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On March 24, 2020, the United States Department of Labor ("DOL") issued limited guidance regarding the Families First Coronvirus Response Act (the “Act”).
Most importantly, the DOL identified April 1, 2020 as the Effective Date of the Act, contrary to the conclusion of most observers that the Act would go into effect on April 2, 2020. Accordingly, employers of all sizes should plan to come into compliance on April 1, 2020. The DOL also clarified that the Act is not retroactive. The DOL also advises not to send requests for the small business exemption to the department, and that it will issue regulations regarding the small business exemption at a later date.
On March 18, 2020, President Trump signed the Families First Coronavirus Protection Act (the “Act”) into law. The Act includes provisions to assist employers and employees during these extraordinary times.
Expansion of Protections Under the Family and Medical Leave Act
For the period of time beginning April 2, 2020 to December 31, 2020, the Act expands the protections of the Family and Medical Leave Act (“FMLA”). Employees may be eligible for a combination of paid and unpaid leave for a period of up to 12 weeks under the FMLA, under certain conditions.
This requirement applies only to employers with fewer than 500 employees. The Act gives the Department of Labor authority to exempt small employers (those with fewer than 50 employees) where the imposition of the Act’s requirements would jeopardize the viability of the business as a going concern. The Department of Labor will use guidance on this procedure. Employers of health care professionals and emergency responders may also elect not to comply.
Eligible employees will receive 2 weeks of unpaid leave and 10 weeks of paid leave. To be eligible for leave, the employee must have been on the employer’s payroll for 30 days. The Act applies where the employee is unable to work or telework to care for a child of an employee if the child’s school or place of care has been closed, or the childcare provider is unavailable, due to the Covid-19 crisis.
The employer has no obligation to pay for the first two weeks, but the employee is free to use paid time off during this period. The employer cannot require the employee to exhaust paid time off. After the first two weeks of unpaid leave, employers must continue paid leave, calculated as two-thirds of the employee’s usual rate of pay. The maximum amount of paid leave under the Act is $200 per day and $10,000 in the aggregate.
Employers must return the employee to the same or equivalent position upon return to work. There is an exception for employers who employ less than 25 employees – if the position no longer exists due to the Covid-19 crisis, the employer must make “reasonable efforts” to restore the employee to an equivalent position over a one-year period.
Two Weeks of Emergency Paid Leave
The Act requires employers with fewer than 500 employees to provide full-time employees with 2 weeks of paid sick leave, and to provide part-time employees with the equivalent of average hours per week for 2 weeks, if the employee is unable to work or telework because the employee:
- is subject to a quarantine or isolation order;
- has been advised by a health care provider to self-quarantine;
- is experiencing symptoms and seeking a medical diagnosis;
- is caring for an individual (not limited to family members) who is subject to a quarantine order, has been advised to self- quarantine, or is experiencing symptoms;
- is caring for a son or daughter whose school or place of care has been closed or the child care provider is unavailable; or
- is experiencing similar conditions to any specified by the Secretary of Health and Human Services in consultation with the Secretaries of Labor and the Treasury.
A few limitations apply to this requirement. If the leave is required because the employee is subject to a quarantine order, has been advised to self- quarantine or is experiencing symptoms and seeking a diagnosis, paid leave under this provision shall not exceed $511 per day and $5,110 in the aggregate Where the leave is necessary to care for another or a child, paid leave under the Act is limited to $200 per day and $2,000 in the aggregate. The Act limits the required payment to two-thirds of an employee's regular rate of pay (subject to the caps) for care of family members.
For this provision, the Department of Labor has substantial authority to issue guidance on which employers may be excluded from this requirement.
This leave is available for immediate use by employees, regardless of length of employment. Employers cannot require employees to exhaust other paid leave before using the paid leave provided by the Act.
Antheil Maslow & MacMinn will continue to provide guidance to employers with regard to the Coronavirus Outbreak on employment, tax and related issues as they develop. Please contact Employment Law partner Patricia Collins or Tax Law partner Michael Mills, with questions.
Late Friday, the United States House of Representatives passed the Families First Coronavirus Response Act (the “Act”). The President has tweeted his support of the legislation, and the Senate will take it up this week.
Most employers these days are aware of the many workplace claims an employee might bring, including allegations of discrimination on account of race, color, religion, sex, national origin, sexual orientation, pay, age, or disability. Among other claims are those brought under the Fair Labor Standards Act (minimum wage, overtime) and the Family Medical Leave Act.
Employers paradoxically seem less aware of a retaliation claim an employee may bring. Paradoxically, because as reported by the Equal Employment Opportunity Commission (“EEOC”-the federal agency responsible for enforcing laws prohibiting employment discrimination), retaliation claims constituted the highest percentage of all charges filed in its fiscal year 2019.
Moreover, as discussed below, retaliation claims, by which an employee can obtain the same remedies as discrimination claims, are often easier for an employee to prove.
A recent opinion by the United States Court of Appeals for the Third Circuit (covering Pennsylvania) illustrates what an employee must do to state a case for retaliation and how an employer might defend the action.
On September 24, 2019, the United States Department of Labor announced a new final rule regarding eligibility for overtime pay. The rule requires employers to revisit their classifications of employees as exempt in order to ensure compliance.
As I discussed in previous articles (Texas Federal Judge Blocks New Overtime Rules and Speaking of Overtime Rules and One Final Overtime Update) the DOL announced rules in 2016 to dramatically increase the salary threshold in order for certain categories of employees to meet the standards for exemption from federal overtime requirements. The rules were met with litigation and a stay of their enforcement.
The new final rule raises the salary threshold from $455 a week to $684 a week, or $35,568 a year. Employers may now use nondiscretionary bonuses and incentive payments, such as commissions to satisfy up to 10% of the salary level. Employees will still have to meet requirements related to their duties in order to meet the standards of exemption for the overtime requirements.
This final rule will become effective on January 1, 2020. As we advised in 2016, employers should take steps to ensure compliance by the end of the year. The first step is to identify any employees who are classified as exempt but are making less than $422 a week, and develop a plan to reclassify those employees, or revise their compensation. This is a good time to revisit the job duties of those employees to ensure that they meet the applicable standards for exemption in terms of their duties as well as their salary. This is also a good time to review overtime policies to ensure appropriate recordkeeping, efficient use of overtime and compliance with applicable law.
AMM can help employers navigate these new rules and review their employee classifications to ensure compliance and minimize risk.
Many companies use restrictive covenant agreements with key employees to guard against economic harm to the company by an employee who takes a job with the company’s competitor and/or tries to persuade the company’s customers to stop doing business with the company. These are particularly common with sales staff. In Pennsylvania, these covenants will generally be upheld if they are narrowly drawn to protect the employer’s legitimate business interests and if the employee has been given meaningful consideration in exchange for agreeing to be bound by the covenants. To learn more about Noncompetes, visit our Navigating Noncompetes blog series in the AMM Employment Law Blog.
Companies recognize that merely doing business with other firms can also be risky when it comes to protecting their interests in employees and customers. Consequently, it has become customary to include “no hire” provisions in contracts to prohibit a party from hiring away the other party’s staff. These clauses are particularly common in agreements in the technology field and in non-disclosure agreements that parties often enter into when evaluating whether or not to begin a business relationship. The viability of these provisions is in doubt in Pennsylvania, where the Pennsylvania Superior Court struck down a no-hire clause in a service agreement earlier this year. The Pennsylvania Supreme Court has agreed to hear the case.
In Pittsburgh Logistics Systems, Inc. v. BeeMac Trucking, LLC, the trial court held that the no-hire clause was unenforceable because it prevented individuals from seeking employment with certain companies even though those individuals had not agreed to or been compensated for the restriction. It is important to note that in a separate action, Pittsburgh Logistics Systems (“PLS”), the company attempting to enforce the restrictions against BeeMac, was unsuccessful in its efforts to enforce the restrictive covenants contained in four employees’ employment agreements, each of whom left to work at BeeMac. The trial court concluded that the covenant not to compete was oppressive and overly broad since it had an unlimited geographic scope. The court viewed PLS as having “unclean hands” and refused to enforce the restriction at all.
The Superior Court agreed with the trial court and held that the no-hire clause was unenforceable as a matter of law. The Superior Court was influenced by the lower court’s holding that the non-compete covenants in the employment agreements were not enforceable, noting that it would be unfair for PLS to achieve the same result by using a contractual no-hire provision in its contracts with other companies.
Two Superior Court judges dissented, drawing a distinction between a no-hire provision in a contract between two companies and a non-compete clause binding employees. They reasoned that the no-hire clause did not restrict the employees’ actions; rather, the clause was a bargained-for restriction in recognition of the fact that BeeMac would have access to PLS employees and know-how. The dissenting opinion suggests that the correct analysis is whether the no-hire clause was a reasonable restraint on trade. Using that test, the dissenting judges would have enforced the clause and granted the injunctive relief requested by PLS to prevent BeeMac from “enjoy[ing] the benefit of its purported breach” and “leverag[ing] the specialized knowledge that PLS’s former employees acquired while under its employment.”
It will be interesting to see how the Pennsylvania Supreme Court views these issues when it hears this case. Stay tuned for further developments.
Reprinted with permission from the June 21st edition of The Legal Intelligencer. (c) 2019 ALM Media Properties. Further duplication without permission is prohibited.
In Fort Bend County v. Davis, 587 U.S. ___ (2019), the Court held that the requirement that a plaintiff in an employment discrimination case brought under Title VII, 42 U.S.C. § 2000e, et seq, file a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) prior to filing a complaint in court is a procedural and not a jurisdiction requirement. Therefore, an employer’s failure to assert the absence of an appropriate charge of discrimination in a motion to dismiss results in a waiver of the defense. The Supreme Court’s decision resolves a split in the circuits regarding whether the requirement is jurisdictional, and highlighted the importance of the charge of discrimination and the motion to dismiss in employment discrimination cases.
Reprinted with permission from the April 19th edition of The Legal Intelligencer. (c) 2019 ALM Media Properties. Further duplication without permission is prohibited.
On April 12, 2019, in the United States District Court for the Western District of Pennsylvania, a jury returned a verdict that serves as a reminder to employment law practitioners of the importance of treating mental health issues with sensitivity and consistent with the Americans with Disabilities Act (“ADA”) and taking a practical approach to reasonable accommodations. The jury in Schirnhofer v. Premier Comp Solutions LLC, Western District of Pennsylvania docket number 2:16-CV-00462, found that the employer, Premier Comp Solutions LLC (“Premier”), had discriminated against the Plaintiff, Ms. Schirnhofer, on the basis of her mental health disability, and in violation of the ADA. The jury awarded Ms. Schirnhofer $285,000 in damages: $35,000 in backpay, and $250,000 in non-economic damages.
This summary of the facts of the case is drawn from the Court’s opinion on Premier’s summary judgment motion, issued on March 28, 2018. Ms. Schirnhofer began her employment at Premier in 2009, and was terminated on February 5, 2014. She was employed as a billing assistant in the billing department. During the course of her employment, she had good performance reviews. Ms. Schirnhofer was diagnosed with anxiety and other mental health issues prior to her employment with Premier. Her condition was exacerbated in 2012 when her newborn grandchild died, and a co-worker with whom she was close left Premier. What followed was a series of interpersonal problems, and conflicts with and complaints about co-workers. Premier’s president and Ms. Schirnhofer’s co-workers had referred to her as “Sybil” (referencing a character in the movie Sybil who suffered from mental health issues). The human resources representative noted that she should seek “medical attention.” Ms. Schirnhofer eventually asked for a reasonable accommodation in the form of two additional ten-minute breaks. She provided a letter from her physician regarding the need for such breaks to accommodate her Post Traumatic Stress Disorder and her Generalized Anxiety Disorder. On January 28, 2019 Premier denied the request, despite the advice of its human resources professional to provide the accommodation. Instead, Premier offered to move her work area. On a particularly bad day in February, 2014, Ms. Schirnhofer took to Facebook to vent her anxiety. She was terminated on February 5, 2014 for her Facebook posts in violation of Premier’s Social Media policy. Ms. Schirnhofer sued, alleging that Premier had terminated her in retaliation for her request for an accommodation, that Premier had discriminated against her in violation of the ADA, and that Premier had failed to provide a reasonable accommodation. The jury returned a verdict in her favor on the issue of discrimination, but found that Premier had not retaliated against Ms. Schirnhofer.
The lessons for employment law practitioners in this verdict are many, among them: mental health issues and accommodations are subtle, and require sensitivity; requests for reasonable accommodations provide an excellent opportunity for risk management; and, it is quite expensive to be wrong.
The increased attention to sexual harassment in the work place is reflected in the increasing number of sexual harassment suits filed by the United States Equal Employment Opportunity Commission-a federal agency whose responsibilities include enforcing federal nondiscrimination laws.
This trend magnifies the need for employers to be aware of an opinion by a judge of the United States District Court of the Eastern District of Pennsylvania, holding that an employer may be liable for the sexual harassment of one of its employees by a nonemployee.
In this case, Hewett v. BS Transportation of Illinois, LLC, et al., the Court considered various claims by an employee, Hewitt, including a claim of sexual harassment, against his employer, BS Transportation.
Specifically, Hewitt alleged that he was a freight driver for BS Transportation whose job responsibilities included weekly loading of oil at a Sunoco refinery.
According to the allegations in Hewitt’s complaint:
During the course of Hewitt’s employment, a Sunoco employee sexually harassed Hewitt, first with sexual
comments and hand gestures and then after Hewitt asked the employee to stop, with more aggressive behavior including
physical contact. Hewitt made complaints to the Sunoco employee’s supervisor, as well as Hewitt’s supervisor at BS
Transportation who was also the owner of BS Transportation. Although Hewitt’s supervisor indicated he would
“handle the matter” with the Sunoco employee, the supervisor did not investigate the complaint nor did the Sunoco
employee’s supervisor. After a pause in his harassment of Hewitt, Sunoco’s employee again engaged in sexual
harassment of Hewitt, who again complained to Hewitt’s supervisor. Hewitt’s supervisor did not notify Sunoco of
these latest actions by the Sunoco employee. Shortly after the resumption of the harassment, Hewitt’s employment
with BS Transportation ended.
As a result of the alleged harassment described above, Hewitt filed suit in federal court alleging, among other claims, sexual discrimination by BS Transportation in violation of Title VII of the Civil Rights Act of 1964. (The Court dismissed claims against Sunoco and its employee). While dismissing certain claims against BS Transportation and its supervisor, the Court did permit the sex discrimination claim to proceed-deeming it a claim of hostile work environment. (The Court in allowing the case to proceed did not make any factual findings regarding Hewitt’s allegation. Rather the Court needed to decide at this stage whether Hewitt stated a plausible claim against his employer).
The Court noted that the claim in this case was not like most claims of employment discrimination, where the offending conduct is alleged to have been committed by an employee of the employer. This case instead involved a nonemployee. The Court, however, allowed the case to proceed based on the allegations that a management -level employee (Hewitt’s supervisor)of BS Transportation was aware of the harassment complaints and failed to investigate or take appropriate action and that BS Transportation failed to notify Sunoco when Sunoco’s employee allegedly resumed harassment of Hewitt.
Pointing to decisions of other courts, the Court in this case held that an employer may be liable for employment discrimination “where the employer (or its agents or supervisory employees) knows or should have known of the conduct and fails to take immediate and appropriate action”(quoting Johnson-Harris v. AmQuip Cranes Rental ,LLC). The Court ruled that Hewitt had alleged sufficient facts to let the matter go forward. The Court also found that Hewitt stated a claim (yet to be proven) that BS Transportation’s supervisory employee had aided or abetted an unlawful discriminatory practice under the Pennsylvania Human Relations Act.
The obvious takeaway from this decision is that an employer must have procedures in place to immediately and thoroughly investigate claims of workplace discrimination of any type. These procedures, of course, go along with anti-discrimination policies and procedures that may be used by an employee to file a complaint with the employer.
The less obvious lesson from this case is that an employer could be found liable for the unlawful conduct of a nonemployee if it fails to take appropriate action, including a thorough investigation. The reasoning of this case can easily be applied to other nonemployees who come into contact with an employer’s employees- vendors, outside maintenance personnel, salespeople, customers and so on. An employer must be alert as to any such claim that could give rise to a lawsuit.
A recent case from the United States Court of Appeals for the Sixth Circuit demonstrates the ongoing struggle to apply the Fair Labor Standards Act (“FLSA”) to the “side gigs” that have come to signify the modern employment market. In Acosta v. Off Duty Police Services, Inc., United States Court of Appeals for the Sixth Circuit, Nos. 17-5995/6071 (February 12, 2019), the Sixth Circuit held that security offers working for Off Duty Police Services (“ODPS”) as a side job were employees entitled to overtime pay under the FLSA.
ODPS workers were either sworn law enforcement officers who worked for law enforcement entities during the day, or unsworn workers with no background in law enforcement. All workers had the same duties, but sworn officers earned a higher hourly rate. Duties included “sitting in a car with the lights flashing or directing traffic around a construction zone.” They were free to accept or reject assignments, but would be punished by withholding future assignments if they did so. When they accepted an assignment, ODPS instructed the workers where to report, when to show up, and who to report to upon arrival. ODPS provided some equipment, but workers did have to use some of their own equipment. Workers followed customer instructions while on assignment, and only occasionally received supervision from ODPS. ODPS paid workers for their hours upon submission of an invoice. Workers did not have specialized skills, as sworn officers and unsworn workers had the same duties.
ODPS treated the workers as “independent contractors.” As the facts set forth in the Sixth Circuit opinion demonstrate, the factors relevant to determining whether a worker is an independent contractor or employee do not provide a clear answer. The United States District Court for the Western District of Kentucky broke the tie this way: the court held that “nonsworn workers” were employees, but that the sworn officers were independent contractors because they “were not economically dependent on ODPS and instead used ODPS to supplement their incomes.”
The Sixth Circuit disagreed, noting that the FLSA is a broadly remedial and humanitarian statute, designed to improve labor conditions. The Sixth Circuit applied the “economic reality” test to determine that the sworn offers were also employees and not independent contractors, and to uphold the finding that unsworn workers were employees. Specifically, the Court noted that the officers provided services that represented an integral part of the business, and that the work required no specialized skills, that the officers made only limited investment in equipment, and that the workers had little opportunity for profit or loss. The Court noted that the facts did not “break cleanly in favor of employee or independent contractor status” regarding the right to control the work for the sworn officers.