2016/2017 Labor & Employment Observer

Joseph E. Tilson

Message from the Chair

I am pleased to provide you with our 2016/2017 Labor and Employment Observer, which looks back at significant developments in labor and employment law over the past year and forward to what employers can expect in 2017.

I trust that you will find the enclosed articles both interesting and informative. As always, all members of the Labor & Employment Department at Cozen O’Connor welcome your inquiries and look forward to serving your labor and employment needs in the New Year.

Best Regards,

Joseph E. Tilson

In This Issue:

Activist NLRB Created More Problems For All Employers in 2016 -- What Happens Under President Trump?
Noncompete Agreements: New Considerations Under Both Employment and Antitrust Law
Trump Transition Brings Good News for “Gig Economy” Employers, But Dramatic Change May Be Unlikely
Immigration Under the Trump Administration
Federal Contractors Might Be in for a Wild Ride in 2017
ACA Relief Brightens 2017 for Small Employers
Employment Laws Go Local — The Rise of Municipal and State Lawmaking
EEOC Updated Its Retaliation Guidance After 18 Years Of Silence: Implications For Employers In 2017
The Roller Coaster Ride of the New White Collar Regulations
Trade Secrets Litigation Likely to Surge in 2017 Under the DTSA
Developments in Disability Discrimination Law in 2016, and Predictions for the Future
Three, Two, One … Happy New Year, California Employers!

Activist NLRB Created More Problems For All Employers in 2016 -- What Happens Under President Trump?

Jeremy J. Glenn

(312) 474-7981

During 2016, the National Labor Relations Board (NLRB or the Board) maintained its generally pro-union, anti-employer stance in ways that affect both unionized and non-unionized employers. The Board currently sits with three members, which gives the newly elected president the ability to nominate two new members and shift the Board majority from Democratic to Republican. However, due to the Board’s structure, employers might not see immediate improvement under a reconstituted Board, although major changes should be seen in the long-term. Thus, even given the ideological “sea change” that could flow from the presidential election, employers in 2017 will be forced to grapple with the Board’s 2016 activity in the following key areas until the opportunity for reconsideration is presented.

Organizing Efforts Are Eased Through Joint Employer Relationships

Perhaps the most important 2016 NLRB decision is Miller & Anderson, Inc., 364 NLRB No. 39 (July 11, 2016).This decision amplified last year’s Browning Ferris ruling, expanding the ability of “joint employees,” such as those provided to a user-employer by a staffing company, to organize. Miller & Anderson reversed years of precedent by holding that the Board would no longer require the consent of both the user-employer and provider-employer to combine workers in a single unit for a union election. Rather, solely and jointly employed employees can band together in the same unit without consent from either the user-employer or the provider-employer, if the “community of interest” standard is met. In a combined unit, the user-employer is required to bargain over all terms and conditions of employment for all employees it solely employs and for jointly employed employees that it possesses the power to control. This simplifies the task of organizing joint employees.

In light of this decision, we expect a spate of organizing occurring within the staffing industry, and this organizing will flow over into those companies using supplied employees. Our advice to staffing companies is to step up their employee satisfaction and union avoidance programs — right now. User-employers may need to completely reassess their staffed employee business models. At a minimum, user-employers need to evaluate both their own and their staffing companies’ vulnerability to union organizing. And in all cases, employers in this situation should be looking at scenarios, including worst-case scenarios, in the event of organizing.

Access to Employer Premises is Increasing

The Board has been expanding access to employer premises. In Capital Medical Center, 364 NLRB No. 69 (August 12, 2016), the Board held that preventing off-duty employees from picketing at nonemergency entrances violated the NLRA. Negotiations between this acute care hospital and the UFCW, representing technical employees, had stalled. Several off-duty employees engaged in hand-billing at two hospital entrances, but two employees engaged in picketing at the main entrance. The hospital asked the picketers to leave and then called the police. The Board found the hospital violated the Act by threatening to discipline employees and have them arrested for picketing, and by summoning the police to the hospital.

In reaching its decision, the Board balanced the employees’ Section 7 rights against the employer’s legitimate business interest in protecting its patients. However, the Board said the hospital failed to show that the prohibition on picketing was necessary to prevent disruption to the patients or the hospital’s operations. Other cases have allowed access to employer premises in various conditions, a trend we hope will stop with new NLRB members.

Organizing Rights for Graduate Students are Expanding

Another 2016 Board decision reversed precedent and expanded organizing rights for graduate students. In Columbia University, 364 NLRB No. 90 (August 29, 2016), the Board held that research and teaching assistants at private colleges and universities are “employees,” and may be unionized, despite their “student” status. (Public universities are not impacted by the Columbia University decision because they are covered by state labor laws rather than the NLRA.)

Central to the Board’s decision was simply “the existence of an employment relationship,” regardless of whether “some other relationship between the employee and the employer is the primary one.” Put directly, the Board held that it was reversing Brown University because that decision “deprived an entire category of workers of the protections of the Act without a convincing justification.” The Columbia students voted in favor of unionization on December 8, 2016.

This decision dovetails with a strong campaign by unions to organize adjunct and other non-tenured professors in higher education, as permitted by other recent NLRB decisions. This trend indicates that many colleges and universities, but especially those where such faculty have organized recently, will be vulnerable to union organizing efforts aimed at student teaching and graduate research assistants in 2017.

Management Rights Clauses are Under Fire

Employers also face new hurdles with respect to discipline rules and other policy changes. In Graymont PA, 364 NLRB No. 37 (June 29, 2016), the Board held that the employer violated the Act by denying the union the opportunity to bargain before unilaterally changing its work rules, absenteeism policy, and progressive discipline policy, notwithstanding a management rights clause in the collective bargaining agreement. The management rights clause stated that the employer “[R]etains the sole and exclusive rights to manage; to direct its employees; … to evaluate performance, … to discipline and discharge for just cause, to adopt and enforce rules and regulations and policies and procedures; [and] to set and establish standards of performance for employees … .”

However, the Board held that the language in the clause did not support the conclusion that the union “clearly and unmistakably” waived its right to bargain over the policies as the language did not specifically mention the policies that would be controlled by the provision, and there was no indication that the parties discussed the subjects in question during negotiations. Thus, the employer had a duty to bargain with the union before changing the policies. This decision grossly undermines the effectiveness of employer management rights clauses, which are often the subject of bitter negotiation. Similarly, in E.I. du Pont de Nemours, 364 NLRB No. 113 (August 26, 2016), the Board held that discretionary unilateral changes made pursuant to a past practice under an expired management rights clause were unlawful, and noted that an employer may unilaterally act under an established past practice only if the changes are not made in the exercise of managerial discretion.

These decisions are a harsh reminder to employers to carefully consider the management rights clause in any operative collective bargaining agreement before implementing unilateral changes. Additionally, employers at the bargaining table in 2017 should reconsider the wording of a management rights clause to maximize their authority to act unilaterally in the future. At least for now, the Board has eroded the discretion that employers historically had under their management rights clauses.

Employers Continue to be “Ambushed”

During 2016, the Board continued to gain experience with its new “ambush” election rules. The time from the filing of an election petition to the actual election is averaging 23 days, which gives an employer little time to make the case against unionization to employees who may have been proselytized by a union for months before a petition is filed. Because of this short time limit, some employers have adopted a “continuous campaign mode” of communicating frequently with employees about unions and workplace concerns. At a minimum, employers should prepare advance plans for their union campaign and campaigners well in advance of any possible petition.

So far, the good news is that unions are not winning a significantly larger percentage of elections under the new rules. However, unions are winning more than 60 percent of the elections they seek, which demonstrates the need for vigilance.

Handbook Policies Are Under the Board’s Microscope

All employers, regardless of union status, should remain (or become) aware of the general counsel’s position that many handbooks and other employer policies may be unlawful. In March 2015, the Board’s general counsel issued guidance on lawful employer policies in GC Memorandum 15-04.This guidance applies to union and non-union employers alike. The guidance reviews recent Board decisions and provides the general counsel’s own interpretations of acceptable and unacceptable employer policies.

The guidance gives examples of bad and good language for policies on keeping employer information confidential (broad policies are deemed unlawful, because employees must be allowed to discuss wages and other issues of mutual interest), professionalism, media contact (employees have the right to talk to the media on their own behalf or on behalf of others), use of company logos (employees are allowed to use logos and marks for their own, non-commercial purposes), conflicts of interest, and, quite controversially, recording and photography at work, which the General Counsel says must be permitted on non-work time when employees are engaged in protected activity. Changes here cannot be expected for some time, as many of these theories are now supported by recent NLRB decisions.

For example, in Blommer Chocolate Co. of California, LLC, 32-RC-131048 (February 17, 2016), the Board directed a second election on the grounds that the employer maintained overly broad work rules that interfered with the initial election. The assault on employer governance continued in Chipotle Mexican Grill, 364 NLRB No. 72 (August 18, 2016), in which the majority held that the employer violated Section 8(a)(1) by prohibiting employees from posting certain social media statements, soliciting during nonworking times if the activity occurred in close proximity to customers, limiting the use of the employer’s name, discussing politics, and maintain certain rules regarding “ethical” communications. As noted above, employers in 2017 should closely review their written policies and procedures to the extent they have not recently done so because the Board has made it clear the lengths it is willing to go to enforce the Act as it relates to employer handbook policies.

Employees’ Right to Use Company Email is Emphasized

In T-Mobile USA, Inc., 363 N.L.R.B No. 171 (April 29, 2016), the Board found that an employer rule prohibiting “non-approved individuals’ access to information or information resources, or any information transmitted by, received from, printed from, or stored in these resources” without prior written approval was unlawful under the rule established in Purple Communications because it would prevent employees from sharing, with their union representatives or their coworkers, information relating to work conditions stored on the information systems. The Board also struck down bans on employees using information or communication resources in ways that were “disruptive, offensive, or harmful” or to “advocate, disparage, or solicit for political causes or non-company related outside organizations.” The Board found that these prohibitions were overbroad and could reasonably be understood to include protected Section 7 activity.

In 2017, employers should audit all written policies and procedures in light of this and other recent decisions centering on language the Board finds to impose impermissible restrictions on employee use and access to email and information systems.

Unions Gain Easier Access to Witness Statements

In Piedmont Gardens, 364 NLRB No. 95 (Aug. 24, 2016), the Board declared that witness statements obtained from employees subject to a promise of confidentiality are not “fundamentally different” from other types of information and that there should not be a “blanket exemption” precluding union access. In other words, the Board made it much easier for unions to demand investigation materials from employers.

Unless and until the Board reverses course on this point, witness statements must be turned over unless the employer can show that particular circumstances exist that make disclosure inappropriate. A “legitimate and substantial confidentiality interest” must exist for an employer to withhold such a statement — it appears interests such as threats of violence or retaliation, a pending investigation, or the implication of trade secrets or other protected confidential business information would be sufficient grounds for doing so.

What Employers Can Expect in 2017 and Beyond

With the election of Donald Trump, employers are asking what changes are likely at the Board. For the present, there is a 2 to 1 Democratic majority of members. A former union lawyer is the general counsel and has the power to decide which unfair labor practice cases are litigated. Although there is a tradition that the Board should not decide major cases when not at full-strength, it is possible that the current majority will ignore the tradition and continue to issue far-reaching decisions. In fact, a series of such decisions were issued in August 2016, during the month that a Democratic member’s Board term expired.

Changes at the Board depend upon how quickly the new president can nominate Republican members and have them confirmed by the Senate. Even then, it will take time to overturn precedents the current Board set, as the members do not choose the decisions that come before the Board. History suggests that it will take most or all of the next four years before a significant number of precedents are reversed. However, employers are well-advised, if charged with unfair labor practices, to argue for reversals of recent anti-employer precedents. This tactic was used successfully by unions to effect change at the Obama Labor Board, and similar appeals may receive a receptive hearing once a Trump Labor Board is in place.

With respect to rules, such as the “ambush” election rules, despite the president-elect’s comments on reducing federal regulations, rule changes do not come easily. Rather, a notice-and-comment procedure, followed by potential legal challenges, must be used to eliminate regulations adopted through the same process.

The president can, however, rescind executive orders and policy statements. This may result in changes to some regulations at the Department of Labor, such as the “blacklisting” rules (requiring reporting by government contractors of federal labor “violations”) under the Fair Pay and Safe Workplaces Executive Order of President Obama. In addition, a new administration may change the government’s legal position on contested matters. As examples, most of the blacklisting rules, the DOL’s “persuader” rules (requiring reporting by lawyers and consultants working on organizing and other employee issues with employers), and the new Fair Labor Standards Act rules (raising the salary level for exempt employees), have all been enjoined by federal courts. The Trump administration may decide not to appeal or to drop any appeals of those orders, effectively killing these rules.

In conclusion, we expect changes at the NLRB once a new Republican majority and general counsel take control. These changes will not be immediate, but given the length of the NLRB proceedings, employers may be able to adopt a more aggressive approach now on unfair labor practices and other matters, in the expectation that the cases ultimately will be reviewed by a Board with a changed majority membership.

Noncompete Agreements: New Considerations Under Both Employment and Antitrust Law

Michael C. Schmidt

(212) 453-3937

BREAKING NEWS: There were a lot of employment law developments in 2016.

In fact, there were a lot of developments in the world generally in 2016. The legal landscape when it comes to employers and employees was not any different. You have been hearing, reading, and re-tweeting all about the new Department of Labor overtime exemption regulations that were and then weren’t, and about how the Trump administration might impact various aspects of workplace issues. However you feel about November’s presidential election, you are likely still feeling the impact one way or another of identifiable pro-employee initiatives over the past eight years on the federal, state, and local levels.

One area that might not fly under the radar much longer involves restrictive covenant agreements. “Restrictive covenant” is a common umbrella term for several concepts, including provisions requiring confidentiality, non-competition, and non-solicitation (of both customers/clients and employees). For the most part, restrictive covenants have historically been the subject of private arrangements between employer and employee, with the judicial branch determining their enforceability when brought to its attention. Except in the rare case (i.e., California), restrictive covenants have not historically prompted the ire of the executive and legislative branches of government. Until now.

This article will summarize recent government initiatives that require your company to give careful consideration to your restrictive covenants as follows: whether and to what extent they can be used (1) between employer and employee as a matter of employment law principles; and (2) between one employer and another employer as a matter of antitrust principles.

The Pros and Cons of Noncompete Agreements

According to a recent report, approximately 18 percent, or 30 million, of workers in the United States are currently subject to a noncompete agreement whereby they are prohibited from working for a “competitor” after the termination of their employment. And another publication notes a 61 percent rise from 2002 to 2013 in the number of employees being sued by their former employers for allegedly violating noncompete agreements.

Clearly, noncompete agreements are being used and sought to be enforced. But why? Noncompete agreements are generally viewed as a deterrent to protect against employees jumping to work for a competitor and also as a deterrent against competitors poaching the company’s employees. Noncompete agreements are also viewed as another tool to protect competitively sensitive information from being disclosed or used outside of the employer’s organization. But increasing the number of bells and whistles in a noncompete agreement will not necessarily increase its enforceability, and could potentially backfire on the employer, particularly if they are used broadly and indiscriminately.

In fact, many companies have not considered the potential negative aspects of noncompete agreements. For one, they have the potential to negatively impact the ability to recruit top talent, while also reducing the morale of a workforce being asked to sign a noncompete agreement mid-employment without any additional consideration. There is also a significant cost attendant to creating the noncompete agreement initially and then seeking to enforce an agreement in court or through arbitration. Finally, there is an oft-ignored cost in instances where an employer has drafted the noncompete agreement and commenced legal action to enforce it, yet has received an adverse decision by a judge or arbitrator that serves as precedent for the rest of the employer’s workforce who have signed similar agreements.

Nevertheless, if companies have not considered the potential negative aspects of noncompete agreements, the government now has. 2016 has been a watershed year for the start and continuation of government efforts to regulate the employer-employee relationship. For example, there is a national trend toward paid sick leave, minimum wages have increased, and there has been a push for greater wage transparency and pay equity. Likewise, the government has taken aim at noncompete agreements and their perceived effect on employees and the labor market in general.

Government Involvement — Employment Law Considerations

Again, with certain exceptions, most jurisdictions have tended to enforce noncompete agreements when necessary to protect an employer’s valuable business interest, when the agreement is geographically and temporally reasonable, and when the interests of the employee and the public are not otherwise unduly harmed. However, in May 2016, the White House issued a report titled Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses. The White House report unabashedly characterizes itself as “a starting place for further investigation of the problematic usage of one institutional factor that has the potential to hold back wages — noncompete agreements.” Some might argue that the White House went into such investigation with a predetermined bias against noncompetes.

The May 2016 report identifies five principal problems with noncompete agreements as they tend to be used by employers: (i) even low-wage workers are compelled to sign noncompete agreements; (ii) workers have less bargaining power when asked to sign noncompete agreements after already accepting a job and giving notice of resignation to a prior employer; (iii) workers do not have a clear sense of the implications and enforceability of noncompete agreements they sign; (iv) workers are not given additional consideration for signing noncompete agreements beyond the promise of new or continued employment; and (v) employers tend to draft overly broad or patently unenforceable noncompete agreements, relying on the hope or expectation that a court will “blue pencil” the agreement if any part is ultimately deemed problematic.

The purpose of the May 2016 White House report appears to have been to set the stage for further action. Five months later, on October 25, 2016, the White House issued another statement, this time a “call to arms” to encourage states to take action where federal executive or regulatory action cannot necessarily succeed because noncompete agreements are generally a creature of state law. The White House’s October 2016 statement noted:

In adopting these strategies, states can help ensure that workers can move freely from job to job, without fear of being sued[.] … Even in states that choose to enforce noncompetes, we have heard from experts that only in rare cases are a noncompete the best option for an employer to use, over and above the host of other legal frameworks — including trade secret protections, nonsolicitation agreements and nondisclosure agreements.

State officials have heeded the federal call. For example, states like Oregon, New Hampshire, Massachusetts, and Illinois have joined California and others to enact legislation limiting the use of noncompete agreements and, in some instances, banning them outright. Other states, such as New York, Washington, and Idaho have proposed noncompete agreement legislation or announced that they will be doing so. For example, New York’s Attorney General has been very active in investigating and redressing unconscionable noncompete agreements through settlement agreements with major, national companies in the past year. He has also stated publicly that he will introduce legislation in New York in 2017 that will address the salary threshold required before an employee can be required to sign a noncompete agreement, requiring noncompete agreements to be provided before a job offer is extended, as well as extra consideration that must be paid and the permissible temporal scope of any restrictions.

It is imperative that your company become familiar with current, and any future, developments with noncompete agreements in the specific jurisdictions in which you do business.

Government Involvement — Antitrust Law Considerations

Worker mobility is not impacted only by noncompete agreements between employer and employee. Employers may also try to limit the ability of employees to leave the company by entering into agreements with other companies to not solicit or poach each other’s employees. According to new guidance issued jointly by the U.S. Federal Trade Commission (FTC) and the Department of Justice Antitrust Division (DOJ), such a practice may have severe consequences.

On October 20, 2016, the FTC and DOJ released a document titled Antitrust Guidance for Human Resource Professionals to explain how antitrust law applies to employee hiring and compensation practices. The guidance advises that, going forward, the DOJ intends to conduct criminal investigations of companies that agree with one or more competitors to fix wages or other terms of employment, or that enter into “no-poaching” agreements by promising not to recruit the other company’s employees. The DOJ explains in the guidance that such agreements have the damaging effect of eliminating competition in “the same irredeemable way” as agreements to fix the price of goods or allocate customers, and further notes that agreements that do not rise to the level of a criminal violation may still result in civil liability under the statutes enforced by the FTC and DOJ. Companies that compete for employees may be deemed competitors even if the companies do not compete in the products or services that they offer.

The October 2016 antitrust guidance makes clear that illegal no-poaching or wage-fixing agreements need not be formal, written, or even spoken in order to be subject to potential antitrust enforcement. Rather, an agreement can be inferred from circumstantial evidence, such as evidence of discussions and parallel behavior. The guidance also addresses the legality of competitors exchanging sensitive information regarding the terms and conditions of employment, warning that the exchange of this type of information among competitors may amount to a violation of antitrust laws even without an explicit agreement. There are, however, certain permissible information exchanges recognized by the guidance, although careful consideration must be given by the companies involved with the exchange to make sure all legal requirements are met.

Finally, the October 2016 guidance offers suggestions for how businesses can permissibly exchange certain information, such as by exchanging aggregated, relatively old information through a neutral third party. The guidance also includes a Q&A section regarding answers to common scenarios faced by HR professionals. The FTC and DOJ also distributed a document titled Antitrust Red Flags for Employment Practices, which serves as a quick reference for HR professionals to detect warning signs of potentially illegal employment practices, such as participation in trade association meetings discussing the hiring, compensation, or competition for employees.

Employer Takeaway

So much happened in 2016, and so much more is expected in 2017. It is imperative that your company continue to stay abreast of the ever-changing legal developments affecting your employees and workplace. In terms of restrictive covenants, and noncompete agreements specifically, not much is likely to diminish solely because of a Republican White House and Congress. Given that noncompete agreements mostly remain a creature of state and local law, it is likely that we will continue to see new and proposed initiatives to limit or ban noncompete agreements in various jurisdictions across the United States.

So ask yourself these three questions:

Does your company truly want/need noncompete agreements given the nature of your industry and business model (and is your company actually soliciting employees from other companies without regard to their potential noncompete agreements)?
If you do want/need noncompete agreements, for which positions and employees do you truly need a noncompete agreement, and why?
If you do want/need noncompete agreements for certain positions and employees, are your agreements drafted in a way that most narrowly and reasonably protects your company’s valuable (and identifiable) business interests, without unduly harming or punishing the employee or general public?

When it comes to conversations with other companies that might be competing for workers from the same workforce, it is equally imperative that you ensure that your discussions and ultimate action, if any, do not run afoul of antitrust law. Looking back at 2016 and looking ahead to 2017, it is clear that big brother is and will be watching to some extent.

Trump Transition Brings Good News for “Gig Economy” Employers, But Dramatic Change May Be Unlikely

“It’s the Uber of [INSERT NAME OF SERVICE HERE],” is a phrase no doubt uttered countless times on a daily basis. From car ride services to grocery shopping, to hotel room alternatives, to personal training, to handyman services, and countless others, the so-called “gig economy” model is uniting skilled workers seeking flexibility and quick income with tech-savvy consumers who are increasingly seeking convenience and on-demand service. In many ways, these innovations have transformed the way we work and live. But as innovative tech startups have disrupted both the marketplace and traditional notions of the employer-employee relationship, regulators have struggled to keep up. Meanwhile, there is mounting pressure on these companies to provide fair pay and employment benefits to workers, and the plaintiffs’ bar is taking full advantage of the shades of gray in this area of the law.

The ultimate question plaguing this industry fraught with legal strife is whether people who accept “gigs” on an on-demand basis are employees, independent contractors, or something in-between. Some observers believe that attempting to answer this question forces gig economy companies to fit the square peg of their contingent workforce into the round hole of existing labor and employment laws. Regardless, how these workers are defined will have a huge impact on myriad aspects of these relationships. The applicability of every conceivable aspect of labor and employment law — i.e., wage and hour laws, labor laws, anti-discrimination laws, health care regulations and tax implications, just to name a few — is premised upon the existence of an employer-employee relationship.

Some tech startups, such as Instacart (a grocery shopping service), opted to classify their workers as employees after being sued for misclassification rather than litigate the issue. Others, like Uber and Lyft, have vigorously defended against a barrage of lawsuits and campaigns, arguing that their workers are truly freelancers who are afforded the benefit of flexibility and control over their own hours and working conditions.

For the most part, the Obama administration has avoided the fray, leaving it to the plaintiffs’ bar to press the issue of whether gig economy jobs are properly classified as independent contractors. While administrative agencies under President Obama have spearheaded enforcement efforts on independent contractor misclassification over the past eight years, they have largely refrained from taking a position regarding whether non-traditional, gig economy jobs are misclassified, instead investigating and instituting enforcement actions against more clear-cut misclassification cases in more traditional employment models.

Thus far the president-elect has appointed, or indicated that he will appoint, cabinet members who favor deregulation and have expressed a friendly disposition toward companies that rely on the viability of the gig economy model. For instance, President-elect Trump’s pick for transportation secretary, Elaine Chao, has acknowledged that existing labor laws were not designed with this model in mind and that there is work to be done in order to adapt to the 21st century. She has received public support from the leaders of Uber and Lyft. She has also openly acknowledged those companies and others and expressed a need to craft policies that do not stifle this type of innovation. Likewise, President-elect Trump’s anticipated nominee for labor secretary Andy Puzder is as anti-regulation and pro-entrepreneurship as it gets and has openly lambasted efforts to raise the minimum wage. It can be assumed that if appointed labor secretary, Mr. Puzder will not be initiating any enforcement initiatives intended to force the Ubers and Lyfts of the world to classify their workers as employees.

To some tech entrepreneurs, this comes as a welcome answer to what had been a looming question mark. During the campaign, Candidate Trump did not afford any lip service to Silicon Valley. In fact, with the lone exception of Peter Thiel, the majority of Silicon Valley leaders openly opposed his campaign. Far from focusing on the tech industry and its interests, President-elect Trump’s campaign was, at least on the surface, devoted to his promise to reinvigorate manufacturing in the United States and bringing back factory jobs to rural areas. His focus on manufacturing, coupled with his open contempt for globalism, free trade, and intent to crack down on immigration even for skilled workers (upon which many Silicon Valley companies are hugely dependent upon) continues to cause great concern for many. For companies that rely on the peer-to-peer service economy, however, President-elect Trump’s emerging agenda is aligned more closely to their own interests.

While the Trump administration might set a more business-friendly tone, however, that is not to say gig economy and on-demand businesses should feel free to classify their workers as independent contractors. For one, private class actions and the attorneys who herald them are not about to go anywhere. These class actions remain splashy and potentially lucrative, and not likely to lose momentum. Along the same lines, the workers themselves might band together and insist on fair treatment, regardless of whether they are employees or contractors in the eyes of the law. Some such groups have had success in that regard, such as Instacart workers whose lawsuit prompted the company to change course and deem them to be employees.

Furthermore, whether or not the federal government takes a position on the definition of an independent contractor, state governments remain free to make their own, more restrictive regulations. Many states, including those with Republican governors, have opted for more restrictive laws defining independent contractors and engaged in a more aggressive crackdown on gig economy companies than the federal government (even under President Obama). State agencies have a keen interest in seeing as many workers classified as employees as possible, otherwise, they risk depriving the state of income from unemployment insurance contributions, workers’ compensation premiums, and income tax withholdings. For that reason, state-level initiatives to target misclassified independent contractors have traditionally enjoyed bipartisan support. This is not likely to change course as the republicans take over the federal government.

While most of the focus on gig companies centers on the wage and hour issues that flow from alleged misclassification, the Equal Employment Opportunity Commission (EEOC or the Commission) has also entered the fray. In its 2017-2021 strategic enforcement plan, the EEOC references gig and other contingent workers, and the Commission has long-stated its concern that some companies misclassify employees to evade obligations under federal employment bias laws. Additionally, the EEOC’s focus on discrimination motivated by customer preference finds a new target in this burgeoning market sector, in which customers frequently provide feedback through an “app” that could clearly reveal preferences tied to protected categories. All that said, the Commission could be in for a shake-up under President Trump, especially given the departure of EEOC General Counsel David Lopez, which might curtail or refocus its enforcement agenda.

In short, while so-called gig economy companies can breathe a sigh of relief that they are not likely to face increased scrutiny from the federal government over the next four years, the landscape defining the relationships between contingent workers and the companies that hire them remains uncertain. Until there is clarity in this area, companies are well advised to attempt compliance with existing laws and engage in other initiatives to minimize independent contractor misclassification risks. Failing to do so might result in costly litigation, public relations battles, or low morale and productivity among disenchanted workers.

Immigration Under the Trump Administration

For those of us reading tea leaves after the election, the question remains: how will the election of Donald Trump to the office of the presidency affect immigration? Candidate Trump became well-known for his strong anti-immigration rhetoric, especially when speaking on the topic of illegal immigrants. But how much of that campaign rhetoric will translate into executive action remains to be seen.

During the campaign, President-elect Trump laid out the following key proposals:

build a physical wall on the southern border;
detain and remove anyone who illegally crosses the border with Mexico;
work with local, state, and federal law enforcement to deport all illegal immigrants who have been convicted of a crime;
increase the number of ICE agents and increase the number of agents patrolling the border with Mexico;
terminate President Obama’s 2014 executive actions on immigration, which granted temporary deportation stays to some immigrants (i.e., children under the DREAM Act, as discussed in greater detail below);
suspend the issuance of visas where adequate screening cannot occur until proven and effective vetting mechanisms can be put into place;
ensure that a biometric entry-exit visa tracking system is fully implemented at all land, air, and sea ports; and
increase workplace enforcement and mandate all employers to start using E-Verify, which is an on-line program that confirms, before a worker is employed, that they are authorized to work in this country. Currently, government contractors are required to use E-Verify, while many companies use it voluntarily.

President-elect Trump’s “100-Day Action Plan to Make America Great Again” lays out his plan for his first 100 days in office. Many of the proposals will impact immigration, and the policies outlined are largely unchanged from his campaign plan discussed above. The plan also notes his commitment to cut all federal funding to “sanctuary cities,” where authorities do not ask to see an immigrant’s paperwork as a matter of local policy, and likewise, do not prosecute people on the basis of being an undocumented immigrant. President-elect Trump’s plan also promises to remove more than “2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won’t take them back.” He has also suggested a suspension of all visas for nationals of “Muslim regions” and/or extra scrutiny for anyone who is a Muslim. The details of this program have not been disclosed yet, and a list of where these regions are located has not been released, but Syria will likely be at the top of the list.

According to the press, the nascent Trump administration is considering reinstating a database of immigrants from Muslim-majority countries which the federal government maintained from 2002 to 2011. The database, known as the National Security Entry-Exit Registration System or NSEERS, was put into place by the Bush administration after the events of 9/11. While NSEERS was in effect, certain “foreign citizens and nationals” in the United States were required to periodically submit to fingerprinting, photos, and interviews at immigration offices. The “special registration” system only applied to men over the age of 16, whose country of origin was included on a list of 24 majority-Muslim countries (plus North Korea), and who held non-immigrant visas (including tourism and work visas). In 2011, the Obama administration removed all 25 countries from the “special registration” list and suspended the program.

One question raised by President-elect Trump’s statements that he will overturn all of President Obama’s executive actions on immigration is whether “dreamers” will be deported along with the other illegal immigrants that President-elect Trump has promised to deport. Dreamers is a term given to young undocumented immigrants brought to the United States as children by their parents and protected by the Development, Relief, and Education for Alien Minors (DREAM) Act. Under Obama’s Deferred Action for Childhood Arrivals (DACA), these individuals were given work permits and protected from deportation on a two-year renewable basis if they registered with USCIS and submitted to a background check.

To respond to this concern, in early December 2016 Senators Lindsey Graham (R-S.C.) and Dick Durbin (D-Ill.) introduced a bipartisan bill in the Senate that would protect dreamers by extending the legal protections they are granted by DACA. The bill is called “Bar Removal of Immigrants who Dream and Grow the Economy” or BRIDGE Act. This bill would not grant amnesty or citizenship but would let these dreamers continue living legally in the United States for three-year renewable terms. The BRIDGE Act would provide DACA-eligible individuals the chance to apply for a provisional protected presence, which is temporary protection from deportation similar to that provided by DACA. Employment authorization would also be granted after recipients pay a fee and pass stringent background checks.

Many of President-elect Trump’s proposals on immigration deal with illegal immigration, so a large question remains as to whether and how he will shift policies on legal immigration. While the newly elected president has not specifically stated his position on certain visa programs, he has criticized the H-1B system in the past and claimed that H-1B visas are “decimating” U.S. workers. Annually, 65,000 foreign professional workers and 20,000 graduate students from U.S. universities are admitted into the United States under the H-1B program. President-elect Trump sent mixed messages during the campaign, sometimes criticizing the visas, but other times calling them an important way to retain foreign talent. It is very probable that his own companies use H-1B workers, as do most U.S. companies when possible. The H-1B program has been oversubscribed for years, meaning there is a much greater demand than the quota provides. In 2016, less than 30 percent of the timely applicants were able to get the visa.

We expect increased requirements in order to qualify for the H-1B and L work visas programs. President-elect Trump has mentioned increasing wage requirements (there are already wage requirements in place through the U.S. Department of Labor, but we expect the wages to be increased), and possibly mandating a labor market test before filing the H-1B or L petition. It is unlikely that this can all be accomplished before the next H-1B quota filing the first week of April 2017, but should be expected sometime in 2017. It is also unlikely that the Republican Congress, with its pro-business policies, would allow either work visa to be eliminated.

However, the appointment of Senator Jeff Sessions (R-Ala.), a long-time critic of the H-1B visa worker program, as attorney general is a concern. For years Senator Sessions has urged severe restrictions on visas, called for drastically expanded immigration enforcement, and blocked all practical reforms to our outdated immigration system. As the country’s top lawyer and highest-ranking law enforcement official tasked with administering justice, the attorney general has substantial authority over our nation’s laws, including our immigration laws. The U.S. Department of Justice has investigative authority over immigration, and Sessions could direct the agency to intensify immigration inspections and investigations at U.S. companies that use visa programs. From the press, it appears that Senator Session is likely to be confirmed by Congress.

On the other hand, President-elect Trump’s decision to nominate fast food CEO Andrew Puzder to head the U.S. Department of Labor has drawn backlash from those who support anti-immigrant policies, because of his support for foreign workers and advocacy for a path to legal status that ends short of citizenship. How Congress ultimately will respond to this nomination remains to be seen as of this writing.

Other changes to visas programs that are likely to happen under President-elect Trump include renegotiating the North American Free Trade Agreement (NAFTA), which contains the TN work visa for Canadian and Mexican workers. We do not know what will happen to this visa at this time, and while the list of professions needs to be updated (it is two decades old), the TN visa is utilized by many U.S. companies and should not be eliminated or restricted. Further, the extension of the EB-5 Regional Center Program is currently tied to federal government funding. The president-elect has not taken a position yet on the EB-5 program, but his son-in-law has reportedly used the program to finance housing in Jersey City, N.J. The Senate has passed continuing resolution legislation that will keep the program funded through April 28, 2017.

Many of the changes to immigration policies President-elect Trump has promised require a change to the laws, and therefore Congressional support. Many of the immigration policies and proposals President-elect Trump has suggested will also require an increased budget, which also must be authorized by Congress. So Congress will be key in determining which Trump immigration proposals will be enacted. Because the Republicans currently have a majority in both the House and Senate, the newly elected president’s legislative proposals might be viewed favorably.

President-elect Trump might choose to take action using executive power, but that option could pose problems. In 2014, responding to congressional inaction on immigration reform, President Obama issued administrative reforms on immigration. Certain initiatives in the executive action were challenged by Texas and 25 other states, which alleged the president had overstepped his executive authority. The case was appealed all the way up to the Supreme Court, which issued a 4-to-4 split decision, effectively leaving in place the decision of the U.S. Court of Appeals for the Fifth Circuit, blocking protections for millions of immigrants. In October, the Supreme Court denied the Obama administration’s request to rehear arguments in the 2016-17 session, ending all appeals. It is likely that any executive action taken by President-elect Trump on immigration reform will also be challenged by the states in court. However, the newly elected president will nominate a Supreme Court justice early in his administration, and that justice will most likely be the 4-4 tie breaker in the Supreme Court on immigration challenges. In short, with a Republican majority in the House and Senate, and a new conservative Supreme Court justice, President-elect Trump might be unstoppable on immigration issues.

Federal Contractors Might Be in for a Wild Ride in 2017

Debra Steiner Friedman

(215) 665-3719

President Obama has signed multiple executive orders impacting federal contractors throughout his administration, and 2016 has been a particularly active year for the Office of Federal Contract Compliance Programs (OFCCP). In 2016, the OFCCP took significant steps toward implementing the president’s executive orders focusing on self-reporting of labor law violations (the so-called blacklisting rule) and pay transparency, among other initiatives. Some of those efforts have been stalled and others roll ahead. It remains to be seen whether the Trump administration will quickly put the brakes on, or even rescind, the executive orders and their implementing regulations.

OFCCP’s Blacklisting Rule and Ban on Mandatory Arbitration Are Preliminarily Enjoined

Executive Order 13673, Fair Pay and Safe Workplaces, requires covered federal contractors to self-report a whole range of labor law violations. Known as the blacklisting rule, it is designed to determine whether prospective or current contractors have satisfactory records of integrity and business ethics and to ensure that repeat offenders are not awarded federal contracts. Executive Order 13673 also requires covered federal contractors to provide detailed wage statements to their employees. Finally, the executive order prohibits covered federal contractors with a government contract of at least $1 million from requiring employees to agree to mandatory arbitration of claims under Title VII or for sexual harassment or assault claims in general.

Final regulations implementing Executive Order 13673 were scheduled to become effective October 25, 2016, with the reporting of labor law violations being phased in over time. However, on October 24, 2016, the U.S. District Court for the Eastern District of Texas entered a nationwide preliminary injunction enjoining implementation of the blacklisting rule and the restrictions on the use of mandatory arbitration agreements. It is unclear whether these aspects of the executive order will be permanently enjoined or whether the Trump administration will rescind all or part of the executive order.

OFCCP’s Pay Transparency Initiatives Go Forward — for Now

Executive Order 13673’s requirement for the provision of wage statements is not impacted by the district court’s preliminary injunction. Accordingly, starting January 1, 2017, contractors and subcontractors with a contract exceeding $500,000 must provide employees with a wage statement each pay period that sets forth the employee’s hours worked (including any overtime hours), pay, and any additions or subtractions from pay. If employers provide pay less frequently than weekly, the wage statement must be broken down into weekly components. Employers are not required to report hours worked for employees who have been informed in writing that they are exempt from the overtime laws.

President Obama further promoted pay transparency by issuing Executive Order 13665, which expressly permits employees and applicants of federal contractors to inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants without fear of retaliation. The Final Rule implementing Executive Order 13665 took effect on January 11, 2016, and applies to new federal contracts or alterations to federal contracts made on or after January 11, 2016. Federal contracts and employee handbooks must be updated to reflect the new nondiscrimination provision, and federal contractors must disseminate the nondiscrimination provision by posting it electronically or where it will be available to applicants or employees.

The Obama administration’s push for pay transparency also is evident in the Equal Employment Opportunity Commission’s (EEOC) recent revisions to the EEO-1 report. On September 29, 2016, the EEOC issued its final revisions to the EEO-1 report, which will require all private employers with 100 or more employees, including federal contractors and subcontractors, to submit summary pay data on wages paid to their employees. The summary pay data reporting requires employers to identify and report employees’ W-2 earnings and hours worked in 12 pay bands, and apply the pay bands to each of the 10 EEO-1 job categories. This reporting requirement is in addition to the current reporting by job category of employee gender, race, and ethnicity and currently is scheduled to go into effect for EEO-1 reports due March 31, 2018.

OFCCP’s Paid Sick Leave Provisions Are in Place — for Now

Executive Order 13706, signed by President Obama in September 2015, requires covered federal contractors to provide employees with up to seven days of paid sick leave every year. Paid sick leave may be used for the employee’s own care, for family care, and for absences resulting from domestic violence, stalking, or sexual assault.

Executive Order 13706 applies only to certain categories of federal contracts. These include contracts for services under the Service Contract Act, construction covered under the Davis-Bacon Act, concession contracts, or contracts in connection with federal property or lands and related to offering services for federal employees, their dependents or the general public. The executive order excludes contracts for the manufacturing or furnishing of goods subject to the Walsh-Healey Public Contracts Act.

The DOL issued regulations implementing Executive Order 13706 on September 30, 2016, and the regulations are effective as of November 29, 2016. Executive Order 13706 and its implementing regulations will apply to new, covered federal contracts entered into on or after January 1, 2017.

What’s Next for Federal Contractors?

Patricia Shiu left her position as director of the OFCCP in November 2016. President-elect Trump and the person he appoints to lead this agency — and other agencies within the Department of Labor — might implement significant changes to reduce compliance burdens on federal contractors. Indeed, his nominee to lead the U.S. Department of Labor, Andy Pudzer, has criticized paid sick leave and other regulations over workers. How far the new administration will go, and how quickly, is unclear, but federal contractors might see a significant shift in reporting obligations and enforcement priorities in the coming years.

ACA Relief Brightens 2017 for Small Employers

Jay A. Dorsch

(215) 665-4685

On December 13, 2016, President Obama signed the 21st Century Cures Act (the Act), which provides government funding and support for a number of health care initiatives. Significantly, the last section of the Act eases restrictions on health reimbursement arrangements (HRAs) sponsored by certain small employers.

Under the Affordable Care Act (ACA), employer-sponsored health plans must provide “minimum essential coverage” (MEC). The penalties for violating this rule are potentially significant: $36,500 per year, per affected individual. Additional penalties may be applied if the failure is discovered on audit, or is deemed to be significant. Regulations and other rulings providing guidance on this provision have indicated that it will be interpreted to prevent employer-sponsored HRAs, unless such programs are paired with a separate plan that, itself, provides MEC. The enforcing agencies recognized that this prohibition on “standalone” HRAs would prohibit many programs and arrangements traditionally established by smaller employers. Although the agencies continued to indicate that standalone HRAs were prohibited by ACA, penalties were waived through the end of 2016, to allow employers a transition period to revise their programs.

The Act formally reverses the HRA guidance when applied to a “qualified small employer health reimbursement arrangement” (an SEHRA). An SEHRA must be sponsored by an employer that is not subject to ACA’s “pay or play” mandate (i.e., the employer has fewer than 50 full-time equivalent employees). Additionally, all employees of the employer with more than three years of service must be eligible to participate, and the program must be entirely funded by employer contributions. If these requirements are met, the employer may provide for the reimbursement of the costs of medical care, including individual insurance premiums, up to $4,950/employee ($10,000 for SEHRAs that also provide dependent coverage), without running afoul of ACA.

It is important to note that coverage under an SEHRA will not itself satisfy the employee’s individual health care mandate responsibilities. However, it will impact the amount of a government subsidy for which the employee will be eligible. The Act obligates an employer that sponsors an SEHRA to notify participants of this impact. Failure to provide the notice can result in penalties assessed against the employer.

Employment Laws Go Local — The Rise of Municipal and State Lawmaking

David L. Barron

(713) 750-3132

Ban the Box, living wage, sick pay, and legalized marijuana. These laws are at the cutting edge of employment law, and they are all legislative efforts at the state and city level. With a Republican Congress since 2010, new legislation in the employment law arena has not been a priority, and that is not expected to change under President Trump. If anything, one would expect a roll back of the Affordable Care Act and existing regulations like the increase in the minimum salary threshold under the Fair Labor Standards Act.

The country is rapidly moving toward a human resources professional’s worst nightmare — local governments implementing employment laws on a patchwork basis with differing rules based on city limits and state lines. Imagine the difficulty in implementing a different employment application or sick pay plan depending upon the jurisdiction. This is no longer a minor inconvenience, and local legislation is likely to get worse in the near future. This article will outline the main areas of state and city legislation and the recent laws that warrant the most attention.

Ban the Box

This area of legislation means exactly what it says — banning the box on an employment application that asks about an applicant’s criminal background. Connecticut, Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island, and Vermont have banned the question from private employer applications. Additionally, more than 150 cities and counties have some form of ban the box legislation. President Obama also issued an executive order removing the inquiry from the employment applications used by federal agencies and limiting their use of criminal background checks until later in the hiring process.

Ban the Box laws and regulations are especially problematic in that no two laws are the same. Some simply ban the question on an application, while others require special notices or other “hoops” for employers to make an inquiry into an applicant’s background.

Sick Pay

In the United States, seven states, 32 cities, two counties, and Washington, D.C. have sick pay laws on the books. All of these laws are different, but the trend seems to be toward requiring 40 hours of sick pay per year for large employers. Although this may not sound onerous, as many large employers already have such benefits available, the devil is in the details.

For example, Connecticut requires an accrual of one hour of sick pay for every 40 hours worked. In California, however, the required accrual rate is one hour of sick pay for every 30 hours worked. These small differences are critical and enough to make an employer operating in multiple jurisdictions pull its hair out in frustration.

Legalized Marijuana

This year will likely be remembered as the year the United States reached the tipping point on legalized marijuana. More than half of the states now allow some form of medical marijuana use. Eight states, and Washington, D.C., allow legal adult recreational marijuana use. In states like Colorado and Washington, cannabis is fast becoming a billion-dollar industry.

Like any other cultural shift, there has been a substantial effect on the workplace in affected states. Employers in states with legalized marijuana must wrestle with difficult questions involving drug testing and whether employees can be fired for lawful marijuana use on their free time.

Minimum Wage

With a Republican president and Congress, it is highly unlikely there will be an increase in the federal minimum wage in the next four years. That said, Bernie Sanders (and Hillary Clinton later) ran on a promise to raise the minimum wage to $15 per hour. That effort is alive and well on the state and local level and will continue notwithstanding the presidential election.

This year, a number of large states voted to increase the minimum wage. For example, voters passed a minimum wage increase in Arizona, Colorado, Maine, and Washington in 2016. City and state legislatures also passed wage increases in New York City, California, and Oregon.

How to Manage in 2017 and Beyond

Some practical steps to manage this patchwork of new local lawmaking include:

Monitor legislative trends and consider modifying policies or practices for all employees once a “critical mass” of jurisdictions with company facilities pass a law or requirement.
Plan for state or local “inserts” for employee handbooks. Add disclaimers to handbooks making clear that company policies apply only to the extent they are not inconsistent with state or local laws.
Join local HR associations or trade groups that monitor local legislation and provide regular updates on developments.

What all of this means for employers is that everything about the employment relationship is now being regulated at every step of government, down to the city or county level. The minimum wage or benefits required in facilities a few miles apart may be different if the facilities are separated by a city limit sign. For large employers, these developments are especially troubling because centralized human resources staff must now keep up with not just 50 states, but hundreds of city and county laws. This trend, however, appears to be here to stay, and the days of largely uniform federal employment laws governing the workplace may, unfortunately, be a thing of the past.

EEOC Updated Its Retaliation Guidance After 18 Years Of Silence: Implications For Employers In 2017

Since 1998, the Equal Employment Opportunity Commission (EEOC) left employers to sift through the same old retaliation guidance to ensure their employment practices are compliant — until last summer. On August 25, 2016, the EEOC released EEOC Enforcement Guidance on Retaliation and Related Issues, along with a Q&A and Small Business Fact Sheet to help employers implement the updated guidance. This article helps to sort through the new guidance, focusing in particular on the EEOC’s major concerns regarding retaliation and what employers should do in 2017 and beyond to stay off the Commission’s radar.

Retaliation claims have doubled since the EEOC released the initial retaliation guidance in 1998. Nearly 45 percent of all EEOC charges include a claim of retaliation, and it has been the most frequently alleged basis of unlawful conduct in EEOC charges since 2015. The EEOC took into account how the courts have interpreted and applied the law to specific facts when drafting the updated guidance. Where the lower courts have not consistently applied the law, or the EEOC’s interpretation differs in some respect, the guidance states the Commission’s considered position and reasoning. Although most employers already understand the importance of creating outlets through which employees can voice any discrimination concerns without fear of retaliation, the updated guidance should cause them to reevaluate existing policies and make any necessary adjustments.

Protected Activity: What Kind and Why it Matters

The EEOC’s updated guidance stresses the three elements of retaliation that remain unchanged: 1) protected activity (“participation” in an EEO process or “opposition” to discrimination); 2) materially adverse action taken by the employer; and 3) a causal connection between the two. Protected activity has historically been placed in either the participation or opposition category. A distinction is drawn between these types of protected activity because they arise from two statutory retaliation clauses that differ in scope. It is important to understand the difference between the two because the Commission and some courts have seen a need to give greater protection to individuals who engage in participation than to those engaging in opposition activity. While the EEOC has narrowly defined participation to refer to individuals raising a claim, testifying, assisting, or participating in any manner in an investigation, proceeding, or hearing under the EEO laws, participation is broadly protected. And while opposition activity is broadly defined to encompass a wide range of ways an individual may communicate, explicitly or implicitly, opposition to perceived employment discrimination, protection for opposition is limited to a higher “reasonable belief” standard. That standard requires that the plaintiff has a reasonable belief that the action he/she was opposing was unlawful.

EEOC Paints Participation in Broad Strokes

The EEOC guidance states that an employer’s internal EEO complaint process can also be considered participation, although many courts characterize it as opposition. The Supreme Court in Crawford v. Metropolitan Government of Nashville & Davidson County left open the issue as to whether internal EEO complaints are considered participation. The EEOC has taken the view that there is significant overlap between participation and opposition activity and that internal EEO complaints can fit into both categories. The participation clause in Title VII contains no limiting language that would suggest an employer’s internal investigation procedure is only considered opposition activity as it states, “participated in any manner in an investigation, proceeding, or hearing” (emphasis added).

The Commission interprets the participation clause as broadly protecting internal complaints, even if the complainant does not have a reasonable, good-faith belief that the underlying allegations constitute unlawful conduct. The EEOC stresses in its guidance that “these protections ensure that individuals are not intimidated into forgoing the complaint process, and that those investigating and adjudicating EEO allegations can obtain witnesses’ unchilled testimony.”

Reasonable Belief Requirement for Opposition Activity Remains

The EEOC views opposition activity as any implicit or explicit communications an individual makes to an employer regarding perceived employment discrimination. However, unlike participation, opposition activity must be reasonable and must be based on a reasonable, good-faith belief that the conduct opposed is, or could become, unlawful. The Commission and courts impose this standard to balance the individual’s right to oppose employment discrimination against the employer’s need to have a stable and productive work environment. Although some conduct can fit into both categories, it is important to remember that the opposition clause protects a broader range of conduct than the participation clause.

The EEOC guidance includes numerous examples of protected opposition conduct, such as accompanying a coworker to the HR office to file an internal complaint, a female employee stating that the reason she is paid less is because of her sex, or an employee reporting to management harassment due to his/her sexual orientation. These situations would be considered opposition activity if the allegations were based on a reasonable, good faith belief that unlawful conduct had occurred.

Some other key points to note from the new guidance include the following:

All individuals are protected from retaliation if they engage in opposition activity, including managers, human resources personnel, or other EEO advisers.
The individual’s communication need not contain the words “harassment,” “discrimination,” or any other legal terminology, so long as they are conveying opposition to a perceived potential EEO violation.
Complaints are not limited to those made to managers. Individuals can complain to union officials, coworkers, an attorney, or others outside of the company (including the police), and still be protected under the opposition clause.
An employee telling their employer that they are going to file an EEOC charge is a reasonable form of opposition.
Unreasonable forms of opposition include an employee making an overwhelming amount of patently specious complaints, badgering a subordinate employee to give a witness statement in support of an EEOC charge, unlawful acts, or threatening violence.
Any employee, including managers, complaining to management about compensation or discussing rates of pay can be considered opposition activity. This provides employees more cushion than the National Labor Relations Act, which limits its protections to non-supervisory employees.
Opposition to alleged discrimination does not give employees a free pass to stop performing their required job duties. Employers still have the right to discipline or discharge the employee if their opposition renders them ineffective in their job.

Materially Adverse Actions Can Be Non-Work Related, But Must Dissuade a Reasonable Person from Engaging in Protected Activity

Employers are still prohibited from engaging in materially adverse action against individuals who participate in or oppose EEO activity. Note that the employer’s actions must rise to the level that might deter a reasonable employee from complaining about discrimination, even if it does not indeed deter them. The 2006 landmark Supreme Court case Burlington Northern & Santa Fe Railway Co. v. White made clear that petty slights, minor annoyances, and simple lack of good manners will not create such deterrence. Context is very important when deciding whether an employer’s actions are adverse and will depend on a fact-driven analysis, because an act that is immaterial in some situations may be material in others.

The EEOC points out that materially adverse actions can also be non-work related and have no effect on an individual’s employment. An action can take place outside of work and still be considered materially adverse as long as it would dissuade a reasonable person from engaging in protected activity. For example, disparaging an employee to others or in the media, making false reports to government authorities, making threats of deportation, and taking action against a close family member can all be materially adverse even if they are non-work related.

The Cause Behind Causation

In order for an employer to be liable for retaliation, there must be a causal connection between the protected activity and the materially adverse action. The EEOC guidance is employer-friendly with respect to causation, subjecting retaliation claims against private sector, state, and local government employers to the “but for” standard, as opposed to the more plaintiff-friendly “motivating factor” standard. (Federal sector employers are subjected to the more plaintiff-friendly motivating factor standard, under which the causation requirement can be met even if the employer would have taken the same action absent a retaliatory motive so long as it was a motivating factor.) The but for standard, which was set forth by the Supreme Court in University of Texas Southwest Medical Center v. Nassar, does not require that retaliation be the sole cause of the materially adverse action, but the individual must show that the employer would not have taken the materially adverse action but for a retaliatory motive.

The EEOC guidance explains that certain evidence, taken together, might allow an inference that the materially adverse action was retaliatory. Such evidence might include the employer’s oral or written statements, comparative evidence, inconsistent explanations, and suspicious timing. However, temporal proximity is not always required in order to find a causal connection and a retaliatory motive, which could very well exist even if the timing between the protected activity and materially adverse action is lengthy.

Even when a materially adverse action exists, an employer may provide a non-retaliatory reason for its action. The guidance lays out several examples where an employer could be found not liable due to its non-retaliatory reasoning:

Employer was unaware of the individual’s protected activity.
Even if the employer was aware of an individual’s complaints, it did not know that they concerned discrimination.
Employer was motivated by a legitimate, unrelated reason such as an employee’s poor job performance, misconduct, or inadequate qualifications for the position sought.

The EEOC’s “Promising Practices” Serve as a Vanguard for Employers to Follow

The Commission concludes its guidance with “promising practices” for employers to implement. These steps are suggested to help reduce the risk of violations, but employers are encouraged to customize these practices based on their own workplace and circumstances.

The EEOC first suggests that all employers should develop a plain-language, anti-retaliation policy that includes examples of what should and should not be done in order to more thoroughly communicate the employer’s expectations. The EEOC guidance provides more than 30 fact pattern examples that employers can use and refer to when creating their policies. Employers should focus on the less obvious examples of retaliation that might not strike managers as actionable. The policy should also include proactive steps for avoiding retaliation, reporting mechanisms for employee concerns, and a clear explanation that retaliation can be subject to discipline, including discharge.

Employers should consider training all managers, supervisors, and employees on the anti-retaliation policy. A message from upper management that retaliation will not be tolerated, along with periodic refresher training, can be extremely beneficial. The EEOC suggests tailoring the training to address any specific deficiencies in EEO knowledge or behavioral issues that have occurred in the particular workplace. It is also important to stress that if particular individuals in management are accused of EEO violations, they should not act on feelings of revenge or retribution, although those emotions might arise. The training should also provide a detailed proactive process that management and human resources can use when an individual raises concerns about a potential EEO violation. Employers should follow up with the individuals promptly and seek additional information and clarification in order to ensure a complete investigation.

The guidance states that an “automatic part” of an employer’s response following EEO allegations should be to provide information to all parties and witnesses regarding the anti-retaliation policy, how to report alleged retaliation, and how to avoid engaging in it.

Lastly, employers should consider designating a human resources or EEO specialist, or in-house counsel, to review proposed employment actions of consequence to ensure that they were not decided on the basis of any discriminatory motive. This would require all decision makers to specify their reasoning for taking any adverse actions against an individual and to provide supporting documentation to back their reasoning. If a proposed action is believed to be driven by a retaliatory motive, the employer should implement any process changes necessary to prevent the scenario from repeating itself, including all of the above suggestions.

Trump Administration Could Affect EEOC Enforcement Agenda

With only days remaining before the Trump administration enters the White House, many employers are trying to forecast how the change will impact their workplace. With a surplus of questions and a deficit of answers, one can only predict how President-elect Trump will affect the EEOC’s enforcement agenda. Thus, it is imperative that employers solidify their anti-retaliation policies before the flowers of uncertainty blossom.

With the Republicans holding a majority in both houses of Congress, there will undoubtedly be changes in the EEOC’s personnel, resources, and substantive and procedural focus after President-elect Trump takes office. For instance, he has chosen Republican fast-food CEO Andrew Puzder as the Labor Secretary. In the past, Puzder has vehemently opposed raising the minimum wage to $15 an hour and enforcing the U.S. Department of Labor’s proposed expansion of overtime protection to more than 4 million workers. President-elect Trump will also have the opportunity to designate a new chair of the EEOC, which would impact processes greatly. In addition, former EEOC General Counsel David Lopez was closely scrutinized by Republican members of Congress for many decisions, including the EEOC’s pursuit of large-scale litigation where no aggrieved person had filed a discrimination charge. Lopez’s decision to step down from his position in December 2016, gives President-elect Trump the opportunity to appoint his successor. These high-level leadership changes will certainly impact the Commission’s strategic direction.

The Trump presidency could also lead to a shift in resources and create budget constraints. The EEOC’s budget under the Bush administration was continuously cut, and the Republicans could very well resume this trend in 2017 and beyond. If this occurs, the Commission will have to develop strategies on how to carry out its goals with a reduced budget. The EEOC has typically utilized its resources to focus on systemic litigation because these high-impact cases address employer practices that affect a wider range of employees or job applicants and have a greater deterrent effect. The EEOC might have to retool its efforts and focus on smaller cases that have less of an impact. With the new guidance in place, this could lead to the Commission focusing on allegations such as retaliation that usually have less of an impact on large groups of employees at a given time.

The contours of the EEOC enforcement landscape moving forward remain to be drawn, and employers should keep their finger on the pulse of any and all developments as President-elect Trump makes his way to the Oval Office. Adhering to the EEOC retaliation guidance that is already in place will assist employers in mending any gaps that may exist in current policies, or serve as a stepping stone to creating new policies to minimize their potential exposure.

The Roller Coaster Ride of the New White Collar Regulations

Susan N. Eisenberg

(305) 704-5941

The Fair Labor Standards Act (FLSA) got a lot of attention in 2016, and as we move into 2017, there is significant speculation as to what will happen next.

As most are aware, the FLSA requires employers to pay employees a minimum wage for all hours worked, and overtime for hours worked over 40 in a workweek. The FLSA also provides for an exemption from the minimum wage and overtime requirements for those in an executive, administrative, and professional positions (often referred to as the White Collar Exemptions). To determine whether a position qualifies under the White Collar Exemptions, there are three tests, each of which must be met. First, the position must pay a minimum salary, the employee must be paid on a salary basis, and the position must meet the duties test.

On March 13, 2014, President Obama issued a memorandum directing the Department of Labor (DOL) to “modernize and streamline” the existing White Collar Regulations, and this process has seen more ups and downs than most roller coaster rides. It then took the DOL just shy of 16 months to prepare the proposed changes. On July 6, 2015, the DOL finally published its proposed rule changes to the overtime regulations. The DOL’s proposals targeted the salary threshold for employees to be exempt from FLSA overtime requirements, seeking to raise the salary levels for the first time since 2004. As is expected when such a major change in a regulation occurs, the public comment period drew significant interest from many sources, and by the end of the 60-day notice period, the public had submitted more than 270,000 comments to the DOL’s proposed changes. During this time, there was great speculation as to whether the DOL would ultimately also change the duties test.

In May 2016, after considering the comments, the DOL released the final form of its regulations. These new regulations were scheduled to take effect on December 1, 2016. The final regulations did not address the duties test but instead raised the salary level from $455 per week (or $23,660 annually) to $913 per week (or $47,476 annually). It also raised the salary level for the highly compensated employee exemption from $100,000 to $134,004 a year. The regulations also provided for automatic updates to the compensation level to occur every three years with the first increase scheduled to take place January 1, 2020. The amount of this increase was shocking because it more than doubled the salary level needed for the exemption.

At that point, employers had approximately six months to audit their positions and determine how to proceed. The toughest issue to deal with were the positions that currently paid less than $40,000 a year. To raise those employees’ salaries to meet the new salary threshold would mean a 20 to 50 percent raise — and a tremendous increase in labor budgets. The alternative would be to make these positions non-exempt and retro-fit an hourly rate or salary to take into account the amount of overtime that would be worked. This could also be a tremendous morale issue because many of the employees who would be reclassified as non-exempt might never have been in a position that paid overtime or required that they keep time, and they might view this change as a demotion. As the December 1, 2016, deadline loomed closer, employers completed their audits, adjusted their budgets, and started to communicate the changes to their affected employees.

Meanwhile, employers hoped for some relief. The U.S. House of Representatives passed legislation on September 28, 2016, that would give employers a six-month extension of time — until June 1, 2017 — to comply. While not a complete remedy, the reprieve would have provided some time to come up with additional avenues of challenge. The legislation did not get through the Senate, and if it had, the Obama administration was prepared to veto.

Then two separate lawsuits were filed challenging the regulations. On September 20, 2016, the state of Nevada and 20 other states filed suit against the DOL in the Eastern District of Texas. On the same day, the Plano Chamber of Commerce and more than 50 other business organizations also filed suit challenging the regulation. This was a “Hail Mary” effort that was not expected to do much other than perhaps invalidate the automatic increase. On October 12, 2016, the state plaintiffs moved for emergency preliminary injunctive relief that was not fully briefed until November 15, 2016 (a mere two weeks before the regulations were to go into effect). Almost simultaneously, the Plano Chamber on October 1, 2016, filed an expedited Motion for Summary Judgment. The court consolidated the two cases and on November 16, 2016, heard oral argument on the state plaintiffs’ motion for preliminary injunction.

On November 22, 2016, just eight days before the regulation was to go into effect, the court entered an order enjoining the implementation and enforcement of the regulation nationwide. Judge Amos Mazzant from the U.S. District Court for the Eastern District of Texas effectively blocked the DOL from implementing and enforcing the new overtime regulations as planned on December 1. The injunction meant that no aspect of the new regulation could be implemented or enforced.

Once again, employers were thrown into a frenzy and had to think quickly about next steps. Some employers decided not to implement the changes they had planned but rather to wait and see what happens next. Some, who had already budgeted and communicated changes to employees, decided to go ahead with the changes as planned.

While no one has a crystal ball, a review of the Injunction Order does shed some light on the issue Judge Mazzant had with the new regulations. He ruled that the FLSA does not give the DOL any authority to establish a minimum salary level. “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” While Judge Mazzant stated that Congress did not give DOL authority to utilize a salary-level test, his opinion was careful to disclaim any broad ruling striking down the very concept of a salary-level test, noting in a footnote that the injunction applies only to the final rule’s specific amendment to the salary-level test. Nevertheless, the groundwork has been laid for a future challenge to the DOL enforcing a salary-level test even at the prior $455 per week threshold.

In addition, Judge Mazzant ruled that the DOL lacks the authority to implement the automatic updating mechanism, which was scheduled to increase the minimum salary threshold every three years beginning in January 2020.That portion of the final rule was also preliminarily enjoined.

We cannot lose sight of the fact that the DOL that issued the new regulation was appointed by the Obama administration. This will not be the DOL under the Trump administration after January 20, 2017. One thing we do know is that the Trump administration will not want to implement any regulation that hurts or is perceived to hurt business. Also, the DOL has appealed Judge Mazzant’s Order to the U.S. Court of Appeals for the Fifth Circuit, which granted the DOL’s request for expedited briefing. While the appeal will not be fully briefed until January 31, 2017, the DOL’s brief was due to be filed by December 16, 2017, giving the Obama administration DOL an opportunity to make its position known.

The fate of the new regulation remains to be seen. If the Court of Appeals reverses Judge Mazzant’s Order, then the new regulations could become law; at least until there is a final ruling by Judge Mazzant. The DOL under President Trump could withdraw the appeal and instead revamp the regulation altogether. Also, if the new DOL agrees with Judge Mazzant that Congress only authorized the DOL to further define the duties test, then the DOL might do exactly that. This goes under the old adage, be careful what you wish for. A salary level test is clear and concise: an employee’s salary either meets the test or not. A refined duties test might bring nothing but further litigation. Imagine if the new DOL adopts a rule similar to California law, which provides that to be exempt the employee must perform exempt duties at least 51 percent of the time. That rule would invite litigation with employees who claim that they never spend 51 percent of their time on exempt duties.

At this point, the roller coaster ride is far from over, and anything can happen.

The Fair Labor Standards Act (FLSA) got a lot of attention in 2016, and as we move into 2017, there is significant speculation as to what will happen next.

At this point, the roller coaster ride is far from over, and anything can happen.

Trade Secrets Litigation Likely to Surge in 2017 Under the DTSA

In 2016, Congress drastically changed trade secret law with the passage of the Defend Trade Secrets Act of 2016 (the DTSA) that creates a federal civil action for trade secret theft, and we expect plenty of trade secret litigation in 2017.

Previously, for civil cases, trade secrets were protected by a patchwork of common law and state laws based, in part, on the Uniform Trade Secrets Act (UTSA).Many states adopted parts of UTSA, with the notable exceptions of New York and Massachusetts, and the DTSA does not preempt these state laws. But the DTSA gives victims of trade secret theft powerful new remedies to secure the return of the trade secrets and seek damages for their misuse. The most powerful of these is the right to seek an ex parte seizure order.

The Right to Seek a Seizure Order

Under the DTSA, a court may — upon ex parte application and based on an affidavit or verified complaint showing that the circumstances are extraordinary — “issue an order providing for the seizure of property necessary to prevent the propagation or dissemination of the trade secret that is the subject of the action.” For trade secret lawyers, this is groundbreaking.

To issue a seizure order, a court must find “that it clearly appears from specific facts” that each of the following elements is present:

other forms of relief would be inadequate because the defendant “would evade, avoid, or otherwise not comply with such an order”;
failure to seize the property will cause the moving party immediate and irreparable damage;
the balance of harms, including potential harm to third parties, weighs in favor of seizure;
the movant is likely to succeed in showing that the property at issue is a trade secret and that the defendant either misappropriated it or conspired to do so;
the person against whom seizure would be ordered “has actual possession of the trade secret and any property to be seized”;
the matter to be seized is described with reasonable particularity, as is its location (to the extent possible);
if given notice of the possibility of seizure, the party in possession would “destroy, move, hide, or otherwise make such matter inaccessible to the court”; and
“the applicant has not publicized the requested seizure.”

How a Seizure Order Will Be Executed

Under the DTSA, a federal law enforcement offer shall serve the seizure order and “shall carry out the seizure under the order” (emphasis added). The court may permit state or local law enforcement officials to participate in the seizure, but the plaintiff (and its agents) are not permitted to do so.

A technical expert unaffiliated with either party may participate in the seizure, but only at the request of law enforcement officials (not at the request of either party) and only “if the court determines that the participation of the expert will aid the efficient execution of and minimize the burden of the seizure.”

What to Expect Post-Seizure

The plaintiff does not get the property back right away. The court will retain exclusive custody over the property until both parties have been heard, and may appoint a special master “to locate and isolate all misappropriated trade secret information” and facilitate the return of data and property. Additionally, the DTSA requires the court to take “appropriate action to protect the person against whom [a seizure order] is directed from publicity, by or at the behest of the person obtaining the order, about such order and any seizure under such order.”

A hearing will be held within seven days after a seizure order is issued unless the party against whom the order is directed agrees to a later date, and the moving party must post a bond in an amount to be determined by the court. Those who believe they were damaged by a wrongful or excessive seizure may file their own cause of action.

The DTSA has a three-year statute of limitations and does not apply retroactively.

New Immunity for Whistleblowers

The DTSA gives immunity for employees and contractors who disclose trade secrets under certain circumstances. The DTSA also mandates that employers give notice of this immunity in any confidentiality or trade secret agreement with employees or contractors. If employers fail to do so, they cannot secure remedies under the DTSA, including exemplary damages (up to twice the amount of actual damages) and attorneys’ fees for willful or malicious violations. Thus, employers must incorporate the immunity notice into their relevant employment agreements and policies as soon as possible.

Passage of the DTSA was a truly groundbreaking development in trade secrets law, and we expect that litigation in 2017 and beyond will more fully reveal its true reach.

Developments in Disability Discrimination Law in 2016, and Predictions for the Future

President-elect Trump made headlines during the campaign (as he often did) when he gave the appearance of mocking a physically disabled reporter. The election of Donald Trump in 2016 carries far-reaching implications for disability discrimination cases (as well as other employment discrimination matters), but they will not be felt until 2017 or beyond. After taking office, President-elect Trump will have the power to the influence regulatory and enforcement efforts of the Equal Employment Opportunity Commission (EEOC), which enforces the Americans with Disabilities Act (ADA). While another amendment to the ADA is unlikely, President-elect Trump stated his intent to appoint more conservative federal judges to fill more than 100 judicial vacancies, which could result in more narrow interpretations of the statute as we move from 2016 into 2017.

In addition, the vacancy of the EEOC’s general counsel position may also provide an opportunity to impact the direction of EEOC enforcement litigation. For now, the EEOC, stacked with a number of President Obama-appointed commissioners with terms ending deep into President-elect Trump’s presidency, will aggressively move forward with its enforcement agenda. One of the EEOC’s priorities for 2017 is the qualification and accommodation of employees with disabilities. Employers should expect to see more disability discrimination lawsuits focused on whether an employee is qualified for a position and its reasonable accommodation obligations.

During the last couple of years, courts considered a number of disability accommodation cases that highlight the importance of having job descriptions that accurately identify essential job functions. For example, in EEOC v. LHC Group, Inc., a registered nurse sued her employer after being terminated shortly after suffering a grand mal seizure at work. She returned to work but was restricted from driving. As a result, the employer claimed the nurse was no longer qualified for the position; driving was an essential function identified in the employee’s job description. The employee was able to overcome summary judgment in favor of her employer with testimony of one of her supervisors, who explained that many of the employee’s duties were performed in the branch office, which, according to the court, undercut driving being an essential function as stated in the job description.

In Colbert v. Harris Co. Juvenile Probation, another job description case, a plaintiff with a hearing impairment applied for juvenile supervising officer position with a juvenile detention center. The position’s job description required the “ability to communicate effectively in written and oral forms.” This, the employer stated, included the ability to use a two-way radio, which the employer emphasized during the interview process. The employee successfully challenged the two-way radio requirement noting that the job description did not identify using a two-way radio and that other employees in similar positions did not use two-way radios.

Even if a job function is essential, an employer cannot immediately separate an employee who cannot perform such function. Instead, an employer must also determine if there is a reasonable accommodation that enables such employee to perform the essential function. In the 2016 case of Cannon v. Jacobs Fied Services., an applicant with an inoperable rotator-cuff injury applied for a job requiring ladder climbing and driving. The applicant’s shoulder injury required him to take prescription pain medicine and prevented him from raising his arm above his shoulder. The employee was medically cleared to perform the job but restricted from driving company vehicles and climbing ladders. The employer was concerned about the prescription medicine use and the ladder climbing restriction — because of the job requirements — and rescinded the job offer. The employee was able to show that he could avoid taking pain medicine during work and offered a video of himself climbing a ladder in an OSHA-compliant manner. This, the court ruled, was enough to overcome summary judgment in favor of the employer.

The EEOC closed out 2016 with a reminder that the next time your employee with performance issues comments that he or she is depressed or suffers some other form of mental condition, you might not be able to discipline the employee right away. On December 12, 2016, the EEOC published a “Your Legal Rights” bulletin emphasizing protections for employees with mental health conditions, including depression. Notably, the EEOC explained that a condition “need not be permanent or severe to be ‘substantially limiting’” and that such conditions are disabilities if they make “activities more difficult, uncomfortable, or time-consuming to perform compared to the way that most people perform them.” Even symptoms that “come and go” may be disabilities if they are sufficiently limiting when the symptoms are present. The EEOC identified examples of the types of accommodations an employer would have to offer, which include more breaks or altered break schedules, scheduling work around therapy appointments, “quiet office space,” “changes in supervisory methods” (such as requiring written instructions from a supervisor), specific shift assignments, and “permission to work from home.”

The release of this guidance could be a clarion call for plaintiffs to file EEOC charges in 2017 and beyond centering on alleged discrimination on the basis of a mental health condition. Regardless of whether we see an uptick in this particular brand of disability claim, we do expect 2017 to be an active year for ADA-related charges and lawsuits generally.

Three, Two, One … Happy New Year, California Employers!

Brett Nicole Taylor

(213) 892-7925

California employers and HR professionals once again have their work cut out for them in keeping abreast of and complying with all the new laws that will take effect in 2017. However, of all the new laws, three stand apart as particularly important and touch on some fundamentals — immigration, minimum wages, and all-gender restrooms.

Be careful what you ask for, as it may cost you (a lot!)

Beginning January 1, 2017, additional prohibitions against unfair immigration-related practices will become effective. Specifically, in the new year it will be an unlawful employment practice for a California employer to: (1) request more or different documents than are required under federal law (i.e., 8 U.S.C. § 1324(b)); (2) refuse to honor documents tendered that on their face reasonably appear to be genuine; (3) refuse to honor documents or work authorizations based upon the specific status, or term of status, that accompanies the work authorization; or (4) attempt to reinvestigate or re-verify an incumbent employee’s authorization to work using an unfair immigration-related practice. In addition, an applicant for employment or an employee who is subject to such unlawful acts may file a complaint with the Division of Labor Standards Enforcement and may recover a penalty of up to $10,000 per violation.

Single-user restrooms in California must be all-gender

California employers will have until March 1, 2017, to comply with the state’s new “all-gender” requirements for single-user restrooms. The new law requires all single-user toilet facilities in any business establishment, place of public accommodation, or local government agency in California to identify the restroom as all-gender. Thus, if a California business has a toilet facility with no more than one water closet and one urinal with a lock controlled by the user, signage must identify the restroom as all-gender.

California’s all-gender restroom law is one of many recent state laws regarding restroom rights of the transgender community. On the federal level, the Equal Employment Opportunity Commission (EEOC) has taken the position that transgender employees are protected against sex-based discrimination under Title VII of the Civil Rights Act of 1964. The EEOC has recently stated that “denying an employee equal access to a common restroom corresponding to the employee's gender identity is sex discrimination.” Additionally, the Department of Labor’s Occupational Safety and Health Administration (OSHA) has published guidance on transgender employees’ restroom access, stating that “[a]ll employees, including transgender employees, should have access to restrooms that correspond to their gender identity.” Most recently, the U.S. Supreme Court agreed to consider a Virginia school district’s challenge to the Obama administration guidelines that require schools to allow transgender students to use restrooms matching their chosen gender instead of their birth gender. Although that case, Gloucester County School Board v. G.G., involves discrimination in education, it will likely have an impact on discrimination against the transgender community in the employment arena, especially with regard to the EEOC and OSHA’s guidance and decision regarding transgender employees’ access to restrooms.

Minimum wage is not just a state law, cities and counties count too

California, as well as a number of its cities and counties, implemented new minimum wage requirements that will increase applicable minimum wages in 2017. HR professionals are reminded that employers must follow the strictest minimum wage laws, or said another way, the highest rate for employees. For example, California employers are subject to the federal minimum wage of $7.25 per hour for nonexempt employees, but because California’s current minimum wage is $10.00 per hour, employers in California must pay nonexempt employees a minimum of $10.00 per hour. The same is true with respect to cities and counties that require a higher minimum wage than that of the state of California.

Starting January 1, 2017, the minimum wage in California will vary depending on the size of the employer. For small employers with employees of 25 or fewer, the minimum wage will remain at $10 per hour for 2017, and will increase to $10.50 per hour on January 1, 2018; $11.00 per hour on January 1, 2019; $12.00 per hour on January 1, 2020; $13.00 per hour on January 1, 2021; $14.00 per hour on January 1, 2022; $15.00 per hour on January 1, 2023; and adjusted for inflation January 1, 2024 and every January 1 thereafter.

For large employers with 26 or more employees, minimum wage in California will increase to $10.50 on January 1, 2017; $11.00 per hour on January 1, 2018; $12.00 per hour on January 1, 2019, $13.00 per hour on January 1, 2020; $14.00 per hour on January 1, 2021; $15.00 per hour on January 1, 2022; and adjusted for inflation January 1, 2024 and every January 1 thereafter.

The following are some (but not all), of the highest wage requirements of cities and counties in California at present, as well as increases that take effect in 2017:

The city of Los Angeles and the unincorporated areas of Los Angeles County, which presently requires the minimum wage of businesses with 26 or more employees to be $10.50 per hour, establishes a minimum wage of $12.00 per hour on and after July 1, 2017.The minimum wage for employees of businesses with 25 or fewer employees will be $10.50 on and after July 1, 2017. Unincorporated areas of Los Angeles are areas of Los Angeles County that are not governed by local city governments. (To find out whether your business is located in an unincorporated area of Los Angeles County, click here).
Berkeley currently requires $12.53 per hour and will increase to $13.75 per hour on October 1, 2017.
El Cerrito currently requires $11.60 per hour and will increase to $12.25 per hour January 1, 2017.
Emeryville currently requires $13.00 per hour for small employers with 55 or fewer employees and $14.82 per hour for large employers with 56 or more employees, and will increase to $14.00 per hour on July 1, 2017 for small employers and will be adjusted for inflation based on the local consumer price index on July 1, 2017 for large employers (estimated to be $15.20 per hour).
Mountain View currently requires $11.00 per hour and will raise to $13.00 per hour on January 1, 2017.
Oakland currently requires $12.55 per hour and will raise to $12.86 on January 1, 2017.
Palo Alto currently requires $11.00 per hour and will increase to $12.00 per hour on January 1, 2017.
Pasadena is currently at California’s minimum wage of $10 per hour for small employers with fewer than 25 employees and $10.50 per hour for large employers of 26 or more employees and will increase to $10.50 per hour for small employers and $12.00 per hour for large employers on July 1, 2017.
Richmond currently requires $11.52 per hour and will increase to $12.30 per hour on January 1, 2017. (There are certain applicable reductions based on employer contributions to benefit plans and/or minimum export of Richmond produced goods or services.)
San Diego currently requires $10.50 per hour and will increase to $11.50 per hour on January 1, 2017.
San Francisco currently requires $13.00 per hour and will increase to $14.00 per hour on July 1, 2017.
San Jose currently requires $10.30 per hour and will increase to $10.50 per hour on January 1, 2017.
Santa Clara currently requires $11.00 per hour and will increase annually based on the Consumer Price Index for the previous year beginning in January 2017.
Sunnyvale currently requires $11.00 per hour and will increase to $13.00 per hour on January 1, 2017.

Bottom line

In connection with work authorization documents, California employers should not seek more or different documents than are required under federal law and should accept those documents that on their face reasonably appear to be genuine. Failure to comply with all aspects of the new law as detailed above can cost them $10,000 per violation. In addition to making sure that single-user restrooms comply with the new “all-gender” signage by March 1, 2017, employers should consider reviewing employment policies to confirm transgender employees have access to restrooms that correspond with their gender identity. Finally, when it comes to minimum wage, employers must be mindful of the size of their workforce, the state of California’s minimum wage requirements for the size of their business, as well as the municipal and county requirements in which their employees are located to ensure they are adhering to the strictest minimum wage laws that apply to them.

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