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1 This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via at: Thank You! 1
2 November 14, Trends for Moderated By: Amy Burke, Director & Legal Counsel Dunkin Brands, Inc. Presented By: Ted Borromeo, AGC, Employment Law, McKesson Corporation Garry Mathiason and Natalie Pierce, Shareholders, Littler Mendelson, P.C. 2
3 Trend #1: Background Checks State Legislation 20+ states and localities have laws imposing restrictions on use of criminal records; 6 states as well as Seattle enacted laws in 2013, so the trend is growing 10+ states have laws imposing restrictions on the use of credit histories EEOC updated its enforcement guidance on arrest and conviction records and made Eliminating Barriers in Recruitment and Hiring SEP priority EEOC s Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 (2012) U.S. Equal Employment Opportunity Commission Strategic Enforcement Plan FY Several recent lawsuits indicate this is a big issue for the EEOC See, e.g., Rod M. Fliegel, Barry Hartstein, and Jennifer L. Mora, Two New EEOC Criminal Record Lawsuits Underscore Important Strategic and Practical Considerations for Employers Conducting Background Checks, Littler ASAP (June 2013), So far, courts have not taken as broad a view as the EEOC 3
4 Trend #1: Background Checks 2014 Checklist Articulate and document job-relatedness of criminal and credit history inquiries for designated class or categories of jobs, particularly for credit history inquiries and evaluate whether written job descriptions need corresponding revisions Identify the class or categories of jobs that will be required to submit to preemployment background checks and take measures to ensure all applicants for these jobs are subject to precisely the same standards When, as in Freemen, employer does not have a single-step, across-the-board screening process, EEOC cannot just challenge process as a whole, but must demonstrate alleged disparate impact stems from specific elements of the process For multi-state employers, know your state laws, review application forms, and consider conducting periodic site audits to ensure global compliance If using a 3rd party screening firm, consider whether explicit instructions are needed and ensure compliance with federal Fair Credit Reporting Act requirements and similar state laws that may impose greater restrictions (ex: advance consent, notice requirement in the event of an adverse employment decision is made based on background check) 4
5 Trend #2: Retaliation Retaliation is now the most common type of discrimination alleged nationally. The number of claims filed with the EEOC each year alleging unlawful retaliation has almost doubled since 2000 (19,694 in 2000 to 37,836 in 2012). In 2012, 38 percent of all EEOC claims filed alleged retaliation. All retaliation claims have 3 elements: Protected activity Materially adverse action Connection between the two Proving causal connection: Knowledge of protected activity Involvement in adverse decision Proximity in time Contrast facts before protected activity...and after 5
6 Trend #2: Retaliation 2014 Checklist University of Texas Southwestern Medical Center v. Nassar the Supreme Court held that retaliation claims under Title VII are subject to the higher standard of proof i.e., must be the but for cause of the adverse action v. simply a motivating factor. Will this stem the tide? Management must communicate with Human Resources. When taking adverse action, never assume you have all the information. An employer s good-faith efforts to avoid taking an adverse action based on retaliatory motives may, in fact, serve as evidence that the employee s protected activity influenced the employer s decision. Promote a speak up culture. 6
7 Trend #3: Employee Misclassification Crackdown 7,764 FLSA lawsuits were filed thus far in 2013; 10% increase 4,204 wage and hour class actions were filed in 2012 (91% of all complex employment litigation Civil settlements of wage and hour cases totaled $467 million in 2012 alone and approximately $2.7 billion from 2007 to 2012 Exempt/Nonexempt: Exemption misclassifications continue to be one of the primary targets of federal and state regulators, and plaintiff's counsel Return of Right to Know? Independent Contractor: Investigating independent contractor misclassification remains a top priority for the DOL; Wage and Hour Division is working with state labor departments and workers compensation departments, as well as other federal agencies, to share information to more readily target miscreant employers 7
8 Trend #3: Employee Misclassification Crackdown 2014 Checklist Audit: Employment laws and regulations, and the cases interpreting those laws and regulations, evolve year by year and so should your practices Look at performance measures, job descriptions, training materials, industry benchmarking, recruiting materials, performance evaluations, operational documents, etc. Get commitment by senior management to remedy identified risks once found Legal reengineering tools now streamline that process Litigation Armoring to Help Build Advance Defenses to Common Claims: Most litigation defenses can be improved upon is assessed before the litigation is filed Assemble a strategic planning team Conduct a Day One assessment of the strength of a company s defenses Utilize sample complaint allegations drawn from competition and industry litigation Use self-evaluations that can help build stronger defenses for tomorrow s litigation 8
9 Trend #3: Employee Misclassification Crackdown 2014 Checklist Golden rules: Never engage a former employee as a contractor Never be a contractor's first customer Never engage someone as a contractor who is/has been employed anywhere within the last 18 months Never engage someone as a contractor who will do the same work / under similar conditions as employees Never convert a contractor to an employee Develop internal screening process Review all proposed contractor relationships before engagement Harness resources to deal with these issues Classify for employer purposes Defend / explain in event of inquiry / audit Empower a contractor czar to oversee compliance 9
10 Trend #4: Class Action Lawsuits Internship Class Actions Is your intern really an employee? Several recent lawsuits involving publishing and entertainment industries Conde Nast is ending its internship program entirely Review federal and state definitions Perform self-audit 10
11 Trend #4: Class Action Lawsuits Crowd Sourcing Otey v. CrowdFlower Inc., et al. internet-based labor force employees or contractors? Huffington Post unpaid blogger case settled for $18 million $18 billion lawsuit against Yelp 11
12 Trend #4: Class Action Lawsuits Seating Cases Are you required to provide seating? Retail employers are increasingly litigating alleged seating violations under the California Wage Order and the Private Attorneys General Act ( PAGA ). But note that California is not the only state that requires adequate seating for employees. Ten other states require employers to provide suitable seating for employees to use while not engaged in their active duties: Florida, Massachusetts, Montana, New Jersey, New York, New Mexico, South Dakota, Washington D.C., West Virginia, Wisconsin, and Oregon (City of Portland). 12
13 Trend #4: Class Action Lawsuits In order to guard against potential seating violations, employers should: document any efforts that have been made to determine whether the nature of any particular position reasonably permits sitting, and if not, why not; prepare a policy regarding seating expectations and the basis for them; review and analyze job descriptions and customer service standards to determine whether they clearly identify jobs where continual mobility and standing are essential functions of the job; and incorporate those standards into job descriptions; and provide an adequate number of suitable seats in a nearby break room and allow employees to use the seats if/when it does not interfere with the performance of their duties. 13
14 Trend #4: Class Action Lawsuits California Meal & Rest Breaks It s not over yet! These class actions have become common in healthcare/hospital settings. For employers with operations in California, have lawful written meal and rest break policies AND maintain records demonstrating that such meal breaks were taken and, if not, that employees were paid for the time worked and, where appropriate, were provided premium pay. See BRINKER REDUX: California Superior Court Certifies Meal Break Class and Denies Decertification of Rest Period Class (Oct. 2013), 14
15 Trend #4: Class Action Lawsuits Bag Check Is time spent in line for a mandatory security screen de minimis, or compensable? The employer s best argument would be that the bag checks are de minimis such that compensation is not calculable and it is not reasonable to require an employer to account for time spent in bag checks. Another argument would be the portal to portal framework and that such security checkpoints are not for the benefit of the employer. 15
16 Trend #5: Arbitration and Class Action Waivers A class action waiver in an arbitration agreement will be strictly enforced under the Federal Arbitration Act American Express Co. v. Italian Colors Restaurant FAA does not permit court to invalidate arbitration agreement with class waiver on the ground that plaintiff s cost of individually arbitrating exceeds potential recovery D.R. Horton? Remains on the books, but not all courts agree with NLRB Reed Elsevier (6 th Circuit November 6, 2013) Courts, not arbitrators, decide whether class arbitration is permissible. Caution - courts that have not been favorable to arbitration in the past may continue to apply unconscionability principles more rigorously 16
17 Trend #5: Arbitration and Class Action Waivers Checklist Recent decisions affirm that employers can dramatically reduce their exposure to employment law class actions by adopting arbitration agreements that contain class action waivers. There are many complexities in drafting these agreements, setting up the arbitration process, rolling out the agreements to current and new employees and administering the agreements on a going forward basis; consider consulting with outside counsel. 17
18 Trend #6: Affordable Care Act Compliance Employer mandate and reporting requirements under the ACA set to take effect in Insurance Exchanges ( Marketplaces ) and premium subsidies available for eligible employees in Be prepared to field inquiries about the cost and scope of your health coverage from the federally-run exchanges for employees who have applied for a federal subsidy. Bi-partisan legislation has been introduced to change the definition of full-time. Forty Hours is Full Time Act of 2013 (H.R. 2575, S. 1188) Employers are re-evaluating their health packages. 18
19 Trend #6: Affordable Care Act Compliance Checklist Do you meet the 50-employee or FTE threshold? Does your insurance provide minimal essential coverage? Minimum value? Is it affordable? Healthcare Reform Advisor Have you considered a wellness program? Have a benefits attorney evaluate your health care offerings Monitor federal legislation and regulations Stay tuned for new regulations 19
20 Trend #7: Paid Sick Leave To date, 7 jurisdictions have enacted mandatory paid sick leave, 3 of which were enacted in 2013 Connecticut Washington, DC Jersey City, NJ San Francisco, CA New York City, NY Portland, OR Seattle, WA Statutes vary on who is covered, and for whom leave can be taken (i.e., self, spouse, child, grandparent, in-law, etc.) Statutes also vary on whether leave can be taken concurrently with other paid leave 20
21 Trend #7: Paid Sick Leave Checklist Multi-state employers should review leave policies for compliance in each state Determine whether paid sick leave can be taken concurrently with other leave Certain city ordinances extend coverage to part-time, temporary, and/or independent contractors Ensure timekeeping, payroll, and benefits systems properly calculate, track, and detail accrued and used sick time. If a third-party payroll processor is used, ensure it is aware of and complies with the requirements of the ordinance. 21
22 Trend #8 Pregnancy Accommodation 9 states have some form of pregnancy accommodation law (Alaska, California, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Texas, and New York) Some provide accommodations only for disabilities related to the pregnancy Types of accommodation vary Most provide allowances for undue hardship Supreme Court has asked Solicitor General for his opinion re: Young v. UPS, in which the 4 th Circuit held that employers are not required under the ADA or PDA to provide pregnant employees with light duty assignments so long as the employer treats pregnant employees the same as non-pregnant employees with respect to offering accommodations This case was the impetus for the Maryland law. 22
23 Trend #8 Pregnancy Accommodation 2014 Checklist Employers should ensure compliance with the new posting and handbook requirements by which employees are to be informed of these new requirements. If an employer does not have an employee handbook, it still must either edit or revise an existing policy, or create a new one to ensure compliance with this law. 23
24 Trend #9: Alternative Union Organizing Big labor is trying new organizing tactics to address declining membership. Worker Centers Create grass roots fronts for organizing activities that do not follow the laws that govern labor unions. Engage in protests and disruption. International Labor Standards and Global Campaigns Coordinate with unions in other countries to further domestic agenda. Use a company s Social Responsibility initiatives to pressure company to waive rights available under national law. 24
25 Trend #9: Alternative Union Organizing 2014 Checklist Recommendations re Worker Centers Know these groups - Recognize that they are either fronts for existing labor union or labor unions themselves They are masters of publicity - Social media and publicity are a major tool for these groups, and they will take advantage of the unsuspecting store manager/supervisor They prey on the unwary - Train your first line managers on how to deal with these groups and how to avoid NLRB and other claims Recommendations re Global Union Efforts Prepare for a global strategy - Labor unions are actively pursuing global strategies to further their goals domestically in organizing and at the bargaining table What you say will be used against you - Corporate Social Responsibility initiatives routinely prove to be a vulnerability for multinational companies that adopt policies and global principles that they do not fully understand Divide and conquer - The disconnect between corporate departments can create significant difficulties in these battles 25
26 Trend #10: Federal Regulations Gridlock in Congress has prevented any significant workplace legislation from being enacted. Therefore, expect significant workplace policy to be effected through federal regulations. Significant regulations include: Companionship Rule Nearly 2 million workers will be reclassified as of Jan. 1, 2015 OFCCP Affirmative Action Rules for Veterans and Disabled New rules effective March 24, 2014 Persuader Rule Final rule imminent; expands scope of reportable activities Injury and Illness Prevention Program (I2P2) Proposal expected shortly; would change safety obligations Compensation Data Tool Proposal expected shortly; would be used to identify contractors likely to violate sex & race based discrimination laws Sex Discrimination Guidelines Proposal expected shortly; would revise guidelines for federal contractors and subcontractors Pension Plan Disclosures Final rules imminent; will govern funding notices, target date disclosures Who is a Fiduciary? Proposal would redefine who is a fiduciary under ERISA EEOC Filing & Complaint Handling Procedures Proposals expected in 2014 Employer Mandate Final rules imminent; will govern pay-or-play shared responsibility provisions 26
27 Trend #10: Federal Regulations 2014 Checklist Make sure to track federal regulations and their requirements Participate in the process proposed regulations have notice and comment periods. Agencies are required to address all substantive comments in crafting final rules. Silence is not golden consider also involving yourself through trade associations, engagement with legislators, special industry groups, Workplace Policy Institute 27
28 Trend #11: Guns in the Workplace To date, 22 states guarantee employees the right to possess firearms while commuting to and from work, and to store them in their locked vehicles while at work Disgruntled employees have accessed their firearms and killed employees Employers have been subject to lawsuits for failure to maintain a safe workplace 28
29 Trend #11: Guns in the Workplace 2014 Checklist Know and comply with state and local laws and ordinances Implement a legally compliance policy Require employees to notify the company whenever they bring guns onto company property Designate separate parking areas with added security for employees with concealed weapons Train managers, supervisors and employees on warning signs of potential violence (See Something, Say Something) Establish security protocols for on-sight personnel actions such as suspensions and terminations Coordinate with local law enforcement 29
30 Trend #12 Whistleblowing Dodd-Frank Bounty Program raised the bar, although several questions remain: Who is a whistleblower? See, e.g., Gregory Keating and Stephen Melnick, When is a Whistleblower Not a Whistleblower?, Littler ASAP (Oct. 2013), What constitutes whistleblower activity? Healthcare Industry False Claims Act cases on the rise Website to Facilitate Reporting HHS introduced Proposed Rule akin to SEC bounty program regarding Medicare fraud: Federal Contractors NDAA Pilot Program States have begun implementing their own whistleblower statutes 30
31 Trend #12 Whistleblowing 2014 Checklist Promote mechanism for internal reporting Monitor state/local law developments Review case law in your jurisdiction to see how courts have interpreted whistleblowers and whistleblower conduct Ensure your organization maintains an anti-retaliation policy, and train supervisors accordingly Consider implementing a corporate ethics policy 31
32 Trend #13: Robotics Robotics is the fastest growing industry in the U.S. It has been estimated that by 2025, half of U.S. jobs will be performed by Robots and Artificial Intelligence systems (AI) Virtually every aspect of labor and employment law will be impacted 32
33 Trend #13: Robotics 2014 Checklist Designate an In-House HR/ Legal Robotics Specialist Consider a Tech/Robotics Audit Compliance Requirements Use of Robotics (Safety/ADA/ Workers Comp) Read Robotics Business Review and Abundance by Diamandis & Kotler 33
34 Trend #14: Social Media Password Protection Laws To date, 12 states have enacted social media password protection legislation More than 20 other states have bills pending The various laws create a patchwork of obligations, restrictions, and penalties See Phillip Gordon and William Simmons, US patchwork of social media laws creates confusion, PRIVACY LAWS & BUSINESS INTERNATIONAL REPORT (Oct. 2013), available at Patchwork-Social-Media-Laws-Create-Confusion-October-2013.pdf 34
35 Trend #14: Social Media Password Protection Laws 2014 Checklist Multi-state employers should review their social media policies for compliance with the various laws Before investigating an employee s or applicant s personal Internet activity, carefully scrutinize the precise contours state prohibitions to avoid exposing HR professional. Be aware of NLRA 7 implications 35
36 Questions? 36
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