HOT TOPICS IN EMPLOYMENT LAW: DIVERSITY AND WAGE ISSUES
Sponsor: Young Lawyers Division CLE Credit: 1.0 Friday, June 19, 2015 11:20 a.m. - 12:20 p.m. Elkhorn A-D Lexington Convention Center Lexington, Kentucky
A NOTE CONCERNING THE PROGRAM MATERIALS
The materials included in this Kentucky Bar Association Continuing Legal Education handbook are intended to provide current and accurate information about the subject matter covered. No representation or warranty is made concerning the application of the legal or other principles discussed by the instructors to any specific fact situation, nor is any prediction made concerning how any particular judge or jury will interpret or apply such principles. The proper interpretation or application of the principles discussed is a matter for the considered judgment of the individual legal practitioner. The faculty and staff of this Kentucky Bar Association CLE program disclaim liability therefore. Attorneys using these materials, or information otherwise conveyed during the program, in dealing with a specific legal matter have a duty to research original and current sources of authority.
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TABLE OF CONTENTS The Presenter .................................................................................................................. i
Hot Topics in Employment Law: Diversity and Wage Issues .......................................... 1 Case Law Update ................................................................................................ 1 Statutory and Regulatory Update ....................................................................... 12 Executive Action ................................................................................................ 15 Agency Enforcement ......................................................................................... 16 Hot Button Issues .............................................................................................. 21
Kembra Sexton Taylor McBrayer McGinnis Leslie & Kirkland, PLLC Post Office Box 1100 Frankfort, Kentucky 40602 (502) 223-1200 [email protected]
KEMBRA SEXTON TAYLOR is a partner with McBrayer McGinnis Leslie & Kirkland, PLLC in Frankfort and practices in the areas of labor and employment, state personnel, appellate, administrative, state regulatory and insurance defense law. She received her B.A., with distinction, from Centre College and her J.D. from the University of Kentucky College of Law. Prior to joining the firm, Ms. Taylor served as Deputy General Counsel, General Counsel, Deputy Secretary, Executive Director and Chief of Staff for the Kentucky Labor Cabinet. She is admitted to practice before the United States District Court for the Eastern and Western Districts of Kentucky and the United States Court of Appeals for the Sixth Circuit. Ms. Taylor is a member of the Kentucky and American Bar Associations.
HOT TOPICS IN EMPLOYMENT LAW: DIVERSITY AND WAGE ISSUES Kembra Sexton Taylor
CASE LAW UPDATE A.
Vance v. Ball State University, 133 S.Ct. 2434 (2013). An employee is a supervisor under Title VII of the Civil Rights Act only if he or she has the authority to take tangible employment action against the alleged victim. Vance sued Ball State University, claiming, inter alia, that she was subjected to a hostile working environment and retaliation. The Court resolved the split among circuits as to whether the Farragher and Ellerth supervisor liability rule applies to those whom the employer vests with authority to direct and oversee the victim's daily work or is limited to harassers who have the power to "hire, fire, demote, promote, transfer, or discipline" their victims.
U.T. Southwestern Medical Center v. Nassar, 133 S.Ct. 2517 (2013). Title VII retaliation claims must be proven according to traditional principles of but-for causation, not the lessened causation standard. Dr. Nassar, who was of Middle Eastern descent, claimed that he was constructively discharged from the school's faculty due to racial discrimination by his superior. The Court determined that an employee must prove that an employer would not have taken adverse employment action but for an improper motive and may not establish a claim with only proof that an improper motive was one of multiple reasons for the employment action.
Sandifer v. U.S. Steel Corp., 134 S.Ct. 870 (2014). This was a collective action on behalf of 800 current and former steel workers seeking backpay under the Fair Labor Standards Act (FLSA) for time spent donning and doffing certain pieces of protective gear that the plaintiffs asserted U.S. Steel required them to wear. The District Court and Court of Appeals for the Seventh Circuit granted summary judgment to the defendant, concluding that the plaintiffs' donning and doffing constituted "changing clothes" under §203(o). The U.S. Supreme Court affirmed, adopting a broader definition of "clothes" and agreeing that parties may bargain collectively over whether time spent donning and doffing protective gear must be compensated.
Lawson v. FMR LLC, 134 S.Ct. 1158 (2014). Two former employees of a company that provided investment advising services under contract to the Fidelity family of mutual funds filed suit under the Sarbanes Oxley Act (SOX), alleging that FMR retaliated against them for engaging in protected activity. The U.S. Supreme Court extended SOX whistleblower protection to employees of the contractor of a publicly traded company. This is the first time the Supreme Court has decided a case under Section 806 of SOX, enacted in 2002.
United States v. Quality Stores, Inc., 134 S.Ct. 1395 (2014). Severance payments made to employees terminated in connection with a company's Chapter 11 bankruptcy plan are taxable wages under the Federal Insurance Contributions Act (FICA). The ruling resolves a split among federal circuits. Quality Stores filed a Chapter 11 bankruptcy petition and terminated thousands of employees, who received severance payments. The company first reported the severance payments as wages, paying the employer's portion of FICA taxes and withholding the employee's share, and later applied for a refund. The bankruptcy court held that such payments did not constitute taxable wages and ordered a refund. The U.S. District Court for the Western District of Michigan and the Sixth Circuit Court of Appeals affirmed. The company asserted that the severance payments were actually "supplemental unemployment compensation benefits" (SUBs) and, therefore, not taxable. The IRS countered that precedents made it clear that payments made after the employment relationship ends are wages under the act's expansive definition. The U.S. Supreme Court reversed. The Court did agree with Quality Stores that severance payments were SUBs; however, noting that the Internal Revenue Code chapter governing income tax withholding does not limit the meaning of "wages" for FICA purposes, the Court decided that SUBs were wages and therefore taxable. The Court examined the history of the statute and concluded that Congress had sought to eliminate a conflict in taxation of unemployment benefits among the states by amending the statute to treat all SUBs, including severance payments, "as if" they were wages subject to withholding. Therefore, it was irrelevant whether the severance payments were tied to the receipt of state unemployment income benefits.
Lane v. Franks, 134 S.Ct. 2369 (2014). Edward Lane sued Central Alabama Community College president Steve Franks after Lane was fired from his job leading the school's program for at-risk youth. Lane had discovered that an Alabama state representative was on the program's payroll despite having done no work for the organization. Franks fired Lane after he testified in an FBI case against the elected official.
In a unanimous decision, the Supreme Court ruled that the First Amendment "protects a public employee who provided truthful sworn testimony, compelled by subpoena, outside the course of his ordinary job responsibilities." 7.
Burwell v. Hobby Lobby, 134 S.Ct. 2751 (2014). Closely-held corporations whose owners have religious objections cannot be required to comply with the Affordable Care Act's (ACA) mandate to provide contraceptive coverage for their employees. Hobby Lobby, a Christian-owned craft supply chain, and Conestoga Wood Specialties, a wood manufacturer owned by Mennonites, challenged the requirement on the grounds that it violated their religious freedom. By a vote of 5-4, the Court ruled that the government failed to prove that the law's mandate was the "least restrictive means of advancing its interest" in providing birth control at no cost to women.
Integrity Staffing Solutions v. Busk, 135 S.Ct. 513 (2014). Time spent by warehouse workers waiting to undergo and undergoing security screening is not work time and therefore not compensable under the Fair Labor Standards Act (FLSA), as amended by the Portal to Portal Act. Employees of Integrity Staffing who worked at two warehouse facilities in Nevada fulfilling orders for Amazon sued after the company began requiring workers to go through screening before they left the premises but failed to pay them for the time. The District Court and U.S. Court of Appeals for the Ninth Circuit found that the time spent undergoing screening, which the employees claimed took up to twenty-five minutes each day, was a job requirement and for the employer's benefit. The U.S. Supreme Court reversed, finding that the security screenings were not an integral part of the job, which was sorting and shipping packages, not undergoing screening.
NLRB v. Noel Canning, 134 S.Ct. 2550 (2014). Three of President Obama's "recess appointments" to the National Labor Relations Board were declared unconstitutional. Therefore, the board lacked a valid quorum when it determined that Noel Canning, a Pepsi-Cola bottler and distributor located in Washington, had violated the National Labor Relations Act (NLRA) by refusing to execute a collective bargaining agreement with the local Teamsters union. This case marks the first time in history that the Supreme Court has interpreted the U.S. Constitution's Recess Appointment Clause.
Harris v. Quinn, 134 S.Ct. 2618 (2014). A 5-4 majority of the Court ruled that, in certain cases, unions could not collect fees from some categories of public employees
who did not want to join. The plaintiffs were home health personal assistants, arguing against the need to pay their "fair share" of dues under a collective bargaining agreement between their employer, the state of Illinois, and the union. The Court determined that Abood v. Detroit Board of Education, 97 S.Ct. 1782 (1977), which held public employees who do not wish to join a union can be compelled to pay "fair share" dues, did not apply to this class of employees. 11.
EEOC v. Ford Motor Company, 752 F.3d 634 (6th Cir. 2014). Plaintiff Jane Harris was employed by Ford as a steel "resale buyer," acting as an intermediary between the company's steel suppliers and its parts manufacturers. She suffered from irritable bowel syndrome and asked to work from home if needed as an accommodation. Ford denied her request to telecommute, contending that it would prevent her from performing the essential functions of her job; however, the company offered alternatives, all of which the plaintiff rejected. The EEOC filed suit on her behalf, alleging a violation of the Americans with Disabilities Act (ADA). The District Court granted summary judgment to Ford, and a three-judge panel from the appellate court reversed, concluding that there was an issue of fact as to whether Harris's telecommuting request was reasonable. The full Sixth Circuit vacated that decision and reheard the appeal en banc. The Court ultimately sided with Ford and determined that the company had engaged in a good faith "interactive process."
Home Care Association of America v. Weil, ___ F.Supp. 3d ___2014 WL 7272406 (D.D.C. Dec. 22, 2014) In December 2014, the District Court struck down the portion of the amended regulation that barred third-party employer's claiming companionship/live-in domestic exemptions to minimum wage and overtime under the Fair Labor Standards Act (FLSA). In January 2015, 1 the Court vacated the second component of the regulation that redefines the FLSA's "companionship services" exemption from overtime compensation. The court stated that the new regulation's definition of companionship was so restrictive that it would have essentially written the companionship exemption out of existence. Home Care Association of America filed an appeal with the D.C. Circuit on January 23, 2015.
Young v. UPS, 135 S.Ct. 1338 (2015). The Supreme Court was called upon to decide whether the Pregnancy Discrimination Act (PDA) requires an employer that provides work accommodations to non-pregnant employees with
2015 WL 181712 (D.D.C. Jan. 14, 2015).
work limitations to accommodate pregnant employees who are "similar in their ability or inability to work." Peggy Young, a UPS delivery driver, became pregnant, and her doctor recommended that she refrain from lifting packages heavier than twenty pounds. UPS denied Young's request for accommodation, even though the company had a practice of giving light duty assignments to other employees who were temporarily unable to perform their jobs. Young was forced to take extended, unpaid leave, without medical coverage. She sued UPS under the PDA, which amended Title VII of the 1964 Civil Rights Act's definition of "discrimination" to include discrimination in employment "because or on the basis of pregnancy, childbirth, or related medical expenses." The District Court granted summary judgment to the defendant, ruling that UPS did not discriminate against Young, because the company's policy was based on "gender-neutral, pregnancy-blind" criteria, such as whether an employee was injured on or off the job. The Fourth Circuit Court of Appeals upheld the judgment, concluding that the plaintiff did not present any direct evidence of pregnancy discrimination. The Supreme Court reversed, holding that an employee who alleges disparate treatment under the PDA may do so by applying the McDonnell Douglas framework. The Court also held that a genuine issue of material fact exists under a PDA claim if the employee can produce evidence that the employer accommodates a large portion of non-pregnant workers while failing to accommodate a large portion of pregnant workers. 14.
M & G Polymers USA, LLC v. Tackett, 135 S.Ct. 926 (2015). The Court favored a traditional contract analysis test for determining whether collective bargaining agreements allow changes in the duration of retiree benefits, sounding the deathknell for the "context" analysis used by the Sixth Circuit in Agricultural Implement Workers of America v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983). When M&G Polymers purchased the Point Pleasant Polyester Plant in Apple Grove, West Virginia, in 2000, it executed a collective bargaining agreement and related pension and insurance agreement that extended health care coverage to plant retirees. In 2006, the company began charging retirees for a portion of their health care coverage. The retirees filed suit, alleging that the decision violated the applicable collective bargaining agreements, even though the agreements were silent on the matter. The District Court dismissed the case for failure to state a claim. The Court of Appeals for the Sixth Circuit reinstated the retirees' claim that they had vested life-time coverage at no cost, relying upon Yard-Man, which held that courts must look to the "context" of labor negotiations to resolve any ambiguity. The case then went back to the trial court, which found for the retirees. The Court of Appeals affirmed. The Supreme Court reversed, determining that the "context" approach violates traditional principles of contract interpretation by "placing
a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements." 15.
Mach Mining, LLC v. EEOC, 135 S.Ct. 1645 (2015). The U.S. Supreme Court held that courts may review the EEOC's alleged failure to engage in sufficient conciliation efforts, although the agency has broad discretion to determine the manner and content of its pre-suit conciliation efforts and the scope of judicial review is narrow. The EEOC alleged that Mach Mining had a pattern or practice of not hiring women for mining positions or, alternatively, that the company's hiring policy had a disparate impact on women. The company asserted several affirmative defenses, including that the EEOC had failed to conciliate in good faith before filing suit. The EEOC moved for summary judgment on that issue alone, and, although the District Court denied the motion, it certified the issue to the Seventh Circuit Court of Appeals. The appellate court rejected the "failure to conciliate defense" and stated that it would not scrutinize the EEOC's presuit obligations. The Supreme Court reversed, albeit narrowly, holding that courts have authority to review whether the EEOC has fulfilled its Title VII duty to attempt conciliation. The Court did not go so far, however, as to hold that the EEOC has a duty to conciliate in "good faith."
Heffernan v. City of Paterson, 777 F.3d 147 (3d Cir. 2015). This public employee has no claim under 42 U.S.C. §1983 for being demoted for a perceived exercise of a First Amendment right. Mr. Heffernan, a police officer in Paterson, New Jersey, was a friend of a former city police chief who was running for mayor against the incumbent. Mr. Heffernan did not live in Paterson, could not vote in the city, and claimed that he was not involved in the campaign. A member of the mayor's security detail observed Mr. Heffernan picking up a campaign sign from the challenger's headquarters. Mr. Heffernan claimed that the sign was for his mother. The next day, Mr. Heffernan was demoted for engaging in political activities. Mr. Heffernan filed suit, alleging retaliation based on the exercise of his rights of freedom of speech and association. Mr. Heffernan initially obtained a verdict in the trial court on one of the claims, but the appellate court remanded the case for consideration of both claims. The initial trial judge subsequently recused himself, and the second judge on remand granted summary judgment to the defendants on both claims. The Third Circuit affirmed, holding that the officer's demotion did not violate his constitutional rights to free speech and association. A petition for certiorari was docketed in the Supreme Court on April 24, 2015.
Ruffin v. Motor City Casino, 775 F.3d 807 (6th Cir. 2015). Time spent monitoring work radios during meal times are not compensable under the Fair Labor Standards Act (FLSA), provided the monitoring does not interfere with or prevent employees from enjoying personal activities during their break. A group of security guards sued for overtime, alleging violation of the Fair Labor Standards Act (FLSA) because they were not permitted to leave the premises during lunch break and had to monitor work radios and respond to emergencies. The District Court granted summary judgment to the casino. The Court of Appeals agreed, finding the evidence proved that the meal periods predominantly benefited the employees, not the employer, because the guards could eat, read, socialize, and conduct personal business on their phones, even though they were monitoring their work radios.
EEOC v. Beverage Distributors Co., LLC, 780 F.3d 1018 (10th Cir. 2015). "Direct threat" defense under the Americans with Disabilities Act (ADA) does not require proof of an actual threat. An employee of Beverage Distributors whose position was eliminated was offered a new position, provided he could pass a physical examination. A physician opined that the employee would require accommodation for impaired vision. The company determined that it could not reasonably accommodate the request, and that the employee's impaired vision created a significant risk of harm to himself or others. The employee filed a complaint with the EEOC and won a verdict in the trial court. The Tenth Circuit Court of Appeals reversed, because the jury instruction failed to say that, in evaluating the reasonableness of the company's position, there did not have to be proof of an actual threat.
Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014). A non-competition agreement that Donald Brown signed after working sixteen years as a driver, dispatcher, and salesperson for Charles T. Creech, Inc., was not supported by adequate consideration and therefore unenforceable against Mr. Brown and his new employer. Mr. Brown was an experienced employee, who was not promoted and did not receive any further training or valuable information. His continued employment was insufficient consideration to support the new agreement.
Furtula v. University of Kentucky, 438 S.W.3d 303 (Ky. 2014). Employees Vera Furtula and Anthony Miller do not have implied contracts with the University of Kentucky relating to long-term
disability benefits. Therefore, the doctrine of governmental immunity shielded UK from suit for breach of contract. KRS 45A.245 of the Model Procurement Code waives state immunity only for written contracts. UK's employee handbook contained explicit disclaimers of any intention to be bound contractually to any policy provisions. The Court clarifies that Parts Depot, Inc. v. Beiswenger, 170 S.W.3d 354 (Ky. 2005), which holds that policies in employee handbooks could rise to the level of implied contracts, is limited to such cases where such handbooks do not contain either "precatory language or explicit disclaimers." 3.
Kentucky Uninsured Employers' Fund v. Hoskins, 449 S.W.3d 753 (Ky. 2014). This is a case of first impression in which the Kentucky Supreme Court addressed "the relationship between the common law loaned servant doctrine and the employee leasing arrangements that are the subject of KRS 342.615." Julian Hoskins sustained a work-related injury while working as a long-distance truck driver for Four Star Trucking. Unbeknownst to Mr. Hoskins, Four Star had "leased" Mr. Hoskins under a complex leasing arrangement with Better Integrated Systems, Inc., which, in turn, leased Mr. Hoskins's employment responsibilities to an affiliated company, Beacon Enterprises. Four Star did not maintain its own workers' compensation coverage. The question was whether the responsibility for Mr. Hoskins's coverage had been legally transferred from Four Star to Better Integrated and then to Beacon Enterprises. The leasing company's workers' compensation insurance carrier, KEMI, argued that its policy did not apply. The Supreme Court ultimately held that it did not matter whether the claimant was aware of the complicated legal arrangement. He was an employee of the employee leasing company, and KEMI was responsible for providing coverage.
Vander Boegh v. Energy Solutions, Inc., 772 F.3d 1056 (6th Cir 2014). Gary Vander Boegh began working as landfill manager at the Paducah Gaseous Diffusion Plant (PGDP) in 1992. In subsequent years, Mr. Vander Boegh engaged in a range of protected activity as landfill manager, including reporting environmental violations. Beginning in 2006, PGDP moved its operations from the company who had run the plant since 1998 to Energy Solutions. Mr. Vander Beogh applied to be the new landfill manager, but Energy Solutions hired someone else. He filed suit, claiming that he was not hired because of his whistleblowing activity. The Court held that as an "applicant," Mr. Vander Boegh was not an "employee" under the Energy Reorganization Act and, therefore, not protected.
MacGlashan v. ABS Lincs Ky., Inc., 448 S.W.3d 792 (Ky. 2015). Margaret MacGlashan was fired from her position as a nurse manager for Cumberland Hall Hospital. She discovered that a patient had been given drugs to which he was allergic and had him transferred to another facility. She undertook an investigation, visited the patient in the other hospital, and took the patient's records home to study. The hospital claimed that Ms. MacGlashan violated HIPAA, reported her to Health and Human Services, and eventually fired her. She filed suit in federal court for, inter alia, wrongful termination. The District Court certified the question to the Kentucky Supreme Court of whether an employee who is covered by whistleblower statute governing health care workers and suffers reprisal in violation of the statute may recover front pay. The Kentucky Supreme Court answered the question in the affirmative and held that front pay, for purposes of a wrongful termination claim, is money awarded for lost compensation during the period between judgment and reinstatement or in lieu of reinstatement. In finding that front pay is an element of recoverable damages in a wrongful-termination action, the Kentucky Supreme Court overruled Highlands Hosp. Corp. v. Castle, No. 2007-CA-002432-MR, 2010 WL 2787906 (Ky. App., Jul. 16, 2010).
McCann v. Sullivan University, No. 2014-CA-000392-ME, 2015 WL 832280 (Ky. App., Feb. 27, 2015). On February 27, 2015, the Kentucky Court of Appeals ruled that class actions for unpaid wages and overtime are not permitted in Kentucky. Mary McCann brought a putative class action against Sullivan University under the Fair Labor Standards Act (FLSA) and Kentucky's Wage and Hour Act, KRS Chapter 337, on behalf of all admissions officers. She alleged that the university misclassified the admissions officers and failed to pay them overtime. She voluntarily dismissed her FLSA claim and sought to certify a class under Kentucky law. The decision turns on the specific language in KRS 337.385(2), which provides that one or more employees may bring such actions "for and in behalf of himself, herself, or themselves." Kentucky's law is different from the FLSA, which specifically permits employees to bring collective actions. This case builds upon the holding in the unpublished case, Toyota Motor Manufacturing Kentucky, Inc. v. Kelley, No. 2012-CA-001508-ME, 2013 WL 6046079 (Ky. App. Nov. 15, 2013).
Gateway Area Development District, Inc. v. Cope, Nos. 2013-CA001855-MR, 2013-CA-001937-MR, 2015 WL 602726, ___ S.W.3d ___ (Ky. App. Feb. 13, 2015). The Gateway Area Development District, Inc. (GADD) is one of fifteen area development districts in Kentucky, created by statute,
that work with local governments on issues and projects. David Cope was an employee of GADD from 1989 to 1996, when GADD decided to contract out his services. Mr. Cope bid on the request for proposal and became an "independent contractor." In 2009, Mr. Cope sought a determination from the IRS regarding whether he was an independent contractor or actually an employee. As a result of the inquiry, GADD then reclassified the position from independent contractor to employee, but then moved Mr. Cope to part-time employment. Mr. Cope sued, alleging, inter alia, a violation of the Kentucky Whistleblower Act, KRS 61.101-103. The trial court took judicial notice that GADD was a state employer. The Court of Appeals reversed, holding that Mr. Cope had failed to establish that GADD was a political subdivision of the Commonwealth. Furthermore, the Court found that Mr. Cope did not make a good faith disclosure of unlawful conduct that was concealed or not publicly known. 8.
Moss v. Kentucky State University, No. 2013-CA-001431-MR, 2014 WL 6602516, ___ S.W.3d ___ (Ky. App. Nov. 21, 2014). Kentucky State University terminated Rosaland Moss from an accountant position for complaining that her task of reconciling the university's financial accounts was "impossible." She sued under the Kentucky Whistleblower Act, KRS 61.101-103. Franklin Circuit Court awarded summary judgment to KSU, and the appellate court affirmed. The Court of Appeals determined that Ms. Moss's complaints were nothing more than disagreements with her supervisor and were not actionable under the Whistleblower Act.
Pennyrile Allied Community Services, Inc. v. Rogers, 2013-SC000012-DG, 2015 WL 736827, ___ S.W.3d ___ (Ky. Feb. 19, 2015, modified Mar. 3, 2015). The Kentucky Supreme Court ruled for the first time that Kentucky's Whistleblower Act, KRS 61.101-103, does not require a public employee's report or disclosure to touch on a matter of public concern. The Court also decided – again, for the first time – that the language "reports, discloses, divulges, or otherwise brings the attention of…" under the act "describes behavior that brings to light facts not otherwise known to the recipient." Katricia Rogers was an at-will employee of Pennyrile Allied Community Services, Inc. (PACS), who traveled around to schools presenting educational programs. Her supervisor, Dennis Gibbs, routinely went to the homes of his subordinates to verify that they were actually working. One day, Mr. Gibbs went to Ms. Rogers's home and damaged her gravel driveway. Ms. Rogers went to the local sheriff's office, not to report the incident, but to learn whether anyone, including a supervisor, could legally come on private property uninvited. A deputy sheriff opined that such activity would constitute trespass. Two months later, Ms. Rogers confronted Mr. Gibbs at a staff meeting about his actions in checking on
employees. The next day, PAC fired Ms. Rogers, so she filed suit. The trial court dismissed the case, and the Court of Appeals reversed. The Supreme Court agreed with the appellate court's determination that the Whistleblower Act did not require employees to report, disclose, or divulge information that touches on a public concern. However, the Court determined that Ms. Rogers's actions were not protected by the Act. 10.
TECO Mechanical Contractor, Inc. v. Kentucky Labor Cabinet, No. 2013-CA-001601-MR, 2014 WL 5305464, ___ S.W.3d ___ (Ky. App. Oct. 17, 2014). This is the second round of appeals in this case. In the first, the trial and appellate courts determined that Kentucky's prevailing wage, KRS 337.505 et seq. did not violate due process. The case was remanded due to evidentiary issues. On the second appeal, the Court of Appeals determined that the Kentucky Labor Cabinet properly used the "work-incident-to-trade" method of computing employee pay rates on a prevailing wage project, which takes into account all the time a skilled worker spends actually performing his or her trade plus preparation and clean-up time. Furthermore, there was sufficient evidence that the defendant violated Kentucky's prevailing wage law by using a formula to split the workers' time arbitrarily between skilled and unskilled pay rates. Finally, the trial court properly awarded prejudgment interest, even though it failed to do so in the initial judgment entered in 2008.
Gray v. Kenton County, No. 2013-CA-000145-MR, 2014 WL 5304978, ___ S.W.3d ___ (Ky. App. Oct. 17, 2014). The chief deputy county clerk's conduct involving the plaintiffs was not severe and pervasive enough to create a hostile work environment. Furthermore, a transfer did not constitute tangible, adverse employment action. Finally, even if the plaintiffs' claims had established a prima facie case of quid pro quo sexual harassment, the county clerk was unaware of the conduct and could not be held vicariously liable. Therefore, the plaintiffs did not have a claim under title VII of the Kentucky Civil Rights Act.
Estill County Fiscal Court v. Commonwealth Secretary of Labor, No. 2013-CA-001501-MR, 2015 WL 832274, ___ S.W.3d ___ (Ky. App. Feb. 27, 2015). Employee-to-employer complaints are not protected activity under Kentucky's occupational safety and health whistleblower statute, KRS 338.121(3). Although the state statute is nearly identical to the federal, Kentucky does not have an administrative regulation similar to the federal, which clearly defines such activity as prohibited. Therefore, the Kentucky Occupational Safety and Health Review Commission impermissibly engaged in policymaking when it upheld the citation issued by the Kentucky
Occupational Safety and Health program (KOSH). In this case, Mary Smith, a part-time emergency dispatcher in Estill County, complained to the county judge executive about smoke, to which she was allergic. The county removed her from the work schedule, ostensibly to protect her health, and she filed a complaint with KOSH. At this writing, the Court of Appeals had denied a motion for rehearing and a motion for discretionary review had not yet been filed. II.
STATUTORY AND REGULATORY UPDATE A.
WIOA. President Obama signed the Workforce Innovation and Opportunity Act (WIOA) on May 21, 2014. According to the U.S. DOL, "WIOA is designed to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy." WIOA marks the first legislative reform in fifteen years of the public workforce development system. Generally, the law streamlines programs, reporting, and administration in the workforce development system. WOIA eliminates fifteen existing federal training programs, including Workforce Investment Act (WIA) incentive grants, WIA pilot and demonstration projects, and the Workforce Innovation Fund, (WIF). It creates common measures across core programs for both adults and youth, and mandates a single, unified plan for all core programs. WIOA retains the basic structure of WIA, i.e., occupational training, adult basic education; literacy and English language acquisition; and vocational rehabilitation. The act also reaffirms the Wagner-Peyser Act of 1933 (as amended by the WIA passed in 1998), which initially provided for a national employment system managed by the states. The majority of WIOA provisions will become effective on July 1, 2015, the first full program year after enactment. However, the Act includes several provisions that become effective on other dates. For example, the WIA state and local plans remain in effect for plan year 2015, which begins July 1, 2016. In addition, the WIA performance accountability provisions will take effect at the beginning of plan year 2016.
DOL change in definition of "spouse" for same-Sex spousal leave under FMLA. The DOL's final rule became effective on March 27, 2015. It changes the "place of residence" definition of spouse for purposes of FMLA same-sex spousal leave to "place of celebration." Under the new rule, if an employee who resides in Kentucky is married in New York, where same sex marriage is valid, the Kentucky
employer must provide spousal leave, provided the employee is otherwise qualified under FMLA. 3.
EEOC new proposed rule on workplace wellness. The EEOC released its proposed rule on workplace wellness programs on April 20, 2015. The new rule would apply to employers with fifteen or more employees that offer workplace wellness programs that include disability-related inquiries or medical examinations. Covered wellness programs must be voluntary and reasonably designed to promote health or prevent disease.
U.S. DOL proposed minimum wage regulations for federal contractors. On June 17, 2014, the U.S. DOL released its proposed regulations relating to Executive Order 13658, which established a minimum wage for federal contractors. The Notice of Proposed Rulemaking (NPRM) establishes procedures for implementing and enforcing the Executive Order and defines key terms. A "contract" or "contract-like instrument" is defined as an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. A "concessions contract" is a contract under which the federal government grants a right to use federal property, including land or facilities, for furnishing services. The proposed regulations use "worker" in a broad sense and establish standards for contractors who apply in determining whether their employees are covered by the EO. The regulations also contain recordkeeping requirements and directions for finding the required rate of pay for all workers, including tipped workers and workers with disabilities. DOL plans to adopt existing mechanisms used for enforcing prevailing wage laws to enforce the provisions of the EO. Under the proposal, any contractors that DOL determines has failed to pay the proper minimum wage will be notified and asked to remedy the violation. Additionally, the contracting agency may be directed to withhold payments under the contract. If a notice of violation is issued, the contractors may appeal to an administrative law judge.
U.S. DOL final rule on companionship exemption. The U.S. DOL's final rule, effective January 1, 2015, with a delayed enforcement date of July 1, 2015, changed the definition of "companionship services," thereby subjecting third-party providers to minimum wage and overtime requirements imposed by the FLSA. The U.S. District Court for the District of Columbia struck down the amendment in Home Care Association of America v. Weil, discussed above. Stay tuned.
Proposed FLSA exemption changes. According to Secretary of Labor, Tom Perez, proposed new definitions for the federal Fair Labor Standards Act's (FLSA) executive, administrative, professional, outside sales, and derivative exemptions have been submitted to the Office of Management and Budget (OMB), which must approve them before they are released to the public.
OSHA recordkeeping. In 2014, the U.S. Department of Labor amended the federal Occupational Safety and Health Administration's (OSHA's) reporting and recordkeeping regulations. The new rule revises the reporting requirements regarding severe injuries and updates the list of industries partially exempt from recordkeeping requirements established in 29 CFR 1904.4. The new requirements went into effect in federal jurisdictions on January 1, 2015. However, since Kentucky operates an approved state plan, the new reporting requirements do not apply to Kentucky employers, unless adopted by the Kentucky Occupational Safety and Health Standards Board, which meets in May 2015. In 2006, Kentucky completely revamped its reporting regulation, 803 KAR 2:180. The state requirements are similar, but not identical, to the ones in the new rule. Here is a reminder about what Kentucky employers must do to report fatalities and injuries:
Report the death of any employee or the hospitalization of three or more employees within eight hours.
Report an amputation or hospitalization of fewer than three employees within seventy-two hours of the incident. An amputation means an injury in which a portion of the body including bone tissue is removed.
Activity in 2015 session of Kentucky General Assembly. a.
Right to work.
Right to work.
Local Initiatives 1.
Minimum wage. In 2014, the Louisville Metro Council adopted a measure that would increase the minimum wage from $7.25 to $9.00 per hour by 2017. In March 2015, the Lexington-Fayette Urban County Council proposed to increase the minimum wage to $10.10 per hour over the next three years.
Right to work. Hardin County was the first Kentucky county to pass a local ordinance under the auspices of "Home Rule." Since then, eleven other localities have also proposed to follow suit.
Fairness. Ordinances are in effect or under consideration in: Louisville, Lexington, Covington, Frankfort, Vicco, Morehead, Danville, Owensboro, Bowling Green, Elizabethtown, Berea, and Midway.
EXECUTIVE ACTION A.
Equal Pay Executive Orders Affecting Federal Contractors On April 8, 2014, President Obama signed two Executive orders affecting federal government contractors. The signing was timed to coincide with National Equal Pay Day, the day that symbolizes how far into the next year women must work to earn what men earned the previous year. One Executive Order prohibits retaliation against employees who discuss pay with co-workers. The White House maintains that the order will encourage pay transparency and provide workers an additional mechanism for discovering violations of equal pay laws. The other, more controversial Executive Order directs the U.S. Department of Labor (DOL) to promulgate administrative regulations requiring federal contractors to provide compensation data based on sex and race. DOL will use the data to conduct more targeted enforcement against federal contractors with regard to compliance with equal pay laws.
Minimum Wage for Federal Contractors President Obama signed Executive Order 13658 on February 12, 2014, establishing a minimum wage for federal contractors. The EO raises the minimum wage on covered federal contracts from $7.25 to $10.10 per hour beginning January 1, 2015. Thereafter, the Secretary of Labor will be required to set the amount of increase to take effect on January 1 of each year, indexed to inflation. The EO applies to contracts for construction covered by the Davis-Bacon Act that exceed $2,000; contracts for services covered by the Services Contract Act that exceed $2,500; concessions contracts (for food, lodging, fuel, souvenirs, news-
paper stands, or recreational equipment on federal property); and contracts to provide services, such as child care or dry cleaning, in federal buildings. In procurement contracts where workers' wages are governed by the FLSA, the EO applies only to contracts that exceed $3,000. IV.
AGENCY ENFORCEMENT A.
US DOL Wage and Hour Division 1.
Employee misclassification. Several years ago, the U.S. DOL launched its "Misclassification Initiative." In 2011, former Secretary Solis signed a Memorandum of Understanding (MOU) with the IRS, so that the two agencies could share information and work together to reduce instances where workers are misclassified as independent contractors. DOL has also entered into agreements with several states to address employee misclassification. The agency's efforts in this area are continuing in 2015.
Unpaid interns. Since at least 2013, the U.S. DOL has devoted a lot of attention to employers who regularly use unpaid interns. According to "Fact sheet #71: Internship Programs under the Fair Labor Standards Act," the DOL applies six criteria to determine whether interns must be paid: (http://www.dol.gov/whd/regs/compliance whdfs71.pdf): a.
The internship, even though it includes actual operation of the employer's facilities, is similar to training that would be given in an education environment;
The internship experience is for the benefit of the intern;
The intern does not displace regular employees, but works under close supervision of existing staff;
The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
The intern is not necessarily entitled to a job at the conclusion of the internship; and
The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
"Micro-units." In Macy's Inc. v. Local 1445, 361 NLRB 4 (2014), United Food and Commercial Workers Union "micro-units" were expanded to the retail industry. The NLRB permitted the cosmetic and fragrance workers employed in a single Macy's department store in Massachusetts to organize. The Board rejected Macy's argument that allowing the UFCWU to organize cosmetic and fragrance workers in one store would "allow a proliferation of micro-units based solely on the products sold by employees [resulting in] chaos and disruption of business." This decision extended the principle enunciated in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011) that it was "appropriate" under Section 9 of the NLRA, 29 U.S.C. §159(b), to organize a small unit containing employees who have common interests. That case involved certified nursing assistants in an extended care facility. The Sixth Circuit upheld the Board's decision in the context of the healthcare industry in Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013).
Reciprocal enforcement. The NLRB entered into a reciprocal arrangement with the U.S. DOL to assist in enforcing FLSA and OSHA. The NLRB General Counsel advised regional directors that, when investigating unfair labor practices (ULP) charges, investigators should encourage each charging party to file a claim if the person "divulges facts that suggest that an employer may have committed a possible [occupational safety and health or wage and hour] violation." Before this action, the Board had already enlisted the assistance of DOL employees in investigating OSHA whistleblower complaints to encourage claimants to file ULP charges to take advantage of the NLRA's longer statute of limitations.
Work rules and social media policy. In Professional Electrical Contractors of Connecticut, No. 34-CA071532, 2012 WL 1357569, (NLRB 2012), NLRB Administrative Law Judge Raymond Green held that certain work rules and social media policies designed to protect customer privacy constituted unfair labor practices. The rules and policies at issue applied to employees who worked on customers' premises. The company was ordered to cease and desist from enforcing work rules or policies that: a.
Prohibit employees from disclosing the location and telephone number of employee customer assignments, as it could inhibit the ability of a labor union to meet and communicate with employees;
Prohibits employees from engaging in boisterous or disruptive activity in the workplace, based on prior Board decisions, because the rule is "sufficiently imprecise" and could encompass any disagreement or conflict among workers protected by Section 7 of the NLRA.
Prohibit employees from initiating or distributing chain letters, sending communications, posting information, or using personal computers in any manner that may adversely affect company business interests or reputation, because the rule overreached by including personal computers; and
Prohibiting employees from photographing, taping, or recording any person, document, conversation, communication, or activity that in any way involves the company, its associates, customers (except to the extent that the customer disallows photographing or filming on its premises), or other individual with whom the company intends to do business. The ALJ opined that, on balance, the employees' right generally outweighed the employer's well-intended interest in customer privacy.
The ALJ upheld the company's policy prohibiting employees from disclosing customer information to other customers, third parties, or members of the employee's family. He reasoned that such a rule would not unreasonably deter employees from talking to one another or the union about terms and conditions of employment. Some aspects of the ruling conflict with other ALJ decisions, adding to the confusion and which work rules or social media policies the NLRB would determine to be impermissible. As ALJ Green observed, "[A] legitimate conflict of principles . . . will require board and Appellate Court clarification." This is an example of the NLRB General Counsel's continued enforcement efforts to focus on work rules and policies that conceivably limit employee rights to discuss wages, as well as other terms and conditions of employment. 4.
Work email and union organizing. In December 2014, the NLRB held in Purple Communications, No. 21-CA-095151, 2015 WL 936235 (NLRB 2015), that employees have a right to use their work email for non-business purposes during non-working hours. Such use includes the use of email for union organizing purposes. The case overruled the 2007 decision in Register Guard, 2 which held that an employer can prohibit employees from using company email for non-business purposes.
The Guard Publishing Co. d/b/a The Register-Guard and Eugene Newspaper Guild, CWA Local 37194, 351 NLRB 70 (2007).
"Quickie election rule." The new rule significantly changes the election procedures regarding union representation. Now, there is a much shorter timeframe between filing a petition for representation and holding the election. Also, the rule requires employers to include voters' telephone numbers and email addresses in final voter lists, which must now be produced within two, rather than seven, days.
Organizing for college athletics. The full import of the decision allowing Northwestern University's football team to organize remains to be seen.
ACA whistleblower. Section 1558 of Title I of the Affordable Care Act (ACA) protects employees from retaliation for reporting violation of the various reforms found in the Act and for receiving a premium tax credit or cost sharing reduction for enrolling in a qualified health plan. Employees who believe that they have been subjected to such retaliation may file complaints with OSHA. If an investigation reveals a violation, OSHA can order reinstatement and payment of lost wages and benefits. Hearings are held before a Department of Labor (DOL) administrative law judge (ALJ).
OSHA recordkeeping and FMLA confidentiality. In Secretary of Labor v. United States Postal Service, 17 Fed.Appx. 505 (8th Cir. 2001), the Occupational Safety and Health Review Commission held that the FMLA's confidentiality provisions supersede OSHA's recordkeeping requirements. An employee in the USPS distribution center in Seattle, Washington, submitted an application for leave under FMLA after she learned she was allergic to the dust generated at the facility where she worked sorting mail. The postal service did not record the illness as work-related on its OSHA 300 log or 301 form pursuant to 29 C.F.R. Part 1904. The employee filed a complaint with OSHA, which, after an investigation, issued a citation. The USPS contested the citation, arguing that a FMLA regulation, 29 C.F.R., §825.500(g) required the information to remain confidential; that the knowledge of the employee's FMLA coordinator about the nature of the employee's illness could not be imputed to the USPA; and that the employee's supervisor had no independent knowledge of the illness. After a hearing, an Administrative Law Judge upheld the citation, including the $500 proposed penalty, and the USPS appealed. The Commission agreed with the employer on all points and reversed the decision.
OSHA initiatives. a.
OSHA plans to require all employers to implement injury and illness prevention programs.
OSHA will soon require all employers with 250 or more employees to submit their injury and illness records electronically.
OSHA intends to implement a whistleblower employee incentive reward program.
OSHA is expected to require that union representatives be allowed to accompany OSHA inspectors when OSHA visits nonunion work sites.
2012-2016 Strategic Enforcement Plan. a.
"Systemic" focus to strategic enforcement.
"Education and outreach" to prevent discrimination.
Improving service "through a skilled and diverse workforce and effective systems."
Performance and Accountability Report for Fiscal Year (FY) 2014. In February 2015, the EEOC released its enforcement and litigation statistics for fiscal year 2014. Some highlights are: a.
88,778 workplace discrimination charges were filed;
Retaliation charges were at an all-time high, comprising nearly 43 percent of all charges;
Thirty-five percent of charges alleged race discrimination;
Twenty-nine percent of charges alleged discrimination based on sex, including pregnancy and sexual harassment;
$22.5 billion in monetary relief was obtained through litigation and mediation;
A total of 133 lawsuits were filed; and
Total number of charges in Kentucky was 1,781.
Sexual orientation and transgender discrimination. Title VII does not expressly cover sexual orientation and transgender issues, but several states and localities do. Also, the EEOC has taken the position that sex discrimination can include discrimination against transgender employees. In April, the agency settled a gender-identity discrimination claim against an eye clinic that terminated an employee after she began to present as a woman and informed her employer that she was transgender.
GINA. In 2014, the EEOC settled its first systemic class action lawsuit against Founders Pavilion, Inc., a New York rehabilitation center and nursing home for alleged violations of the Genetic Information Nondiscrimination Act (GINA). The company required job applicants to take medical examinations, including filling out patient history forms including family medical history. The EEOC obtained injunctive relief and a $50,000 fine.
Wellness programs. In 2014, the EEOC sued three employers, Flambeau, Honeywell, and Orion, alleging that their company workplace wellness programs violated the Americans with Disabilities Act (ADA). The agency is proposing a new rule address specifically how Title I of the ADA applies to wellness programs consistent with the Health Insurance Portability and Accountability Act (HIPAA).
Severance agreements. The EEOC has taken an aggressive approach to challenging waivers in severance agreements, regardless of whether they contain the approved "carve-out" provision for EEOC claims. The agency has filed suit against employers, arguing that other provisions in the agreements discourage employees from exercising their rights under Title VII of the Civil Rights Act of 1064.
HOT BUTTON ISSUES A.
Applicant Screening Should employers use social media sites, such as Facebook, LinkedIn, Twitter, and Instagram; background checks, including credit and criminal history; and medical information to screen applicants? Employers may be held responsible for violating federal anti-discrimination and other laws if they misuse the information to take adverse action or dispose of such information improperly.
"Big Data Analytics" According to Wikipedia: "The term [big data] often refers simply to the use of predictive analytics or other certain advanced methods to extract value from data . . . . Accuracy in big data may lead to more confident decision making [that] can mean greater operational efficiency, cost reductions and reduced risk." Online retailers use big data to predict purchases based on previous behavior. In the employment context, some companies use data to evaluate job applicants and predict job performance. The Equal Employment Opportunity Commission and the Federal Trade Commission have warned that such activity could violate laws.
Pay Equity Research indicates that there is still a gender pay gap. Those fighting for pay equity support the Paycheck Fairness Act and the Fair Pay Act in order to build upon the Lilly Ledbetter Fair Pay Act, which President Obama signed into law.
LGBTQ Rights As of December 2014, thirty-five states and the District of Columbia have full marriage equality; eighteen states have state-wide bans on discrimination in employment on the basis of sexual orientation and gender identity; and three states prohibit discrimination on the basis of sexual orientation, but not gender identity. The Employment NonDiscrimination Act (ENDA) will not likely pass Congress anytime soon. However, courts have relied upon Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which held that Title VII protections include claims based on sex stereotyping, to prohibit discrimination against LGBTQ individuals. One such case is Smith v. City of Salem, 369 F.3d 912 (6th Cir. 2004).
"Ban the Box" There is a growing effort for states and localities to prohibit employers from asking applicants whether they have been arrested or convicted of a crime. The objection is that such information will have a disparate impact on certain classes of people. According to the National Employment Law Project (NELP), sixteen states and one hundred counties or municipalities have adopted "Ban the Box" laws.
"Worker Predictable Scheduling" There is a growing movement to insure that hourly and part-time employees have predictable schedules, in order to promote economic security and address challenges balancing work and family. Some sources report that the U.S. Department of Labor's (DOL) Wage and Hour Administrator is evaluating whether the Fair Labor Standards Act provides for such worker predictable scheduling.
Paid Sick Leave As Claire Zillman recently wrote in Fortune magazine: "There is no doubt about it, the paid sick leave movement is on a roll." State and local ballot initiatives on the subject – just like those proposing increases in the minimum wage – are winning. President Obama has proposed a federal law on the subject. Some states are passing laws prohibiting localities from adopting such policies on their own.
Workplace Violence/Bullying According to the Bureau of Labor Statistics, Census of Fatal Occupational Injuries (CFOI), 14,770 workplace homicides were reported between 1992 and 2012. Thousands of employees are treated each year for nonfatal workplace assaults. In 2015, ten states have introduced some version of an anti-bullying "Healthy Workplace Bill," that imposes liability on employers for enabling abusive work environments.
Minimum Wage Increases Twenty-nine states and the District of Columbia have minimum wages above the federal minimum wage of $7.25. There are a growing number of state, city, and local governments throughout the nation that are considering increases. Kentucky's state minimum wage is tied to the federal.