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It’s Off to the Races: The Employment Law Landscape Continues to Evolve As Employers Sprint to Rebuild and Reopen Businesses In the Shadow of COVID-19

As states begin to move away from Shelter in Place orders and employers are permitted to reopen and rebuild their businesses, plaintiffs’ lawyers, unsurprisingly, have wasted no time in racing to courts to file lawsuits that assert various coronavirus-related employment claims.  Employers should be aware of these trending causes of action as they develop or update, and implement, employment policies and procedures to avoid being caught in the fray.  Additionally, the new Chicago predictive scheduling law’s effective date is rounding the corner, so any covered Chicago employers, if they have not done so already, should act quickly to comply by July 1st.  Finally, employers, particularly those outside of California, should take note of the Department of Labor (“DOL”) rules issued in mid-May, one of which expands the types of employers who may be entitled to use the commissioned sales overtime exemption and another that favorably revises the federal regulations to allow the application of the fluctuating workweek method of calculating overtime on bonuses for salaried, non-exempt employees whose hours vary from week to week.

FLAGS ARE UP SIGNALING THE ONSLAUGHT OF COVID-19 EMPLOYMENT CLAIMS:  Plaintiffs’ lawyers, chomping at the bit, are initiating actions against employers, asserting a multitude of COVID-19-related employment claims.  To minimize the potential for being corralled by costly litigation, employers should consider the following sources of potential liability when taking employment actions and developing and implementing best practices:

(1) Families First Coronavirus Response Act Claims. These suits generally allege employees were unlawfully denied benefits afforded by the Families First Coronavirus Response Act (“FFCRA”) and/or were terminated for requesting, or were denied, FFCRA leave. As you recall from our previous e-alert, the FFCRA requires private employers with fewer than 500 employees and certain public employers to provide emergency paid sick leave and expanded family and medical leave for specified COVID-19 related purposes.  See:  https://srclaw.com/families-first-coronavirus-response-act-what-employers-need-to-know-march-20-2020/  Unlike most discrimination claims, there is no exhaustion-of-remedies requirement for an FFCRA claim, such as first filing a complaint with a governmental agency, and individual managers can be sued due to the law’s broad definition of “employer.”  Thus, aggrieved employees have been able to file FFCRA lawsuits at an unprecedented pace, and the cost of these claims can quickly add up because the remedies are the same as those available under the Fair Labor Standards Act (“FLSA”) and Family and Medical Leave Act (“FMLA”) (e., actual damages, liquidated damages, and attorney fees). Employers are encouraged to implement FFCRA training and procedures to ensure leave requests are handled properly, benefit decisions are made fairly and consistently, and supporting documentation for each leave request and denial is maintained.  See also the DOL’s FFCRA page: https://www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave

(2) ADA, FMLA, and Privacy Claims. Although having COVID-19 may or may not qualify as a covered disability under the Americans with Disabilities Act (“ADA”) and applicable state disability laws, there are several ways employers may incur liability related to COVID-19 considerations.  Certain employees may have pre-existing impairments that put them at higher risk for becoming severely ill and these impairments may qualify as ADA disabilities, thus triggering the duty to consider reasonable accommodations for the non-COVID-19 impairments. Employers who screen employees for symptoms of COVID-19 must do so privately and maintain the confidentiality of any medical information obtained.  Additionally, although the FFCRA temporarily amended the FMLA, employers must remember that traditional FMLA obligations still apply even if they overlap with FFCRA obligations.  In fact, plaintiffs have already filed lawsuits against employers for violations of the FMLA and FFCRA for denial of benefits. See, e.g., Robtoy v. Kroger Co., 1:20-cv-00173 (N.D. Ind., filed Apr. 28, 2020) (alleging former employer violated FLMA and FFCRA by denying paid leave under employer’s policy, which was requested because of COVID-19 symptoms, and later terminated employee).  Employers are encouraged to familiarize themselves with the FFCRA and FMLA, and the disability accommodation interactive process, and seek legal advice as needed.

(3) Discrimination Claims. Due to furloughs, layoffs, recalls, and the significantly increased rate of leave requests, employers should also expect claims of discrimination stemming from what are viewed as unfair administration or denial of leave or improper selection for furlough or layoff or return to work selections. Employers must be sure to document the legitimate business reasons for any employment action.

(4) Wage and Hour Claims. Employers can be assured there will also be a significant uptick in wage and hour claims arising from their attempts to ride out the pandemic.  Many employers have permitted employees to work from home or implemented modified work schedules to accommodate reduced business due to COVID-19.  These employers need to remember to pay exempt employees their full salary for any workweek in which some work is performed (barring one of the exceptions), and ensure that any reduction in salary still meets the required salary threshold for exemption.  Further, to the extent exempt employees’ job duties were modified to adjust to the pandemic, it is important that the modified duties still meet the criteria for exempt status.  In regard to non-exempt employees, employers must make sure all hours worked are accurately and completely recorded, and required meal and rest breaks are taken, while they work reduced schedules or from home.  Further, any hazard pay or performance-based incentives must be properly included in the regular rate when calculating overtime pay. Employers should also be aware that lawsuits have been filed contending that nonexempt employees’ time spent waiting to be screened for COVID-19 symptoms is compensable.  In California, and possibly other states, best practice is to compensate employees for this pre-work screening time and pay reporting time pay if they fail the screening and are sent home without working.  COVID-19-related expenses incurred by employees in connection with work, such as the cost of masks or other required PPE, or the use of personal cellphones, computers, internet access, and office supplies when working from home may lead to claims for reimbursement of business expenses.  Finally, employers should be reminded to check their applicable state and local minimum wage ordinances for any increases scheduled to take effect on July 1, 2020.  In some locations, minimum wage increases may be suspended or delayed as a result of the economic impact of the pandemic on businesses.

(5) Unsafe Workplace Claims. Another emerging employment litigation trend is the addition of public nuisance claims to workers’ complaints. Employees and their families allege that lax workplace safety protocols and/or the employer’s failure to comply with such rules create unsafe working conditions and put them at risk of COVID-19 exposure.  The pending lawsuits do not seek monetary damages but instead seek injunctions that would require the employers to comply with public health officials’ recommendations and best practices regarding COVID-19. Whether these public nuisance claims will be successful is unclear.  Nevertheless, employers are encouraged to update and implement workplace safety rules and guidance in accordance with applicable public health guidance, and closely monitor compliance, to minimize the risk of employees contracting or spreading COVID-19 to others at work.  In some states, such as California, workers compensation may be presumed to cover employees who contract COVID-19 at work.  California’s Governor Newson issued Executive Order 62-20 on May 6, 2020, creating a time limited rebuttable presumption that if an employee tests positive or is diagnosed with COVID-19 and it is confirmed by a positive test within 14 days after performing a service at a place of work, the employee will be eligible for workers’ compensation benefits. This “no fault” system makes it easier for employees to access workers’ compensation benefits, while relieving employers from being sued outside the workers’ compensation system for damages related to an employees’ work-related illness.  However, the extent to which workers’ compensation may cover an employee’s injury or death due to COVID-19 may vary from state to state.  Therefore, it is still important to closely track and follow local workplace safety and health orders.

To end up in the Winner’s Circle and avoid unnecessary litigation, employers are encouraged to consider the following action items:

  1. Develop and implement procedures for equitably and consistently administering FFCRA, FMLA, and any employer-provided benefits and for maintaining proper documentation.
  2. Review the process for ADA accommodation requests to ensure requests from employees with COVID-19 or other impairments are properly evaluated.
  3. Review procedures for employment actions including leave or paid time off requests, furloughs, layoffs, discipline, and termination to ensure that such actions are taken for legitimate business reasons and that these decisions are well documented.
  4. Review the salary and duties of exempt employees to confirm they remain qualified for exempt status and are paid their full salary during any workweek in which some work is performed, unless an exception applies.
  5. Periodically audit non-exempt employees’ time records to ensure work hours and any required meal breaks are accurately and completely recorded.  Also verify that employees are paid the applicable minimum wage, and any overtime pay has been calculated correctly in light of hazard pay or other performance-based incentives.
  6. Update and implement workplace safety protocols in accordance with public health officials’ recommendations and best practices regarding COVID-19, and regularly and thoroughly monitor your business’ compliance. It is also advisable to provide training and frequent review of safety precautions, and to post signs and notices as reminders of safe work practices.
  7. Review and update business expense reimbursement policies to take into account COVID-19 related business expenses.

DO YOU NEED TO IMPLEMENT PREDICTIVE SCHEDULING?:  On July 1, 2020, Chicago’s new Fair Workweek Ordinance will go into effect, adding to the patchwork of local and state predictive workweek laws in jurisdictions such as San Francisco, Emeryville, San Jose, Berkeley, New York City, Seattle, Philadelphia, Washington, D.C., and the state of Oregon. The Chicago Ordinance, touted to be the most expansive scheduling policy in the U.S., applies to employers primarily engaged in a Covered Industry—building services, healthcare, hotels, manufacturing, restaurants, retail, and warehouse services—that employ 100 or more full- or part-time individuals globally and employ 50 “Covered Employees.” A Covered Employee is an employee who primarily works in the City of Chicago and earns either a salary of $50,000 or less or an hourly wage of $26 or less. Covered Employees include both full- and part-time employees. Additionally, the Ordinance applies only to restaurants with at least 30 locations and at least 250 employees globally and does not include businesses with three or fewer locations in Chicago that are owned by one employer and operating under a sole franchise.

Under the Ordinance, covered employers must provide new hires with an estimate of their projected days and hours of work for the first 90 days of employment and must provide this estimate before the commencement of employment. Employers must also post the work schedules of its Covered Employees no later than 10 days before the new schedule begins. This 10-day deadline will increase to 14 days on July 1, 2022. Covered employers may change the work schedule before the 10-day deadline without penalty. However, changes in work schedules after this deadline will result in certain penalties, depending on how much notice was provided. In addition to the predictive scheduling, the Ordinance saddles Chicago employers with a variety of posting and notice requirements.

Outside of Chicago, as mentioned, employers should be mindful of the other jurisdictions that have also enacted predictive scheduling laws, including San Francisco, New York City, Seattle, Philadelphia, Washington, D.C., and the state of Oregon. While these laws vary by city or state, they generally include requirements for advanced posting of schedules and penalties for unexpected schedule changes.

Although most businesses have had a tough time these last few months and may be adjusting to a new normal in the wake of COVID-19, employers subject to predictive scheduling laws must be aware of and comply with applicable scheduling requirements to avoid being saddled with a litany of monetary penalties.

DOL ISSUES TRIFECTA OF NEW RULES:  Between May 18 and 20, 2020, the U.S. Department of Labor (“DOL”) announced three new rules that cover pay and overtime issues and the Labor Secretary’s power to review administrative decisions.

The first rule expands the types of employers that can qualify as “retail” businesses and may be entitled to utilize the commissioned sales exemption under Section 7(i) of the FLSA.

The second rule revises the federal regulations regarding the “fluctuating workweek” method of paying overtime to salaried, non-exempt employees.  As of the rule’s effective date, employers may pay bonuses or other incentive-based pay to salaried, non-exempt employees whose hours vary from week to week applying the more favorable fluctuating workweek method of calculating overtime.  Under this method, the fixed weekly salary is intended to pay the employee for all straight-time hours worked in a workweek, however many or few, so he or she will be entitled to additional compensation at one-half of (rather than 1.5X) the “regular rate” for overtime hours.  While this FLSA rule may be helpful in some states, California employers should be mindful that the fluctuating workweek method of paying overtime is not permitted under California law and therefore is of limited application.

Finally, the third new rule makes technical revisions to DOL regulations needed to give the Labor Secretary discretion to review decisions issued by the Board of Alien Labor Certification Appeals and the Administrative Review Board, including rulings on federal contract pay discrimination, wage-hour violations, immigration, whistleblower cases, and more.

Again, this trifecta of new federal rules will be of limited application to California employers, but are noteworthy for those employers required to follow FLSA only.

Employers who have questions or would like further information about any of the above topics are encouraged to consult an SRC employment law attorney for assistance in assessing how these developments may affect their businesses and for guidance on best practices.

 

For further information, please contact one of our employment attorneys. 

Hope Case
(650) 494-4098
hcase@srclaw.com
Merrili Escue
(858) 381-5458
mescue@srclaw.com
Nancy Kawano
(858) 381-4890
nkawano@srclaw.com

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The contents of this newsletter are intended for general informational purposes only and should not be construed as legal advice or a legal opinion. You are advised to consult an attorney about any specific legal question.