Update on Publication of the New FLSA Overtime Regulations

The final overtime rule is edging closer to release: the U.S. Department of Labor (USDOL) has sent its final changes for determining which workers are eligible for overtime pay to the Office of Management and Budget (OMB) for an administrative review.  Procedurally, this is the final step before a new regulation is published as a final rule.  OMB’s final review could take several months or just a few weeks.  Once complete, the final rule will be published in the Federal Register and take effect within 60 days of publication.

Commentators believe that the final rule will work its way quickly through OMB and most likely be published by July 7, meaning it would take effect on Labor Day, Sept. 5.  That has obvious symbolic meaning.  Alternatively, considering other significant events taking place this fall, if the rule is published on September 2 -- the Friday before Labor Day -- it will take effect on November 1, the day prior to Election Day.

Although the proposed regulations were issued in July 2015, the differences between those proposed regulations and the final rule won't be made public until the final rule is actually issued.

According to the Unified Agenda and Regulatory Plan, published in November 2015 by OMB, the earliest the final rule could be released would be in July. Timing is important. Under the Congressional Review Act, a joint resolution from both houses of Congress and the President can undo laws and rules passed during the final 60 legislative days of the previous Congress.  In other words, the Obama Administration must work quickly so that the regulations take effect before President Obama leaves office and to protect the new regulations from being overridden, if a Republican wins the White House.

Employers ought to be planning now for implementation of the new regulations.  Among the changes likely to be reflected in the new regulations when they are published include:

• The salary threshold under which employees would be required to receive overtime pay (regular hourly rate x 1.5 for all hours worked beyond 40 hours in a given workweek) would be the 40th percentile of average weekly earnings in the U.S. The USDOL has projected that the 40th percentile weekly wage in the final rule will be $970, or $50,440 per year for a full-time employee.  This represents a significant jump from where it currently stands -- $23,660.
  
• This new salary-level threshold will be annually updated, based either on the percentile or indexed to inflation.
  
• For highly compensated employees (considered exempt without regard to any duties test), the new annual salary threshold will be $122,148, which is up from the current level of $100,000.

It remains to be seen whether changes in the applicable duties test will be incorporated into the new regulations.  No proposed changes to the duties test were reflected in the proposed rule published in 2015.

To avoid paying overtime to employees who would need to be reclassified as nonexempt, employers might consider increasing the employees’ salaries to a level above $50,440.   Alternatively, employers might considering reducing the hours of employees who would be newly non-exempt and eligible to receive overtime.  A third option is to adjust the hourly rates of newly non-exempt employees downward so that, when their additional overtime pay is considered, their overall weekly compensation remains unchanged.  Most employers will implement some combination of these tactical options in order to control the financial implications of the new regulations.

New Developments in Medical Marijuana and the Workplace

According to the National Conference of State Legislatures, twenty-three states now have medical marijuana laws on the books.  The conventional wisdom is that these laws bring with them greater protections for employees who are users of medical marijuana.  Court rulings over the last several years, however, have shown that this conventional wisdom is not always correct and that not all state medical marijuana laws are created equal.

For example, last summer the Colorado Supreme Court held that although Colorado law allowed for the use of medical marijuana, that law did not prevent an employer from terminating a medical marijuana user who had tested positive for marijuana in violation of the company’s zero-tolerance drug policy.  Reaching a similar conclusion, a federal district court in Washington recently dismissed an employee’s discrimination complaint and found that the law in Washington does not require employers to accommodate the use of medical marijuana where they have a drug-free workplace policy.  Swaw v. Safeway, Inc. (W.D. Wash. 2015).  In Swaw, the court pointed to an earlier 2011 decision from the Washington Supreme Court, which held that Washington’s medical marijuana law “does not regulate the conduct of a private employer or protect an employee from being discharged because of authorized medical marijuana use.”

That courts in Colorado and Washington (and California and Oregon, to name a few others) have construed medical marijuana laws in favor of employers does not mean that employers in other states with medical marijuana laws can assume their courts would reach similar interpretations.  This is because the medical marijuana laws in some states, such as Washington and Colorado, simply de-criminalize medical marijuana without providing any specific employment protections.  Other states, however, such as Maine, include specific protections that prohibit employers from taking adverse action against an employee based on his or her status as a medical marijuana user.  Consequently, court rulings from “de-criminalization” states should not be viewed as indicative of how a court would rule in another jurisdiction, such as Maine, where the applicable law expressly provides for some level of employment protection for medical marijuana users.

Although Maine’s courts have had little opportunity to weigh in on the issue of medical marijuana, Maine’s Department of Labor has recently issued a report that recommends several changes to the state’s drug testing law.  The report is the culmination of a workgroup that was convened by MDOL to explore a number of issues relating to substance use and abuse in the workplace, including the medical use of marijuana. The report, which is available here, recommends two changes.  The first change is directed at streamlining the process to approve drug testing policies and recommends the use of a uniform drug testing policy, which would be prepared by MDOL and used by all employers in the state. The second change involves replacing the “probable cause” standard for drug testing with a program whereby employers would receive training to detect impairments, regardless of their cause, and employers would then have the option to refer the alleged impairment case to a “preferred occupational provider” to confirm the impairment and make recommendations to address or accommodate the cause.

Federal Court Finds Employee’s Explanation for Failed Drug Test Insufficient to Provide Notice of a Disability

Most employers are well aware that, under state and federal disability laws, an employee with a disability is entitled to reasonable accommodations in the workplace.  What can sometimes be less clear for employers is determining at what point the obligation to provide a reasonable accommodation arises.  Not surprisingly, the answer often depends on the facts.

As a case in point, a federal district court recently held that an employee’s disclosure that he was taking oxycodone for his back pain was not sufficient to put the employer on notice that he had a disability or that he required an accommodation.  Angel v. Lisbon Valley Mining Co., LLC (D. Utah, Nov. 23, 2015).  The employee disclosed that he was taking oxycodone after he had failed a drug test. Although the employee told human resources that the medication was for a back impairment and provided them a copy of his prescription along with a physician’s note, the court found neither the prescription nor the doctor’s note was sufficient to notify the employer that he was claiming a disability or asking for an accommodation.  In this case, the court held that the employer’s mere awareness of the employee’s physical condition (i.e. back pain) was insufficient to show that it was aware of an alleged disability or a request for accommodation.

Although it is difficult to generalize from the facts of a particular case, the outcome in Angel nonetheless confirms that the duty to provide a reasonable accommodation is triggered only after an employee has put the employer on notice of a disability and a desire for an accommodation. Although an employee’s accommodation request can be in “plain English” and does not need to use any special words, it must still be sufficient to notify the employer that the employee needs a modification at work and that the modification is related to a medical condition.

Maine’s Law Court Blows the Whistle on McDonnell Douglas

Maine’s highest court has closed out the year with two notable decisions involving the state’s Whistleblowers’ Protection Act (WPA).  The decisions revise the method for analyzing WPA cases on summary judgment and, as a result, are likely to have impacts that are more procedural than substantive. 

When a party files a motion for summary judgment, they are essentially arguing that no factual dispute exists with respect to the key aspects of the case and that a court can therefore decide the case as a matter of law, without having to go to a trial.  In employment discrimination cases, courts have for years relied on a framework developed by the U.S. Supreme Court to determine whether or not a factual dispute exists that would prevent summary judgment from being awarded. The framework, known as McDonnell Douglas, generally sets out a procedure for presenting evidence of discrimination.  The procedure involves shifting burdens, where the employee must first establish a prima facie case of discrimination, which the employer must then rebut with an explanation as to why it had legitimate reasons for any actions it took.  Assuming the employer provides that explanation, the burden then shifts back to the employee to point to sufficient evidence in the record that would allow a jury to conclude that the employer’s conduct was nonetheless motivated, at least in some measure, by discrimination. 

In Brady v. Cumberland County (November 10, 2015) and Cormier v. Genesis Healthcare, LLC (December 15, 2015), the Law Court announced that it would no longer use the McDonnell Douglas framework for adjudicating WPA cases on summary judgment.  In brief, the Law Court noted that because of the way a WPA claim is defined under Maine law, an employee must produce evidence of causation—i.e. evidence that the employer had an unlawful motive for taking an adverse action—as part of his or her prima facie case.  This is in contrast to claims under Title VII, where employees are not required to produce evidence of causation until the third step of the McDonnell Douglas framework—after the employer has produced a legitimate non-discriminatory explanation for its actions. Noting this difference between the WPA and Title VII, the Law Court concluded that, for WPA cases, the second and third steps of the McDonnell Douglas framework are duplicative.  Consequently, rather than employing the McDonnell Douglas burden-shifting framework, the Law Court explained that when analyzing WPA cases on summary judgment, it will consider evidence in a “unitary way and simply determine whether the record as a whole would allow a jury to reasonably conclude that the adverse employment action was motivated at least in part by retaliatory intent.” 

In a sense, then, the Brady and Cormier decisions do not signal a significant change.  In WPA cases, employees and employers will still need to present the same evidence to prevail on summary judgment; the difference is that the Law Court will not go through the exercise (or require the parties to through the exercise) of sorting that evidence through a burden-shifting framework.  Instead, in a nod to judicial efficiency, the Court will simply consider all the evidence at once to determine whether there is sufficient evidence to suggest that an adverse employment action was motivated at least in part by protected activity.

Recent Decision Provides Case Study on Managing Suspected Alcohol Impairment

If an employer suspects that an employee may be coping with a substance abuse issue, such as alcoholism, what steps can it take to ensure that the employee is not coming to work impaired?  A recent federal court case explored this issue and found that an employer acted within the scope of the law when it required an employee to undergo a breathalyzer test for alcohol and, based on the results of that test, terminated the employee from his safety-sensitive position.

The employee in the case, Foos v. Taghleef Industries, worked with machinery that required him to follow several safety protocols to ensure his own safety and that of others.  During his employment, the employee went out on a number of FMLA-covered leaves.  When requesting to return from his last leave, his physician submitted a return to work note that identified his diagnosis as “acute alcoholic pancreatitis.”  Upon receiving the physician’s certification, a health and wellness manager became concerned that the employee might be consuming alcohol at work.  The concern was based on the employee’s history of pancreatitis (which the employer did not know was related to alcohol prior to the doctor’s certification), as well as information that the employee had been hurt in a bar fight (which resulted in one of the employee’s previous FMLA-covered leaves).  Based on these concerns in light of the employee’s safety-sensitive position, the company concluded that it had reasonable grounds to believe that the employee was coming to work impaired.  When the employee returned from work, the company therefore sent him to the hospital for a breathalyzer test.  The company then terminated the employee after his test came back positive.

Although the employee claimed that the alcohol test was unlawful under the ADA, the court concluded that, under these facts, it was reasonable for the company to inquire into whether the employee was able to perform his job.  The alcohol test was therefore “consistent with business necessity.”  Also bolstering the employer’s case was that it applied the same procedures any other time it suspected an employee was returning to work in an impaired condition.  In other words, there was no evidence that the company singled out this employee for treatment that was distinguishable from other employees.

Although this decision certainly provides some guidance as to the steps an employer can take to ensure an employee is not coming to work impaired, it is just that: a guidepost.  Each case – and each employee – must obviously be analyzed on an individual basis.

Second Circuit Upholds NLRB’s Views on Employee Social Media Use

Last year, the National Labor Relations Board held for the first time that “liking” a comment on a Facebook page may qualify as protected activity if it relates to comments that are otherwise protected under Section 7 of the NLRA.  For a brief overview of this case, Three D, LLC, see our previous blog post here.

Now, the Second Circuit Court of Appeals has affirmed the Board’s decision. Although the Second Circuit issued its ruling as an unpublished summary order, which means that it does not have precedential effect, employers should not discount the effect that this ruling will have on the Board’s aggressively pro-employee agenda.

Three D argued on appeal that the Board incorrectly ruled that a discussion by a group of employees on Facebook was protected under the NLRA.  Although the discussion ostensibly related to the terms and conditions of employment, because it involved the issue of taxes and wages, the company argued that the employees crossed the line by incorporating obscene and disloyal comments into their discussion.  According to the company, the Board ignored the company’s legitimate interest in preventing the disparagement of its reputation, particularly where the employees’ Facebook discussion was viewable – and was in fact viewed – by customers.

The Second Circuit disagreed, however, finding that almost “all Facebook posts by employees have at least some potential to be viewed by customers” and that, even though customers did see the Facebook discussion at issue, the “discussion was not directed toward customers and did not reflect on the employer’s brand.”  Consequently, the employees’ comments – including the act of “liking” the comments – were protected and precluded the company from disciplining the employees.

The decision raises an important question for employers in the area of social media, which is:  when does an employee’s post “reflect on the employer’s brand?”  Here, even though the employees’ posts referenced the name of the company and alleged it had mismanaged its employees’ taxes, the comments were not found to reflect on the company’s brand.  The Second Circuit’s decision therefore suggests than an employee’s disparaging comments will have to be far more specific before losing protection under the Act, particularly where the comments arguably relate to terms and conditions of employment.  In other words, an employee’s online post does not become unprotected simply because it contains obscenities and is viewed by the company’s customers.  According to the Second Circuit, this conclusion simply reflects “the reality of modern-day social media use.”

NLRB Announces New Joint Employer Standard

In July of last year, the National Labor Relations Board released an advice memorandum directing regional offices to treat the franchisors and franchisees of McDonald’s as joint employers in a series of unfair labor practice cases pending throughout the country.  The memorandum, which was issued by the NLRB’s Office of General Counsel, did not carry the weight of law but nonetheless provided a strong indication of the Board’s future direction.

Last month, the Board took a major step in turning the advice in the July 2014 memorandum into actual law.  The Board held in a 3-2 decision that companies may be held to be joint employers if they “share or codetermine those matters governing the essential terms and conditions of employment.”  The Board’s decision in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186 (Aug. 27, 2015), overturns long-standing precedent that had found franchisors to be too far removed from the day-to-day decisions of franchisees to be considered joint employers.  In reaching their decision, the three members of the majority explained that the NLRB’s standards simply did not recognize the realities of today’s workforce in which far more contingent workers are employed by employment agencies.

The genesis of the Browning-Ferris dispute began in August 2013, when a regional director for the NLRB held that a Browning-Ferris subsidiary was not a joint employer of workers provided by a subcontractor under a labor services agreement.  The International Brotherhood of Teamsters appealed the regional director’s determination and the NLRB granted review.  In granting review, the Board explained that it intended to consider the continuing vitality of two of its cases from 1984.  In those two cases, the Board had announced a joint employer standard that required a showing that a joint employer exercised “substantial direct control” over an employment relationship.

The Board majority noted that the two 1984 cases were based on an earlier decision from the U.S. Court of Appeals for the Third Circuit, NLRB v. Browning-Ferris Industries of Pennsylvania, Inc.  In that case, the Third Circuit had found that employers could be considered joint employers if they “share or codetermine those matters governing the essential terms and conditions of employment.”  Returning to the standard in that case, the Board majority found that, since 1984, the NLRB had improperly focused on “actual control” of workers in determining a joint employer status, rather than the common law principle that focuses on the “right to control” employees.

Under the new standard announced by the majority Board, companies may be considered joint employers if they are employers within the meaning of the common law (i.e. have the “right to control”) and they share or codetermine those matters governing the essential terms and conditions of employment.  Consequently, not only will evidence of direct control be relevant to determining joint employer status, but evidence of indirect or potential control over working conditions will also influence the determination.