Private employers with more than 100 employees previously have been required to report workforce data across 10 job categories broken down by race, gender and ethnicity. The data is reported annually by October 1 to the U.S. Equal Employment Opportunity Commission (“EEOC”) on the EEO-1 form, which currently comprises one page for each facility of an employer.

In the summer of 2016, during the Obama administration, the EEOC expanded the EEO-1 effective March 31, 2018, to require employers to report the racial and gender makeup of employees in each of the 10 job categories within 12 pay ranges. This would expand the EEO-1 report from one page to as many as 10 pages for employers, with a separate report being needed for each of an employer’s facilities.

In 2017, during the Trump administration, the Office of Management and Budget (“OMB”) issued a stay on the pay data portions of the revised EEO-1, as business groups were concerned that the additional requirements would be too burdensome and costly.

The National Women’s Law Center and the Labor Council for Latin America Advancement subsequently sued the EEOC and OMB in November 2017 in the U.S. District Court for the District of Columbia, Case No. 17-2458. On March 4, 2019, Judge Tanya Chutkan ruled that the OMB’s action in staying implementation of the revised EEO-1 was an “arbitrary and capricious” decision that lacked any “reasoned explanation.” The Court then vacated the OMB’s stay and ordered the EEOC’s expanded EEO-1 to be in effect.

Prior to the D.C. Court’s ruling, the EEO-1 filing deadline for the revised EEO-1 had been set at May 31, 2019. It is not clear whether employers will have to comply with the new requirements by the current deadline of May 31, but it is anticipated that the OMB will appeal the decision, and that the EEOC will soon issue guidance regarding the Court’s March 4 ruling.

We will continue to keep you updated as new information becomes available.

A Federal District Court in the Western District of North Carolina has dismissed a claim of race discrimination by an African-American Lowe’s employee who was fired after seven months of employment. The Court found that the same person who hired him had made the decision to terminate his employment. This fact, according to the Court, created a strong presumption that the discharge was not motivated by unlawful bias, or the person would not have hired him in the first place. The Court noted that seven months is a short enough time span between the hiring and discharge to invoke the same actor rule. That rule relies on the logical principle that someone who is biased will show the bias through hiring decisions, not just by firing employees. Why would a racist hire a person only to try to fire that person soon after? (Critics of the same actor rule do note that there may be circumstances where exactly that does take place.)

The Court also found that the inference was not negated by the decision-maker having contacted Lowe’s human resource department for advice. According to the Court, human resources “simply served as a sounding board” and the human resource department did not make the termination decision.

Importantly, the Court held that in order to defeat the same actor presumption, a discharged employee must bring forth “egregious evidence” of race discrimination in order to rebut the inference. In this case, the alleged facts that the decision-maker had taken Caucasian employees to lunch but never the discharged employee, and that he referred to a magazine as being marketed to African-Americans were not sufficiently egregious to rebut the inference.

If you are interested in the full decision, the case can be found at Pulliam v. Lowe’s Co. 

This case and others like it are instructive particularly in the termination of new hires. When possible, it is advisable both to have the hiring decision-maker also be the termination decision-maker and to make termination decisions without undue delay in order to take advantage of the same actor presumption.

Lame duck legislative sessions are often fraught with risk, as legislators who have been defeated or are retiring have a last chance to leave a “legacy” and the others have the maximum time before their next election. Often, more gets done in the lame duck sessions than in any comparable time period during the rest of the General Assembly’s term. In the 2018 post-election session of the General Assembly, the House Leadership controversy created even greater compression of official activity. However, two laws were passed that may help employers, at least in the long run.

HB 271 enacted Ohio Revised Code Section 4112.16 to provide that individuals claiming to be aggrieved by a violation of an accessibility standard can notify the person alleged to be responsible for the violation. If no notice is provided, the aggrieved party can file a civil action, but is precluded from receiving attorneys’ fees, unless the judge specifically orders them.  If the party provides the notice, he or she is not entitled to file an action until one of several things has occurred, including lack of response by the accused within 15 days; failure to make required changes within 60 days; and allegedly inadequate corrections. There are forms for the notice and procedures for resolving issues of compliance, so that the process of ensuring accessibility will be more focused upon making property accessible than upon “gotcha” cases where attorneys’ fee claims dominate any substantive relief.

SB 255 added a number of provisions to the Ohio Revised Code relating to occupational licensing. Many employers must deal with requirements that some of their employees be licensed to do their jobs. Many otherwise qualified individuals encounter barriers to their employment because past criminal records preclude their being eligible for licenses under current rules of the many Ohio licensing boards. SB 255 takes a welcome step of sunsetting all occupational licensing systems every 6 years, and allows licensing boards to review past convictions on a case-by-case basis as to whether the convictions should preclude licensing. To avoid being sunset, the licensing will need to go through a process of examination for need, consumer protection, fairness, market impact and so forth. The Common Sense Initiative is mandated to participate. Thus, over a period of time, the abundance of licensing requirements in Ohio should diminish. Of course, the temptation to add new requirements in response to constituent complaints about bad behavior can be irresistible. SB 255 also adds an entire licensing regimen for home inspectors, and requires real estate agents who recommend a home inspector to a client to provide a list of other inspectors. The law also adds “makeup artist” to the list of beauty salon workers who require state licensure. Overall, however, the bill is a giant step forward, and just a couple of small steps back.

As of January 1, 2019, Connecticut and Hawaii have joined the ranks of California, Delaware, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, and Vermont by adopting state-wide bans against salary history inquires. State and local governments across the country are increasingly introducing and passing legislation prohibiting employers from asking candidates their salary history information, with the aim of ending pay inequity.  The purpose behind salary history bans is to prevent employers from relying upon a candidate’s previous, and potentially discriminatory, pay to determine the applicant’s future salary, effectively stopping a cycle of gender and minority pay disparity.

  • Connecticut: In May 2018, Connecticut Governor Dannel Malloy signed “An Act Concerning Pay Equity” into law. The law prohibits employers from inquiring or directing a third party to inquire about a prospective employee’s wage and salary history. Connecticut employers may inquire generally about other elements of a job applicant’s previous compensation structure, such as stock options, but may not inquire about the value of such compensation. However, employers are free to discuss a candidate’s compensation history if he or she has voluntarily disclosed it.
  • Hawaii: Similarly, in June 2018, SB 2351 amended Chapter 378 of the Hawaii Revised Statutes. The law prevents employers from inquiring about or relying on the salary history of a candidate during the hiring process. Additionally, employers are prohibited from conducting a public record search for an applicant’s salary history. The ban does not apply to applicants for internal promotions or transfers. However, Hawaii employers may discuss and verify an applicant’s salary history if the applicant has voluntarily disclosed such information.

Ohio has not passed a salary history ban (yet), so Ohio employers are in the clear for now. However, with legislation introduced or pending in several localities, this trend is expected to continue. Accordingly, multi-state employers need to be aware of how bans may affect their businesses and should regularly review and update hiring processes to ensure compliance with the many differing state and local bans.

Feel like the government shutdown has reduced news coming out of the federal administrative agencies? If so, January 17, 2019 likely provided a spark to your week. Last Thursday, National Labor Relations Board (“NLRB”) Chairman John Ring issued a letter which served as the most-recent move in the NLRB’s joint employer dance.

In his letter, Chairman Ring responded to the request of two U.S. House of Representatives Democrats that the NLRB withdraw its proposed joint employer rule. As we previously reported, in September 2018 the NLRB proposed to change the standard utilized to determine joint employer status. Under the new rule, an employer could be “found to be a joint employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner not limited and routine.” If implemented, this rule would reverse the NLRB’s 2015 Browning-Ferris decision, which had overturned 30 years of NLRB precedent.

The House Democrats’ request stemmed from a recent D.C. Circuit Court of Appeals decision that found the NLRB’s 2015 Browning-Ferris decision proper. In Browning-Ferris, the NLRB ruled that it would consider a potential joint employer’s reserved right to control workers and any indirect control exercised. In its decision, the D.C. Circuit “affirm[ed] the [NLRB’s] articulation of the joint-employer test as including consideration of both an employer’s reserved right to control and its indirect control over employees.”

Given the D.C. Circuit’s decision, the House Democrats argued that the NLRB should withdraw its proposed joint employer rule and apply the Browning-Ferris standard.

However, in his January 17 letter, Chairman Ring resoundingly rejected the House Democrats’ arguments. In particular, Chairman Ring asserted that:

  • The joint employer standard the NLRB articulated in Browning-Ferris was neither clear nor affirmed by the D.C. Circuit;
  • “[T]he NLRB has long adhered to a consistent policy of deciding for itself whether to acquiesce to the views of any particular circuit court or whether to adhere to its own view until the United States Supreme Court rules otherwise[;]” and
  • The NLRB “is not compelled to adopt the court’s position as its own, in either Browning-Ferris itself or the final rule on joint-employer status.”

When the D.C. Circuit released its decision, some predicted that it would restrict the NLRB’s efforts to restore its prior joint employer test.  Chairman Ring’s letter should give employers some comfort that the NLRB may not feel so restrained.

Nonetheless, only time will tell how the NLRB’s joint employer dance concludes.  In light of the D.C. Circuit’s decision, the NLRB further extended the proposed rule’s notice and comment period (comments due by January 28 and responses to comments due February 11).  Therefore, it will be some time before the NLRB even releases its final rule.

Administering payroll for employees with variable work schedules and hourly rates can cause major headaches for employers. In an effort to simplify and reduce administrative costs, employers are oftentimes tempted to set a standard overtime rate to be paid at a set dollar amount to all employees regardless of variations in compensation rates and actual weekly compensation earned. However, as a recent Department of Labor Opinion Letter explains, employers must adhere to the FLSA’s overtime calculation rules when setting such rates.

The December 21, 2018 letter analyzed home health aides who provide in-home services to various clients. Some of the employees’ weekly schedules were heavily influenced by travel between clients throughout the day and, as a result, their hours worked varied greatly. To capture the total time worked and corresponding pay, the employer multiplied an employee’s time with clients by his or her hourly pay rate for such work. The employer then divided the total by the employee’s total hours worked, which includes both the client time and the travel time. The typical standard rate for the employees was $10 per hour, and if any employees worked over 40 hours in a given work week, they were paid time and a half for all hours over 40 based on that standard rate ($10 x 1.50 = $15/hour).

The Opinion letter took issue with the standard rate of $10 per hour. The $10 per hour rate was lawful for all employees who made $10 per hour or less, as an employer may choose to pay overtime greater than its statutory obligation. However, the DOL determined that the employer’s practice did not comply with the FLSA’s overtime calculation rules for those employees whose regular rate of pay exceeded $10 per hour. Those employees’ standard rate, when calculating overtime, could not be lower than their actual hourly rate.  As the DOL further explained, the employer’s practice did not entirely compensate certain employees for all overtime worked.

This letter reminds employers that, when calculating overtime compensation, the regular rate of pay cannot be arbitrarily selected, especially when the selected amount is potentially less than the employee’s actual hourly wage rate. Rather, overtime must be based on the actual rate of pay the employee earns.

Although some departing employees are willing to risk violating their non-competes when they leave a company, a recent court decision reinforced one of the significant dangers that those employees can face in doing so. In this decision, a federal appeals court in Ohio ruled that a former employee who violates a non-compete can be forced to pay the employer’s legal fees, even if the former employer does not prevail on all of the issues raised.

In an opinion issued on January 10, 2019 in Kelly Services Inc. v. De Steno, the U.S. Court of Appeals for the Sixth Circuit considered a case involving three employees who left Kelly Services to join a competitor. The employees had signed non-compete agreements during their employment, so Kelly Services sued them and secured a preliminary injunction. The injunction was not permanent, and was intended to remain in effect only until the court could examine the enforceability of the restrictions in the non-competes. The court maintained the injunction for the one-year period set out in the non-compete and lifted the injunction shortly after that period expired, all without ever ruling on the enforceability of the restrictions.

After the court lifted the injunction, Kelly Services asked the court to order the employees to pay for its attorneys’ fees. Kelly Services based its request on language in the agreements that allowed Kelly Services to recover the fees and costs involved “in enforcing” the agreements. The former employees objected to the request and argued that Kelly Services could not recover its fees and costs because it had not actually won on its claims. The district court found, however – and the Sixth Circuit agreed – that the former employees had to pay the fees and costs because the specific language in the agreements did not require Kelly Services to win. Rather, the agreements only required that Kelly Services incurred the fees “in enforcing” the agreements.

Although the Sixth Circuit did not have to reach the issue, its language suggested that there are limits to the circumstances in which broad fee-shifting provisions will be enforced. For example, the Sixth Circuit suggested that it would not be proper to award fees incurred in enforcing an agreement if the former employer’s efforts to enforce the agreement lacked sufficient legal basis or were simply designed to oppress or harass a former employee.

This case reinforces the importance of both including a fee-shifting provision in agreements of this nature and having the proper language in those agreements.

On September 14, 2018, the National Labor Relations Board published a new proposed rule that attempts to reverse the joint-employer rule created in the Board’s Browning-Ferris Industries decision of 2015. (Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015). On December 10, 2018, the Board issued a notice that it was extending until January 14, 2019, the deadline for submitting comments to the proposed rule, and extending until January 22, 2019, the deadline for responding to comments to the proposed rule.

Under Browning-Ferris, the Board expanded its joint-employer standard and changed 30 years of precedent in ruling that two businesses are joint employers when one has “indirect” or “reserved” control over another’s workers rather than the previously required direct and immediate control over essential employment terms that was actually exercised. As we previously reported, the Board had overruled Browning-Ferris in its December, 2017 Hy-Brand Industrial Contractors decision, but in February, 2018, the Board vacated its Hy-Brand decision when it determined that one of its members had improperly participated in the decision.  When the Board vacated Hy-Brand, it effectively reinstated the indirect control test set forth in Browning-Ferris. The Board’s proposed new rule would again reverse Browning-Ferris and require a finding of direct and immediate control over the essential terms and conditions of employment in order to establish a joint-employer relationship. Additional information regarding the proposed new rule can be found here.

This is the second time that the NLRB has extended the comment period for its proposed new rule, and to date more than 10,000 comments have been submitted.

The Ohio medical marijuana industry is ready to go live, with most of the pieces in place to complete the regulatory structure passed by the Ohio General Assembly in September of 2016. However, like the medical marijuana industry in general, the Ohio market will have a difficult time accessing banking services. This is because while marijuana may be legal under state law, it is still illegal under federal law, and thus banks are reluctant to offer banking services to the industry for fear of violating federal banking laws and rules to which the banks are subject.

However, there are signs in Ohio that banks may be beginning to give the medical marijuana industry a fresh look. Recently, Wright-Patt Credit Union in Dayton, through its board of directors, gave approval for the credit union to begin offering limited services to the medical marijuana industry. At this point, the nature of the services and what they might include have not been specified. Additionally, the Ohio Department of Commerce, through its Division of Financial Institutions, recently issued guidance for banks contemplating getting into the industry.

The decision by Wright-Patt, while isolated in Ohio, reflects a national trend in the industry. By the end of March 2018, 411 banks and credit unions in the U.S. were “actively” operating accounts for marijuana businesses, according to a report prepared by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). That’s up more than 20% from when President Trump took office.

The business reasons for the timing of the announcement are not entirely clear. Banks and credit unions in other states, mostly state chartered, have quietly served the industry to varying degrees for years. Some banks do increased due diligence on their marijuana clients to ensure compliance with a FinCEN memo of February 2014, while other banks may turn a blind eye. What is becoming clear is that as more states pass laws legalizing marijuana and the federal climate for rescheduling marijuana under the Controlled Substances Act and re-examining cannabis related issues continues to improve, many financial institutions want to be ready to jump into a large and growing marketplace that is woefully underserved.

Frantz Ward attorneys Tom Haren and Pat Haggerty attended the Marijuana Business Conference this past November. Tom was a presenter at the Marijuana Business Crash Course, and Pat attended the Hemp Forum. The biggest takeaway from the conference is that 2019 could be a banner year for cannabis in Ohio and nationwide.

Hemp reform is moving forward.

It has now been confirmed that the 2018 Farm Bill will include the federal Hemp Farming Act, which would remove industrial hemp (cannabis containing less than 0.3 percent THC) from the Controlled Substances Act.

Hemp-derived CBD has been all the rage as of late, with this segment of the industry on track to hit $591 million in 2018. Some analysts predict this could be a drop in the bucket: The Brightfield Group predicts that the CBD industry alone could hit $22 billion by that time.

Legalization of hemp at the federal level is the first step toward a nationwide market for hemp and its derivatives — after passage of the 2018 Farm Bill, it will be incumbent upon the states to develop their own hemp programs.

Broader cannabis reform is possible in 2019.

With the coming change in control of the House of Representatives, many are confident that 2019 will bring significant cannabis reforms. For one thing, the expected Democratic Chair of the House Rules Committee will no longer block cannabis-related amendments from being debated on the House floor.

While that is newsworthy in and of itself, there is also confidence that Congress may finally pass the STATES Act during this session.

The STATES Act would exempt state-compliant cannabis operators from the purview of the federal Controlled Substances Act. In addition to removing the fear of federal prosecution, this change would allow banks to service state-compliant cannabis businesses, and also permit state-compliant cannabis companies to take standard tax deductions on their federal tax returns.

President Trump has indicated that he supports this change, which has bipartisan support in both chambers of Congress.

If you have questions about the 2018 Farm Bill, the Hemp Farming Act, or the STATES Act, please do not hesitate to contact one of Frantz Ward’s Cannabis Attorneys.