FLSA, FMLA, and ADA Update John E. Pueschel Womble Carlyle Sandridge & Rice, LLP April 8, 2016
FLSA Key Issues and Legal Trends Proposed Changes to Overtime Regulations for White Collar Workers FMLA Family Responsibilities ADA Pregnancy Unpaid Leave as Accommodation
Fair Labor Standards Act Developments and Trends
FLSA Brief Refresher The Fair Labor Standards Act ( FLSA ) is the primary federal law governing wages and hours in employment. Establishes a federal minimum hourly wage rate Establishes overtime pay Restricts the employment of minors (child labor) Requires equal pay for men and women Establishes recordkeeping requirements 4
Current White Collar Exemptions FLSA provides an exemption from the minimum wage and overtime pay requirements for certain executive, administrative, and professional employees. Duties test Salary level test Salary basis test
Proposed Changes to Salary Level Test Current minimum salary employee must earn to be exempt: $455 per week, or $23,660 per year Last updated in 2004 DOL proposes to set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers Amount will be adjusted annually Assuming these regulations become final in 2016, the minimum salary is estimated to be $970 per week, or $50,440 per year.
Proposed Changes for Highly Compensated Employees Current Regulations Employee must earn total annual compensation of $100,000 or more (at least $455 per week) Employee s primary duty must include office or non-manual work Employee must perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee. Proposed Regulations Would increase total annual compensation requirement needed to exempt HCEs to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers (at least $122,148 annually)
Automatic Yearly Adjustment Mechanism DOL proposes to establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption. Two proposed adjustment mechanisms: Fixed Percentile Approach CPI-U Approach
Fixed Percentile Approach Would annually update the thresholds based on fixed percentiles of earnings for full-time salaried workers Would maintain the minimum salary threshold at the 40th percentile of the weekly wages of all full-time salaried workers Would maintain the salary threshold for HCEs at the 90th percentile of the weekly wages of all full-time salaried workers Bureau of Labor Statistics publishes weekly earnings deciles quarterly, so employers could plan for changes
CPI-U Approach Would update the thresholds based on changes to the Consumer Price Index for All Urban Consumers ( CPI-U ) CPI-U measures changes in price of a basket of goods and services bought by the average consumer Primary index used by government for: Federal income tax brackets Treasury inflation-indexed debt securities interest rates Federal poverty levels, which determine eligibility for many government assistance programs
Focus of Department of Labor Extending Overtime Protections Today the Department of Labor has announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation. Increasing Salary Levels Failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year. For example, a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay. http://www.dol.gov/whd/overtime/nprm2015/
Areas Unaddressed by Proposed Duties test Changes Whether nondiscretionary bonuses may serve to satisfy a portion of the standard salary requirement
Duties Test The DOL did not propose specific regulatory changes to the duties test, but did seek comments on the following issues: Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for the exemption? Should the DOL reconsider its decision to eliminate the long/short duties test structure? Should there be a limitation on the amount of nonexempt work?
Nondiscretionary Bonuses in Salary Level Requirement The DOL is considering whether to permit nondiscretionary bonuses and incentive payments to count toward a portion of the standard salary level test for the white collar exemptions. Amount would be limited to 10 percent of the standard weekly salary level. Because the salary basis requirement is designed to ensure that exempt workers receive a minimum level of compensation on a consistent basis, employees would need to receive the bonus payments monthly or more frequently.
Business Impact DOL estimates approximately 4.6 million workers would lose their exemption (and thus be eligible for overtime pay) under proposed regulations, unless employers increase their pay. DOL estimates that the average annualized direct employer costs will total between $239.6 and $255.3 million per year. DOL also states that this proposed rulemaking will also transfer income from employers to employees in the form of higher earnings. Average annualized transfers are estimated to be between $1.18 and $1.27 billion, depending on which of the two updating methodologies is used. http://www.dol.gov/whd/overtime/nprm2015/faq.htm.
Business Impact Look at workers to make sure classifications are correct under new regulations! For workers who usually work 40 hours a week or less, the DOL assumes that employers will reclassify these workers as overtimeeligible and will pay the same weekly earnings for the same number of hours worked. While these employees will become overtime eligible, employers can continue to pay their current salaries and need make no adjustments as long as the employees hours do not exceed 40 hours in a workweek. 80 FR 38562.
Business Impact Look at workers to make sure classifications are correct under new regulations! For employees who work overtime, employers may: (1) Pay the required overtime premium for the current number of overtime hours based upon the current implicit regular rate of pay; (2) reduce the regular rate of pay so total weekly earnings and hours do not change after overtime is paid; (3) eliminate overtime hours; (4) increase employees salaries to the proposed salary level; or (5) use some combination of these responses. 80 FR 38562-63.
Timeline DOL s Fall 2015 Semiannual Regulatory Agenda indicates that the timeline for publishing the final rule is July 2016 However, the final rule might come at any time. In an interview with Bloomberg BNA on December 16, 2015, Labor Secretary Thomas Perez stated, I'm confident we ll get the final rule out by the spring of next year.
Family & Medical Leave Act Developments and Trends
FMLA Brief Refresher The FMLA is a federal law that requires covered employers to provide up to 12 weeks of unpaid, job-protected leave to eligible employees per year Upon return to work, the eligible employee must be reinstated to the same or equivalent position Additional protections for military
Who is eligible for benefits under the FMLA? The FMLA applies to private employers with 50 or more employees (within a 75-mile radius) Eligible employees must satisfy the following: Work for their employer at least 12 months Work at least 1,250 hours in the last 12 months AND Have a qualifying reason for taking FMLA leave
What is a qualifying reason for taking FMLA leave? For incapacity due to pregnancy, prenatal medical care, or child birth To care for the employee s child after birth, or placement for adoption or foster care To care for the employee s spouse, son, daughter, or parent who has a serious health condition For a serious health condition that makes the employee unable to perform the employee s job Military caregiver leave and qualifying exigency leave
FMLA: Serious Health Condition An illness, injury, impairment, or physical or mental condition involving one or more: In-patient care Incapacity for more than three consecutive calendar days that includes two or more treatments by health care provider, or one visit and a regimen of continuing treatment Chronic condition Prenatal treatment or pregnancy
Types of Leave FMLA: Use of Leave 1. Continuous 2. Intermittent Scheduled As needed Interaction with other Leave
Employee Responsibilities Must provide 30 days notice if need to take leave is foreseeable Otherwise, notice as soon as practicable Eligibility Notice Employer Responsibilities Rights and Responsibilities Notice Certification Employees may be required to provide a certification and periodic recertification supporting the need for leave
FMLA Protections Employer may not restrain employee from exercising FMLA right (referred to as interference or denial of claims) Employer may not discriminate against or retaliate against employee exercising FMLA right (Or stated simply, an employer cannot deny qualifying leave requests, and cannot take adverse action against an employee because of the request or because he or she took protected leave.)
Developments: Definition of Spouse DOL amended regulatory definition of spouse so that eligible employees in legal same-sex marriages may take FMLA leave to care for their spouse or family member, regardless of where they live (Effective March 27, 2015) Obergefell v. Hodges (U.S. Supreme Court, June 26, 2015) Held right to marry is a fundamental right under the Due Process and Equal Protection clauses of the Fourteenth Amendment and same-sex couples may not be deprived of that right Held states must recognize lawful same-sex marriages DOL regulation had been enjoined in Texas, Arkansas, Louisiana, and Nebraska, but preliminary injunction was dissolved after Obergefell Now: All married couples will be covered, regardless of where they were married or where they live
Developments: (Finally) Revised FMLA Forms The DOL has revised the official FMLA Forms New forms bear an expiration date of May 31, 2018. The new forms have a GINA disclaimer in the Instructions to Health Care Providers: Do not provide information about genetic tests, as defined in 29 C.F.R. 1635.3(f), genetic services, as defined in 29 C.F.R. 1635.3(e), or the manifestation of disease or disorder in the employee s family members, 29 C.F.R. 1635.3(b).
(Finally) Revised FMLA Forms New forms can be found at http://www.dol.gov/whd/fmla/ 1. WH-380-E Certification of Health Care Provider for Employee s Serious Health Condition 2. WH-380-F Certification of Health Care Provider for Family Member s Serious Health Condition 3. WH-381 Notice of Eligibility and Rights & Responsibilities 4. WH-382 Designation Notice 5. WH-384 Certification of Qualifying Exigency for Military Family Leave 6. WH-385 Certification for Serious Injury or Illness of Covered Service Member -- for Military Family Leave 7. WH-385-V Certification for Serious Injury or Illness of a Veteran for Military Caregiver Leave
Developments: Family Responsibilities Expansion of family members for whom care may require FMLA leave? Employee took FMLA leave to stay with her adult daughter who had cancer. During the absence, the employee also spent her time caring for her daughter s children, the employee s grandchildren. The employee was not reinstated, and she sued. (And she won.) The Court did not limit its ruling on the reinstatement issue, because the employer argued she should not have been granted leave in the first place because care of grandchildren is not covered. Gienapp v. Harbor Crest, 756 F.3d 527 (7th Cir. June 24, 2014)
Care of grandchildren covered? [The conceded facts] require us to frame the issue as whether a combination of assistance to one s daughter, plus care of grandchildren that could take a load off the daughter s mind and feet, counts as care under the Act. To this the answer must be yes. Harbor Crest has never contended that Gienapp s assistance to other members of the family could not have given her daughter a mental boost. A person who knows that her family is well looked after has an important resource in trying to recover from a medical challenge. Doubtless some forms of familial assistance are too tangential to hold out a prospect of psychological benefits to a covered relative, but Harbor Crest does not contend that Gienapp s aid was too slight to qualify. Gienapp v. Harbor Crest (7th Cir. June 24, 2014)
Developments Is paid FMLA coming? 2015 State of the Union: It s time we stop treating child care as a side issue, or a women s issue, and treat it like the national economic priority that it is for all of us. Six weeks of paid leave for federal employees? Federal funding for state paid family leave programs?
Trends Increase in FMLA lawsuits, locally. FMLA remains among the most difficult employment law in terms of compliance, especially in larger workforces. Frequent employer mistakes: Eligibility. Notice requirements. Medical certifications. Counting of leave. Counting FMLA leave as occurrences under attendance policies. Key employer challenge: Managing intermittent leave.
Would a supervisor telling you this about an employee on FMLA give you a migraine? It was difficult. I know in her last performance review, it was difficult to give her an adequate performance review without her being at work as much as, as often as she missed. When she was at work, she was very effective and I alluded to that in her performance review, but the fact that she did miss a lot of work did play in the fact that she wasn t as effective as she could have been just by the fact she wasn t there. Alexander v. Boeing Company (July 28, 2014, W.D. Wash.)
Americans with Disabilities Act Developments and Trends
Americans with Disabilities Act: Eligibility 1. Individual with physical or mental impairment that substantially limits a major life activity, or with a history of or being regarded as having such impairment AND 2. Who is qualified to perform the essential functions of the job, either with or without reasonable accommodation
ADA: What is a Disability? A physical or mental impairment that substantially limits one or more major life activities Substantially limits EEOC guidance is that this is a lower degree of functional limitation than the standard previously applied by courts. An impairment does not need to prevent or severely or significantly restrict a major life activity to be substantially limiting. Nonetheless, not every impairment will constitute a disability. Decided without regard to mitigating measures (except for ordinary glasses or contacts). If it is episodic or in remission, it is a disability if it would substantially limit a major life activity when active.
ADA: Essential Functions of the Job Have detailed, updated job descriptions Courts typically give deference to employer s judgment Amount of time spent on the function Consequences of not having someone to perform the function Collective bargaining agreement Actual experience of other employees Ability to show modified duties of job not enough Disability cannot interfere with employee s ability to get necessary certification/license Note: Employees are subject to same performance standards
ADA: Reasonable Accommodation Changes or alterations to the position to allow the employee to perform essential functions of the job unless undue burden This can include Job restructuring Modified work schedules Reassignment to vacant position Equipment (assistive equipment or modification to existing equipment) Changing exams or training Providing interpreters or readers Remember: This can result in preferential treatment for disabled employee. Remember: It has to be reasonable. It does not have to be the employee s requested accommodation.
ADA: What is the Employee s Obligation? Does the employee have to request a reasonable accommodation? Not in those words Be attentive to the suggestion that he or she might need one Does the employee have to make the request in writing? Not initially Can ask to have this formalized, but this does not stop the process Does the employee need to document the disability? Yes Can you ask for more information? Yes! And should! What if the employee fails to provide it or refuses to provide it? That can be the end of their request Does the employer have to accept the accommodation the employee requests? No, but EEOC has stated cannot require employee to go on leave if something would allow them to work DOCUMENT, DOCUMENT, DOCUMENT
Pregnancy and the ADA
EEOC Guidance on Pregnancy Discrimination
EEOC Guidance On July 14, 2014 the EEOC issued new Enforcement Guidance on Pregnancy Discrimination and Related Issues. First comprehensive update of the EEOC s position on discrimination against pregnant workers since 1983. The Guidance addresses: Pregnancy Discrimination Act Americans with Disabilities Act Other legal requirements, including FMLA Best Practices
EEOC Guidance (continued) PDA: An employer may not discriminate against an employee because of pregnancy; and pregnant women must be treated the same as other persons similar in their ability or inability to work. EEOC Interpretation: If an employer offers light duty to anyone, the employer must offer light duty to pregnant employees. An employer s policy of providing light duty only to employees with on- the-job injuries violates the PDA.
EEOC Guidance (continued) Pregnancy itself is not a disability under the ADA. Pregnant employees may have impairments related to their pregnancies that qualify as disabilities. The cause of the impairment is not relevant in determining whether the impairment is a disability.
EEOC Guidance (continued) Parental leave (which is distinct from medical leave associated with childbearing or recovering from childbirth) must be provided to similarly-situated male and female employees on the same terms.
EEOC Guidance Continued The EEOC suggests : implementing a strong policy against pregnancy discrimination; training managers; responding to complaints promptly and effectively; evaluating restrictive leave policies for any disproportionate impact on pregnant workers; consulting with pregnant workers to develop a plan for covering job duties during anticipated absences; and explicitly stating that reasonable accommodation procedures are available to employees with pregnancy-related impairments.
Young v. United Parcel Service (U.S. Supreme Court 2015)
Young v. UPS: Background Young worked for UPS as a delivery driver. The job required her to lift up to 70 pounds. Young became pregnant, and her doctor placed her on a 20-pound lifting restriction. She requested light duty and was denied. UPS policy provided temporary light duty only for drivers who were injured on the job (i.e., workers comp. injuries).
Young v. UPS: Background Young exhausted all of her FMLA leave. UPS did not fire her, but required her to take an extended, unpaid leave of absence. During this extended leave, she lost her medical coverage. After the birth of her child, Young was reinstated to her position.
Young v. UPS: Background Young sued UPS, alleging sex and disability discrimination under the ADA and the PDA. UPS moved for summary judgment, arguing that 1) Young could not show that UPS s decision was based on her pregnancy or that she was treated differently than a similarly- situated co-worker, and 2) that UPS had no obligation to offer accommodations under the ADA because Young s pregnancy did not constitute a disability. The district court agreed with UPS and dismissed Young s claim. The Fourth Circuit affirmed. Young petitioned the Supreme Court for review.
Young v. UPS: The Arguments Young argued for a "most favored nation status" for pregnant employees. UPS argued that an employer should be permitted to treat pregnant employees just like other workers with off the job injury.
Young v. UPS: The Legal Question Must women affected by pregnancy, childbirth, or related medical conditions be treated the same for all employment-related purposes as other persons not so affected (i.e., not pregnant) but similar in their ability or inability to work?
Young v. UPS: The Answer No, BUT courts must consider the extent to which an employer s policy treats pregnant workers less favorably than non-pregnant workers with similar inabilities to work and determine whether if there is a legitimate reason for doing so.
Young v. UPS: The Decision No clear winner or loser unclear legal standard. The case was remanded for consideration by the lower courts. Plaintiff employee must show: 1. She belongs to the protected class (i.e., pregnant); 2. She sought an accommodation; 3. The employer did not accommodate her; and 4. The employer accommodated others similar in their ability or inability to work.
So where does that leave us? Not really sure - even the EEOC is unsure of the legal standard. Pregnancy is still not a disability, but complicating medical conditions may be. May you have a workers comp. only light duty policy after Young? EEOC is revising the EEOC Guidance in response to Young.
Other ADA Trends and Developments Working Remotely as an Accommodation EEOC pushing as an accommodation, but courts are generally resistant. EEOC v. Ford Motor Company (6th Cir. April 10, 2015) (telework not a reasonable accommodation on facts of that case). If denying remote work, employers need to make the case on why job location is important (team work, supervision, etc.).
Other ADA Trends and Developments Mandatory Reassignment to Open Positions In June 2015, the EEOC announced a $1M settlement in its litigation with United Airlines to end the employer s practice of not automatically reassigning disabled workers to open positions. EEOC v. United Airlines (7 th Circuit 2013) held that requiring disabled employees (who could not perform their current jobs) to compete for vacant positions for which they were qualified violated the ADA.
Other ADA Trends and Developments Social Anxiety Order a Disability Jacobs v. N.C. Admin. Office of the Courts (4th Circuit- March 12, 2015): Deputy Clerk at courthouse informed supervisor of Social Anxiety Disorder and requested not to work front desk. The Fourth Circuit held a reasonable jury could conclude that Social Anxiety Disorder was a disability Key Takeaways Documentation was lacking. Reasons for termination were constantly changing No good faith interactive process Front desk duties not an essential function
Questions and Discussion