Department of Labor Publishes Final Regulation: “Joint Employment”

By:  Claudia D. Orr, Plunkett Cooney

This month, the US Department of Labor (“DOL”) issued the final rule revising its regulations that interpret joint employer status under the Fair Labor Standards Act (“FLSA”). There are two primary scenarios for determining joint employer status under the FLSA. Only the first was affected by the final rule.

In its January 12th announcement, the DOL explained the affected first scenario stating: “The final rule provides updated guidance for determining joint employer status when an employee performs work for his or her employer that simultaneously benefits another individual or entity, including guidance on the identification of certain factors that are not relevant when determining joint employer status.” (Emphasis added)

There is a growing variety and number of business models and labor arrangements that have made joint employment far more common than in the past and the DOL considers joint employment issues in literally hundreds of investigations each year.  So, why is this big deal? Because if the DOL finds a joint employer relationship, then all of the hours worked by the employee for either of the joint employers are hours worked for purposes of determining overtime pay each week. In addition, the DOL may hold each of the joint employers liable for any violations.

The new regulations, which were published on January 16, 2020 in the Federal Register, apply a balancing test that examines whether the potential joint employer:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • determines the employee’s rate and method of payment; and
  • maintains the employee’s employment records.

Significantly, the potential employer must actually exercise control over the worker. Simply having the ability is relevant, but it is not determinative without some actual exercise of control.

The DOL notes that factors such as whether there is a franchise agreement, or contracts in place obligating compliance with health/safety or quality standards do not make a joint employer relationship more, or less, likely. Nor is the provision of a sample handbook or other employment forms, participating in an apprenticeship program or providing association health care or retirement plans particularly relevant to the analysis.

In fact, “whether the employee is economically dependent on the potential joint employer, including factors traditionally used to establish whether a particular worker is a bona fide independent contractor (e.g., the worker’s opportunity for profit or loss, their investment in equipment and materials, etc.), are not relevant to determine joint employer liability.”

In its Jan 2020 Fact Sheet, the DOL indicated that the test for the “second scenario” remained largely unaffected by the final rule, explaining as follows:

If the employers are acting independently of each other and are disassociated with respect to the employment of the employee, each employer may disregard all work performed by the employee for the other employer in determining its liability under the FLSA.

The DOL cautioned, however, that if the employers are “sufficiently associated with respect to the employment of the employee” they will be determined to be joint employers which will require them to aggregate all of the hours the employee works for both of the employers for purposes of overtime compliance:

The employers will generally be sufficiently associated if there is an arrangement between them to share the employee’s services, the employer is acting directly or indirectly in the interest of the other employer in relation to the employee, or they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.

In my experience, most employers are oblivious to the concept of joint employer relationships or that hours worked for either company may need to be stacked for purposes of overtime pay calculations.

The final rule, which becomes effective March 16, 2020, provides several examples of how the DOL analyzes joint employer relationships in various situations. Finally, remember, this is the test applied only under the FLSA.  There are different tests under the National Labor Relations Act, civil rights laws and for pensions and welfare benefits under the Employee Retirement Security Act, to name a few.  If you have any questions about the wage laws or any other employment related issues, always 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. January 2020.

Non-Discretionary Bonuses Affect Overtime Pay and Other Wage Issues

By:  Claudia D. Orr, Plunkett Cooney

 I was probably 7 years into my practice before I knew that, under the Fair Labor Standards Act, a non-discretionary bonus (one that is simply announced in advance, even if contingent) affects the regular rate of pay of a non-exempt employee and requires recalculation of the overtime for the period the bonus covers. It came to my attention after a young Human Resources Generalist, right out of college, told her employer, an international Fortune 500 company, which then called to ask me.  How I never came across this issue in my first 7 years of practice still amazes me. Incidentally, that young generalist has risen in the ranks over the years and is now an HR big shot with that company!

Well, the Department of Labor (DOL) issued an opinion letter yesterday on this very topic and it occurred to me that there may be employers out there who are unaware of this so I thought it best to inform Detroit SHRM members.

Let me explain the issue. A non-discretionary bonus is not what you think.  It is not one etched in stone that the employer must pay. It is a bonus announced in advance that encourages employees to work harder, be more efficient and perform better. The employer can still retain discretion to pay it or not based on overall financials, for example.

Let’s look at an annual bonus. At year end, once the bonus is paid to the nonexempt employee, the employer would need to divide the bonus by 52 to determine how much income is added to each week. This in turn affects the regular rate of pay of the nonexempt employee for each week, which then affects the calculations for any overtime worked each week. If the employee worked overtime during that year, the employer needs to pay the additional “half” time based on the new overtime calculations.

The new DOL opinion letter makes clear that the bonus can be spread between all of the weeks it covers when it can’t be attributed to any week in particular.  I thought you might be interested, especially if you hadn’t heard of this before. If you want to read the entire letter, click here:

https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/2020_01_07_01_FLSA.pdf

Incidentally, in case you missed it, minimum wage in Michigan jumped from $9.45 to $9.65 an hour on Jan 1, 2020. In addition, don’t forget that exempt employees must now be paid at the rate of not less than $684/week or $35,568/annually (and the highly compensated exempt employee not less than $107,432/annually). This is a great time to have your wage practices and job descriptions reviewed by 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. January 2020.

Supreme Court Decides NOT to Issue Advisory Opinion on the Constitutionality of the Paid Medical Leave and Improved Workforce Opportunity Acts

By:  Claudia D. Orr, Plunkett Cooney

 A divided Michigan Supreme Court ruled yesterday that it does not have the authority to issue an advisory opinion on whether the Paid Medical Leave Act and the Improved Workforce Opportunity Act were properly passed by the state legislature, stating in one short paragraph:

            On July 17, 2019, the Court heard oral argument on the requests by the House of Representatives and the Senate for an advisory opinion on the constitutionality of 2018 PA 368 and 2018 PA 369. On order of the Court, the requests are again considered, and they are DENIED, because we are not persuaded that granting the requests would be an appropriate exercise of the Court’s discretion.

Supreme Court Case Nos. 159160, 159201. While there was considerable debate concerning the reason why an advisory opinion should not be issued, and strong dissenting opinions in the 48 page opinion, this ends the suspense – for now.  The laws could be challenged directly in court, which would start the legal process over. But for the time being, both laws will remain as they were passed by the lame duck legislative session in 2018.

Let’s look back at what happened. As you may recall, there were two citizen initiatives that were to appear on  the November 2018 ballot which, among other things, would have (1) provided 40 hours of paid sick time to employees who work for smaller employers (having fewer than 10 employees) and 72 hours of paid sick time to employees working for employers with 10 or more employees; and (2) increased the minimum wage rate to $10/hour with additional yearly increases, bringing the minimum wage rate to $12/hour by 2022 and phasing out the tip credit by 2024.

If both initiatives became law by vote of the citizens, the Michigan Legislature could only change them by a three-quarters vote of all members of both chambers of the Legislature, rather than a simple majority vote.

But the citizen initiatives were removed from the ballot when the Legislature adopted both laws.  If that was the end of the story, we would not now have issues to be decided by the Supreme Court. After the November election, the Legislature amended both laws and then Gov. Rick Snyder signed the amended versions into law during the lame duck session. That’s the rub. Can they adopt and amend?

The amendments significantly watered down the benefits to employees, making both laws friendlier to employers.  For example, under the amended laws (which became effective March 29, 2019), paid sick time must only be provided by employers with 50 or more employees and then only 40 hours a year.  Similarly, the minimum wage rate was increased to $9.45/hour and it won’t reach $12/hour until 2030. In addition, the tip credit will stay in place.

Democrats in the Legislature asked the state’s new Attorney General Dana Nessel to opine on whether the so called “adopt and amend” process is constitutional under Article 2 § 9 of the Michigan Constitution, which begins by stating: “The people reserve to themselves the power to propose laws and to enact and reject laws, called the initiative, and the power to approve or reject laws enacted by the legislature, called the referendum.”

The Republicans made the same request of the Michigan Supreme Court, believing its conservative majority would provide a more pro-employer opinion. The Supreme Court agreed to hold oral arguments on the issue but did not commit to issuing an advisory opinion. It requested briefs from the attorney general’s office, arguing both for and against the constitutionality of the process that had been utilized by the Legislature and the new laws. On July 17, 2019, the Michigan Supreme Court held oral argument in In re Advisory Opinion on 2018 PA 368 & 369. It has now ruled.

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. December 2019.

Supreme Court Yet to Decide Fate of Paid Medical Leave Act and Improved Workforce Opportunity Act. What do Employers Need to do Now?

By:  Claudia D. Orr, Plunkett Cooney

Back in July, I reported on the oral arguments before the Michigan Supreme Court in In re Advisory Opinion on 2018 PA 368 & 369. As you will recall, the court was asked to advise on whether the “adopt and amend” process utilized by the Michigan Legislature with regards to the Paid Medical Leave Act (PMLA) and the Improved Workforce Opportunity Act was constitutional.

I would have thought that the court would have weighed in by now given it held oral argument during the middle of its summer break.  I can only guess that there will be a strong dissent opinion and perhaps some separate concurrence opinions. Hopefully the Supreme Court will issue an advisory opinion soon.

But, what should employers be doing now that 2019 is coming to an end?  Unlike the Family and Medical Leave Act (FMLA) which becomes an issue when an employee indicates his/her need for a leave of absence, the PMLA grants most non-exempt employee who worked, on average, 25 or more hours a week during the immediately preceding calendar year, 40 hours of paid time off that can be used for the purposes identified in the act.

So, this is just a reminder to audit your employees’ hours for 2019.  Some employees who have been treated as full-time may no longer qualify if they took time off under the FMLA, for example.  More importantly, other employees who were thought to be part-time may have worked sufficient hours to become eligible for paid leave under the PMLA. So, run a report and make sure that you are applying the PMLA correctly as you head into 2020. Of course, this might all change when the Supreme Court rules!

P.S., don’t forget that the Fair Labor Standards Act’s new regulations for the white collar exemptions take effect in a couple of weeks as well.  So, in case you are wondering what you can do over the holidays, consider auditing your exempt employees’ salaries to ensure they can still be treated as exempt! Yep, employment law — the gift that keeps on giving!

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. December 2019.

FMLA Abuse – Good Catch By The Employer

By:  Claudia D. Orr, Plunkett Cooney

 I often hear from clients seeking advice when an employee is suspected of abusing their approved leave under the Family and Medical Leave Act (“FMLA”). Tell the truth, doesn’t this drive you crazy from time to time?

So what can a frustrated employer do? Well, the first step is to not approve FMLA leave if the Certification of Healthcare Provider is incomplete or contains internal inconsistencies. Send it back to the physician with questions seeking clarification or an instruction to respond to certain questions. Also, make sure that the information provided about the condition actually qualifies for FMLA leave. Finally, remember, you can always challenge the information/need by sending the employee for the second/third opinions. However, given the cost, I think I have only suggested that once or twice since the law was enacted.

Most of the frustration comes with intermittent leave under FMLA. When the employee is seeking intermittent leave, the employer should monitor the employee’s use of leave as compared to what the healthcare provider indicated on the certification. When the employee’s use is inconsistent with the predicted use, the employer can do two things: (1) send the employee back to the healthcare provider to get a new certification, or (2) hire a private investigator to catch the employee in fraudulent use.

While the first idea generally costs the employee another $20, it usually results in a much more broadly written certification that allows the employee to come and go without any restrictions on use. The second idea may be more expensive, but it can be fruitful.  That is what the employer did in LaBelle v Cleveland Cliffs, Inc, a recent unpublished case by the US Court of Appeals for the Sixth Circuit. Let’s review what happened for inspiration!

The salient background facts are going to sound strikingly familiar. LaBelle, a long term employee, developed a medical condition as a result of repetitious motions at work. At first he received disciplinary actions for his attendance until he complained about his shoulder pain. That is when helpful management suggested that he “check into getting FMLA.” Boy, I bet they later kicked themselves for that one!

LaBelle did, but his FMLA request was denied. The employer told LaBelle that it was because “information LaBelle provided did not show that he was incapacitated for more than three calendar days at a time or that he had a chronic condition that required treatment at least twice a year.” Can I just say “TMI”? The employer provided LaBelle with a roadmap of how to fix the issue with the certification. So, LaBelle went to a different doctor who fixed the issue.

The new certification provided that LaBelle ‘“intermittently will have exacerbations that limit work’ and that it was medically necessary for LaBelle to miss work during ‘flare-ups,’ which would occur about once a month for three-day periods.” Thus, the FMLA leave was approved, but LaBelle was also told that “improper use or abuse of intermittent leave is grounds for discipline, up to and including termination.” That’s good. I might start adding language like that to my FMLA policies.

Well, as often happens LaBelle developed a “suspicious pattern” of FMLA leave which was tacked on to his scheduled days off or vacation days. This is where the private investigator comes in and we head towards our happy ending.

Because the employer knew that LaBelle liked to golf and that his league played on Tuesdays that was the day chosen for the investigator to surveil LaBelle. Management watched the videos of LaBelle playing “without any sign of distress or discomfort” with a golf swing that was both smooth and powerful. LaBelle was confronted with the fraud and placed on an administrative leave pending the outcome of the informal hearing. [I would probably would have gotten away with it because my swings are never smooth or powerful.] Following the hearing, management agreed that if LaBelle was able to golf, he was able to work. Thus, he was fired.

LaBelle filed a grievance, but the arbitrator found that his use of FMLA to play golf was inconsistent with LaBelle’s claim that he was unable to work and needed “to rest his shoulders from the rigors of his job.” Thus, the company had “just cause” to fire him.

LaBelle filed a civil lawsuit, claiming, in relevant part, that the company violated FMLA. The lawsuit was dismissed following discovery when the company’s motion for summary judgment was granted. LaBelle appealed.

The appellate court recognized that there are two types of FMLA claims: interference and retaliation. It found that the interference claim failed because Plaintiff was permitted to take all of the FMLA time he requested.

But the retaliation claim had a few stray comments from management to support it. For example, in response to a request for a spread sheet documenting LaBelle’s use, the area manager wrote “Does this mean that you’re actually discussing this hot potato?” In another email, he wrote “[b]een keeping an eye on a few of [their] folks and mapping out their absences” and “he would ‘dearly love to get at least one of these slackers.’”

But despite the comments, the appellate court found there was no evidence that the proffered reason for termination (FMLA abuse) had no basis in fact.

LaBelle had been approved intermittent FMLA leave (1) to attend medical appointments, and (2) up to three days off per month for a flare up. But, this is not why, according to LaBelle, that he took the time off. “He took FMLA leave because he was in constant pain and would take leave around vacations or weekends to give himself as much rest as possible.

But occasional rest to alleviate low-level background pain is not what his FMLA leave was for. Thus, as the arbitrator put it, ‘[t]here is no doubt that [LaBelle] did not use his FMLA leave in accordance with the restrictions imposed by [his doctor], or in accordance with the purposes of the law.’ If LaBelle had constant pain that required occasional long weekends to mitigate, he should have requested FMLA leave for that purpose.” Thus, the dismissal was affirmed.

Boy, that reasoning was thinly sliced. I don’t know if a different Sixth Circuit panel would have ruled on this basis. I would have just issued an opinion finding that he committed fraud; that golf was inconsistent with the need for time off for a shoulder injury. Period. But, nonetheless, score one for an employer in a FMLA abuse case.

Are you feeling a sense of satisfaction as well? These are not easy issues. Employers should always consult with an experienced employment attorney, such as the author, when faced with potential FMLA abuse.

 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. December 2019.

Recreational Marijuana Is Now Here

By:  Claudia D. Orr, Plunkett Cooney 

Recreational marijuana is now legal in Michigan and there are already several dispensaries (mostly in Ann Arbor) selling the product.  So, what should employers now be doing?  Reviewing and revising their drug testing policy!

The Michigan Regulation and Taxation of Marihuana Act, MCL 333.27951, et seq., specifically provides, in relevant part, the following:

This act does not require an employer to permit or accommodate conduct otherwise allowed by this act in any workplace or on the employer’s property. This act does not prohibit an employer from disciplining an employee for violation of a workplace drug policy or for working while under the influence of marihuana. This act does not prevent an employer from refusing to hire, discharging, disciplining, or otherwise taking an adverse employment action against a person with respect to hire, tenure, terms, conditions, or privileges of employment because of that person’s violation of a workplace drug policy or because that person was working while under the influence of marihuana.

MCL 333.27954 (3)(emphasis added).  As you may know, current testing methods only demonstrate that marijuana is in a person’s system, but they cannot determine whether someone is “under the influence” at the time of the test.  Thus, it is essential for an employer to have a policy that prohibits the use of illegal substances, including marijuana which remains unlawful under federal law, and provides for testing.  Without the policy, an employer will have to prove that the employee was under the influence while at work (i.e., blood shot eyes, smelling like marijuana, slurred speech, munchies…). This is often difficult to do.

Federal contractors are required to maintain a drug free workplace, including prohibiting the use of marijuana. But, more importantly, this is a safety and productivity issue for all employers.

I am recommending to most of my clients that they continue to test employees and terminate any employee who tests positive for so long as marijuana remains unlawful under federal law and/or until testing methods improve. Employers who do not have a drug testing policy should adopt one as soon as practicable. These policies should be written by an experienced employment attorney, such as the author.

In addition, out of fairness, employers who have a policy should alert employees that nothing has changed: testing positive for marijuana, even if smoked or ingested outside of work during non-working hours, will result in the termination of employment.  You do not want to a good employee to fail a drug test thinking this is now acceptable, if it is not under your company’s policies.

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. December 2019.

Are your arbitration agreements “up to code”?

By: Melissa M. Tetreau, Bodman PLC

Employers for a variety of reasons, including procedural expediency, confidentiality, and avoidance of a jury, regularly use arbitration agreements. Obviously, the most critical part of an arbitration agreement is ensuring its enforceability. To many employers, it seems only fair that an employee who files a claim against it should be required to pay a portion of the arbitrator’s fee and costs. But, employer beware. If an employee brings a claim under a law which provides for the losing party to pay the prevailing party’s attorney fees, these fee-splitting provisions may be invalid.

On November 22, 2019, the Eleventh Circuit Court of Appeals (covering Alabama, Georgia, and Florida), invalidated the fee-splitting portion of P.I.P., Inc.’s arbitration agreement.[1] Three former P.I.P. employees filed a lawsuit alleging violations of the Fair Labor Standards Act (“FLSA”) and seeking, among other things, costs and attorneys’ fees pursuant to the FLSA. Because they had signed employment contracts that included an arbitration provision, P.I.P. asked the trial court to send the parties to arbitration.

In response, the employees pointed out language in the agreement stating that each party “will pay its own fees and expense, including attorney fees.” The employees argued this language invalidated the arbitration provision because they were entitled to have P.I.P. pay their attorney fees and costs as a remedy under the FLSA. They claimed that the agreement improperly denied them that right.

P.I.P made the logical response – the arbitration agreement simply required each party to pay their own way through arbitration. Nothing in the agreement barred the arbitrator from shifting the fees after he or she made a decision. The trial court disagreed and invalidated the arbitration provision. After P.I.P. appealed, the Eleventh Circuit Court of Appeals agreed with the trial court. It found that because the arbitration provision stated that each “party to any arbitration will pay its own fees and expense,” the arbitrator had no discretion to shift fees after a decision. Since the employees could prevail at arbitration and not receive the attorneys’ fees and costs they would be entitled to, that portion of the arbitration provision was invalid. The court of appeals sent the case back to the trial court to decide if only the fee-splitting provision was invalid, or if this invalidated the entire arbitration provision. If the trial court decides the latter, P.I.P will be forced to defend the case in court.

Although this decision is not binding on courts in Michigan, it demonstrates the trick bag in which arbitration agreements can put employers. While the story may be complicated, the moral is simple: review your arbitration agreements with experienced counsel.

Melissa Tetreau is a member of the Detroit SHRM Legal Affairs Committee and an attorney with the law firm of Bodman PLC.  She can be reached at MTetreau@bodmanlaw.com.

                                     

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.  November 2019.

[1] Hudson v. P.I.P., Inc., No. 19-11004 (11th Cir. Nov. 22, 2019).

What Disabilities Does the ADA Cover?

By: Melissa Tetreau, Bodman PLC

 

To answer the title’s question, the ADA covers only current disabilities – at least according to the Seventh Circuit (covering Illinois, Indiana, and Wisconsin). To many of us, this seems like the obvious answer. However, Ronald Shell, an applicant for employment at Burlington Northern Santa Fe Railway Company (BNSF), thought otherwise.

Shell applied to work as an intermodal equipment operator with BSNF, where he would operate cranes and work around other heavy equipment.  Due to these job responsibilities, BNSF classifies this position as “safety sensitive.” BNSF requires all applicants to safety sensitive positions to undergo a medical examination after receiving a conditional offer of employment.

Shell was treated no differently. After BNSF extending him a conditional offer of employment, it sent him for a medical examination. The examination revealed that Shell, who is 5’10” and 331 pounds, had a BMI of 47.5.

Why does this matter? BNSF had a policy of not hiring applicants for safety sensitive positions who had a BMI of 40 or higher. Its reasoning was that individuals with a BMI of 40 or higher are at a substantially higher risk of developing certain medical conditions, such as sleep apnea, heart disease, and diabetes. BNSF believed that a safety sensitive employee with a BMI of 40+ could experience a health issue and lose consciousness at any moment, including while operating heavy machinery.

As a result of Shell’s BMI, BNSF rescinded its offer. Unsurprisingly, Shell sued for discrimination on the basis of a perceived disability under the ADA. At the trial court, BNSF moved for summary judgment arguing, among other things, that Shell’s obesity was not a disability and there was no evidence that BNSF regarded him as having a disability. The trial court denied BNSF’s motion. The court agreed that obesity is not a disability under the ADA, but found a question of fact as to whether BNSF regarded Shell has having the allegedly obesity-related conditions of sleep apnea, heart disease, and diabetes.

BNSF appealed to the Seventh Circuit Court of Appeals. The Seventh Circuit reiterated that the ADA covers individuals who are “regarded as” disabled.  The ADA defines this as “being regarded as having [a physical or mental] impairment.” 42 U.S.C. 12102(1)(C). The Court emphasized the present participle in that definition – having. “It does not include something in the past that has ended or something yet to come.”[1] The Court then looked at a further definition of “being regarded as having such an impairment,” which is when an employee is discriminated against “because of an actual or perceived physical or mental impairment.” 42 U.S.C. 12102(3)(A). As the Court noted, a disability that does not yet exist can be neither actual nor perceived.

The Seventh Circuit reversed the trial court’s denial of summary judgment and held that the ADA’s “regarded as” prong does not cover future disabilities. Although this case is not binding on any courts in Michigan, which is in the Sixth Circuit, the decision is in line with other courts that have addressed the issue.  Nonetheless, when an outcome turns on interpreting a “present participle,” employers are well-advised to consult with their experienced employment counsel when making those sorts of decisions under the ADA.

Melissa Tetreau is a member of the Detroit SHRM Legal Affairs Committee and an attorney with the law firm of Bodman PLC.  She can be reached at MTetreau@bodmanlaw.com.

                                     

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.  November 2019.

[1] Shell v. Burlington Northern Santa Fe Railway Company, No. 19-1030 (CA 7, Oct. 29, 2019).

Employers take note: DOL nets record $322 million in back pay in FY2019

By: Miriam L. Rosen, McDonald Hopkins, PLC

With the end of the federal government’s 2019 Fiscal Year on September 30th, the various regulatory agencies are now reporting their “results.”  Think of it as earnings report season for public agencies.  One agency touting its 2019 accomplishments is the Department of Labor’s Wage and Hour Division (WHD), which enforces the Fair Labor Standards Act (FLSA).

For FY 2019, the WHD collected $322 million in back pay from employers surpassing the FY 2018’s record collections of $304 million. Announcing the results, the DOL noted that more than half of the back pay amount – $186 million – came from employers who failed to pay employees time-and-a-half overtime for work beyond 40 hours in a week. Another $40 million came from back pay for failure to pay employees at least the federal minimum wage of $7.25 per hour.

The record collections come at a time of significant activity for the DOL.  With numerous vacancies and leadership changes at the DOL in the first two years of the Trump Administration, employers saw little change in the aggressive enforcement positions taken in the Obama era.  However, in April 2019, a new WHD Administrator, Cheryl Stanton, was sworn in and is now implementing changes to WHD policies and investigation procedures that many employers expected to see much earlier in the Trump Administration.  Following the resignation of DOL Secretary Alex Acosta in July, the new Secretary of Labor, Eugene Scalia, took office on September 30th and is widely expected to work more collaboratively with employers.

After years of fighting about the salary level for exempt employees, the DOL finalized a new rule in September 2019 raising the current salary level for exempt white collar status from $23,660 per year to $35,568 annually. The new rule is effective Jan. 1, 2020.  Employers should take steps to implement that new rule by reviewing the classification of current exempt positions under the new $35,568 threshold.

The new salary rule also provides an opportunity for employers to evaluate non-exempt pay practices to ensure that the types of errors that resulted in $322 million in back pay do not exist in their own organizations. Common pay practice errors that can result in FLSA violations include failing to count all hours worked, failing to include bonus or incentive pay in calculating the regular and overtime rate, failing to pay for travel time, automatic meal break deductions, and rounding errors. As embedded pay practices, these errors can sometimes be overlooked for years, but can result in significant liability when they are discovered in a DOL audit.

Employers should consult with their employment attorneys for advice on the new salary level rule, compliant pay practices, and other steps to avoid wage/hour violations.

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. October 2019.

EMPLOYEE’S ABUSE OF LEAVE DOOMS HIS FMLA CLAIMS

By: Carol G. Schley, Clark Hill PLC

A recent decision from the Sixth Circuit Court of Appeals affirms the importance of precise documentation and diligent monitoring by an employer when an employee takes FMLA leave.

In LaBelle v. Cleveland Cliffs, Inc., Kevin LaBelle worked as a quality-control lab technician, which required him to make repetitious motions while standing with his arms outstretched for up to 12 hours per day.  The employee also had avascular necrosis, which caused him to suffer constant pain in his shoulders.  In 2016, the employer granted Mr. LaBelle intermittent leave under the FMLA pursuant to a doctor’s certification that stated Mr. LaBelle “intermittently will have exacerbations that limit work,” and that he will need to miss work during “flare ups” that occur about once per month for three day periods.  Based upon the certification, the employer informed Mr. LaBelle that he could take intermittent FMLA leave for “up to four medical appointments per year and for monthly flare-ups, which could last up to three days per episode.”  The notice to Mr. LaBelle also confirmed that FMLA leave was “limited to the condition specified” in the medical certification.

The employer soon noticed a suspicious pattern.  Mr. LaBelle tended to take his intermittent FMLA leave in conjunction with other scheduled days off, weekends and vacation days.  The employer hired a private investigator who on two occasions recorded Mr. LaBelle playing golf when he was out on FMLA leave.  The employer conducted an internal hearing, at which Mr. LaBelle said his shoulders hurt every day, so he understood his intermittent leave could be taken at any time of his choosing.  He also admitted to playing golf when he was out on FMLA leave, but said that playing golf was much less aggravating to his shoulders than performing his job duties.  At the conclusion of the internal hearing, the employer determined that “if Mr. Labelle was experiencing a shoulder flare-up that prevented him from working, he would not be able to golf and that if he could golf he could work,” and terminated his employment.

Mr. LaBelle filed a lawsuit against the employer asserting FMLA interference and retaliation claims.  As support for his claims, Mr. LaBelle referenced internal emails discussing his absences from work, in which a manager referred to Mr. LaBelle as a “hot potato” and stated that he would “dearly love to get at least one of these slackers.”

The court held that Mr. LaBelle could not state a viable FMLA interference claim, as there was no dispute that he was granted FMLA leave by the employer, despite hostility to his absences as shown by the manager’s emails.  The court also granted summary judgment to the employer on Mr. LaBelle’s FMLA retaliation claim, as its decision to terminate him had a basis in fact.  Per the court:

Cliffs approved LaBelle’s request for intermittent FMLA leave for two reasons: (1) attending medical appointments and (2) taking three days off per month for a “flare-up.” Even crediting LaBelle’s explanation of why it was ok for him to golf, or why he “stacked” his leave, LaBelle did not take FMLA leave for “flare-ups” or medical appointments. He took FMLA leave because he was in constant pain and would take leave around vacations or weekends to give himself as much rest as possible. But occasional rest to alleviate low-level background pain is not what his FMLA leave was for… If LaBelle had constant pain that required occasional long weekends to mitigate, he should have requested FMLA leave for that purpose.

The key takeaway from this case is that accurate documentation and careful monitoring by an employer is a must when handling FMLA claims.  Here, the employer’s written notice to Mr. LaBelle describing the circumstances under which he could take FMLA leave tracked the doctor’s certification regarding his condition.  Because Mr. LaBelle’s time off was outside the authorized scope of his leave, the employer did not run afoul of the FMLA when it decided to terminate him.

Another takeaway from this case that has general applicability is to exercise prudence when putting things in writing (including emails) about an employee.  While the manager’s emails about getting “slackers” like Mr. LaBelle ultimately did not prevent the employer from prevailing, under other circumstances such statements can be fatal to an employer’s defenses, or at least be sufficient to prevent an employer from prevailing on summary judgment.

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.  October 2019