A Look Back and a Look Ahead

1. Employment Law Update:
A Look Back and a Look Ahead
Peter Donati
Laura Friedel
Kenneth Kneubuhler
September 17, 2015
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2. Today’s Webinar Panel
Peter F. Donati
Practice Group Leader
Tel 312.476.7590
pdonati@lplegal.com
.
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Laura B. Friedel
Partner
Tel 312.476.7510
lfriedel@lplegal.com
Kenneth Kneubuhler
Of Counsel
Tel 312.476.7567
kkneubuhler@lplegal.com

3. Our Program for Today:
• Proposed Overtime Regulations
• Smartphones and Off the Clock Work
• Unpaid Internships
• NLRB Developments
• A Higher Bar for Independent Contractor Status?
• ACA Reporting
• New Requirements for Federal Contractors
• Gay Marriage, Sexual Orientation and Transgender Employees in the
Workplace
• Expanding Availability of Whistleblower/Retaliation Claims
• Accommodation Developments
• EEOC Guidance on Wellness Programs
• Agency Guidance on Policies and Handbooks
• State & Local Developments on Minimum Wage, Sick Leave, and
Ban the Box
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4. Your Questions…
- Your questions can be submitted online
- Only we will be able to see them
- If we don’t have time to answer them today, we’ll follow
up with you
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5. Proposed FLSA Overtime Regulations
• Announced July 6, 2015
• 1st update to regulations since August 2004
• Public comment period closed on September 4th
• Expect final regulations in 2016
• Likely will take effect 30 days after published
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6. Proposed FLSA Overtime Regulations
Exempt status requirements reminder…..
Currently, to be exempt under the White Collar
(Administrative, Executive, Professional) Exemptions the
employee MUST:
1. Be paid on a salary basis;
2. Receive guaranteed salary (or other guaranteed pay) of
at least $455/week ($23,660/year); AND
3. Meet the job duties test.
The proposed regulations only change #2….
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7. Proposed FLSA Overtime Regulations
New proposed minimum guaranteed pay:
• NPRM says $921 per week ($47,892 per year)
• Final likely will be $970 per week ($50,440 per year)
- 40th Percentile of full time salaried employees, nationwide
- NPRM amount is based on 2013 data
- Prediction for final is based on anticipated Q2 2015 – Q1 2016 data
• Annual increases
Two possible methods for annual increases:
• Fixed percentile of salaried employees
- 40th percentile for given year
• CPI-U
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8. Proposed FLSA Overtime Regulations
New proposed minimum for Highly Compensated
Employee Exemption:
• NPRM says $122,148 per year
- 90th Percentile of full time salaried employees, nationwide
- NPRM amount is based on 2013 data
- Predict higher in final rule – based on Q2 2015 – Q1 2016 data
• Annual increases
Remember: HCEE doesn’t apply in all states!
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9. Proposed FLSA Overtime Regulations
Expected Impact of Changes
 4.6 Million employees nationwide (exempt making more
than $23,660 but less than $50,440)
 Greatest concern:
- outside major metropolitan areas
- certain industries (fast food, retail, hospitality)
- certain departments (customer service, accounting)
- commissioned employees with low salary/guaranteed draw
- “intro level exempt” (account managers, analysts)
 Increases will require annual review of exempt status
 Annual increases may disproportionately impact traditional
(rather than “hot”) industries
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10. Proposed FLSA Overtime Regulations
Steps to take in anticipation of new regulations:
 Identify exempt employees making salary <$52k/year
 Identify commissioned exempt employees making
guaranteed pay <$52k/year
 Weigh financial and cultural impact of pay increase vs
transition to non-exempt
 Consider using change in regulations as opening to
change status of questionably-classified employees
 Consider how you will annually assess whether minimum
salary is satisfied
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11. Smartphones and Off the Clock Work
Allen v. Chicago Police Department
• CPD officer brought suit claiming he wasn’t paid for time
spent on his blackberry after hours
• Told to put in overtime slips for time spent off the clock
monitoring and responding to emails/calls/texts
• Class claims that discouraged from doing so and
supervisors should have ensured they did
• Bench trial in late August
• Not a new issue but noteworthy because likely to get an
opinion (most settle)
• Decision could set new standards for how employers
handle afterhours smartphone use
DOL has said it will be weighing in…..
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12. Unpaid Internships & the FLSA
Glatt v. Fox Searchlight Pictures, et. al (2d Cir. 7/2/15)
Schumann v. Collier Ansethesia (11th Cir. 9/11/15)
Issue: What test do we apply to determine if an intern is
really an employee (and thus has a right to pay)
Answer: Primary Beneficiary Test… but how applied differs
Key takeaway: Unpaid internships remain very risky!
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13. NLRB Quickie Election Rules
• Rules intended to shorten election process and reduce
challenges, which gives union an advantage
• If pre-election hearing, 8 days from Notice of Hearing
• Comprehensive and binding position statement required
from employer before hearing
• Pre-election hearing limited to unit issues, other issues
deferred until after election
• Previous rules election could be month or more after
petition – now can be as soon as two weeks
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14. NLRB Quickie Election Rules
What you can do…
 Keep communication channels open with employees
 Consider unit determination issues beforehand
 Provide periodic training for your managers and
supervisors
 Consider keeping a “war plan” in your file that is ready to
go from Day 1
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15. NLRB’s New Joint Employer Standard
Browning-Ferris Industries (NLRB 8/27/15)
Issue: Can a company that has another employer’s
employees working on its premises be deemed to be a joint
employer even if it doesn’t exercise authority to control
aspects of their employment?
Old Rule: To be a “joint employer”, must exercise authority
over terms and conditions of employment in a direct and
immediate manner that was not “limited and routine”
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16. NLRB’s New Joint Employer Standard
NLRB ruling set forth a new standard:
Authority, even if indirect, reserved or unexercised, can
be sufficient to establish a joint employment
relationship
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17. NLRB’s New Joint Employer Standard
• Direct impact is primarily with specific structures
- Franchisees
- Labor agencies that directly supervise their employees working
on client work (limited control by client)
• Key Takeaways
- Franchisors and franchisees need to anticipate claims that they
are joint employers
- Pay attention to contracts with staffing firms and subcontractors
- Ensure that there is mutual obligation to comply with laws &
mutual cooperation obligation
- If concerned about joint employer status, consider letting go of
some control
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18. Other NLRB Developments
• Purple Communications – employers required to open corporate email
systems to union organizing by employees and group discussions of
terms and conditions of employment
• Babcock & Wilcox Construction -- Change in NLRB deferral standard
likely will lead to duplicative proceedings for employers
• Press Room Cleaners -- when a successor violates law by unilaterally
changing the predecessor’s terms and conditions of employment, the
make-whole remedy will include restoration of the predecessor’s terms
and conditions of employment
• Lincoln Lutheran – dues checkoff obligation continues even after
contract expiration
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19. Independent Contractor Developments
New DOL Guidance
• Issued July 15th
• Most workers classified as independent contractors are
misclassified
• No new test.
• Instead, applies the “Economic Realities” Test and reads it
together with a broad view of the FLSA’s definition of
“employ”
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20. Independent Contractor Developments
• Employ = “Suffer or Permit to Work”
- Designed to be VERY broad – broader than agency analysis
- Worker is economically dependent on the entity as opposed to truly
in business for him or herself
• “Economic Realities”
a) Is the work an integral part of the company’s business?
b) Does the worker’s managerial skill affect her opportunity for profit
or loss?
c) How does the worker’s relative investment compare to that of the
company?
d) Does the work performed require special skill and initiative?
e) Is the relationship permanent or indefinite?
f) What is the nature and degree of the company’s control?
Conclusion: DOL says that virtually all workers are
employees….
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21. Independent Contractor Developments
Affordable Care Act raises cost of misclassification
• Many employee benefit plans expressly cover only those the company
designates as employees to protect against retroactive coverage of
misclassified independent contractors.
• Tax-qualified retirement plans have long had to cover a minimum
percentage of non-highly compensated employees (generally 70%).
- Failure to cover enough employees can trigger adverse tax
consequences to both company and employees
- But disqualification is usually avoided through modest fines and
corrective action.
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22. Independent Contractor Developments
• ACA ‘s pay or play mandate requires “large” employers to offer of
qualifying health coverage to a minimum % of full-time employees.
- This year employers of 100 or more full-time equivalent employees
must offer coverage to at least 70% of full-time employees.
- In 2016 employers of 50 or more full-time equivalent employees
must offer coverage to at least 95% of full-time employees.
- Little room for error in 2016.
• ACA penalty of $2000 times all full-time employees (over 30
employees) for failure to offer coverage to 95% of full-time employees
(determined monthly with prorated penalty).
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23. ACA Reporting Required for 2015
Reporting required for calendar 2015, regardless of
plan/policy year:
• employees get individual reports due Jan 31, 2016
• aggregate reporting to IRS due Feb 28 (3/31 if filed
electronically)
Two kinds of reporting:
• Individual Mandate – verifies whether individual had minimum essential
coverage for a month (individual owes penalty for failure to have
required coverage)
• Employer Mandate - determines whether “large” employer offered
qualifying coverage to enough full-time employees for a month
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24. ACA Reporting Required for 2015
Individual Mandate Reporting
• Coverage under insured health plan is reported by insurer
• Minimum essential coverage provided on self-insured basis by ANY
employer is reported by that employer
• Form 1095-B to employee; Form 1094-B transmittal to IRS
Employer Mandate Reporting
• Employers of 50 or more must report for 2015 (<100 employee
exemption for 2015 doesn’t apply for reporting purposes)
• Form 1095-C to employee; Form 1094-C transmittal to Treasury
• Employer can use 1095-C report to report self-insured coverage so
employee gets single report
If you haven’t already started planning for this reporting, its
time to get started!
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25. New Requirements for Federal Contractors
So you want to do business with the U.S. government?
• Paid sick/family leave required for employers who receive contracts
in 2017 -- 1 hour of leave for every 30 hours of work up to max of 7
days – can be used for employee or family sick days, as well as
absences dues to domestic violence or sexual assault
• Minimum wage rises in January 2016 for employees on federal
contracts to $10.15 per hour and $5.85 per hour for tipped employees
• OFCCP's issues final rule concerning pay transparency - federal
contractors barred from discriminating against employees and
applicants who discuss, disclose or inquire about pay
• Proposed guidance issued on “blacklisting rule” which will require
prospective federal contractors to disclose a three-year history of
violations of federal labor and employment laws
• LGBT rule goes into effect barring contractors from discriminating
against lesbian, gay, bisexual and transgender employees
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26. Gay Marriage, Sexual Orientation Discrimination,
Transgender Discrimination
Benefit Plans after Obergefell v. Hodges
• In Windsor (2013) Supreme Court held a same-sex
marriage valid under any state law was valid under federal
law.
• In Obergefell (June 2015) the Court took the next step and
held that states could not ban same-sex marriages.
• Now employers do not need to impute state income tax for
health coverage to same-sex spouse.
- State tax laws that do not track federal tax law need to be amended
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27. Gay Marriage, Sexual Orientation Discrimination,
Transgender Discrimination
Benefit Plans after Obergefell v. Hodges (continued)
• Employers that offer coverage to domestic partners and civil
unions may decide to stop.
- Marriage is now available
- Simplifies plan & tax administration
• Must employers treat same-sex marriages the same as
opposite-sex marriages?
- Federal law does not require health & welfare plans to provide
spousal benefits
- If coverage is offered to opposite-sex spouses, many state
insurance/non-discrimination laws require offer to same-sex spouses
- Would different treatment violate federal law (Title VII)?
• Claims for retroactive benefits.
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28. Gay Marriage, Sexual Orientation Discrimination,
Transgender Discrimination
• DOL final rule on interpretation of “spouse” under FMLA –
recognizes all same sex marriages regardless of state law
• EEOC determines that Title VII covers sexual orientation
discrimination (previously determined that Title VII protects
against discrimination based on gender identity)
• EEOC sues two companies over transgender
discrimination
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29. Expanding Retaliation Claims
• Greathouse v. JHS Security Inc. (2d Cir. 4/20/15)
- Internal, oral complaint could be considered protected activity and
form basis for FLSA retaliation claim.
• Greengrass v. International Monetary Systems (7th Cir.
1/12/15)
- Company’s statement in SEC filing that EEOC complaint was
“meritless” and that it would vigorously defend itself can form the basis
of a Title VII retaliation claim.
• Berman v. Neo@Ogilvy (2nd Cir. 9/10/15)
- Employee could bring whistleblower claim under Dodd-Frank Act even
though he didn’t go to the SEC.
- Internal complaint was sufficient because it was protected under
Sarbanes-Oxley.
- Creates a split with 5th Circuit.
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30. Accommodations in the Workplace
• Illinois amends Human Rights Act to provide greater
protections for pregnancy – notices must be posted,
accommodations are required, scope of coverage
expanded
• Supreme Court rules in Young v. UPS that light duty
positions not necessarily off limit to pregnant employees -
EEOC issues revised enforcement guidance on pregnancy
discrimination and related issues
• Supreme Court addresses standard of proof for religious
discrimination in Abercrombie case – even if no
accommodation request, employer generally cannot use a
religious practice as a basis not to hire
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31. EEOC Wellness Program Guidance
• EEOC says that wellness programs must be voluntary to
avoid violation of ADA (non-job related medical exams &
questions be voluntary, confidential, and not used to
discriminate).
• Two more actions against employers since last year’s
Webinar:
- EEOC v. Flambeau (September 30, 2014)
- EEOC v. Honeywell International (October 27, 2014)
• EEOC issued proposed regulations this April under ADA
- Proposal not fully aligned with HIPAA reward limits
• EEOC says it will later address how Genetic Information
Nondiscrimination Act (GINA) affects employer wellness
programs.
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32. Agency Positions on Employer Policies
NLRB Report of General Counsel on Employee Handbook
Rule Cases
• A rule/policy is unlawful if
1. employees would reasonably construe the rule’s language to
prohibit protected, concerted activity;
2. the rule was promulgated in response to union or other protected ,
concerted activity; or
3. the rule was applied to restrict employee’s exercise of their right
to engage in protected concerted activity.
• Report deals with a number of different types of policies:
• Provides examples of lawful and unlawful policies
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• confidentiality
• professionalism rules
• anti-harassment rules
• conflict of interest rules
• trademark rules
• photography/recording rules
• media contact rules
• rules prohibiting walking off the job

33. Agency Positions on Employer Policies
Key Takeaways from NLRB Report…
 Avoid general prohibitions on sharing/discussing employee
or personnel information or information regarding terms
and conditions of employment.
 Avoid policies that prohibit employees from criticizing the
employer or from being disrespectful, negative,
inappropriate or rude toward the employer, coworkers or
management.
 Avoid prohibitions on negative or inappropriate discussions
among employees, or on discussions of workplace,
compensation, or other terms and conditions of
employment.
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34. Agency Positions on Employer Policies
 Ensure that media policies only apply to statements on
behalf of the company
 Don’t prohibit non-commercial “fair use” of company’s
name and logo.
 Tie prohibitions on recording, photos or video to specific
privacy interests.
 Avoid phrases such as “walking off the job” and “work
stoppage” in policies requiring employees to be at work.
 Don’t prohibit employees from engaging in conduct that is
not in the company’s best interests.
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35. Agency Positions on Employer Policies
Suggestions in light of NLRB Report:
• Consider NLRB’s position when developing policies
• Weigh consequences of violation against benefits of policy
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36. Agency Positions on Employer Policies
Securities & Exchange Commission
• Considered statement that the company required
employees to sign in connection with internal investigation
I understand that in order to protect the integrity of this review, I am
prohibited from discussing any particulars regarding this interview and
the subject matter discussed during the interview, without prior
authorization of the Law Department. I understand that the
unauthorized disclosure of information may be grounds for disciplinary
action up to and including termination of employment.
• Determined that this statement violated Dodd-Frank
whistleblower protections because an employee could read
it to prohibit him from contacting the SEC.
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37. State/Local Law Updates
Significant changes in Paid Sick Leave and Minimum Wage
Laws:
• California mandatory sick leave law went into effect July 1,
2015
• Massachusetts sick leave law effective July 1, 2015
• Oregon sick leave law signed on June 22 goes into effect
on January 1, 2016
• Chicago raises minimum wage from $8.25 to $10 in July, to
$11 in 2017, and to $13 in 2019
• Seattle, San Francisco and L.A. have approved increases
over time to $15/hr., NY has raised for fast food workers,
and D.C. is heading toward ballot initiative
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38. State/Local Law Updates
Ban the Box
• Prohibits questions about criminal history on applications
• Prohibits asking about criminal history until later in process
(exactly when depends on state).
Currently law for private employers in: Hawaii, Illinois,
Massachusetts, Minnesota, New Jersey, Oregon, Rhode
Island, and many municipalities.
Note: Each law is different, so it’s important to check the
specific provisions.
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39. Trouble staying up on legal developments? A
plug for our blog….
lpemploymentlaw.com
39Levenfeld Pearlstein, LLC