupational or professional licensing board or bureau.

               Eplee alleged that as a “business or occupational or professional licensing board or bureau” BWL was prohibited from denying her “any right or privilege” based on her status as a medical marijuana card holder.

            Of course, BWL saw things differently.  In asking the court to dismiss the case, BWL  noted that:  1) the “MMMA does not create a private cause of action authorizing suit for alleged violations of the act;  and 2) that the MMMA does “not prohibit employers from maintaining zero-tolerance drug policies for their applicants and employees.”   BWL also argued that a breach of contract claim could not be based on the rescission of an offer for at-will employment.

Case Dismissed.

            The court noted that the core of the dispute was Eplee’s “contention that because she tested positive for THC as the result of her use of medical marijuana, the BWL was absolutely prohibited for rescinding her conditional offer of employment.” On that point, the court disagreed with Eplee and dismissed her claims.

            With regard to Section 4 of the MMMA, the court noted that the law protects a card holder from loss of a pre-existing entitlement, right, or benefit.  However, the court held that BWL’s rescission of Eplee’s job offer was not the loss of any pre-existing right or entitlement because under Michigan law employment relationships are presumed to be terminable “at the will of either party,” and “such at-will employment relationships may be terminated “for any reason or no reason at all.”   In other words, as an applicant for an at-will position, Eplee had no right or entitlement to the job.  The court noted that the MMMA “does not provide an independent right protecting the medical use of marijuana in all circumstances, nor does it create a protected class of users of medical marijuana.”

Lessons Learned.

            This opinion provides employers with some much needed guidance on how the MMMA applies to enforcement of drug-testing policies. While it is likely that there will be similar challenges to the new recreational marijuana law, that act does specifically state that it “does not prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person…because of that person’s violation of a workplace drug policy.” Finally, the at-will nature of employment was important in this case.   It should serve as a reminder to employers to include clear at-will language in employment applications and to ensure that applicants complete and sign those applications.

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. March 2019.

URGENT UPDATE on Contractual Limitations Periods

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By Claudia Orr, Attorney, Plunkett Cooney 

 

Urgent Update on Contractual Limitations Periods

 

 Just last week I wrote about contractual limitations and reminded everyone what a great defense this was and how every employer should have this on their employment application and on the handbook acknowledgement.

Well, since that article another Michigan Court of Appeals decision was issued and the contractual limitations period was not enforced in that case.  Mohamed v Brenner Oil Company (February 21, 2019).  So, once again I write to explain what happened in that case and to tell you how to avoid this unfortunate outcome.

When Plaintiff Mohamed began his employment with Brenner Oil Company, he received a copy of its Employee Handbook.  The last page of the handbook was a form called “Receipt and Acknowledgment” which contained a 180-day limitations period. The table of contents included a reference to the form and indicated that it was located on page 85 of the handbook.  The bottom of the form was also marked page 85. And, the handbook, being written correctly, noted at various places that nothing in the handbook created any contractual rights.

After plaintiff was discharged in January 2017, he brought suit under the Elliott-Larsen Civil Rights Act in September 2017, well beyond the 180 day limitations period. The defendant moved for dismissal of the complaint based on the contractual limitations period and the motion was granted by the circuit court.

The plaintiff appealed. The Court of Appeals reversed the lower court, finding that the 180-day limitations period was “part” of the employee handbook and, therefore, since nothing contained within the handbook created any contractual rights, the 180-day limitations was unenforceable.  This was the very issue I noted in last week’s article.  But now, we have some additional guidance on how to clearly separate the form from the handbook.

Based on this case, I am now making the following recommendations.  Do not have the acknowledgement in the same Word document as the handbook. Do not make it the last page of the handbook or reference it in the handbook’s table of contents. Keep it separate in every way. Literally, cut the acknowledgement from the handbook, and paste it into a new Word document.  Call the new document “Acknowledgement and Agreement”. And, finally, when you email the handbook to employees for their review, make the Acknowledgment and Agreement a separate attachment to that email.

While this document will still require the employee to acknowledge receiving the handbook and acknowledge that nothing in the handbook creates any contractual rights, you should still require the employee to agree to comply with its terms as a condition of employment. Then add the 180-day limitations period and make the employee agree to that term.  Also, have the employee acknowledge that continuation of the at-will employment, even for one day, is sufficient consideration for the employee’s agreement. You should now have an enforceable agreement (assuming it is correctly written) that can be used to dismiss any untimely claims.

Remember, as I stated last week, it remains unclear whether a contractual limitations period is applicable to federal civil rights claims, but there are plenty of cases that suggest it would.  Unfortunately, we know that contractual limitations will not apply to claims under the Fair Labor Standards Act, the federal wage law (at least in the Sixth Circuit).

Make sure applicants agree to the 180-day limitations period on your employment application. This is especially important if you have a union.  An agreement entered by the individual before becoming employed will likely still be enforceable after the employee becomes a member of the union.

If you need assistance in drafting a contractual limitations period, contact an experienced employment attorney.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association.  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. February 2019.

Contractual Limitations Periods

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By:  Claudia D. Orr, Plunkett Cooney

 

Contractual Limitations Periods

 

Today I write about contractual limitations, one of my absolute favorite defenses. When one of my clients gets sued and does not have a contractual limitations period agreement with the plaintiff, and it would have defeated the claims, I am really, really, disappointed. This has been a valid defense for claims brought under Michigan law since 2001. Therefore, there is no reason for any employer not to have this agreement with its employees.

When I read Dzurka v MidMichigan Medical Center-Midland wherein the Michigan Court of Appeals recently upheld the dismissal of the state law claims on this basis I thought this was a great opportunity to remind employers just how important this is!

Keeping the story brief, the plaintiff filed her complaint in the Midland Circuit Court on December 5, 2017 (765 days after her termination of employment and 36 days after the dismissal of a related federal lawsuit).  The trial court enforced a contractual limitations period found on plaintiff’s 2007 employment application which stated:

Limitations on Claims.  I agree that any lawsuit against MidMichigan Health and/or its agents arising out of my employment or termination of employment including but not limited to claims arising under State or Federal civil rights statutes, must be brought within the following time limits or be forever barred: (a) for lawsuits requiring a Notice of Right to Sue from the EEOC, within 90 days after the EEOC issues that Notice, or (b) for all other lawsuits, within (i) 180 days of the event(s) giving rise to the claim or (ii) the time limit specified by statutes, whichever is shorter.  I waiver any statute of limitations that exceeds this time limit.

Not bad.  I write mine a little differently, but this version did the trick in this case. The trial court found it enforceable and dismissed the lawsuit. On appeal, the plaintiff argued that the “agreement” lacked mutuality of obligation and therefore it failed because it lacked consideration.  The appellate court disagreed, recognizing that the grant of employment established consideration, and the dismissal was upheld.

It is unclear whether a contractual limitations period is applicable to federal civil rights claims, but there are plenty of cases that suggest it would.  Unfortunately, we know that contractual limitations will not apply to claims under the federal wage law (at least in the Sixth Circuit).

Does your employment application have a contractual limitations period on it?  If not, what are you waiting for? A final note: it likely will not be enforceable if it is in the Employee Handbook because if the handbook is written correctly it starts off by saying “nothing in this handbook creates any contractual rights.”  That means if the employer wants to enforce a term it has to be in a separate “contract”.  If you need assistance in drafting a contractual limitations period, contact an experienced employment attorney.

This article was written by Claudia D. Orr, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and an experienced labor/employment attorney at the Detroit office of Plunkett Cooney (a full service law firm and resource partner of Detroit SHRM) and an arbitrator with the American Arbitration Association.  She can be reached at corr@plunkettcooney.com or at (313) 983-4863. For further information go to: http://www.plunkettcooney.com/people-105.html

 Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. February 2019.

EEO-1 Filing Deadline Extended until May 31, 2019

By: Miriam L. Rosen, McDonald Hopkins PLC

 

EEO-1 Filing Deadline Extended until May 31, 2019

 

On February 1, 2019, the EEOC announced an extension of the filing deadline for the 2018 EEO-1 report from March 31, 2019 to May 31, 2019. The extension is the result of the partial federal government shut down, which delayed mailing of log-in information for the EEO-1 web portal.

The EEOC indicated that the filing portal will now be open in early March.  In addition, the EEOC will soon release more information about EEO-1 filing and suggests employers monitor the EEO-1 website.

Completing the EEO-1 form can be a trying process.  If you are in need of a refresher on EEO-1 basics, here are answers to a few common questions related to preparing and filing the EEO-1 report:

  • Does my company need to file an EEO-1 Report?

All companies that meet the criteria below are required to file the EEO-1 report annually:

  1. Subject to Title VII of the Civil Rights with 100 or more employees; or
  2. Subject to Title VII of the Civil Rights Act with fewer than 100 employees if the company is owned by or corporately affiliated with another company and the entire enterprise employs a total of 100 or more employees; or
  3. Federal government prime contractors or first-tier subcontractors subject to Executive Order 11246 with 50 or more employees and a prime contract or first-tier subcontract amounting to $50,000 or more.
  • What information is used to complete the EEO-1 Report?

The EEO-1 Report is based on workforce data from one payroll in the fourth quarter of 2018.

  • How is an employee’s ethnicity determined for EEO-1 reporting purposes?

The EEOC notes that employee self-identification is the preferred method of identifying the race and ethnic information necessary for completing the EEO-1 report. Employers are required to attempt to allow employees to use self-identification to complete the EEO-1 report. If an employee declines to self-identify, employment records or observer identification may be used.

Employers can find additional answers to EEO-1 preparation and filing questions at the EEOC’s web page: EEO-1 Frequently Asked Questions and Answer at: https://www.eeoc.gov/employers/eeo1survey/faq.cfm.

This article was written by Miriam L. Rosen, who is Chair of the Legal Affairs Committee of Detroit SHRM and Chair of the Labor and Employment Law Practice Group in the Bloomfield Hills office of McDonald Hopkins PLC, a full-service law firm. She can be reached at mrosen@mcdonaldhopkins.com or at (248) 220-1342.

 

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. February 2019.