News You Can Use


In this issue:  

  • Labor Solicitor Presses on Misclassification, Warns Violators Face ‘Full Brunt of the Law’
  • Guidance Is Issue On ACA Reimbursements
  • EEOC, OFCCP Heads Discuss Pay Bias as Focus of Efforts
  • EEOC, Private Plaintiffs Pushing for Rulings on LGBT Rights
  • Job Descriptions Can Protect Against Litigation, Speaker Says
  • Doing It for the Team Is Chief Motivato In Employee Performance, Survey Finds



Labor Solicitor Presses on Misclassification, Warns Violators Face ‘Full Brunt of the Law’ Labor Solicitor M. Patricia Smith said Nov. 8 that the Labor Department is continuing to challenge the misclassification of employees as independent contractors or exempt employees under the Fair Labor Standards Act, and is using litigation, amicus briefs and cooperation with state agencies as effective tools to combat minimum wage and overtime violations. Speaking at the American Bar Association’s annual meeting of the Section of Labor and Employment Law in Los Angeles, Smith said misclassification litigation now includes not only independent contractor disputes but also questions about the FLSA rights of trainees, sales workers, and employees with ownership shares of a business, as well as issues about the applicability of the FLSA’s “white collar” exemptions.The DOL has been active in filing and prosecuting challenges to employer misclassification of workers, Smith said, and in making the department’s views known in amicus filings in private lawsuits. Employers that ignore or evade federal and state minimum wage and overtime obligations leave themselves exposed to the “full brunt of the law,” she warned. Smith spoke at a conference session, and was joined by attorneys Michele R. Fisher of Nichols Kaster PLLP in Minneapolis, who represents employees, and Lindbergh Porter, a management attorney at Littler Mendelson P.C. in San Francisco. Jason C. Marsili of Posner & Rosen LLP in Los Angeles moderated the session.A Range of Issues Smith wouldn’t predict when the DOL will issue a notice of proposed rulemaking on changes in its white-collar exemption regulations, but she said the department was charged by President Barack Obama in a March memorandum to consider how to simplify and update DOL regulations to address the changing nature of the American workplace (65 BTM 81, 3/18/14). The agency intends to do just that, Smith promised.She said the DOL, operating with limited resources, has itself filed lawsuits under the act, but that private lawsuits make up most of the FLSA cases filed each year.

Smith said that of approximately 15,000 cases recently filed under the FLSA, at least 2,000 were misclassification cases—48 percent of them individual cases, and 52 percent collective or collective-and-class actions.

Independent contractor disputes continue to proliferate, Smith said, listing exotic dancers, truck drivers, cable/satellite installers, couriers, security guards, delivery drivers (for retail stores and shipping companies) and construction workers as job categories where employers’ classification of workers as independent contractors has been challenged.

Smith said the DOL is asking that courts examining independent contractor claims and controversies consider not only the individual elements of multifactor tests distinguishing employees from independent contractors but also a larger question: “Are you in business for yourself or for another person?”

Substantial Jeopardy The solicitor, who was New York State Commissioner of Labor before coming to the DOL in 2010, pointed out that an employer that violates the FLSA by misclassifying an employee as an independent contractor is almost certainly violating employment obligations under state wage and hour, worker’s compensation and unemployment insurance laws, as well as federal and state payroll tax requirements.

Smith said the DOL has itself gone to trial in seven independent contractor cases in the past two years, but that the department has also entered memorandums of understanding that allow it to cooperate and share information with state agencies.

Both “red and blue states” are cooperating with the department, the solicitor said, citing recent DOL agreements with Alabama and Utah as examples. The DOL signed a cooperation agreement with New Hampshire Nov. 12. The department also shares information about misclassification with the IRS, she warned.

Under the New Hampshire agreement, the agencies will share information and coordinate law enforcement to prevent employees from being misclassified as independent contractors, the DOL said in a Nov. 12 statement.

The DOL has signed similar agreements with other states, including Alabama, California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.

Smith, Porter and Fisher also discussed the recent wave of litigation concerning the use of unpaid interns, and Porter reviewed the DOL’s guidance in a 2010 fact sheet on factors used in determining whether an intern is an employee entitled to minimum wage and overtime compensation under the FLSA (61 BTM 131, 4/27/10).

Smith said intern cases have been rising in several industries, including publishing and modeling, adding that the DOL is looking at another category of unpaid work: individuals performing concessions services at facilities such as sports stadiums.

Of about 15,000 cases recently filed under the FLSA, at least 2,000 were misclassification cases, Labor Solicitor M. Patricia Smith said.

In the concessions cases, Smith explained, individuals referred to as “volunteers” perform work for a concession operator in an arrangement often made by a charity or nonprofit organization.

In exchange for the nonprofit’s providing labor to the concession, Smith said, the concessionaire makes a contribution to the organization. The volunteers get no pay, but the organization that receives the benefit of their work also gets to enjoy a tax deduction.

Smith said no decision has been reached on the concessions arrangements, but the issue is under review. The solicitor also said that determinations of joint employer status under the FLSA are becoming “more and more important.” In the past, Smith said, the issue was only a concern if the nominal employer of workers in an FLSA dispute lacked the resources to pay a judgment for back pay and damages.

Now, she said, the DOL is looking at the phenomenon its new Wage and Hour administrator, David Weil, has referred to as the “fissured” American workplace.

The increased use of temporary agencies and staffing companies to supply employers with “contingent” workforces carries particular risks for workers, Smith said. Lots of temporary employees coming to new assignments in unfamiliar workplaces have been injured or killed on their first day on the job, she said, making the safety obligations of joint employers “very important.”

Smith was asked in reference to the National Labor Relations Board’s pending case involving Northwestern University whether she wanted to offer a DOL position on whether college athletes are employees under wage and hour laws. Smith said she was sure the DOL will have to enter the debate at some point but then laughed and said, “We’ve dodged it so far.” For More Information Text of the New Hampshire-DOL agreement is available at



Guidance Is Issue On ACA Reimbursements An employer can’t provide cash for reimbursement of an employee’s purchase of an individual policy on an insurance market without violating the market reforms in the Affordable Care Act, according to newly issued guidance from the federal government.The guidance also included a warning against employers offering high-claims-risk employees a cash subsidy to encourage them to opt out of the employer’s group health plan. It was issued as the 22nd in a series of frequently asked questions on ACA implementation from the Departments of Labor, Health and Human Services and Treasury.According to the guidance, both of these situations as well as one in which an employer cancels its group policy and then uses a reimbursement plan to help employees select individual policies violate the market reforms in the law.In the FAQ, the agencies address three scenarios in which an employer attempts to assist its employees with purchase of individual policies on the insurance markets established under the ACA by providing a cash subsidy.

In the most basic of these scenarios, the employer offers its employees cash to reimburse them for their premiums.

According to the guidance, this arrangement violates the market reforms because the employer’s payment arrangement is the equivalent of a group health plan and may trigger penalties, including excise taxes under Section 4980D of the tax code, when integrated with an individual policy purchased on the insurance market.

The most complex of the scenarios involves a product offered by a vendor to an employer in which the employer cancels its group health policy and then creates a reimbursement program that works with health insurance brokers to help the now uninsured employees purchase individual insurance policies and allows those same employees access to the premium tax credits for coverage from the insurance marketplace.

The agencies noted that some vendors have begun marketing products that work in this manner, but the guidance warns that they run afoul of the law in a number of different respects. Key among those violations is the fact that, like the cash premium assistance described before, these arrangements are the equivalent of group health plans and thus subject to all of the market reforms included in the law.

For More Information Text of the FAQ is available at .



EEOC, OFCCP Heads Discuss Pay Bias as Focus of Efforts The Obama administration’s efforts to end a persistent gender gap in compensation that harms female workers should be seen as “part of a much bigger picture” of U.S. employers’ failure to fully use a large segment of the workforce, Labor Department official Patricia Shiu said during an American Bar Association conference Nov. 6.Speaking at the ABA Section of Labor and Employment Law’s annual meeting in Los Angeles, Shiu, who heads the Office of Federal Contract Compliance Programs, said the administration’s focus on pay disparities is part of a broader context in which female workers also can be disadvantaged by current leave and accommodation policies.“You don’t leave talent on the table, whatever that talent may be,” said Shiu, who has served as OFCCP director since 2009.Employers, including federal contractors, want employees who are successful, productive team players, but many women’s talents aren’t fully used under current pay and leave policies, Shiu said.

President Barack Obama’s efforts, which include a White House interagency equal pay task force and an executive order prohibiting federal contractors from retaliating against employees who discuss their pay (65 BTM 113, 4/15/14), are incremental steps toward eliminating a gender pay gap that causes an average woman to lose about $400,000 over the course of a working career, Shiu said.

Jenny Yang, who chairs the Equal Employment Opportunity Commission, said she hopes all the attention to equal pay changes how employers “are making these decisions” on starting salaries, job assignments, training and opportunities for advancement.

Even in the 21st century, a “lot of stereotypical notions” persist that male workers are employed to support a family while female employees are working for “pocket change,” Yang told the conference.

There’s a perception women will work for less and won’t negotiate higher salaries, Yang said. But the EEOC sees cases in which female employees who do negotiate on pay either are unsuccessful or if they do get a raise, the employer holds the negotiating against them, Yang said.

Employers that rely on a worker’s past salary to set starting pay often are “really carrying on past discrimination” by perpetuating male workers’ pre-existing advantage, Yang said.

Pay Secrecy an Issue Jon C. Goldfarb, a plaintiffs’ attorney who represented Lilly Ledbetter in her historic sex discrimination lawsuit against Goodyear Tire & Rubber Co. (Ledbetter v. Goodyear Tire & Rubber Co., 550 U.S. 618, 127 S. Ct. 2162, 100 FEP Cases 1025 (2007) (58 BTM 177, 6/5/07)), said he hopes pay secrecy will “no longer be the norm” among employers in the wake of Obama’s executive order prohibiting federal contractors from retaliating against workers who discuss pay.

The National Labor Relations Act protects employees who talk about pay, but there’s no private right of action under the NLRA, and supervisors like Ledbetter wouldn’t be covered, Goldfarb said. The proposed Paycheck Fairness Act would generally prohibit employer retaliation for pay discussions, but Congress has shown no interest in enacting that legislation, said Goldfarb, who is with Wiggins Childs Quinn & Pantazis in Birmingham, Ala.

The president’s anti-retaliation executive order is limited because it protects an employee’s right to raise the pay issue but doesn’t compel the federal contractor-employer to respond, according to David Fortney of Fortney & Scott in Washington, D.C., who represents employers.

Yang cited a recent article published by the Society for Human Resource Management, which indicated employers that voluntarily adopt pay transparency policies exhibit less pay disparity between male and female workers. If an employer knows it must justify its pay structure, then more wage equality occurs, Yang said.



EEOC, Private Plaintiffs Pushing for Rulings on LGBT Rights The Equal Employment Opportunity Commission and private plaintiffs are using the gender stereotyping theory endorsed by the U.S. Supreme Court and the “plain language” of the sex discrimination ban in Title VII of the 1964 Civil Rights Act to argue that the federal law prohibits bias based on gender identity and gender expression, EEOC Commissioner Chai Feldblum told an American Bar Association conference Nov. 7.Speaking at the ABA’s Section of Labor and Employment Law annual meeting in Los Angeles, Feldblum said the EEOC’s strategic enforcement plan (64 BTM 5, 1/1/13) makes it an agency priority to explore the extent to which Title VII’s sex discrimination ban prohibits employment bias against lesbian, gay, bisexual and transgender (LGBT) people.Since the EEOC began keeping track in January 2013, the agency has received more than 800 charges alleging discrimination based on sexual orientation or transgender status, EEOC Chair Jenny Yang said at a separate conference session Nov. 6.The EEOC in a 2012 federal sector decision ruled Title VII’s sex discrimination ban reached a transgender federal employee who alleges she was denied a transfer because her supervisor learned she was transitioning from male to female (Macy v. Holder, EEOC, No. 0120120821, 4/20/12; 63 BTM 146, 5/8/12).

In September, the EEOC filed its first two federal court cases against private employers alleging Title VII sex discrimination claims on behalf of transgender people (65 BTM 318, 10/7/14).

The proposed federal Employment Non-Discrimination Act, which would amend Title VII expressly to prohibit discrimination based on sexual orientation or gender identity, has been introduced in every Congress since 1994. But it hasn’t been enacted, and its political prospects in the upcoming Republican-controlled Congress appear dim.

Gender Stereotyping Is Key The EEOC’s efforts to secure court approval of its view that Title VII protects LGBT individuals from discrimination can be characterized as “a funny thing happened on the way to non-passage” of ENDA, Feldblum said.

The key Supreme Court decision is Price Waterhouse v. Hopkins, 490 U.S. 228, 49 FEP Cases 954 (1989), in which the court ruled a female employee denied partnership in a major accounting firm allegedly because the decision makers saw her as too aggressive and masculine had a triable sex discrimination claim based on sexual stereotyping.

It took some years, but lower federal courts began applying Price Waterhouse’s sexual stereotyping framework to the claims of LGBT individuals who alleged they were denied jobs, harassed or otherwise discriminated against for not conforming to gender stereotypes or expectations, Feldblum said.

However, the courts have issued “a mixed bag” of decisions regarding potential Title VII protection for LGBT people, said Anthony Amendola, a management attorney with Mitchell Silberberg & Knupp in Los Angeles.

Being an openly gay or lesbian person is “actually harmful to the legal claim” under Title VII because the court then can find any bias resulted from sexual orientation, unprotected under federal law, rather than failure to conform with gender stereotypes, Amendola said at the Nov. 7 session.

“The less conforming you are to your gender, the greater the likelihood you can support” a Title VII claim based on Price Waterhouse, Amendola said.

Federal courts are leery of a plaintiff “bootstrapping” what’s essentially a sexual orientation bias claim through a gender stereotyping analysis, Amendola said.

Asked how courts differentiate between sexual orientation discrimination and bias based on gender stereotyping, Amendola said the focus in the latter cases is on how a plaintiff walks, talks or displays other mannerisms that are seen by others as not gender-conforming.

“The courts are so split on this,” Amendola said. “There’s not a whole lot of rhyme or reason in the case law.”

Suggested Best Practices

Annette Bernstein, an in-house counsel for American International Group in New York, and Matt Wood, an attorney with the Transgender Law Center in Oakland, Calif., offered tips on how employers should ensure transgender employees are treated correctly.

Employers should check their written anti-discrimination policies to see if they expressly prohibit bias based on gender identity and gender expression as well as sexual orientation, Bernstein said. If not, the employer should amend the policy to include gender identity and expression to avoid confusion, she said.

Employers also should review their employee benefit policies to ensure they are “putting their money where their mouth is,” Bernstein said.

Employers should train their employees regarding gender identity and expression issues and, if feasible, reach out to a transgender employee who is transitioning to see if he or she is comfortable in helping with such training, Bernstein said.



Job Descriptions Can Protect Against Litigation, Speaker SaysProperly written and frequently reviewed job descriptions are an essential shield for employers against a range of employment law claims, Melissa Fleischer, president and founder of the Rye, N.Y.-based HR Learning Center LLC, said in an Oct. 28 webinar sponsored by Aurora Training Advantage.“It’s amazing how often [employers] don’t understand job descriptions are legal documents that can be introduced in a court of law,” Fleischer said. Thus, she said, it’s important that job descriptions be drafted by human resources in collaboration with managers, and carefully reviewed by the organization’s legal counsel for compliance with the full panoply of state and federal employment laws, she said.According to Fleischer, the job description should include the job title, who the position reports to, a job summary and objectives, responsibilities for the job, requirements to perform the job, essential functions of the job, the salary for the job (which can include a pay grade or status), and the Fair Labor Standards Act classification of “exempt” from overtime or “nonexempt.”

Different aspects of the job description must comply with different laws, Fleischer said. Wording the “essential functions” carefully, for example, is vital in defending against charges the organization has violated the Americans with Disabilities Act, she said. Thus, Fleischer said, it’s important to include only truly essential functions under this rubric; a cashier position, for example, should not include moving heavy boxes to store shelves if the worker only does so occasionally, or the job description could unfairly exclude people with lifting restrictions.

In case someone sues the organization for job discrimination under the ADA, the court has to determine whether the plaintiff is a “qualified individual” who could potentially do the job with or without reasonable accommodation, Fleischer explained. And for that, courts will turn to the “essential functions” section of the job description and “take the employer’s word” for what is written there—as long as that was done before hiring for the position began—as a crucial piece of figuring out what the job necessarily entails, she said.

Like the courts, the Equal Employment Opportunity Commission views the employer’s pre-hiring essential functions description as a crucial piece of evidence, but it also will consider “actual work experience of present or past employees in the job, time spent performing a function, consequences of not requiring that an employee perform a function and terms of a collective bargaining agreement” as evidence, Fleischer said.

Essential functions have implications for more than just the ADA. To avoid discriminating against people with families, Fleischer advised, don’t say that such people shouldn’t apply for a position; instead, if necessary, specify that the job’s essential functions include a lot of travel and/or night and weekend work.

Avoid Implied Contracts A carelessly worded job description could restrict the employer’s right to engage in “employment at will,” including terminating an employee for any nondiscriminatory reason or none, by creating an implied contract, Fleischer said. Plaintiffs may also try to seize on language in the employee handbook or things a manager has said, Fleischer noted.

Thus, she said, it’s important to avoid such words and phrases as all, always, permanent employment and the like. Include clear, prominent disclaimers that employment is at-will in the job description and employee handbook, and train managers carefully, Fleischer said. “Nine times out of 10, it is your managers who end up creating legal liability for you” during an interview or the course of employment, she added.

Job descriptions are also vital to protect employers from misclassification complaints under the FLSA, chiefly by employees who think they should be eligible for overtime but have been classified as “exempt,” and against discriminatory pay complaints under the Equal Pay Act, according to Fleischer.

Misclassification “is a super-hot issue now” for the Department of Labor, she observed, so it’s vital to lay out in the job description accurately whether the position is exempt or nonexempt. “You never want to have managers making these decisions,” she cautioned. “HR and legal counsel should decide if a position is exempt or not.”

As to the Equal Pay Act, which has resulted in multimillion dollar settlements in recent years, job descriptions become a central issue there too because they can provide evidence that a female plaintiff’s job and a better-paid male colleague’s job require the same skill, responsibility and effort, under similar conditions. Only a limited number of “affirmative defenses” can be made if an employer is found to have violated this law, Fleischer noted.

Thus, Fleischer said: “If the jobs are not the same, be careful to make sure that the job descriptions are not the same. Otherwise it could come back to haunt you later on during Equal Pay Act litigation.”

In general, Fleischer said, a job description needs to be “a living, breathing document.” Job descriptions should be reviewed often—at least annually—to see if the job or the functions have changed, she said, adding that HR, managers and legal counsel should conduct these reviews.



Doing It for the Team Is Chief Motivaton In Employee Performance, Survey Finds The top reason why employees go the extra mile is for the sake of their colleagues, an answer 20 percent of respondents in a large, international poll gave, followed by 17 percent who cited their innate desire to do good work.The “2014 TINYpulse Employee Engagement Report,” from Seattle-based employee satisfaction company TINYhr, draws on an online survey compiling more than 200,000 employee responses from more than 500 organizations.About two-thirds of the respondents were from the U.S.Among the other top findings: • 66 percent feel that their opportunities for professional growth are limited where they work; • 64 percent feel that their employers lack a strong work culture; • 49 percent of employees are dissatisfied with their direct supervisors; • 44 percent are happy to acknowledge their peers if they have an easy means of doing so; • 26 percent say they lack the tools they need to do their jobs; and • only 21 percent feel strongly valued at work.

The many problematic aspects of the work world revealed in the survey can be offset if employers frequently conduct short surveys to catch and root out the sometimes trivial-seeming causes of employee dissatisfaction, David Niu, founder and CEO of TINYhr, said in a Nov. 10 interview with Bloomberg BNA.

Annual performance reviews still dominate the landscape, but businesses and employees change more often than an annual cycle allows for, Niu said. “If you do pulse-like surveys, you can be more proactive than reactive,” he said.

Keeping more frequent surveys down to as little as a single question—“What is one thing that drives you crazy at work?”—makes things easier for both the employee and the employer, he added.

Millennials in particular like more frequent feedback than is traditional, Niu added. “One millennial asked everyone for feedback every quarter, and he ended up being one of [an employer’s] stars, and got promoted,” he said.