Our colleague Steven M. Swirsky at Epstein Becker Green has a post on the Management Memo blog that will be of interest to our readers: “NLRB Reverses Key Rulings: Returns to Pre-Obama Board Test for Deciding Joint-Employer Status and for Determining Whether Handbooks, Rules and Policies Violate the NLRA – Assessment of 2014 Expedited Election Rules and Future Changes Also Announced.”

Following is an excerpt:

It should come as no surprise that recent days have seen a stream of significant decisions and other actions from the National Labor Relations Board as Board Chairman Philip A. Miscimarra’s term moves towards its December 16, 2017 conclusion.  Chairman Miscimarra, while he was in a minority of Republican appointees from his confirmation during July 2013 and as a new majority has taken shape with the confirmation of Members Marvin Kaplan and William Emanuel, has clearly and consistently explained why he disagreed with the actions of the Obama Board in a range of areas, including the 2015 adoption of a much relaxed standard for determining joint-employer status in Browning-Ferris Industries, the standard adopted in Lutheran Heritage Village for determining whether a work rule or policy, whether in a handbook or elsewhere would be found to unlawfully interfere with employees’ rights under Section 7 of the National Labor Relations Act to engage concerted action with respect to their terms and conditions of employment, and his disagreement with the expedited election rules that the Board adopted through amendments to the Board’s election rules. …

In Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., decided on December 14, 2017, in a 34-2 decision, the Board has discarded the standard adopted in Browning-Ferris, and announced that it was returning to the previous standard and test for determining joint-employer status and returning to its earlier “direct and  immediate control standard.”  …

In The Boeing Company, also decided on December 14, 2017, the Board adopted new standards for determining whether “facially neutral workplace rules, policies and employee handbook standards unlawfully interfere with the exercise” of employees rights protected by the NLRA. …

Noting that the 2014 Election Rules were adopted over the dissent of Chairman Miscimarra and then Member Harry Johnson, and the fact that these rules have now been effect for more than two years, on December 14th, the Board, over the dissents of Members Mark Pearce and Lauren McFerren, both of who were appointed by President Obama, published a Request for Information, seeking comment …

Read the full post here.

Employers in New York City are required to provide their employees with reasonable accommodations related to childbirth and pregnancy. The New York City Commission on Human Rights has published a new factsheet and notice. The notice should be provided to all employees upon hire, and posted in the workplace to provide employees with notice of their rights under the NYC Human Rights Law.

The notice and factsheet outline employers’ responsibilities with respect to pregnant employees, and recommend that employers work with employees to implement accommodations that recognize employee contributions to the workplace and help keep them in the workplace for as long as possible. The notice and factsheet also provide employees with examples of reasonable accommodations, such as breaks to rest or use the bathroom while at work, and time and space to express breast milk at work.

In December 2016 Philadelphia’s City Council passed a Wage Equity Ordinance (“Ordinance”) prohibiting employers from asking applicants for their salary history or to retaliate against a prospective employee for failing to answer such a question.  The law, which was to become effective May 23, 2017, has been stayed pending resolution of legal challenge by the Chamber of Commerce for Greater Philadelphia, alleging that the law violates employers’ First Amendment rights.

Nevertheless, on October 24, 2017, the Philadelphia Commission on Human Relations adopted a regulation  (“Regulation”) implementing the Ordinance. The Regulation seeks to clarify what employers may and may not ask and to further define which employers and applicants are covered by the Ordinance.

Covered Employers and Applicants

The Regulation specifies that the Ordinance the term “Employer” applies only to persons who are interviewing applicants with the intention of filling a position located within the City.

Prohibited Inquiries

Under the Regulation, an employer “shall not include a question on paper or electronic applications asking Prospective Employees to provide their salary history at any previous position.” The Regulation also prohibits employers from asking current employees seeking a new position (located in Philadelphia) about the employee’s wage history from any previous employer.

Permissible Inquiries

Employers may inquire into the applicant’s salary expectations, skill level, and experience relative to the position sought. In addition, employers may use voluntary salary history disclosures an applicant makes “knowingly and willingly” during an interview, provided it is not in response to a question from an employer.

Action Items

Although the Ordinance is currently on hold, employers with positions or offices in Philadelphia may nevertheless wish to prepare for the possibility that the law will become effective by:

  • Identifying jobs that are based in Philadelphia. This will be especially important for positions where an employee may work in more than one location.
  • Preparing a Philadelphia-specific employment application that removes any request for salary history.  The ordinance does not expressly state that it is sufficient to have an instruction on the employment application that directs Philadelphia applicants not to answer salary history questions.

On November 2, 2017, three Republican Representatives, Mimi Walters (R-CA), Elise Stefanik (R-NY), and Cathy McMorris Rodgers (R-WA), introduced a federal paid leave bill that would give employers the option of providing their employees a minimum number of paid leave hours per year and instituting a flexible workplace arrangement. The bill would amend the Employee Retirement Income Security Act (“ERISA”) and use the statute’s existing pre-emption mechanism to offer employers a safe harbor from the hodgepodge of state and local paid sick leave laws. Currently eight states and more than 30 local jurisdictions have passed paid sick leave laws.

The minimum amount of paid leave employers would be required to provide depends on the employer’s size and employee’s tenure. The bill does not address whether an employer’s size is determined by its entire workforce or the number of employees in a given location.

Number of Employees Amount Of Sick Leave For Employees With Five Or More Years Of Service Amount Of Sick Leave For Employees With Fewer Than Five Years Of Service
1,000 or more

 

20 days 16 days
250 to 999

 

18 days 14 days
50 to 249

 

15 days 13 days
Fewer than 50

 

14 days 12 days

In addition to paid leave hours, employers would be required to offer at least one of the following flexible workplace arrangements: (1) a compressed work schedule that allows employees to increase their daily hours so as to qualify for a four-day workweek, (2) a biweekly work program that permits employees to work a total of 80 hours over a two-week period, (3) a telecommuting program, (4) a job-sharing program, (5) flexible scheduling, or (6) a predictable schedule. Employees would become eligible to participate in a flexible workplace arrangement once they have worked for the employer for 12 months and at least 1,000 hours.

The bill would not affect state paid family leave insurance programs, such as one about to take effect in New York, nor would it affect job-protection coverage afforded by the Family and Medical Leave Act. If signed into law, the bill would become the first ever federal paid leave law.

The New York City Department of Consumer Affairs (“DCA”) has issued proposed rules  for the implementation of the Fair Workweek Law. The law establishes scheduling practices for fast food and retail workers in New York City and is set to go into effect on November 26, 2017.

With regard to retail employers, the proposed rules include:

  • Workplace notice positing requirements, § 14-02.   The DCA’s notice template is not yet available.
  • Workplace schedule posting requirements, § 14-04.   Retail employers must conspicuously post schedules three days before work begins.   The proposed rule expressly provides that employers may not post or otherwise disclose to other employees the work schedule of an employee who has been granted an accommodation based on the employee’s status as a survivor of domestic violence, stalking, or sexual assault, where disclosure would conflict with the accommodation.
  • Recordkeeping requirements to document compliance, § 14-08(a).   The proposed rule states these records must be maintained “in an electronically accessible format” and show:
    • Actual hours worked by each employee each week;
    • An employee’s written consent to any schedule changes, where required; and
    • Each written schedule provided to an employee.
  • Employee work schedule request requirements, § 14-08(b) and (c).   Within two weeks’ of an employee’s request, retail employers must provide employees with their work schedules for any previous week worked for the past three years. Within one week of an employee’s request, retail employers must provide the most current version of the complete work schedule for all employees who work at the same location, with the exception of those employees with accommodations based on the employee’s status as a survivor of domestic violence, stalking, or sexual assault.
  • Procedural guidance for employees who wish to proceed with a private right action against their employers for violations of the law.

A public hearing on the proposed rules is scheduled for Friday November 17, 2017. The deadline for written comments is 5:00 p.m. on November 17, 2017.

In a potentially significant decision following the New Jersey Supreme Court’s ruling in Hargrove v. Sleepy’s, LLC, 220 N.J. 289 (2015), a New Jersey appellate panel held, in Garden State Fireworks, Inc. v. New Jersey Department of Labor and Workforce Development (“Sleepy’s”), Docket No. A-1581-15T2, 2017 N.J. Super. Unpub. LEXIS 2468 (App. Div. Sept. 29, 2017), that part C of the “ABC” test does not require an individual to operate an independent business engaged in the same services as that provided to the putative employer to be considered an independent contractor.  Rather, the key inquiry for part C of the “ABC” test is whether the worker will “join the ranks of the unemployed” when the business relationship ends.

In Garden State Fireworks, the panel analyzed whether pyrotechnicians hired by a fireworks company to conduct fireworks displays were properly classified as independent contractors rather than employees under New Jersey’s Unemployment Compensation Law (UCL).  The panel’s analysis was guided by the “ABC” test, which presumes that a worker is an employee, unless the employer can demonstrate three factors.  As stated in Sleepy’s, these factors are drawn from N.J.S.A. 43:21-19(i)(6), which asks whether:

(A) Such individual has been and will continue to be free from control or direction over the performance of such service, both under his contract of service and in fact; and

(B) Such service is either outside the usual course of business for which such service is performed, or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and

(C) Such individual is customarily engaged in an independently established trade, occupation, profession or business.

During a routine audit by the New Jersey Department of Labor and Workforce Development (the “Department”), the fireworks company was found to have misclassified certain pyrotechnicians as independent contractors. The company appealed the Department’s order, and it was reversed by an Administrative Law Judge (ALJ).  In a final administrative action, however, the Commissioner of the Department rejected the ALJ’s findings and agreed with the auditor’s initial assessment.  The company appealed from the Commissioner’s decision.  After reviewing the hearing record from the ALJ, the panel reversed the Commissioner’s decision and concluded that all of the factors of the “ABC” test had been satisfied.

As to part A, the panel found that there was no evidence to support the conclusion that the company controlled the technicians’ performances. On the contrary, the facts suggested that the technicians were given “virtually complete control” over the fireworks displays.  As to part B, the panel stated that the fireworks displays were performed offsite and outside of all of the company’s places of business. The panel concluded that part C was satisfied because the hearing testimony revealed that the technicians only performed shows during one or two weeks in a year, and none of the technicians relied on the shows as their primary source of income.  The technicians were either retirees or full-time employees in other endeavors when not performing fireworks displays, and were not employed independently to provide the same service.

In applying the “ABC” test, the panel rejected the Commissioner’s interpretation of part C to require an “independently established enterprise or business,” even though this interpretation appears to be consistent with other unpublished appellate division decisions applying the “ABC” test in different factual contexts post-Sleepy’s.  For example, in N.E.I. Jewelmasters of New Jersey, Inc. v. Board of Review, Docket No. A-2333-14T3, 2016 N.J. Super. Unpub. LEXIS 1456 (App. Div. June 24, 2016), a panel held that “[s]atisfaction of [part] C requires a clear showing that a viable independent business exists apart from the particular contractual relationship at issue.”  The panel found that part C was not satisfied in that case because: the sales/marketing employee lacked “an independently established business”; she worked solely for one employer; and “her termination rendered her unemployed.”  Moreover, in ABS Group Services v. Board of Review, Docket No. A-1847-12T3, 2016 N.J. Super. Unpub. LEXIS 989 (App. Div. Apr. 27, 2016), a panel required evidence that the employee, a certified boiler and pressure vessel inspector, was engaged in an independent business to satisfy part C.  Because the employee was dependent upon the employer for his livelihood and did not have a business of his own, the panel concluded that part C was not satisfied.

In Garden State Fireworks, the panel construed “independent business” in part C to include separate employment that continues despite the termination of the challenged relationship.  In so finding, the panel relied on Philadelphia Newspapers, Inc. v. Board of Review, 397 N.J. Super. 309, 323 (App. Div. 2007), for the assertion that part C is satisfied “when a person has a business, trade, occupation, or profession that will clearly continue despite termination of the challenged relationship.” Philadelphia Newspapers, in turn, relies on Carpet Remnant Warehouse, Inc. v. New Jersey Department of Labor, 125 N.J. 567 (1991). Carpet Remnant cites to Trauma Nurses, Inc. v. Board of Review, 242 N.J. Super. 135, 148 (App. Div. 1990), noting parenthetically that nurses are engaged in an independently established profession that can satisfy part C where it can be shown that they work for brokers and/or hospitals performing varying types of work, such as part-time, full-time, and shift work.

Sleepy’s recites a similar interpretation of part C, although Sleepy’s is not cited in Garden State Fireworks.  The court in Sleepy’s indicated that part C “calls for an enterprise that exists and can continue to exist independently of and apart from the particular service relationship,” quoting Gilchrist v. Division of Employment Security, 48 N.J. Super. 147 (App. Div. 1957).  Notably, the Sleepy’s court recited language from case law that uses the broader term “enterprise” instead of “independently established business,” which is a phrase that implies that the worker in question must be a business owner.  Further, like Garden State Fireworks, Sleepy’s notes that part C requires “a profession that will plainly persist despite the termination of the challenged relationship,” citing to Trauma Nurses.  Moreover, the Sleepy’s court stated that if the individual joins “the ranks of the unemployed,” part C is not satisfied.  Thus, the panel’s interpretation of part C’s “independent-business test” in Garden State Fireworks appears to be consistent with court’s interpretation of part C in Sleepy’s.

In addition, the panel did not interpret part C to require that the independently established profession be of the same nature as the service provided to the putative employer. This requirement exists in the “ABC” test of some states, such as Connecticut, Delaware, and Massachusetts, although no such requirement has been found under New Jersey law pursuant to N.J.S.A. 43:21-19(i)(6)(C) or case law.  While Trauma Nurses is an example of a case where an appellate panel found that part C was satisfied where the putative employees were able to provide the same service in the same industry following the conclusion of the relationship with the putative employer, the panel in Trauma Nurses did not hold that providing the same service in the same industry is a necessary component of part C.  The panel in Garden State Fireworks also did not find service in the same industry to be necessary to satisfy part C, implicitly stating that an employee who only works for a company one to three times a year while working full time elsewhere is not an employee of that company under part C even if the full-time employment is in a different industry.  Likewise, the ALJ discerned that part C does not require that the “independently established trade, occupation, profession or business . . . be part of the same industry.”

Another noteworthy observation from Garden State Fireworks is that the panel found, without directly addressing the issue, that pyrotechnicians who were retirees could satisfy part C.  Plainly, a retiree, by definition, is not engaged in an “an independently established trade, occupation, profession or business.”  Nevertheless, if the panel would have addressed the issue, it may have concluded, based on Carpet Remnant, that the retirees were not employees because, being retired from employment, they were not economically dependent on the fireworks company and, thus, would not join the ranks of the unemployed upon termination of the challenged relationship.

In sum, the panel’s analysis highlights that the application of the “ABC” test is a fact-sensitive inquiry. Employers who fail the “ABC” test of the UCL may be liable for unemployment compensation and disability benefits.  Significantly, the “ABC” test, as held in Sleepy’s, is also used to determine independent contractor status under New Jersey Wage and Hour Law and New Jersey Wage Payment Law.  Thus, an employer’s failure to satisfy the “ABC” test with respect to its independent contractors can further result in liability for unpaid wages, overtime, and employee benefits.  A principal who engages the services of an independent contractor should periodically review such engagement to ensure compliance with New Jersey law.

On October 23, 2017, New York Governor Andrew Cuomo signed legislation that amends the Clean Indoor Air Act to ban the use of electronic cigarettes (“e-cigarettes”) everywhere that smoking traditional tobacco products is prohibited.  With this amendment, the Clean Indoor Air Act will prohibit both smoking and vaping in certain indoor areas, including places of employment, as well as certain outdoor areas accessible to the public. This legislation will become effective on November 22, 2017.  Prior to this date,  any required posters and signs will need to be updated to include reference to “No Vaping” or “Vaping” along with the “No Smoking” or “Smoking” signs, or international “No Smoking” symbol.

For the second time in as many years, California Governor Jerry Brown has vetoed “wage shaming” legislation that would have required employers with 500 or more employees to report gender-related pay gap statistics to the California Secretary of State on an annual basis beginning in 2019 for publication on a public website. Assembly Bill 1209 (“AB 1209”), which we discussed at length in last month’s Act Now advisory, passed the Legislature despite widespread criticism from employers and commerce groups.  This criticism included concerns that publication of statistical differences in the mean and median salaries of male and female employees without accounting for legitimate factors such as seniority, education, experience, and productivity could give a misleading impression that an employer had violated the law.  Opponents also decried the burden the bill would place on employers to do data collection and warned that it would lead to additional litigation.  In vetoing the measure, Governor Brown noted the “ambiguous wording” of the bill and stated he was “worried that this ambiguity could be exploited to encourage more litigation than pay equity.”

However, the same pen that vetoed AB 1209 signed another pay-equity law last week: Assembly Bill 168 (“AB 168”).  AB 168 precludes California employers from asking prospective employees about their salary history information.  “Salary history information” includes both compensation and benefits.  Like similar laws passed recently in several other states and cities, the policy underlying the inquiry ban is that reliance upon prior compensation perpetuates historic pay differentials.  Opponents have argued that such a ban will make it more difficult for employers to match job offers to market rates.  Go to our Act Now Advisory on AB 168 for a comprehensive review of this new law.

Our colleague Sharon L. Lippett, at Epstein Becker Green, has a post on the Financial Services Employment Law blog that will be of interest to many of our retail industry employers and plan sponsors: “Plan Sponsors: Potential Targets for IRS Compliance Examinations.”

Following is an excerpt:

The IRS recently released the Tax Exempt and Government Entities FY 2018 Work Plan (the “2018 Work Plan”) which provides helpful information for sponsors of tax-qualified retirement plans about the focus of the IRS’ 2018 compliance efforts for employee benefit plan.  While the 2018 Work Plan is a high-level summary, it does address IRS compliance strategies for 2018 and should assist plan sponsors in administering their retirement plans.…

Read the full post here.

In a decision that will be celebrated by employers in the Seventh Circuit struggling with employee requests for post-Family Medical Leave Act (“FMLA”) leave as an accommodation under the American with Disabilities Act (“ADA”), the Seventh Circuit in Severson v. Heartland Woodcraft, Inc., 2017 U.S. App. LEXIS 18197 (7th Cir. Sept. 20, 2017), recently held that an employer did not violate the ADA by firing an employee instead of extending his leave after he exhausted all leave under the FMLA.  This holding – finding that extended long-term leave is not a reasonable accommodation under the ADA – is not only contrary to the Equal Employment Opportunity Commission (“EEOC”)’s position regarding extended leave as a reasonable accommodation, but also conflicts with several other federal Circuit courts that had previously ruled on the same issue (holding that extended/post-FMLA leave can be a reasonable accommodation under the ADA).

In Severson, the plaintiff was diagnosed with back myelopathy, which negatively affected his back, neck, and spinal cord.  While plaintiff generally could perform his duties without incident, he did experience several “flare ups” which made it difficult for him to walk, bend, lift, stand, and work.  As a result of his disability, plaintiff injured his back and went on FMLA leave, with several continuations of leave, totaling 12 weeks, approved by defendant.  After exhausting all FMLA leave, plaintiff informed defendant that he would undergo disc compression surgery and would require at least an additional two months of leave for recovery time.  Instead of extending plaintiff’s leave, defendant informed plaintiff that his employment would terminate on the date that his FMLA leave expired.

In reaching its holding that leave for an extended period of time is not a reasonable accommodation under the ADA, the Seventh Circuit reaffirmed its analysis in an earlier case – Byrne v. Avon Prods., Inc. 328 F.3d 379 (7th Cir. 2003) – that a long-term leave of absence could not be a reasonable accommodation under the ADA.  Although EEOC guidance “Employer-Provided Leave and the Americans with Disabilities Act” states that employers should consider long-term leaves of absence as reasonable accommodations, the Seventh Circuit disagreed, stating that such an interpretation was untenable and would transform the ADA into “a medical-leave statute – in effect, an open-ended extension of the FMLA.”  (A previous article on the guidance can be found here.)  Moreover, the Court in Severson stated that long-term medical leave does not enable an individual to perform the essential functions of the job and, therefore, cannot be considered a reasonable accommodation because at the time it is required the employee is not a qualified individual with a disability.  Finally, the Court noted that the ADA only requires “reasonable accommodations” and not “effective accommodations”, finding the a request for extended leave is only the latter.  Thus, the Seventh Circuit rejected plaintiff’s argument (which had been joined by the EEOC) that defendant should have granted him a reasonable accommodation of additional leave.

This case represents a stark deviation from both the EEOC’s guidance and the rulings of multiple other Circuit courts throughout the country setting forth that employers must evaluate requests for leave (including those extending beyond FMLA leave) under the ADA on a case-by-case basis to analyze whether granting the leave would be an undue hardship, so long as the request is not for indefinite leave. While this may change the way employers in the Seventh Circuit approach their analysis of leave as a reasonable accommodation under the ADA, employers should be careful not to over-extend this ruling:

  • First, the Severson holding itself does not totally preclude any post-FMLA as an accommodation under the ADA. Indeed, the holding leaves open the possibility that leave spanning a few days or even a couple of weeks could be a reasonable accommodation.
  • Second, some state and local laws governing disability discrimination and accommodation may have different language and standards that could result in a contrary decision. (And now, more than ever, state and local laws that are more restrictive than federal law are being passed on a regular basis.)
  • Third, employers outside the Seventh Circuit should remain diligent in individually analyzing requests for extended leave as an ADA accommodation, particularly in jurisdictions that follow the EEOC’s guidance or where Circuits have expressly ruled contrary to Severson.

No matter what jurisdiction an employer operates in, it is always important for employers to communicate with employees regarding expiration of leave and expected return dates while the employee remains out on leave.