Christopher R. Fontan

On Wednesday, June 07, 2017, the U.S. Department of Labor (“Department”) withdrew two “guidance letters” previously issued by the Department during the Obama administration.  These guidance letters expressed a desire for “tighter standards” for determining joint employment, in an effort to limit the misclassification of workers as independent contractors.

The Department’s three sentence statement simply said that the two guidance letters issued by the Department in 2015 and 2016 were being withdrawn. Current Labor Secretary Alex Acosta said the agency would withdraw an administrator’s interpretation issued in 2015 aimed at curbing the misclassification of employees as independent contractors as well as another guidance document issued in 2016 on joint employment that called for greater scrutiny of business arrangements in which multiple companies might jointly employ workers. Despite its brevity, the announcement clearly signaled the Department’s intent to revert to its prior policies, saying the removal of the previous interpretations “does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law.”

The 2015 guidance letter narrowed the Department’s definition of “independent contractor,” by modifying the test from “control over the work” to a broader “economic realities” test.  At the time, the Department took the position that “most workers are employees under the FLSA’s broad definitions.”  Prior to this, the Department’s Wage and Hour Division looked at how much control an employer exercised over the worker. The more control an employer had (i.e., setting schedules, directing how and where the work was to be done, etc.), the more likely the worker would be considered an employee, and thus entitled to protection under the Fair Labor and Standards Act. The 2015 guidance said the Department would instead look at six economic factors to decide a worker’s status—each revolving around how economically dependent the worker was on the prospective employer.

The 2016 guidance letter offered a similar “re-interpretation” of the definition of “joint employment.” This guidance—which drew heated objections from a broad range of employers when it was issued—increased the likelihood that two employers would be found to be “jointly liable” for wage and hour compliance of an employee or group of employees. Under the 2016 guidance, the hours an employee worked for all joint employers would be aggregated for the purposes of determining overtime and compliance with other FLSA rules.

Importantly, these guidance letters did not have the force of law.  However, many courts have deferred to the Department’s interpretation.  This adds to the importance of the Department’s withdrawal of these earlier interpretations.

Two federal court opinions, issued less than 10 days apart, have set the stage for a potential landmark showdown at our nation’s highest court.  The issue revolves around the proper interpretation of the term “sex” contained in Title VII of the Civil Rights Act of 1964—an interpretation that will greatly impact workplace discrimination rights and requirements for years to come.

On March 27, 2017, a three-judge panel of the U.S. Second Circuit Court of Appeals decided the case of Christiansen v. Omnicom Group, Inc.  In its decision, the 2^nd Circuit revived a homosexual employee’s employment discrimination claims by ruling that the employee possessed viable Title VII claims based on the theory of “sex stereotyping.”  However, in its ruling, the 2^nd Circuit also expressly stated that Title VII’s definition of “sex” did not cover a person’s sexual orientation.  This decision tracked historical rulings of other U.S. courts, in holding that the term “sex” within Title VII refers only to a person’s gender—meaning that discrimination had to be premised on whether a worker is male or female.

Nine days later, on April 4, 2017, the U.S. Seventh Circuit Court of Appeals became the first federal appellate court to buck this trend and rule that Title VII does extend workplace protections on the basis of their sexual orientation.  In deciding the case of Hively v. Ivy Tech, the 7^th Circuit opted to expand the definition of “sex” under Title VII to include an individual’s “sexual orientation.”  With its 8-3 decision, the 7^th Circuit effectively presents two avenues of recovery for individuals asserting claims on the basis of their sexual orientation.

For years, LGBT employees could only advance claims of workplace discrimination under a theory of “sex stereotyping” discrimination—that is, discrimination based on an employee’s failure to conform to an employer’s perceived gender roles.  In July 2015, the U.S. Equal Employment Opportunity Commission (EEOC) issued its first administrative ruling declaring that Title VII’s use of the word “sex” meant both gender and sexual orientation.  However, until now, no federal court had adopted or mirrored the EEOC’s guidance.

Now things are set to get interesting. The contradictory rulings will most likely be condensed and presented before the U.S. Supreme Court. This would be a landmark ruling for employees, LGBT advocates, and employers.  All of this brings further attention to the remaining uncertainty surrounding the 8-justice status of the Supreme Court, the on-going political fight over filling the late Justice Scalia’s seat, and the impending Democratic filibuster over President Donald Trump’s nominee, Neil Gorsuch.  Even if Gorsuch were confirmed, it remains to be seen how he would rule on this issue.

By: Chris Fontan & Kyle Williams

While the Department of Labor’s New Overtime Rule and Regulations have garnered most of the mainstream attention, the federal government is set to enact changes to another key regulation in 2017, impacting thousands of U.S. employers.  Earlier this year, the U.S. Equal Employment Opportunity Commission (EEOC) issued a Notice outlining forthcoming changes to federal EEO-1 Reports, including changes to the information that employers will have to report and changes to the deadline for filing the report.

Current EEO-1 Requirements

Governed by the EEOC, the federal EEO-1 Report is a compliance survey mandated by federal law that serves to collect data from private employers and government contractors about their women and minority workforce.  Federal agencies use EEO-1 Reports to support civil rights enforcement and analyze employment patterns.  Currently, the federal government requires an EEO-1 Report from:

(1)  Private employers with over 100 employees;

(2)  Private employers with less than 100 employees, if the employer is owned by or corporately affiliated with another company and the entire enterprise employs a total of 100 or more employees;

(3) Federal government prime contractors (subject to Executive Order 11246) with 50 or more employees and a prime contract; or

(4) First-tier subcontractors (subject to Executive Order 11246), with a first-tier subcontract amounting to $50,000 or more.

Currently, covered employers are required to submit an EEO-1 report that outlines the sex, race, and ethnicity of their employees.  All EEO-1 reports must be submitted and certified no later than September 30th, annually, and employment data used to complete the report must be pulled from one pay period in July, August, or September of the current year.

Upcoming Changes

Under the new regulations, the EEOC has established a two-tiered component system.  All previously required information—pertaining to the sex, race, and ethnicity of employees—is termed “Component 1” Information.  The regulations add a new layer of reporting requirements—termed “Component 2” Information—which consists of certain pay and hours-worked data.  Under the Rule, all EEO-1 private employers and federal contractors with 100 or more employees will be required to submit Component 1 and Component 2 data on their EEO-1 Reports.  Federal contractors with between 50 and 99 employees will continue to submit Component 1 data, but will not have to furnish Component 2 data.  Consistent with current practice, federal contractors with 1 to 49 employees and other private employers with 1 to 99 employees will be exempt from filing the EEO-1; they will file neither Component 1 nor Component 2.

The new regulations also alter the filing deadline for the EEO-1 Report.  Historically, covered employers had to file their EEO-1 reports on or before September 30th of each year.  Also, the Report had to include information from a “workforce snapshot,” taken during any single pay period between July 1st and September 30^th.  The new regulations change these requirements.  Beginning with the 2017 report, the reporting deadline for all EEO-1 filers will be March 31st of the year following the EEO-1 report year—meaning the 2017 EEO-1 report will be due on March 31, 2018.  (This change will align the EEO-1 with federal obligations to calculate and report W-2 earnings as of December 31^st.)  In addition, the “workforce snapshot”—the pay period when employers count the total number of employees for that year’s EEO-1 report—has been moved to October 1^st—December 31^st.  So, while employers will count their employees during a pay period between October 1st and December 31st, they will report W-2 income and hours-worked data for these employees for the entire year ending December 31st.

Although the filing deadline for the next EEO-1 Report is March of 2018, employers are advised to be proactive and consult qualified labor and employment counsel about taking the necessary preemptive actions.

The U.S. Citizenship and Immigration Services (USCIS) recently announced the approval and pending release of an updated version of the Form I-9 – Employment Eligibility Verification (Form I-9).  USCIS currently plans to release the new version of the Form I-9 on Tuesday, November 22, 2016.  Once released, the updated Form I-9 is scheduled to have an expiration date of August 31, 2019.

USCIS also announced that U.S. employers are allowed to continue using the current Form I-9 version (Rev. 03/08/2013) until Saturday, January 21, 2017.  Starting January 22^nd, it and all prior versions expire and will no longer be valid.  This extension is great news for employers—in 2013, USCIS only provided employers with less than two months between introduction of the updated form and expiration of the old version.

Changes in the Updated Version

While it has yet to be released to the public, USCIS has given employers a preview of the changes they can expect when the updated version of the Form I-9 is released.  The proposed changes to be included in the updated version strive to make the Form I-9 more “e-friendly” and less confusing for employers, with the inclusion of “smart, error-checking features.”  When released, the updated Form I-9 will be a “smart PDF” form—meaning employers will be able to access and complete the form on their computers via Adobe Acrobat.  With this new fillable PDF, employers will have access to features such as:

• Validation assistance in certain fields, to ensure information is entered correctly. (For example, the revised form will validate the correct number of digits for a Social Security number or an expiration date on an identity document.)
• Drop-down lists and calendars.
• Embedded instructions for completing each field.
• Buttons that will allow users to access the instructions electronically, print the form, and clear the form to start over.

While employers can complete the updated version of the Form I-9 on their computers, it will not be a fully electronic document.  After populating the fields, employers will still need to print the PDF form, obtain handwritten signatures, store the hard copies in a safe place, monitor reverifications and updates with a calendaring system, and retype information into E-Verify as required.

The updated version will also feature several structural changes and instructions which will be important for all employers to know and learn, including:

• Additional spaces to enter multiple preparers and translators.
• The requirement that workers provide only other last names used in Section 1, rather than all other names used.
• The removal of the requirement that immigrants authorized to work provide both their Form I-94 number and foreign passport information in Section 1.
• A new “Citizenship/Immigration Status” field at the top of section 2.
• A dedicated area to enter additional information that employers are currently required to notate in the margins of the form (i.e., Temporary Protected Status; Optional Practical Training extensions; etc.)
• A quick-response matrix barcode, or QR code, that generates once the form is printed that can be used to streamline enforcement audits.
• Instruction sheet completely separate from the Form I-9 itself (though employers will still be required to present the instructions to the employee completing the form).

A major goal of the updated version of the Form I-9 is to clarify frequent points of confusion that arise for both employees and employers-specifically focusing on helping employers reduce technical errors for which they may be fined.

If you have any questions concerning your organizations’ Form I-9 compliance, or E-Verify compliance, feel free to contact us for further guidance.

By now, I’m sure everyone is aware of (or at least heard of) the U.S. Department of Labor’s upcoming changes to the Overtime Rules contained in the Fair Labor Standards Act (FLSA).  Brunini’s Labor & Employment Newsletter Subscribers have received numerous updates over the past year, alerting them to the pending change and its potential implications:

• https://www.brunini.com/update-u-s-department-of-labor-releases-proposed-rule-to-expand-employee-overtime-eligibility/
• https://www.brunini.com/u-s-department-of-labors-final-overtime-rule-not-expected-in-2nd-half-of-2016/
• https://www.brunini.com/ready-expanded-employee-overtime-eligibility/
• https://www.brunini.com/department-labor-announces-increase-wage-hour-penalties-employers/

Knowing about the upcoming change is one thing – being prepared for the change is something else altogether.  The New Rule is scheduled to go into effect on December 1, 2016.  That’s just 84 days from today.  Has your organization taken the steps to be in compliance with the New Rule when it goes into effect?

Brunini’s Labor & Employment Practice Group has prepared an article outlining practical considerations for employers to consider and implement in order to prepare for and comply with the New Rule.  You can access this article here: Ways to Prepare for the New Expanded Employee Overtime Eligibility.

Our professionals are available to discuss your organization’s current structure, as well as any steps needed to insure compliance with the ever-changing legal landscape facing employers.  Contact any one of our Labor & Employment Practice Group professionals with any questions concerning the upcoming transition.

On July 13, 2016, the Occupational Safety and Health Administration (OSHA) announced a delay of  the implementation of its recently published Rule that amends requirements for reporting workplace injuries and illnesses.  The goal of the new Rule, originally scheduled to go into effect August 10, 2016, is to promote an employee’s right to report such injuries and illnesses without fear of retaliation.  Because it felt that post-accident drug testing rules were being used by employers to limit reporting of workplace accidents, OSHA also attempted to place restrictions on the use of drug and alcohol tests in the workplace.

Under the Proposed Rule, employers must electronically submit all work-related illness and injury records directly to OSHA, which, according to the Secretary of Labor, will be available to the public, with the exception of personally identifiable information.

OSHA’s announced delay came one day after the Manufacturers Center for Legal Action (MCLA) filed an action in the United States Federal District Court for the Northern District of Texas to enjoin the implementation of the Rule. In its Emergency Motion for Preliminary Injunction, the MCLA alleged the new Rule is contrary to and exceeds OSHA’s statutory authority and is “arbitrary, capricious and not in accordance with applicable law.” This follows a recent hearing before the U.S. House of Representatives’ Subcommittee on Workforce Protections, in which many employers expressed concerns over the Rule’s likely impact.

OSHA announced that it will not enforce the new Rule until November 1, 2016, allowing time “to conduct additional outreach and provide educational materials and guidance for employers.” However, the MCLA legal action remains active, and the District Court might address the matter prior to November 1.

When it comes to wage and hour issues, most U.S. employers are focused on preparing for the Department of Labor’s (DOL) much-debated New Overtime Rule that is set to go into effect on December 1, 2016.  Most notably, under the New Overtime Rule, the requisite salary level for exempt employees jumps from $23,660 annually (or $455/week) to $47,476 ($913 per week).  However, the federal agency has not closed up shop for the year.

On June 30, 2016, the DOL announced  an increase in the dollar value of the civil penalties that that agency assesses to employers for certain violations of the minimum wage and overtime provisions of the Fair Labor Standards Act.  Deemed an “interim adjustment,” pursuant to the 2015 Federal Civil Penalties Inflation Adjustment Act, the DOL’s Wage and Hour Division will increase the civil penalty assessed for “willful violations” from $1,100 to $1,894 per violation.

The DOL’s regulations define a “willful” violation of the minimum wage and overtime provisions as one in which the employer either knew that its conduct was prohibited by law, or showed a “reckless disregard” for the requirements of the law.  While there is no bright-line test on what qualifies as a willful violation, in 2015, the Fifth Circuit Court of Appeals ruled that an employer committed a willful violation of the FLSA by failing to keep adequate records of extended hours worked by an employee.  See Ramos v. Al-Bataineh, 5th Cir., No. 13-20749 (March 30, 2015).

The DOL’s proposed increase represents a 73% jump in the value of assessed penalties—on a per violation basis.  Importantly, the DOL assesses this penalty in addition to any actual back wages owed to the employee(s).  Plus, section 16(a) of the FLSA authorizes criminal sanctions against any person who is shown to have violated the FLSA intentionally, deliberately, and voluntarily, or with reckless indifference to or disregard for the law’s requirements.