EEOC Issues Proposed Enforcement Guidance of Unlawful Harassment, Seeks Comment

by Amelia J. Holstrom

On January 10, 2017, the Equal Employment Opportunity Commission (EEOC) issued its Proposed Enforcement Guidance on Harassment.  The proposed guidance touches on a number of matters, both new and old. In the majority of the 75-page proposed guidance, the EEOC reiterates the elements of harassment and the defenses available to the employer, and provides a number of examples.  In the remainder of the document, however, the EEOC specifically defines each protected class under federal law and provides some training tips for employers.

Unlike the Massachusetts’ anti-discrimination law, which expressly lists gender identity and sexual orientation as protected classes, the federal statute, Title VII, does not.  The EEOC, however, has begun to interpret the prohibition against sex discrimination and harassment to include discrimination and/or harassment based on sexual orientation and gender identity.  As a result, as it has done in the past, the EEOC includes in its definition of sex discrimination and harassment discrimination and harassment based on sexual orientation and gender identity.

Although the EEOC has a long-standing practice of issuing harassment guidance, the EEOC appears to take things a step farther in the January 10 guidance and makes some policy and training suggestions for employers.  The proposed guidance states that the “cornerstone of a successful harassment prevention strategy” rests with senior leaders who must consistently maintain that harassment will not be tolerated in the workplace.  The EEOC sets forth that leaders should frequently and clearly state that harassment is prohibited, allocate resources and time for harassment prevention strategies and efforts, and assess and eliminate harassment risks.

Additionally, the EEOC suggests that employers have an anti-harassment policy, which should include, among other things, a statement that harassment based on any protected characteristic is prohibited, examples of what constitutes harassment, including a definition of prohibited conduct, a statement encouraging employees to report inappropriate conduct, a statement that the employer will conduct a prompt and thorough investigation, and a statement that retaliation is prohibited against those who file complaints and/or participate in investigations.

For employers in Massachusetts, should the proposed guidance be finalized as is, most employers already have an anti-discrimination and anti-harassment policy that meets the EEOC’s suggested criteria.  Under Massachusetts law, employers are required to have a sexual harassment policy which contains a number of the same criteria.  As a practical matter, however, most employers have adopted and issued broader anti-discrimination and anti-harassment policies that include all types of unlawful harassment, as the EEOC suggests.  Should the EEOC’s guidance be finalized, however, employers should review their policies to see if they want to or should make any changes based on the guidance.

Lastly, the proposed guidance indicates that employers need an effective and accessible harassment complaint system and that they should conduct repeated and regular anti-harassment training that is led by senior leaders.

The EEOC does not directly state what sparked its decision to reiterate some of its previous guidance and make new suggestions for employers in the proposed guidance, but its decision appears to be motivated, at least in part, by the increase in the number of harassment charges brought before the EEOC in 2015.  Almost one-third of the 90,000 charges filed before the EEOC in 2015 contained allegations of unlawful harassment.  The 2016 data is not yet available.

The EEOC is seeking public comment on the proposed guidance, which can be submitted electronically here or by sending written feedback to: Public Input, EEOC, Executive Officer, 131 M Street, N.E. Washington, D.C. 20507 by March 21, 2017.  After the comment period closes, the EEOC will review all feedback and consider making revisions prior to finalizing its guidance.

Notably, the proposed guidance was issued just 10 days before President Donald Trump was sworn into office.  As a result, the proposed guidance may be delayed, significantly changed, or eliminated altogether.  For example, it isn’t any secret that at least some members of Trump’s administration have opposed interpreting the terms “sex discrimination” in Title VII to include sexual orientation and gender identity. And, within hours of taking the oath of office, some media outlets were reporting that the White House website had removed a number of webpages that appeared on White House website just hours before, including the LGBT rights page.  Combine this with the fact that President Trump will be able to appoint, with the approval of the Senate, several individuals to the EEOC, and we might see some significant changes in the EEOC’s agenda.  Specifically, the EEOC is made up of a Chair, Vice Chair, three Commissioners, and the General Counsel.  The Chair of the EEOC, Jenny R. Yang, who was named by President Obama and unanimously confirmed by the Senate has a term ending on July 1, 2017.  The Vice Chair and General Counsel positions are currently vacant.  As a result, President Trump will have the opportunity to appoint, subject to approval by the Senate, a new Chair, Vice Chair, and General Counsel in the next few months.  Additionally, Commissioner Chai Feldblum’s term ends in July 2018; Commissioner Charlotte Burrows term ends in July 2019; and Commissioner Victoria Lipnic’s term ends in July 2020.  As a result, President Trump’s administration will have the opportunity to shape the make-up of the EEOC, which may impact the EEOC’s stance on certain issues, including those addressed in this proposed guidance.

My colleague Stefanie Renaud and I will be presenting a firm breakfast briefing on March 2, 2017 from 8:00 – 10:30 in Springfield, Massachusetts titled “What Will 2017 Bring?: Employment Law in the New Year” at which we will analyze, among other things, the potential impact of the new administration on the EEOC, as well as the DOL Overtime Rule, Labor Relations, and other matters important to employers.  If you would like more information or would like to register, please call our office for more information.

The use of this seal confirms that this activity, the March 2, 2017 breakfast briefing titled “What Will 2017 Bring?: Employment Law in the New Year,” has met HR Certification Institute Institute’s® (HRCI®) criteria for recertification credit pre-approval.

Posted in Discrimination, Harassment, Policies, Retaliation, Title VII | Leave a comment

Massachusetts Independent Contractor Statute Still Going Strong After FAAAA Preemption Attack

by Amelia J. Holstrom

Massachusetts has one of the most – if not the most – restrictive independent contractor statutes in the United States.  The statute is intended to drastically reduce the number of individuals that can be properly classified as independent contractors by creating a framework by which the vast majority of workers must be treated as employees and therefore entitled to the benefits and rights of employment.  Consistent with its intended purpose, the statute contains a three-prong test to establish that someone is an independent contractor: (1) the individual is free from control and direction with the performance of the service, both under his contract and in fact; (2) the service is performed outside the usual course of business of the employer; and (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.  If any of the above statements are not true regarding an individual’s work, the worker must be classified as an employee.  Under the law, it is the employer’s burden to prove that all three prongs of the independent contractor test are met.

Over time, courts have grappled with whether the Federal Aviation Authorization Act of 1994 (FAAAA), which applies to employers in the motor carrier industry, preempts the Massachusetts independent contractor statute.  If the law were preempted, it would mean motor carrier employers would be able to disregard the independent contractor requirements for certain workers.  Recently, the Massachusetts Supreme Judicial Court (SJC) weighed in on issue and provided an answer to the long-asked question.

Generally, a state law may be preempted by federal law when there is a conflict between the state and federal laws. In the various challenges to Massachusetts’ independent contractor law, motor carrier companies have claimed that the independent contractor law was preempted by the FAAAA because the FAAAA, which was enacted in an attempt to deregulate the trucking industry, prohibits states from enacting or enforcing laws regarding the “price, route, or service of any motor carrier…with respect to the transportation of property.”

The recent SJC case involved RDI Logistics, Inc., a company that provides delivery services for furniture retailers.  RDI contracted with truck drivers to provide those delivery services.  Those truck drivers filed a lawsuit against RDI alleging that they were misclassified as independent contractors and were entitled to overtime pay.  RDI responded that the independent contractor law couldn’t apply to it, because the law was preempted by the FAAAA.  RDI claimed that prong 2 of the independent contractor test was impermissible, because requiring trucking companies to use employees rather than independent contractors for their services imposed a “significant impact” on motor carriers.   The trial court agreed with RDI and dismissed the claims.  The drivers then appealed, and instead of heading to the Appeals Court, which is the typical process, the SJC granted direct appellate review, which means that the case went directly to the highest court in the state.

The SJC agreed with RDI’s argument that prong 2 imposes an impermissible impact on transportation services under the FAAAA and is therefore preempted by federal law. However, the court concluded that the FAAAA did not preempt the entirety of the independent contractor statute, but rather it only preempted prong 2.  Therefore, instead of declaring the entire law preempted, as the lower court had done, the SJC decided that prongs 1 and 3 still apply to motor carriers and therefore motor carrier companies are not free to disregard those parts of the law.  The case is Chambers, et al. v. RDI Logistics, Inc., et al.

So, what does this all mean?  Employers covered by the FAAAA get a small break from the independent contractor statute from this case.  Specifically, motor carrier companies only have to meet the criteria set out in prongs 1 and 3 to legally use independent contractors rather than hire employees.  Although it is still a difficult test to meet, it is not the impossible test that existed when prong 2 applied.

Employers still need to be careful when classifying individuals as independent contractors.  One misstep can lead to years of litigation for owed wages, which will be costly in the long run.  As a result, employers should consult with labor and employment counsel anytime they are thinking of hiring independent contractors.

Posted in Independent Contractors, Legislation, Wage/Hour | Leave a comment

Legislature Delays Marijuana Sales, But Employers Should Not Delay In Evaluating Existing Drug Policies

by Susan G. Fentin

How time flies when you’re having fun!  It was only four years ago that Massachusetts voters approved a referendum question that allowed individuals to obtain prescriptions for medical marijuana.  Then last November, voters approved the recreational use of marijuana.  Since December 15, 2016, individuals in Massachusetts have had the right to possess, grow, and use limited amounts of marijuana for recreational purposes.  And up until last week, we expected retail pot sales to begin by around January 1, 2018.

The initial law created a Cannabis Control Commission (CCC) to regulate retail sales of marijuana and required the state treasurer to appoint members of the new CCC by March 1, 2017, who would have until September 15, 2017 to issue regulations governing the retail sale of marijuana.  Hence, the expected retail “grand opening” date of January 1, 2018.

Last week, however, Governor Baker signed a bill that delays this timeline by six months – now, CCC members must be appointed by September 2017, and the deadline for the CCC to issue its regulations has been moved to March 15, 2018.  This means the new target date for the opening of retail marijuana establishments is July 1, 2018.

Despite this delay in the sale of recreational marijuana, employers in the Commonwealth are already faced with what to do with a workforce that could be legally using marijuana on a regular basis and how to handle the possible increase in positive drug tests for applicants.

Indeed, one of my clients called me a week ago concerned that her company’s pre-employment drug testing policies might result in increased difficulty filling vacant positions.   And that’s a legitimate fear.  After all, if individuals could test positive for their weekend use of alcohol, hardly anyone would pass a Monday morning test, especially during the holiday season.  So what does the recreational use of marijuana mean for Massachusetts employers?

Let’s start with a brief review of drug testing law in Massachusetts.  Massachusetts permits three circumstances when an employer can ask an individual to take a drug test:  pre-employment, reasonable suspicion, and random testing for safety-sensitive positions.  The restrictions on drug testing come from the courts’ efforts to ensure that employers don’t violate an individual’s privacy rights without good reason.  An individual has a high expectation of privacy in the contents of his/her bodily fluids, so in order to allow an employer to violate those privacy rights, either the employer has to have a really good reason, or the employee has to waive his/her expectation of privacy.   And Massachusetts has a privacy rights statute, Mass. Gen. L. Ch. 214, s. 1B, which protects individuals from unwarranted invasion of their privacy.  This statute could complicate an employer’s ability to drug test current employees if the employer doesn’t proceed carefully.

In the application context, individuals are not forced to apply for a job if they are told up front that a positive drug test will disqualify them from employment; they can just walk away.  So if they consent to the test, they are basically waiving their privacy rights.  In the case of drug testing current employees, if an employer has a reasonable suspicion that the employee is working under the influence, the employer’s interests in a safe and substance-free work environment will trump the individual’s privacy rights, so long as the suspicion is based on actual observation or specific information.

Another way to help avoid violating employees’ privacy rights is to lower their expectations of privacy by implementing a drug testing policy.  After all, if employees are told in advance that their use of drugs or alcohol could lead to a drug test, they are using those substances at their own risk.  Similarly, if employees work in a safety-sensitive position, such as working with dangerous equipment or driving a fork lift for example, the employer’s interest in ensuring employee safety will outweigh the employee’s privacy interests.  Indeed, safety-sensitive positions are the only way an employer can randomly drug test its employees.

So what options do employers have?

Employers that are truly concerned that drug testing applicants will lead to serious problems filling vacant positions can dispense with pre-employment drug testing for marijuana or eliminate pre-employment drug testing for all substances.  That doesn’t mean that employers will have to tolerate employees smoking (or otherwise consuming) weed on the job, whether for medicinal or recreational purposes (both statutes make that clear).  The recreational use law specifically provides that it “shall not require an employer to permit or accommodate conduct otherwise allowed by [the law] in the workplace,” and further, that it “shall not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.”  This means that employers who pre-screen job applicants for marijuana, have drug-free workplace policies that prohibit employees from working under the influence of drugs or alcohol, and who conduct other lawful drug tests of employees may continue their current practices, and need not accommodate an employee’s use of marijuana, whether for medicinal purposes or off-duty.

And it also doesn’t mean that employers will need to ignore someone who appears to be “high” on any substance, whether legal or illegal.  Testing is still permissible.  But experienced labor and employment attorneys recommend proceeding carefully.  The first step for employers who want to continue to test will be to ensure that they have a legally-compliant drug testing policy, maybe one that includes a last chance agreement for employees who test positive but who want to enter rehab.  And employers who want to test for reasonable suspicion are well-advised to have an observed behavior checklist that specifies the specific reasons why they think the employee is under the influence, such as slurred speech, stumbling, bloodshot eyes, or any other indication that the employee’s behavior could be affected by drug or alcohol use.  (Note: Repeated trips to the vending machines for Cheetos is probably not a reliable indicator!)   Employers who have safety-sensitive positions should arrange for a testing facility to manage the random nature of a random drug testing program:  It’s easier to avoid an accusation that the employer is targeting a particular individual if the selection for testing is managed by an independent third party.

What if the test comes back positive?

So far, employers who subject employees or applicants to drug screens are still permitted to terminate or refuse to hire if the individual tests positive for marijuana, even now that the drug is legal in Massachusetts.  So long as marijuana is still illegal under federal law, courts across the country, including Massachusetts, have ruled that employers who test employees for marijuana can take action against an employee who tests positive.  That being said, employers should be aware that the use of marijuana by employees may be increasing now that the growth, use and possession of marijuana has become legal. This means that employers may see a rise in employees “under the influence” at work, positive drug test results, and requests to tolerate off-site use of the drug as a reasonable accommodation for a disability.

Employers who drug test current and prospective employees for positions that are not safety-sensitive should also be aware that they run the risk of being sued for an invasion of privacy under a recent ruling by the Massachusetts Superior Court, Barbuto v. Advantage Sales & Marketing, Inc.  The decision is an outlier, has been appealed, and so far, there has been no actual finding that the drug test in that case invaded the employee’s privacy.  But even though the court dismissed the employee’s claims under the Medical Marijuana statute, the court allowed the employee’s privacy rights claim to go forward.  In Ms. Barbuto’s case, there was no reasonable suspicion that her use of medical marijuana impaired her ability to perform her job; she worked for a day without incident before her pre-employment drug test came back positive, resulting in her termination.  Unless the Appeals Court reverses the decision, the employee will have an opportunity to gather evidence and potentially even to present her case to a jury based on her claim that her termination for use of medical marijuana violated her privacy rights.

Of course, one problem for employers is that the operative chemical in marijuana, THC, stays in the employee’s system long after ingestion.  That means that a good employee or potential applicant can legally smoke a joint on a Saturday night and still test positive for THC on the following Monday.  As marijuana use becomes increasingly legal across the country, enterprising drug testing companies may come up with affordable tests that measure the amount of THC in an employee’s system, so employers could take action if an employee’s level of that chemical exceeds some reasonable standard.   There are other problems here, however:  One employee’s tolerance for marijuana may be significantly lower or higher than another employee’s tolerance, so measuring the level of THC in the employees’ systems might not be a reliable indicator of inebriation.  But so far, it’s legal to test and legal to terminate or refuse to hire, so long as the employer follows the rules. Employers with questions about implementing a drug testing policy for their company should consult with experienced labor and employment counsel.

Posted in Drug Testing, Legislation, Policies | Leave a comment

State Minimum Wage Increases Across the Country

by John S. Gannon

Raises are in order for lots of minimum wage workers in 2017. Nineteen states—including Massachusetts, Connecticut, New York, Maine and Vermont—along with dozens of cities across the country, will see minimum wage increases at the start of the new year. In Massachusetts, the minimum wage will increase from $10/hour to $11/hour (the state’s updated Wage and Hour Law poster can be found here). Only the District of Columbia has a higher minimum wage at $11.50/hour. The Connecticut minimum wage goes up to $10.10/hour on January 1, Vermont increases to $10/hour the same day, and Maine to $9.00/hour. New York’s increases vary depending on employer size and location.

The increase in Massachusetts is the last of three planned wage hikes dating back to 2015 (that link also includes useful information on minimum wage increases for tipped employees).  Similarly, the increase in Connecticut is the last of several consecutive hikes going back to 2014. Other than the increases effective January 1, 2017, there are no current plans to raise the state minimum wage in either Massachusetts or Connecticut—at least for now.  Across the country, many states will significantly increase minimum wage rates over the next few years. For example, New York will increase the state minimum wage to $15/hour in some regions by 2019. California will hit $15/hour by 2022. Will Massachusetts and Connecticut join these states as part of a fight for $15 initiative? Only time will tell.

Posted in Legislation, Massachusetts Wage Act, Uncategorized, Wage/Hour | Leave a comment

Caution: Your Commission Agreements May Violate the Wage Act

By Erica E. Flores

In Massachusetts, the Wage Act requires employers to pay all earned wages, including commissions, on the day the employee is discharged.  Companies who have employees who work on commission have frequently relied upon the language of their commission agreements to relieve them of the obligation to pay some commissions at the time of termination.  However, a recent decision from the Massachusetts Appeals Court may prevent employers from relying on those agreements.

In 2008, Hampden Engineering Corporation (“Hampden”) hired Matt Perry as a Regional Sales Manager.  Perry’s compensation included a $45,000 salary, plus a one-percent commission on all sales in his region, payable at the end of the calendar year.  Hampden modified its commission structure in 2010, creating a tiered commission structure: one percent on all sales up to $2 million, two percent on all sales above $2 million, and three percent on all sales above $3 million.  In 2011, Hampden revised their commission structure yet again, eliminating all commissions on the first $1 million in sales.  Hampden presented the new commission structure to Perry, but he refused to sign.  As a result, Hampden terminated Perry’s employment and paid him in full for all accrued salary and vacation time.  Hampden did not, however, pay Perry his commissions for sales he had completed during the first three months of 2011, because their commission structure specified that commissions were paid at the end of the calendar year and that the employee must still be employed on the date of payment.

Perry filed suit, alleging that Hampden violated the Wage Act by failing to pay him commissions he had “earned” prior to his termination.  The lower court found in Perry’s favor and ordered Hampden to pay him treble damages plus interest, attorneys’ fees, and costs.  Hampden appealed that decision to the Massachusetts Appeals Court.

Wage Act may be superior to employer commission policies

On appeal, Hampden conceded that Perry was its employee, and that the Wage Act would apply to any commissions he earned if the amount had been “definitely determined” and was “due and payable” when Perry was terminated.  However, Hampden argued that Perry’s requested commissions did not meet that standard, and therefore, were not “earned” at the time of his termination.

First, Hampden argued that the commissions were not “definitely determined” because Perry had not agreed to the 2011 commission payment structure.  The Appeals Court rejected this argument, noting that Hampden and Perry had stipulated the amount of commission payments to which he would have been entitled if he had been employed at the end of 2011.

Next, Hampden argued that the commissions were not “due and payable” when Perry was terminated because its commission structure only paid commissions at the end of the calendar year, and only if the employee was still employed by the company at that time.  The Appeals Court rejected this argument as well, concluding that the plain language of the Wage Act foreclosed such an argument.  As the court pointed out, Section 148 of Chapter 149 specifically requires employers to pay earned commissions that are “due and payable” in full on the day of discharge, and expressly states that an employee may not exempt himself from that requirement, even by an agreement with his employer.

Significantly, the Appeals Court also determined that a commission must be treated as “due and payable” at termination even if it is not yet “due and payable” under the employer’s commission agreements or policies.  In other words, the court concluded that Section 148 mandates that all earned commissions be paid at termination, even if they would not otherwise be “due and payable” under the employer’s own compensation arrangements.


The Perry decision is notable not only for its holding but also for its brevity, and perhaps this decision is an outlier:  Other court decisions have held that commissions are not considered “due and payable” if there are unmet contingencies that would prevent their payment, and we don’t have all the facts upon which the trial court ruled in Perry’s favor.  However, if you are planning to terminate an employee who is eligible for commissions, you might consider whether to pay any commissions that could be definitely determined as of the date of the termination, even if your policy would perhaps support an argument that they are not “due.”  Hampden was required to pay Perry treble damages and attorneys’ fees based on this decision, and it would have been cheaper to pay him the commissions that he had “earned” in the first three months of the year.  Check with your labor and employment counsel to be sure your decision regarding pay for commissions is defensible.

Posted in Massachusetts Wage Act, Wage/Hour | Leave a comment

As the Holidays Approach, EEOC Issues Resource Document on Rights of Employees and Applicants with Mental Health Conditions

by Amelia J. Holstrom

Millions of Americans suffer from mental health disorders. According to the National Alliance on Mental Illness, 18.5% of the adult population of the United States suffers from mental illness each year.   These illnesses include conditions such as anxiety, depression, Post Traumatic Stress Disorder (PTSD), and bipolar disorder.

The Americans with Disabilities Act and Massachusetts law prohibit employers from discriminating against an employee on the basis of his disability.  Under the laws, an employer must make reasonable accommodations if those accommodations will allow an employee with a disability to perform the essential functions of their job, unless doing so would be an undue hardship for the company.  The undue hardship standard is very high.  Mental illnesses qualify as disabilities under both the state and federal law.

Although employers address requests for reasonable accommodations for disabilities, including those for mental illnesses, all year, employers may see an increase in requests with the holidays approaching.  Many people experience increased stress and anxiety during the holidays, but those who already live with a mental health condition are particularly susceptible to such seasonal increases in anxiety and depression.

On December 12, 2016,  the Equal Employment Opportunity Commission (EEOC) released a new resource document entitled Depression, PTSD, & Other Mental Health Conditions in the Workplace: Your Legal Rights.  Although the document is directed toward employees suffering from mental health conditions, it may also be helpful to employers trying to navigate requests for accommodation or otherwise addressing mental health concerns in the workplace.  The materials address several major areas and questions, such as what to do if an employee’s mental health condition affects work performance, how to request a reasonable accommodation, and what employees should do if they think their rights have been violated.  Here’s some additional information that may help employers faced with employee mental health issues:

When can an employer request medical information regarding an employee’s condition?

Employers are limited as to when they may request specific information about any employee’s condition, but employers may do so, and should do so, when assessing an employee’s request for a reasonable accommodation. Additionally, if there is objective evidence that someone is unable to perform his job or that he may post a safety risk because of his condition, the employer is entitled to request medical documentation regarding the condition.

How are reasonable accommodations requested and assessed?

Some employers have written policies regarding reasonable accommodation requests.  Whether your company has such a policy or not, all employers should listen to what their employees are asking them for, whether it be verbally or through an informal or formal writing.   Employees may ask for an accommodation at any time, which is why it is important that managers understand what to listen for and report any request to human resources or the appropriate department or person at your company.

Once an employer receives an accommodation request, it may, and should, request medical documentation supporting the need for the requested accommodation from the employee.  If the employer has suggested accommodations, the employer may ask if those suggested accommodations would enable the employee to perform his job as well.

After receiving the documentation, the employer must determine whether it can grant the employee’s request or if there is another accommodation that would enable the employee to perform the essential functions of the position.  If there are two or more possible accommodations, the employer may choose which one to give the employee.  An employer may only decline to provide a reasonable accommodation altogether if all possible accommodations would cause an undue hardship in the form of significant difficulty or expense for the employer.  The burden is on the employer to show significant difficulty or expense, and, as mentioned before, the standard is very high.

When might a leave of absence be appropriate?

While the goal is to provide employees with reasonable accommodations that allow them to work and perform the functions of their job, sometimes that is just not possible.  In those situations, it might be appropriate to offer an employee a block leave of absence as a reasonable accommodation.  Again, employers are entitled to request medical documentation supporting the need for leave and a date certain by which the employee can return.  With that information, the employer can assess whether it can grant the block leave of absence or if it would pose an undue hardship.

Disability discrimination cases are on the rise.  In 2016, the EEOC resolved almost 5,000 charges of discrimination related to mental health disabilities alone, totaling more than $20 million. Therefore, employers should be careful when assessing requests for accommodations and should consult with employment counsel as appropriate.

Posted in Uncategorized | Leave a comment

Churches Score Out-of-Court Victory Over MCAD

by Stefanie M. Renaud

As previously reported on our blog here, the Massachusetts Commission Against Discrimination (“MCAD”) issued guidance on September 1, 2016, implementing Massachusetts’ “transgender protection law,” which prohibits discrimination on the basis of gender identity in places of public accommodation.  As I noted in that post, the MCAD guidance included a statement indicating that churches could be liable for violating the law while acting as a place of public accommodation.  Only a few weeks later, on October 11, 2016, the Alliance Defending Freedom (“ADF”) sued the MCAD in federal court on behalf of four Massachusetts churches, claiming the law infringed on their First Amendment rights to free expression of their religious beliefs.

Now, the ADF has withdrawn its lawsuit in light of the MCAD’s revised guidance, issued on December 5, 2016.  The prior language stated that “[e]ven a church could be seen as a place of public accommodation if it holds a secular event, such as a spaghetti supper, that is open to the general public.”  The revised guidance reads:

The law does not apply to a religious organization if subjecting the organization to the law would violate the organization’s First Amendment rights.  See Donaldson v. Farrakhan, 436 Mass. 94 (2002).  However, a religious organization may be subject to the Commonwealth’s public accommodations law if it engages in or its facilities are used for a ‘public, secular function.’  Id.

Further, the old version of the guidance included a footnote indicating that “[a]ll charges, including those involving religious institutions or religious exemptions, are reviewed on a case-by-case basis.”  That footnote has been removed, and the substantive message has been incorporated into the body of the guidance.  The guidance now reads: “as required by statute, MCAD reviews each complaint of discrimination based on the particular factual circumstances presented.   See G.L. c. 151B, §5; Temple Emanuel of Newton v. MCAD, 463 Mass. 472 (2012).”

While the ADF has withdrawn its lawsuit in light of these revisions, it is clear that ADF will be keeping a close watch on any attempts by the state to enforce the law against religious organizations.  The ADF may file future lawsuits if it feels the law is interfering with such organizations’ constitutional rights.

Posted in Discrimination, Legislation | Leave a comment

Legal Marijuana Just Days Away—Are you Modifying Your Drug Testing or Substance Abuse Policies?

by John S. Gannon

Recreational marijuana will become legal in Massachusetts this Thursday, December 15. Last month, Skoler Abbott attorney Erica Flores provided a detailed summary of the new law after it was approved by voters in the Commonwealth. Realistically, retail marijuana dispensaries (aka “pot shops”) will not be around for some time, but home cultivation will be possible right away. Employers are wondering whether and to what extent the new law will impact employment laws and HR policies.

As noted by Erica, the law specifically states that it does not affect the ability of employers to enact and enforce workplace policies restricting employee use of marijuana. Employees are probably unaware of this caveat. If they fail a drug test or show up to work impaired, employers can expect legal use excuses. Therefore, employers who remain committed to enforcing zero tolerance drug testing and/or substance abuse use policies should consider reminding employees—through an internal memo or handbook update—that a zero tolerance company policy still applies to marijuana use.

Now is also a good time to consider whether a zero tolerance policy makes the most sense for your organization. Marijuana use is certain to increase in the Commonwealth, especially when licensed pot shops open for business. Employers should consider whether continued enforcement of a zero tolerance policy will impact employee recruitment and retention efforts. Further, the intersection of medical marijuana and disability discrimination law provides a new avenue for individuals to sue if they are rejected for failing a pre-employment drug test or terminated for off-site medical marijuana use. Fortunately, most courts have ruled in favor of employers when this legal theory has been advanced by employees, as judges are quick to point out that marijuana use (medical or recreational) is still illegal under federal law. In fact, a state court in Massachusetts recently sided with an employer in a similar lawsuit and dismissed a medical marijuana user’s disability discrimination claim when she was rejected for failing a drug test. The employee argued that the employer should have accommodated her disability by turning a blind eye toward her off-site medical marijuana use. The court disagreed, but it did allow a separate invasion of privacy claim to go forward against the employer in that case. Employers should analyze whether their practices are susceptible to attack under an invasion of privacy type of claim. A similar lawsuit was recently filed in Connecticut against and a staffing services provider.

Next week, Erica Flores will be joining Mark Adams with the Employers Association of the NorthEast (EANE) for a webinar entitled Legalization of Marijuana in MA – Will it Impact Your Business? The webinar will take place on Wednesday, December 21, 2016 from 8:30 am to 9:30 am. Click here for more information on the event, including registration details.

Posted in Handicap Discrimination, Legislation, Reasonable Accommodation | Leave a comment

DOL Appeals Overtime Rule Injunction. Now What?

by John S. Gannon

Last Thursday, the U.S. Department of Labor (DOL) filed a notice of appeal—the first step in the appeals process—challenging the decision to temporarily block the new overtime regulations.   As we reported a couple weeks ago, the overtime rules were enjoined nationwide by a Texas federal Court, meaning they did not go into effect on December 1, 2016, as previously expected.  DOL also filed a motion seeking to expedite the appeals process.  Appeals like this can take several months to pan out, or even years.  DOL is looking for resolution much sooner, perhaps as early as March or April 2017.

Many employers are wondering what to do about yet-to-be-made planned compensation changes.  Others are wondering whether already-implemented changes should be scaled back or completely reversed.   Unfortunately, there is no easy answer.  Before getting into compensation changes, it’s important to understand how the rule might play out during the appeal process.  The appeal will be heard by the Fifth Circuit Court of Appeals, which sits in a conservative/pro-business jurisdiction.  Even if the Court of Appeals agrees to an expedited schedule, the Court will not reach a decision before President-elect Trump takes office.  Earlier this year, Mr. Trump reportedly said that he would attempt to delay or exempt small businesses from the overtime regulation, but he did not say whether his administration would try to repeal the entire regulation.  After Inauguration Day, Mr. Trump could direct DOL to forego the appeal process and instead focus on crafting more employer-friendly regulations.  He could also work with Congress to enact legislation that would define exempt criteria by statute, rather than by regulation, effectively eliminating DOL’s ability to modify exempt classifications via the rulemaking process.

Assuming the appeal proceeds unhindered by the Trump Administration, reversal by the Court of Appeals could have significant ramifications for employers who have not made planned compensation changes.  If the Court of Appeals rules the lower court got it wrong, it or other courts could decide that the effective date of the rule is still December 1, 2016, meaning employers would be liable for unpaid overtime liability for employees not making $913/week as of December 1 rather than the date of the appeal court’s decision. This issue is somewhat unresolved in the federal courts, but there is clear precedent for applying the law retroactively in this scenario.

Back in January 2015, a federal court vacated wage and hour regulations implemented by DOL involving exemptions for home care workers—similar to what the Texas federal Court did with the overtime rule.  However, the Court of Appeals in that case reversed the lower court’s decisions, triggering several lawsuits attacking employer compensation practices during the months that the decision was on appeal.  Some of the courts ruled there was no wage and hour liability while the rule was “in limbo,” while other courts, including a federal court in Connecticut, ruled that overtime compensation was due to these previously exempt workers retroactive to the original implementation date of the rule.  The Connecticut decision has been appealed to the Second Circuit Court of Appeals—we will keep you apprised of any updates in that case.

That leaves employers in a precarious position.  For businesses that have already made changes in response to the overtime rules, it likely makes sense to stay the course until the overtime rule gets completely sorted out.  Employers who have not made any changes are in a more challenging spot.  To the extent possible, those employers should limit overtime opportunities for employees making less than $913/week, as well as track their working time so that an accurate assessment of overtime exposure can be made if the Court of Appeals decides the rule is lawful.

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BREAKING: Court Blocks Implementation of DOL Overtime Rule

by Kimberly A. Klimczuk and John S. Gannon

In a surprising turn of events, a Texas federal Court put a hold on the controversial Department of Labor (DOL) overtime rule that would have made over 4 million more workers eligible for overtime starting December 1, 2016.  Yesterday evening, the Court issued an Order granting a preliminary injunction that was filed by 21 states across the country along with a coalition of business groups who were challenging the rule.  The Order effectively blocks the implementation of the rule nationwide, meaning the rules will not become effective on December 1, 2016 as previously expected.  The plaintiff states and business groups presented two main arguments: 1) that the Fair Labor Standards Act (FLSA), the law that provides for a federal minimum wage and federal overtime  requirements, is unconstitutional to the extent that it interferes with states’ independence to set their own minimum wage and overtime rules; and 2) Congress never intended to set any salary threshold for the overtime exemptions, and only allowed the government to issue rules related to the job duties of exempt executive, administrative, and professional employees.  The Court rejected the first argument but agreed with the second, finding that the DOL overstepped its authority when it issued the new salary requirements.

The Court based its reasoning on the fact that the language of the FLSA states that “any employee employed in a bona fide executive, administrative, or professional capacity…as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]” shall be exempt from the FLSA’s minimum wage and overtime requirements.  When Congress grants a federal agency authority to issue regulations implementing a law, as in the case with the DOL and the FLSA, the agency may interpret or provide clarification on ambiguous language in the law, but it cannot change the meaning of unambiguous language.  When a court is asked to review an agency’s interpretation of a law, the court looks to the original language of the statute to determine if the language is ambiguous and, if so, whether the agency’s interpretation is in accordance with Congress’ original intent.  If the congressional intent is unclear, then the court will defer to the agency’s interpretation unless the agency’s interpretation is “arbitrary, capricious, or manifestly contrary to the statute.”

In this case, the court found that the language of the FLSA that exempts “any employee employed in a bona fide executive, administrative, or professional capacity” from its minimum wage and overtime provisions, without any reference to salary, expressed a clear intent by Congress to exempt employees based on the types of duties they perform and not based on any salary test.  The Court held that the DOL’s ability to “define and delimit” the terms “executive, administrative or professional capacity” gave the DOL “significant leeway to establish the types of duties that might qualify an employee for the exemption, [but] nothing in the EAP exemption indicates that Congress intended to define and delimit with respect to a minimum salary level.”

Although that reasoning seems to suggest that the DOL has no authority to set any minimum salary level, including the existing $455/week requirement, the Court made clear in a footnote that it was not making a general statement on the lawfulness of the existing salary-level test.  The court also suggested that the lower salary level test could be valid as a threshold to screen out the “obviously nonexempt employees,” making the duties test unnecessary.  By contrast, the court reasoned that the much higher salary threshold in the new rule created what was, in effect, a “salary-only” test which would lead to situations in which employees who clearly perform executive, administrative and/or professional duties would not be exempt from the statute.  This, the court said, is in direct conflict with Congress’ clear intent to exempt from the FLSA employees “any employee employed in a bona fide executive, administrative or professional capacity.”

This decision was not a final decision on the merits of plaintiffs’ arguments but was rather a decision on whether plaintiffs were likely enough to succeed on the merits to warrant a preliminary injunction delaying implementation of the rule. Although a final decision on the merits is yet to come, the court’s analysis in last night’s opinion is a strong indicator of the court’s view on the issue.   The DOL could (and likely will)  appeal the decision, as well as any final decision on the merits, but with Republicans controlling both houses in Congress and the Trump Administration taking office in January, the future of the overtime rule is certainly in doubt.  For now, if you have questions about enforcement of the rule and/or scaling back changes already in place, we suggest contacting employment counsel to discuss how this decision will impact your overtime compliance obligations.

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