This week, the Wage and Hour Division announced the issuance of two rules interpreting the Fair Labor Standards Act (FLSA) that modernize its application and lessen the burden of overtime calculations for certain employers. First, the agency has eliminated archaic distinctions hindering use of the exception for retail or service establishments under Section 7(i) of the statute. Under Section 7(i), certain employees who receive the majority of their compensation on a commission basis at a rate of 1 and ½ times the federal minimum wage in a representative period do not have to be paid additional overtime compensation if they work more than 40 hours in a particular workweek. Second, the Wage and Hour Division, effective 60 days from publicizing them in the Federal Register, has finalized its regulations for calculating overtime compensation for salaried, nonexempt employees whose base, straight-time compensation encompasses all the hours worked in a workweek and who receive additional compensation such as bonuses, commissions and certain premium payments. The agency has now confirmed that the inclusion of these additional payments will not foreclose an employer from the “half-time” basis of overtime calculation contemplated by the so-called fluctuating workweek proviso delineated in 29 C.F.R. §778.114. Continue Reading
On April 14, 2020, Gov. Phil Murphy signed legislation (S2374) to expand the New Jersey Family Leave Act (NJFLA). The basic idea behind it is to ensure that eligible employees who need to take time off to care for a family member during the COVID-19 outbreak (and other similar health epidemics) can take up to 12 weeks of unpaid family leave in any 24-month period without losing their jobs.
Under the expanded New Jersey law, eligible employees may take leave from work during a state of emergency declared by the governor or indicated by the commissioner of health or other public health authority, an epidemic of a communicable disease, a known or suspected exposure to the communicable disease, or efforts to prevent spread of a communicable disease in order to (a) provide in-home care or treatment of a child because the child’s school or place of care is closed by order of a public official due to the epidemic or other public health emergency or (b) to care for a quarantined family member under certain circumstances. Continue Reading
Just weeks after New York state implemented an Emergency COVID-19 Paid Sick Leave Law, late last week, New York state passed a statewide paid sick leave (State PSL) law as part of its fiscal year 2020-2021 budget. The new law, which adds Section 196-b to the New York Labor Law, requires all New York state employers to provide a minimum of 40 hours of paid or unpaid job-protected sick leave or 56 paid hours, depending on the size and/or net income of the employer. Although the accrual provisions of the law go into effect 180 days after enactment (on or about Sept. 30, 2020), employers can require employees to wait until Jan. 1, 2021, to begin using their sick leave benefits. The details of the State PSL law are below.
Amount of Required State PSL
At a minimum, employers must provide the following amounts of sick leave:
- Employers with four or fewer employees in any calendar year and a net income of $1 million or less in the previous tax year are required to provide each employee with at least 40 hours of unpaid sick leave each calendar year.
- Employers with four or fewer employees in any calendar year and a net income of more than $1 million in the previous tax year are required to provide each employee with at least 40 hours of paid sick leave each calendar year.
- Employers with between five and 99 employees in any calendar year are required to provide each employee with at least 40 hours of paid sick leave each calendar year.
- Employers with 100 or more employees in any calendar year are required to provide each employee with at least 56 hours of paid sick leave each calendar year.
Employers may provide additional amounts of sick leave beyond what is required. Continue Reading
Last night, Governor Andrew Cuomo of New York signed a bill into law that provides statewide paid sick leave related to the COVID-19 pandemic to employees in order “to address the immediate need of employees affected by COVID-19 who are subject to mandatory or precautionary orders of quarantine or isolation” issued by New York state, the Department of Health, a local board of health, or any government entity authorized to issue such order due to COVID-19. This law is effective immediately. The legislation previously included a comprehensive statewide paid sick leave proposal unrelated to COVID-19, but that has been tabled for later.
Here’s what you should know.
- The law applies to public and private employees who are subject to a mandatory or precautionary order of quarantine or isolation issued by the state of New York, the Department of Health, a local board of health, or any governmental entity authorized to issue such order due to COVID-19 (a “Quarantine Order”).
- The employee protections differ based on the size of the employer (as of Jan. 1, 2020) and its net worth (from the prior tax year).
- Employers with 10 or fewer employees subject to a Quarantine Order shall provide employees with unpaid sick leave until the termination of any quarantine. During this time, the employee shall be eligible for paid family leave and disability benefits.
- Employers with 11-99 employees and employers with 10 or fewer employees and a net income greater than $1 million (in the previous tax year) must provide employees subject to a Quarantine Order with at least five days of paid sick leave and unpaid leave until the termination of any Quarantine Order. After five days of paid sick leave, the employee shall be eligible for Paid Family Leave and disability benefits (short-term disability) for the duration of any Quarantine Order.
- Employers with 100 or more employees, as well as all public employers (regardless of number of employees), must provide at least 14 days of paid sick leave and guarantee job protection for the duration of the Quarantine Order
- The law also contains an anti-retaliation provision. Upon return to work following leave taken under this law, employees must be restored to their prior position under the same pay and terms and conditions of employment and cannot be discriminated or retaliated against for taking leave under the law.
- The New York Commissioner of Labor has the authority to adopt regulations and issue guidance on this new law, which may include standards for the use, payment and employee eligibility of sick leave. There is no guidance yet.
- A Quarantine Order is proof of disability or need to take family leave.
“Be careful as you go down the stairs, officer. An alligator lives in my basement.”
Police in Madison Township, Ohio, last week found a 5-foot gator penned in the basement of a family home. The family said that “Alli” was a pet they’ve raised for 25 years, since purchasing him as an adorable little tot at a reptile shop. (My, how they grow.)
The family accepted responsibility and avoided legal liability because they allowed to police to remove the animal.
A larger battle over responsibility and legal liability was also decided last week, but this battle was over the meaning of “joint employment” under the National Labor Relations Act (NLRA).
Here’s a quick Q&A to get you up to speed on the new regulation.
On February 26, 2020, the National Labor Relations Board (NLRB) published a new regulation that changes the rules for determining whether a business is a joint employer under the NLRA.
What do you mean by joint employer?
When one business hires another business to provide services, the business providing the services is the primary employer. We see this often in staffing agency arrangements. The staffing agency is the primary employer. The primary employer is responsible for treating its workers as W-2 employees and doing all the things an employer is supposed to do.
If the business receiving the services exercises sufficient control over the workers, it can be deemed a “joint employer” of those workers. The workers would have two employers simultaneously.
Why should I care if I am a joint employer under the NLRA?
Being a joint employer creates rights and obligations under the NLRA on issues such as collective bargaining, strike activity, and unfair labor practice liability:
- If the employees are represented by a union, the joint employer must participate in collective bargaining over their terms and conditions of employment.
- Picketing directed at a joint employer that would otherwise be secondary and unlawful is primary and lawful.
- Each business comprising the joint employer may be found jointly and severally liable for the other’s unfair labor practices.
Does the new rule make it harder or easier to be deemed a joint employer?
Much harder. The new rule significantly narrows the circumstances when a business can be deemed a joint employer.
What’s the new test?
Under the new regulation, a business can only be a joint employer of another employer’s employees only if it exercises “substantial direct and immediate control” over the “essential terms and conditions” of the workers’ employment.
What are essential terms and conditions?
Wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.
Can you give me an example of how that works?
Ok. I was just messing with you.
Let’s look at wages. You retain a staffing agency. You negotiate a cost-plus arrangement. You negotiate the rate you’ll pay the staffing agency per worker per hour, but the staffing agency determines the rate of pay each worker will receive. That’s not substantial and direct control because the staffing agency sets the wages of the worker.
Let’s consider discharge. You want to remove a staffing agency worker from the project. You instruct the agency to remove the worker. That’s not substantial control over whether the worker is discharged from employment. It’s up to the agency what to do with the worker next — reassign the worker, discharge the worker, tar and feather, etc.
How does this affect background checks and other terms in my contract with the primary employer?
Commonplace and routine clauses, like requiring the agency to perform background checks, are not evidence of joint employment.
In a dispute over whether there’s joint employment, who has the burden of proof?
The party asserting that an entity is a joint employer has the burden of proof.
Is the NLRB’s new joint employer regulation the same as the DOL’s new joint employer regulation?
Of course not. That would make this way too easy, and you wouldn’t need your lawyers as much.
In January 2020, the Department of Labor published a new regulation that sets up a new test for determining whether an entity is a joint employer under the Fair Labor Standards Act (FLSA). There are similarities in the tests. Both tests require the actual exercise of control for there to be joint employment. Previously, the mere right to exercise control was enough. But the tests are different.
You can read more about the DOL test here.
So now there are two tests for joint employment — one under the FLSA and one under the NLRA?
Ah, so naive. Who’s coming up with these questions, anyway?
Nope, there are lots of tests for determining who is a joint employer; and the tests differ based on which law we’re looking at — and based on who’s looking at it.
The DOL announced its new regulation for determining joint employer status under the FLSA, but unless you’re in a DOL audit, that doesn’t mean much. No court has adopted the new regulation yet, and we don’t know whether courts will defer to the regulation or disregard it. There will be litigation over whether the DOL has the right to redefine “joint employer” and limit the scope of a statute (the FLSA) passed by Congress.
The states have their own tests for determining joint employer status under state employment laws. Some states might defer to the regulations, but many states won’t.
But the NLRB regulation is here to stay, right?
Maybe, maybe not. In late 2018, the D.C. Circuit Court of Appeals ruled that the NLRB has no right to redefine “joint employment,” since the question of whether someone is an employee under the NLRA is governed by the common law test of agency — essentially, a right to control test.
But the NLRB chose to disregard that decision and issued its new regulation anyway.
But how can the NLRB enforce a new regulation defining “joint employer” when a federal court has said it can’t do that?
Because the NLRB will just do it anyway. There are 12 federal circuit courts of appeal, and they often disagree. The NLRB has a longstanding practice of ignoring rulings by the federal courts of appeal, except as to the specific case and the specific parties before that specific court. The NLRB takes the position that it must follow rulings by the Supreme Court, not the federal circuit courts of appeal.
So what’s the real status of the new NLRB regulation?
The NLRB will apply this new regulation in all of its proceedings. The new regulation takes effect April 26, 2020, which is 60 days after its publication in the Federal Register.
If NLRB rulings are appealed to a court, it remains to be seen whether some courts will apply the new regulation. The D.C. Circuit Court of Appeals probably will not.
Is the new regulation permanent?
It’s intended to be. There are at least three ways it could be undone.
- Future NLRB members with a more pro-worker orientation could enact a new regulation that changes the definition.
- Congress could pass a statute that redefines joint employer status. The statute would override the regulation.
- The Supreme Court could rule that the NLRB has no authority to create a joint employer test.
Until one of those three things happens, the new test will stick around for a while, like a pet alligator. The Board will apply the new test to NLRA issues.
What happened to the alligator?
It has been relocated to an animal sanctuary in Myrtle Beach, South Carolina. Despite its new residence, the gator was deemed ineligible to vote in last Saturday’s primaries.
Editor’s Note: For more information, tips, and developments on issues related to joint employment and independent contractor misclassification issues, follow Todd Lebowitz’s blog, at whoismyemployee.com
Effective March 16, 2020, COMPS Order #36 (the Order), issued by the Colorado Department of Labor and Employment, will bring about sweeping changes to Colorado’s overtime and minimum pay standards (COMPS) impacting private employers. The Order will also succeed the currently operative Amended Minimum Wage Order #35, which is the source of Colorado’s wage rights and responsibilities beyond those provided by law.
The Order, like the department’s prior annually issued wage orders, includes laws pertaining to an individual’s eligibility for Colorado minimum wage, overtime pay for work past 40 hours per week and 12 hours per day, meal and rest breaks, and other rights and responsibilities belonging to Colorado employers and employees, such as what wage deductions are permissible, how hourly rates are calculated from non-hourly pay for overtime, and posting requirements. Unlike many previous wage orders, however, the new Order expands beyond current federally mandated wage and hour requirements in several key areas, includes numerous substantive changes favoring employees, and imposes significant compliance difficulties on private employers, requiring swift adjustment prior to the March deadline. A summary of key changes contained in the Order is provided below. Continue Reading
When outside forces pose a threat to people’s livelihood, people will go to great lengths to fight back.
Business owners in California are taking more conventional measures to fight back againt the tyranny of Assembly Bill 5, the new California law that seeks to reclassify many of the state’s independent contractors as employee. Here’s a quick summary of the resistance:
- Owner-operator truckers claim the new California law cannot be applied to them because of a federal law (FAAAA) that prohibits states from enacting their own laws that affect the “price, route, or service of any motor carrier with respect to the transportation of property.” They won a preliminary injunction last month, temporarily preventing the law from applying to them.
- Freelance writers and photographers are challenging the law too. The law has an exception for freelancers, but the exemption goes away if freelancers submit 35 or more pieces to a single publication. In other words, they’re independent contractors for submissions #1 through #34, but they instantly become employees with submission #35. They argue that the exemption is arbitrary and violates their First Amendment and equal protection Rights.
- Rideshare and food delivery apps filed their own lawsuit, alleging that the exemptions are arbitrary and violate their equal protection and due process rights.
- Five gig economy app companies have contributed $110 million to a ballot measure that will be voted upon in the November 2020 election if the measure collects 625,000 signatures. The law would exempt app-based gig economy drivers from the new test if the companies provide workers with specific levels of pay, benefits, and rights, which are defined in the proposal.
- Republican lawmakers have proposed a constitutional amendment (A.C.A. 19) called the “Right to Earn a Living Act,” which would overturn Assembly Bill 5 and enshrine in California law “the right to pursue a chosen business or profession free from arbitrary or excessive government interference.” The amendment would reinstate California’s S.G. Borello balancing test for determining whether a worker is an independent contractor or an employee.
Meanwhile, the California Supreme Court is considering whether the 2018 Dynamex decision, which first imposed the ABC Test for wage and hour claims, applies retroactively. If it does, then businesses can be liable for failing to comply with a test that did not yet exist. Really.
That’s a lot of action, and we’ll continue to watch for new developments. Meanwhile, California businesses that use independent contractors should tread carefully, follow the status of legal challenges, and paint their dogs to look like tigers — just in case that turns out to be effective.
Editor’s Note: For more information, tips, and developments on issues related to joint employment and independent contractor misclassification issues, follow Todd Lebowitz’s blog, at whoismyemployee.com.
This week’s post is Family Feud Style. Name Three Things That Sound Like They Would Be “Joint Employment” But Are Not:
1. Long-haired, easy-going product tester at the local wacky tobacky dispensary.
2. Note taker at an orthopedist’s office.
3. The guy on radio ads for non-approved supplements claiming to relieve joint pain who says – really, really fast – “These statements not approved or validated by the FDA.”
Each of those jobs has something to do with joints, but that’s not what the Department of Labor (DOL) means when it addresses “joint employment.”
Under the Fair Labor Standards Act (FLSA), more than one person can be an employee’s employer, and when there’s joint employment, both employers are fully liable for any minimum wage or overtime owed to the employee. So, when is a business a joint employer?
On Sunday, the DOL issued new rules for determining when a business is a joint employer under the FLSA. The new rules take effect in 60 days. Here’s what you need to know. Continue Reading
On Friday, November 22, Bexar County Judge Peter Sakai ordered that San Antonio’s paid sick leave ordinance, which was scheduled to take effect December 1, be delayed once again. Implementation of the ordinance was first delayed in July of this year by agreement of the City of San Antonio and the business groups challenging the ordinance. Following court approval of that agreement, San Antonio revised its ordinance to attempt to appease local businesses. The revisions, which were passed by San Antonio’s City Council on Oct. 3, were not enough to satisfy the plaintiff businesses, which subsequently requested a temporary injunction to block the revised ordinance from taking effect on December 1. Following a hearing, Judge Sakai granted the injunction, which will prevent the ordinance from becoming effective while the case proceeds. A trial will be set to determine whether the ordinance should be enjoined permanently. In the meantime, the city may decide to appeal the injunction to the Fourth Court of Appeals in San Antonio.
The San Antonio Chamber of Commerce released a statement applauding Judge Sakai’s decision, calling San Antonio’s ordinance “a local infringement on the rights of private employers.” See Statement from Chamber on Injunction of Sick Leave Ordinance.
Meanwhile, Dallas and Austin also continue to face legal challenges to their own respective paid sick leave ordinances. Dallas’s ordinance, the only one of the three that has gone into effect, is currently facing a challenge in federal court in the Eastern District of Texas. The judge in that case has not yet ruled on the Dallas companies’ request for injunction or the city’s motion to dismiss. It is important to note that while Dallas’s paid sick leave ordinance became effective on August 1, 2019, the city of Dallas has deferred enforcement of the ordinance, other than for claims of retaliation, until April 1, 2020.
Austin’s paid sick leave ordinance, like San Antonio’s, has been prevented from taking effect by Texas state courts. In November 2018, the Austin ordinance was enjoined by Texas’s Third Court of Appeals, which declared the ordinance unconstitutional. The city of Austin has appealed that decision, and the parties are expected to complete briefing to the Texas Supreme Court on January 7, 2020. The court will likely not issue its ruling until the spring of 2020. While only the Austin ordinance is at issue in the case pending before the Texas Supreme Court, the court’s decision will almost certainly have legal implications for the Dallas and San Antonio ordinances as well.
Due to the uncertainty caused by these legal challenges, employers operating in San Antonio, Dallas or Austin should continue to closely monitor the events relating to all three ordinances. Our Texas Labor and Employment Group would be happy to answer any specific questions you may have regarding the paid sick leave ordinances and how you or your business may be affected.
For years, state governments have claimed they were losing hundreds of millions of dollars in unpaid withholdings as a result of independent contractor misclassification. Now, one state is making a grab for a massive piece of that pie — all at once.
On November 12, the state of New Jersey sent a bill to Uber Technologies for $459 million and a bill to its subsidiary Rasier LLC for $642 million seeking unpaid contributions, penalties, and interest. The bills cover 2014 through 2018 and allege a failure to make required payments under the New Jersey Unemployment and Temporary Disability Insurance Laws.
Contributions, of course, are due only for employees, not independent contractors. And there’s the rub. Like many states, New Jersey uses an ABC Test to determine whether a worker is an employee or an independent contractor for unemployment insurance purposes, and the state is claiming that Uber and Rasier misclassified drivers.
Uber and Rasier will appeal, and there are defenses available. They have good arguments, and they will assert them vigorously. But the stakes are high, and the outcome is uncertain. When a state brings a claim like this one, a company’s arbitration agreements and class action waivers don’t help. These are not arbitrable claims. Continue Reading