What Dallas Employers Need To Know About New Paid Sick Time Ordinance

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

[Update: The Dallas Office of Equity & Human Rights has published (1) the posters (English & Spanish ) which must be displayed by covered employers, and (2) administrative rules for administering the ordinance].

Earlier this year, Dallas became the third Texas municipality (after Austin and San Antonio) to enact a paid sick time ordinance applicable to private employers. There is no corresponding Texas state law which mandates paid sick time in the private sector.

Unlike the Austin ordinance, which was ruled unconstitutional by a Texas Appellate Court, no Texas court has yet ruled on the constitutionality of the Dallas ordinance. The Texas legislature, which adjourned in May, otherwise enacted no legislation affecting municipal paid sick time ordinances.

What Employers Are Covered By The Ordinance?

The ordinance applies to any “person, company, corporation, firm, partnership, labor organization, non-profit organization or association that pays an employee to perform work for an employer and exercises control over the employee’s wages, hours and working conditions.”  The ordinance does not limit its coverage to employers with a minimum number of employees.

The ordinance does not apply to (1) the United States, (2) a corporation wholly owned by the United States, (2) the state or a state agency, (3) the City of Dallas, or (4) any other agency that cannot be regulated by city ordinance.

What Employees Are Covered By The Ordinance?

The ordinance covers any “individual who performs at least 80 hours of work for pay within the City of Dallas, Texas in a year for an employer, including work performed through the services of a temporary or employment agency.” The ordinance does not apply to independent contractors or unpaid interns.

How Much Earned Paid Sick Time Is Mandated By The Ordinance?

An employer must grant one hour of earned paid sick time for every 30 hours worked for the employer in the City of Dallas. Earned paid sick time is accrued starting at the later of the employee’s start date or the effective date of the ordinance. Earned paid sick time accrues only in hourly increments, unless the employer has written policies establishing the accrual of earned paid sick time in fraction of an hour increments.

An employee who is rehired by an employer within six (6) months following separation from employment may use any earned paid sick time available to the employee  at the time of the separation.

Are There Any Caps To Earned Paid Sick Time Mandated By The Ordinance?

An employee of an employer with 15 or fewer employees, excluding family members, can only accrue up to 48 hours of earned paid sick time in a year, unless the employer chooses a higher limit. An employee of a larger employer can only accrue up to 64 hours of earned paid sick time in a year, unless the employer chooses a higher limit. All available earned paid sick time up to the applicable limit shall be carried over to the following year.

An employer is not required to allow use of earned paid sick time by an employee for more than eight (8) days in a year.

For What Absences Can Earned Paid Sick Time Be Used By An Employee?

An employee is entitled to available earned paid sick time if the employee makes a timely request for the use of earned paid sick time before the employee’s scheduled work time. There is an exception for unforeseen circumstances.

Available earned paid sick time can be requested by an employee for an absence caused by:

  1. the “employee’s physical or mental illness, physical injury, preventative medical or heath care or health condition”;
  2. the “employee’s need to care for their family member’s physical or mental illness, physical injury, preventative medical or health care or health condition”; or
  3. the “employee’s or their family member’s need to seek medical attention, seek relocation, obtain services of a victim services organization, or participate in legal or court ordered action related to an incident of victimization from domestic abuse, sexual assault, or stalking involving the employee’s family member.”

The term “family member” is defined as an employee’s “spouse, child, parent, any other individual related by blood, or any other individual whose close association with an employee is the equivalent of a family relationship.”

Can An Employer Require Verification Before Paying For Sick Time?

An employer may adopt reasonable verification procedures to establish that an employee’s request for earned paid sick time for more than three (3) consecutive work days is a qualifying absence. An employer may not adopt verification procedures that would require an employee to explain the nature of domestic abuse, sexual assault, stalking, illness, injury, health condition, or other health need when making a request for earned paid sick time.

How Is Earned Paid Sick Time Calculated?

The employer shall pay earned paid sick time in an amount equal to what the employee would have earned if the employee had worked the scheduled work time, exclusive of overtime premium, tips or commissions, but no less than the state minimum wage.

What Does The Ordinance Proscribe?

An employer may not:

  1.  require “an employee to find a replacement to cover the hours of earned paid sick time as a condition of using earned paid sick time”;
  2.  erase earned paid sick time upon “an employee’s transfer to a different facility, location, division, or job position with the same employer”; or
  3.  “transfer, demote, discharge, suspend, reduce hours, or directly threaten such actions against an employee because that employee requests or uses earned sick time, reports or attempts to report a violation of [the ordinance], participates or attempts to participate in an investigation or proceeding under [the ordinance]; or otherwise exercises any rights afforded by [the ordinance].

What Employment Policies Are Unaffected By The Ordinance?

The ordinance does not affect employer policies which allow an employee to donate available earned paid sick time to another employee.

The ordinance does not prohibit an employer from allowing an employee to voluntarily exchange hours or voluntarily trade shifts with another employee or prohibit an employer from establishing incentives for employees to voluntarily exchange hours or voluntarily trade shifts.

What Records Are Mandated Of Employers By The Ordinance?

On at least a monthly basis, an employer must provide electronically or in writing to each employee a statement showing the amount of the employee’s available earned paid sick time.

An employer that provides an employee handbook to its employees must include therein a notice of employee rights and remedies under the ordinance.

Each employer must display a sign in a conspicuous place or places where employee notices are customarily posted.

An employer which, as a matter of company policy, uses a 12-consecutive-month period other than a calendar year for purposes of determining an employee’s eligibility for and accrual of earned paid sick time must provide its employees with written notice of such policy.

Does The Ordinance Provide Employees With A Private Of Action?

No. For violations, the ordinance only provides for a civil penalty assessed by the City.

How Is The Ordinance Enforced?

The ordinance is enforced by the director of the department designated by the city manager for its implementation, administration and enforcement. A complaint alleging a violation must be filed with the director by or on behalf of an aggrieved employee with two years from the date of the violation.

What Is The Civil Penalty For Violation Of The Ordinance?

No civil penalty for a substantive violation may be assessed prior to April 1, 2020. Thereafter, an employer which fails to cease a violation by the end of the 10th business day after the employer receives notice of the violation by the director is liable to the City for a civil penalty of up to $500 for that violation.

Civil penalties of $500 per violation for retaliation, however, can be assessed on and after the applicable effective date.

Are Any Affirmative Defenses Available To Employers Under The Ordinance?

The ordinance does not expressly provide any affirmative defense for a failure to pay an employee earned paid sick time. Presumably, the City will consider any lawful reason for an adverse employment action taken against an employee who has (1) requested or used earned paid sick time, (2) reported a violation of the ordinance, or (3) participated in an administrative proceeding under the ordinance.

What Is The Effective Date Of The Ordinance?

The ordinance is effective August 1, 2019.  For employers with five (5) or less employees, however, the ordinance is not effective until August 1, 2021.

When Is The Time for Dallas Employers To Implement Earned Paid Sick Leave Policies?

For Dallas employers with more than five (5) employees, the time is now.  There is presently no legislation being considered in Austin, nor litigation pending in Dallas, which will forestall the ordinance from taking effect on August 1, 2019.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor and employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com.

Supreme Court To Decide Whether Title VII Bars LGBT Discrimination

Posted on by Robert G. Chadwick, Jr.

The Summer 2019 Edition of Professional Liability Defense Quarterly, published by the Professional Liability Defense Federation, features an article by Robert G. Chadwick, Jr. entitled “Supreme Court to Decide Whether Title VII Bars LGBT Discrimination.”

Read Article

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor and employment law issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com.

 

Texas’ New Employment Laws

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

The Texas 86th Legislature recently concluded with the passage of several new employment laws affecting private employers.

Disclosure of Information Regarding Sexual Misconduct

Effective June 10, 2019, a new law provides limited immunity from civil liability for disclosing certain information to designated persons regarding sexual misconduct by an employee, volunteer, or independent contractor of a charitable organization.

Disclosures protected by the new law are those made in good faith as to information reasonably believed to be true. A person is not immune from civil or criminal liability for acting in bad faith or with a malicious purpose.

The only persons to whom protected information may be disclosed under the new law are current or prospective employers of the charitable organization’s employee, volunteer or independent contractor.

The disclosures which may be made under the new law include allegations of (1) sexual misconduct, (2) sexual abuse, (3) sexual harassment, or (4) a sexual offense under the Texas Penal Code. Child abuse may be disclosed only if previously reported to an appropriate agency under Section 261.103 of the Texas Family Code. An individual is not immune from civil or criminal liability for reporting the individual’s own sexual misconduct.

Civil immunity under the new law extends to charitable organizations, and employees, volunteers and independent contractors of charitable organizations.

Jury and Grand Jury Service

Currently, Section 122.001 of the Texas Civil Practice & Remedies Code provides only that “[a] private employer may not terminate the employment of a permanent employee because the employee serves as a juror.”

A new law, which becomes effective on September 1, 2019, amends Section 122.001 to state that “an employer may not discharge, threaten to discharge, intimidate, or coerce any permanent employee because the employee serves as a juror, or for the employee’s attendance or scheduled attendance in connection with the service, in any court in the United States.”

Another new law, which becomes effective on September 1, 2019, amends Section 122.001 to include “grand jury” service.

Report of Child Abuse or Neglect

Currently, Section 261.110 of the Texas Family Code states that an employer may not suspend or terminate the employment of, or otherwise discriminate against, a person who is a professional and who in good faith … reports child abuse or neglect.”

A new law, which becomes effective on September 1, 2019, extends the prohibition of Section 261.110 to any adverse employment action. “Adverse employment action” is defined as “an employee’s compensation, promotion, transfer, work assignment, or performance evaluation, or any other employment action that would dissuade a reasonable employee from making or supporting a report of abuse or neglect…”

The new law also now enables a claimant to sue for injunctive relief.

Age Discrimination in Training

Currently, Section 21.054(b) of the Texas Labor Code limits the prohibition against age discrimination in certain employment training programs to “an individual who is at least 40 years of age but younger than 56 years of age.”

A new law, which becomes effective on September 1, 2019, repeals the age cap.

Minimum Wage for Disabled Workers

Section 14(c) of the Fair Labor Standards Act authorizes employers, after receiving a certificate from the Wage & Hour Division of the U.S. Department of Labor, to pay sub-minimum wages to disabled workers.

A new Texas law, which becomes effective on September 1, 2019, sets forth a mechanism for increasing the wages paid by community rehabilitation programs to the federal minimum wage not later than September 1, 2022.

Competition & Trade Secrets

An amendment to the Texas Citizens Participation Act clarifies that, effective September 1, 2019, the Act is not applicable to a legal action arising from an officer-director, employer-employee, or independent contractor relationship that (1) seeks recovery for misappropriation of trade secrets or corporate opportunities, or (2) seeks to enforce a non-disparagement agreement or a covenant not to compete.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

Disgruntled Employees & Gun Violence: The Disturbing New Reality

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

In the aftermath of the mass shooting at a municipal building in Virginia Beach on Friday, May 31st which left twelve dead and others wounded, two familiar words were used to describe the gunman – “disgruntled employee.”

In the past two years, workplaces in Virginia Beach (May 31, 2019), Aurora, Illinois (Feb. , 2019), Harford County, Maryland (Sept. 20, 2018), Edgewood, Maryland (Oct. 18, 2017), San Francisco, California (June 14, 2017), and Orlando, Florida (June 5, 2017) have been victims of mass shootings by gunmen described as “disgruntled” current or former employees. Workplace shootings by “disgruntled” current or former employees have also occurred in Albuquerque, New Mexico (Nov. 13, 2018), Las Vegas, Nevada (April 16, 2018), Birmingham, Alabama (March 14, 2018), Taylor, Michigan (February 1, 2018), Nashville, Tennessee (Jan. 11, 2018), Houston, Texas (Dec. 29, 2017), Bronx, New York (June 30, 2017), New York, New York (Oct. 5, 2017), Charleston, South Carolina (Aug. 24, 2017), Cleveland, Ohio (June 15, 2017). and Dallas, Texas (April 24, 2017), amongst other locations.

So, why the surge in shootings? Postulations regarding the phenomenon of school shootings may provide an answer. In an October 12, 2015 New Yorker article, Malcolm Gladwell theorized that school shootings are akin to “a slow-motion ever-evolving riot in which each new participant’s action makes sense in reaction to and in combination with those who came before.” If this theory is accurate as to “disgruntled” workers, the explanation for past shootings also serves as an ominous sign of the future.

If employers have not yet become alarmed regarding the prevalence of workplace shootings, their employees certainly have. According to data compiled by the Society for Human Resources Management (“SHRM”) in 2019, approximately one out of seven Americans do not feel safe at work.  The same data indicates that nearly 50% of human resources professionals have experienced a workplace violence incident.  In a March 19, 2019 press release, SHRM President and CEO Johnny C. Taylor remarked: “This data shows we have a lot of work to do in terms of security, prevention, training and response.”

To be sure, not all gun violence is preventable by an employer.  An unavoidable consequence of the prevalence of gun violence, however, is the increasing pressure to hold employers legally responsible. As noted in another blog article by this author, the Occupational Safety & Health Administration (“OSHA”) can and has issued citations arising from workplace violence under the general duty clause of the Occupational Safety and Health Act. State worker’s compensation laws do not always insulate employers from wrongful death suits, especially in states where worker’s compensation insurance is optional.

With each new incident of gun violence, therefore, comes inevitable scrutiny as to the employer’s action or inaction beforehand. Increasingly, questions are being asked as to whether (1) the employer had a workplace violence prevention plan, (2) the “disgruntled” employee had a violent background before being hired by the employer, (3) the employer had policies and procedures regarding threats of workplace violence, (4) the employer had training for recognizing the signs of imminent violence, (5) there were any warning signs of violent behavior by the “disgruntled” employee, (6) the employer had security protocols for preventing firearms in the workplace, (7) the employer had security protocols for denying access to former employees, (8) the employer had a response plan, and (9) whether employees were trained as to the response plan.

The disturbing new reality for employers, therefore, is the immediate need to understand the importance and severity of the threat of gun violence by “disgruntled” workers. Guidance in this area is already available from OSHA and SHRM. From this guidance and legal advice, policies and procedures can be formulated by employers to mitigate the risk of loss of human life and legal liability.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

NLRB Restresses Risk Of Firing Employees Who Discuss Pay

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

Employers understand the disruption to workplace morale which can result from open discussions about employee compensation.

For instance, on February 24, 2011, MCPc, Inc., a non-union company, invited employees to a “team building” lunch. The lunch quickly devolved from “team building” to complaints by employees about their excessive workloads. One employee urged the company to hire additional employees to alleviate these heavy workloads. He added the company could have hired several employees for the $400,000 annual salary being paid to a newly hired executive. Other employees agreed. Employee morale was worse after the lunch than it had been beforehand.

MCPc, Inc. responded to the ill-fated “team building” lunch by terminating the employee who had accessed and shared the salary of the newly hired executive. At the time, the company likely did not anticipate this decision would be the catalyst for more than eight years of costly litigation culminating in a May 23, 2019 Order that the employee be (1) reinstated without prejudice to his seniority and with all records of his prior dismissal expunged, (2) made whole for lost earnings and other benefits, with interest, (3) compensated for “search-for-work” expenses, and (4) compensated for the adverse tax consequences, if any, of receiving a lump sum backpay award.

So, what did MCPc, Inc. allegedly do wrong? According to the National Labor Relations Board (“NLRB”) Decision accompanying the May 23, 2019 Order, the employee’s conduct at the “team building” lunch was protected concerted activity under the National Labor Relations Act (“NLRA”). Specifically, the employee had contributed to shared employee concerns regarding staff shortages. The NLRB found the company violated Section 8(a)(1) of the NLRA by discharging the employee for his protected concerted activity.

To be sure, MCPc, Inc. can, and likely will, appeal the NLRB decision in a federal appeals court. Still, its experience serves as a cautionary tale for other employers. The NLRA is applicable to both union and non-union employers. What an employer may regard as a disruption to workplace morale, the NLRB may regard as legally protected conduct. When employee misconduct even arguably implicates shared concerns over terms or conditions of employment, prudent risk management demands that the NLRA be considered before taking any further action.

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Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues.  To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

Supreme Court To Hear Three LGBTQ Discrimination Cases

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

On Monday, April 21, 2019, the U.S. Supreme Court agreed to hear, during the 2019-2020 term, three cases alleging sex discrimination in employment under Title VII of the Civil Rights Act of 1964 (“Title VII”). These three cases provide the Court an opportunity to  decide whether Title VII’s bar against sex discrimination extends to discrimination based upon sexual orientation and gender identity.

Zarda v. Altitude Express, Inc.

On February 26, 2018, the Second Circuit ruled en banc that Title VII bars discrimination based on sexual orientation. The Court opined: “… the most natural reading of the statute’s prohibition of discrimination “because of sex” is that it extends to sexual orientation discrimination because sex is necessarily a factor in sexual orientation.”

Bostock v. Clayton County Board of Commissioners 

On May 10, 2018, the Eleventh Circuit reached a different conclusion as to whether Title VII bars discrimination based upon sexual orientation.  In doing so, the Court followed 1979 precedent from the 11th Circuit holding that “discharge for homosexuality is not prohibited by Title VII.”

EEOC v. R.G. & G.R. Harris Funeral Homes, Inc.

On March 7, 2018, the Sixth Circuit ruled that “[d]iscrimination on the basis of  transgender and transitioning status is necessarily discrimination on the basis of sex …”  The Court clarified that “discrimination against transgender persons necessarily implicates Title VII’s proscriptions against sex stereotyping.”

Takeaways for Employers

As observed in a March 2018 post on this blog, a new wave of lawsuits alleging LGBTQ discrimination in employment had begun long before the Zarda ruling on February 26, 2018. Even in circuits which, as the Eleventh Circuit, have rejected the application of Title VII to LGBTQ claims, the chance that the Supreme Court may overturn such precedent has provided hope that such suits can ultimately prove successful.

To be sure, the Supreme Court may ultimately decide that Congressional, not judicial, action is needed to expand the scope of Title VII to include sexual orientation and gender identity discrimination. Such a decision, however, may not come until 2020. In the meantime, employers must manage the risk of LGBTQ lawsuits even in states which do not have state or local laws barring such discrimination.

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Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

Hateful Conduct or Hate Hoax? Important Lessons For Employers

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

According to FBI statistics, hate crimes rose 17% in the U.S. in 2017. Amongst the motivations for hate crimes tracked by the FBI are “race/ethnicity/ancestry bias”, “religious bias”, “sexual orientation bias”, “disability bias” and “gender bias.” 

The FBI does not similarly document the number of false allegations of hate crimes. Recent events, however, have shown that hate hoaxes are real.

On January 29, 2019, actor Jussie Smollett, who is black and gay, claimed to have been attacked in Chicago by two masked men. According to Smollett, the two men yelled racist and homophobic slurs, wrapped a rope around his neck, physically assaulted him and poured a substance over him. The media, politicians and entertainers were quick to condemn the incident as a hate crime.

Paradoxically, what started as a police investigation of a hate crime, quickly became an investigation of a hate hoax. On February 20, 2019, Smollett was formally charged with filing a false police report.

In 2017, the Jackson, Michigan home of Nikki Joly, a prominent member of the local LGBTQ community, was burned to the ground. The FBI initially regarded the incident as a hate crime. A Jackson newspaper named Joly its 2018 Citizen of the Year. After a lengthy investigation, Joly was surprisingly charged in 2018 with first degree arson in burning his own home.

Just as in society as a whole, hateful conduct continues to be an unfortunate reality in the workplace. Indeed, most employers understand their legal obligations to take reasonable measures to prevent such conduct and to take prompt remedial action in response to such conduct. Recent hate hoaxes nevertheless underscore three important lessons in exercising these legal obligations.

Lesson 1: Take All Allegations of Hateful Conduct Seriously

The possibility of a hate hoax does not diminish an employer’s obligations to be vigilant in remediating hateful conduct in the workplace. This duty requires that all explanations be considered, including the explanation that the allegation is truthful.  

A hate hoax thus cannot be the first and certainly not the only explanation embraced by an employer for alleged hateful conduct. The risk of precipitously embracing such an explanation is that it may ultimately prove to be wrong. Any action subsequently taken against the accuser could then result in a discrimination claim. Even worse, the accused may only be emboldened to engage in other misconduct in the future.

Lesson 2:  Look Beyond Mere Appearances

The possibility of a hate hoax does underscore the importance of a thorough investigation of alleged hateful conduct. This duty requires that all explanations be considered, including the explanation that the allegation is untruthful.  

What may appear at first to be a clear case of misconduct by the accused may through further investigation be revealed to be a case of misconduct by the accuser. The risk of a rush to judgment is that the accused may be wrongfully punished, and the accuser may be wrongfully rewarded. Any action taken against the accused could then be the basis of a reverse discrimination claim against the employer. Having been successful in one hoax, the accuser may also be encouraged to undertake other hoaxes in the future.

Lesson 3: Be Objective

The possibility of a claim by the accused or accuser does mandate an objective response by an employer to allegations of hateful conduct. Even as to conflicting accounts, such a claim can simply be based upon alleged favoritism in the employer’s response.

For some employers, such alleged favoritism may lean toward the conclusion of a hoax.   The alleged reasons for such favoritism can include (1) the prospect of punishing or losing the accused employee, especially if he or she is a productive employee, (2) the fear of finding evidence of its own culpability in failing to prevent the misconduct, or (3) previous performance or conduct issues of the accuser employee.

For other employers, such alleged favoritism may lean toward the conclusion that hateful conduct occurred. The alleged reasons for such favoritism can include (1) fear of suit by the accuser, (2) fear of backlash by the accuser’s community, (3) empathy for the accuser’s status, or (4) past discriminatory behavior by the employer.

In responding to allegations of hateful conduct, employer must thus avoid even the appearance that the process is being influenced by favoritism in either direction. The risk of not heeding this advice is a costly discrimination or reverse discrimination claim.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

Non-Compete Agreements For Low-Wage Workers Under Fire

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

According to a University of Michigan Law & Economic Research Paper last revised on January 19, 2019, post-termination non-compete agreements “are more likely to be found in high-skill, high-paying jobs, but they are also common in low-skill, low-paying jobs.”

California is famous for outlawing virtually all covenants not to compete for employees. Historically, most other states have required only that such covenants have reasonable limitations as to time, geographical area and scope of activity to be restrained.

Increasingly, however, states are also limiting the types of jobs that may subject to a non-compete agreement. A Massachusetts law which became effective on October 1, 2018 provides that non-compete agreements cannot be enforced against an employee who is classified as non-exempt under the FLSA. An Illinois law which became effective on January 1, 2017 bans covenants not to compete for low-wage employees whose “earnings do not exceed the greater of (1) … the minimum wage required by … law or (3) $13 per hour.”

Other states, including New Hampshire and New Jersey, are considering similar legislation making non-compete agreements unenforceable against low-wage workers.

At the federal level, legislation limiting jobs subject to a non-compete agreement was first proposed by Democratic Senator Christopher Murphy in 2015. Earlier this month, Marco Rubio became the first Republican Senator to propose such legislation with the introduction of the Freedom to Compete Act. In a January 15, 2019 press release, he proclaimed: ““Non-compete agreements that arbitrarily restrict entry-level, low-wage workers from pursuing better employment opportunities are egregious and outdated in the twenty-first century American economy.”

Senator Rubio’s bill seeks to amend the Fair Labor Standards Act (“FLSA”) to (1) void any non-compete agreement with an employee entered into before enactment, and (2) prohibit any non-compete agreement with an employee after enactment.  The term “non-compete” agreement is broadly defined as an agreement “that restricts [an] employee from performing, after the employment relationship … terminates “[a]ny work for another work for another employer for a specified period of time”, “[a]ny work in a specified geographical area”, or “[a]ny work for another employer that is similar to such employee’s work for the employer that is a party to such agreement.”

As with other provisions of the FLSA, Senator Rubio’s bill states that any employee employed in a bona fide executive, administrative or professional capacity, or in the capacity of outside salesman, would not be protected by the proposed amendment. Also, the proposed legislation clarifies that it does not “preclude an employer from entering into an agreement with an employee to not share any information (including after the employee is not longer employed by the employer) regarding the employer or the employment that is a trade secret, as defined in section 1839 of title 18, United States Code.”

The genesis of the movement to ban non-compete agreements for low-wage workers appears to be an October 15, 2014 Huffington Post article which ridiculed Jimmy Johns for including non-compete agreements in hiring packets for low-wage employees.  The practice ultimately prompted (1) a class action suit, (2) investigations by, and settlements with, the States of Illinois and New York, and (3) legislative initiatives to curb such practices by other employers.

Non-compete agreements for low-wage workers have rarely been a good idea for employers. Non-compete agreements are generally justified as necessary to protect an employer’s good will, trade secrets or specialized training. Typically, only management and sales employees are privy to such information.  Asking low-wage employees to sign non-compete agreements can thus strain the credibility of a claim that their enforcement is necessary as to management and sales employees. That such agreements are now the target of legislative efforts is simply another reason to avoid them.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

Employers Should Be Monitoring “Right to Disconnect” Initiatives

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

As many employers already know, states and municipalities have recently been at the forefront in enacting legislation to protect the rights of workers. Previous articles on this blog have highlighted new laws governing predictive scheduling, state-specific sexual harassment prevention,  non-disclosure agreements, job candidate screening, paid sick time, and other terms and conditions of employment.

So what other legislative initiatives should employers be monitoring? Based upon a bill scheduled this week for hearing by the New York City Council, “right to disconnect” initiatives should certainly be on this list.

Under the proposed New York ordinance, it would be unlawful for a covered private employer “to require an employee to access work-related electronic communications outside of such employee’s work hours, not including overtime, except in cases of emergency.” The term “electronic communications” includes “electronic mail, text messages, or other digital means of conveying data electronically.”

Under the proposed ordinance, a covered employer would face a fine of $250 “for each instance of an employee being required to access work-related electronic communications outside of the standard work hours.” For an employee terminated in violation of the proposed ordinance, available remedies include “reinstatement” and “full compensation including wages and benefits lost.”

The proposed ordinance would take effect a mere 120 days after its enactment.

The New York City initiative comes on the heels of “right to disconnect” laws enacted in 2017 in France and Italy.  India is also currently considering a “right to disconnect” law.

Whether or not New York City enacts the proposed ordinance, it is likely states and other municipalities will take notice of the arguments cited in favor of enactment. These arguments include quality of life away from work, which has already been successfully  cited as a reason for predictive scheduling ordinances. Even if New York City does not pass a “right to disconnect” law, another jurisdiction will likely do so.

As previously advised on this blog, compliance and risk management strategies by employers must adapt to the ever-changing legal landscape, especially at the state and local level.  This landscape can change in months, not years. The price of not being diligent in monitoring this landscape may be liability for fines, damages or worse.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com

“Take This Job And Shove It”: Emerging Trends In Employee Departures

Posted on by Robert G. Chadwick, Jr.

By Robert G. Chadwick, Jr., Managing Member, Seltzer, Chadwick, Soefje & Ladik, PLLC.

2018 Bureau of Labor Statistics data proves what many employers already know. More than 3½ million employees quit their job every month.

Two-weeks-notice of a resignation may still be the norm for most of these employees, but anecdotal evidence shows that, in a booming job market, more and more employees are willing to end employment relationships in a more abrupt or even callous manner.

On December 6, 2018, a 17-year old Walmart employee posted a video on Facebook entitled “How I quit my job today.” In the video, the employee records himself reading a prepared statement over a Walmart intercom system. The approximately one-minute video, which now has over 500,000 views, begins with the following line: “Attention all shoppers, associates and management, I would like to say to all of you today that nobody should work here, ever.”

On December 5, 2018, the Federal Reserve noted in its monthly Beige Book that “several Chicago firms have reported that some employees have simply quit – with no notice nor means of contact.” The Beige Book, which tracks employment trends, referred to this manner of quitting as being “ghosted.”

Other employers have reported being notified that an employee had resigned via text from the employee. There are even smartphone apps which assist a user in constructing such a text to an employer.

Abrupt departures may not be a new phenomenon and are often attributable to the demand of a prospective employer. The willingness of more departing employees to “ghost” their employers or shame their employers via social media, however, is a relatively new trend.

So, what can an employer legally do to prevent an employee from leaving it in the lurch? What can an employer legally do to prevent a departing employee from sounding off on social media? The answer is very little.

Employment At Will

There are no federal or state statutes in the United States which require that an employee provide any notice of resignation, much less two-weeks-notice. Absent a contract which provides otherwise, the same laws which allow an employer to terminate an employee without cause or notice provide the same option to an employee.

Withholding Last Pay Check

Under the Fair Labor Standards Act and the laws of most states, an employer must pay an employee for hours worked. Many states have payday or last paycheck laws which also dictate the manner and amount of an employee’s last paycheck. Withholding an employee’s last paycheck as punishment for the manner of resignation thus risks a claim by the employee under such laws.

Forfeiture of Paid Vacation Time

A well-drafted, written policy which provides for the forfeiture of unused paid vacation time upon a resignation without notice can be enforceable in most states. The deterrence value of such a policy, however, depends upon the amount of unused paid vacation time available to the employee at the time of separation. A few states, moreover, have laws expressly outlawing forfeiture of vacation pay under such circumstances.

Contractual Incentives

Amongst the contractual options available to an employer are employment agreements which provide for a resignation notice period incentivized by (1) monetary consideration, or (2) a promise of a similar termination notice period by the employer.  Employment agreements may also encourage retention through (1) stock options and other incentives which vest in yearly increments of continued employment, and/or (2) up-front benefits, such as signing bonuses, relocation reimbursement or training, which an employee must repay upon departure before a prescribed tenure of employment.

Job Reference – Circumstances of Departure

There is no legal impediment to the adoption of a policy warning employees that departure without notice will be noted as the reason for separation in response to any inquiry by a prospective employer. Such a policy, however, may not always deter an employee who leaves for another job.

Job Reference – Not Eligible for Rehire

If an employee resigns in response to alleged discrimination in the workplace, the legal risk of a “not eligible for rehire” response to an inquiry from a prospective employer is a retaliation claim.

The legal risks of such a response otherwise vary by state. Some states regard such a response as evidence of an unlawful blacklist. Other states may regard such a response as protected speech.

Disparagement

State tort laws provide a remedy for false factual statements which result in financial loss to a business. A social media post presented entirely as an unfavorable opinion, however, may not be actionable disparagement.

A non-disparagement clause in an employment agreement, which survives termination of the employment relationship, may also provide a contractual remedy for an employer as to certain statements made by a former employee. Certain statements, however, may be legally protected speech under labor and employment laws even if within the scope of such a non-disparagement clause.

Takeaways

Sound human resources practices are certainly a good starting point for avoiding unscrupulous departures. Even as to a good employer, however, the risk of such a departure remains. As noted above, there may be some legally available options to deter such departures, but they may not always be fool proof.

Like it or not, therefore, “ghosting” and viral social media posts may be new facts of life for employers, at least until the booming job market subsides. Without procedures to account for such phenomena, the damage to an employer can be significant. Consider the hypothetical example of an individual who has surreptitiously quit but still has access to an employer’s access codes and passwords.

If they have not already done so, employers should thus immediately be developing crises management procedures to cope with employees who have opted to burn their bridges. As if human resources was not already a difficult job.

Robert G. Chadwick, Jr. frequently speaks to non-profit organizations regarding labor & employment issues. To contact him for a speaking engagement please e-mail him at rchadwick@realclearcounsel.com