Employment Law Update – Summer 2017
MOMENTUM BUILDS FOR RECOGNITION OF NEW PROTECTED CLASS
On April 4, 2017, the Federal Court of Appeals sitting in Chicago ruled that the chief federal law that prohibits discrimination, Title VII, covers discrimination on the basis of sexual orientation in Hively v. Ivy Tech Community College of Indiana. Noting that the U.S. Supreme Court has not yet ruled on this issue, the Court of Appeals held that discrimination on the basis of sexual orientation is a form of sex discrimination covered by Title VII. Following this decision, other courts have already begun to agree with the reasoning in this decision that could ultimately lead to national recognition of a new protected class.
The U.S. Equal Opportunity Commission (EEOC) has also taken the position that sexual orientation discrimination is a violation of Title VII and shows no signs of backing off of its efforts to convince courts to go along with this view under the new Administration. And the Trump Administration announced earlier this year that the President will continue to enforce the 2014 Executive Order prohibiting discrimination against LGBT employees by government contractors. According to a White House statement [t]he executive order signed in 2014, which protects employees from anti-LGBT[ ] workplace discrimination while working for federal contractors will remain intact at the direction of President Trump.
Whether the Supreme Court will ultimately agree with this developing case law is uncertain. But there is no question that there is growing support for recognition of a new protected class. The Supreme Court has previously recognized in a 1989 decision, Price Waterhouse v. Hopkins, that discrimination against an overly effeminate male or a masculine female violates Title VII since this kind of sexual discrimination perpetuates sexual stereotyping. But our highest court has not yet ruled that it is unlawful to fire someone for actually being gay or lesbian.
Not only does there appear to be a national trend for recognition of this new protected class, but various state and local laws already protect LGBT employees from discrimination and harassment. Accordingly, all human resource professionals may need to commit to training employees in line with these principals and ensure that their EEO policies are revised accordingly to ensure comprehensive coverage of all protected categories. These and other proactive steps employers should consider will be presented at a workshop as part of the July 20th showing of the 33rd Annual Employment Law Update to be held at the Hampton Roads Convention Center. To register, click here or contact Andrea King at 757-624-3232.
NEW DIRECT DEPOSIT PAYROLL SCAM
If hackers are nothing else, they are innovative constantly changing ways to gain unauthorized access to accounts and information. In an effort to re-direct an employee’s direct deposit, hackers are now using phishing techniques to gain access to employee email accounts. Once the hackers have access, they send a password reset request from the employee’s email to the employer’s payroll provider. The hackers will change the employee’s inbox forwarding rules so that all emails from the payroll provider will be sent to the employee’s junk mail folder. As soon as the email lands in the junk email folder, the hackers will change the direct deposit bank account information and have the employee’s payroll deposited in their own account. Adding insult to injury, with access to the employee’s account information with the payroll provider, the hackers can also access the employee’s W-2 information and file fraudulent tax returns.
Should the employer re-pay the stolen direct deposit? That’s ultimately up to the employer, but remember that the compromised system was the employers. The employer is responsible for ensuring the security of its system. The compromised individual was the employee who fell victim to the phishing attack as a result of a vulnerability exploited by the hackers. The vulnerability? Some may want to point to the system, but employees are often an employers largest threat when it comes to data breaches. One investment that will go a long way in protecting both the employer and the employee is training. An employer should not only consider formal training with employees, but also more informal reminders, such as through the employer’s internal newsletter or periodic emails. The more often employers are in front of their employees on the issue of security, the more likely employees are to pay attention to suspicious emails and requests.
Kaufman & Canoles can help you protect your business before a data related incident occurs. We are available to help you craft policies and plans to manage your risks. In the event of a potential breach, attack or upcoming HIPAA audit, or if you have questions regarding security planning, response or compliance, contact Nicole Harrell, the Chair of our Data Privacy and Security Practice Group. Nicole can be reached by phone at (757) 624-3306 or by email at email@example.com.
EMPLOYER FMLA REINSTATEMENT OBLIGATIONS CLARIFIED
On May 17, 2017, the Federal Court of Appeals sitting in Richmond ruled in Waag v. Sotera Defense Solutions, Inc. that an employee does not have to be returned to his or her original position after FMLA leave as long as the employee is placed in an equivalent position. The Court clarified that an employee who takes FMLA leave must be restored to either the employees’ original position or to an equivalent position. FMLAs restoration requirement has no preference for restoring employees to their original jobs over equivalent positions, nor does it require an employer to hold employees original positions open while they are on FMLA leave.
In this case, the plaintiff, Mr. Waag, worked for a defense contractor, Sotera, that provided technology products and services to federal agencies, and Mr. Waag managed a program called NexGen. After Mr. Waag severely injured his hand falling from the roof of his house, Mr. Waag took leave for several weeks, and while Mr. Waag was out, Sotera moved another employee into the NexGen program manager role. When Mr. Waag returned to work, Sotera placed Mr. Waag in a different role; he now reported to a different supervisor and would be working on a different program, although he kept his same rate of pay. A few months later, Mr. Waag was laid off after the federal budget sequestration went into effect and Sotera saw a drastic decrease in revenue.
The Court rejected Mr. Waag’s claims that Sotera had violated FMLA when Sotera declined to return Mr. Waag to his old job. Instead, it held that Mr. Waag did not have an absolute right to return to his original position and that Sotera had the option of placing Waag in a job equivalent to his original, pre-leave job. The Court also looked at Mr. Waag’s post-leave job and found it to be an equivalent position to his pre-leave job: Mr. Waag’s salary was the same in his new position, his benefits were the same, the worksite was the same, his title was the same, and his new duties and responsibilities were substantially similar to his original position.
JOINT EMPLOYER LIABILITY EXPANDED
Earlier this year, the U.S. Court of Appeals for the Fourth Circuit (which has jurisdiction over Virginia) announced a new test for determining when two entities are joint employers under the Fair Labor Standards Act (FLSA). This test significantly expanded potential liability for joint employers for wage and hour violations. Under the new test, joint employment exists if: (1) two or more entities share, agree to allocate responsibility for, or otherwise codetermine the essential terms and conditions of a workers employment; and (2) the worker is an employee, not an independent contractor. The Court held that the fundamental question in assessing joint employment is whether two or more entities are not completely disassociated with respect to a worker, such that they should both be deemed the workers’ employer. In answering this inquiry, the Court directed that the following six factors be considered:
- Whether the entities jointly determine, share, or allocate the direction, control, and supervision of the worker;
- Whether the entities jointly determine, share, or allocate the power to hire and fire or the power to modify the terms of employment;
- The permanence or duration of the relationship between the entities;
- Whether one of the entities through ownership or otherwise has control over the other entity;
- Whether the premises on which the worker performs his/her duties are owned or controlled by one entity independently or together; and
- Whether the entities jointly determine, share, or allocate the functions ordinarily carried out by an employer, such as payroll, workers compensation insurance, taxes, and the provision of tools and equipment.
Applying this test for the first time in Salinas v. Commercial Interiors, Inc., the Court had no problems finding joint employment between a general contractor and its drywall installation subcontractor. In reaching this conclusion, the Court noted that the general contractor and subcontractor had a long relationship; almost all of the subcontractors work was performed on jobs for the general contractor; the general contractor controlled the subcontractors staffing of its jobs, actively oversaw and directed the day-to-day activities of the subcontractors workers, required the subcontractors workers to attend meetings and abide by safety protocols, and required the workers to sign in and out with the general contractors supervisors; and the general contractor provided the tools and equipment necessary for the jobs. Accordingly, both the general contractor and the subcontractor were responsible for FLSA violations alleged by the workers.
Joint employment is a hot issue for employers whether under the FLSA or federal employment discrimination laws. And, even though this case involved the FLSA, the decision may signal the Courts willingness to consider a broader definition of joint employment under other laws. Therefore, employers need to be mindful of the expanded potential for joint employer liability when considering and implementing subcontracting relationships, joint ventures, independent contractor agreements or hiring temporary employees.
HOUSE PASSES COMP TIME BILL
On May 2nd the House of Representatives passed the Working Families Flexibility Act of 2017, H. R. 1180. The bill now goes on to the Senate. If passed and signed by the President the new law would, for the first time, extend to employers and employees in the private sector an opportunity to provide compensatory time off in lieu of overtime wages. That flexibility has been available in the public sector for many years.
However, this potentially significant bill faces an uncertain future in the Senate. Similar bills have made it through the House in the past only to be stalled in the Senate. But if the House version is passed by the Senate, President Trump has indicated he would sign it into law. So stay tuned because this would be a rather dramatic wage-hour development for private sector employers.
33RD ANNUAL EMPLOYMENT LAW UPDATE RETURNS TO HAMPTON
On July 20, 2017, the 33rd Annual Employment Law Update returns to the Hampton Roads Convention Center for its 3rd showing and will feature members of the K&C Employment Team and speakers from several key employment law agencies. For example, EEOC Directors from Norfolk and Richmond will help present a number of topics including; Effective Workplace Harassment Investigations and Handling Discrimination Charges Under the New EEOC Digital System. Attendees will also have the opportunity to have any and all employment law questions answered by these and other specialists during this full-day seminar and speakers will be available in the ever-popular K&C Answer Booth.
The 33rd Annual Employment Law Update will address the most recent legal changes and hot topics, like the impact of the Trump Administration on employment laws, to provide attendees with vital information. Attendees can also earn up to 6 credit hours toward PHR and SPHR recertification through the Human Resource Certification Institute (HRCI) and 5 PDCs toward the SHRM-CP or SHRM-SCP. In keeping with this years theme, one lucky attendee will win a private group cooking class ($1,000 value for up to 10 people) with Casual Gourmet at the Culinary Institute of Virginia. For more information or to register, visit www.kaufcan.com/events or contact Andrea King at 757-624-3232.
The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2019.