The Sixth Circuit yesterday outlined narrow circumstances under which an employer can show good faith reliance on a Department of Labor opinion letter in setting wage-hour policy. In Perry v. Randstad General Partner, No. 16-1010 (6th Cir. Nov. 20, 2017), the Court held the employer did not establish a good faith reliance defense despite undisputed evidence that the employer relied on a 2005 DOL opinion letter in determining that its employees met the administrative exemption of the FLSA. The opinion serves as a note of caution to employers relying on DOL opinion letters for wage-hour policies.
On Monday this week, Arizona Governor Doug Ducey signed Executive Order 2017-07 to provide “second chance opportunities” for the 1.5 million Arizonans with criminal records. The Order prohibits state agencies from initially questioning job applicants about their criminal records. Arizona cities Phoenix, Tempe, and Tucson already have similar laws for city job applications.
Importantly, Ducey’s Order still allows state agencies to check the applicant’s criminal record—just after the applicant has received an initial interview—and the Order does not apply to private Arizona employers. Ducey affirmed that he doesn’t “set policy for private employers.” Instead, he stated, “We’re trying to lead the way in terms of examples from state government.”
Arizona joins 29 other states that have prohibited questions about criminal records in initial state employment applications. Ten states, including California, have imposed the same limitation on private employers.
The “ban the box” movement continues to spread. Employers should check local laws before creating application forms or interview questions that call for the applicant’s criminal history.
On October 3, 2017, California Governor Jerry Brown signed into law Senate Bill 306, dramatically limiting an employer’s right to defend itself against allegations that it retaliated against an employee for making wage claims. In short, the law makes it far easier for employees and the California Labor Commissioner to obtain injunctive relief in retaliation cases, potentially requiring employers to reinstate discharged employees before an employer can fully defend itself against the allegations. The law takes effect January 1, 2018.
The law allows the Labor Commissioner or an employee to obtain injunctive relief against an employer based on a mere showing that “reasonable cause exists to believe a violation has occurred.” That’s a far lower burden of proof than a court’s typical standard for injunctive relief, which requires a showing that (1) the employee will suffer irreparable harm, (2) the employee will likely succeed on the merits, and (3) the employee’s interests outweigh the employer’s. The law also requires a court considering a request for an injunction to evaluate “the chilling effect on other employees.”
Other features of the new law that restrict employers’ rights include:
- Authorizing the Labor Commissioner to seek injunctive relief before concluding its own investigation;
- Permitting the Labor Commissioner to initiate investigations on its own, “without a complaint,” if the suspected retaliation occurred during the adjudication of a wage claim or a field inspection, or in instances of immigration-related threats;
- Allowing the Labor Commissioner to issue its own citations ordering reinstatement or back pay, without going to court;
- Placing a heavy burden on the employer to challenge Labor Commissioner citations, including requiring the employer to post a bond equal to the total amount of back pay allegedly owed.
Key Takeaways: The new law increases the need for California employers to make careful, well-reasoned, and thoroughly-documented disciplinary and discharge decisions. Notably, when employees make wage claims, they often also simultaneously engage in protected concerted activity under Section 7 of the NLRA. Given the potential overlap between the Labor Commissioner’s jurisdiction and the NLRB’s jurisdiction, employers facing legal action under the new law should consider whether an NLRA preemption defense applies.
On September 28, 2017, the Supreme Court agreed to review whether service advisors at auto dealerships qualify as exempt from overtime under the Fair Labor Standards Act, in Encino Motorcars, LLC v. Navarro. The employer’s petition asks the Court to overturn the Ninth Circuit’s decision that the employees who advise customers about repair work could continue their wage-hour lawsuit against a California Mercedes Benz dealership. A Supreme Court decision could have wide-ranging impact on how lower courts interpret exemptions under the FLSA. (We’ve previously written about misclassification issues here.)
The Court also agreed to rehear the issue of whether requiring non-union employees in the public sector to pay fees to unions violates their First Amendment rights, in Janus v. AFSCME, Council 31. The petitioners seek to overturn the Court’s 1997 decision in Abood v. Detroit Board of Education, which affirmed that unions can require fees from non-members to cover costs of collective bargaining, contract administration, and grievance handling. The Court reheard the issue in March 2016 shortly after Justice Scalia’s death, but the case ended in a 4-4 tie. Newly-appointed Justice Gorsuch is expected to provide the clinch vote to ban to fees.
In related news, the Court will hear oral argument on Monday, October 2, 2017, in the consolidated cases asking whether arbitration agreements that bar employees from pursuing class or collective action claims violate Section 8(a)(1) of the NLRA.
On August 31, a Texas federal court struck down the Obama-era Department of Labor rule that significantly increased the salary threshold for the white collar exemptions to overtime pay. The court temporarily enjoined the rule in November 2016, and this latest ruling makes that decision final (save for an unlikely appeal).
The court ruled that the DOL “does not have the authority to use a salary-level test that will effectively eliminate the duties test” set forth in the Fair Labor Standards Act.
Notably, new Secretary of Labor Alexander Acosta issued a request for information on the DOL’s overtime rules in late July. The request solicited several comments on whether the DOL should update the current $23,660 salary threshold. So while the Texas court’s ruling gives employers some temporary certainty on overtime exemptions, it remains to be seen what the Trump Administration’s DOL will do.
The Industrial Commission of Arizona (ICA) held a public hearing on August 8 on its proposed rules under Arizona’s new paid sick time (PST) law of the Fair Wages and Healthy Families Act. Those who attended had an opportunity to ask ICA representatives, including Labor Department Director Steve Welker, questions about the ICA’s interpretation of the law. Here’s a summary of information shared during the hearing:
On August 2, Arizona’s highest court released a unanimous opinion explaining its March 14 rejection of several constitutional challenges to the state’s new paid sick time (PST) law. You may remember that, upon denying the requested injunction and special action relief, the Court said it would issue a written opinion further explaining its decision in due course. The August 2 opinion does just that. It discusses the constitutionality of the PST law under the Revenue Source Rule (Ariz. Const. art. 9, § 23), the Separate Amendment Rule (art. 21, § 1), and the Single Subject Rule (art. 4, pt. 2, § 13). Although informative, the opinion does not change anything for Arizona employers. The PST law remains effective and enforceable.
This week the Democratic Party announced a new economic agenda largely focused on employment issues affecting working families. Entitled: “A Better Deal,” the agenda consists of several proposals that aim to create jobs, raise wages, and lower household costs.
For example, the agenda sets a goal to create 10 million good-paying, full-time jobs within five years through employer tax credit incentives, apprenticeships, and paid on-the-job training. It also seeks to implement paid family leave, as well as new merger standards and post-merger reviews aimed at protecting workers, consumers, and competition.
Yesterday the Second Circuit cast doubt on whether an arbitrator can certify a class that includes absent class members. The court remanded for the district court to decide “whether the arbitrator exceeded her authority in certifying a class that contained absent class members who have not opted in.” Jock v. Sterling Jewelers, Inc., No. 15-3947-cv (2d Cir. July 24, 2017). The case poses potentially big implications for class arbitration’s ability to resolve cases with finality.
This week the Massachusetts Supreme Judicial Court held that a fired medical marijuana user can pursue a disability discrimination claim against her former employer under the state’s anti-discrimination law. The decision is significant because it’s the first time a state’s highest court has recognized that the protections afforded under an anti-discrimination law extend to employees who use medicinal marijuana to treat disabilities.