Employment Law Update

Transcription

1 Employment Law Update CPA Firm Management Association 2017 National Practice Management Conference June 21, 2017 Presented By Devon D. Sharp

2 Agenda

3 Tips for Employers / Pitfalls to Avoid and "party favors" for you to bring back to your business! 1. Written acknowledgement regarding former employment: Avoiding tortious interference claims 2. Deductions from wages: Obtaining employee consent 3. Payment of wages under the FLSA: Safe harbor policy 4. Independent contractor arrangements: Correct classification and sample form of agreement 5. Basic separation and release agreement: Nuts and bolts 6. Defend Trade Secrets Act: Language to include in all confidentiality and non-disclosure agreements 7. Arbitration agreements for employees: Key components and sample form of agreement

4 Recent Employment Law Developments / Issues on the Horizon DOL s withdrawal of employee classification and joint employer guidance Fate of the DOL federal overtime rule Title VII sexual orientation discrimination F-word Facebook firing case Other issues to watch for on the horizon

5 Written Acknowledgement Regarding Former Employment

6 Written Acknowledgement Regarding Former Employment Most of your new hires were employees or contractors elsewhere before coming to you. You need to ensure they aren t violating any confidentiality or other obligations to their former employers. Why? Because if you don t, you could easily get pulled into a dispute. Most common claim for the new employer: Tortious Interference Other potential claims: Misappropriation of confidential information or trade secrets; conversion; civil conspiracy; aiding and abetting breach of fiduciary duty

7 Written Acknowledgement Regarding Former Employment Best way to prevent/defuse legal claims: Obtain a comprehensive written acknowledgement from the new employee at the outset of employment Obtain all confidentiality, non-disclosure, non-solicitation and non-competition agreements under which employee is bound BEFORE hiring them. Have your employment lawyer review them.

8 Sample Form of Acknowledgement

9 Deduction from Wages

10 Wage Deductions: Obtaining Employee Consent Rules vary from state to state. But most states require advance written authorization for most wage deductions.

11 Wage Deductions: Obtaining Employee Consent Generally, an employer may only make a deduction that is either: Legally authorized, or Voluntarily authorized by the employee, and for the employee, not the employer s, benefit. Best practice: Obtain authorization for deduction of expenses at the time of hiring. Authorization agreement shouldn t be overly broad, but it should adequately cover the likely deductions that and employer may need to make from the employee s wages. Remember that even if an employee agrees to the deduction, the deduction may not make the employee s wages fall below the minimum wage unless authorized by the FLSA.

12 Wage Deductions: Obtaining Employee Consent In sum Before making deductions: First consider whether the deductions are authorized by federal law or court order. If not, you must generally have an agreement signed by the employee. Finally, you must consider whether the deductions would result in the employee s wages dropping below minimum wage.

13 Sample Form of Texas Wage Deduction Authorization Agreement

14 Payment of Wages Under the FLSA

15 FLSA Safe Harbor Policy The DOL s rules on the white collar exemptions from federal overtime and minimum wage requirements under the FLSA provide a safe harbor that may preserve an employee's exempt status in the event impermissible deductions are made.

16 FLSA Safe Harbor Policy Safe Harbor Rule The salary basis component of the exemption test is not lost if the employer: has a clearly communicated policy prohibiting improper deductions, including a complaint mechanism; reimburses employees for any improper deductions; and makes a good faith commitment to comply in the future. This safe harbor is not available if the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints

17 Sample Form of FLSA Safe Harbor Policy

18 Independent Contractor Arrangements

19 Independent Contractor Arrangements: Getting it Right It s critical to classify your workers correctly. The DOL and IRS have stepped up their enforcement efforts in recent years that might change now to be discussed later Standard is promulgated by the IRS.

20 Independent Contractor Arrangements: Getting it Right Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? Financial: Are the business aspects of the worker s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

21 Sample Form of Independent Contractor Agreement

22 Basic Separation and Release Agreement

23 Basic Separation and Release Agreement When you need to end an employment relationship, a severance package coupled with a release agreement can serve both the employer and employee s interests. Not necessary or appropriate in every instance, but useful when risk factors are at play. Typical provisions: Amount and delivery method for severance Taxes and insurance Confidentiality Non-disparagement OWBPA language if 40 or older

24 Basic Separation and Release Agreement More critical elements of a release agreement: Short; plain English; limit legalese Reference specific employment statutes, both by name and legal citation Statement that employee was given a reasonable period of time to consider Statement that employee was encouraged to consult with an attorney Statement that the release doesn t restrict the employee s right to file a charge with the EEOC or similar agencies, but it does restrict the employee s right to recover damages as a result

25 Sample Form of Separation and Release Agreement

26 Defend Trade Secrets Act

27 Defend Trade Secrets Act Amends the Economic Espionage Act by providing a civil remedy for trade secret misappropriation. Effective May 11, Largely parallels the Uniform Trade Secrets Act (adopted in 48 states). Does not preempt state law.

28 Defend Trade Secrets Act So how does it change things? Allows suit in federal court Ex parte seizure orders carried out by law enforcement in extraordinary situations Potential extraterritorial reach Notice requirement to employees

29 Defend Trade Secrets Act What do employers need to do? Notice regarding immunity provisions must be given in any contract or agreement with an employee that governs the use of a trade secret or other confidential information. Only required in contracts entered into or updated after DTSA. Includes agreements with consultants and independent contractors. Penalty for noncompliance: No attorneys fees or punitive damages.

30 Defend Trade Secrets Act What agreements must include the notice? Offer letters or employment applications with contractual language Employment agreements Restrictive covenant agreements Nondisclosure agreements Stock or incentive plans BYOD and computer use agreements Separation agreements What if the employer has one slip-up?

31 Defend Trade Secrets Act Language

32 Arbitration Agreements for Employees

33 Arbitration Agreements for Employees Benefits of arbitration: Faster Less expensive Private No jury / Select an arbitrator with specific expertise Limited discovery More relaxed / No formal rules of evidence Right of appeal is limited

34 Arbitration Agreements for Employees Drawbacks of arbitration: Typically no emergency injunctive relief Fewer dispositive motions Greater likelihood of award versus dismissal Limited discovery More relaxed / No formal rules of evidence Right of appeal is limited

35 Arbitration Agreements for Employees Mandatory class action waivers in employee arbitration agreements: NLRB has said they are unenforceable. Seventh and Ninth Circuits have followed the NLRB. Second, Eighth and Fifth Circuits have rejected the NLRB s ruling. U.S. Supreme Court is considering the issue now.

36 Sample Form of Arbitration Agreement

37 Recent Employment Law Developments and Issues on the Horizon

38 DOL Yanks Obama-Era Wage and Hour Guidance BUT: Democratic states may opt to step in and adopt rules similar to those of the Obama administration. Just because the DOL may scale back its enforcement efforts doesn t necessarily mean that state labor departments will. Many attacks on employee misclassification come through private lawsuits and class actions. The Browning Ferris case is still out there.

39 DOL Yanks Obama-Era Wage and Hour Guidance Takeaways: Continue to analyze prospective independent contractor relationships carefully and follow the IRS s guidance. If you engage workers through a temporary or staffing agency, consider the language of your contract with the agency and try to take a hands-off approach with respect to the workers to the extent possible.

40 Fate of the DOL Federal Overtime Rule New overtime rule was set to take effect on December 1 but was blocked by a federal judge in Texas. What s next? The DOL is deciding whether to continue pursuing its appeal of the Texas litigation. New (extended) briefing deadline is June 30. Labor Secretary Acosta has acknowledged that the salary threshold needs to be increased, but believes that $47,476 was too much. He may support a threshold of ~$33,000. What the DOL will do regarding the rest of the proposed rule is uncertain.

41 Title VII: Sexual Orientation Discrimination Hively v. Ivy Tech Community College On April 4, the Seventh Circuit ruled that sexual orientation claims are actionable under Title VII. Discrimination because of sex includes discrimination because of sexual orientation. Currently, almost half of the states in the country have laws prohibiting sexual orientation discrimination in employment. Some additional states protect state workers from such discrimination. Consider local ordinances, as well.

42 F-Word Facebook Firing Case NLRB v. Pier Sixty, LLC Second Circuit ruled that an employee who used a public Facebook page to curse out not just his boss, but also his boss s mother and entire family, should not have been fired from his job. Bob is such a NASTY MOTHERF ER don t know how to talk to people!!!!!! F k his mother and his entire f king family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!

43 F-Word Facebook Firing Case NLRA prohibits employers from discharging an employee for concerted or union-related activity. Was the Facebook post so opprobrious as to lose the protection that the NLRA affords union-related speech? No, due to the circumstances. The subject matter of the Facebook post included workplace concerns: management s allegedly disrespectful treatment of employees, and the upcoming union election. Also, employer permitted managers and employees alike to use profanity in the workplace on a regular basis with few repercussions. Finally, statement was not in the immediate presence of customers, did not disrupt the catering event, and there was no evidence that the statement reached any customers or potential customers.

44 F-Word Facebook Firing Case Takeaway: Consult your employment attorney before firing someone based on a social media posting!

45 Other Issues to Watch For No action yet to fill vacant NLRB positions, but nominees will almost certainly be pro-employer/anti-union. Prior NLRB precedent could go on the chopping block once a Republican board majority is in place. But change will take time, because the NLRB tends to interpret the law through decisions rather than through rulemaking. Within other federal employment law agencies (EEOC, DOL Wage & Hour Division), although some of the top positions have been filled, none of the key policymaking decisions have been filled/replaced. So, many of those positions are still held by Democratic appointees. The latest budget proposal out of the Trump administration keeps funding for these agencies steady, which will allow them to continue to operate at the level they operated at in the prior administration.

46 Questions? Devon D. Sharp Munsch Hardt Kopf & Harr, P.C. Dallas / Shareholder dsharp@munsch.com