July Updates






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This HR Alert addresses the following topics:
  1. UPDATE: “Persuader Rule” Blocked by Texas Court
  2. EEOC Issues Sample Notice for Employers Offering Wellness Programs
  3. HIPAA Audits Coming Soon
  4. FLSA Overtime Classification of Auto Dealer Service Advisors in Question
  5. California Supreme Court Puts Federal Bonus Overtime in Doubt
  6. Connecticut Bans the Box
  7. Connecticut Allows Use of Payroll Cards
  8. Massachusetts Allows Self-Help Discovery
  9. New Jersey Employers Prohibited from Shortening Time Limit on Lawsuits/Claims
  10. District of Columbia Extension of Raised Minimum Wage
  11. Tennessee Expands Scope of Garnishments

UPDATE: “Persuader Rule” Blocked by Texas Court

Last week, we reported on the “Persuader Rule” affecting public disclosure of labor relations advisors.  On Tuesday, June 27, the Northern District of Texas heard the second of three lawsuits filed in an attempt to block the Rule.  The Texas Court decided to block the rule in its entirety, releasing a nationwide injunction.  While the injunction is in place, employers can continue seeking advice from attorneys and other consultants without making disclosures under the broadened scope of the Rule.

However, it is likely the U.S. Department of Labor will appeal this decision.  Thus, though the July 1, 2016 deadline is technically no longer in effect, it would be wise for employers to still secure a long-term agreement with their labor relations advisors in the event the Rule is later validated by higher courts.

Interested employers should look for more news from ManagEase as this area continues to develop.

EEOC Issues Sample Notice for Employers Offering Wellness Programs

We recently reported on the EEOC’s Final Rules regulating the Americans with Disability Act (“ADA”) and Genetic Information Nondiscrimination Act (“GINA”) as they apply to workplace wellness programs.  One of the new requirements is for employers to provide their workers with a notice describing what medical information will be collected as part of the program, with whom it will be shared, how it will be used and how it will be kept confidential.  The EEOC has provided a sample notice on their website.

HIPAA Audits Coming Soon

The enforcing agencies for the Health Insurance Portability and Accountability Act (“HIPAA”) have begun phase 2 of their audit program.   The Office for Civil Rights (“OCR”) will review policies and procedures implemented by covered entities and business associates to meet the Privacy, Security and Breach Notification Rules’ compliance requirements.

How do you know if you will be audited?  All covered entities/business associates are eligible.  Covered organizations will receive an e-mail from the OCR requesting contact information.  Upon receipt, the OCR will provide a pre-audit questionnaire to gather information about potential auditees to create a subject pool.  The OCR will then select and notify auditees from the pool via e-mail.  Failure to return the questionnaire does not exempt an organization from selection.

Covered entities/business associates should be sure to check their e-mail inboxes and spam folders for communications from the OCR.

FLSA Overtime Classification of Auto Dealer Service Advisors in Question

In Encino Motorcars, LLC v. Navarro et al., a group of service advisors working for an auto dealership filed suit against the company, Encino, alleging failure to pay overtime.  Encino asserted that the service advisors were ineligible for overtime due to a long-standing rule that auto dealership service advisors were exempt from Fair Labor Standards Act (“FLSA”) overtime regulations.  The district court granted a motion to dismiss, but the Ninth Circuit reversed, deferring to the U.S. Department of Labor (“DOL”) interpretation of the FLSA.

However, the history of the DOL’s interpretation on this particular exemption proved problematic. In 2008, the longstanding interpretation of auto dealership service advisors as an exempt position was to be codified in a rule proposed by the DOL.  However, the DOL issued a final rule in 2011 that eliminated the exemption without providing a clear explanation of why the exemption was being abandoned.

Due to these conflicting rules, the U.S. Supreme Court reversed the Ninth Circuit’s deference, stating that the DOL failed to demonstrate awareness in its changing position and a good reason for its new policy (here, the elimination of the service advisor exemption).  The Court thus remanded the case to the Ninth Circuit to “determine the meaning of the statute in the first instance.”  Employers who operate auto dealerships should look for more news on the Ninth Circuit’s decision to determine the future of the service advisor exemption.

California Supreme Court Puts Federal Bonus Overtime Formula in Doubt

In January 22, 2016, the California Court of Appeals stated in Alvarado v. Dart Container Corp. of California that an employer could use the federal formula for calculating overtime on a flat sum bonus, even though California state law provides otherwise.  On May 11, 2016, the California Supreme Court granted review in the case, and Alvarado is no longer citable as precedent.  The final decision from the California Supreme Court is still pending.

Connecticut Bans the Box

Effective January 1, 2017, Connecticut’s new “ban the box” law goes into effect for all employers with one or more employee in Connecticut.  Employers will be prohibited from attempting to obtain information about criminal charges and past arrests/convictions on initial employment applications.  Unlike other, similar ban the box legislation, Connecticut’s version does not require employers to wait until a certain point in the hiring process to make criminal history inquiries – employers can make such inquiries as long as they are not present on the initial employment application.

There are two specific exceptions to the prohibition on criminal history inquiries: (1) where the employer is required by federal or state law to seek criminal history information for the specific position, and (2) where the position requires a security, fidelity, or equivalent bond.  If one of these exceptions apply, the employer must include certain notices along with the criminal history inquiry.

Employers should review their employment applications and job advertisements for compliance with the law.

Connecticut Allows Use of Payroll Cards

Effective October 1, 2016, Connecticut employers can use a “payroll card,” defined as “a stored value card or other device used by an employee to access wages from a payroll card account that is redeemable at the employee’s election at multiple unaffiliated merchants or service providers, bank branches or automated teller machines.”  If used, employers must ensure that any associated processing fees from using the card is paid by the employer, not the employee.  Additional regulations for card use apply; see the full text of the act here.

Before using payroll cards for distribution of compensation, employers must (1) provide a written notice to employees containing  specific information about terms and conditions of use, and (2) the employee must provide voluntary written authorization to receive compensation by payroll card.

Lastly, an employee currently paid by payroll card has the right to change the method of wage payment to direct deposit or negotiable check.  Employers who receive notice of the desire to change method of payment must do so within 14 days of receiving notice.

Massachusetts Allows Self-Help Discovery

The Massachusetts Supreme Court has stated that an individual’s search for confidential documents as part of proving a discrimination claim may constitute protected activity.  This arose from the case Verdrager v. Mintz Levin Cohn Ferris Glovsky & Popeo PC, et al.  The plaintiff alleged that she was retaliated against, in the form of poor performance reviews and assignments, after reporting sexual harassment from a superior.  She filed a gender discrimination complaint, which she claimed led to a demotion in February.  The plaintiff searched through the firm’s files and located and sent documents and communications to her personal e-mail and attorney, at which point the firm terminated her employment.  She then filed a lawsuit.

The trial court granted summary judgment for the firm, but the Massachusetts Supreme Court reversed the decision, stating that the plaintiff presented evidence that both her demotion and ultimate termination were the result of unlawful discrimination and retaliation.  The Court found that an employee who obtains and shares with counsel confidential business information that bolsters a discrimination claim may be protected from discipline.  The Court relied on a previous case, Quinlan v. Curtiss-Wright Corp., which established a seven-step test to determine when an employee can engage in such “self-help discovery” of documents.

Employers should review their security controls, confidentiality agreements, and employee access to sensitive information.  If employees do access confidential information in relation to a discrimination claim, employers must be cautious when proceeding with disciplinary action to avoid unlawful retaliation.

New Jersey Employers Prohibited from Shortening Time Limit on Lawsuits/Claims

The New Jersey Supreme Court in Rodriguez v. Raymours Furniture Co. Inc. stated that employers cannot shorten the time limit for employees to bring forth a lawsuit or file a claim under the New Jersey Law Against Discrimination (“NJLAD”).

There, an employee signed an employment application that stated in large, conspicuous text that the signee must file any lawsuit or claim related to the employer within six months of the date of the employment action that was the subject of the lawsuit/claim, and that “[the signee would] waive any statute of limitations to the contrary.”

The Supreme Court stated that the reduced time frame could interfere with the ability of the Division of Civil Rights to effectively investigate claims.

Employers who make use of applications or agreements that limit the time frame for an employee to file a NJLAD lawsuit/claim should immediately review their materials.

District of Columbia Extension of Raised Minimum Wage

On June 7, 2016, the District of Columbia Council voted to raise D.C.’s minimum wage for tipped and non-tipped employees.  The Fair Shot Minimum Wage Amendment Act of 2016 will increase D.C.’s minimum wage from the current $10.50 per hour to $15 per hour by 2020, with additional regulations for the hospitality industry.  After reaching $15 in 2020, the wage rate will be automatically adjusted based upon the Consumer Price Index.  The Ordinance has not yet been signed; however, Major Muriel Bowser has pledged her support and is expected to sign the bill.  D.C. employers should review their current labor arrangements and budget to prepare for the expected increase.

Tennessee Expands Scope of Garnishments

Effective September 1, 2016, garnishment regulations will be expanded.  Currently, garnishments can be placed upon an employee’s salaries, wages, or other compensation paid by the employer/garnishee.  The amendment expands the scope of garnishments to cover “earnings” due from an employer/garnishee.  Therefore, compensation owed to independent contractors—not just traditional employees—may be subject to deductions for garnishments.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2016 ManagEase, Incorporated.

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