EEOC Issues Final Enforcement Guidance on Retaliation and Related Issues after Public Input Process

On August 29, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) issued its final Enforcement Guidance on Retaliation and Related Issues, to replace its 1998 Compliance Manual section on retaliation. The guidance also addresses the separate “interference” provision under the Americans with Disabilities Act (ADA), which prohibits coercion, threats, or other acts that interfere with the exercise of ADA rights.

“Retaliation is asserted in nearly 45 percent of all charges we receive and is the most frequently alleged basis of discrimination,” said EEOC Chair Jenny R. Yang. “The examples and promising practices included in the guidance are aimed at assisting all employers reduce the likelihood of retaliation. The public input provided during the development of this guidance was valuable to the Commission in producing a document to help employers prevent retaliation and to help employees understand their rights.”

The guidance addresses retaliation under each of the statutes enforced by EEOC, including Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (ADEA), Title V of the Americans with Disabilities Act (ADA), Section 501 of the Rehabilitation Act, the Equal Pay Act (EPA) and Title II of the Genetic Information Nondiscrimination Act (GINA).

Since EEOC’s 1998 Compliance Manual section on retaliation, the U.S. Supreme Court has issued seven decisions addressing retaliation under EEOC-enforced laws, and the filing of EEO claims that include a retali-ation allegation has continued to grow. Charges of retaliation surpassed race discrimination in 2009 as the most frequently alleged basis of discrimination, accounting for 44.5 percent of all charges received by EEOC in FY 2015. In the federal sector, retaliation has been the most frequently alleged basis since 2008, and retaliation findings comprised between 42 percent and 53 percent of all findings of EEO violations from 2009 to 2015.

EEOC is responsible for enforcing federal laws against employment discrimination. Further information about the agency is available at www.eeoc.gov.

Summary of Recent FLSA Amendments

In May 2016, the Department of Labor enacted several important changes to the Fair Labor Standards Act (FLSA) relating to overtime-exempt employees. These amendments substantially expand the number of salaried workers that will be able to claim overtime wages. These new rules go into effect on December 1, 2016. It is important for unions and employees to understand these changes in order to ensure that employers can be held accountable to pay their workers fairly. The most important changes are:

1. An increase in the salary threshold for Executive, Administrative, Professional and Computer (“EAP”) employees (from $23,660 to $47,476). This means employees making less than $47,476 cannot be FLSA-exempt regardless of their duties.

2. An increase in the salary threshold for Highly Compensated Employees (HCE) (from $100,000 to $134,004). This means employees making more than $134,004 are FLSA-exempt under a relaxed “duties” test – only minimal involvement in EAP-related duties is required.

3. The creation of an automatic updating mechanic to increase these levels in the coming years.

4. Under the new rules, the employer may count nondiscretionary bonuses and incentive payments towards salary thresholds, but they may not count for more than 10% of the total.

More specific detail on each of these changes follows:

1. Salary Threshold for Executive, Administrative, Professional and Computer employees

One of the largest categories of overtime-exempt employees are Executive, Administrative, Professional and Computer employees. Each of the exemptions is intended to cover salaried employees in highly-skilled or managerial positions and each of these four categories has a slightly different “duties test.” However, the tests do not apply unless the employee meets the salary basis test as well. The salary basis test has two components: (1) the employee must be paid on a salaried, not an hourly, basis, and (2) the salary paid must exceed a minimum threshold.

The rules for salary basis payment have not changed. Generally speaking, the salaried employee must receive as pay a predetermined amount of compensation, which cannot be reduced because of variations in the quality or quantity of the employee’s work. An employee’s salary under these exemptions must be paid each week an employee works, regardless of the number of hours worked each day (exempt employees do not need to be paid in a week in which no work is performed). Reductions in pay for part-day absences destroys the exempt status of the employee, even if the employee otherwise satisfies the applicable duties test. An hourly employee can be docked pay for each hour missed.

Since 2004, the salary threshold to meet any of these exemptions has remained at $23,660 per year ($455 per week). The 2016 FLSA amendments raise this salary threshold to $47,476 ($913 per week). This salary level change will open up overtime eligibility to many more employees.

2. Salary Threshold for Highly Compensated Employees

In addition to the salary-based overtime exemptions for EAP employees, prior to December 1, 2017 there is an exemption for employees who earn more than $100,000 per year. The HCE exemption has substantially lower standards for evaluating the duties of the employee, known as a “minimal duties test.” An HCE overtime-exempt employee has to simply be in a position where the employee’s primary duty includes performing office or non-manual work and the employee customarily or regularly performs at least one of the exempt duties of an EAP overtime-exempt employee.

The 2016 FLSA amendments raise this salary threshold from $100,000 per year to $134,004 per year. The types of pay that can meet this threshold are wider than that of the EAP exemption — the total annual compensation may consist of commissions, nondiscretionary bonuses and other nondiscretionary compensation; though medical, retirement and fringe benefits are not included. The rise in the HCE threshold will render more highly-compensated employees eligible for overtime, provided they are not exempt under the traditional duties tests for Executive, Administrative, Professional and Computer (“EAP”) employees.

3. Automatic Updating

Prior to the 2016 FLSA amendments, there was no formula or structure to update the overtime-exempt salary thresholds; the levels remained stagnant since 2004. With the passage of the 2016 FLSA amendments, the EAP salary threshold is now set at the 40th percentile of weekly earnings of full-time salaried workers in the lowest wage Census Region (currently the South; $47,476 per year) and the HCE salary threshold is set to equal the 90th percentile of earnings of full-time salaried workers nationally ($134,004 per year). Rather than waiting for the Department of Labor to choose when to update this level in the future, these levels are slated to update automatically every three years based on the 40/90 percentile bases. The Department of Labor is required to public the upcoming salary thresholds 150 days before their effective date.

4. Inclusion of Nondiscretionary Bonuses and Incentive Payments for EAP Employees

Prior to the 2016 FLSA amendments employers were not allowed to include nondiscretionary bonuses and incentive payments, such as commissions, in calculating the annual salary of an EAP overtime-exempt employee. After December 1, 2016, employers will be permitted to use nondiscretionary bonuses and incentive pay in the calculation of an employee’s annual salary, however, nondiscretionary bonuses and incentive pay is capped at 10 percent of the required salary threshold. Discretionary bonuses, such as an unannounced holiday bonus, or a bonus that is at the subjective discretion of a manager, do not count toward the EAP overtime pay threshold.

Table Comparison of Prior Regulations & New Final Rule

Naturopathic Physicians and Their Patients File Discrimination Lawsuit

BHMK filed a class action lawsuit on behalf of naturopathic physicians and their patients. The lawsuit alleges that two insurance companies—Health Net Health Plan of Oregon, Inc., and American Specialty Health Group, Inc.—violated the Patient Protection and Affordable Care Act (“ACA”) by discriminating against naturopathic physicians.

The ACA mandates non-discriminatory health care with the goal of improving the quality, affordability, and accessibility of patient care. Specifically, insurance companies cannot discriminate against a health care provider acting within the scope of their state-issued license.

The State of Oregon has licensed naturopathic physicians since 1928 with a broad scope of practice that allows naturopathic physicians to serve as primary care providers, provide preventative services, prescribe pharmaceuticals, and order tests necessary to diagnose and treat illness.

The lawsuit alleges that Health Net and American Specialty Health violated the non-discrimination mandate by limiting patient access to naturopathic physicians licensed in Oregon. Those discriminatory practices include prohibiting reimbursement to naturopathic physicians for certain types of care, capping annual reimbursement amounts to naturopathic physicians, and paying naturopathic physicians less than other providers performing the same service.

The lawsuit seeks several remedies, including: (1) reimbursement to individuals who have been denied benefits under their health insurance plans; (2) repayment of profits retained by the insurance companies as a result of their discriminatory practices; (3) enforcement of non-discriminatory practices in the future; and (4) a declaratory judgment clarifying application of the ACA’s non-discrimination mandate.

You can read more about the lawsuit here and here.

Federal Labor Ruling Expands Definition of “Joint Employer” in Browning-Ferris Industries of California

A landmark ruling by the National Labor Relations Board (NLRB) in the Browning-Ferris Industries of California case vastly expands the definition of corporate employee by redefining “joint employer,” providing additional protections for millions of workers.  This decision is a win for workers because it expands the number of entities that can be considered joint employers and prevents employers from evading responsibility through use of subcontractors or franchisees.  The NLRB describes the impetus for the rule change as follows:  “With more than 2.87 million of the nation’s workers employed through temporary agencies in August 2014, the Board held that its previous joint employer standard has failed to keep pace with changes in the workplace and economic circumstances.”  The NLRB will continue to apply the joint employer test: (1) whether both entities are employers under common law;  and (2) whether both entities share essential terms and conditions of employment.  However, the NLRB will now consider as a factor whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so.  The decision can be read here.

Federal Law on Workplace Non-Discrimination Now Protects Against Sexual Orientation Discrimination

The EEOC has finally issued a ruling that sexual orientation workplace discrimination is illegal under federal law –  the Civil Rights Act of 1964.  This provides litigants an additional source of protection and cause of action against employers discriminating on the basis of their sexual orientation.  The EEOC found that although the Act does not contain an explicit prohibition on sexual orientation discrimination, “an allegation of discrimination on the basis of sexual orientation is necessarily an allegation of sex discrimination.”

Link to article from The New York Times

BREAKING: U.S. Department of Labor Guidance on Broad Interpretation of Employee for Fair Labor Standards Act

On Wednesday, July 15, 2015, the U.S. Department of Labor issued guidance on how to distinguish between employees and independent contractors.  Employee misclassification is and has been a serious problem for workers seeking to make a living as employers seek to classify them as independent contractors, depriving them of overtime pay and benefits, such as unemployment insurance.  Employers often assert that determining whether a worker is an independent contractor is fuzzy, but the new guidelines provide additional clarification on interpreting the existing regulations.  The guidelines focus heavily on “FLSA’s statutory directive that the scope of the employment relationship is very broad” and “the broader concept of economic dependence.”  The guidance ends with a clear conclusion: “most workers are employees under the FLSA’s broad definitions.”  Read the guidance here.

Oregon Supreme Court Protects PERS Benefits

For over two decades Greg Hartman has represented a coalition of public sector labor unions in protecting the rights of members under Oregon’s public employee retirement system. This representation has involved not only litigation but multiple appearances before the Oregon legislature as well as before the Public Employee Retirement Board. Greg has handled several cases which have resulted in billions of dollars of saved benefits for members of the Public Employee Retirement System. He was lead counsel in the case Strunk et al. v. Public Employee Retirement Board et al., in which the Oregon Supreme Court held a portions of the 2003 reform legislation were unconstitutional, thereby reinstating over $2 billion of benefits for PERS members.

Most recently Greg, along with partner Aruna Masih, pursued legal challenges to the 2013 changes to PERS benefits in the case of Moro et. al. v. State of Oregon et. al. before the Oregon Supreme Court. On April 30, 2015, the Oregon Supreme Court held that most of the changes to PERS cost-of -living adjustment (COLA) made by the 2013 legislature, including those that were part of the “Grand Bargain,” unconstitutionally impaired PERS members’ contract rights.

At issue in the Moro case was $5.3 billion dollars in benefits for PERS members and retirees. The Supreme Court’s decision finding the SB 822 and SB 861 reductions to COLA unconstitutional for benefits earned before the effective dates of the changes means that over $4 billion of the $5.3 billion in benefits at issue have been protected. This represents a significant victory for PERS retirees and members.

The court affirmed the changes to the 1991 (SB 656) and 1995 (HB 3349) income tax offsets for out of state retirees and to COLA for benefits that members earn on or after the effective dates of SB 822 (May 6, 2013) and SB 861 (October 8, 2013). A complete copy of the Supreme Court’s decision can be found through the link to the pleadings on our PERS Litigation page.

Special Post: Challenges to Fair Share

It is no secret that many members of the United States Supreme Court are extremely hostile to unions. In Knox v. SEIU, 132 S. Ct. 2277 (2012), the Court held that the Union failed to follow the proper procedures when it increased its dues and fair share fees for political purposes related to several hotly contested ballot measures and other political activities. While the result was not entirely unexpected, the majority opinion went beyond what even the plaintiffs were asking for, holding that if a public sector union seeks to increase dues or levy a special assessment mid-year for any purpose, the union must provide non-members a separate notice and may not collect any funds from non-members without their affirmative consent. That is, for the first time, the Supreme Court held that the union must offer an opt-in system in order to protect non-member First Amendment rights.

While the court did not overrule prior precedent, the majority expressed extreme skepticism about the correctness of the “opt-out” approach, referring to it as an “anomaly” and a “remarkable boon for unions.” The opinion also includes scathing comments about the political activities of unions and how they are not to be trusted to properly audit and report such activities to non-members.

The same anti-union sentiment was evident in the Court’s recent decision in Harris v. Quinn, (June 30, 2014). In that case, the majority struck down a portion of an Illinois law that required all homecare workers represented by a union to pay their fair share of the cost of that representation. Similar to Oregon, Illinois law authorized homecare workers who are hired directly by clients but who are paid with state funds to organize and collectively bargain with the state to set basic terms of employment. The majority, in an opinion written by Justice Alito, found that because these employees are not “full-fledged” public employees, the fair share provisions in the collective bargaining agreement were unconstitutional.

Plaintiffs in that case urged the Court to expressly overrule Abood v.Detroit Bd. of Ed., 431 U.S. 209, 222 (1977), the lead case upholding “fair share” fees in the public sector, and unions expressed some relief that it declined to do so. However, the majority decision demonstrates a serious disdain for value of collective bargaining or precedent. As he did in Knox, Justice Alito took cheap shots at Abood and, without any convincing rationale other than he wanting to limit Abood, he found that Abood’s concerns with preventing free ridership and promoting labor peace were not sufficiently substantial for these “partial” public employees to justify any infringement on their constitutional right not to associate.

In a strongly worded dissent joined by four members of the Court, Justice Kagan emphasized that the doctrine of stare decisis would prevent overturning Abood given the lack of any new “special justification” and the existence of enormous reliance interests: “[T]he Abood rule is deeply entrenched, and is the foundation for not tens or hundreds, but thousands of contracts between unions and governments across the Nation.” Thus, “[o]ur precedent about precedent, fairly understood and applied, makes it impossible for this Court to reverse [Abood].” Justice Kagan also criticized the majority for failing to recognize that the State was the joint employer of the homecare workers where the State continued to have authority over workforce-wide conditions of employment, such as wages and insurance.

What does this mean for Oregon’s public sector unions?

In Oregon, anti-union forces have often taken aim at unions through the initiative process. BHMK has worked with our union clients and allies to ensure that these initiatives have accurate and informative ballot titles and that they fail at the ballot box. As a result, Oregon law still protects the right of public employee unions to require all bargaining unit members to share in the cost of representation the union is legally obligated to provide.

These decisions from the Supreme Court threaten those rights. Like Illinois, Oregon statutes authorize homecare and childcare workers to bargain collectively. Harris will now require unions representing those workers to change their practices with regard to fair share.

For other public employee unions, we need to understand that the current conservative majority on the Court appears prepared to overturn the “opt-out” approach for all fees and/or to seriously limit what is a “chargeable” expense for non-members. In the meantime, neither Harris nor Knox requires any changes in the union’s standard procedures for providing notice and an opportunity to “opt-out” for annual dues or fees. However, if the union determines it needs to increase dues and fees and/or to impose a special assessment mid-year for any purpose, the Knox requires the union to send out a fresh notice to non-members and only collect funds from those non-members who affirmatively opt-in.

If you have any questions about the implications of Harris v. Quinn or Knox v. SEIU, please do not hesitate to contact attorneys Aruna Masih or Margaret Olney.

City Not Entitled to Recoup Overpaid Pension Benefits by Self-Help

After the City of Portland discovered a 15-year-old error in its pension payment calculations for public safety members of the Fire Police Disability and Retirement Fund, the City tried to get back overpayments totaling more than $3 million, by taking it directly out of Fire and Police Pension benefits, without giving members a chance to respond or raise defenses.  BHMK Attorney Hank Kaplan brought class action litigation challenging the City’s action, based on violations of Oregon’s wage deduction statute, 652.610.  The City denied the statute applied, and contended that its action was justified by IRS requirements to preserve the tax qualified status of the pension plan.  Multnomah County Circuit Judge Henry Breithaupt, a former tax attorney, rejected the City’s contentions and on July 26, 2012 ruled that the City violated the Oregon wage deduction statutes.

Oregon Workers’ Compensation Board Affirms Second Firefighter Cancer Claim

Nearly two years to the day after an Oregon firefighter was diagnosed with testicular cancer the Workers’ Compensation Board (WCB) affirmed an Administrative Law Judge’s finding that the firefighter’s cancer was work–related. Attorney Nelson Hall of Bennett Hartman Morris & Kaplan represented the firefighter.

The firefighter filed a workers’ compensation claim with SAIF in 2010 alleging that his exposure to smoke and chemicals while fighting fires caused his condition. SAIF denied his claim, and the firefighter appealed. On appeal, the issue was whether SAIF had established by clear and convincing medical evidence that the testicular cancer was not caused or contributed to in material part by his work as a firefighter pursuant to ORS 656.802(5). This rule provides that certain identified cancers (including testicular cancer) are presumed to result from qualifying firefighter’s employment. The WCB review panel found that medical experts testifying on behalf of the firefighter persuasively rebutted SAIF’s opinions regarding the relationship between occupational exposures of firefighting and the development of testicular cancer.