Category Archives: New Developments

Covid-19, Minnesota Employers, Paid Time Off, Unemployment Insurance, Compensation Changes

This post addresses several related personnel issues, including furloughs, unemployment insurance, paid time off, compensation options, and health benefits.

The past two days have brought several developments in the overlap of covid-19 and personnel issues. On Monday, March 16, Minnesota’s Governor Walz issued an executive order closing many places of public accommodation.

Tuesday, March 17, Governor Walz issued another executive order, concerning unemployment insurance and covid-19.

This brief post is intended to answer a few frequently asked questions with reference to the March 17 E.O. and related information. First, the order.

Unemployment Insurance

The Governor’s March 17 executive order results in the following changes to remain in effect during the current peacetime emergency. (These are simplified summaries; the text of the order and related law should be reviewed before relying on these bullet points.)

  • Strict compliance with the unemployment statutes will not be required
  • For unemployment insurance benefit applications between March 1 and December 31 of this year, there will be no waiting week
  • Benefit recipients are required to search for “suitable employment.” “Suitable employment” does not include jobs that present a safety or health risks for the applicant or others
  • Suspensions from employment—such as leaves of absence, inactive status, furloughs—due to Covid-19 will not disqualify applicants for unemployment insurance benefits
  • Unemployment insurance payouts related to Covid-19 will not be considered when determining a business’s future unemployment insurance tax
  • Business owners will not be subject to the prior five-week limit on benefits

Layoffs: Employees who have been terminated because the Governor has ordered their place of employment to close or to reduce operations substantially should be entitled to unemployment insurance benefits (assuming no other, disqualifying circumstances). Some people are referring to this as being laid off.

Furloughs: Employees who have been placed on inactive status because the Governor has ordered their place of employment to close or to reduce operations substantially should be similarly entitled to unemployment insurance benefits (assuming no other, disqualifying circumstances). Some people are referring to this as being furloughed.

Health Insurance

Furloughed employees may be allowed to retain their employer-sponsored group health insurance, and employers may be allowed to continue funding the health benefits for their employees on inactive status, depending on the terms of the insurance plan (or self-funded benefits plan). The summary plan description might provide guidance, but a definitive answer can come only from the plan documents. At least one health insurer doing business in Minnesota will allow furloughed employees to retain their group health benefits while on inactive status. Check with your insurer to learn more about your situation.

Sick and Safe Time

In Minneapolis, “an employee may use accrued sick and safe time for … the closure of the employee’s place of business by order of a public official to limit exposure to an infectious agent, biological toxin or hazardous material or other public health emergency.” If an employee has been terminated because their employer has closed due to the covid-19-related peacetime emergency order in Minnesota, they would be entitled to their accrued sick and safe time. For employers who have included S.S.T. in a broader Paid Time Off plan, the employee would be entitled to their accrued P.T.O. (or such portion of their P.T.O. as may have been designated previously as sick leave).

Nothing would prevent an employer from asking to negotiate (a) the timing of the payment(s) or (b) the retention of a furloughed employee’s accrued P.T.O. until the employer reopens, if resuming operations is a reasonable likelihood. The decision, however, of whether to receive or to defer the payment of P.T.O. remains the employee’s.

Outside of Minneapolis, St. Paul, and other locations with local sick/safe time ordinances, paid time off is considered a component of wages. And like wages, the timing, amount, and circumstances in which P.T.O. (or sick/vacation) is payable depends in part on the arrangement struck between the employer and employee (or union). If the funds are clearly payable, then, as above, employers might be able to negotiate the timing; but unless there is a lawful basis for withholding any of the accrued leave time, employees are entitled to payment.

Irregular hours: Employers who will be staying open with reduced operations and whose employees will be working fewer and potentially irregular hours have a few options on how to pay those workers. Nonexempt workers could continue to be paid on an hourly basis or on a fixed salary for fluctuating hours (but note that the latter option has particular overtime compliance requirements). Exempt workers whose hours will be reduced could have their salary reduced accordingly, but note that exempt employees must be paid a week’s salary for any workweek in which they do any work. (Note also that some exemptions require the employee to supervise others, and some exemptions do not have that requirement; since January 1, 2020, an employee must also be paid at least $684 per week in order to retain the exemption.) A previously exempt worker might also be reclassified as nonexempt in order to manage workload uncertainty; the primary differences are entitlement to overtime and, for some, pride. In any event, please be aware that remote work and required availability are compensable.

This post is intended to be a summary of key points that have been raised frequently over the past two days. This is not intended to be a comprehensive treatment of the topics addressed. This is only a starting point; nothing here should be relied upon without further research or consultation. There are always details that spell the difference between compliance and liability. Additionally, legal requirements and best practices are changing daily as the situation evolves.

Planning for Coronavirus

We don’t know how disruptive the novel coronavirus will be, but there are reasons to believe that the virus, officially named Covid-19, will infect many people. Few workplaces will escape having to manage problems related to staffing and mission execution. Even if—or because—we can’t predict the scope of harm, it is necessary to prepare now. Adequate preparation is likely to be the only path to limiting the spread of the virus in the workplace and to preserving the viability of the organization.

The following is from the U.S. Centers for Disease Control and Prevention. Updates to the information can be found here.

Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19), February 2020

This interim guidance is based on what is currently known about the coronavirus disease 2019 (COVID-19). The Centers for Disease Control and Prevention (CDC) will update this interim guidance as needed and as additional information becomes available.

CDC is working across the Department of Health and Human Services and across the U.S. government in the public health response to COVID-19. Much is unknown about how the virus that causes COVID-19 spreads. Current knowledge is largely based on what is known about similar coronaviruses.

Coronaviruses are a large family of viruses that are common in humans and many different species of animals, including camels, cattle, cats, and bats. Rarely, animal coronaviruses can infect people and then spread between people, such as with MERS-CoV and SARS-CoV. The virus that causes COVID-19 is spreading from person-to-person in China and some limited person-to-person transmission has been reported in countries outside China, including the United States. However, respiratory illnesses like seasonal influenza, are currently widespread in many US communities.

The following interim guidance may help prevent workplace exposures to acute respiratory illnesses, including COVID-19, in non-healthcare settings. The guidance also provides planning considerations if there are more widespread, community outbreaks of COVID-19.

To prevent stigma and discrimination in the workplace, use only the guidance described below to determine risk of COVID-19. Do not make determinations of risk based on race or country of origin, and be sure to maintain confidentiality of people with confirmed COVID-29. There is much more to learn about the transmissibility, severity, and other features of COVID-19 and investigations are ongoing. Updates are available on CDC’s web page at www.cdc.gov/coronavirus/covid19.

Recommended Strategies for Employers

Actively encourage sick employees to stay home:

  • Employees who have symptoms of acute respiratory illness are recommended to stay home and not come to work until they are free of fever (100.4° F [37.8° C] or greater using an oral thermometer), signs of a fever, and any other symptoms for at least 24 hours, without the use of fever-reducing or other symptom-altering medicines (e.g. cough suppressants). Employees should notify their supervisor and stay home if they are sick.
  • Ensure that your sick leave policies are flexible and consistent with public health guidance and that employees are aware of these policies.
  • Talk with companies that provide your business with contract or temporary employees about the importance of sick employees staying home and encourage them to develop non-punitive leave policies.
  • Do not require a healthcare provider’s note for employees who are sick with acute respiratory illness to validate their illness or to return to work, as healthcare provider offices and medical facilities may be extremely busy and not able to provide such documentation in a timely way.
  • Employers should maintain flexible policies that permit employees to stay home to care for a sick family member. Employers should be aware that more employees may need to stay at home to care for sick children or other sick family members than is usual.

Separate sick employees:

  • CDC recommends that employees who appear to have acute respiratory illness symptoms (i.e. cough, shortness of breath) upon arrival to work or become sick during the day should be separated from other employees and be sent home immediately. Sick employees should cover their noses and mouths with a tissue when coughing or sneezing (or an elbow or shoulder if no tissue is available).

Emphasize staying home when sick, respiratory etiquette, and hand hygiene by all employee:

  • Place posters that encourage staying home when sick, cough and sneeze etiquette, and hand hygiene at the entrance to your workplace and in other workplace areas where they are likely to be seen.
  • Provide tissues and no-touch disposal receptacles for use by employees.
  • Instruct employees to clean their hands often with an alcohol-based hand sanitizer that contains at least 60-95% alcohol, or wash their hands with soap and water for at least 20 seconds. Soap and water should be used preferentially if hands are visibly dirty.
  • Provide soap and water and alcohol-based hand rubs in the workplace. Ensure that adequate supplies are maintained. Place hand rubs in multiple locations or in conference rooms to encourage hand hygiene.
  • Visit the coughing and sneezing etiquette and clean hands webpage for more information.

Perform routine environmental cleaning:

  • Routinely clean all frequently touched surfaces in the workplace, such as workstations, countertops, and doorknobs. Use the cleaning agents that are usually used in these areas and follow the directions on the label.
  • No additional disinfection beyond routine cleaning is recommended at this time.
  • Provide disposable wipes so that commonly used surfaces (for example, doorknobs, keyboards, remote controls, desks) can be wiped down by employees before each use.

Advise employees before traveling to take certain steps:

  • Check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from China, and information for aircrew, can be found at on the CDC website.
  • Advise employees to check themselves for symptoms of acute respiratory illness before starting travel and notify their supervisor and stay home if they are sick.
  • Ensure employees who become sick while traveling or on temporary assignment understand that they should notify their supervisor and should promptly call a healthcare provider for advice if needed.
  • If outside the United States, sick employees should follow your company’s policy for obtaining medical care or contact a healthcare provider or overseas medical assistance company to assist them with finding an appropriate healthcare provider in that country. A U.S. consular officer can help locate healthcare services. However, U.S. embassies, consulates, and military facilities do not have the legal authority, capability, and resources to evacuate or give medicines, vaccines, or medical care to private U.S. citizens overseas.

Additional Measures in Response to Currently Occurring Sporadic Importations of the COVID-19

  • Employees who are well but who have a sick family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
  • If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

Planning for a Possible COVID-19 Outbreak in the US

The severity of illness or how many people will fall ill from COVID-19 is unknown at this time. If there is evidence of a COVID-19 outbreak in the U.S., employers should plan to be able to respond in a flexible way to varying levels of severity and be prepared to refine their business response plans as needed. For the general American public, such as workers in non-healthcare settings and where it is unlikely that work tasks create an increased risk of exposures to COVID-19, the immediate health risk from COVID-19 is considered low. The CDC and its partners will continue to monitor national and international data on the severity of illness caused by COVID-19, will disseminate the results of these ongoing surveillance assessments, and will make additional recommendations as needed.

Planning Considerations

All employers need to consider how best to decrease the spread of acute respiratory illness and lower the impact of COVID-19 in their workplace in the event of an outbreak in the US. They should identify and communicate their objectives, which may include one or more of the following: (a) reducing transmission among staff, (b) protecting people who are at higher risk for adverse health complications, (c) maintaining business operations, and (d) minimizing adverse effects on other entities in their supply chains. Some of the key considerations when making decisions on appropriate responses are:

  • Disease severity (i.e., number of people who are sick, hospitalization and death rates) in the community where the business is located;
  • Impact of disease on employees that are vulnerable and may be at higher risk for COVID-19 adverse health complications. Inform employees that some people may be at higher risk for severe illness, such as older adults and those with chronic medical conditions.
  • Prepare for possible increased numbers of employee absences due to illness in employees and their family members, dismissals of early childhood programs and K-12 schools due to high levels of absenteeism or illness:
    • Employers should plan to monitor and respond to absenteeism at the workplace. Implement plans to continue your essential business functions in case you experience higher than usual absenteeism.
    • Cross-train personnel to perform essential functions so that the workplace is able to operate even if key staff members are absent.
    • Assess your essential functions and the reliance that others and the community have on your services or products. Be prepared to change your business practices if needed to maintain critical operations (e.g., identify alternative suppliers, prioritize customers, or temporarily suspend some of your operations if needed).
  • Employers with more than one business location are encouraged to provide local managers with the authority to take appropriate actions outlined in their business infectious disease outbreak response plan based on the condition in each locality.
  • Coordination with state and local health officials is strongly encouraged for all businesses so that timely and accurate information can guide appropriate responses in each location where their operations reside. Since the intensity of an outbreak may differ according to geographic location, local health officials will be issuing guidance specific to their communities.

Important Considerations for Creating an Infectious Disease Outbreak Response Plan

All employers should be ready to implement strategies to protect their workforce from COVID-19 while ensuring continuity of operations. During a COVID-19 outbreak, all sick employees should stay home and away from the workplace, respiratory etiquette and hand hygiene should be encouraged, and routine cleaning of commonly touched surfaces should be performed regularly.

Employers should:

  • Ensure the plan is flexible and involve your employees in developing and reviewing your plan.
  • Conduct a focused discussion or exercise using your plan, to find out ahead of time whether the plan has gaps or problems that need to be corrected.
  • Share your plan with employees and explain what human resources policies, workplace and leave flexibilities, and pay and benefits will be available to them.
  • Share best practices with other businesses in your communities (especially those in your supply chain), chambers of commerce, and associations to improve community response efforts.

Recommendations for an Infectious Disease Outbreak Response Plan:

  • Identify possible work-related exposure and health risks to your employees. OSHA has more information on how to protect workers from potential exposures to COVID-19.
  • Review human resources policies to make sure that policies and practices are consistent with public health recommendations and are consistent with existing state and federal workplace laws (for more information on employer responsibilities, visit the Department of Labor’sexternal icon and the Equal Employment Opportunity Commission’sexternal icon websites).
  • Explore whether you can establish policies and practices, such as flexible worksites (e.g., telecommuting) and flexible work hours (e.g., staggered shifts), to increase the physical distance among employees and between employees and others if state and local health authorities recommend the use of social distancing strategies. For employees who are able to telework, supervisors should encourage employees to telework instead of coming into the workplace until symptoms are completely resolved. Ensure that you have the information technology and infrastructure needed to support multiple employees who may be able to work from home.
  • Identify essential business functions, essential jobs or roles, and critical elements within your supply chains (e.g., raw materials, suppliers, subcontractor services/products, and logistics) required to maintain business operations. Plan for how your business will operate if there is increasing absenteeism or these supply chains are interrupted.
  • Set up authorities, triggers, and procedures for activating and terminating the company’s infectious disease outbreak response plan, altering business operations (e.g., possibly changing or closing operations in affected areas), and transferring business knowledge to key employees. Work closely with your local health officials to identify these triggers.
  • Plan to minimize exposure between employees and also between employees and the public, if public health officials call for social distancing.
  • Establish a process to communicate information to employees and business partners on your infectious disease outbreak response plans and latest COVID-19 information. Anticipate employee fear, anxiety, rumors, and misinformation, and plan communications accordingly.
  • In some communities, early childhood programs and K-12 schools may be dismissed, particularly if COVID-19 worsens. Determine how you will operate if absenteeism spikes from increases in sick employees, those who stay home to care for sick family members, and those who must stay home to watch their children if dismissed from school. Businesses and other employers should prepare to institute flexible workplace and leave policies for these employees.
  • Local conditions will influence the decisions that public health officials make regarding community-level strategies; employers should take the time now to learn about plans in place in each community where they have a business.
  • If there is evidence of a COVID-19 outbreak in the US, consider canceling non-essential business travel to additional countries per travel guidance on the CDC website.
    • Travel restrictions may be enacted by other countries which may limit the ability of employees to return home if they become sick while on travel status.
    • Consider cancelling large work-related meetings or events.

Resources for More Information

CDC Guidance

Other Federal Agencies and Partners

 

Employers May Restrict Use of Organization’s E-mail

Reversing prior, if contentious, law, the National Labor Relations Board held this week that an employer’s property interest in its e-mail system would allow it to restrict employees from using the system for communications unrelated to their jobs, as long as (a) alternative means are available for employees to communicate effectively with each other concerning the terms and conditions of their employment, and (b) the rules do not discriminate against the exercise of employees’ protected rights to concerted action.

We recognize that there may be some cases in which an employer’s email system furnishes the only reasonable means for employees to communicate with one another. Consistent with the principles stated above, an employer’s property rights may be required to yield in such circumstances to ensure that employees have adequate avenues of communication. Because, in the typical workplace, employees do have adequate avenues of communication that do not infringe on employer property rights in employer-provided equipment, we expect such cases to be rare.

We hold … that an employer does not violate the Act by restricting the nonbusiness use of its IT resources absent proof that employees would otherwise be deprived of any reasonable means of communicating with each other, or proof of discrimination.

Caesars Entertainment d/b/a/ Rio All-Suites Hotel and Casino, 368 N.L.R.B. No. 143 (2019) , slip op. at 8. The decision can be found at this link.

Employers May Require Confidentiality During Investigations

In a decision released today, the National Labor Relations Board reversed prior law concerning confidentiality during open workplace investigations. Commenting on the employer rules in the case, the majority wrote:

The rules at issue do not broadly prohibit employees from discussing either discipline or incidents that could result in discipline. Rather, they narrowly require that employees not discuss investigations of such incidents or interviews conducted in the course of an investigation. Employees not involved in an investigation are free to discuss such incidents without limitation, and employees who are involved may also discuss them, provided they do not disclose information they either learned or provided in the course of the investigation. Further, the rules do not restrict employees from discussing workplace issues generally or limit the employees’ ability to discuss disciplinary policies and procedures. Finally, we note that the rules do not prohibit a union-represented employee from requesting the help of a union representative during such an investigation (if the Respondent’s employees were to unionize), pursuant to NLRB v. J. Weingarten, 420 U.S. 251, 267 (1975).

Apogee Retail LLC d/b/a Unique Thrift Store, 368 N.L.R.B. No. 144 (2019), slip op. at 8. The full decision can be found at this link.

E.E.O.C. Announces September 30, 2019, Deadline for 2018 EEO-1 Submissions Including Component 2 Data

Brief History

Annual EEO-1 survey data must be reported (a) by employers that are covered by Title VII and have more than 99 employees and (2) by federal contractors and their immediate subcontractors that are covered by E.O. 11246 and have more than 49 employees and a relevant contract of at least $50,000.

In 2016, the E.E.O.C. expanded the kinds of data that  should be reported in the EEO-1. The expanded data, “Component 2 data,” included compensation data analyzed by pay tier, category, age, race, sex, and ethnicity.  

In 2017, the O.M.B. revoked its Paperwork Reduction Act approval of the E.E.O.C.’s 2016 expansion of required EEO-1 data. The National Women’s Law Center and others challenged the validity of O.M.B.’s action. The court sided in part with the plaintiffs, and invalidated O.M.B.’s stay. E.E.O.C. suggested that employers and the agency itself might need substantial time to prepare their procedures to submit and to accept the Component 2 data. The Court required an accelerated response.

Recent Development

On April 3, E.E.O.C. filed its response to the Court’s efforts to move the process along more expeditiously. The Agency has rescheduled the EEO-1 submission deadline for 2018 data, including Component 2 data, to September 30, 2019.

The EEO-1 reporting portal is not yet capable of receiving the Component 2 data. Presumably, E.E.O.C. will issue instructions over the coming months, as the reporting enhancements come on line.

Revised F.M.L.A. Forms Now Available

The U.S. Department of Labor has revised its approved forms for various stages of the F.M.L.A. process. The new forms, which are valid for the next three years, can be found here.

Minneapolis Minimum Wage Ordinance-Update

Here is an update, current as of June 14, on the Minneapolis City Council’s movement toward an increase in the minimum wage for employees working within the city of Minneapolis (Council File Number: 17-00723).

  • A draft ordinance has been presented to the City Council (technically to the Committee of the Whole). The draft is available here.
  • A slide presentation on the proposed ordinance is available here. Note that the ordinance will cover employees who normally work within the City for at least two hours in a given workweek.
  • A public hearing will be held on Thursday, June 22, 2017, at 3:30pm. Comments can be submitted before that time by e-mail to this address.
  • The final draft ordinance will go before the Council’s Committee of the Whole on Wednesday, June 28, 2017, at 10:00am. The Council is expected to act on the matter on Friday, June 30, at it’s 9:30am meeting.

The City’s staff has prepared a report on the issues, which is available here. Among its many important points is a comparison of buying power. See paragraph a on page 21.

Note also that there has been no traction to date on changing the State’s law that bars tip credits toward the minimum wage. (For mid-priced restaurants, which present relatively affordable options served by employees who receive customer gratuities, the increase in minimum wage without a tip credit is likely to result in cuts to already slim profit margins, and/or increased wage disparities between customer-facing staff (front of house) and those supporting the efforts behind the scenes (back of house), and/or higher prices for consumers.)

Information on Minnesota’s current minimum wage laws can be found here, here, and here.

If you have questions concerning this or other employment-related laws, please call or contact us.

Court Enjoins New Overtime Rule

The United States District Court for the Eastern District of Texas on November 22 issued a nationwide injunction against the implementation of the U.S. Department of Labor’s Final Rule on, among other things, increasing the minimum salary threshold for an employee to be exempt from overtime. State of Nevada vs. U.S. Dept. of Labor. The Rule had been scheduled to become effective on December 1, 2016.

There remain several ways the saga might continue to unfold. The appellate court could stay the injunction pending resolution of an appeal. The appellate court could also keep the injunction in place while the appeal proceeds. As of this writing, the chances appear unscientifically to be about fifty-fifty. (The appellant would be the Secretary of Labor, but note that the next Secretary would not be obligated to continue an appeal begun by the current Secretary.)

If you have already restructured your compensation and/or staffing in order to comply with the new rule, you have the choice between retaining the new structure, which most organizations are likely to do, or reverting to the previous structure, which carries the risk that you will have to change once again if the injunction is stayed or the rule is reinstated after appeal.

The District Court’s reasoning for issuing the injunction is sound. The Court decided that the new rule had the effect of making an employee’s salary as important as their duties when determining whether the person should be exempt. Raising the importance of an employee’s salary to the level of their duties was contrary, the Court ruled, to the intent of Congress.

Bargaining with Unions that Represent a Minority of Employees

Generally, a private-sector employer that is not in the construction industry has an obligation to bargain with a union only when that union represents a majority of employees in the relevant unit. Sometimes the union is recognized voluntarily by the employer; sometimes they are certified by the National Labor Relations Board (“N.L.R.B.”), a federal agency. Either way, that union becomes the “exclusive bargaining representative” for covered employees. Now, though, employers may soon receive demands to bargain with unions that do not represent a majority of employees.

In the recent case of Children’s Hosp. of Oakland, 364 N.L.R.B. No. 114 (2016), the National Labor Relations Board held that an employer was required “to  arbitrate pending grievances arising under an expired collective-bargaining agreement with the union that was party to that agreement, even if the union has been superseded by another union….” That part is important, but there was another piece of the case that may prove to be more difficult to implement.

In a concurrence, Member Hirozawa wrote with approval about a doctrine that many labor lawyers thought had been put to rest. He articulated the basis for an employer’s duty to bargain with a union on behalf of that union’s members, even if the union does not represent a majority of the unit employees. Noting that a covered employer’s statutory obligation to bargain is “subject to the provisions of” Section 9(a) of the National Labor Relations Act , he wrote, “I think it is also useful, however, to consider what the subject-to-Section-9(a) clause does not mean.  It does not mean that for an employer to have a duty to bargain with a union on behalf of its employees, the union must be a Section 9(a) exclusive representative.”

That non-exclusivity doctrine, which had been argued by, among others, Charles Morris, a well-respected author and law professor, appeared to have been struck down for good after the N.L.R.B.’s Office of General Counsel issued an “Advice Memorandum” ten years ago. Now, though, Member Hirozawa’s concurrence has breathed into it new life, and Prof. Morris, sensing that the doctrine might once again be stirring, has posted a comment on the topic.

What does it all mean? It means that employers may soon be receiving demands to bargain from unions which concede that they represent only a minority of employees. How to respond depends, as always, on an assessment of each employer’s values, situation, goals, and options.

Please let us know if you would like additional information or assistance.

Trade Secrets, Overtime, and Other Priority Developments

It’s been a busy time in the world of employment law. A few recent developments have particular priority for human resources managers and general business lawyers. This post concerns three of those developments: trade secrets, overtime exemptions, and changes to the E.E.O.-1 form.

New Trade Secret Protections and Requirements

One development concerns proprietary and confidential information. A new law offers the first federal protections for trade secrets. It’s an important law. Part of it authorizes the seizure of things that were used in the process of allegedly diverting trade secrets, such as computers and storage media. That’s an important contingency that should be considered when provisioning critical hardware, proprietary software, and network access.

Another part of the law requires the supplementation of all agreements with employees and contractors which addresses confidential information or trade secrets. Those materials must now contain a notice to employees (or reference to a separate, available document) to the effect that trade secrets may be used in a limited fashion to engage in whistleblowing activity or in employment litigation alleging whistleblower retaliation.

In light of the Defend Trade Secrets Act, employee agreements, handbook policies, and other materials which contain provisions on trade secrets should be reviewed and supplemented with appropriate text as soon as possible. (And, of course, this is a good opportunity to be sure that other developments from the past few years are properly implemented, such as Minnesota’s Women’s Economic Security Act and the N.L.R.B.’s application of Section 7 to handbook and other employee policies.)

New Overtime Eligibility Rule, Pay Equity, and the E.E.O.-1

Most employers by now have received multiple announcements of the final rule issued last month by the U.S. Department of Labor concerning the increased salary threshold required to be exempt from overtime. Organizations should review their options on classifying and compensating affected employees. There are several ways to proceed in compliance with the regulation, depending on employer objectives.

Just complying with the new rule, though, could leave an organization vulnerable to adverse assessments in the near future, assuming that the categories of data required for the E.E.O.-1 form expand as planned. Here’s why, and what to do:

All organizations with 100 employees and many smaller organizations must file an E.E.O.-1 annually with the U.S. Equal Employment Opportunity Commission. The form includes information on current employees by job category, ethnicity, and sex. If the current rulemaking proceeds as planned, the form will also include twelve compensation bands. Now hold that thought….

There’s been a resumption in the discussions among some circles about comparable worth analyses. The comparable worth approach seeks to close the gender-based pay gap by comparing compensation by gender within “comparable,” but not “equal,” jobs. Minnesota and California have long required comparable pay assessments in the public sector. Minnesota now also requires comparable pay for private and third sector employers with at least forty employees having government contracts of at least a half-million dollars. There is an increased focus, and in some areas also legislative activity, around employee protections for discussing compensation issues. Add in the increase in data collection, analysis, and dissemination that current technologies and vendors are providing, and it seems likely that there will be an increase in lawsuits attempting to prove sex discrimination through a deep analysis of how employers have arrived at gender disparities in the compensation of comparable, but not equal, jobs. Let’s go back to those E.E.O.-1 changes.

The new form will funnel multiple jobs and job categories into a dozen compensation-based bands for employers (and sufficiently related employer groups) having 100 employees. By doing so, the information will help the government to assess the distribution of jobs by compensation level as well as by the various other attributes entered into the form.

The information should also help employers to smooth out gender- (and other non-job-) based inequities, whether derived from bias, history, or other sources. Smoothing out those arguable inequities would minimize exposure to a range of problems based on a comparable worth analysis, including investor inquiries, government contract compliance, and even discrimination claims, which have generally been unsuccessful but are showing signs of making a comeback. And what might happen if the EEO-1 shows inequities that are not self-remedied? In litigation, the information would likely become available (from the employer, not the government) to plaintiffs challenging job bias.

Now let’s go back to that new F.L.S.A. regulation. Employers should review the overtime classifications of currently exempt workers who make less than the new salary threshold. They could take this opportunity to review, as well, their other employees’ overtime classifications. But any adjustments employers make—e.g., to classification, compensation levels, compensation mechanisms, reporting lines—should anticipate the forthcoming E.E.O.-1 requirements. This is a good time to rationalize classifications and compensation, and to develop a plan to squeeze out any vestige of bias in the way that employees are compensated and assigned. More guidance on ways to implement the new rule will appear in a later post.

A comprehensive approach to these issues also answers one of the common questions raised by the new F.L.S.A. regulation: “How do I communicate the effects of the rule change to my workforce?” Communicating a systematic review of compensation to make the process more transparent and more equitable can increase an employee’s perception of fairness; and research indicates that increased perceptions of fairness result in a decreased litigation risk. (Other elements to communicate in the course of implementing the regulation depend on employer objectives and choices, but the message to employees need not be negative and the effect on employer budgets need not be extreme.) More information on the subject of communication will appear in a later post.

Note that employers are likely to have an obligation to bargain over one or more aspects of compensation adjustments for unionized employees. The scope of the bargaining duty will depend on the specific collective bargaining relationship, including both contract language and past practice.

A careful implementation of the new overtime salary rule could be an affordable opportunity to improve morale, enhance recruiting and retention, minimize bias-related exposure to liability, and promote regulatory compliance. Let us know if we can help.

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