U.S. Department of Labor Headquarters

A federal district court in Texas yesterday struck down (once and for all?) the changes to the overtime rules proposed by the Obama Administration.  Previously, those rules (affecting the white collar exemptions) had been stayed, but the Court’s ruling suggests that there is a fatal flaw to the proposed rules and barred its implementation.

In doing so, the Court said that the salary-level test that was proposed was too high to determine which workers were exempt from overtime compensation.

Of course, there was little chance that these rules were going to get the go-ahead anyways because the Trump administration has shown no desire to support them either politically or in court.  Indeed, in July, the Department of Labor sought public feedback on ways to revise the proposed rule.

The ruling applies to employers nationwide.

While you’ll see a round of headlines today about how this is a big decision, it really should come as no surprise for those of us who have been following this for many months.

So all that guidance last year about how to comply with the new rules? Forget about it for now.

Keep calm and carry on.

 

So this week, I’ll be speaking at our firm’s semi-annual Labor & Employment Law seminar.  Amazingly, we have reached capacity for this event and are now taking names for a waiting list! Many thanks to all who have signed up.  It should be a lot of fun.

Frequent blog contributor (and, well, a colleague) Chris Engler and I will be talking about the nuts and bolts of the hiring process.  Hiring is, after all, the engine that runs companies.  And making good hiring decisions can yield a ton of benefits in the long run.  Moreover, hiring good employees can help avoid lawsuits from arising too.

So what are we going to talk about? Well, we’re going to look at some of the new laws on hiring.  “Ban the Box” is the latest law to arise — limiting the ability of employers to ask about criminal histories on job applications.  Limits on the use of credit reports is another relatively recent law in the last few years.

After I put together the presentation, though, I came across a really interesting article in the Wall Street Journal about how some companies are using quirky interviews in their hiring process.    In doing so, the companies are striving for “culture fit”.

At Zappos, an online retailer famed for its offbeat office culture and corporate values, veteran employees size up candidates’ ability to blend in—and have veto power over those who miss the mark. The culture experts ask candidates questions that seemingly have little to do with the job, such as “If you were to write your biography, what would the title be?”

Rick Jordan, who leads talent acquisition for the nearly 1,500-person company, says longtime employees sometimes have a “gut feeling” about who is likely to succeed. About 1 in 8 don’t make the cut, he notes. “People who are true fits to the culture and believe what we believe—they’ll do anything for the business.”

But as the article notes, “culture-fit interviews raise concerns among employment experts, who warn that such screenings may be rife with potential for bias. Though these screenings haven’t been at the center of a major employment lawsuit, legal experts are concerned that they could put companies at risk.”

Indeed, there’s already a backlash against such interviews. Facebook, the article notes, “discourages its managers from using culture fit as a criteria in hiring, and calls the term ‘a bias trap,’ according to a spokeswoman.”

Where to from here? Well, employers should continually look at their hiring processes to ensure that the message of fair, non-discriminatory hiring is getting across to those who are making the decisions.

We’ll discuss this and more at the upcoming seminar. If you’re coming, please feel free to introduce yourself to me (during a break!).  See you then.

(P.S. Many thanks to Jon Hyman who alerted me to the hilarious video of President Obama’s “job interview” with Stephen Colbert. Worth a watch.)

Yesterday, President Obama signed the Defend Trade Secrets Act — a broad federal law designed to give companies added protection.  It does not circumvent state law — indeed, where a state law is more protective of the trade secret, it still applies. Nevertheless, it provides a base level of uniformity nationwide.

My colleagues, Pat Fahey and Lee Duval, prepared this summary a few days ago, which I republish here.  But candidly, there are plenty of such summaries out there by nearly every lawfirm.  You can find a whole host of them on LXBN.  If the subject is of interest to you, it’s worth following up with your attorney to get more information about how this statute is likely to impact your particular company.

congressWith the long-awaited passage of the Defend Trade Secrets Act of 2016 (“DTSA”), which amends the Economic Espionage Act, federal law will now provide a civil cause of action for misappropriation of trade secrets.

Prior to the DTSA, the protection of trade secrets was largely a matter of state law and based primarily on the Uniform Trade Secrets Act (“UTSA”).

Most states have adopted a version of UTSA, but variations between states on essential requirements, such as what qualifies as a trade secret, led to the call for a federal body of law that would be more predictable and uniform.

The DTSA does not preempt state laws governing trade secrets, but will allow civil litigants to pursue an additional claim and to bring those claims in federal court.

Litigants will still be able to pursue state law claims for misappropriation of trade secrets, but by filing in federal court, they will now have access to the broad, nationwide discovery permitted by the Federal Rules of Civil Procedure and the unique remedies afforded by the new law.

Two provisions of DTSA are particularly noteworthy: the allowance of ex parte seizure orders and certain employee protections.

Ex parte seizure orders – essentially an order from the court permitting the seizure of property to prevent the use or dissemination of the stolen trade secret without notice to the accused wrongdoer – would be permitted in “extraordinary circumstances.”

In the event that a wrongful seizure occurs, the victims will be entitled to damages, including punitive damages upon a showing of bad faith, and attorneys’ fees.

It remains to be seen how courts will interpret the ex parte seizure provisions, including what constitutes a wrongful seizure, and whether or not such requests will be made often by the trade secret owner.

The DTSA also provides certain protections for employees, which includes contractors and consultants.

Specifically, the legislation provides protection for certain “whistleblower” employees, and employers are obligated to inform their employees of these new protections.

For example, if an employee discloses a company’s trade secret in confidence “solely for the purpose of reporting or investigating a suspected violation of law,” that employee is immune from liability under DTSA.

Moreover, going forward, employers who fail to provide their employees with notice of the new immunities could lose the ability to recover punitive damages or attorneys’ fees in an action against an employee.

The notice requirement may be satisfied by an employer “provid[ing] a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.”

In addition, the law prohibits a court from “prevent[ing] a person from entering into an employment relationship” and requires that any conditions placed on the new employment “be based on evidence of threatened misappropriation and not merely on the information the person knows”, which is intended to foster employee mobility and to avoid conflict with state law.

Thus, in states that have authorized the “inevitable disclosure” doctrine as being a sufficient basis to justify a misappropriation of trade secrets claim, it will be imperative that the employer bring state law claims in addition to a DTSA claim.

We strongly recommend that employers take notice of the changes the DTSA makes to existing law.  All employers should review any employee agreement that “governs the use of a trade secret or other confidential information” and provide the requisite notice of the new immunities.

Employers also are encouraged to perform a trade secret audit to identify or inventory and document their claimed trade secrets, the steps that have been implemented to protect those trade secrets from disclosure and the economic value associated with the trade secret.

By taking these steps now, an employer will be in a better position if it finds itself in a dispute regarding the misappropriation of the company’s trade secrets.

The New York Times reported this morning that President Obama will ask the United States Department of Labor to revamp its regulations on the so-called “white collar” exemptions to the federal overtime laws.

Specifically, he will direct the DOL “to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees.

The article also suggests that “he will try to change rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform. Under current rules, if an employer declares that an employee’s primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime.”

As of mid-morning, the order was still not available on the White House’s website but you can check here. 

However, based on the article, it seems that the executive and professional employee exemption would be most directly impacted, but it is unclear what the impact would be on the administrative exemption.

But before you start throwing out your position descriptions just yet, realize that the President’s direction is just the first step in a process, not the last.

The regulations still need to be drafted, proposed and then adopted by the United States Department of Labor. It is certainly possible that further revisions will occur during that process.  The timing of this is still unclear.

For employers in Connecticut, understand that if these new proposals do come into effect, it would provide a new “floor” for wage & hour laws in Connecticut and many employers would have to adopt them, even though Connecticut’s own rules would be different.  As I’ve noted before, when federal law provides more protection to employees than state law, federal law will control. (The vice versa also applies too.)

However, this suggests the most significant change we’ve seen in the wage and hour area in a decade and could potentially open up a new front on the wage & hour class action battles.

So stay tuned.

President Obama was re-elected to a second term last night (something forecasted by stats guru Nate Silver). What does it mean for employers?

Four More Years

I won’t go quite as far as fellow blogger Jon Hyman, who said this morning that “it just doesn’t matter” who won last night.  I think it matters in part.

But the impact for employers will probably be far less than was suggested during the campaign season.  Much will depend on the level of compromise that comes out of Washington.

Here are four areas where we should keep an eye on:

  • “Obamacare” — With Obama’s re-election, the idea that universal healthcare will somehow be repealed is done.  With implementation of key provisions due in 2014, employers who have been on the fence about the changes that are required to their benefit system should now start moving forward.  Verdict: It’s happening.
  • NLRB — The National Labor Relations Board has been flexing its muscle under Obama’s first term.  This political agency will likely try to continue to push forward changes to election rules and posters — even as the litigation regarding those items promises to slow things down.   This is one area that employers ought to pay close attention to. Verdict: NLRB remains an agency to watch.
  • ENDA — The Employment Nondiscrimination Act, which would prohibit employers nationwide from discriminating against employees based on their sexual orientation, has been discussed a lot. But with same-sex laws passing in Maine and Maryland, the sentiment in the country appears to be shifting.  While this won’t have much impact in Connecticut (where state law already prohibits such discrimination), I wouldn’t be surprised to see a new push for this bill’s passage.  Verdict: Some compromise bill is likely on ENDA.
  • Paycheck Fairness Act — Stephanie Thomas of the Proactive Employer blog suggests this morning that the gender pay gap was an issue in the last term and will remain a priority in the next term.  (Check out her post for other potential issues.) I tend to agree with her, but with a Republican-controlled House of Representatives, it’s hard to see how a compromise is going to be shaped here.  Verdict: My guess is that we won’t see passage of this bill anytime soon.

But as I said before, it’s still too early to figure out what the next four years will bring.  Even driving into work, I heard a dozen differing opinions about what the election “means”.  We tend to overstate the results from elections on the morning after, and I think the same applies here.

The fact is we’ve had gridlock on the Hill for the last two years; no employment laws have been passed. Will the gridlock in Washington continue? Perhaps.  But if it starts to break, then perhaps we will start to see some more compromise measures being passed.

 

Finally, today is Election Day.  

And while the pundits tonight will all look forward to what the next four years might bring, it’s worth taking a quick peek back at Obama’s (first?) four years with a review of some of the posts from 2008-9.

Before his term, there were predictions that he would be good for employers, or bad for employers.   But I think that its fair to say that, with the notable exception of the NLRB, there really haven’t been a lot of changes to employment laws for the last four years.

You can chalk it up to a variety of reasons — bad economy, Washington gridlock, to name a few — but compared with the prior four years, in my view, employers haven’t had to worry about a lot of federal legislative developments.  (The rise in social media’s impact on employment, I would argue, has been much more significant.)

In 2008 alone, you had the Americans with Disabilities Amendment Act and the expansion of FMLA for military leave.  You also had new regulations for the Family Medical Leave Act.   

Remember what Obama pledged to get done?  A look at what happened showed a stalling out on a variety of issues.  Here are a few examples:

•Obama and Biden will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. (NLRB strengthened though impact lessoned as various proposals have been tied up in courts; EFCA never passed and has no reasonable likelihood of doing so)

•Obama and Biden will raise the minimum wage and index it to inflation. (While the minimum wage did increase in July 2009 to $7.25, that was as a result of a 2007 compromise bill. No further changes to minimum wage have been made since.)

•Obama and Biden will expand FMLA to cover businesses with 25 or more employees. They will expand the FMLA to cover more purposes as well, including allowing workers to take leave for elder care needs; allowing parents up to 24 hours of leave each year to participate in their children’s academic activities; and expanding FMLA to cover leave for employees to address domestic violence. (No substantive changes to FMLA have been made.)

• As president, Obama will initiate a strategy to encourage all 50 states to adopt paid-leave systems. (Connecticut did pass paid sick leave, but no strong federal support was seen.)

Other bills that have not yet passed include the Employment Non-Discrimination Act, which would prohibit employers from discriminating against employees because of their sexual orientation. 

So what did occur? Among other things: Passage of The Lilly Ledbetter Fair Pay Act (though query whether this has had much impact in the workplace).  And nursing mothers received additional federal protections under “Obamacare”.  The EEOC also released new guidance on the use of criminal records and credit reports.   But overall, the impacts on employers have probably been far less than forecasted.

What do the next four years hold? For that, we’ll just have to wait until tonight.

Election Day is nearly upon us.  Much like I did two years ago, it’s time to recap the rules for employers regarding the election.  The polls are open from 6 a.m. to 8 p.m. for everyone to vote for their favorite candidate…or at least the one that they dislike the least.  You can find out where you should vote at this easy to use link.

Any Time Off Required?

One question that arises from time to time: Do employers in Connecticut need to provide employees with time off to vote?

Many states offer this protection.   However, Connecticut isn’t one of them.

What does that mean? It means employers can insist that employees vote during non-working hours and have no legal obligation to provide time off to employees to vote. 

However, a reminder to employees about the polls being open and that they should vote either before or after their particular shift or work hours is certainly appropriate.

No “Threats” To Employees

Connecticut does have one peculiar law, however, that prevents employers from interfering with an employee’s vote. In fact, earlier this year, Conn. Gen. Stat. Sec. 9-365 was amended to make interference with the election a Class D felony:

Any person who (1) during the period that is sixty days or less prior to any election, municipal meeting, school district election or school district meeting, attempts to influence the vote of any operative in his or her employ by threats of withholding employment from him or her or by promises of employment, or (2) dismisses any operative from his or her employment on account of any vote he or she has given at any such election or meeting shall be guilty of a class D felony.

Despite a version of this law being on the books for nearly 60 years, don’t expect to find much, if any caselaw or commentary on it.  Yet, employers should still avoid the appearance of suggesting how to vote to employees. 

Remind Employees of “Bill of Rights”

Employers can feel free to remind employees of their “Bill of Rights” for voting.   Connecticut set up these rules and summarized them in a document here.  Among the more noteworthy rules that employees should know of is their right to vote when they are “in line” at the time the polls close. 

Other Tidbits

Reviewing the state’s laws on elections also reveals some other interesting quirks and trivial details.  For example, voting areas must have have a United States flag on the wall (Connecticut’s flag is optional), and a telephone. (And no United Nations Flags are allowed.)

Thanks to all who came and attended our employment law seminar at the Hartford Club today. As a reminder, we’re running another one on October 18th.  More information is available here.

At today’s seminar, we talked about the need for companies to implement a social media policy and also about how social media can get out of control quickly.

I used, as an example, a tweet from last night’s presidential debate. In the middle of the debate, the following tweet from KitchenAid’s corporate account appeared:

“Obamas gma even knew it was going 2 b bad! ‘She died 3 days b4 he became president’. #nbcpolitics”

Oy. 

That tweet used a “hashtag” that made the tweet easily seen by anyone following NBC News’ coverage of the debate.  The tweet itself was quickly deleted and replaced by a series of other tweets including this one: “It was carelessly sent in error by a member of our Twitter team who, needless to say, won’t be tweeting for us anymore.”

KitchenAid to its credit, has responded swiftly and promptly.  And it has made the most of what was obviously a mistake by a person who ran the Twitter account.

But the damage is already done.  Everyone has now seen it.  And we’re talking about it all over the internet today. 

Could this have been avoided? Yes and no.

First, let’s state the obvious. A tweet like this is just the new version of the “reply all” mistakes we see time and again.  No amount of technology is going to ever prevent a mistake from happening.

But there are ways to reduce the risk of these types of tweets from happening.  How?

Well, PR Daily already recapped some of them here.  They include: making sure that only members (and not interns) have access to your social media accounts; making sure you have a policy that outlines penalties and usage guidelines; and making sure that people who use multiple accounts note that their personal tweets are, well, personal.

Social media policies, as we talked about at today’s seminar, are continuing to evolve.  If you don’t have one yet, get one. If you have one, take a look at it periodically to see if it is still being followed in practice.  And above all else, educate your employees in how social media should be used by your company.

Learn from others. Mistakes happen. But some mistakes can be avoided.

Courtesy of Obama Campaign

Next up in this week’s series of employment law-related debate questions for the candidates: Vice President Joe Biden.

  • One of the big ideas of the administration early on was the Employee Free Choice Act. It’s an act that you publicly showed strong support for. The bill never passed and some of the ideas regarding “card check” seem on life support. What happened with the bill? What lessons have you learned from its defeat and do you still support its provisions, even if it is done through administrative rule changes, rather than legislation?
  • Why do you support the Paycheck Fairness Act? And why is that bill needed in light of all the other laws already on the books preventing pay discrimination, including the Equal Pay Act?

So, what do you think? What questions would you ask Vice President Biden related to employment law.

And don’t forget to check out posts from other employment law blogs here, here, here, and here.