Category Archives: New Developments

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.

Update stream from publisher Wolters Kluwer

N.L.R.B. on Recent Decisions Regarding Employee Rights Posting

The following text is the entire public announcement by the National Labor Relations Board on April 17, 2012, concerning the requirement that employers post notices of certain federal labor law rights:

“In light of conflicting decisions at the district court level, the D.C. Circuit Court of Appeals has temporarily enjoined the N.L.R.B.’s rule requiring the posting of employee rights, which had been scheduled to take effect on April 30, 2012.

“In view of the D.C. Circuit’s order, and in light of the strong interest in the uniform implementation and administration of agency rules, regional offices will not implement the rule pending the resolution of the issues before the court.

“In March, the D.C. District Court found that the agency had the authority to issue the rule. The NLRB supports that decision, but plans to appeal a separate part that raised questions about enforcement mechanisms. The agency disagrees with and will appeal last week’s decision by the South Carolina District Court, which found the N.L.R.B. lacked authority to promulgate the rule.

“Chairman Mark Gaston Pearce said of the recent decisions, ‘We continue to believe that requiring employers to post this notice is well within the Board’s authority, and that it provides a genuine service to employees who may not otherwise know their rights under our law.'”

New Online Resource Steps through F.M.L.A. Eligibility

The U.S. Department of Labor recently released an updated version of its Family and Medical Leave Act Advisor. The F.M.L.A. Advisor is an online resource that, through an interactive question-and-answer program, helps to clarify which employers are required to provide F.M.L.A. leave and which employees are eligible to take such leave. The resource also provides links and information concerning valid reasons for leave, notice requirements, certification steps, citations to regulations, and other information.

The Advisor may not answer all difficult F.M.L.A. questions, and it does not provide information on how to handle cases that involve not only F.M.L.A. but also the Americans with Disabilities Act or state worker’s compensation law. Nevertheless, it is a helpful first step that, in some cases, may provide all the assistance that a human resources manager needs.

Federal Agency To Require Posting of Employee Labor Rights

The National Labor Relations Board has issued a Final Rule that will require covered employers to notify employees of their rights under the National Labor Relations Act, effective November 14, 2011. 

Private-sector employers (including labor organizations) whose workplaces fall under the National Labor Relations Act will be required to post the employee rights notice where other workplace notices are typically posted. Additionally, employers who customarily post notices to employees regarding personnel rules or policies on an internet or intranet site will be required to post the Board’s notice on those sites. Copies of the notice will be available from the Board’s regional offices may also be downloaded from the NLRB website

The notice, which is similar to one required by the U.S. Department of Labor for federal contractors, states that employees have the right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, as well as to refrain from any of those activities. It provides examples of unlawful employer and union conduct, and instructs employees how to contact the NLRB with questions or complaints. 

The Board received approximately 6,500 comments during the 60-day comment period following publication of the Proposed Rule in the Federal Register, and accepted an additional 500 that arrived after the deadline. In response to the comments, some parts of the rule were modified. For example, employers will not be required to distribute the notice via email, voice mail, text messaging or related electronic communications even if they customarily communicate with their employees in that manner, and they may post notices in black and white as well as in color. The final rule also clarifies requirements for posting in foreign languages. Similar postings of workplace rights are required under other federal workplace laws. 

Questions about compliance with this or other requirements can be directed to this firm, to the National Labor Relations Board, or to other resources familiar with employment and labor law.

Text credit in part to Nancy Cleeland, Director of N.L.R.B. Office of Public Affairs

New Aid to Employers Paying Health Benefits for Early Retirees

The White House announced Tuesday that it would help pay medical bills for early retirees who have health insurance provided by their former employers. Under the program, the federal government can reimburse employers for 80 percent of the cost of claims from $15,000 to $90,000 a year for a retired worker who is 55 or older and not eligible for Medicare.

The program will run from June 1 of this year to Jan. 1, 2014, when many early retirees will be able to enroll in health plans offered through new state-based markets known as insurance exchanges. John J. Castellani, president of the Business Roundtable, which represents large employers, welcomed the new program, saying it would make health benefits “more affordable for employers and early retirees and their families.” Kathleen Sebelius, the secretary of health and human services, predicted that 4,500 employers — 3,000 private entities and 1,500 state and local governments — would seek federal aid under the program.

Employers can apply through the U.S. Department of Health and Human Services. Applications will be available by the end of June 2010.

The federal aid will be available to private employers, state and local governments, nonprofit and religious organizations and labor unions that sponsor health benefit plans. It will be available to employers who pay premiums to insure early retirees, as well as to employers who assume the risk themselves and pay claims with their own assets. Under the new law, employers must use the federal money to reduce “health benefit costs” for themselves or their retirees — for example, by reducing premiums, deductibles or co-payments. As a condition receiving federal aid, employers must maintain their current contributions to the cost of retiree health benefits. Many companies expected to apply for the new program already receive federal subsidies under a 2003 law to help offset the cost of providing prescription drug benefits to retirees, Ms. Sebelius said.

Edited from the New York Times, May 7, 2010

Federal Minimum Wage Increases

Effective July 24, 2009, the federal minimum wage increases to $7.25 per hour. This is the last increase required by the 2007 Minimum Wage Act.

Employers of covered employees must post a notice that describes, among other things, employees’ minimum wage rights. A link for posters is available below, under “Resources.” Note that the U.S. Department of Labor is likely to revise the currently available posters.

Minnesota employers who are not covered by the federal Fair Labor Standards Act’s minimum wage provisions are likely to be covered by the state’s wage and hour laws. Minnesota’s minimum wage remains unchanged, at $5.25 per hour for employers grossing less than $625,000 and $6.15 per hour for employers at or above that level. More information on Minnesota’s minimum wages, including some exemptions, information on the training wage, and discussion of the fact that there is no tip credit allowed in Minnesota, is provided in the official notice available below, under “Resources.”

Whether a particular classification of employee is covered by the federal minimum wage law is an analysis that is beyond the scope of this brief article. The answer depends in part on the nature of the employer’s enterprise and in part on the specific duties of the employee. If you have questions about coverage, you might contact any of the following: the Wage and Hour Division of the Employment Standards Administration of the U.S. Department of Labor; your employment law advisor; or this firm.

Resources:

  1. Federal minimum wage and other wage-and-hour posters
  2. Frequently asked questions about federal employment posters
  3. Compliance assistance with federal wage-and-hour issues
  4. Minnesota employment posters
  5. Information on Minnesota minimum wage law

E.F.C.A. Moves Ahead with Revisions

The Employee Free Choice Act is a bill that was drafted when it had no chance of moving successfully through Congress. It sought to eliminate union elections by allowing unions unlimited time to campaign and then requiring employers to accept the union if sufficient numbers of employees expressed interest. The Bill’s supporters argued that eliminating secret ballot elections would prevent employers from coercing employees during a campaign period. In reality, however, coercion occurs at the point when organizers ask coworkers to sign on to a union campaign. The Bill would have retained that problem, while eliminating an employer’s right to express differing views.

Yesterday Democratic Senators negotiated a compromise to the Bill by retaining an employee’s right to a secret ballot election on becoming unionized. This is a significant development and a gain for employees and management alike.

The Bill still retains other, poorly thought out provisions. For example, if there is an impasse in negotiating a first contract, a third party will be brought in to impose contract terms. But the agency that would manage that process is not presently staffed to do so, and the procedure by which a third party would decide which proposals to impose has not been outlined. Additionally, the civil penalties provided in the Bill would be based on a host of factors that do not include the effect on the employer.

It is clear that the Bill is progressing through the Senate, but it is not the cakewalk that it’s organized supporters had hoped for. Stay tuned.

Resources:

  1. The text of E.F.C.A. as it was introduced originally in the House.
  2. An article in the N.Y. Times on the recent negotiations to retain the secret ballot.

New E.E.O.C. Guidance on Severance Agreements

On July 15, 2009, the U.S. Equal Employment Opportunity Commission issued updated and comprehensive guidance on the issue of employee waivers of discrimination claims contained in severance agreements. Although the recent guidance is directed to employees, it contains valuable information for management, as well. The document
addresses, among other topics, the requirements of the Older Workers Benefit Protection Act. It also provides a checklist for employees, which has obvious value for human resources staff who are drafting material or preparing for layoff conferences, and model text for an enforceable waiver.

The guidance pertains only to the limited issues presented by discrimination waivers in severance agreements. There are many related issues regarding both general compliance requirements and also problems arising from specific workers or worksites that the guidance does not attempt to address. It is important, therefore, not only to review this recent expression of the E.E.O.C.’s position but also to continue to use more comprehensive checklists, involve in-house expertise, or consult with an employment lawyer.

F.M.L.A. Amended: 26 Weeks for Military-related Medical Reasons

The federal Family and Medical Leave Act has been amended to add two types of required leaves of absence. The 2008 National Defense Authorization Act (“N.D.A.A.”) amends the F.M.L.A. to provide a new 26 week leave to care for a family member who is in the military and is undergoing treatment or is temporarily disabled due to a serious injury or illness. The N.D.A.A. also extends the familiar 12 week leave to care for a family member who has experienced an as-yet-undefined “qualifying exigency.”

Prior to the 2008 N.D.A.A., the F.M.L.A. required covered employers to grant eligible employees up to twelve workweeks of unpaid leave during a twelve month period for one or more of the following reasons:

  • for the birth and care of the newborn child of the employee;
  • for placement with the employee of a son or daughter for adoption or foster care;
  • to care for an immediate family member (spouse, child, or parent) with a serious health condition; or
  • to take medical leave when the employee is unable to work because of a serious health condition.

The National Defense Authorization Act amendments to the F.M.L.A. extend the scope of the law to permit a “spouse, son, daughter, parent, or next of kin” to take up to 26 workweeks of leave to care for a “member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness.” This part of the N.D.A.A. became effective on January 28, 2008. The Department of Labor is preparing guidance and proposed regulations to implement the new leave.

The amendments also extend the F.M.L.A. by permitting an employee to take leave for “any qualifying exigency (as the Secretary [of Labor] shall, by regulation, determine) arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation.” This part of the amendment is not yet effective; it will become effective after the Department of Labor issues final regulations defining “any qualifying exigency.”

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