Title: Current Employment Law Challenges in the Franchise Industry. Start Time: 2:30 PM ET

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1 Title: Current Employment Law Challenges in the Franchise Industry Start Time: 2:30 PM ET

2 Current Employment Law Challenges in the Franchise Industry Gary R. Wheeler Gary R. Wheeler

3 Trump Administration: Predicting the (Un)predictable Things Are Changing Daily and We Are Paying Particularly Close Attention To Changes In.... Courts Government Agency Leadership Executive Orders Pending Regulatory Matters/Legislation

4 What Is (Supposed To Be) The General Theme? The general theme is supposed to be that President Trump s decisions, leadership choices and policies will be.... Business friendly as long as you define business-friendly as less government regulation or oversight and less overreaching

5 Supreme Court Vacancy Currently, a near 4-4 split in the Supreme Court since Justice Scalia passed away. Conservatives : Alito, Thomas, Roberts, and Kennedy (Kennedy has been a swing vote, but perhaps more conservative) Liberals : Sotomayor, Kagan, Ginsburg, Breyer President Trump has nominated Judge Neil Gorsuch from the Federal Appeals Court for the 10 th Circuit.

6 Supreme Court Vacancy A disciple of Judge Scalia Deeply skeptical toward giving agencies wide latitude on agency rules/decisions Published opinions reflect largely conservative and pro-management views Routinely upholds summary judgment for employers and written favorably concerning arbitration agreements Quote: A judge who likes every outcome he reaches is very likely a bad judge.

7 Department of Labor (DOL)

8 Secretary Labor Nominee R. Alexander Acosta February 2017, Trump announces the nomination of Alexander Acosta (Puzder withdraws) Double Harvard Degrees Clerk to then Judge Samuel Alito (3 rd Circuit) Kirkland & Ellis in Washington Labor & Employment NLRB appointee for 9 months First Hispanic Assistant Attorney General, DOJ Civil Rights Division U.S. Attorney for the Southern District of Florida Dean of the Florida International University College of Law

9 Secretary Labor Nominee R. Alexander Acosta Unions not necessarily opposed to Acosta Sided with majority in a 3-2 decision that Kroeger Grocery chain broke the law by barring workers from having union discussions on company time; Issued several opinions stating that employers unlawfully refused to provide union information to workers; In a 3-2 decision Acosta joined Lieberman and democrat Walsh to find that a stray mark on a ballot did not invalidate the election (employee checked the yes box to establish a union, but also drew a question mark next to it); However, allowed Armored Car Company to administer polygraph after $25,0000 went missing; and, Agreed that Bell Atlantic could bar employees from wearing union t-shirts with road kill symbolizing employees being run over by company trucks.

10 Department of Labor The Obama DOL under Tom Perez was fairly aggressive in pursuing enforcement action against employers, hiring more investigators and field staff, and in using administrative action to impose new restrictions. The Trump administration will likely seek to slow administrative interpretations and rulemaking. The DOL s enforcement budgets may be cut, thus reducing audits. Nonetheless, state and local governments may respond by increasing their own regulations.

11 Fair Labor Standards Act Overtime Rule Expanded the overtime protection under the Fair Labor Standards Act ( FLSA ) to about 4 million more workers Required that salaried exempt employees now earn $913 per week, or $47,476 per year (instead of $23,660 per year) But then, a Texas federal judge halted it from going into effect and the Department of Labor appealed Now, President Trump is giving it thought and may modify it or rescind it (or, may elect to continue to pursue the appeal)

12 Minimum Wage Minimum Wage? any federal increase (if it occurs) will be small President Trump has expressed varying positions on the minimum wage But employers must still comply with state minimum wage laws, which are typically higher than the federal minimum wage anyway

13 Upcoming Employment Issues Definition of Joint Employer under the NLRB Class Action Waivers Title VII protection of sexual orientation/transgenderism Accommodating healthy pregnancies (again)

14 Equal Employment Opportunity Commission

15 Shift in Focus at the EEOC Victoria Lipnic has been named Acting Chair of the EEOC Lipnic was a critic of the EEOC s pregnancy discrimination guidance and voted that Title VII prohibition against gender discrimination did not include discrimination based on sexual orientation Commission will soon be majority Republican

16 Shift in Focus at the EEOC Effort to limit litigation by requiring more robust conciliation process and more vigorous review prior to filing suit EEOC may modify recent changes to the EEO-1 Report (pay data collection), or eliminate it altogether No expansion of Title VII rights via regulatory guidance Lipnic has indicated the enforcement priorities outlined in the EEOC s strategic enforcement plan for will largely remain the same

17 Trump s Impact in Specific Areas of Law -- The Strategic Enforcement Plan ( ) Targets the following areas: Inflexible Leave Policies; Trump favors paid maternity leave, so we may see new legislation and consistent investigation of these matters Disability Discrimination expect consistent enforcement LGBT Discrimination Trump has endorsed his support for this protected category Pay Equity new EEO reporting rule may be rescinded Systemic Discrimination EEOC will likely end its participation in single-plaintiff matters Lipnic focus is more class action and systemic discrimination based, leaving the single-plaintiff matters to the many capable plaintiff s lawyers/ state agencies

18 Changes to EEO-1 Reporting Rule Employers with 100 or more employees must submit annual pay data by gender, race, and ethnicity on their EEO-1s. The first deadline is March 31, It is far from clear whether Trump will rescind or revise the rule. Trump is generally committed to deregulation and VP Pence has publicly opposed equal pay legislation. Acting Chair Lipnic is opposed to EEO-1 Reporting Rule. But Trump has stated that he supports equal pay for equal work. Best Practice: Employers should gear up to comply with the rule but closely monitor it to see whether EEOC limits its scope or repeals it altogether.

19 Employment Non-Discrimination Act and LGBT Rights President Trump has professed support for LGBTQ rights Vice-President Pence and numerous cabinet members and advisors have not Lipnic does not believe Title VII covers sexual orientation discrimination EEOC may take a less aggressive approach to fighting sexual orientation discrimination in the courts

20 ADA Agee v. Mercedes-Benz Handbook provision requiring overtime work and history of overtime proved ability to work overtime was essential function 20

21 ADA Frazier-White v. Gee Indefinite extension of light duty not a reasonable accommodation Williams v. AT&T Mobility Flexible work schedule not a reasonable accommodation 21

22 ADA EEOC v. St. Joseph s Hospital, Inc. No duty to reassign disabled employee if doing so entails disregard of normal, competitive application process 22

23 Sex Discrimination LGBT discrimination issues continued to heat up during 2016, beginning with EEOC filing its first lawsuits claiming Title VII covers sexual orientation discrimination EEOC v. Scott Medical Center EEOC v. Pallet Cos. 23

24 Sex Discrimination Some courts are ruling that LGBT discrimination is prohibited by Title VII Hiveley v. Ivy Tech Community College Winstead, et al. v. Lafayette County 24

25 Sex Discrimination Bauer v. Lynch Employers must walk a fine line when creating different physical fitness standards for men and women 25

26 Race EEOC v. Catastrophe Mgmt. Sols. Dreadlocks hair style is not an immutable characteristic of race and therefore can be subject to dress code regulation 26

27 WHAT IS JOINT EMPLOYMENT? Most of you have probably heard the term before, but here it is in layman s terms: Someone who is not your employee... Someone who very clearly is the employee of another... May also be YOUR employee.

28 Joint Employment Joint employment is defined broadly. U.S. Dept. of Labor, Wage Hour Division, Fact Sheet #35 And the wage-hour division is focusing on the hospitality industry, along with the construction, agricultural, warehouse, staffing and janitorial industries. The wage-hour division considers whether a joint employment relationship exists in hundreds of investigations each year.

29 WHAT HAPPENS IF YOU ARE A JOINT EMPLOYER? You are responsible for... Compliance with all wage-hour laws for your new-found employees (e.g., overtime, meal breaks, sick leave (under Massachusetts law, and other states)) If the actual employer is bankrupt or cannot pay for other reasons, the joint employer is fully liable for all damages. Compliance with other employment statutes (Family and Medical Leave, Anti-Discrimination laws) According to the National Labor Relations Board (e.g., McDonalds, Taco Bell) you may be called to the bargaining table and forced to deal with employee disputes over wages, etc.

30 HOW TO AVOID A JOINT EMPLOYMENT FINDING 1) When outsourcing a relationship, ensure that it is structured in a way that allows for as little direct involvement with the outside contractor s employees as possible such as requiring the third party entity to provide on-site management to supervise the work of its own employees performing services with the hotel. 2) Review contracts with third party entities to ensure you are not retaining control over employees performing services for the hotel 3) Audit all policies and practices to make sure that there are no provisions demonstrating day-to-day control over employees of another company

31 Conclusion QUESTIONS??? Gary R. Wheeler