Recent reports of campaigns designed to discourage potential employers from hiring Trump Administration officials raise the question of whether a private sector employer would have any jeopardy for going along with such a boycott. The answer depends upon where the act takes place. Fifteen states,[1] plus Puerto Rico and the District of Columbia, prohibit discrimination or retaliation against employees or applicants on the basis of political affiliation or activity. Some states have more limited, but potentially applicable laws. (For a thorough analysis of these laws see Volokh). Other states may recognize doctrines, such as violation of public policy or engaging in lawful activities, that could be fashioned into a reasonable argument for employee protection.

Political parties are not mentioned in the Constitution of the United States. What is mentioned is “…the right of the people to peacefully assemble, and to petition the Government for a redress of grievances.” (Amendment I) In addition to freedom of speech, this provides some protection from governmental interference with the right of persons to join and support political parties. Indeed, the current suits against alleged gerrymandering to favor one party over another, use this type of argument to create a constitutional violation out of interfering with an institution unmentioned in the document.

The so-called right of free association has been recognized as covered by the First Amendment protections, thereby giving additional heft to arguments that political party participation should enjoy some special protection, at least from government interference. Thus, local governments cannot officially prefer members of one party over another, or retaliate against employees for their participation in political campaigns, subject to certain limitations. Private employers, except in the locations where there are statutes, have not had to worry about this category of discrimination. It would not be surprising, however, to see a disappointed applicant or discharged employee make an argument that the presence of these rights in the First Amendment (and in many state constitutions) establishes a clear public policy to protect political activity, including service to the nation by joining whatever administration is currently in power. On the other hand, employers also enjoy the right to associate with whom they choose, and could argue that forcing a rock-ribbed conservative to hire a socialist activist would violate the rights of the employer. Or forcing a liberal think tank to hire a Trump administration true believer would be inconsistent with the free association model.

Given that many former administration officials seek post-government work in the District of Columbia, in New York City, at Yale, or at think tanks in coastal states, they are likely to find themselves with at least theoretical protection against political discrimination. Employers who accede to the suggestions to boycott administration officials may find themselves subject to discrimination claims, with uncertain results.

[1] Arizona, California, Colorado, Connecticut, Louisiana, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, South Carolina, Utah, West Virginia, Washington.

Last month we discussed a developing story regarding employer requirements to provide pay data on EEO-1 reports – more formerly known as Component 2. As we discussed, on March 4, 2019, The U.S. District Court for the District of Columbia ordered the immediate reinstatement of the EEOC’s pay data collection provisions (requiring covered employers to report pay information by race, ethnicity, and gender) in their EEO-1 report. The Office of Management and Budget (OMB) had suspended those Obama era provisions in 2017.

Shortly after our post, the Court held a status conference inquiring as to how the EEOC and the OMB planned to comply with its order. The EEOC stated that as a result of the Court’s reinstatement of the revised EEO-1 Component 2 collection, the EEOC would need until September 30, 2019 in order to account for significant practical challenges associated with complying with the Court’s order – it would also need to approach a third party vendor in order to handle the mass amount of data. The commission relied upon the EEOC Acting Chair’s administrative powers under Title VII as its authority to adjust the Component 2 pay data collection deadline to September 30, 2019.

Based on the recent filings, it is clear the EEOC is not equipped to begin pay data collection for Component 2 by May 31, 2019. Simply put, the Commission intends to delay pay data collection until September 30, 2019 – at the earliest. What this means for the immediate future of Component 2 is entirely unclear. It remains possible that the Court’s original March 4, 2019 ruling reinstating the pay data collection may be appealed – while it is also not entirely clear how the Court will respond to the EEOC’s most recent explanation.

With all of this in mind, employers should submit the Component 1 EEO-1 report data as required by May 31, 2019.  As of today, unfortunately, it is not clear when Component 2 pay data will need to be submitted.  Employers should be prepared to submit such data at a later date. We will continue to monitor this developing situation.

On April 1, the U.S. Department of Labor proposed a new regulation for determining a company’s joint employer status under the Fair Labor Standards Act. When two companies are deemed joint employers, they share responsibility for the workers’ wages, which include the payment of minimum wages and overtime. Under the new rule, the Labor Department would analyze the following four factors in evaluating whether a company jointly employs workers:

  • Whether the company hires or fires the employees
  • Whether the company supervises and controls the employees’ work schedule or conditions of employment
  • Whether the company determines the employees’ rate and method of pay; and
  • Whether the company maintains the employees’ employment records.

The Labor Department proposed the new rule to determine, as a matter of economic realty, whether a company actually exercises sufficient control over an employee to qualify as a joint employer. In the Labor Department’s estimation, a business model (e.g., franchise or staffing) does not alone indicate joint employer status under the FLSA. Rather, the company must exercise sufficient control over the employee.

If implemented, this new regulation will limit companies’ shared wage and hour liability and follows the trend established by other agencies within the Trump administration. As we previously reported, in September 2018 the National Labor Relations Board proposed to limit the circumstances under which a company would be considered a joint employer under the National Labor Relations Act.

For now, the waiting game begins. Before the rule can go into effect, the Labor Department must publish it in the Federal Register for public comment. As we have done consistently, Frantz Ward attorneys will monitor developments on this proposed rule and other joint employer liability developments.

Earlier today, the U.S. Department of Labor (“DOL”) announced a proposed rule to update regular rate calculations under the Fair Labor Standards Act (“FLSA”). Under the FLSA, employers must pay overtime pay to employees who work more than 40 hours in a week. The overtime pay rate is one and a half times an employee’s “regular rate” of pay. However, as many employers know, calculating an employee’s regular rate is not as straightforward as it may seem.

The DOL has not implemented any significant changes to the regulations regarding regular rate of pay in several decades. Accordingly, the proposed rule will update the regulations to clarify whether common benefits offered in the modern workplace must be included in an employee’s regular rate of pay.

In an effort to encourage employers to provide more benefits to their employees, the proposed rule excludes the following from an employee’s regular rate:

  • The cost of providing onsite specialist treatments from chiropractors, personal trainers, counselors, etc.
  • The cost of providing gym access, gym memberships, and fitness classes
  • The cost of providing wellness programs, such as health promotions and disease prevention activities
  • Employee discounts on retail goods and services;
  • Payments for unused paid leave, regardless of the type of leave
  • Reimbursed travel or other expenses, even if not incurred “solely” for the employer’s benefit
  • Reimbursed travel expenses that do not exceed the amounts set forth in the Federal Travel Regulation
  • Certain types of bonuses, broadening the current meaning of “discretionary bonus”
  • Certain types of benefit plans, such as accident, unemployment, and legal services; and
  • Certain types of tuition programs, such as course discounts, tuition-reimbursement programs, and programs for repayment of educational debt.

The proposed rule also includes changes to the existing “call-back” pay and “basic rate” regulations.

Frantz Ward attorneys will monitor developments on the proposed rule throughout the comment period.

Earlier today, the U.S. Department of Labor announced the official publication of the proposed changes to the federal overtime rules. This announcement is significant because it triggers the start of the 60-day period for public comments in favor of and opposed to the rule changes. The comment period will remain open until May 21, after which the Department of Labor will evaluate the comments and decide whether and when to implement any of the changes.

The DOL’s proposed overtime rule changes primarily involve increasing the minimum salary that employers must pay certain workers to avoid overtime from $455 per week ($23,660 annually) to $679 per week ($35,308 annually). The proposed rule changes also involve increasing the total annual compensation required for the “highly compensated employee” overtime exemption from $100,000 to $147,414. The DOL estimates that these changes will make more than one million additional American workers eligible for overtime pay.

A complete description of the DOL’s proposed rule changes can be found on the DOL’s web site, and anyone interested in submitting comments regarding the proposed rule changes can submit them electronically.

Oxycontin No Longer Covered

  • In light of the major role Oxycontin has played in the opioid crisis faced by Ohio and the rest of the country, the Ohio Bureau of Workers’ Compensation (BWC) has removed the painkiller from its list of approved drugs it will cover for Ohio’s injured workers. Starting in July of this year, no new prescriptions for Oxycontin will be approved and the drug will be replaced by Xtampza ER, another form of oxycodone like Oxycontin, but specifically formulated to make it difficult to crush, snort, or inject.

Deadline Approaches for DFSP Annual Reports

  • The Ohio BWC’s Drug Free Safety Program (DFSP), designed to help limit workplace injuries and accidents involving drug and alcohol use, offers state-fund employers a premium rebate in exchange for their voluntary enrollment in the program. If you are a private employer currently enrolled in this program, the deadline for submitting your Annual Report—a requirement to remain enrolled—is quickly approaching on the last business day of this month, March 29, 2019. If you are not currently enrolled but would like to be, applications for private employers are due on or before the last business day in May preceding the new policy year beginning on July 1.

Premium Rates Drop 20% for Private Employers

  • The new policy year beginning on July 1 will bring with it a reduction in premium rates by an average of 20% for private employers, the Ohio BWC recently announced. The BWC calls this their largest reduction in nearly 60 years. Note that this 20% represents the statewide average, but individual private employers’ rates and reductions will vary depending on such factors as their recent claims history and enrollment in rebate programs, among others.

BWC No Longer the BWC?

  • Earlier this month, the BWC Administrator/CEO Stephanie McCloud announced a rebranding initiative for the BWC that may result in a change to the name of the organization entirely. The organization has sought feedback and creative ideas from BWC employees and stakeholders throughout the state, although it is unclear at this time when or even whether any name change will be ultimately decided upon and enacted.

Last week, the Department of Justice issued some revisions to its guidance on enforcement of the Foreign Corrupt Practices Act. This guidance informs employers of what the DOJ looks for when assessing employers’ level of cooperation and compliance with the FCPA. Thus, employers take this guidance very carefully into account when developing their compliance programs.

One notable change made by the DOJ was a clarification of employers’ obligations to develop policies on the use of “ephemeral messaging platforms” by employees. These are messaging systems such as WhatsApp that automatically delete the messages after some short period of time, such that they cannot be retrieved, and thus evade the employer’s normal records retention system. The potential for use of these systems to facilitate bribes or other improper activities without leaving tell-tale traces caused the DOJ to highlight the issue in 2017. At that time, it was not clear whether the DOJ wanted employers to ban employee use of such apps totally. The new revision indicates that employers do not have to impose a total ban, but they must make a risk-based assessment, develop appropriate policies on the use of such apps, train employees, and enforce the policies. Otherwise, in any DOJ investigation, the employers will not receive full credit. The new language requires employers hoping to receive cooperation credit from the DOJ to have in place:

Appropriate retention of business records, and prohibiting the improper destruction or deletion of business records, including implementing appropriate guidance and controls on the use of personal communications and ephemeral messaging platforms that undermine the company’s ability to appropriately retain business records or communications or otherwise comply with the company’s document retention policies or legal obligations

While this policy directly applies only to employers subject to the FCPA, that Act has a very broad reach. Moreover, the concepts in the DOJ policy will almost certainly bleed into other contexts, such as domestic bribery, domestic theft schemes, biased comments on fellow employees, and union organizing. Thus, employers would be well advised to review their employees’ use of these ephemeral messaging platforms and develop reasonable and effective controls on their use. Otherwise, employers may be found to have failed to have proper records retention policies and to have turned a blind eye to a known method for employees to avoid detection of their activities.

In developing policies for use of these apps, employers should not just adopt off-the-shelf language, but must make an assessment of the risk certain apps present. Employers should think about what the legitimate uses of the apps are; what real risk they present; are there particular recipients that present greater problems; how widespread is the use of such apps currently; alternative methods of communicating that present lower risk levels; and difficulties in enforcement and administration of any new rules.

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.