Labor & Employment Insights

On July 15, 2015 the U.S. Department of Labor (DOL) issued an Administrator Interpretation aimed at eradicating what the DOL perceives as widespread improper misclassification of “employees” as “independent contractors” in violation of the Fair Labor Standards Act (FLSA). According to the DOL, misclassifying workers as independent contractors results in workers being deprived of important protections such as minimum wage, overtime compensation, unemployment insurance and workers compensation benefits available to employees. The DOL also pointed to the loss in payroll tax revenues to the government and the intentional misclassification by some employers to cut costs and avoid compliance with labor laws. Citing the “economic realities test” used by the courts to determine whether a worker is an employee or independent contractor under the FLSA, the DOL declared that “in view of the expansive definition of ‘employ’ under the Act, most workers are employers under the FLSA.”

The DOL’s expansive interpretation “employ” under the FLSA: The FLSA simply defines “employ” as “to suffer or permit to work.” Historically, the multi-factored “economic realities test” has been applied to determine whether an employer “suffers or permits” an individual to work within the meaning of the FLSA. The economic realities test considers whether:

• the work being performed is an integral part of the company’s business

In its recent landmark ruling in State v. Saavedra, the New Jersey Supreme Court ruled that a former school board employee who was pursing discrimination and retaliation claims against the school could be criminally prosecuted for removing confidential school documents she claimed would aid her in pursuing those legal claims. This decision was somewhat of a surprise in light of the court’s 2010 ruling in Quinlan v. Curtiss-Wright Corp., that an employee’s theft and use of confidential personnel documents to assist her discrimination lawsuit against her employer was protected activity under the New Jersey Law Against Discrimination (LAD).

The upshot if these two rulings is that while an employee who steals corporate documents may not necessarily be fired for doing so, they might be subject to criminal prosecution under certain circumstances.

The Facts: Ivonne Saavedra was a clerk for the North Bergen Board of Education (the Board) who filed suit against the Board alleging discrimination and retaliation claims in violation the LAD and the Conscientious Employee Protection Act (CEPA). During discovery, Saavedra produced over 350 documents, including original and copies of confidential documents in violation of Board policies. Many of the documents contained sensitive educational and medical information about students, information that the Board was prohibited from disclosing to third parties by federal and state law. The Board notified the Hudson County prosecutor who in turn secured an indictment against Saavedra for official misconduct and theft. Saavedra efforts to dismiss the indictment were unsuccessful at the trial and appellate level, and the Supreme Court affirmed.

A recent decision from the Fourth Circuit Court of Appeals (a federal court with jurisdiction over MD, NC, SC and VA) is a stark reminder to employers of the consequences of failing to appropriately respond to any and all claims of unlawful workplace harassment no, matter what the source. In Pryor v. United Air Lines, Inc. (United), the Fourth Circuit vacated summary judgment entered for United by the court below, noting that the company’s response to an anonymous violent and racially-charged note left for an employee was inadequate to shield the it from liability for creating a racially hostile work environment.

The Facts: In January 2011 July Renee Pryor, an African-American flight attendant for United Airlines, Inc. at is Dulles Airport facility, found an anonymous note in her company mailbox located in a secure mailroom restricted to United employees. The note contained numerous racial slurs and claimed to be a hunting license permitting the holder to “hunt & kill N****** . . . day or night, with or without dogs.” The note also contained an image of a lynching along with the words “this is for you.” Prior was frightened by the note an immediately shoed it to her supervisor, who told her he was “sorry” but there was not much United could to because there were no security cameras in the mailroom. The supervisor then gave Pryor an incident report to fill and told her that the report, along with the racist note, would be provided to security and the base manager. Unfortunately, the supervisor did not comply with United’s Harassment & Discrimination Policy that instructed supervisors to immediately report all complaints to the Employee Service Center (ESC) who would conduct an investigation into the claims.

Thereafter, United Management engaged in a series of missteps, including the following:

For nearly 30 years the National Labor Relations Board (“NLRB” or “Board”) has reasoned that two businesses can only be deemed “joint employers” – and thus jointly responsible for purposes of collective bargaining and unfair labor practices – upon a showing that the companies exercised actual, direct and substantial control over the terms and conditions of employment of the employees in the other entity. Factors such as the right to hire, terminate, discipline, supervise and direct employees were relevant to the level of control assessment, and theoretical, limited or routine control over workplace activities of the other was generally deemed insufficient.

In a decision that may have sweeping implications for companies that subcontract work through staffing agencies or other third party vendors, the NLRB has announced a new standard that will result in many more companies being deemed “joint employers” of their third-party contractors. The Board’s expanded joint employer standard will also have implications for franchisor/franchisee, parent/subsidiary and other corporate relationships.

The New “Direct or Indirect” Control Standard: In a significant departure from established precedent, a 3-2 majority in Browning-Ferris dramatically lowered the standard for establishing a “joint employer” relationship. At issue in the case was whether Browning Ferris Industries was a joint employer with Leadpoint, a staffing services company, in a union representation election among Leadpoint workers who staffed conveyor belts in Browning-Ferris’ plant. The union already represented Browning-Ferris’ employees at the plant.

Employers: Prepare to Reclassify Employees

Ranks of OT-eligible employees will swell by an estimated 5 million, under proposed DOL rules

The U.S. Department of Labor’s (DOL’s) long-awaited proposals overhauling the “white collar exemptions (which include the executive, administrative and learned professional exemptions) to the overtime requirements of the Fair Labor Standard Act (FLSA) have finally arrived.

By: Kathleen Connelly, Esq.

Last December Attorney General Eric Holder issued a memorandum directing the Department of Justice to consider prosecuting claims on behalf of individuals who believe they have been discriminated against based on their gender identity or transgender status.  While such claims were previously not recognized under Title VII of the Civil Rights Act, the Attorney General’s memorandum observed that “the text of Title VII, the relevant Supreme Court case law interpreting the statute, and the developing jurisprudence in this area” support the DOL’s new interpretation that Title VII’s prohibition of “sex” discrimination encompasses gender identity and transgender bias.

This action is consistent with other federal efforts to expand lesbian, gay, bi-sexual and transgender rights.  Last August the Office of Federal Contract Compliance Programs issued clarifying that Title VII’s prohibition of “sex” discrimination prohibits LGBT discrimination in all federal government contracts.   This action was on the heels of President Obama’s issuance of , amending to expressly include gender identity as a protected class requiring affirmative action and non-discrimination in government contracts.   Likewise, in its 2012 holding in , the Equal Employment Opportunity Commission ruled that Title VII’s protections extended to an employee claiming discrimination on the basis of her gender identity and transgender status. On the Congressional front, lawmakers have introduced the Employment Nondiscrimination Act which would specifically prohibit employment discrimination on the basis of LGBT status, although those efforts have been stalled.