On April 12, 2018, the Wage and Hour Division (WHD) of the Department of Labor reinstituted its practice of issuing opinion letters, providing the Agency’s interpretation of discrete issues under the Fair Labor Standards Act. The Obama administration had suspended the longstanding practice nearly a decade ago. Two of the opinion letters issued on April 12 address issues of compensability, including the compensability of short work breaks taken by employees for health-related reasons under the FMLA, and for certain time spent traveling for work.

A. Short Breaks Under the FMLA Are Not Compensable

In Opinion Letter FLSA 2018-19, the WHD addressed the question of whether a non-exempt employee’s 15-minute rest breaks, certified by a physician as necessary under the FMLA for a serious health condition, are compensable. The factual scenario considered by the WHD involved an employee who required a 15-minute break every hour, resulting in the employee’s only working six hours during an eight hour shift.

The Opinion Letter explained that the U.S. Supreme Court previously has ruled that the compensability of an employee’s time depends on “[w]hether [it] is spent predominantly for the employer’s benefit or for the employee’s.” Generally, courts applying this rule have found that short rest breaks of up to 20 minutes are compensable, as they primarily benefit the employer by providing a more efficient and re-energized employee.

The WHD explained that the breaks in question here differed, however, as they were provided to accommodate the employee’s serious health condition. Accordingly, the Opinion Letter concluded that the FMLA-protected breaks predominantly benefited the employee and, therefore, were not compensable.

Finally, the WHD warned that employers should be careful to provide employees who take FMLA-protected breaks with as many compensable rest breaks as their co-workers. In other words, employers should not penalize employees who utilize breaks for FMLA-related reasons with fewer paid breaks.

B. The Compensability of Travel Time Depends on the Circumstances

In Opinion Letter FLSA 2018-18, the WHD examined three separate scenarios involving the travel time of hourly technicians who do not work set schedules or at fixed locations, but rather work varying hours and at different customer locations each day.

In Scenario 1, the WHD addressed the compensability of a technician’s travel by plane on a Sunday from his home state to a different state in order to attend a training class beginning at 8:00 a.m. on Monday at his employer’s corporate office. The WHD explained that such travel away from the employee’s home community constitutes worktime when it cuts across the employee’s regular working hours, even on a non-work day like Sunday. Thus a “9 to 5” employee would need to be paid for any such travel time on Sunday between those hours. Because the scenario presented involved an employee with an irregular schedule, however, the WHD provided various alternative methods for calculating the “normal” work hours for employees who do not work a regular, set schedule. These included: reviewing the employee’s time records during the most recent month to determine if they reveal “typical work hours” during that month; calculating average start and end times during the most recent month; and, in rare cases in which an employee truly has no normal work hours, negotiating with the employee to determine a reasonable amount of compensable time for travel away from the employee’s home community.

Scenarios 2 and 3 addressed travel by technicians: 1) from home to the office in order to get job itineraries, followed by subsequent travel to customer locations; and 2) directly from home to multiple different customer locations. The WHD explained that both scenarios dealt largely with ordinary commutes to and from work. In both instances, whether traveling from home to the office or from home to the first customer location, “compensable work time generally does not include time spent commuting between home and work, even when the employee works at different job sites.” Of course, once the employee has arrived at his or her first job site, all subsequent travel between job sites is compensable.

The issuance of these opinion letters is a promising development for employers. It would appear to indicate that the WHD is seeking to provide employers with clarity regarding difficult issues under the FLSA and proactively assist them in complying with the law.

In a 5-4 decision, the Supreme Court on Monday held in Encino Motorcars, LLC v. Navarro, et al., that current and former service advisors in a car dealership were not entitled to overtime under the Fair Labor Standards Act. The Court ruled that the service advisors were exempt from overtime under 29 U.S.C. §2113(b)(10)(A), which applies to “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements. . .”

The service advisors claimed that while their job description required them to attempt to sell additional services beyond what prompted the customers’ visits, they did not sell cars or perform repairs. The majority of the Supreme Court disagreed with the service advisors and stated that the question is whether service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles.”  The Court concluded that they were. Much of the majority opinion and the dissent focused on the grammatical interpretation of the use of “or” to disjoin three types of employees doing two types of work on three kinds of products. The majority found that the language meant that a salesman primarily engaged in servicing automobiles was exempt, while the dissent argued that a salesman had to be engaged only in selling automobiles to qualify.

The service advisors also argued that the FLSA exemptions should be construed narrowly. The Supreme Court also rejected this argument because, according to the majority, the FLSA gives no “textual indication” that its exemptions should be construed narrowly and that there was no reason to give them “anything other than a fair (rather than a ‘narrow’) interpretation.” Notably, the Court stated that exemptions contained in the FLSA are to be construed just the same as the basic protections in the Act, noting that exceptions are often the price paid to have the law passed in the first place.

This is the second time this case has been before the Supreme Court.  In 2011, the Department of Labor issued a rule that interpreted “salesmen” to exclude service advisors, and the Ninth Circuit deferred to that administrative determination. In 2016, the Supreme Court, in its prior Encino Motorcars’ decision, held that courts should not defer to that rule because it was procedurally defective. The Supreme Court remanded the case back to the Ninth Circuit Court of Appeals to address whether service advisors are exempt. The Court of Appeals for the Ninth Circuit held on remand that service advisors were exempt without regard to the 2011 interpretation and that decision was reversed by the Supreme Court on April 2.

The U.S. Third Circuit Court of Appeals issued an opinion on October 13, 2017, that serves to remind employers of the need to pay employees when they take short work breaks during their workday.

In DOL v. Am. Future Sys., Inc. 2017 BL 367399, 3d Cir., No. 16-2685, the employer had a “flex time” policy under which it allowed employees to take breaks “at any time, for any reason, and for any duration.” The company tracked employee breaks by monitoring when they logged off their computers, which they were required to do when on a break, and they were only paid while logged-on to their computers. While on their breaks, employees were allowed to leave their work stations and to use the time for their own personal benefit.

The Department of Labor (“DOL”) argued that the employees should have been paid for their short breaks taken during the course of the day, and the trial court granted it summary judgment. Although the employer argued that employees were free to do what they wanted while on breaks, the DOL relied on the language in the regulations for the Fair Labor Standards Act (“FLSA”), which provide that rest periods up to 20 minutes should be compensable. The 3rd Circuit Court of Appeals gave “substantial deference” to the DOL since it is responsible for administering the FLSA, and it affirmed the granting of summary judgment for the DOL. The Court noted, however, that should employees abuse the “flex time” policy, such as by taking multiple breaks of 19 minutes in length, the employer could discipline the employees, but it nevertheless had to pay them for the break time.

This decision serves as a reminder to employers to pay employees for any breaks that are 20 minutes or less, regardless of whether the employees are free to use the time as they choose or to leave the employer’s facility. This is also a good time for employers to remember that any unpaid breaks, such as meal times, must not be interrupted by the employer or the entire meal period could become compensable.

It’s no secret that President Obama’s use of executive orders to transform workplace laws was unprecedented. But perhaps even more unprecedented is how quickly those efforts have been derailed by the Trump administration. From NLRB appointments, to safety standards, to persuader-disclosure and joint-employment rules—to name a few—the White House has been systematically reversing workplace rules that President Obama implemented through executive orders, rather than through Congress.

Now, add two more hits to the list.

Obama-Era Overtime Rule Takes Final Hit.

The first hit was the final blow to President Obama’s  controversial overtime rule, which sought to expand the number of workers eligible for overtime compensation. In November 2016, a Texas federal district court preliminarily enjoined the rule just before it was due to take effect. The Department of Justice (DOJ) subsequently appealed that decision to the Fifth Circuit Court of Appeals.

On  August 31, 2017, with the Fifth Circuit appeal pending, the district court made its final determination that the rule was invalid. Specifically the court held, as it had opined in November, that the overtime rule exceeded the Department of Labor’s (DOL’s) rulemaking authority because it focused too heavily on employees’ salary levels—rather than the nature of their job duties—in determining overtime eligibility. The court found that this was contrary to the intent of the Fair Labor Standards Act and granted summary judgment to the plaintiffs.

On September 5, 2017, at the Direction of President Trump and Attorney General Sessions, the DOJ asked the Fifth Circuit to dismiss its appeal of the preliminary injunction. The Court granted the request on September 6 and dismissed the appeal, thus leaving the overtime rule all but permanently invalidated. As a result, the minimum salary for exempt status under the FLSA remains at $23,600.

So what’s next?

Technically, the DOL still has until September 30, 2017 to appeal the district court’s August 31 decision. An appeal is highly unlikely. What is more likely is that the DOL will go back to the drawing board to develop and issue a new revised overtime rule. Current Secretary of Labor Alex Acosta previously stated that he believes the salary threshold should be raised to $33,600 (substantially lower than the Obama overtime rule’s roughly $47,000 threshold), and in July 2017, the DOL issued a request for public comment on potential revisions to the Obama overtime rule. The deadline to submit comments is September 25, 2017, with a revised rule expected to issue thereafter. Employers should stay tuned for further updates.

Obama-Era Revisions to EEO-1 Form Abandoned

The second recent hit  to President Obama’s workplace-law overhaul is the White House’s announcement suspending the Obama administration’s changes to the EEO-1 form. The revised EEO-1 form would have gone into effect March 31, 2018, and would have required employers with 100 or more employees and federal contractors with 50 or more workers to report W-2 wage information and total hours worked for all employees by race, ethnicity and sex within 12 proposed pay bands. The Obama administration had claimed that rewriting the form would help identify and reduce workplace wage discrimination. Opponents argued, on the other hand, that the new form was overly burdensome and would do little to accomplish its stated purpose, primarily because the aggregated pay data required for the form would not have compared people in the same job positions or controlled for the many other non-discriminatory variables that impact compensation. The time for reporting was also problematic, since it did not match the calendar year periods utilized by most HRIS programs.

On August 29, 2017,  the White House Office of Management and Budget agreed with the opponents and stated that the pay collection and reporting requirements “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” The White House explained its reasoning in a letter to the Chair of the Equal Employment Opportunity Commission, Victoria Lipnic.

So what’s next?

As a result of the announcement, the EEOC must publish a notice in the Federal Register announcing the immediate stay of new compensation and hours worked reporting requirements contained in the revised EEO-1 form and “confirming that businesses may use the previously approved EEO-1 form in order to comply with their reporting obligations for FY 2017.” Additionally, employers will not need to submit 2017 data until March 31, 2018.

This decision is welcome news for employers who have been struggling with the practical and potentially expensive challenges of complying with the new EEO-1 Form, including how to merge systems and payroll data to accurately and efficiently collect and calculate the requisite information. Nevertheless, as we previously posted, pay equity is an increasingly scrutinized issue—with more and more states passing laws imposing pay transparency obligations and prohibiting salary history inquiries of applicants. As such, employers should continue to stay abreast of these changes and ensure that compensation determinations are adequately documented and made in compliance with applicable laws.

The Trump administration withdrew a proposed requirement to screen all truck, train and bus operators for sleep apnea – a condition that, if untreated, can cause poor performance in everyday activities as well as severely impaired driving. A few high-profile incidents had called into question the issue of this emerging sleep disorder. The most notable one was when a conductor crashed a train into a crowded train station in Hoboken, New Jersey, killing one and injuring over 100 people. Last March, the Obama administration issued a proposed rulemaking notice that would’ve required screening train engineers and truck drivers for sleep apnea. The Trump administration announced that the proposed requirement was withdrawn, consistent with its continued efforts to eliminate regulations in an attempt to promote economic growth.

Currently, Federal Motor Carrier Safety Administration regulations provide for medical examinations that probe sleep apnea and sleep disorders in drivers. Thus, some were critical of the proposed regulation because they viewed the extra testing as unnecessary. Additionally, the proposal invited scrutiny to drivers of a certain age, body mass index and neck size.

To the contrary, a spokesperson for the National Transportation Safety Board, which has advocated for screening truckers for the sleep disorders for years, told Bloomberg that the agency is “disappointed” that the Department of Transportation withdrew the “much-needed rule.”

Recently, House Republicans renewed efforts to rein in expansion of two federal labor laws’ joint employer definition by introducing the Save Local Business Act (“SLRA”) (H.R. 3441). The SLRA limits how affiliated companies are considered joint employers for collective bargaining liability purposes and within wage and hour laws.

The SLRA represents an expanded effort to reverse the National Labor Relations Board’s (“NLRB”) Browning-Ferris Industries of California Inc., 362 NLRB No. 186 (Aug. 27, 2015) decision. In Browning-Ferris, the NLRB reversed a 30-year old standard for determining joint employer status under the National Labor Relations Act (“NLRA”). According to Browning-Ferris, affiliated companies are joint employers if they 1) “are both employers within the meaning of the common law” and 2) “share or co-determine” matters governing the essential terms and conditions of employment. Under the first prong, the NLRB focuses on a company’s “right to control” employees and does not consider whether the company exercises that right. For example, a company may create a common law employer relationship if it reserves ultimate discharge authority over temporary workers but does not exercise that right. For the second prong, the NLRB defines “essential terms and conditions” to include wages, hours, hiring, firing, and supervision. Evidence of controlling these “essential terms and conditions” may include dictating the number of contingent workers supplied and controlling schedules or overtime.

The SLRA also addresses recent expansion of the joint employer definition by courts under the Fair Labor Standards Act (“FLSA”). For example, in Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017), the federal Fourth Circuit Court of Appeals, covering Maryland, North Carolina, South Carolina, West Virginia, and Virginia, applied an expanded test to conclude that general and subcontractors were joint employers. Under the Salinas-applied test, joint employment exists when 1) two companies “share, agree to allocate responsibility for, or otherwise codetermine – formally or informally, directly or indirectly – the essential terms and conditions of a worker’s employment” and 2) the companies’ combined influence “over the terms and conditions of the worker’s employment” renders the person an employee instead of an independent contractor. This determination has significant implications because, as joint employers, both companies must comply with the FLSA as it relates to an individual’s entire employment for a workweek. In other words, a company must add the hours worked for both employers to determine whether and to what extent the individual earned overtime pay.

The SLRA rolls back these expanded definitions by redefining joint employer in both the NLRA and FLSA.  Specifically, under the Act:

A person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment (including hiring employees, discharging employees, determining individual employee rates of pay and benefits, day-to-day supervision of employees, assigning individual work schedules, positions, and tasks, and administering employee discipline).

Ultimately, the bill seeks to reinstate the traditional joint employer standard and restore some semblance of predictability that the NLRB eviscerated in the Browning-Ferris decision. Although the House is on recess, the bill will almost assuredly proceed within Education and Workforce Committee upon Congress’s September return. In addition, the bill could quickly move to the House floor for consideration and, with sufficient support, advance to the Senate. Frantz Ward will keep close track of the bill and provide updates on the SLRA’s progress.

Are the changes to the overtime rules going to take effect or not? Ever since a federal court issued an injunction in late 2016 stopping major changes to the federal overtime rules, employers have anxiously been waiting for an answer to that question. Last week, the U.S. Department of Labor (DOL) turned the tables, and asked employers and others whether the overtime rules should change and, if so, how they should change. More specifically, the DOL published a formal Request for Information (RFI) in the Federal Register on July 26 acknowledging concerns about the previously proposed changes and asking the public for its help in formulating a new proposal.

The DOL’s RFI poses eleven specific questions and asks interested individuals and organizations to provide written answers to those questions within 60 days. The questions suggest that the DOL may be open to considering increasing the minimum salary level for exempt employees, but perhaps not increasing it as much as the DOL had proposed in 2016. The questions also suggest the DOL may revisit the idea of automatic increases to the minimum salary level and may explore other overtime rule changes.

Many commenters view the DOL’s action as a positive sign for employers, especially given certain business-friendly comments made by Secretary of Labor Alexander Acosta during his March 2017 confirmation hearing. At the very least, this is the first step in a process that will hopefully result in more balanced and reasonable changes to the overtime rules. We will certainly continue to monitor the issue.

The U.S. Citizenship and Immigration Services released a new I-9 Form on July 17, 2017, to replace the I-9 Form that was last revised and issued in November 2016.

The I-9 is an Employment Eligibility Verification form that all U.S. employers must use to verify the identity and authorization of individuals hired to work in the United States. Employers are required to complete an I-9 for each individual they hire to work in the U.S., regardless of whether the person is a citizen of the United States.

The new form may be used immediately. The prior I-9 also may be used until September 17, 2017, but as of September 18, 2017, employers must use the new form.

1283811-protests-1483480044-672-640x480Last week workers across the United States participated in a national protest aimed at President Trump’s immigration policies. Organized by advocacy groups and promoted largely through social media, “A Day Without Immigrants” involved an organized effort to urge workers to stay home in protest of the new administration’s immigration policies and actions, including recent enforcement raids, the proposed border wall, and the high-profile Executive Order on immigration and refugees. Employers’ reactions have ranged from closing their businesses in support of the protests to terminating employees for not coming to work.

This likely is not the end of such protests. On March 8, organizers of last month’s Women’s March on Washington plan to hold “A Day Without a Woman” protest, asking women to stay home from work in support of various issues that impact women. Other less publicized protests by different groups are also planned.

Impacted employers that seek to enforce their attendance rules and other workplace policies must carefully consider potential legal issues when reacting to employees who miss work in support of these protests. For example, the National Labor Relations Act (“NLRA”) protects both unionized and non-unionized workers who engage in protected concerted activity. Typically, this involves two or more workers acting together to improve or protest various terms and conditions of their employment, including protests related to pay, safety, hours of work, and other workplace issues. The discipline or discharge of employees who engage in protected concerted activity can result in charges of unfair labor practices before the National Labor Relations Board and potential liability. However, employee actions or protests that are purely political in nature, with no real connection to the workplace, are unlikely to qualify for protection under the NLRA.

The true objectives behind workers’ absences in supporting these causes can be unclear. The upcoming “A Day Without a Woman” protest identifies a number of diverse concerns, some of which arguably could relate to workplace issues, and some of which clearly do not. The organizers’ website poses the following questions in asking supporters to withhold their labor on March 8:

  1. Do businesses support our communities, or do they drain our communities?
  2. Do they strive for gender equity or do they support the policies and leaders that perpetuate oppression?
  3. Do they align with a sustainable environment or do they profit off destruction and steal the futures of our children?

Employers who choose to discipline or terminate employees who elect to miss work as part of these protests need to consider, on a case-by-case basis, whether an employee’s actions qualify as a protected protest related to workplace conditions, particularly when they can be linked to their own workplace, or are a more generalized expression of support for a political cause. Employees who explicitly tie their absences to issues in the workplace are far more likely to be protected under the NLRA.

Employers also must consider the potential applicability of both state and federal anti-discrimination laws, like Title VII, when reacting to employee absences. Both the “A Day Without Immigrants” and “A Day Without a Woman” protests potentially implicate protected classifications under the anti-discrimination laws – e.g., national origin and gender. Employers that choose to pursue discipline or termination may potentially face allegations of discrimination, either based upon assertions that the employer harbored animus towards a particular protected group (and its causes), and/or that the employer selectively enforced its policies to the detriment of the protected group. Employers should base any disciplinary or discharge actions on previously established and promulgated workplace policies, including attendance rules and no-call/no-show policies. Employers also should ensure that they have acted consistently with respect to past employee absences (like the parade in Cleveland after the Warriors blew a 3-1 lead in the 2016 NBA Finals). A prior, consistent history of discipline or discharge in similar situations will help protect against allegations of discrimination.

Forms-2It’s no secret that Donald Trump is fulfilling his signature campaign promise to address immigration reform. So far, most of the media attention has been on the U.S.-Mexico border wall and the travel/refugee ban. For employers, however, other issues require attention.

One major issue requiring employers’ attention is I-9 compliance. In an Executive Order issued on January 25, 2017, titled “Enhancing Public Safety in the Interior of the United States,” President Trump directed all executive agencies to prioritize the enforcement of U.S. immigration laws. Such enforcement will very likely include more frequent and significant  audits and investigations of employers’ I-9 compliance.

A few days earlier, on January 21, 2017, the United States Citizenship and Immigration Services began requiring employers to use a new version of the I-9 form for all new hires. Employers who fail to use the proper form can be subject to civil penalties exceeding $2,000 for every improper form used. Thus, hiring 10 employees with the expired I-9 form can trigger 10 separate penalties.

Here is a link to the new form and instructions for completing it: https://www.uscis.gov/i-9. Note that unlike prior versions, the instructions are now contained in a separate document and are more detailed.

Otherwise, the new form itself contains only a few minor changes (for example, permitting the use of a P.O. Box for an address). However, there is now an “electronic” version available that includes drop-down menus and informational pop-up boxes to facilitate correct completion. This version is not mandatory, so employers can still print and complete the I-9 by hand.

While the I-9 form has been around for a number of years, its requirements are technical and proper completion requires solid training. Particularly with the new administration’s heavy immigration focus, we strongly recommend that  employers audit their I-9 processes, ensuring that all forms are properly completed and that all employees are authorized for employment in the U.S.

If you have any questions about I-9 compliance, please contact us.