Retail Labor and Employment Law

Retail Labor and Employment Law

News, Updates, and Insights for Retail Employers

Philadelphia’s Salary History Law Temporarily Stayed Pending Lawsuit

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Amid challenges regarding Philadelphia’s upcoming law prohibiting employers from requesting an applicant’s salary history, the City has agreed not to enforce the upcoming law until after the court has finally resolved the injunction request.

The law, which was set to become effective May 23, 2017, has been challenged by the Chamber of Commerce for Greater Philadelphia (the “Chamber”). The Chamber’s lawsuit alleges that the pending law violates the First Amendment by restricting an employer’s speech because, among other reasons, “it is highly speculative whether the [law] will actually ameliorate wage disparities caused by gender discrimination.” It is also alleged that the law violates the Commerce Clause of the U.S. Constitution, the Due Process Clause of the Fourteenth Amendment, and Pennsylvania’s Constitution as well as its “First Class City Home Rule Act” by allegedly attempting to restrict the rights of employers outside of Philadelphia.

On April 19, a judge for the Eastern District of Pennsylvania stayed the effective date of the law, pending the resolution of the Chamber’s motion for a preliminary injunction. Prior to resolving the injunction, the parties will first brief the court on the Chamber’s standing to bring the lawsuit. This issue, regarding whether the Chamber is an appropriate party to bring this lawsuit, will be fully briefed by May 12, 2017, before the law is set to become effective. However, there are several other issues to be resolved as part of the lawsuit. The City’s decision to stay enforcement of the pending law until all issues are resolved is intended to help employers and employees avoid confusion during the pendency of the lawsuit.

Although the City of Philadelphia will not enforce this law in the interim, employers with any operations in Philadelphia should review their interviewing and hiring practices in case the lawsuit is decided in favor of the City. Further, employers in Massachusetts and New York City will also be subject to similar restrictions on inquiring about an applicant’s salary history when those laws go into effect. Massachusetts’ law is scheduled to become effective in July 2018, and New York City’s law will become effective 180 days after Mayor de Blasio signs the law, which may occur as soon as this week.

Beyond Joint Employment: Do Companies Aid and Abet Discrimination by Conducting Background Checks on Independent Contractors?

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Ever since the National Labor Relations Board (“NLRB”) issued its August 2015 decision in Browning-Ferris Industries of California, Inc., holding two entities may be joint employers if one exercises either direct or indirect control over the terms and conditions of the other’s employees or reserves the right to do so, the concept of joint employment has generated increased interest from plaintiffs’ attorneys, and increased concern from employers. Questions raised by the New York Court of Appeals in a recent oral argument, however, indicate that employers who engage another company’s workers on an independent contractor basis would be wise to guard against another potential form of liability, for aiding and abetting acts that violate various anti-discrimination statutes, including both the New York State (“NYSHRL”) and New York City Human Rights Laws (“NYCHRL”) and the New Jersey Law Against Discrimination (“NJLAD”).

On March 28, 2017, the New York Court of Appeals heard oral arguments in Griffin v. Sirva, Inc., to answer three questions that had been certified by the U.S. Court of Appeals for the Second Circuit: (1) does the NYSHRL’s prohibition of employment discrimination based on workers’ criminal records limit liability to an aggrieved party’s “employer”; (2) if so, is the scope of the term “employer” limited to a worker’s direct employer, or does it include other entities who exercise a significant level of control over the direct employer’s discrimination policies and practices; and (3) does the portion of the NYSHRL that prohibits aiding and abetting the discriminatory acts of another apply to a non-New York entity that requires its New York agent to discriminate in employment based on a worker’s criminal history.

Griffin illustrates a concern faced by employers in a variety of industries, who subcontract certain types of work to employees of a separate business entity on an independent contractor basis. Among other tasks, companies may engage contractors to provide cleaning services, security, delivery of goods, installation of purchases or, as in Griffin, packing and moving services.  Such subcontracted services may be performed in a variety of settings, ranging from the company’s premises to its customers’ homes.  With increasing concerns regarding workplace violence, companies often choose to conduct their own criminal background checks on these contract workers, either personally or through an outside vendor, in an attempt to protect the company’s employees, customers, and property. This concern is particularly heightened when, as in Griffin, the contract workers in question will be performing services in the homes of a company’s customers.

In these types of scenarios, a question often arises regarding whether the company that engaged the contractors can be liable for violating state or city laws prohibiting discrimination based on criminal convictions, by virtue of requiring the background check, even though that company was not the workers’ direct employer. In resolving this question, courts typically rely on the concept of joint employment, analyzing the extent to which the company is involved in the hiring or firing of the contractors, or in exerting control over their working conditions. Presumably anticipating this sort of analysis, the parties in Griffin (including the State of New York, which filed an amicus curiae brief and was permitted to participate in oral argument) focused their briefing and arguments on whether a company that performs background checks on its contract workers should be deemed an employer under the NYSHRL.  Through its questions at oral argument, however, the court appeared to indicate that there may be a simpler resolution in this type of case, which does not require addressing the complex question of whether the company requiring the background checks is the workers’ employer or joint employer.

In addition to directly prohibiting discrimination based on criminal history, the NYSHRL states that it is “an unlawful discriminatory practice for any person to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under [the NYSHRL], or to attempt to do so.” “Person” is defined as including “one or more individuals, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers.” Based on this expansive language, several judges seemed to indicate that the NYSHRL’s “aiding and abetting” provision was sufficiently broad to encompass third parties who conduct background checks on contractors, regardless of whether such entities would otherwise be considered the contract workers’ employer or joint employer.  Assuming the “aiding and abetting” provision covers such conduct, multiple judges noted that imposing liability under that provision would be simpler than wrestling with the joint employment issue.  Further, the judges expressed concern that expanding liability under the main section of the NYSHRL to non-employers would render the “aiding and abetting” provision superfluous.

While it is premature to predict how the Court of Appeals may ultimately rule in Griffin, particularly given the recent unexpected death of one of the court’s seven members, Judge Sheila Abdus-Salaam, companies who engage workers on an independent contractor basis should be aware that potential joint employment issues may not be their only concern with regard to such workers. Regardless of whether a company exerts sufficient control over its contract workers to be deemed a joint employer, if the company operates in a jurisdiction whose anti-discrimination laws allow for “aiding and abetting” liability, that provision may serve as an alternative basis of potential liability for a company that conducts criminal background checks on contract workers engaged through a separate business entity.  Specifically, because the NYSHRL, NYCHRL, and NJLAD each include broad provisions that prohibit any person or entity from aiding, abetting, inciting, compelling, or coercing any acts that violate those laws, businesses that operate in New York State, New York City, or New Jersey should ensure that any background check requirement imposed on another entity’s workers complies with all applicable “ban-the-box” and anti-discrimination laws (e.g., NY State Correction Law Article 23-A, the NYC Fair Chance Act, and the NJ Opportunity to Compete Act), in order to avoid potential liability under the applicable “aiding and abetting” provisions in those jurisdictions.

California Regulations on Use of Criminal History Information in Employment Decisions

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California’s Fair Employment & Housing Council has finalized and adopted new regulations to establish criteria for the use and consideration of criminal history information in employment decisions where such use may constitute a violation of California’s Fair Employment and Housing Act. The new regulations take effect July 1, 2017, and are available here and on the Council’s website.  The regulations are intended to clarify, outline and maintain consistency between the laws governing the consideration of criminal history information in employment decisions.

The regulations reiterate existing prohibitions on the use of criminal history information and also require employers to demonstrate a business necessity, in addition to job-relatedness, for requesting a criminal history if the policy or practice of considering criminal history information creates an adverse impact on applicants or employees based on certain protected classes. Applicants and employees bear the initial burden of demonstrating that the policy or practice has an adverse impact on a protected class.  If this showing is made, the burden shifts to the employer to establish that the policy is justifiable because it is job-related and consistent with business necessity. To do so, the employer must demonstrate that the policy or practice is appropriately tailored, taking into account several factors including: (i) the nature and gravity  of the offense or conduct; (ii) the passage of time; and (iii) the nature of the position held or sought.  Even if an employer can demonstrate job-relatedness and consistency with business necessity, an applicant or employee may still bring a claim if he or she can show that there is a less discriminatory alternative available to advance the employer’s legitimate concerns.

Retail employers in California should review their policies and practices to ensure that their use of criminal history information complies with the new regulations. Employers are also reminded of their obligation to comply with the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., and the California Investigative Consumer Reporting Agencies Act, Cal. Civ. Code § 1786 et seq.

Maryland General Assembly Passes Sick and Safe Leave Bill

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Paid Leave_shutterstock_371740363The state of Maryland appears poised to join seven other states and various local jurisdictions (including Montgomery County, Maryland) already requiring employers to provide paid sick and save leave. On April 5, 2017, the Maryland House of Delegates approved a bill previously passed by the Maryland Senate that would require most employers with at least 15 employees to provide up to five paid sick and safe leave days per year to their employees, and smaller employers to provide up to five unpaid sick and safe leave days. Although the bill contains an effective date of January 1, 2018, the actual effective date will depend on action by Governor Larry Hogan.

The following employees are not covered by the bill:

  • Employees who regularly work less than 12 hours a week;
  • Employees who are employed in the construction industry;
  • Employees who are covered by a collective-bargaining agreement that expressly waives the requirements of the law;
  • Certain “as-needed” employees in the health or human services industry.

Under the bill, an employer may not be required to allow an employee to:

(1) earn more than 40 hours of earned sick and safe leave in a year;
(2) use more than 64 hours of earned sick and safe leave in a year;
(3) accrue a total of more than 64 hours at any time;
(4) use earned sick and safe leave during the first 106 calendar days the employee works for the employer.

The bill also preempts local jurisdictions from enacting new sick and safe leave laws except for amending existing laws enacted before January 1, 2017, i.e. the existing law in Montgomery County.

The bill passed with enough support in both chambers to survive a promised veto by Governor Hogan, who favored an alternative that would require the benefit only for companies with at least 50 workers and make tax incentives available for smaller companies that offered the leave. However, if he still vetoes the bill, lawmakers will not have an opportunity to override the veto until next year’s legislative session beginning on January 10, 2018, which means the bill would not take effect until after January 1, 2018, and could possibly be subject to amendment in the next session.

*Marc-Joseph Gansah, a Law Clerk – Admission Pending in the firm’s New York office, contributed to the preparation of this blog post.

In Re Chipotle Mexican Grill, Inc.: The Tenth Circuit Permits a Company-Wide FLSA Collective Action to Proceed Under the Spurious Action Approach to Facilitate Notice

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In In re: Chipotle Mexican Grill, Inc., Case No. 17-1028 (10th Cir. March 27, 2017), the Tenth Circuit Court of Appeals reiterated its holding in Theissen v. GE Capital Corp., 267 F.3d 1055 (10th Cir. 2001), that a district court may utilize a variety of approaches to identify similarly situated workers for purposes of authorizing facilitated notice in FLSA collective actions.

The Tenth Circuit reaffirmed its position when denying Chipotle’s petition for a writ of mandamus. There, the district court issued an order in Turner v. Chipotle Mexican Grill, Inc., 123 F. Supp. 3d 1300 (D. Colo. 2015), authorizing notice in a collective action resulting in 10,000 opt-in plaintiffs.  As part of its petition, Chipotle sought a writ of mandamus to dismiss the district court’s joinder of 10,000 opt-in plaintiffs, or, in the alternative, to remand to permit discovery to ascertain if the opt-ins are similarly situated and to provide an opportunity to file a motion to decertify the collective action.  The Tenth Circuit rejected Chipotle’s application because the district court’s order was “not such a gross abuse of discretion” to warrant mandamus relief.

That the Tenth Circuit denied mandamus relief is unremarkable based on factors presented. Of significance, however, is the court’s discussion and acknowledgment that Theissen’s three approaches (the ad hoc approach; Rule 23 approach; and spurious approach under pre-1966 Rule 23 amendments) remain available to district courts to use to determine who is similarly situated under FLSA Section 216(b) for purposes of facilitated notice.

In Turner, plaintiffs allege that Chipotle’s company-wide automated computer timekeeping system “arbitrarily cuts off the time clock at half past midnight,” allegedly resulting in some shift-closing hourly employees working off-the-clock without being compensated.

The district court analyzed “the proper procedural mechanism for pursuing a representative action ‘on behalf’ of employees similarly situated.” 123 F.Supp. 3d at 1305.  The court rejected so much of plaintiffs’ motion insofar it was characterized as one for conditional certification under a lenient standard of “substantial allegations” that the plaintiff and those similarly situated were victims of “a single decision, policy or plan.”  It also rejected Chipotle’s request for a stricter standard of review of plaintiffs’ motion for facilitated notice, as plaintiffs had discovery, and that certification should be limited to stores where there is “substantial evidence” of a common decision, policy or plan. Id.

The district court proceeded to identify the proper standard to authorize notice of collective action. It specifically rejected the two-step ad hoc conditional certification rubric as well as the Rule 23 approach to facilitate notice of the collective action because such approaches conflate the Rule 23 class certification standard with Section 216(b)’s permissive joinder standard.  Rather, it found that Section 216(b) collective action may be analogized under the spurious class action approach (old Rule 23(a)(3)), as both were “‘aggregated damages claims for only those who opted in and both were joinder liberalizations.’” Id. at 1306 (citation omitted).  It concluded that the proper approach in deciding a motion to facilitate notice “is to presumptively allow workers bringing the same statutory claim against the same employer to join as a collective, with the understanding that individuals may be challenged and severed from the collective if the basis for their joinder proves erroneous” (emphasis supplied).  The court placed the burden on Chipotle to “winnow” the collective at some later point in the proceeding through F.R.Civ.P. Rules 21 (misjoinder) and Rule 42 (severance) procedures.

The Tenth Circuit found that the district court’s “presumptive” approach to facilitate notice, which it likened to the “spurious” approach, complies with Section 216(b). It noted that “under the spurious approach, courts incorporate into § 216(b) the pre-1966 requirements of Rule 23 based on Advisory Committee notes which are: (1) “the character of the right sought to be enforced … must be several,” (2) “there must be a common question of law or fact affecting the several rights,” and (3) “a common relief must be sought.”

The district court’s departure from the ad hoc/two-step approach is notable.  Under the ad hoc approach, the first step requires a named plaintiff to make a modest factual showing that the named plaintiff and potential opt-in plaintiffs are victims of a common decision, policy, or plan.  If shown, court-approved notice to potential collective action members will issue.  The second step, occurring after the completion of discovery, requires the district court, applying a more stringent standard of proof, to make factual findings whether the opt-in plaintiffs are in fact similarly situated to the named plaintiff.  The ad hoc approach is used by many district courts and has been acknowledged by a number of circuit courts, in addition to the Tenth Circuit, as an acceptable approach. See e.g. Zavala v. Wal Mart Stores Inc., 691 F.3d 527 (3d Cir. 2012); Myers v. Hertz Corp., 624 F.3d 537 (2d Cir. 2010).

The Tenth Circuit in In Re Chipotle repeated its position in Theissen, “that the two-step process is arguably the best of the three approaches we have experienced,” but, at the same time, noted that the differences between the approaches were minimal, as “[a]ll approaches allow for consideration of the same or similar factors.”  It deferred to the district court’s discretion whether to deny collective action treatment “for trial management reasons.” The Tenth Circuit rejected Chipotle’s argument that the ad hoc approach is mandated by Theissen.

Also, the Tenth Circuit rejected Chipotle’s argument that the spurious approach violates its due process rights because there is no threshold determination if the matter is suitable for collective action treatment and it places the burden on Chipotle to “winnow” the collective action thereafter. Acknowledging that the winnowing process may be burdensome, the circuit court observed that, at this stage of the litigation, Chipotle had not identified a basis relieving it from this task.

The Tenth Circuit concluded by opining that it made “no definitive determination of the merits of using the spurious approach as opposed to either of the others”, and noted that the district court’s approach “may be debatable”. Nevertheless, the Turner case proceeds as a collective action with 10,000 opt-in plaintiffs.

Takeaways

  1. Trial courts are given wide latitude in deciding how to identify and provide notice to similarly situated litigants of FLSA collective actions. In the Tenth Circuit, no one method is mandated under § 216(b).  Nevertheless, the Turner district court decision, if followed, may signal even larger collective actions.  The ad hoc or two step approach has enjoyed wide acceptance at the district court and, more important, acquiescence at the circuit level.  The standard of proof at the initial certification stage is low to meet its purpose “to determine whether ‘similarly situated’ plaintiffs do in fact exist.” Myers, 645 F.3d at 555 (emphasis in original).  Although the plaintiff’s initial burden is modest, “it is not non-existent.” Khan v. Airport Mgmt. Servs., LLC, No. 10-CV-7735, 2011 WL 5597371 at *5 (S.D.N.Y. Nov. 16, 2011).  The “modest factual showing” to support conditional certification at the first stage inquiry starts the winnowing process by determining “whether, ‘similarly situated’ plaintiffs do in fact exist.” Myers, 624 F.3d at 555 (citations omitted; emphasis in original).  Under the Turner district court decision, the winnowing process will start later through misjoinder and severance motion practice, possibly on an individualized basis.
  2. The Turner case highlights the risk associated with utilizing automated time and attendance tracking systems. The administrative efficiencies that such systems bring to the workplace can be offset by lawsuits alleging inaccurate recording of working time.  An automated timekeeping system may reduce administrative overhead and control payroll, but it may lead to incidents of off the clock work, when, for example, meals are not taken, but recorded as having occurred.  Or, as alleged in Turner, an employee working a closing shift cannot record time, because the automated timekeeping system is not operational after a certain hour.  Some employers have learned this lesson the hard way in auto-deduction class and collective actions, involving meal breaks, particularly where a monitoring system is not in place to verify that all hours worked are recorded.

Immigration Update: Travel Ban and Other News for Employers

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The Immigration Law Group at Epstein Becker Green released a Special Immigration Alert that will be of interest to our readers.

Topics include:

  1. President Trump Issues Revised Executive Order on Travel
  2. USCIS Suspends Premium Processing for H-1B Petitions Starting April 3, 2017: All H-1B Petitions, Including H-1B Cap Petitions, Are Affected!
  3. Use of New Form I-9 Is Now Mandatory
  4. IRS Announces That Delinquent Taxpayers Face Revocation/Denial of U.S. Passports
  5. DHS Issues Two New Memos on Enforcement/Border Security

Read the full alert here.

Employers: How to Prepare for “A Day Without” Actions

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A new post on the Management Memo blog will be of interest to many of our readers in the retail industry: “‘A Day Without’ Actions – How Can Employers Prepare?” by our colleagues Steven M. Swirsky and Laura C. Monaco of Epstein Becker Green.

Following is an excerpt:

[T]he same groups that organized the January 21, 2017 Women’s March on Washington – an action participated in by millions of individuals across the county – has called for a “Day Without Women” to be held on Wednesday, March 8, 2017. Organizers are encouraging women to participate by taking the day off from paid and unpaid labor, and by wearing red – which the organizers note “may be a great act of defiance for some uniformed workers.”

Employers should be prepared to address any difficult questions that might arise in connection with the upcoming “Day Without Women” strike: Do I have to give my employees time off to participate in Day Without events? Can I still enforce the company dress code – or do I need to permit employees to wear red? Can I discipline an employee who is “no call, no show” to work that day? Am I required to approve requests for the day off by employees who want to participate? As we explained in our prior blog post, guidance from the National Labor Relations Board’s General Counsel suggests that an employer can rely on its “lawful and neutrally-applied work rules” to make decisions about granting requests for time off, enforcing its dress code, and disciplining employees for attendance rule violations. An employer’s response, however, to a given employee’s request for time off or for an exception to the dress code, may vary widely based upon the individual facts and circumstances of each case. …

Read the full post here.

Changes to NLRB Election Rules and Employee Handbook and Email Standards Are Likely Under Miscimarra

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Our colleague Steven M. Swirsky, a Member of the Firm at Epstein Becker Green, has a post on the Management Memo blog that will be of interest to many of our readers in the retail industry: “NLRB Acting Chair Dissents Point to Likely Changes to Board Election Rules and Employee Handbook and Email Standards.”

Following is an excerpt:

NLRB Acting Chair Philip Miscimarra has given the clearest indication to date of what steps a new Republican majority is likely to take to reverse key elements of the Labor Board’s hallmark actions of the Obama administration once President Trump nominates candidates for the Board’s two open seats and the Senate confirms. In each of these cases, Miscimarra highlighted his earlier opposition to the majority’s changes in long standing precedents and practices. …

Read the full post here.

HR and Payroll Departments Should Beware of Phishing Scams This Tax Season

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Our colleagues Brian G. Cesaratto and Adam S. Forman, at Epstein Becker Green, have a post on the Technology Employment Law blog that will be of interest to many of our readers in the retail industry: “Phishing Scam Targets Human Resources and Payroll Departments.”

Following is an excerpt:

Human Resources and Payroll should advise employees in their departments to be on the lookout for the latest tax season phishing scam designed to steal employees’ tax related information and social security numbers. Given the regular frequency of these types of attacks, employers should be taking appropriate steps to safeguard employee Personally Identifiable Information (“PII”).  At a minimum, Human Resources should have in place written policies regarding the handling of employee PII and provide training designed to protect employee PII against a data breach.  Because Human Resources works with employee PII on an everyday basis, it may be the best equipped to secure sensitive personnel information against the type of fraudulent scheme highlighted in the recent IRS alert. …

What preventative steps can be taken to guard against these attacks? Human Resources should ensure that policies and procedures are in place requiring that the sending of employees’ confidential tax related information by email only be done with 100% confidence that the intended recipient is within the organization and has requested the information. Indeed, the IRS advises that employers consider adopting written policies that govern the electronic distribution of confidential employee Form W-2s and tax related information. …

Read the full post here.

D.C. Mayor Signs Ban on Most Employment Credit Inquiries

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Our colleagues Brian W. Steinbach and Judah L. Rosenblatt, at Epstein Becker Green, have a post on the Heath Employment and Labor blog that will be of interest to many of our readers in the retail industry: “Mayor Signs District of Columbia Ban on Most Employment Credit Inquiries.”

Following is an excerpt:

On February 15, 2017, Mayor Muriel Bowser signed the “Fair Credit in Employment Amendment Act of 2016” (“Act”) (D.C. Act A21-0673) previously passed by the D.C. Council. The Act amends the Human Rights Act of 1977 to add “credit information” as a trait protected from discrimination and makes it a discriminatory practice for most employers to directly or indirectly require, request, suggest, or cause an employee (prospective or current) to submit credit information, or use, accept, refer to, or inquire into an employee’s credit information. …

Read the full post here.

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