On August 31, 2017, in Nevada v. U.S. Department of Labor, 2017 WL 3780085 (S.D. Tex.), a federal court in Texas formally nullified the Obama administration's dramatic revisions to the federal overtime rule. The court held that the previous Administration exceeded the authority Congress gave it when it dramatically expanded the number of people entitled to overtime pay by more than doubling the minimum salary requirement for exemption. The same court had previously granted an injunction, preventing the rule from going into effect as scheduled late last year. Many employers already had made big changes to comply with the anticipated rules. But the Court's latest decision - capped by an announcement from the U.S. Department of Justice that it would not file an appeal, even though the previous administration had announced that it would appeal the injunction - made it final. The $47,000+ minimum salary that employers would have had to pay in order for an employee to be considered exempt from overtime is no more: the law now reverts to the former level of about $24,000, coupled with an examination of the employee's actual job duties.
Prior to the Court's ruling, Secretary of Labor Alexander Acosta already had published a notice indicating that the Department was contemplating changes to the new overtime rules. The court's decision certainly relieves pressure to make further changes, but the Department of Labor (DOL) will likely decide to revisit the §541 regulations, last revamped in 2004 during the George W. Bush Administration. A request for information is underway as the DOL suggests that it intends to build a record for new rule-making. Some of the key issues include what methodology do you use for determining new salary thresholds as well as the impact on the companies that implemented the 2016 regulations anyway. In his confirmation hearing, DOL Secretary Acosta suggested that the DOL may issue a new rule with a more moderate salary threshold increase, probably in the low $30,000 range.
On September 5, 2017, President Trump announced that he would end the program that protects undocumented immigrants that entered the U.S. as children, while urging Congress to pass broad immigration legislation protecting these persons. The Obama Administration initiated the Deferred Action for Childhood Arrivals (DACA) in 2012 stating that immigration officials should exercise "prosecutorial discretion" and focus on "enforcement priorities," rather than low priority cases like those persons brought to the U.S. as children. DACA not only deferred deportation for these children who have been called "dreamers," but also made them eligible for temporary work authorization. The DACA Program applied to some 800,000 immigrants, and two years later the Obama Administration expanded the protections. The later program was known as the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) which would have granted legal protection to 4,000,000 or so undocumented immigrants. A federal district court prohibited the Obama Administration from implementing the latter program, a decision later upheld by the Fifth Circuit Court of Appeals. The court said that the Obama Administration did not go through the proper procedures to implement the rules to create substantive rights, and that the expanded program would also fail because it was contrary to existing immigration legislation. Therefore, when the Trump Administration announced the ending of the DACA program, Attorney General Sessions said that the DACA Program would likewise be enjoined just like the latter program as a violation of applicable law. Several states led by Texas had threatened to sue to enjoin the DACA protections.
Bipartisan legislation introduced by Senators Graham and Durbin will provide a path for legalization for DACA recipients. The Trump Administration called for "an orderly wind-down of DACA" rather than wait for a potentially disruptive court injunction. The current Dreamers whose permits expire over the next six months will be allowed to apply for renewals by October 5, but no new applications will be accepted. Addressing concerns that existing DACA recipients will then become subject to deportation, the Trump Administration announced that those persons are not enforcement priorities unless they are criminals. As of press time, President Trump was attempting to reach a compromise agreement with Congressional Democrats on a bipartisan agreement to provide protection to the "dreamers" and to work together to improve boarder security that would not include an agreement on the "border wall."
Editor’s Note: Although not required, employers may want to help with the DACA renewal process if employees are among those who can renew their work permits by October 5. However, employees are not required to disclose their DACA status and employers should not be confronting them as to their status. Of course, on request, employers can suggest resources, or employers may post a general notice of information. It is possible that some of these persons can also stay in the country by applying for asylum or temporary protected status. Of course, if a DACA recipient loses worker authorization, employers are liable for employing them if they know or should have known the workers are not authorized. Although DACA recipients may not be terminated before their work permit expires, the employer must be careful to discontinue the employment if the company has knowledge that the worker’s authorization has expired.
On August 29, 2017, the Office of Management and Budget (OMB) informed the Equal Employment Opportunity Commission (EEOC) that it is initiating a review and immediate stay of the new pay data collection aspects of the EEO-1 form that was developed during the Obama Administration. The expanded form would have required employers with 100 or more employees to report annually to the EEOC summary pay data characterized by sex, race, and ethnicity. The purpose of the revised form was greater pay transparency, which was supposed to result in more pay equality. President Obama had supported the Pay Check Fairness Act that would have required such wage-data collection, but it had not passed Congress. The OMB cited the high cost and difficulty of compliance with the rule, which according to some studies would lead to indirect overhead and annual costs of over $1 billion. The OMB utilized the Paperwork Reduction Act which requires federal agencies to show that regulations have value and to minimize the cost. By many accounts, the new EEO-1 form would have provided very little insight into illegal pay disparity, as the form would not have provided information about the various factors that go into pay decisions, and bases the pay data on certain broad job categories.
For now, employers with 100 of more employees and federal government contractors and first-tier subcontractors with 50 or more employees and at least $50,000 in contracts should plan to comply with the earlier approved EEO-1 (Component 1) by the previously set filing date of March 31, 2018. The more onerous reporting requirements for Component 2 have been placed on hold.
The EEOC now must decide whether they want to withdraw the expanded EEO-1 form altogether or submit a revised form. In the meantime, EEOC acting Chair Victoria Lipnic expressed the hope that: "This decision will prompt the discussion of other more effective solutions to encourage employers to review their compensation practices to insure equal pay and close the wage gap." The stay may bring more attention to pay equity issues on a state or local level.
A somewhat interesting situation has resulted from the change in administrations, with the National Labor Relations Board (NLRB) and the Department of Justice (DOJ) taking opposite positions in a couple of important pending court cases. In October, two arguments will be heard in a U.S. Supreme Court case that is actually a consolidation of several cases on the issue of whether workplace arbitration agreements that ban class actions violate the National Labor Relations Act because they restrict the employees’ right to engage in "concerted activities." When the NLRB case was originally filed, the government supported the NLRB position that class and collective bans violated federal labor law. The change in administrations resulted in a new position, however, with the acting Solicitor General telling the justices that his office had reconsidered the issue with the arrival of the new Administration. "We do not believe that the Board in its prior unfair-labor-practice proceedings, or the government’s certiori petition in Murphy Oil, gave adequate weight to the Congressional policy favoring enforcement of arbitration agreements as reflected in the FAA," the new position stated. On the other hand, NLRB General Counsel Richard Griffin, whose term expires in November, a former union official, will argue the case shortly before the Board itself changes from a Democratic to a Republican majority. One Republican nominee has been confirmed by the Senate, and the other is expected to be confirmed soon.
A similar situation has arisen in an employment discrimination case involving sexual orientation. In late July, the DOJ took the position that gay, lesbian and bi-sexual workers are not covered by Title VII of the 1964 Civil Rights Act. The DOJ stated its interpretation in an amicus brief submitted to the U.S. Court of Appeals for the Second Circuit.
Since 2015, the Equal Employment Opportunity Commission (EEOC) in contrast, has interpreted Title VII’s prohibition against sex discrimination as encompassing sexual orientation bias. As of the beginning of the year, more than 3,000 sexual orientation charges were pending before the EEOC. The EEOC also is investigating some 300 cases that include transgender discrimination claims.
According to EEOC Acting Chair Victoria Lipnic, the EEOC will maintain its current position and see eventually what the Supreme Court has to say about it. Lipnic does note that Congress has not acted to expressly include such sexual orientation protections in Title VII, and various bills that would have made that interpretation have not passed Congress. Further, Lipnic acknowledges that there is no doubt that Congress was not contemplating such sex orientation discrimination when it passed the Civil Rights Law in 1964.
The federal appeals courts are currently split on the issue. Lipnic notes interesting questions such as: "What does it mean if a term has changed over time culturally? What does it mean for courts having to follow precedent?"
Editor’s Note: Not only is it interesting that the federal agencies are taking opposite positions, but the cases involve issues extremely critical to the employment community. Employers have increasingly favored requiring employees to arbitrate their legal claims rather than taking them to court, and the potential for banning class actions in arbitration agreements has made the decision more attractive to employers. Transgender and sexual orientation issues seem to have ballooned both from a litigation standpoint as well as a public interest standpoint. It should be noted that on the sexual orientation issue, even if the courts do not accept the EEOC’s position that sex orientation issues is a form of sex discrimination, existing law generally forbids discrimination based on sex stereotyping. Some transgender employees are protected under the concept of sex stereotyping based on the particular facts of their cases, even if the type of discrimination is not generally prohibited.
Employer wellness programs have become increasingly popular in recent years as a device that might be a "win-win" to reduce health care costs, improve employee health and productivity, and also show that the company is interested in the well-being of its employees. However, wellness programs (including those which require medical examinations before allowing employees to participate) are often challenged by plaintiffs groups as violating the Americans’ With Disabilities Act (ADA) or other federal laws. The AARP recently challenged the Equal Employment Opportunity Commission (EEOC) wellness program regulations, as to whether a program is truly voluntary if employees must choose between receiving up to a 30% decrease in health insurance premiums or providing their family’s personal health information to their employer. The AARP contends that the regulations permit companies to penalize workers who do not join wellness programs because they are opposed to sharing their medical information with their employer. The EEOC issued the regulations following a 2013 case involving Honeywell International, Inc., which found a violation in such situations, and following passage of the 2010 Affordable Care Act, which encourages the use of wellness programs.
Both the ADA and the Genetic Information Nondiscrimination Act (GINA) restrict employers from collecting medical or genetic information from their employees, but allows some collection in wellness programs as long as the information is voluntarily provided by the employee. As neither statute specifically defines voluntary participation, the rules established in 2016 set forth specific criteria. The AARP sued to block the rules from taking effect and, in a ruling in late August, the AARP won a pre-trial judgment in a challenge to the rules, the court finding the EEOC had not sufficiently explained its rationale for its criteria. AARP v. EEOC, 2017 WL 3614430 (D.D.C. 8/22/17). The court instructed the EEOC to reconsider them but denied AARP’s request to vacate the rules, saying that such actions would throw the legality of many wellness programs into question. Thus, for the present time employers are allowed to take advantage of the EEOC wellness program regulations while EEOC is reviewing the status.