Employment Law Update - Winter 2016 < Articles < News

Employment Law Update – Winter 2016

EMPLOYERS MUST NOW USE NEW EEOC DIGITAL CHARGE SYSTEM

The Norfolk and Richmond Offices of the Equal Employment Opportunity Commission (“EEOC”) were two of eleven EEOC offices to utilize a pilot program of its new Digital Charge System beginning in May of 2015. This system provides parties to an EEOC Charge with a secure online portal to transmit and receive documents between the parties and the EEOC. While employers’ use of the “respondent portal” for this system was initially voluntary, at the November 19, 2015, showing of the 32nd Annual Employment Law Update, EEOC Deputy District Director Thomas Colclough told attendees during his luncheon presentation that they could expect this Digital Charge System to be a requirement for employers in 2016. Effective January 1, 2016, all fifty-three EEOC offices nationwide implemented required use of this Digital Charge System. Employers may not opt out of the EEOC Digital Charge System unless they do not have the technological capability to receive or submit information online or via email.

Employers should now expect to receive a system-generated password to facilitate required access to the new digital system whenever a charge of discrimination is filed against them. Any documents submitted will be placed in a secure “respondent portal.” But employers should take care in what they submit because position statements or other documents submitted by an employer may be shared with charging parties or their counsel unless the document is specifically designated as confidential. Although position statements will almost always be shared with charging parties, attachments to the position statement designated as confidential should not be.

Although this is a fairly dramatic change for employers, the EEOC believes this new system will be a very positive change. When contacted for this article, Deputy Director Thomas Colclough stated: “The new Digital Charge System utilizes cutting edge technology that will ultimately help the charge processing system go smoother for everyone.” However, given that it is new for everyone, difficulties may arise in using the system. In that event, employers may contact the appropriate EEOC office by using the email address provided on the notice of the discrimination charge.

FYI

To help explain this new system and answer any questions attendees might have, the EEOC Deputy Director for Charlotte, Thomas Colclough, and the EEOC Richmond Office Director, Daron Calhoun, will be on hand at the April 28th showing of the 32nd Annual Employment Law Update at the Richmond Convention Center. In the meantime, many of the most commonly asked questions about the Digital Charge System can be found on the EEOC website at http://www.eeoc.gov/employers/act-digital-qanda.cfm.

EMPLOYEE OR NOT EMPLOYEE? – THAT IS THE QUESTION

According to the Department of Labor (DOL), “[t]he misclassification of employees as independent contractors presents one of the most serious problems facing affected workers, employers and the entire economy.” Besides depriving misclassified employees of protections like minimum wage, overtime, and leave and unemployment benefits, the DOL notes that misclassification results in lower tax revenues for federal and state governments. Therefore, the DOL has implemented its Misclassification Initiative to “combat” this issue, making a crackdown on improper misclassification a high priority.

Given the DOL’s focus on misclassification issues, employers should take care when deciding whether to treat someone as an independent contractor. The DOL issued an Administrator’s Interpretation last summer to provide guidance for determining whether workers should be employees or independent contractors. According to the DOL, the following factors should be considered in deciding the employee or independent contractor question:

Is the work an integral part of the employer’s business?
Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?
How does the worker’s relative investment compare with the employer’s investment?
Does the work performed require special skill and initiative?
Is the relationship between the worker and the employer permanent or indefinite?
What is the nature and degree of the employer’s control?

Each of these factors is to be considered, with no single factor having more weight. Ultimately, a review of these factors should allow an employer to determine “whether the worker is economically dependent on the employer,” in which case the worker is an employee, or whether the worker is “truly in business for him or herself” and, therefore, an independent contractor. However, the DOL clearly warned employers of its view in an official guidance that “most workers are employees.”

Misclassification of employees is and will continue to be, a top priority for the DOL. Consequently, employers who use independent contractors need to review and assess the relationship to make sure they have it right. Otherwise, they could be the next target in the DOL’s enforcement efforts that resulted in the payment of more than $74 million in back wages last fiscal year.

WAGE-HOUR CONCERNS LIKELY TO INCREASE IN 2016

Unfortunately, employer costs related to how they pay their employees are likely to increase in 2016 both from the standpoint of legal claims and wage-hour compliance. Federal wage-hour court filings have increased 450% since 2000 and the number of cases has increased in eight of the last ten years. In 2015, the caseload rose 7.6% to a new high of 8,781 according to a recent Seyfarth Shaw LLP analysis. This trend is likely to continue as wage-hour litigation remains a favorite source of claims for lawyers who represent employees suing employers.

On the compliance side, the U.S. Department of Labor (DOL) plans to finalize its new overtime regulations in July of 2016. High on the DOL agenda is its proposed doubling of the salary threshold for salaried employees who are most commonly treated as exempt from overtime. This salary requirement is currently $455 a week and is likely to increase to $970 per week. This would increase the number of employees eligible for overtime for almost all employers.

EEOC DEPUTY DIRECTOR TO HIGHLIGHT K&C SEMINAR

K&C’s 32nd Annual Employment Law Update Richmond Showing is on April 28th at the Greater Richmond Convention Center. This long-standing seminar on annual employment law changes will feature members from the K&C Labor & Employment Team and speakers from several key employment law agencies including the Equal Employment Opportunity Commission (EEOC), the Virginia Employment Commission (VEC) and the Virginia Department of Labor and Industry (VDOL).

Thomas M. Colclough, EEOC Deputy District Director/Charlotte will be featured as the luncheon speaker and will provide attendees with timely information on the EEOC’s new Digital Charge System. In addition, attendees will have the opportunity to have any and all employment law questions answered by Mr. Colclough and other employment specialists throughout the day in the ever-popular K&C Answer Booth.

Seminar topics will include several relevant employment law subjects including Evolving Social Media Strategies, Effective Documentation, and Dealing with Problem Absenteeism. Not only will attendees earn 6 HRCI credits and 5 SHRM PDCs, but one lucky attendee will win a $350 gift card. For more information, or to register click here or contact Andrea King at 757.624.3232.

GYRATIONS IN INTERSTATE COMMERCE

A Virginia federal court recently held that the exotic dancers at the “Gold & Silver Private Club” in Roanoke were “employees,” and not “independent contractors” – and thus covered by the minimum wage laws – even though each of them had signed a contract with the club stating that the dancer was “at all times . . . an independent contractor.” Chief Judge Glen Conrad applied the standard “economic realities” test: is the worker economically dependent on the business or, is she as a matter of economic reality, in business for herself?

Aside from the prurient appeal of the case, two principles of law stand out. First, the court found that making the dancers obey the club’s rules – no drinking, no boyfriends, no foul language, no early departures, etc. – weighed in favor of finding the dancers to be employees. But unfortunately, even “real” independent contractors often are required to obey the rules of the company which hires them (which may well include “no drinking on the job” and “no boyfriends ride along”).

Second, the court made another ruling critically important to small businesses by finding that it did not need to decide whether the Club was covered by federal wage-hour law as an “enterprise” engaged in interstate commerce with gross sales of $500,000 or more. The mere fact that the dancers gyrated to music obtained from an Internet-streamed music service was sufficient – because the Internet is an instrumentality of interstate commerce all by itself, and dancing to Internet music means the dancers were regularly using an instrumentality of interstate commerce in their work!

Practical Pointer

This case is in keeping with the Department of Labor’s recent guidance that most workers will be determined to be employees. Add to this the high priority of other government agencies on policing the misclassification of employees as independent contractors and the risk of employee misclassification is even greater. Accordingly, employers should carefully review whether workers they treat as independent contractors have been properly classified.