Massachusetts HOME Act Mandates Handbook Revisions

by Susan G. Fentin

At the end of the most recent legislative session, the Massachusetts Legislature passed An Act Relative to Housing Operations, Military Service and Enrichment.  The purpose of the Act was to give greater access to housing for veterans in the Commonwealth where their disability was 100% related to their military service, a laudable goal.  But buried in the statute were two provisions that impact Massachusetts employers and that may require changes to your employee handbook.

The bill amends Mass. Gen. L. Ch. 149, s. 52A½, which allows veterans who desire to participate in a Veterans Day or Memorial Day exercise, parade, or service to take time off to participate in those activities in their community of residence.  Previously, Ch. 149, s. 52A½ required employers to allow veterans to take this time off with or without pay, at the employer’s discretion, but the amendment requires employers of 50 or more employees to provide the veteran employee with paid time off if the veteran takes time off on Veterans Day to participate in services in their community.  Employers may not have a Veterans Day/Memorial Day Leave provision in their handbooks, but if you are a covered employer, and have such a provision in your handbook, you will need to amend it to provide paid leave to veterans who ask for leave on Veterans Day.  If you don’t have a handbook provision covering this leave, you should be sure that your Human Resources Department understands your obligations under this little known Massachusetts statute.  Note that the leave provisions do not apply to employees whose services are “essential and critical to the public health or safety” and whose presence has been determined to be “essential to the safety and security of each such employer or property thereof.”  The statute cross references definitions of veteran in other Massachusetts statutes: for purposes of this leave, a veteran is any person with an honorable discharge who served in any branch of the U.S. military or who served full time in the National Guard under certain conditions.  Any person who served in wartime and was awarded a service-connected disability or Purple Heart is also a qualifying veteran.

In addition, the bill amends the state’s anti-discrimination law, Mass. Gen. L. Ch. 151B by adding the term “status as a veteran” to the list of protected classes.  Previously, Ch. 151B only applied to individuals who were actively serving in the military, but now the statute also protects veterans from discrimination.  Presumably, the definitions of veteran cross-referenced in other sections of the HOME Act will apply here as well.  Employers should check their employee handbooks to see if veteran status is already listed among the protected classes in their anti-discrimination provisions, including their anti-harassment policy, and add this to the list if it is not there already.

This bill was passed as “emergency legislation,” so it is effective upon signature, meaning that as of July 2016, veteran status has been a protected class in Massachusetts.

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Limiting Exposure Under the New DOL Overtime Rule

by John S. Gannon

A few weeks ago, I had the pleasure of speaking at a fantastic Lunch & Learn event hosted by the Chicopee Chamber of Commerce.  Along with Jenny MacKay from The Gaudreau Group, we discussed compensation and benefit plan concerns stemming from the US Department of Labor’s new overtime exemption rule.

By now, I’m sure most (if not all) of our readers are aware that the minimum annual salary threshold for exempt “white collar” workers will be going up to $913/week ($47,476 annually) on December 1, 2016.   One topic we discussed at length during the Lunch & Learn was how to compensate employees who will be earning less than $913/week as of December 1.  I outlined three of those options in a previous post:  (1) give raises; (2) convert salaried employees to an hourly rate; or (3) maintain salary basis compensation and pay overtime.  It’s the third option that seems to give employers confusion.  Remember, it’s perfectly legal to pay non-exempt employees on a salary basis; you just need to make sure they are paid an overtime premium when they work more than 40 hours in a workweek.  Plus, you can significantly limit overtime compensation exposure by paying salaried, nonexempt employees pursuant to the fluctuating workweek method (FWW).  The FWW method allows employers to pay some employees an overtime rate that is one-half the regular rate of pay, rather than one-and-a-half times the regular rate.  Stated otherwise, if an employee with a regular rate of $20/hour works 10 hours of overtime, under the traditional overtime rule the employee would be due $300 in additional weekly compensation ($20 x 1.5 x 10 hours) for overtime hours worked.  If the employee is paid under the FWW method, s/he would be due $100 in overtime pay ($20 x .5 x 10 hours), all while retaining the morale boost associated with being a salaried worker.  Talk to employment counsel if you think the FWW method might be good for your business.

Another hot topic during the Lunch & Learn was exempt/nonexempt status misclassification.  Although the new overtime rule does not alter the duties tests for the “white collar” exemptions, this is a good a time to correct misclassification errors that have been lingering for years.  Employees are less likely to scrutinize your reasons for reclassifying them if the changes are made in light of the new overtime rule.

To learn more about strategies for complying with the DOL overtime rule, make sure you attend our Labor and Employment law symposium the morning of September 20, 2016.  Attorneys from the firm will be discussing significant developments in state and federal law, including overtime compliance, the Massachusetts pay equity law, proposed changes to EEO-1 reporting requirements, emerging issues like transgender discrimination, and much more.  Contact Skoler Abbott for more details about the Labor and Employment law symposium.

Posted in Wage/Hour, Legislation | Leave a comment

Governor Baker Signs Pay Equity Bill Into Law

by John S. Gannon and Stefanie M. Renaud

Last week, Massachusetts Governor Charlie Baker signed a new law aimed at strengthening pay equity for women in the Commonwealth. The new law amends the state’s Equal Pay Act by imposing rigorous equal pay obligations and prohibiting certain pay-related conduct. The new law goes into effect on July 1, 2018, but employers should immediately start planning for necessary compliance obligations.

According to the new law, pay differences between persons performing comparable work are only acceptable if based upon: (1) a seniority system; (2) a merit system; (3) a per unit or sales compensation scheme; (4) geographic location of the job; (5) education, training and experience, or; (6) the amount of travel required. The new law defines “comparable work” as work that requires “substantially similar skill, effort and responsibility” and is performed under “similar working conditions.” This “substantially similar” language is broader than the “equal pay” language used under federal law, so it will likely lead to more favorable results for plaintiffs who file under the state law.

In addition to defining comparable work, the new law prohibits employers from engaging in several common pay-related practices. For example, employers may not prohibit employees from talking about their salaries nor may employers screen job applicants on the basis of salary or wage history. The law also penalizes employers who require applicants to provide wage and salary history as a prerequisite of being interviewed or considered for a position. Employers similarly cannot seek an applicant’s pay history information from a current or prior employer.

The new law also extends the statute of limitations for bringing an equal pay lawsuit from one year to three years. Employers should note that each issuance of a paycheck under a “discriminatory compensation decision or practice” will be deemed a separate violation, with its own statute of limitations period attached. A successful employee is entitled to recover unpaid wages, an amount equal to unpaid wages as liquidated damages, and attorney’s fees.

Employers may not reduce the salary of an employee in order to comply with the new law. Employers who have unexcused pay differentials will need to “level up” and bring the pay of the lower earners up to the pay of the highest earner doing “comparable work.”

There is one silver lining for employers. The statute provides an affirmative defense to employers who complete a “good faith” self-evaluation of their pay practices and demonstrate “reasonable progress” toward eliminating any wage differentials. This means that employers who adequately audit their pay practices may avoid liability under the new law, but only if the employer’s self-evaluation is “reasonable in detail and scope in light of the size of the employer.” We recommend that employers consider formally auditing their pay practices to ensure compliance with the new law.

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Court Overrules NLRB and Holds That Labor Arbitration Decisions Are Entitled to Deference

by Ralph F. Abbott, Jr.

For over 30 years, employers have been able to rely upon an arbitrator’s decision as final and binding under a doctrine known as the deferral doctrine.  That doctrine was threatened by a recent decision of the National Labor Relations Board, which overturned an arbitrator’s decision in a case involving Verizon.  Fortunately, the United States Court of Appeals for the D.C. Circuit has overturned that decision and ruled that, in most cases, the NLRB must defer to an arbitrator’s award and not second guess the arbitrator.

The facts in Verizon New England, Inc. v. NLRB, 2016 BL 197813, D.C. Cir., No. 15-1062 (6/21/16) are straightforward.  The collective bargaining agreement between the union and Verizon contained a waiver of the union’s right to picket:  “The union agrees that during the term of this agreement . . . it will not cause or permit its members to cause, nor will any member of the union take part in, any strike of or interference with any of the Company’s operations or picketing of any of the Company’s premises.”

In 2008, a few months before the labor agreement was set to expire, the union planned to picket three Verizon facilities.  Picket signs were prepared, but rather than engage in what is commonly understood as “picketing,” employees visually displayed the signs in the windshields of their cars while parked on Verizon property.  Verizon ordered the employees to remove the signs in their cars, and the employees complied, but the union filed an unfair labor practice with the NLRB.

The Board’s Regional Director declined to rule on the union’s ULP charge and instead directed the parties to arbitration under the labor agreement’s grievance/arbitration procedure, finding that the dispute arose “from the contract between the parties.”  The union submitted to arbitration the issue of whether Verizon’s order that employees remove the signs from their parked cars had violated the labor agreement.  The arbitration panel ruled for Verizon, relying upon the provision in the collective bargaining agreement that expressly waived the union members’ right to picket.  The panel decided that the visible display of the signs in the cars was a form of “picketing.”

Notwithstanding the arbitration panel’s award, the NLRB refused to defer to the panel’s decision and issued a complaint against Verizon, alleging that Verizon had violated Section 8 of the NLRB by ordering employees to remove the signs from the cars.  An Administrative Law Judge ruled that the arbitration award in Verizon’s favor should be deferred to because the decision was not repugnant to the NLRA.  That ruling was overturned by the NLRB on appeal. The NLRB refused to defer to the arbitration panel’s decision and ruled that the arbitration decision was indeed “repugnant” to the Act.  The NLRB found that the union’s waiver of “picketing” did not apply to the employees’ right to display pro-union signs in parked cars.

The D.C. Circuit Court rejected the Board’s refusal to defer to the arbitration panel’s decision.  The court held that the arbitration panel’s view was reasonable and “far from egregiously wrong especially where the cars were lined up in the employer’s parking lot and thus visible to passers-by in the same way as a picket line.”  The court concluded that the panel’s award was neither repugnant to the NLRA nor a “palpably wrong” interpretation of Verizon’s contract with the union and therefore the NLRB should have deferred to the arbitration award.

Lesson 

This decision reinforces the vitality of the deferral doctrine as announced by the NLRB over 30 years ago.  The standard that the Board has long used to review arbitration decisions remains highly deferential to the arbitrator.  In most instances this should result in an arbitration award being final and binding, which is the intent of the parties when negotiating their grievance/arbitration procedures.

Posted in National Labor Relations Board, Arbitration, Unions | Leave a comment

Connecticut Becomes Most Recent State to “Ban the Box”

by Amelia J. Holstrom

On June 1, 2016, Connecticut became the most recent state to “ban the box” when Governor Dannel Malloy signed a bill that prohibits employers from asking questions about an employee’s prior arrests and criminal charges or convictions on the initial application for employment, unless state or federal law requires the employer to ask such questions or a security, fidelity or equivalent bond is required for the position for which the employee is applying.

Employers who fit into one of the two limited exceptions allowing them to ask about criminal history on the initial application must include the following disclaimers in “clear and conspicuous language” on the initial employment application:

  1. any person whose criminal records have been erased pursuant to section 46b-146, 54-76o or 54-142a shall be deemed to have never been arrested within the meaning of the general statutes with respect to the proceedings so erased and may so swear under oath;
  2. the applicant is not required to disclose the existence of any arrest, criminal charge or conviction, the records of which have been erased pursuant to section 46b-146, 54-76o or 54-142a; and
  3. criminal records subject to erasure pursuant to section 46b-146, 54-76o or 54-142a are records pertaining to a finding of delinquency or that a child was a member of a family with service needs, an adjudication as a youthful offender, a criminal charge that has been dismissed or nolled, a criminal charge for which the person has been found not guilty or a conviction for which the person received an absolute pardon.

Nothing in the statute prohibits an employer from requesting information about an employee’s criminal history at any point after the initial job application.  As a result, employers may continue to discuss these issues in the job interview or make the inquiry, in writing or verbally, any time other than on the initial application.

Notably, the statute does not provide an individual with a private right of action against the employer.  An applicant may only file a complaint with the state’s Labor Commissioner.

The law will go into effect on January 1, 2017. Between now and then, employers should review their employment applications and make any changes that are necessary to comply with the new law.

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Massachusetts House Passes Gender Pay Equity Bill

by Susan G. Fentin

On July 14, the Massachusetts House passed a bill that would prohibit employers from paying a woman less than a man if the two workers had comparable jobs.  This bill (H. 4509) will now go to a conference committee to resolve differences between this version and a version passed by the Senate in January.  The House bill contains a number of exceptions to the requirement that both men and women be paid equally.  Under the House bill, disparity in pay between men and women does not violate the statute if the difference is based on:

  • Seniority;
  • Merit;
  • The geographic location where the job is performed;
  • Education, training, or experience, if reasonably related to the job;
  • Travel, if travel is a regular and necessary condition of the job; or
  • The quantity or quality of the employee’s work.

Although the bill permits differences in wages based on seniority, it specifically states that time spent on leave because of a pregnancy-related condition or protected parental or family and medical leave may not affect an employee’s seniority.  The House bill also prohibits employers from asking applicants about their salary history, but permits that inquiry after an offer of employment with compensation information has been made to the applicant.  The purpose for this provision is to force employers to decide what the job is worth and make an offer before any discussion of prior earnings is allowed.  The bill also prohibits employers from penalizing employees who share salary information with one another.  Female employees who believe they have been paid less than their male counterparts are allowed to bring suit against their employers without first filing a charge of discrimination with the Massachusetts Commission Against Discrimination.

The bill applies to both public and private employers and would take effect on July 1, 2018.  Employers who review their internal salary practices would be protected from liability for three years.  It’s not clear whether the legislature will be able to achieve compromise on the two versions of the bill before it adjourns for the year at the end of July, and although Governor Baker has supported the concept of gender pay equity, he has not commented on this particular version of the legislation.  Stay tuned for further developments in this significant legislative initiative.

Posted in Wage/Hour, Discrimination, Legislation | Leave a comment

Using Temps Just Got More Complicated

by Timothy F. Murphy

On Monday, the National Labor Relations Board (the “Board”) ruled – in a case referred to as Miller & Anderson – that unions can petition to represent solely employed employees and jointly employed workers in the same unit without the consent of the employers. As a result of Miller & Anderson, jointly employed temporary workers supplied by staffing agencies (the “supplier employer”) do not need a user employer’s permission to join unions that include the user employer’s full-time employees as long as the temporary workers share a “community of interest” with the full-time workers.

This decision reversed a 2004 Board ruling – in Oakwood Care Center – that held that temporary and permanent workers must bargain separately unless the employer agrees. In fairness, Oakwood Care Center reversed a 2000 case (Sturgis) that said the opposite. [The Board’s serial flip-flopping may be a topic for a future blog post.]

In dissent, board member Philip Miscimarra wrote that Miller & Anderson will create bargaining instability for companies with contingent workforces and force many staffing companies to bargain with unions that represent the full-time workers of other user companies.

Miller & Anderson is part of the ongoing effort by the Board to expand the “joint employer” doctrine and thereby expand the opportunities for unions to organize workers.

Take-Aways

It is no longer enough for companies who wish to remain union free to keep their own houses in order. Miller & Anderson makes the case for “user” employers to make it their business to know how their staffing agencies treat their workers too. The same holds true for staffing agencies so that union vulnerability can be assessed and addressed. In addition, both should attempt to avoid a joint employer relationship, if possible. Either way, “supplier” and “user” employers should take care to clarify who controls and does not control the terms of employment, who is on the hook for what and respective responsibilities for union organizing and collective bargaining.

Posted in National Labor Relations Board, Unions | Leave a comment

Massachusetts Passes Transgender Discrimination Protection Bill

By Stefanie M. Renaud

On July 8, 2016, Massachusetts Governor Charles Baker signed Senate Bill 2407 “an Act relative to transgender anti-discrimination” which bars discrimination against transgender persons in places of public accommodation. The law takes effect on October 1, 2016.

Under the new law, transgender people cannot be discriminated against in places of public accommodation because of their gender identity. Transgender persons will also be allowed to use the bathroom or locker room corresponding with their gender identity. Additionally, the law explicitly prohibits the use of gender identity for an improper purpose and includes a provision requiring the Attorney General to develop guidelines for law enforcement on addressing improper claims of gender identity.

On October 1, 2016, the Massachusetts Commission Against Discrimination (“MCAD”) will begin enforcing the new law. By September 1, 2016, it must issue rules and regulations designed to accomplish the law’s goals. Specifically, the MCAD must issue rules to determine exactly how and when the sincerity of one’s gender identity can be “proven” to merit protection under the law.

Implications for Employers

As most Massachusetts employers are aware, Massachusetts has prohibited discrimination against transgender people in employment and housing since 2011. The new law simply expands these protections to include all places of public accommodation.

However, the law does have some implications for Massachusetts employers. First and foremost, employees must be allowed to use the restroom or locker room that corresponds with their gender identity. Employers are also reminded that the Equal Employment Opportunity Commission has stated that employers may not require transgender employees to use a unisex bathroom, and that doing so may be a violation of Title VII of the Civil Rights Act of 1964. Additionally, businesses that are considered places of public accommodation, such as retail stores, restaurants, and hotels, may not refuse service to a person because of their gender identity. Employers should inform employees who have consumer contact of this new requirement and provide training if necessary.

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What to Wear?

by Timothy F. Murphy

The National Labor Relations Board (“NLRB”) ruled that a Massachusetts Honda dealership broke the law when it maintained a handbook policy stating that “[e]mployees who have contact with the public may not wear pins, insignias, or other message clothing.” The dealership appealed that decision to the First Circuit Court of Appeals, which covers Massachusetts, but that court just sided with the NLRB. (Boch Imports, Inc. v. NLRB, (June 17, 2016)).

Many employers would be surprised to learn that the NLRB interprets the National Labor Relations Act (“NLRA”) to guarantee employees the right to wear union insignia and clothing during work time unless their employer can prove that “special circumstances” justify limitations on that right.

“Special circumstances” can include legitimate employer concerns over the effect that union buttons, pins, or attire may have on: 1) employee safety, 2) the potential for damage to employer goods or equipment, or 3) the potential to unreasonably interfere with a public image that the employer has established. This third concern was the biggest issue in the court’s decision to uphold the NLRB’s decision here.

The Court majority – it was a 2-1 decision – found that the dealership did not produce enough evidence that its dress policy was intended to create a specific and unique environment for the public as opposed to a general professional environment. Promoting a professional environment to customers was not deemed a “special circumstance” justifying the ban on union-related clothing and paraphernalia.

The lone dissenting judge thought that created a very confusing legal standard for employers. Although it might not be much consolation for employers, I thought employers should know that there are some judges who feel employers’ “pain” at trying to deal with “fine” legal distinctions requiring case-by-case decisions and run a business at the same time. So here are a couple of passages from Judge Stahl’s dissenting opinion:

Employers must examine each t-shirt, button, sticker, or hat and make an on-the-spot judgment call, in each instance, about whether a particular message in a particular context has “crossed the line.” Thus, the employer risks liability every time human resources or in-house counsel draws that line (assuming the business can afford such experts) and bears the burden of proof to boot. And, of course, once that determination is made, employees are free to don a slightly altered piece of attire, leaving the employer in a quicksand of boundary-testing litigation.

And

Even a manager aware of [prior NLRB cases on dress policies] will have difficulty making a contemporaneous assessment when an employee shows up wearing a union button that is 2-1//4-inches wide (rather than 2-1//2-inches wide), is a slightly-less-conspicuous shade of mustard (rather than a conspicuous bright-yellow), and is inscribed with an edgy (but not quite provocative) slogan. Pick wrong, and the employer will be liable for a labor-rights violation. Pick right, and the employee may return the following day with a slightly smaller and darker button. To businesses seeking to avoid liability, and courts seeking to ascertain administrable rules, the Board’s standard is simply unworkable.

While Judge Stahl’s words are music to the ears of those on the front lines of synching legal compliance with the real world of the day-to-day workplace, his opinion is not law.  In the end, they are just words, albeit insightful words.

This case leaves employers with the challenge of drafting and maintaining dress code policies for their “public-facing” employees that are narrowly tailored to promote a specific and unique public image. No easy task.  Employers faced with this challenge would be wise to consult with labor and employment counsel.

Posted in National Labor Relations Board, Policies, Unions | Leave a comment

Massachusetts Takes Major Step Toward Noncompete Reform

by John S. Gannon

Earlier this week, the Massachusetts House of Representatives unanimously passed a bill that would dramatically alter the noncompete landscape in the Commonwealth and require employers to review almost all existing noncompete agreements for compliance.  The bill was viewed by many as a compromise between the business community and trade associations opposing noncompetes, the latter of which claims they stifle innovation and employee mobility.

The most significant portion of the legislation would limit noncompete agreements to one year from the final day of employment, unless the employee unlawfully takes property belonging to the employer (physical or electronic property), or breaches a fiduciary duty to the employer.  In cases involving property theft or fiduciary duty breach, the noncompetition period can only be extended to two years.  In addition, to be enforceable for any period of time, the noncompete must be “no broader than necessary” to protect legitimate business interests and must be “reasonable in geographic reach,” which is defined as a geographic scope limited to areas where the employee provided services or had a “material presence” within the last two years.

Another portion of the bill—known as the “garden leave” provision—requires employers to pay departing employees half their salary during the post-employment noncompete period, or some other agreed-upon amount of money (likely set out in the noncompete).   Failure to make these post-employment payments would render the agreement unenforceable.

Here are some other relevant provisions of the bill:

  • For agreements entered into at the outset of employment, employers must state that the prospective employee has a right to consult with counsel prior to signing, and employers must provide the agreement to the prospective employee on the date a formal employment offer is made or 10 days before the employee’s first day, whichever is earlier.
  • For agreements entered into after the start of employment, the right to consult with counsel and 10 days’ notice must be provided, and the employer must provide “fair and reasonable” consideration (i.e., compensation or benefits) above and beyond continued employment.
  • Noncompetes cannot be enforced against nonexempt employees, student interns, and minors. This exception for nonexempt employees could be significant with the salary threshold for exempt-employee status more than doubling on December 1.
  • Noncompetes similarly cannot be enforced against employees terminated without cause or laid off.
  • Choice of law provisions—which provide that the law of a state other than Massachusetts applies to the noncompete—will not be enforced if the employee resides or works in Massachusetts at the time of termination.
  • The law applies to agreements executed on or after October 1, 2016.

Notably, the legislation expressly protects anti-solicitation, anti-recruitment and nondisclosure agreements.  This means that even if the law passes, employers can still restrict a terminated employee’s ability to poach clients, recruit coworkers, or disclose confidential information.

The legislation will now move to the Massachusetts Senate, which can approve as is, pass with changes, or reject.  Major changes would need to be worked out before sending the legislation to Governor Baker for his signature.  Governor Baker has yet to take a position on noncompete agreements.

Posted in Legislation, Non-Competition | 2 Comments