Labor and Employment Law Watch 2018
From the increased focus on sexual harassment in the workplace to new policy guidelines issued by the U.S. Department of Labor, 2018 has started with a flurry of activity in the employment law arena. We have been monitoring recent developments and trends, most of which are employer friendly under the current administration, and have identified a watch list of key topics for employers in the coming year. As these issues arise in your workplace, our labor and employment team is poised to help you navigate the landscape.
Employers need to be more proactive than ever in preventing and managing sexual harassment claims in the current climate surrounding the “post-Weinstein” workplace and “Me Too” movement. We stand ready to assist you in conducting lawful and effective internal investigations and creating preventative strategy solutions, including basic harassment training and updating policies, to identify and handle these workplace issues. In addition, promoting an employment environment that values candor and fosters open communications will be beneficial to creating a culture of compliance and mutual respect and avoiding potential claims.
In the last few years, the Equal Employment Opportunity Commission (EEOC) has taken the position that discrimination on the basis of sexual orientation is sex discrimination because sexual orientation is inextricably linked to sex. The Eleventh Circuit Court of Appeals, which controls our jurisdiction, has rejected the EEOC’s position, holding that employment discrimination based solely on sexual orientation is not covered under federal law. On the other hand, the same court found that employment discrimination based upon gender stereotyping is actionable. Although the U.S. Supreme Court recently rejected a petition to hear the Eleventh Circuit case, the issue is still ripe for resolution given the split among the federal circuits as to whether sexual orientation is covered under federal law. Employers should be aware, however, that sexual orientation is currently protected on a local level through several of our city and county ordinances.
Regarding transgender individuals, the Eleventh Circuit has held that employment discrimination on the basis of gender identity is an actionable form of sex discrimination. In a contrasting approach, the Department of Justice (DOJ) under Attorney General Jeff Sessions has announced that it will take the stance that federal law does not cover discrimination based on gender identity or transgender status in all its pending and future matters, except where controlling precedent dictates otherwise. Although the DOJ enforces federal law in employment matters against state and local governments, public employers in Florida should be mindful that they may still be liable under applicable state law and local ordinances.
Wage and Hour
Beginning January 1, 2018, the new Florida minimum wage is $8.25 per hour. For tipped employees, Florida employers may take a $3.02 tip-credit when all Fair Labor Standards Act (FLSA) requirements are met, making the tipped minimum wage $5.22. Florida law requires the Florida Department of Economic Opportunity to calculate a minimum wage rate each year which is based on the percentage increase in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers in the South Region for the prior 12-month period. Failure to pay the increased minimum wage will result in liability for unpaid wages and potential liquidated damages. Also, employers should be watching to see when the new salary requirements for the FLSA white collar exemptions from overtime are promulgated and become effective.
Proposed Rule on Tip Credit
In December 2017, the U.S. Department of Labor (DOL) announced that there was a Notice of Proposed Rule Making regarding the sharing of tips among employees. Under the proposed rule, workplaces would be allowed to share tips among both tipped and non-tipped workers when employers: 1) pay a full minimum wage; 2) do not take a tip credit; and 3) allow sharing tips through a tip pool with employees who do not traditionally receive direct tips – such as restaurant cooks and dish washers. The DOL believes that these “back of the house” employees contribute to the overall customer experience, but may receive less compensation than their traditionally tipped co-workers, and that the proposal would help decrease wage disparities between tipped and non-tipped workers. Comments on the proposed rule are being accepted until February 5, 2018.
On January 5, 2018, the DOL rang in the New Year by issuing new policy guidelines for internships. The guidelines reflect a change from the former six factor test to a seven-factor “primary beneficiary test” to determine whether an individual is an intern or an employee under the FLSA. The test focuses on seven factors including: 1) the extent to which the intern and the employer clearly understand that there is no expectation of compensation (any promise of compensation, express or implied, suggests that the intern is an employee and vice versa); 2) the extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions; 3) the extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit; 4) the extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar; 5) the extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning; 6) the extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern; and 7) the extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. No single factor is determinative and, ultimately, whether an intern is an employee under the FLSA necessarily depends on the unique circumstances of each case.
DOL Opinion Letters
The DOL has reinstated opinion letters, which are available for review on its website. The Wage and Hour Division of the DOL can issue opinion letters regarding the FLSA and the Family and Medical Leave Act (FMLA). These letters serve as a means by which employers can develop a clearer understanding of how best to comply with the requirements of both of these laws. Interested parties, including businesses, may seek Opinion Letters, which are official written explanations of what the FLSA or the FMLA requires in fact-specific situations. These Opinion Letters may be relied upon as a good faith defense to claims arising under these laws and their return provides employers with an additional tool for ensuring compliance and mitigating liability.
NLRB Reverses Course
With the newly seated National Labor Relations Board (NLRB), we can expect to see vast differences in how the NLRB previously interpreted the National Labor Relations Act (NLRA). One of the most recent changes occurred in December 2017, when the NLRB issued an opinion overruling the thirteen-year-old standard which previously governed the analysis of whether facially neutral workplace rules, policies and employee handbook provisions unlawfully interfered with the exercise of employment rights protected by the NLRA. The new test for evaluating a facially neutral policy focuses on the nature and extent of the potential impact of the policy on NLRA rights and legitimate justifications associated with the policy. This decision has major implications for employers, as it provides them a broader ability to construct employment rules than they had under the previous standard. The analysis will no longer focus only on how an employee may reasonably construe the rule, but will consider the employer’s potentially legitimate reasons for maintaining that rule, as well as looking at external context and circumstances of the particular case. Under this new standard, workplace rules that have legitimate business justifications are more likely to withstand scrutiny under the NLRA.
The NLRB has also reinstated a previous standard for determining whether entities are joint-employers of an employee. The NLRB’s recent decision in Hy-Brand Industrial Contractors, Ltd. provides clearer guidance for determining whether a joint employment relationship exists, which now requires that the alleged joint employer entities have actually exercised joint control over essential employment terms and that the control be “direct and immediate” and not just “limited and routine.” This means that it is less likely that the NLRB will find larger entities to be joint employers of their contractors’ employees based on the “economic realities” of that relationship.
Class Action Waivers
In October 2017, the U.S. Supreme Court heard oral arguments concerning three consolidated cases that may decide the fate of class action waivers in the employment context. These cases represent a circuit split as to whether federal courts should follow the NLRB’s decision in In Re D. R. Horton, Inc., which held that class arbitration waivers are unenforceable under the NLRA because they violate employees’ rights to act collectively under Section 7 of the NLRA. The Supreme Court’s decision will determine the enforceability of these waivers and potentially set the tone for other arbitration issues in the workplace.
It has become increasingly popular for employers to offer employees incentives in conjunction with employer-sponsored wellness programs which serve as a means to promote employee health while reducing healthcare costs. To balance the tension between the intended purpose of wellness programs with the protections afforded to employees under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) as well as other state and local laws, the EEOC adopted regulations that limit the amount of incentives that an employer can offer to employees for participating in a wellness program. The EEOC had capped these incentives at 30 percent of the single coverage premium cost when the wellness plan required disclosure of information protected under the ADA or GINA. Last fall, a federal court ruled that the 30 percent cap was arbitrary and determined that the regulation was invalid. Rather than revoking the regulation immediately, the court gave the EEOC until January 1, 2019 to issue a revised regulation. Thus, the 30 percent cap still applies to employee wellness programs for 2018, but for wellness plans in 2019, there may be a revised regulation or no regulation at all if the EEOC fails to provide one in a timely manner.
On June 23, 2017, Governor Rick Scott signed into law S.B. No. 8-A, which amended Florida’s medical marijuana regulations. While the law does broaden the scope of medical marijuana in Florida, it also makes clear that individuals are not permitted to use medical marijuana at their places of employment unless permitted by their employers. In addition, the law does not: 1) limit the ability of an employer to enforce a drug-free workplace program or policy; 2) require employers to accommodate either the medical use of marijuana in the workplace or any employee working while under the influence of marijuana; or 3) permit employees to sue an employer for wrongful discharge or discrimination related to their medical marijuana use. Additionally, because marijuana is still considered a Class I drug and federal law continues to prohibit marijuana use, distribution, and possession for any reason, the use of medical marijuana is not protected under either the ADA or FMLA. If an employee’s status as a medical marijuana user reveals an underlying condition which may be protected under the ADA or FMLA, however, an employer may have an obligation to engage in an interactive process with the employee and discuss reasonable accommodations, other than medical marijuana use, and/or appropriate leave options prior to taking an adverse action against the employee. As the use of medical marijuana expands in Florida and other states, the law in this area will continue to evolve.
Colleen M. Flynn is a partner in the Clearwater office whose practice focuses on Labor and Employment Law.
Joan M. Vecchioli is a partner in the Clearwater office and is Board Certified in Labor and Employment Law by the Florida Bar.
Rachael L. Wood is an associate in the Clearwater office whose practice focuses on Labor and Employment Law.