Another Noteworthy Wage and Hour Law Development

By Timothy G. Kenneally, Esquire

A business owner from Texas, we’ll call him George, posed this question, “Why is a Texas-based business required to provide a 30-minute meal break to certain company employees working shifts of more than 6 hours in Massachusetts, when no such breaks are required in the company’s home state of Texas?” The response to this inquiry seemed clear – Massachusetts wage and hour laws apply to employees working in Massachusetts. However, George pressed on, “I looked at the Fair Labor Standards Act (FLSA), he said, and it does not require a meal break.  Why doesn’t the federal law trump Massachusetts?”   The answer – many states throughout the country have state specific wage and hour laws in place. When state and federal laws address the same topic, the law that provides the greater benefit to the employee prevails.

Just this week, we saw an example of an important United States Supreme Court (Supreme Court) decision that will impact thousands of automobile dealerships in states across the country, and yet that decision will not change anything in Massachusetts.

The Supreme Court’s April 2, 2018 decision in Encino Motorcars, LLC v Navarro, et al. was heard loud and clear over the din of service departments in automobile dealerships throughout the United States.  The issue: whether Encino Motorcars violated the FLSA by failing to pay overtime wages to service advisors who regularly worked more than forty (40) hours in a week.  The answer: NO.

Encino Motorcars claimed that its service advisors were exempt from the FLSA’s overtime-pay requirement under 29 U. S. C. §213(b)(10)(A), which states : “[A]ny salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers” is exempt from the overtime wages requirement of the law (the 10A exemption).  The Court of Appeals for the Ninth Circuit had ruled that the 10A exemption did not apply to service advisors who did not perform any work on the vehicles for the dealership, and that the service advisors were entitled to overtime.  Following a close vote (5-4), the Supreme Court overruled that decision reasoning:

[S]ervice advisors are ‘salesm[e]n . . . primarily engaged in . . . servicing automobiles,’ [and are therefore] exempt from the FLSA’s overtime-pay requirement…Service advisors are also ‘primarily engaged in . . . servicing automobiles.’ ‘Servicing’ can mean either ‘the action of maintaining or repairing a motor vehicle’ or ‘[t]he action of providing a service.’ Service advisors satisfy both definitions because they are integral to the servicing process.

Of import, the impact of the Supreme Court’s decision is limited to the FLSA, which is the federal wage and hour law.  For those jurisdictions with state overtime laws that do not adopt or mirror the FLSA, employees may remain eligible for overtime even where they are exempt under the FLSA.  In jurisdictions that do not include the 10A exemption (or similar language) within their overtime law, for example Massachusetts, service advisors remain eligible for overtime compensation under state wage and hour laws.

State wage and hour laws and exempt classification do not always follow federal law, and can result in costly damages in the event of an audit or lawsuit.  We recommend that employers review their employee job descriptions and applicable law to determine whether their employees are properly classified.

Our recent blog entry regarding the new PAID law (https://conta.cc/2GO4VPN) presents another example of a federal regulation that employers would be wise to know and understand, while also comparing that law to the laws of their state.  Please also check out www.foleylawpractice.com for more information on the services we provide. We are here to help.

FMLA and Caring for Aging Parents

A client posed a variation on the following question to me:

“I have an employee whose father is going in for surgery.  She has requested FMLA leave, and I understand his surgery would be considered a serious health condition.  However, she has a mother and sister who are also available to care for her father.  Are we required to grant FMLA when there are two other caretakers available, who will be providing the primary care?”

The FMLA regulations provide that eligible employees may take leave when the employee is needed to care for certain qualifying family members (child, spouse or parent) with a serious health condition.

The FMLA does not require that the employee be the primary caretaker for the qualifying family member.  Further, the employee does not have to be the only individual or family member available to care for the qualifying family member.  The employee need only provide a certification from the healthcare provider that includes a statement that the employee is “needed to care for” the qualifying family member.

According to the FMLA regulations, “needed to care for” may encompass both physical and psychological care.  For example, it includes situations where, because of the serious health condition, the family member is unable to care for his or her own basic medical, hygienic, or nutritional needs or is unable to transport him or herself to the doctor.

It also includes situations where the employee is needed to provide “psychological comfort and reassurance” for a parent who is receiving inpatient or home care and where the employee may be needed to substitute for others who normally care for the qualifying family member.

FMLA Is Not Limited to Parents, Spouses, and Children

It should be noted that the definition of child includes individuals for whom the employee stood or is standing “in loco parentis,” and the definition of parent includes individuals who stood “in loco parentis” to the employee.

In the case of an employee seeking leave to care for an aging family member, employers should not immediately dismiss a request for leave to care for a grandparent, aunt or uncle, or even a family friend.  In loco parentis refers to a relationship where one person assumes and discharges the obligations of a parent to a child, and does not require a biological relationship. The in loco parentis relationship exists when an individual intends to take on the role of a parent to a child who is under 18 (or 18 years or older and incapable of self-care because of a mental or physical disability).

Under the FMLA, to qualify as in loco parentis the person must have day-to-day responsibilities to care for or financially support a child. Applicable factors include:
• The age of the child;
• The degree to which the child is dependent on the person;
• The amount of financial support, if any, provided; and
• The extent to which duties commonly associated with parenthood are exercised

Based on the above, there may be circumstances where an employee will be eligible to take FMLA to care for an aging family member or friend who is not a parent.

 

 

 

 

WWYLD – 03/28/18 – Early Termination of COBRA Coverage

In this week’s “What Would Your Lawyer Do” post, we take on a continuation of healthcare coverage, or “COBRA,” issue.  Generally, an individual may be entitled to COBRA for a maximum of either 18 or 36 months, depending on the nature of the basis for entitlement (the “qualifying event”).  But, coverage can be terminated before that 18 or 36-month mark in certain situations.  That’s the topic of this week’s WWYLD.

Question:  A former employee reached out to say that his new employer’s benefits are not as comprehensive as ours.  So, although he’s eligible for benefits at his new employer, he’d prefer to stay on our plan via COBRA.  Can he do that?  In general, when can we terminate an employee’s COBRA?

To be able to terminate COBRA coverage before the maximum coverage period is reached, both the law and the plan must allow it.

Under COBRA, coverage may be terminated before the maximum coverage period is reached if:

• The employer ceases to maintain any group health plan;
• Premiums are not paid in full on a timely basis;
• A qualified beneficiary begins coverage under another group health plan after electing continuation coverage;
• A qualified beneficiary becomes entitled to Medicare benefits after electing continuation coverage; or
• A qualified beneficiary engages in conduct that would justify the plan in terminating coverage of a similarly situated participant or beneficiary not receiving continuation coverage (such as fraud).

To address the current situation:  the law states that, to terminate coverage early, the former employee must be “covered” under another plan.  The determining factor is actual coverage, not entitlement.  In this case, the employee’s COBRA benefits cannot be terminated early because he has not enrolled in the new employer’s benefits and, therefore, he is not covered by the new employer’s plan.  Because the law prohibits early termination, the terms of the plan don’t come into play.

But, you ask about other situations in which you can terminate COBRA early.  Let’s do some hypotheticals.

Hypothetical #1:  A former employee elected COBRA and then elected the new employer’s coverage.  The employee wants to remain on the COBRA plan as well.  Can he?  We know from the information above that the law states the former employer can terminate COBRA in this situation.  So, the answer hinges on the terms of the plan document.  Most plan documents have a section that directly and specifically addresses COBRA.  Investigate the contents of your plan document, or work with your agent to understand the COBRA-related terms.  If the plan document is silent, the former employer could not terminate COBRA coverage early. The employee could have coverage under both the new and former employer (messy as that might be for the employee).  But, if the plan document specified that coverage terminates early upon election of coverage with the new employer, COBRA could be terminated early.

Hypothetical #2:  A former employee elected COBRA and then became entitled to Medicare.  The plan document states that coverage is terminated upon entitlement to, and election of, Medicare.  Can coverage be terminated early?  The law states that the former employer can terminate COBRA early when the employee becomes entitled to Medicare.  The determining factor is entitlement to Medicare, not coverage.  But, the plan document indicates that the employee must be enrolled in Meidicare before COBRA terminates.  Because the plan document is more restrictive than the law, the plan document controls.

Note, too, that some states have state-specific COBRA laws, often called “mini-COBRA.”  A mini-COBRA may provide more employee protections than the federal law alone.  For example, an employer in Massachusetts cannot terminate COBRA early even if the employee actually signs up for coverage under a new group health plan if that plan would not cover the employee’s pre-existing condition.

Questions about COBRA?  We can help.

When Employee Performance/Discipline and Disability Accommodation Are Involved, Documentation is Everything.

Under the law, the Americans with Disabilities Act requires employers to engage in what is called the interactive dialogue with any employee who requests accommodation for a disability. However, in reality, the ADA rarely (if ever) appears in the workplace when an employee proactively states: “I need accommodation for my recognized disability!”

It is far more common for HR to hear rumors about an employee’s medical condition months after the employee’s supervisor began informally accommodating the employee by allowing him or her to leave work to attend appointments, or an employee with known performance problems is disciplined and in turn blames the problems on a mental or physical health condition.

Unfortunately, when a disability is present or even suspected, terminating or demoting an employee once the issue of a potential disability has been raised can be a tricky process.  At the same time, performance issues should not be ignored. In fact, the opposite is true.  Performance issues should always be carefully documented and placed in employee files.  This documentation creates a record that will offer employers protection in the event that a discrimination claim is made.

By documenting performance problems in real time, you can avoid a situation where:

1. The supervisor gets fed up with an employee’s poor performance or the accommodation that had been informally in place;
2. The supervisor decides to terminate; and
3. The employee claims he or she had no history of performance issues and is being discriminated against.

What, how and when to document matter.  We can help–contact us at 508.548.4888 or info@foleylawpractice.com

 

 

 

 

 

WWYLD – 03/20/18 – Is There a Timeline for “Temporary?”

A few weeks ago, Angela Snyder wrote about the DOL’s new guidance regarding interns. In her article, Angela discussed considerations related to intern pay. Another issue that often arises with regard to interns is employment status—should the intern be hired as a “regular” or “temporary” employee? That’s the topic of this week’s WWYLD.

Question: Our handbook indicates that a “temporary” employee is someone who works for the organization for three months or less. A manager has asked if we can hire an employee on a temporary basis for a 4-month engagement. Are there any legal restrictions on what constitutes “temporary” employment?

In general, “temporary” is defined by the employer not the law. Legally, employees are “at will” (which means employment can be terminated at any time by either the employer or the employee) unless a contract or agreement assures otherwise.  A temporary status or probationary period does not affect the at will status.  But, there are other legal considerations for temporary employees. Let’s start there and finish with some operational considerations.

The Affordable Care Act (“ACA”): Many employers have policies that state that certain benefits, including health insurance, are not made available to temporary employees. The ACA requires that employers (with 50 or more employees) offer health insurance that is affordable and provides minimum value to their full-time employees. The ACA states that a waiting period of up to 90 days is permissible. Therefore, if a full-time (defined as working 30 or more hours/week), temporary employee remains employed beyond 90 days, he or she is legally entitled to benefits, regardless of company policy. This is one reason many employers limit temporary employment to three months or less.

Title VII: It is lawful and nondiscriminatory to provide different benefits and privileges to different employees based on employment status (regular vs. temporary, exempt vs. non-exempt, full-time vs. part-time). But an employer could open itself up to claims of discrimination if employees doing similar jobs are categorized differently and, therefore, receive different benefits and privileges. Let’s say, for example, that employee A and employee B have the same job title and both have 6-months of tenure. Employee A is “regular” and employee B is “temporary.” The employer only provides benefits to regular employees with at least 90 days of tenure. Employee B could assert a claim that he is being retained at the temporary status to avoid providing benefits, and this is an adverse action that relates to the employee’s membership in a protected class. Again, this is not to say that temporary employment, or that providing different benefits to temporary employees, is unlawful or discriminatory. Employers must ensure they have legitimate non-discriminatory business reasons for classifying employees as they do.

Operational Considerations:

• Ensure you have well-documented policies regarding temporary employees. Consistently apply the policy.
• Ensure you have well-written job descriptions that clearly outline the duration of the specific assignment.
• Before the job is posted, clearly document the business need for hiring an employee on a temporary, rather than regular, basis.
• Monitor the duration of the assignment to ensure it aligns with policy and the job description. Where the assignment goes beyond the scope of the policy/job description, consider changing the employment status—moving to regular employment or moving to termination.
• Monitor the hours worked to ensure compliance with the ACA.

 

Questions about employment status? Please reach out.

Un-“PAID” Is a Better Option

Last week the U.S. Department of Labor’s Wage and Hour Division (WHD) unveiled its new Payroll Audit Independent Determination (PAID) program to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standard Act (FLSA). Below you will find the highlights of the program and our advice and recommendations on compliance.

WHD will implement this “self-audit pilot program nationwide for approximately six months” to begin in April. At the end of the six month pilot period, WHD will determine whether to make the program permanent. In the meantime, as your team contemplates this opportunity, we recommend you keep WHD’s stated goal in mind: “To ensure that more employees receive the back wages they are owed – faster.”

All FLSA-covered employers are eligible to participate in the program on a voluntary basis. The program covers potential violations of the FLSA’s overtime and minimum wage requirements including, for example, violations based on alleged “off-the-clock” work; failures to pay overtime at one-and-one-half times the regular rate of pay;  misclassification of employees as exempt from the FLSA’s minimum wage; and overtime requirements.

There are some attractive elements to the program. It enables employers to expeditiously resolve inadvertent minimum wage and overtime violations without litigation (perhaps—see below), without the payment of liquidated damages, and without civil monetary penalties. That certainly sounds attractive but there is a catch or two or three… .

For many employers, the downside of this program will outweigh the upside. For example:

• This program does not require employees to surrender any rights.
• If an employee chooses not to accept back payment, the employee will not release any private right of action.
• If the employee chooses to accept the back payment, the employee will not grant a broad release of potential claims under the FLSA.
• By allowing employers to participate in the program, WHD does not waive its right to conduct any future investigations of the employer.
• The participating employer must pay 100% of the calculated back wages immediately, no exceptions.
• An employer’s DOL-supervised settlement under this program does not necessarily prevent state law wage claims.

All FLSA-covered employers nationwide confront the same critical question: Does the PAID program reduce risk or increase exposure for your company? Our experience tells us that many employers will be better off conducting their own Audit outside the PAID program and under the attorney/client protection. Certainly, it would be prudent for all employers to conduct an Audit of pay practices to assess compliance under the FLSA and state wage and hour laws. Our employment law crystal ball identified these issues a few years back and led us to develop our very popular FLSA Wage and Hour and Timekeeping Audit Service and our Exempt or Non-Exempt Positions Classification Service. You can achieve compliance without the PAID program pitfalls. Please let us know how we can help. www.foleylawpractice.com or call 508.548.4888

 

In some jurisdictions this blog post is regarded as Attorney advertisement.

WWYLD – 03/16/18 – Time Off Under FMLA to Care for an Adult Child

Question:  An employee is requesting time off to be with her adult daughter who is having a procedure done at the hospital.  Could the employee be entitled to FMLA leave?

This employee could be entitled to FMLA leave, but the employer may request additional information to definitively determine entitlement.  The employee’s eligibility for FMLA leave will depend on the following factors:  1) whether the employee’s adult child has “serious health condition” 2) whether the employee’s adult child is “incapable of self-care;” and 3) whether the employee is “needed to care for” the child.

To be eligible for FMLA leave, an employee must work for a covered employer and:

• have worked for that employer for at least 12 months; and
• have worked at least 1,250 hours during the 12 months prior to the start of the FMLA leave; and,
• work at a location where at least 50 employees are employed at the location or within 75 miles of the location.

1)  Serious Health Condition

An eligible employee is entitled to up to a total of 12 workweeks of unpaid leave in a 12-month period:

• for the birth of a son or daughter, and to care for the newborn child;
• for the placement with the employee of a child for adoption or foster care, and to care for the newly placed child;
• to care for an immediate family member (spouse, child, or parent — but not a parent “in-law”) with a serious health condition; and
• when the employee is unable to work because of a serious health condition.

A “serious health condition” means an illness, injury, impairment, or physical or mental condition that involves:

• any period of incapacity or treatment connected with inpatient care (i.e., an overnight stay) in a hospital, hospice, or residential medical care facility; or
• a period of incapacity requiring absence of more than three calendar days from work, school, or other regular daily activities that also involves continuing treatment by (or under the supervision of) a health care provider; or
• any period of incapacity due to pregnancy, or for prenatal care; or
• any period of incapacity (or treatment therefore) due to a chronic serious health condition (e.g., asthma, diabetes, epilepsy, etc.); or
• a period of incapacity that is permanent or long-term due to a condition for which treatment may not be effective (e.g., Alzheimer’s, stroke, terminal diseases, etc.); or,
• any absences to receive multiple treatments (including any period of recovery therefrom) by, or on referral by, a health care provider for a condition that likely would result in incapacity of more than three consecutive days if left untreated (e.g., chemotherapy, physical therapy, dialysis, etc.).

2)  Incapable of Self Care

A “child” is defined as a biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis who is either under 18 years of age or is 18 years of age or older and “incapable of self-care because of a mental or physical disability” at the time FMLA leave is to commence.

An individual will be considered “incapable of self-care” for FMLA leave purposes if he or she requires active assistance or supervision in three or more activities of daily living or instrumental activities of daily living.

• The FMLA regulations include the following as examples of “activities of daily living”:
  • Caring appropriately for one’s grooming and hygiene
  • Bathing
  • Dressing
  • Eating
• The FMLA regulations provide the following examples of “instrumental activities of daily living”:
  • Cooking
  • Cleaning
  • Shopping
  • Taking public transportation
  • Paying bills
  • Maintaining a residence
  • Using telephones and directories
  • Using a post office

3)  Needed to Care For

To be eligible for leave, the employee will be “needed to care for” her daughter.  The employee would be considered “needed to care for” her daughter if the daughter is unable to care for his or her own basic medical, hygienic, or nutritional needs or safety, or unable to transport herself to the doctor/treatments, because of a serious health condition. “Needed to care for” also includes providing psychological comfort and reassurance that would be beneficial to a son or daughter with a serious health condition who is receiving inpatient care or home care.

Suggested Steps

With regard to #1 and #2, the employer can ask that the employee obtain documentation from the daughter’s medical provider that answers the following:

• Dates associated with the care the daughter requires;
• Appropriate medical facts about the condition;
• A statement of the care the daughter requires

With regard to #3, it is permissible to ask the employee for a brief explanation of why the employee is needed to care for her daughter.  This information would come from the employee herself and does not need to be supported by a request/recommendation from a medical provider.  If this information was shared in previous communications, those communications between the employee and the employer could be adequate to support #3.

Questions about FMLA?  We can help.

When A Salary History Ban Includes More Than Just Salary…

As salary history bans continue to be enacted throughout the U.S., our clients are expressing increased anxiety over how exactly they should comply with this aspect of the pay equity trend sweeping the states.

The reason for the confusion? Most of the laws prohibit employers from requesting compensation information without specifically defining what that means.

For example, California’s version of the law prohibits employers from requesting and relying on salary history information, unless disclosed voluntarily by the applicant (without prompting), including questions about past “compensation and benefits.” In the absence of legislative guidance or regulations defining “compensation and benefits,” to avoid risk, employers should consider stock options and deferred and variable compensation as part of the broad category of salary history information.

In fact, while equal pay laws vary by state, employers looking to create a national practice or policy related to salary history should avoid questions about any form of compensation or benefits history.

In fact, while equal pay laws vary by state, employers looking to create a national practice or policy related to salary history should avoid questions related to any form of compensation or benefits history.  And, unless or until further guidance is issued to the contrary, the list below should be considered part of compensation history:

• Salary
• Commissions
• Bonus
• Equity
• 401(k)
• Benefits
• Deferred and variable compensation.

Returning to California, while California’s laws now prohibits employers from asking about or relying on prior salary information in deciding whether to offer a job and setting pay, the law does permit employers to consider salary history information if an applicant, “voluntarily and without prompting,” discloses the information.

However, we caution all employers who choose to base starting salary on voluntarily disclosed information to keep in mind that the California Fair Pay Act (Lab. Code § 1197.5(a)(2)) precludes employers from relying on prior salary, by itself, to justify any gender, ethnicity or race-based disparities in pay.

 

 

 

 

Equal Pay Is Coming Your Way

Less than a handful of states do not have laws that prohibit gender-based compensation discrimination, and the federal pay equity laws have been on the books for years. California, New York and Massachusetts seem to be competing to have the most aggressive pay equity laws, with other states in the race. While this alert focuses on Massachusetts, we are happy to answer questions about your state’s equal pay laws or the federal law.

Is your company covered by the new Massachusetts pay equity law? Yes, all employers in Massachusetts with the noted exception of the federal government are covered by the new law: for-profit; not-for-profit; large and small; in all industry sectors. Unlike most employment laws, the number of individuals employed is not relevant – your company is covered.

The assessment of gender-based pay inequity in Massachusetts has changed significantly. The standard is different. The definitions are different. Exposure is different. Potential corrective measures are different. Defenses are different. The conversation about salary history and employee wages will be significantly different.

Many find that the guidance recently issued by the Massachusetts Attorney General raised as many questions as it answered. The good news is that the Attorney General’s guidance includes a basic self-evaluation tool for employers. We recommend using outside counsel as part of this process to protect your findings under the attorney-client privilege. Think of our Pay Equity Audit as a protective cloak: it shields any pay inequities you may discover, and will allow your team to make reasonable progress eliminating pay disparities without creating other distractions.

In less than four months, the Massachusetts law goes into effect and your company must be in compliance. We have been advising our clients for over a year to conduct gender-based pay equity audits to protect their organization against the new exposure and litigation from this law: Several have used our innovative Pay Equity Audit already. The Attorney General’s guidance has made it very clear that there are very few clear answers implementing this law– and that all employers should make compliance a top priority.

Our Pay Equity Audit is designed to help your Massachusetts team achieve compliance with the new law and create a rolling affirmative defense to a gender-based pay equity claim. No worries, if you are not located in Massachusetts, we have other state specific Pay Equity Audits. We stand ready to help and can be reached at questions@foleylawpractice.com or 508-548-4888.

What International Women’s Day Means for Your Business

March 8, 2018, is International Women’s Day and this year it is getting a lot of attention. Does anyone remember what went on last year? Or the prior 109 years it was celebrated? Thought not.

McDonalds is turning its Golden Arches upside down. Google is trading its logo to one highlighting 12 women artists and their stories, while also encouraging stories from other women–quite a platform. 

Your employees are watching, listening and reading. It is time to be proactive. We have found that a combination of the traditional and non traditional approaches work best. Two examples are our firm’s Equal Pay Audit Service and our Sexual Harassment Prevention Toolkit.

International Women’s Day is a good time to examine workplace issues affecting women. We stand ready to help.

We are proud of the fact our law firm is over 50% women. Call 508-548-4888 or email us at questions@foleylawpractice.com

www.foleylawpractice.com