Human Resource and Labor Relations professionals (HR/LR) normally take the lead on workplace investigations of employee misconduct. Given that, they may also bear the blame for investigations that result in adverse employment actions that do not withstand litigation scrutiny. If a current or former employee challenges an adverse employment action via an EEOC or NLRB charge, a DOL complaint, a CBA grievance, or court action, the employer incurs significant expense and disruption simply defending the action. The employer’s exposure increases exponentially if the employer loses the case on the merits before a regulator or court. Consequently, HR/LR should devote sufficient time and attention to workplace investigations to avoid challenge in the first place, where possible, and to ensure the best chance of winning on the merits if a challenge does take place. But where to look for guidance? This blog answers that question and provides a checklist for HR/LR to follow to conduct employee misconduct investigations that will withstand litigation scrutiny.
On April 30, 2018, the California Supreme Court substantially narrowed the class of individuals who qualify as independent contractors under California wage-hour law and paved the way for a new wave of class actions. In Dynamex Operations West, Inc., the Court adopted the restrictive “ABC test” used in other jurisdictions for determining when a worker qualifies as an independent contractor under California’s Industrial Wage Orders.
Under that test, the court presumes all workers qualify as employees. A hiring entity can prove that the worker qualifies as an independent contractor only if it can show that the worker:
A) is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
B) performs work that is outside the usual course of the hiring entity’s business; and
C) is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
On Monday, April 2, 2018, the Supreme Court of the United States ruled that car dealerships do not have to pay service advisors overtime under federal law. In a 5-4 decision, the Supreme Court held that service advisors, like auto salespersons, partspersons, and mechanics, are exempt from the Fair Labor Standards Act’s overtime requirements.
In Part 1 of the series reexamining harassment policies and procedures, we looked at common harassment investigation missteps and how to correct them. In Part 2, we examine confidentiality policies.
Employers often defend Title VII harassment claims by showing that they exercised reasonable care to prevent and correct harassing behavior. A key aspect of reasonable care requires an employer to have an anti-harassment policy that, according to the EEOC, “should contain, at a minimum” six elements including an “assurance that the employer will protect the confidentiality of harassment complaints to the extent possible.”
At the same time, the NLRA prohibits employers from maintaining blanket confidentiality rules that prohibit employees from discussing workplace investigations. In Banner Estrella Medical Center, 358 NLRB 809 (2012), the NLRB found that an HR consultant violated the NLRA by routinely asking employees not discuss ongoing investigations with their coworkers. To lawfully require confidentiality of employees, an employer must show a legitimate business justification specific to the investigation at issue, such as the need to protect witnesses or prevent tampering with evidence. That remains the law today, despite the NLRB’s recent shift on employer policies.
So how’s an employer to reconcile those seemingly conflicting laws? Continue Reading Confidentiality Policies that Survive EEOC and NLRB Scrutiny: Reexamining Harassment Investigation Protocol Part 2
On March 5, 2018, the California Supreme Court changed the test for factoring flat sum bonuses into the overtime rate in Alvarado v. Dart Container Corporation of California, ordering a calculation that will increase the costs of overtime for employers who pay such bonuses. Under the federal formula, an employer must divide an employee’s total weekly pay (including non-discretionary bonuses) by the total number of hours the employee worked in a week to get the regular rate; the employer then must pay time-and-a-half that rate for all overtime hours. But under the Alvarado court’s formula, the employer must divide the total weekly pay by only “the number of nonovertime hours the employee [actually] worked during the pay period.” That smaller divisor will lead to higher overtime rates.
Following the recent wave of sexual harassment and assault allegations, a wake of news stories emerged about how HR departments have failed to conduct proper investigations into such complaints. Women claimed HR failed to write down their complaints or take any action; one woman claimed HR told her “We don’t want to get involved in this.” The stories asserted that HR “is supposed to protect the company’s interests,” not the employee’s. But as any experienced employment lawyer or HR manager knows, HR cannot protect the company if it conducts a subpar investigation.
Two of the most common harassment investigation missteps include (1) using investigators that lack sufficient training about how to conduct an investigation, and (2) failing to involve legal counsel at the right time.
Earlier this month, the Wage and Hour Division of the Department of Labor reissued 17 opinion letters from the Bush administration. The letters provide employers important guidance on a wide-range of issues under the Fair Labor Standards Act.
The reinstatement marks the first publication of opinion letters since the DOL announced last June that it would bring back that form of guidance. The Obama administration had eliminated the practice and withdrawn many existing opinion letters, including many of those reissued this month.
The reinstated letters do not upend any existing laws, but they provide important guidance and a possible safety net to employers facing similar situations. Many of the reinstated letters concerned application of Section 13(a)(1)’s overtime exemption for executive and administrative employees. The letters also discussed whether certain bonuses must be included in the regular rate for purposes of calculating overtime and whether certain on-call time qualified as compensable working hours.
The letters contain a cover letter noting that someone had specifically asked the DOL to reissue that particular opinion letter. Thus, employers who would like to rely on previously withdrawn opinion letters should consider asking the DOL to reissue them under its new policy.
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.