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WAGE/HOUR OVERTIME RULE DEVELOPMENTS

In a Department of Labor regulatory release of May 9, 2018, the Wage/Hour Division now estimates a January 2019 release of its important salary level rules to determine the number of workers eligible for overtime pay.  This rule would replace the Obama Administration’s version of the rule which would have doubled the salary level below which employees qualify for time and a half overtime wages.

An interesting new development in the May 9, 2018 release is a separate initiative in which wage/hour plans to clarify and update its "regular rate" requirements, dealing with types of compensation that must be considered in determining overtime pay.  This deals with whether various payments to employees must be considered in calculating overtime pay, including things like bonuses, commissions, prizes, and awards.  It is a little unclear exactly how far the regulation might go, as it could include modifying the salaried non-exempt standard of using fluctuating work week overtime calculations.

CURRENT DEVELOPMENTS REGARDING USE OF INDEPENDENT CONTRACTORS

Almost every company hires contractors to do some function or other.  In spite of various types of legal attack, the use of independent contractors is growing, not declining.  This article will summarize some of the current developments concerning the use of contractors.

Secretary of Labor Acosta last November revoked two Obama Administration guidance memos dealing with independent contractor and joint employer relationships.  In December, the new NLRB Republican majority in a 3-2 ruling in Hy-Brand, reverted to the traditional test of joint employment relationships and reversed an Obama-Era doctrine indicating indirect control of a contractor’s employees to be sufficient to establish a joint employment relationship.  The Hy-Brand decision itself was vacated because of a potential conflict of interest on the part of one of the NLRB members, casting doubt on the current status of joint employment issues as far as the NLRB is concerned.  (Wimberly Lawson represents the employer in the Hy-Brand litigation.)

The NLRB is also reviewing a case dealing with the issue of whether the employer violates the Labor Act if it mis-classifies employees as independent contractors.  Velox Express, Inc., Case 15-CA-184006, Amicus Briefs 4/30/18.  The union takes the position that when a business misinforms workers that they are independent contractors, they are being told they have no rights or protections under the Labor Act, which chills legitimate union or concerted activities.  Employers take the position that misclassification alone is insufficient to violate the Labor Act, and some other coercive act or conduct is necessary.  The Republicans now having re-established a 3-2 majority at the NLRB, and the new NLRB General Counsel, are taking a more pro-employer approach, so it is likely that there will be no ultimate ruling that a misclassification case is a per se NLRB violation. 

The State of California is currently struggling with the definition of independent contractor under its state employment laws.  In February of this year, a judge ruled that a Grub Hub food delivery driver was an independent contractor rather than an employee, but more recently the California Supreme Court changed its test for who is an employee in its Dynamax decision.

Congress joined the action when the House of Representatives last year passed a bill to tighten the joint-employment standard under federal labor laws as well as the wage and hour law, but the measure is unlikely to get enough votes in the Senate to avoid a filibuster.  The latest development relates to an announcement from the NLRB in its regulatory agenda released on May 9, 2018 that it may develop a regulation to resolve the joint employer liability debate.  The rule-making process would likely take a long time, however, and cases would continue to progress through the current system.   Further, a proposed Labor Department rule is supposed to be published in the near future which would change the definition of "employer" to make it easier for individuals and employers in the same industry or geography to band together in an association and form their own health plan.  There does seem to be some bipartisan support for legislation to provide portable benefits and other protections to the GIG economy workforce of independent contractors.  Federal and state law makers are considering changes like adding a new classification covering workers who fall between traditional employees and independent contractors.  Republicans tend to support this approach while Democrats seem divided because some believe any changes could lessen worker protections that employment status provides.  Democrat Senator Mark Warner of Virginia has introduced with bipartisan support the Portable Benefits of Independent Workers Pilot Program Act which would use a DOL grant program to help nonprofits and local governments experiment with portable benefits for GIG workers.

Meanwhile, there continues to be an onslaught of lawsuits in which certain independent contractors claim they are actually employees, and thus entitled to various benefit programs and the protections of the various employment laws.  Two of the most unusual new cases involve NFL cheerleaders and a female professional mixed martial arts fighter.  The NFL cheerleaders filed an employment discrimination charge with the EEOC contending that the New Orleans Saints had workplace rules for cheerleaders that were discriminatory.  One cheerleader was terminated allegedly because of an Instagram post that showed her wearing a one-piece bathing suit, an apparent violation of the team’s rules.  There were also reports that she had attended a party with football players, thus violating a rule that prohibits the cheerleaders from socializing with the team’s members.  The contention is that not only is she an employee rather than an independent contractor, but that the difference in treatment with the male football players is discriminatory since they have no social media limitations or fraternization limitations.

In contrast, the female martial arts fighter is looking to unionize her fellow fighters, contending that the MMA Organization decided not to renew her contract in retaliation for her attempt to unionize her fellow fighters.  The case is complicated not only because of the unfair labor practice charge, but also because of an ongoing lawsuit filed in 2014 by multiple martial arts fighters.  The case contends that the parent company is an illegal monopoly under the anti-trust laws.  The contention is that if the fighters are not employees but are contractors, the organization’s rules create an unlawful monopoly. 

A particularly unusual case arises in Seattle in which an ordinance allows independent contractor Uber and Lyft drivers to unionize.  The U.S. Chamber of Commerce and other entities sued contending that the controversial Seattle law was inconsistent with the National Labor Relations Act, and therefore should be pre-empted by it, making the Seattle law null and void.  The case remains pending. 

ELECTRONIC REPORTING AND OTHER OSHA DEVELOPMENTS

OSHA has long required employers to keep logs of job-related injuries and illnesses, but until recently the Agency did not require employers to file copies with the government.  In 2016, OSHA issued a rule that required employers with 250 or more workers to submit OSHA Form 300A, which lists the number of job-related injuries and illnesses needing more than first-aid treatment, the number of workers at a site, and how frequently injuries and accidents occurred.  The rule also would have required employers to electronically file their annual Form 300 log and reports on individual incidents, OSHA Form 301.   There were several delays until finally there was a deadline of December 15, 2017, to file copies of the OSHA Form 300A alone electronically.  It was expected that OSHA might use the information to target inspections at work sites with rates worse than industry averages or even publicize with "public shaming" the results.  In later regulatory guidance, OSHA indicated it was considering deleting other requirements that employers submit the 300 log and the 301 forms dealing with individual accident reports.

The deadline to submit 2017 OSHA Form 300A is currently July 1, 2018.  Additional information regarding the electronic reporting requirement is available at: https://www.osha.gov/injuryreporting.  The ability of OSHA to cite employers for violation of a failure to electronically file the Form 300A is limited because of the six-month statute of limitations prior to any inspection.  While the enforcement of the electronic reporting requirement has been limited, the maximum fine is $12,934.00. 

In another OSHA development, OSHA reports that worker safety and health inspections increased in fiscal year 2017.  However, the 2017 total remains below the peak years of the Obama Administration, when the Agency conducted more than 40,000 inspections in both 2011 and 2012.  About forty-five percent (45%) of the 2017 inspections were "programmed," resulting from efforts to emphasize a particular hazard, or a particular industry.  Remaining inspections were "unprogrammed," which were often short-notice responses for industrial accidents. 

THE PROS AND CONS OF PROHIBITING EMPLOYEES’ RECORDINGS

The issue of whether an employer should allow employees to record or video conversations is very important, and very controversial.  There are many legal and practical considerations.  Let’s take the legal issues first.

During the Obama Administration, the NLRB overruled prior precedent and ruled that employers could not ban all audio or video recordings in its workplace.  The theory in the ruling was that employees during their nonworking time could exercise a protected concerted activity right when making such recordings.  However, in December of 2017, the NLRB overturned that ruling and instead ruled that an employer could have a lawful work rule prohibiting such recordings in the workplace.  The Boeing Company, 365 NLRB No. 154.

Various state laws come into play as well.  Many states have privacy-related laws and policies about recordings, and some states even ban the secret recording of conversations.  A more common state rule is to require at least one party to the conversation to consent to the recording, while a few states require all parties to consent to the recording.  An example of the application of such state laws occurred involving the witness in the President Clinton investigation where the witness secretly recorded her conversations with Monica Lewinsky. 

Now let’s move on to some practical considerations.  A number of years ago the Equal Employment Opportunity Commission (EEOC) indicated that about one-third of complainants bringing discrimination charges brought digital evidence with them, including audio recordings, as a part of establishing their discrimination case.  This writer has had experience in certain organizational campaigns when allegedly the union told employees to "bait your supervisors into making unlawful comments" which are later the subject of unfair labor practice proceedings. 

Employers are also aware that certain activists desire to record or film certain happenings at the workplace, related to treatment of animals, safety, or various other issues.  Employees often do not ask before recording such events.  It is easy to secretly record in many circumstances, and there is particular danger of a widespread dissemination of the conversation and/or recordings, including going viral through social media.

When employees do ask about their right to record, sometimes it creates a very sensitive situation for the employer.  Suppose an employee is asked to come to a disciplinary meeting and asks if he can record the conversation?  In union organizational campaigns, suppose management observes some of the employees in a group meeting recording the presentation?

The risk of so many sensitive situations suggests that the employer should have a written policy in place addressing such recordings.  The policy could be based on privacy and proprietary information, and could ban such recordings without express permission from management, and permission could be granted for valid work-related reasons.  In the absence of a rule that is uniformly enforced, an employer may have difficulty enforcing such a concept in sensitive situations. 

The next question is whether management itself should obey the rule, or whether the rule should be carefully drafted to be applicable only to non-management employees?  For example, on occasions employers may desire to record conversations of meetings with employees.  Further, most work sites now use various types of videos for security and other purposes.

As a general rule, employers should not record conversations or meetings with employees, for reasons unrelated to rule enforcement and privacy.  If the recording is made secretly, it is sometimes viewed as "sneaky" by judges and juries.  Further, the employer may be creating evidence that is just as likely to be used against it as for it.  It is usually better to have witnesses present than to use recordings.

There is an old saying, "What’s in a name?" that should equally apply to the theme of this article, "What’s in a Rule?"


Wimberly, Lawson, Steckel, Schneider & Stine

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