During the pandemic, many employers have permitted employees to work remotely/telework in an effort to slow the spread of COVID-19. As the incidence of the virus has subsided in certain geographic areas, employers have begun to reopen their worksites and have required employees to return to their physical place of work. In doing so, these employers have been met with requests from certain employees that they be permitted to continue working remotely, leading to the question of whether the employer is required to grant such a request. In Technical Assistance Questions and Answers issued on September 8, the U.S. Equal Employment Opportunity Commission (“EEOC”) answered the question with a qualified “NO.” Continue reading “EEOC Says Work-from-Home Not Guaranteed as Post-Pandemic Reasonable Accommodation”
Category: Employment policies and procedures
Deferral of Employee Social Security Taxes Not Even a Good Idea on Paper
In a Memorandum to the Secretary of the Treasury, President Trump directed that the Secretary use his authority to defer the withholding and payment of the employee’s share of certain Social Security taxes for the period September 1, 2020, through December 31, 2020, and that employers be permitted to pay the deferred taxes during the period beginning January 1, 2021, and ending April 30, 2021. On August 28, 2020, the Secretary followed the directive by issuing guidance in the form of IRS Notice 2020-65.
What the IRS Notice Says
According to the Notice, the taxes imposed by Section 3102(a) of the Internal Revenue Code on taxable wages paid (not earned) between September 1, 2020, and December 31, 2020, may be deferred. Importantly, though not explicitly stated, the Notice does not require an employer to defer the withholding and payment of the taxes. It simply extended the deadline for such withholding and payment. Continue reading “Deferral of Employee Social Security Taxes Not Even a Good Idea on Paper”
Philly’s Salary History Ban to Be Enforced Starting in September
Asima J. Ahmad
As outlined in a previous post, the Philadelphia Wage Equity Ordinance is back in play. And now that the litigation dust has settled, the city announced that the Philadelphia Commission on Human Relations (“PCHR”) will begin enforcing the ordinance on September 1, 2020.
As a reminder, the Ordinance prohibits all employers, employment agencies, or their agents from asking about a job applicant’s current or prior salary history during the application or hiring process if the position is located in Philadelphia. Shortly after the salary history ban was announced, the Chamber of Commerce for Greater Philadelphia sued to block it from going into effect on free speech grounds. The case proceeded to the Third Circuit, which ultimately held that the ordinance was constitutional in a unanimous decision issued this February.
The PCHR recently issued a set of FAQs which provide some useful information for employers, including whether the ordinance applies to internal candidates (no), whether an employer can rely on market data for salaries (yes), and whether an employer can ask a job applicant about their salary expectations (yes, but employers should not ask candidates if their salary “expectation” is tied to their current or prior salary history). The FAQs also outline suggested best practices for compliance, including:
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- Focusing questions on the applicant’s salary demands, experience, skills, and qualifications during the interview process;
- Establishing salary ranges or pay scales for open positions;
- Creating or modifying written policies to reflect compliance with the ordinance;
- Training interviewers, hiring staff, and other applicable staff regarding compliance;
- Refraining from seeking prior salary history from other sources, including a former employer or public records;
- Instructing background reporting agencies to exclude information found regarding an applicant’s salary history; and
- Developing protocols for discarding or isolating salary information that employers inadvertently receive but are prohibited from considering.
Job applicants who are asked about their salary history in violation of the ordinance can file a complaint with the PCHR and may be awarded compensatory damages, punitive damages, reasonable attorneys’ fees, costs, injunctive relief, or other relief. Employers are prohibited from retaliating against applicants who refuse to provide their salary history.
We recommend contacting a member of Blank Rome’s Labor & Employment team as soon as possible to ensure that your hiring process and practices follow the ordinance’s requirements, and that your staff understands the do’s and don’ts of the new law. We are happy to answer any questions about compliance or updating your policies and procedures, or to schedule a training.
Button Up Restrictive Covenants before Employees Start in New Positions
Kevin M. Passerini and Oliver R. Katz
Pennsylvania law has long required that a restrictive covenant agreement be signed prior to or at the start of employment for it to be enforceable. By extension, Pennsylvania law has also required consideration beyond continued employment—a promotion, bonuses or stock options, severance, or other meaningful consideration—to support a restrictive covenant agreement with an existing employee. Those requirements left a somewhat gray area where a newly hired employee (or an internal employee elevated to a new position) does not sign a restrictive covenant agreement until shortly after starting in the new role and does so without receiving any consideration distinct from the new employment position itself.
In its June 16, 2020 decision in Rullex Co., LLC v. Tel-Stream, Inc., 27 EAP 2019 (Pa. 2020), the Pennsylvania Supreme Court waded into that gray area to consider whether new or “fresh” consideration must be provided any time a restrictive covenant agreement is executed after an employee’s first day in a new role. The court rejected the exclusive use of a bright-line rule requiring execution at or prior to the commencement of employment. Instead, relying in part on a decision from 50 years ago, it left the door slightly open so that restrictive covenants signed after employment has already commenced may be enforced where there was a meeting of the minds on the substance of the restrictive covenants at or prior to the start of employment. As the court noted, the critical inquiry is whether the parties had agreed to the “essential provisions” when the relationship began, such that the restrictive covenant agreement was ancillary to the taking of employment, or whether there was no meeting of the minds such that the restrictive covenants were a “belated addition” to their relationship, requiring additional consideration. In applying its standard to the facts of the case, the court held that there was no meeting of the minds at the start of the relationship based on the delay of at least two months before the signing of the agreement and Rullex’s willingness to consider and accommodate revisions to the original draft.
With the clarity provided in Rullex, employers likely cannot rely on the mere circulation of a restrictive covenant agreement prior to the start of a new employment position to ensure its enforceability. And employers must also be wary of continued negotiations with prospective employees (or existing employees who are candidates for promotions) after having presented an agreement containing restrictive covenants.
Going forward, the most obvious (and best) way to avoid a dispute over whether the parties had a “meeting of the minds” is to have a restrictive covenant agreement signed before a new employee commences work in the new role and before an existing employee assumes a new role within the company. Another good option is for an employer to attach the restrictive covenant agreement to an offer letter that conditions employment (or any promotion or other new position) on the execution of the agreement and to require the individual to sign that offer letter in advance of starting in the new position with an acknowledgment that he or she has received and reviewed the agreement and accepted all of the terms of the offer. Anything less is likely to leave employers in the gray area, fighting it out in court or in arbitration.
No More Double the Trouble: DOL Relents on “Automatic” Liquidated Damages
After enduring a decade or so of the U.S. Department of Labor (“DOL”) “automatically” demanding double the amount of back pay in virtually every settlement of a wage and hour investigation under the Fair Labor Standards Act (“FLSA”), employers around the country can now breathe a heavy sigh of relief. In a Field Assistance Bulletin (“FAB”) dated June 24, 2020, the DOL said it “will no longer pursue pre-litigation liquidated damages as its default policy from employers in addition to any back wages found due in its administratively resolved investigations.”
First, it is somewhat amazing that the DOL admitted that liquidated damages was its “default policy.” While the FLSA clearly allows the recovery of liquidated damages in an amount equal to 100 percent of the back wages due, nowhere does the statute authorize the DOL to impose such damages in an investigation. Though arguably beyond the DOL’s authority in pre-litigation proceedings—that good old ultra vires concept—the lack of explicit statutory authority did not stop the agency from imposing liquidated damages in nearly every case without regard to whether any evidence of bad faith or willfulness existed. Not only did the DOL impose them as a penalty, but it also leveraged the threat of litigation to “persuade” employers to settle and accept the imposition of liquidated damages—remember, it almost never makes sense to fight the government in litigation, as it can outspend just about anyone, while doing so using “your” tax money.
Now, according to the FAB, effective July 1, 2020, the DOL will not assess these double damages if, for example, there is no evidence of bad faith or willfulness or the employer has no previous history of violations or the matter involves complex “white collar” exemption issues. Importantly, seeking pre-litigation damages will require approval from two top DOL officials: the Wage & Hour Division Administrator and the Solicitor of Labor. More hurdles for the DOL—a plus for employers doing their best to comply with a complex, nuanced, and at times tedious statute and regulations.
But, alas, this “practice” change may be short-lived if a new administration takes the White House in 2021. Stay tuned and enjoy it while it lasts!
“Supremes” Validate Title VII Protection for LGBTQ Workers
Yesterday, the United States Supreme Court issued a long-awaited, watershed decision confirming that Title VII of the Civil Rights Act of 1964 does protect against discrimination in employment based on gender identity and sexual orientation. It may be the most significant employment-related decision in more than 20 years. The decision addresses a connected trio of separate cases that were argued in the fall before the Court: Bostock v. Clayton County, Georgia (on appeal from the 11th Circuit), Altitude Express, Inc. v. Zarda (on appeal from the 2d Circuit), and R.G. & G.R. Harris Funeral Homes, Inc. v. EEOC (on appeal from the 6th Circuit). For a little background, see our prior blog here.
With a 6-3 majority, the four “liberal” justices joined with two “conservative” justices to reach this momentous decision—in fact, Justice Gorsuch penned the decision. Clearly finding that the word “sex” in Title VII encompasses employment actions based on gender identity or sexual orientation, Justice Gorsuch admitted that the original legislators who drafted Title VII “might not have anticipated their work would lead to this particular result.” The focus on interpreting the text of the law, which was often championed by the late Justice Antonin Scalia, carried the day—leading to “new” protections that will enhance the rights of the LGBTQ worker community throughout the country, especially in numerous states and locales that do not otherwise provide such protection. The decision also ensures that the “paradoxical legal landscape in which a person can be married [to a same sex partner] on Saturday and then fired on Monday for just that act” (raised in 2017, by a panel of the Seventh Circuit Court of Appeals in Hively v. Ivy Tech. Community College) has drifted off into the sunset.
Simply put, the Supreme Court said, “Because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violates Title VII.”
For employers across the country, the uniformity created by this decision will impact millions of workers in states where there was no similar protection for such discrimination—which is more than 50 percent of the states. There is much to consider. For example, if an employer employs 15 or more employees and does not have a policy prohibiting gender identity and sexual orientation discrimination, it is time for a handbook update…as the immediate first step, with a corresponding move to update and implement new workforce training. As important, employers should take this valuable opportunity to engage with all employees. Be mindful of, and creative in, bringing positive and productive communication and, where needed, change to the workplace—culture emanates from the top and cannot be overestimated as to its impact on the effectiveness and health of the workforce.
It is inevitable that there will be additional questions as this decision filters out into the workplace and the lower courts interpret it. Cases down the line will likely force the courts to address issues relating to the interplay of this decision with the exercise of religious freedom. Also, as the dissent from Justice Alito noted, the ruling could have unforeseen consequences, leaving courts to address its implications in athletics, bathroom and locker room access, university housing, and other contexts. Though undoubtedly putting to bed one of the most substantive issues in employment law in the 21st century so far, as with all significant decisions of the highest court, the ripple effects will engender further battles and be felt for decades to come.
Empire State Requires All Employers to Provide Sick Leave
Mara B. Levin, Anthony A. Mingione, and Jacob W.E. Kearney
Late last month, Governor Cuomo signed into law the State Budget (S7506B), which includes new paid and unpaid sick leave requirements for employers in New York State. The law requires that all employers provide workers with job-protected sick leave, with the amount of leave dependent upon the employer’s size, number of employees, and net income. The law goes into effect September 30, 2020, but employers can prohibit the use of sick leave accrued under the law until January 1, 2021.
The law requires:
- Employers with 100 or more employees must provide at least 56 hours of paid sick leave each calendar year;
- Employers with between five and 99 employees must provide at least 40 hours of paid sick leave each calendar year;
- Employers with fewer than five employees but having a net income greater than one million dollars in the previous tax year must provide at least 40 hours of paid sick leave each calendar year; and
- Employers with fewer than five employees but having a net income less than one million dollars in the previous tax year must provide at least 40 hours of unpaid sick leave each calendar year.
Employers can fulfill their obligations by either providing the sick leave in a lump sum at the beginning of the calendar year (i.e., frontloading it) or by allowing employees to accrue sick leave at a rate of not less than one hour for every 30 hours worked, beginning at the later of September 30, 2020, or the commencement of employment. While current employees will begin accruing sick leave in 2020, employers are not required to permit usage of that accrued time until January 2021. Employees must be allowed to carry unused sick leave over to the next calendar year, but employers can restrict the use of sick leave to the maximum hours guaranteed under the law (either 40 or 56). The carryover of hours is intended to allow employees to maintain continuity and a bank of sick leave, which avoids accruals starting from zero every year; and the cap is meant to keep the total usage in a given year from being problematic for employers. Employers are not, however, required by the law to pay an employee for unused sick leave upon the employee’s termination, resignation, retirement, or other separation from employment.
The law’s requirements act as a floor, and employers can provide employees with additional benefits and sick leave in excess of the law’s requirements. Significantly, the sick leave requirements in S7506B are not limited to the COVID-19 pandemic but rather are permanent.
Bereavement Leave and Employee Support Amid COVID-19
Emery Gullickson Richards
As employers seek to support employees losing loved ones to the coronavirus COVID-19, thoughtful consideration of workplace measures takes on critical significance. How employers support employees through the loss of a loved one has an indelible impact on the lives of employees, the work environment, and the organization’s integrity. Bereavement leave policies address the unprecedented circumstances created by the mounting, tragic toll of COVID-19, providing support to employees at the time when they need it most. Although bereavement leave policies are not legally required in most jurisdictions in the United States, most U.S. employers offer some amount of paid bereavement leave.[1]
Bereavement Leave Laws
Only a small number of jurisdictions have bereavement leave laws. For example, the Oregon Family Leave Act (“OFLA”) provides employees at certain employers[2] in the state with the right to take protected leave to make funeral arrangements, attend a funeral, or to grieve a family member who has passed away. This bereavement leave may last for a period of up to two weeks and must be completed within 60 days of the employee learning of the death of their loved one. Similarly, the Illinois Child Bereavement Leave Act provides employees[3] with bereavement leave rights in the event of the loss of a child, and an employee who loses more than one child within a year may take up to six weeks of bereavement leave. Other states, such as Massachusetts, have considered similar laws. Recently, a Massachusetts resident created an online petition urging legislators to take up the cause again amid the coronavirus pandemic, highlighting the increased focus on these policies today. Continue reading “Bereavement Leave and Employee Support Amid COVID-19”
Another Round for the Garden State! New Jersey Again Changes Leave and Disability Benefits for COVID-19 Impacted Employees
Thomas J. Szymanski
New Jersey Governor Phil Murphy recently signed S2374 into law, expanding the New Jersey Family Leave Act (“NJFLA”) and New Jersey Temporary Disability Benefits Law (“NJTDBL”) and providing additional employee protections during the coronavirus COVID-19 pandemic and future epidemics, including (1) the expansion of reasons for leave; (2) certification changes; (3) intermittent use of such leave; (4) changes related to highly compensated employees; and (5) the expansion of the scope of compensable leave under NJTDBL. These changes are effective immediately and apply retroactively to March 25, 2020.
NJFLA—Expanded Reasons for Leave
During a state of emergency declared by the Governor, or when indicated to be needed by the Commissioner of Health or other public health authority, due to “an epidemic of a communicable disease, a known or suspected exposure to the communicable disease, or efforts to prevent spread of a communicable disease,” an employee may use NJFLA leave for the following new reasons:
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- Childcare—to care for a child due to a school or daycare closure;
- Mandatory quarantine— to care for a family member subject to mandatory quarantine; and
- Voluntary self-quarantine—to care for a family member whose doctor recommends a voluntary self-quarantine.
NJ WARN Amended in Light of COVID-19 Pandemic
Asima J. Ahmad
On April 14, 2020, New Jersey Governor Phil Murphy signed Senate Bill 2353 into law, which excludes mass layoffs resulting from the coronavirus COVID-19 pandemic from the notice and severance pay requirements contained in the Millville Dallas Airmotive Plant Job Loss Notification Act (“NJ WARN”). Prior to this change, employers faced uncertainty on whether they would be obligated to provide notice and severance pay to each full-time employee that was terminated with less than the required 60-days’ notice due to the pandemic.
Specifically, SB 2353 revises the definition of “mass layoff” to mirror the exceptions that are already contained in NJ WARN’s definition of “termination of operations.” As a result, a mass layoff which would otherwise require notice shall not include one “made necessary because of a fire, flood, natural disaster, national emergency, act of war, civil disorder or industrial sabotage, decertification from participation in the Medicare and Medicaid programs as provided under Titles XVIII and XIX of the federal “Social Security Act,” Pub.L. 74-271 (42 U.S.C. s.1395 et seq.) or license revocation pursuant to P.L.1971, c.136 (C.26:2H-1 et al.).” These changes go into effect immediately and are retroactive to March 9, 2020, the date that Governor Murphy declared a COVID-19-based state of emergency and public health emergency in New Jersey via Executive Order 103. Continue reading “NJ WARN Amended in Light of COVID-19 Pandemic”