Fifth Circuit Grants Request to Delay Appeal on Federal Overtime Rule

The appeal regarding the validity of the federal overtime rule will not be fully briefed until May 1, 2017, according to an order issued by the Fifth Circuit on February 22, 2017, granting an unopposed request by the Department of Justice for an extension.

When the Department of Labor first appealed the nationwide injunction issued by a Texas district court blocking the federal overtime regulation, it requested the Fifth Circuit to expedite the appeal.  But that was before the election.  Since the election, the Department of Justice (representing the DOL) has requested just the opposite.  In January 2017, the DOJ asked for an additional 30 days, until March 2, 2017, to submit its final brief in support of the appeal.  And on February 17, 2017, the DOJ asked for an additional 60 days, until May 1, 2017, to submit its final brief.  In a short unopposed motion, the DOJ requested the additional time “to allow incoming leadership personnel adequate time to consider the issues.”

The request may have resulted from the withdrawal of Andrew Puzder from consideration as Secretary of Labor.  The additional time will presumably allow Alexander Acosta, the current nominee for Secretary of Labor, to assess the government’s position on the appeal, if confirmed.

Meanwhile, back at the district court, a motion by the Texas AFL-CIO to intervene in the action is still pending, as is the motion for summary judgment filed in the case brought by various business groups, which was fully briefed on November 21, 2016, and which the State Plaintiffs moved to join.  The district court subsequently denied a motion to stay proceedings pending the appeal on January 3, 2017.  It is possible, therefore, the district court could issue a ruling on the summary judgment before the appeal is decided.

Philadelphia Mayor Signs into Law Legislation to Ban Inquiries into Wage History – Update

On January 23, 2017, Philadelphia Mayor Kenney signed the Wage History Ordinance into law, making Philadelphia the first major U.S. city to make it illegal for employers to inquire about a potential employee’s salary history. Employers have 120 days to comply as the bill will be effective as of May 23, 2017. As discussed here, the Philadelphia City Council passed the bill in December 2016, however, the City’s Law Department has spent the interim period analyzing concerns about the applicability and effect of the bill raised by both Philadelphia businesses and the City’s chamber of commerce. Despite challenges from the business community about the legality of the bill and potential First Amendment violations, Mayor Kenney, upon signing, conveyed his confidence in the City’s ability to defeat any challenges to the law and noted that the Philadelphia City Council passed it by unanimous vote.

 

NYSDOL Adopts Regulations Implementing State Law Limiting Employer’s Right to Restrict Employee Discussion Regarding Wages

In October 2015, New York amended its equal pay law making it unlawful for an employer to prohibit employees from inquiring about, discussing, or disclosing their wages or the wages of other employees.  N.Y. Lab. Law § 194(4).  The law reflects the belief that if employees can openly discuss their wages (including knowledge regarding the wages of co-workers performing similar work), the equal pay law would be more fully implemented.  “Policies adopted by employers that discourage or prohibit employees from sharing information about their earnings can contribute to unjust wage disparities going undetected,” according to the memorandum submitted in support of the law.

But not every employee wants his or her wages discussed among co-workers.  The law recognizes this, and permits employers to establish a written policy to set “reasonable workplace and workday limitations on the time, place and manner for inquiries,” including limitations on the ability of an employee from discussing or disclosing the wages of other employees without their “prior permission.”  The law also contains an exception for those employees who, based on their job functions, have access to the wages of other employees (e.g., Human Resources professionals).

NYSDOL regulations effective February 1, 2017 (published in the NYS Register the same day as the effective date) implement these provisions.  While largely parroting the statute, the regulations do explain that the law applies to all employees and explain that while an employer is permitted to issue a written policy prohibiting employees from discussing the wages of other employees without their prior permission, that “permission” means an “express, advance, authorization given voluntarily by the employee,” which need not be in writing.  Thus, although an employer may implement a written policy prohibiting employees from disclosing or discussing the wages of other employees without their prior permission, a co-worker may verbally provide such permission.

Employers should consider all applicable laws before implementing any written policy limiting employee discussion of wages as employees covered by the National Labor Relations Act already have the right to discuss terms and conditions of employment including wages for mutual aid and protection.

Fifth Circuit Grants Government Request for Additional Time to State Position on Overtime Rule

Before the election the Department of Labor asked the Fifth Circuit Court of Appeals to expedite its appeal regarding the validity of the DOL’s Final Rule, which increased the salary level for the white collar exemptions.  Earlier this week, however, following the inauguration of President Trump, the Department of Labor made the opposite request, asking the Court to slow down the process.  The DOL asked the Court for additional time to submit its reply brief, currently due January 31, 2017, “to allow incoming leadership personnel adequate time to consider the issues.”  The Fifth Circuit Court of Appeals granted that request on January 26, 2017, extending the due date for the reply brief to March 2, 2017.

The confirmation hearing for President Trump’s nominee for Secretary of Labor, Andrew Puzder, is currently scheduled for February 7.  Puzder will likely be questioned at the hearing about his intentions regarding the overtime rule.  He has previously expressed his disapproval of the regulation.

The DOL’s position on the rule may affect a separate motion filed by the Texas AFL-CIO to intervene in the action, filed due to fears the DOL will not defend the rule, which is still pending before the district court.   Stay tuned…

DOL Requests Additional Time to “Consider Issues” Before Filing Reply In Support of Salary Basis Rule

Earlier today, the Department of Labor filed an unopposed motion to extend the deadline for its next submission in support of its appeal of the salary basis rule injunction.  The motion for extension requested until March 2, 2017 to submit the Department’s reply brief to the Fifth Circuit, and expressly stated that the extra time is “necessary to allow incoming leadership personnel adequate time to consider the issues.”  Stakeholders, including proposed intervenors AFL-CIO, have have expressed concern that President Trump’s nomination of Andrew Puzder for Labor Secretary reflects the administration’s clear intent to quash the salary basis initiative commenced in 2014 by President Obama.  The extension request came even as centrist republicans — including Health, Education, Labor and Pensions Committee member Susan Collins — fielded questions regarding Puzder’s nomination.  Watch this space for further coverage of the appeal handling, and the new administration’s other labor initiatives.

State Plaintiffs Urge Fifth Circuit to Affirm Nationwide Injunction Blocking DOL Overtime Rule

In the latest round in the litigation between 21 States, led by the State of Nevada, and the Department of Labor regarding the Final Rule, the State Plaintiffs filed their appeal brief today with the Fifth Circuit, urging the Court to affirm the district court’s order, which issued a nationwide injunction blocking the rule.  “As the District Court held, and the United States Supreme Court precedent confirms, the terms in Section 213(a)(1) are defined functionally and cannot be swept aside by a rule that imposes a cutoff based on salary alone,” the States argued.  The State Plaintiffs explained the salary level requirement has been controversial from the date the requirement was imposed (contrary to the DOL’s assertion), but that it was set so low that there was no incentive to challenge it.  The Final Rule, however, changes that, as it will result in millions of workers no longer being covered by the exemption, even though their duties would otherwise qualify for the exemption.    “[T]he DOL is openly transforming the salary threshold into a de facto minimum wage mechanism that deliberately excludes many bona fide EAP employees from an overtime exemption,” the State Plaintiffs said.  

The case should be full briefed by the end of the month and oral argument will likely be scheduled in February.  The State Plaintiffs have asked for additional time for oral argument (30 minutes each side) in light of the complexity and importance of the issue.  The oral argument before the district court lasted 3.5 hours.

 

United States Supreme Court Agrees to Review Class Action Waiver Cases

Earlier today, the United States Supreme Court granted certiorari in National Labor Relations Board v. Murphy Oil USA, Case No. 16-307, Epic Systems Corp. v. Lewis, Case No. 16-285 and Ernst & Young LLP v. Morris, Case No. 16-300, consolidating them for argument. The three cases present the question whether class action waivers in employment arbitration agreements violate the National Labor Relations Act (“NLRA”).  The Supreme Court’s action promises the much-anticipated resolution of the circuit split on the issue.

Background

Arbitration agreements that require employees to pursue claims in arbitration rather than in court have long been enforced pursuant to the Federal Arbitration Act (“FAA”). Due to a series of Supreme Court decisions, employers increasingly have included class and collective action waivers in such agreements. However, the National Labor Relations Board (“NLRB”) has taken the position that employers violate the NLRA when they make such waivers in arbitration agreements a condition of employment.

Disagreeing with the NLRB, in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013) and Murphy Oil USA, Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015), the United States Court of Appeals for the Fifth Circuit generally held that class and collective action waivers do not violate the NLRA.  Since then, the Second and Eighth Circuits followed the Fifth Circuit and enforced arbitration agreements requiring employees to submit their employment claims to individual arbitration. (Click for more information on the D.R. Horton case.)

Last May, the Seventh Circuit created a circuit split in Lewis v. Epic Systems Corp., 823 F.3d 1147 (7th Cir. 2016), holding that arbitration agreements that prohibit employees from bringing or participating in class or collective actions violate the NLRA.  Most recently, in Morris v. Ernst & Young, No. 13-16599, 2016 U.S. App. LEXIS 15638 (9th Cir. Aug. 22, 2016), the Ninth Circuit agreed with the Seventh Circuit and the NLRB. (Click for more information on the Epic Systems Corp. case and the Ernst & Young case.)

In September 2016, the employers in Epic Systems Corp. and Ernst & Young and the NLRB in Murphy Oil each petitioned the Supreme Court to decide the issue once and for all. Reflecting the state of uncertainty on the issue, cases presenting this same question are currently before several other Courts of Appeals.

Executive Order Issued by Governor Cuomo Prohibits State Agencies From Asking Applicants About Prior Salary History to Help Ensure Pay Equity

On January 9, 2017, New York State Governor Andrew Cuomo issued an executive order aimed at ensuring pay equity. The executive order prohibits the State from asking job applicants about their current or previous compensation history until a conditional offer of employment with compensation has been extended.

Such measures have become increasingly popular in employee-friendly states and localities. Effective January 1, 2017, California employers are prohibited from relying on an employee’s prior salary to justify a disparity between the salaries of similarly situated employees. And beginning July 1, 2018, Massachusetts employers will be prohibited from screening job applicants based on their salary histories, requiring applicants to provide their salary history before receiving a formal job offer, and seeking the salary history of prospective employees from current or former employers prior to extending an offer of employment. Other jurisdictions, including Philadelphia, New York City, and New Jersey, are considering barring similar pre-hire inquiries of salary history.

New York employers should expect these types of measures to soon affect the private sector, too. Employers generally should anticipate similar legislation to spread to other employee-friendly jurisdictions.

Ohio Means Business: New Law Prohibits Cities and Counties From Enacting Paid Sick Leave, Predictive Scheduling, and Minimum Wage Laws

Imagine you operate multiple business locations in Columbus, Ohio where 3 counties comprise the city proper and as many as 11 counties comprise the larger Columbus Metropolitan Area. Now imagine that each of those counties adopts their own local ordinance requiring paid sick leave as well as advance notice (and extra pay) to employees before you can change their work schedule. Perhaps a few of the counties also enact an increased minimum wage of $15 an hour –much like the proposal to increase the minimum wage that was supposed to be voted upon in Cleveland in May of 2017. Would you want to continue to do business in Columbus or would you curtail your growth in that city and look for a more employer friendly home for your future business locations?

Many employers across the country continue to struggle with the spread of local paid sick leave, predictive scheduling, and minimum wage ordinances. In fact, Fox News ran a story last week about the challenges employers in the Village of Barrington, Illinois face by virtue of the fact that the Cook County line splits the business community in half making employers on one side of the street subject to one set of local ordinances, while businesses on the other side of the same street are subject to a different set of laws.

Fortunately for Ohio employers, Governor Kasich has recognized that this kind of patchwork of local laws is bad for business. Ohio Senate Bill 331 goes into effect on March 20, 2017. It prohibits political subdivisions of the state of Ohio from legislating or regulating the following areas of employment for private employers:

  • requiring fringe benefits for employees, defined to include leaves of absences, vacation, and separation, sick and holiday pay, as well as health, welfare, and retirement benefits;
  • whether an employer will provide advance notice of initial, new, or changes to an employee’s work schedule, including whether an employer will provide predictive schedules;
  • the amount of notice an employee receives of work schedule assignments or changes to work schedule assignments, including any addition or reduction of hours, cancellation of a shift or changes in the day or time of a shift;
  • minimization in the fluctuation of the number of hours an employee is scheduled to work daily, weekly and monthly;
  • providing additional hours to current employees before employing additional workers;
  • the number of hours an employee is required to work or be on call;
  • the time an employee is required to work or be on call;
  • the location where an employee is required to work; and
  • additional pay for reporting time when work is no longer available, being on call, or working a split shift.

The new law also prohibits cities and counties from adopting a minimum wage that exceeds that of Ohio and/ or the federal government.

Ohio definitely means business when it comes to putting a kibosh on local PSL, predictive scheduling, minimum wage, and other similar local employment laws.

Sen. Sanders, Other Members of Congress, File Amicus Brief in Support of DOL Salary Basis Regulation

Sen. Bernie Sanders, along with twenty-five other members of Congress, have filed an amicus brief in the Fifth Circuit Court of Appeals urging the Court to reverse the injunction issued by a Texas federal judge enjoining enforcement of the Department of Labor’s recent increase to the salary basis threshold for the white collar exemptions under the Fair Labor Standards Act (“FLSA”).  The amici stated that they “are committed to the right of American workers to receive fair pay for their work,” are “[w]orking to ensure that workers are provided fair wages,” and “have a strong interest in the proper interpretation and strong enforcement of the [FLSA].”  According to the amici, the “Department of Labor took a needed step toward ensuring that workers receive fair pay” and “strengthened overtime protections for millions of Americans by” increasing the salary basis threshold for the white collar exemptions.

In support of their position that the DOL did not exceed its authority by more than doubling the salary basis test, the amici argue that the concept of a salary level test as part of the white collar exemptions “is supported by the history and purpose of the FLSA and the bona fide [executive, administrative, and professional] exemption.”  The amici argue that “every iteration” of the DOL’s regulations defining the exemptions has included a salary level as a component of the exemption and that Congressional inaction since the salary level was imposed reflects agreement with a salary level test, particularly since Congress has amended the FLSA multiple times without removing the salary level test. The State Plaintiffs have explained, however, that inaction does not signal an agreement with the salary level requirement.  Rather, the salary level was never before set so high, so it did not previously exclude employees from coverage under the exemption even though their duties would qualify them for it, and there was no need for Congressional action.  The filing of the amicus brief by democratic members of Congress, coming after the announcement that President-elect Trump has named Pudzer as his nominee for Secretary of Labor, an outspoken critic of the overtime rule, injects further political theater regarding the appeal, which will be fully briefed by the end of January.

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