On Monday of this week, the U.S. Supreme Court reversed the Ninth Circuit when it ruled in Encino Motorcars, LLC v. Navarro that auto dealership service advisors are exempt from the FLSA’s overtime requirements. The justices’ analysis led the five-justice majority to conclude that service advisors fall squarely within the applicable exemption for “any salesman, partsman or mechanic primarily engaged in selling or servicing automobiles.” 29 U.S.C. § 213(b)(10)(A). This case, however, promises broad national impact because the majority rejected the longstanding principle established through decades of FLSA jurisprudence that exemptions should be construed narrowly.
Don Davis is a Practice Group Associate in the firm’s Washington DC office. He has represented clients in a wide variety of cases that have touched upon a number of issues including employment contracts, wage and hour disputes, employment discrimination, disability accommodations, wrongful discharge claims, family and medical leave, defamation, and whistleblower rights.
The U.S. Court of Appeals for the Sixth Circuit ruled on March 7 that employer R.G. & G.R. Harris Funeral Homes unlawfully discriminated on the basis of sex when it fired a transgender employee after she informed the company that she would begin presenting consistent with her gender identity. In so doing, the court emphatically rejected the employer’s defense invoking religious liberty to discriminate on the basis of sex and other protected minorities. On the heels of the Second Circuit’s decision in Zarda v. Altitude Express, this case represents a further affirmation that existing civil rights laws protect LGBTQ employees from both gender identity and sexual orientation discrimination.
Austin, Texas recently became the first municipality in the South to enact a paid sick and safe leave law for private sector employees. The sick and safe leave ordinance will take effect on October 1, 2018 for employers with five or more employees. Employers with fewer than 5 employees will have an additional two years – until October 1, 2020 – to begin complying.
On Monday, for the second time in less than a year, a federal appeals court ruled that Title VII forbids sexual orientation discrimination because it is a form of sex discrimination. This time, in Zarda v. Altitude Express, Inc. the Second Circuit overturned decades of precedent and ruled that Title VII’s ban on discrimination “because of . . . sex” encompasses discrimination based on sexual orientation. The decision is also an apparent rebuke of the position taken by the United States Department of Justice (contrary to the Equal Employment Opportunity Commission’s position) that sexual orientation discrimination was never intended to by Congress to be covered by Title VII. The issue is almost certainly headed to the Supreme Court in its next term.
On Wednesday this week, all nine justices agreed that the Dodd-Frank Act’s anti-retaliation provision does not extend to an individual who has not reported a violation of the securities laws to the Securities and Exchange Commission (“SEC”). In other words, making only internal complaints does not shroud an employee in whistleblower protection under the Dodd-Frank Act.
On January 12, 2018, the Maryland Senate joined the Maryland House in voting to override Governor Hogan’s veto of House Bill 1, the Maryland Healthy Working Families Act, which requires employers to provide paid sick and safe leave to hundreds of thousands of Maryland workers. The bill was enacted upon the Senate’s override and will become effective on February 11, 2018, unless the General Assembly passes emergency legislation that was introduced on January 23, 2018 to delay implementation of the law by an additional 60 days.
This emergency bill is designed to give both employers and state administrative agencies more time to implement the law’s requirements. It is not yet known whether there are enough votes to delay implementation of the sick and safe leave law, but we will continue to provide updates on the status of this bill in the coming days.
The sick and safe leave law requires employers with 15 or more workers to allow them to earn up to five days per year of paid leave, which employees may use for their own illnesses or to attend to issues related to domestic violence or sexual assault. Employers with fewer than 15 employees would be required to allow workers to earn the same amount of unpaid leave. We will update this post when more information becomes available.
2017 is in the books and 2018 is now upon us. A dramatic close to 2017 on Capitol Hill ushered in sweeping changes to the tax code that will begin to impact both employers and employees in a number of ways – some more immediately – from employers losing deductions for sexual harassment settlement payouts, to penalties for high nonprofit executive compensation, to tax deferral on exercise of stock options for public company executives, to employee benefit plans. Wage and leave-related issues are also likely to dominate in 2018, as more states (and employers on their own initiative) increase wage thresholds and broaden employee paid and unpaid leave entitlements (even for some smaller employers). Salary history bans, such as those already enacted in New York City, Massachusetts, and California, will continue to get traction in 2018 as more states and municipalities jump on that bandwagon. We also expect to continue to witness a significant shift in the NLRB’s enforcement policy and decision-making; the NLRB’s new General Counsel has already announced a number of changes that are sure to make employers sigh with relief. Also in 2018, employers could continue to face rising uncertainty with respect to health plans in the wake of the tax bill’s repeal of the individual mandate that was central to keeping health plans affordable under the Affordable Care Act. Finally, so that we can help keep you accountable to the five New Year’s resolutions we made for you over the holidays (that we know you were eager to adopt as your own), we have collected them for you here: (1) review and refresh your non-harassment policies and training; (2) update your leave policies; (3) make sure your job applications comply with new state ban-the-box laws and salary history inquiry bans; (4) assess the strength and enforceability of your post-employment covenants under changing state law; and (5) make sure your employee benefit plans are compliant.
In the case of DiFiore v. CSL Behring, LLC, the Third Circuit ruled for the first time that the more demanding “but for” causation standard applies to retaliation claims under the False Claims Act (“FCA”), rejecting the lower “motivating factor” (also commonly known as the “mixed-motive”) standard. The Third Circuit’s ruling is a welcome result, especially for employers who deal with the federal government and may, therefore, be exposed to FCA retaliation claims. But, employers need to be mindful that different causes of action have different causation standards. For example, the more stringent “but for” standard applied by the Third Circuit to FCA retaliation claims also applies in Title VII retaliation and ADEA cases, but the lower “mixed motive” standard applies in other cases, including “status based” Title VII and ADA discrimination claims. So, employers are left with a mishmash of different causation standards to consider when assessing risk around employment decisions and defending cases.
Taking note of the #MeToo movement, Congress included a new provision in the tax code overhaul bill — Section 13307 – which is titled “Denial of Deduction for Settlements Subject to Nondisclosure Agreements Paid in Connection with Sexual Harassment or Sexual Abuse.” While the title of the section makes its purpose clear, the provision raises more questions than it answers.
This past year, a growing number of states and municipalities banished the Ghost of Christmas Past from haunting job applicants. As a result, employers in those jurisdictions must resolve now to bid auld lang syne to asking applicants about their salary and criminal histories. Employers should take a fresh look at their job applications, and hiring practices, policies and procedures and update them now to remain in compliance in the New Year.