Coronavirus Crisis: Navigating The Maze Of The Families First Coronavirus Response Act

Posted on by Robert G. Chadwick, Jr.

By Robin Foret, Of Counsel, Seltzer, Chadwick, Soefje & Ladik, PLLC.

Purpose and Duration

On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA” or the “ACT”), an emergency measure in response to the Coronavirus pandemic. The Act became effective on April 1, 2020, and is scheduled to automatically expire on December 31, 2020. The Act is essentially comprised of two separate statutory provisions that are both enforced by the Department of Labor (“DOL”): (1) the Emergency Paid Sick Leave Act (“EPSLA”) that is enforced through the Fair Labor Standards Act (“FLSA”). See 29 C.F.R Part 826.20 et seq.; and (2) the Emergency Family Medical Leave Expansion Act (“EFMLEA”) that is enforced as an extension of the FMLA. See 29 U.S.C. § 2601. et seq.

  • City of Dallas Ordinance – Employers in the City of Dallas should be aware that in light of the COVID-19 crisis and the implementation of the FFCRA, the Dallas Sick Leave Law has at least for now, been suspended so that employers should comply with the Act instead.

Employers

An employer for purposes of this Act is defined as anyone who has at least one employee, but less that 500 employees. All such employers must comply with the Act, subject to some exceptions that may apply to employers with under 50 employees under certain circumstances explained below.

Employees

An eligible employee is any employee (full-time or part-time) who has worked for the employer at least 30 consecutive days in the last 60 days.

Posting Requirements

A Notice of Rights Poster, which can be obtained from the DOL website, must be posted at the employer’s place(s) of business. For employees exclusively working from home or who cannot otherwise be at the office or business location, the Poster should also be sent by e-mail or regular mail.

Work to Perform Requirement

It is important for employers to note that there must in fact be work for the employee claiming leave to perform in order for that employee to be able to obtain leave benefits under either the EPSLA or the EFMLEA. More specifically, if an employee is unable to work at the office or telework from home due to a “lack of work” at the company or the particular business location that they work, no paid sick leave because of a shut down or partial shutdown. In those instances, the employee is eligible for unemployment benefits until his or her work resumes. For example, if an employee worked at Starbucks and the particular location does not have a drive-thru, there may be not work to perform.

Telework

Telework means that a particular employee is able to work from home. Employees who are able to telework are not eligible for sick leave benefits unless another COVID-19 reason prevents them from working (examples: their own illness, a power outage). It is important to note that the FLSA “Continuous Workday Rule”, that requires an employer to count all hours between the first hour worked and the last hour worked during a workday, does not apply.  Instead, employees who telework are asked to keep track of their hours and breaks (for example: when they stop work to care for a child or assist with home schooling). This provides more flexibility during the crisis. See 29 C.F.R. 790.6.

Emergency Paid Sick Leave Act (“EPSLA”)

This statute allows an eligible employee to take up to 2 weeks (80 hours) of paid leave for the following six reasons related to COVID-19: (1) if the individual is subject to a federal, state or local quarantine or stay-at-home order; (2) the individual has been advised by a healthcare provider to self-quarantine; (3) the individual is experiencing COVID-19 symptoms and is currently seeking a diagnosis (including testing); (4) the individual is caring for someone who is subject to an order as stated in number 1 above or who has been advised to self-quarantine as stated in number 2 above; (5) the individual is caring for a son or daughter whose school or day care has closed and has no other caregiver (this includes children under 18 and those over 18 who are unable to care for themselves); or (6) the individual is experiencing a similar condition that has been specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor (this last reason for leave has not yet been developed and more guidance is expected).

  • How Much Leave is Allowed? – Full time employees (defined as those regularly scheduled to work 40 or more hours per week), are entitled to up to 2 weeks (80 hours) of paid leave at their normal rate of pay. Part time employees are entitled to the average hours that the employee worked during the last 2-week period (or, if their schedule varies, use the last 6 months, or the number of months they are at the job if less than 6 months, to calculate the average). An employer may alternatively use 2 times the number of hours that an employee is scheduled to work per week.
    • The calculation must include all days during the period, and days taken during that period for PTO or vacation may not be deducted.
  • How Much Pay is Allowed? – If the employee is seeking sick leave for one of the first 3 reasons listed above concerning his or her own condition, quarantine or stay-at-home order, the employee is entitled to his or her full daily rate up to a maximum of $511 per day, and $5,110 total. If the employee is seeking leave for any other reason listed above (reasons 4-6), the maximum daily amount is $200, with a total of $2,000 allowed.
  • What is a Self-Quarantine Order? – This requires advice from a healthcare provider that the employee has COVID-19, may have COVID-19, or is vulnerable to getting the disease, and, that because of one of these reasons the employee is precluded from working or teleworking.
  • What is Considered Has Symptoms / Seeking Diagnosis? – Symptoms ordinarily means those pursuant to the Centers for Disease Control (“CDC”), which includes a fever, dry cough, shortness of breath, etc.). This requires that the employee: be unable to work or telework, seek diagnosis and treatment, and must be advised to self-quarantine during that time.  Sick leave is allowed during the time that the employee is waiting for test results, regardless of the severity of the symptoms.  In the event that the healthcare provider states that the individual does not qualify for a test, then use the second reason – 14-day self-quarantine per CDC guidelines.
  • To Care for Someone Else – If the reasons for leave is to care for another (reason number 4 above) who is under an isolation order or under self-quarantine, the individual cared for must be an immediate family member, roommate, or similar person who has a relationship that creates the expectation of being cared for by the employee.
  • The “But For” Test – If the reason for the sick leave is either reasons 4 or 5 listed above (to care for another or because of the lack of child care), then leave requires that “but for” those conditions, the employee would be able to work or telework. Again, if there is no work for the employee to perform due to work stoppage or slow-down, paid leave is not permitted.

Emergency Family Medical Leave Expansion Act (“EFMLEA”)

The EFMLEA is an extension of the FMLA that again, applies to all employers with between 1 and 500 employees. It allows up to 12 weeks of leave (the first two of which are unpaid under this statute, but which may be paid under the EPSLA if those requirements are satisfied – 5th reason for sick leave discussed above). This provision permits partial pay in the event that, due to COVID-19 reasons, an employee must remain home to care for a son or daughter because of a school closure or the lack of daycare when there is no other caregiver available. This applies to children under 18, as well as to those over 18 who are unable to care for themselves.

  • How Much Pay is Allowed? – The employee is entitled to 2/3 of their regular rate of pay for up to 10 weeks at a maximum daily rate of $200, and $10,000 in total leave benefits. The maximum is $12,000 when combined with the 2 weeks of sick leave benefits.
  • Under 50 Employees – Possible Exemption. Employers who have less than 50 employees may be eligible for exception to the expanded FMLA leave if they can show that providing such benefits will be detrimental to the viability of the business. In such cases, companies should evaluate and document any reasons they identity to not provide such leave, although they need not send documentation to the Department of Labor at this time.
  • Under 25 Employees – Reinstatement Rights. As with the FMLA, employees who take leave under the EFMLEA are entitled to be reinstated to their position or a substantially equivalent position when leave ends. However, if the business has less than 25 employees, it is exempted from providing job restoration following leave if: (1) the employee’s position no longer exists due to economic conditions; (2) the employer has made reasonable efforts to restore the employee to the same or equivalent position; and (3) the employer continues to make reasonable efforts to contact the employee for one-year if an equivalent position becomes available.
  • No Private Right of Action – Under the EFMLEA, an employee has no private right of action to file a complaint or lawsuit against an employer with less than 50 employees, because that employer was not subject to the FMLA before the expansion Act was created. Such employees must seek a remedy through the Department of Labor or other designated agency.

Required Documentation to Request Leave

An employee is required to provide his or her employer with documentation in support of Paid Sick Leave or Expanded Family and Medical Leave. That documentation must include: (1) the employee’s name; (2) the dates for which leave is requested; (3) the COVID-19 qualifying reason for leave, and (4) a statement representing that the employee is unable to work or telework because of the COVID-19 qualifying reason. Additional documentation may be required. For example, the name of the government entity that issued the quarantine or isolation order and/or the name of the healthcare provider who advised the employee to self-quarantine for COVID-19 reasons or to care for another individual under self-quarantine. An employee requesting leave to care for a child must state: (1) the name of the child; (2) the name of the school, daycare or child care provider unavailable due to COVID-19, and (3) a statement that no other suitable person is available to care the for child.

Penalties for Non-Compliance

The Paid Sick Leave statute is enforced under the FLSA. Failure to provide paid leave under this section is considered the same as failing to pay minimum wage benefits in violation of Section 6 of the FLSA, and those penalties apply (See 29 U.S.C. 216 and 217).  An employer may not discharge, discipline, retaliate or discriminate against an employee who takes leave under this section, or who files a complaint, proceeding or testifies in a proceeding. Violation of this section carries penalties that are stated in 29 U.S.C. 215(a)(3), 216 and 217. Moreover, the Secretary of Labor is permitted to verify compliance with this statute through periodic compliance checks. The Expanded Medical Leave Act is enforced in a similar manner as the FMLA.

  • The DOL will observe a temporary period of non-enforcement for the first 30 days after the Act takes effect, so long as the employer has acted “reasonably and in good faith to comply with the Act. Good faith exists when violations are remedied, the employee is made whole as soon as practicable by the employer, the violations are not willful, and, the employer sends a written commitment to the DOL that it will comply with the Act in the future.

The information contained in this article is not designed to address specific situations.  If you have questions concerning this topic, you should consult with legal counsel for advice on fact specific matters. 

Robin

Robin Foret is Of Counsel at Seltzer, Chadwick, Soefje & Ladik, PLLC, and is Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization.  Robin Foret is a frequent speaker and writer on employment law compliance topics.  She also provides training for companies to assist them comply with federal and state employment laws.  She can be reached at rforet@realclearcounsel.com or by telephone at (469) 626-5358.  You may also visit the website for more information about our law firm’s services at www.realclearcounsel.com. 

Preliminary Injunction Blocks Dallas Paid Sick Time Ordinance

Posted on by Robert G. Chadwick, Jr.

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

As noted in an earlier blog post, the City of Dallas enacted a paid sick time ordinance which became effective on August 1, 2019 for private employers with six (6) or more employees. Under the Ordinance, no penalties were to be assessed, except for anti-retaliation violations, until April 1, 2020.

On June 30, 2019, a lawsuit was filed in the U.S. District Court for the Eastern District of Texas to stop the ordinance from taking effect. On March 30, 2020, two days before the ability of the City of Dallas to assess penalties, the Court issued a preliminary injunction blocking enforcement of the ordinance. The court’s reasoning was similar to that used by the Texas Third Court of Appeals in finding Austin’s paid sick time ordinance unconstitutional.

Since the ordinance has been in effect for eight months, many Dallas employers have already implemented sick leave policies in compliance with its prescriptions. Although likely welcomed by most Dallas employers, the preliminary injunction nevertheless presents the difficult question of whether to continue such policies, thereby incurring increased payroll costs, or to discontinue such policies, thereby risking poor employee morale or attrition.

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

How Will Small Businesses Fare In Court Under Emergency Paid Leave Law?

Posted on by Robert G. Chadwick, Jr.

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

For small businesses with fewer than 50 employees, the Families First Coronavirus Response Act (“FFCRA”) includes two parts which suddenly present new, unanticipated and complex leave mandates.

Emergency Family & Medical Leave Expansion Act

The first part amends the Family & Medical Leave Act (“FMLA”) to include leave mandates applicable to school or place of care closures or child care provider unavailability for COVID-19-related reasons.

Small businesses with fewer than 50 employees are included in this mandate subject to the authority of the Department of Labor (“DOL”) “to issue regulations for good cause to exclude small businesses …”when the imposition of such a requirement would jeopardize the viability of the business as a going concern.”

Only the DOL may bring an enforcement action under this part of the FFCRA. In such an action, the DOL may seek not only actual damages, but also an additional amount equal to the amount of actual damages as liquidated damages to punish the employer.

Emergency Paid Sick Leave Act

This part prescribes 80 hours of paid sick leave for all employers with fewer than 500 employees. There is no exemption for small businesses with fewer than 50 employees.

As to the paid sick leave prescriptions, the FFCRA incorporates the penalty provisions of the Fair Labor Standards Act (“FLSA”) which allow for (1) civil actions by the DOL, (2)  civil actions by “any one or more employees on behalf of himself or themselves and other employees similarly situated”, (3) liquidated damages in an amount equal to the paid sick leave denied by the employer, and (4) attorney’s fees.

DOL Guidance

The Department of Labor (“DOL”) has provided (1) question & answer guidance to help small businesses understand these mandates, (2) a temporary rule interpreting the FFCRA, and (3) notice of its intent to delay full enforcement of the Act until April 18, 2020.

Included in this guidance is the small business exemption under the first part of the FFCRA. The DOL has stated a small business may claim the exemption if an authorized officer of the business has determined that:

  1. The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
  2. The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
  3. There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.

Litigation Under Emergency Family & Medical Leave Expansion Act

Beyond the limited guidance provided by the DOL, little guidance is being offered to small businesses as to what to expect if litigation is brought by the DOL for a violation of the FMLA.

1. Who Has Burden of Proving Availability of Small Business Exemption?

To be sure, the DOL has provided guidance for small businesses in determination the availability of the small business exemption. But, who would have the burden of proving the availability of this exemption in court?

FLSA and the FMLA jurisprudence generally provides it is the employer’s burden to prove the availability of applicable exemptions. If cases under the FFCRA follow such precedent, the courts will look to small businesses to prove they fall within the exemption. A small business unable to meet its burden faces actual and liquidated damages as to each affected employee.

2. What Evidence Will Prove Availability of Small Business Exemption?

Interestingly, the DOL has stated the availability of the small business exemption hinges upon a “determination by an authorized officer of the business.” There is no similar FLSA or FMLA exemption tied to such a determination.

It will thus likely be up to the courts to determine, as a matter of first impression, what evidence is necessary as to the determination. Among the questions which will likely be addressed by the courts are: (1) Must a determination be in good faith? (2) Must a determination be based upon evidence? (3) What evidence must be considered in the determination? These questions will likely make the jeopardy inquiry much more complicated than the three-prong inquiry published by the DOL.

3. How Narrowly Will Small Business Exemption Be Construed?

The DOL guidance also leaves unanswered the question of how broadly or narrowly the small business exemption will be construed by the courts. For years, cases under the FLSA and FMLA have dictated that statutory exemptions under those statutes be narrowly construed. Several courts have thus held the burden of proving the availability of an exemption under the statutes is a substantial one.

If FFCRA cases follow FLSA and FMLA jurisprudence, they will likely require more than minimal evidence of jeopardy. Indeed, close questions as to jeopardy will likely be resolved in favor of the DOL.

Litigation Under Emergency Paid Sick Leave Act

Similarly, little guidance is being offered to small businesses as to what to expect if litigation is brought by the DOL or an employee for a violation of the paid leave prescriptions.

1. How Many Employees Can Join a Suit For Unpaid Sick Leave?

The only limitations on the number of employees which can join a suit under the FLSA are (1) the number of employees employed by the employer, (2) the number of employees who are shown to be similarly situated to the lead plaintiff, and (3) the statute of limitations.  Even for a small business, therefore, the stakes of litigation can be liability to multiple employees for unpaid sick leave and liquidated damages.

2. What Amount of Attorney’s Fees Can Be Awarded? 

The only limitation on the ability of a court to award attorney’s fees to a successful plaintiff is that the fees be reasonable. Indeed, in many FLSA collective actions, the attorneys fees awarded can exceed the combined liability of a defendant employer to all claimants.

3. Will Employers be Able to Avail Themselves of a Good Faith Defense?

The FLSA (29 U.S.C. 260) expressly allows an employer to avoid liquidated damages if the employer proves the act or omission which violated the Act was in good faith and the employer had reasonable grounds for believing the act or omission was not a violation. No such provision is expressly set forth in this part of the FFCRA.

Accordingly, a question which courts will be presented from the onset is whether a good faith defense exists for failure to provide paid sick leave. This question will be especially important for small businesses which are tackling federally mandated leave for the first time. If the good faith defense does not exist, the stakes of making wrong determinations become more serious for small businesses.

Takeaways

For small businesses, effective risk management under the FFCRA requires more than merely following DOL guidance. It requires understanding the stakes, expense and evidentiary realities of litigation. A small business which does not account for these realities risks unwanted litigation or, worse, a costly judgment or settlement.

So, how will small businesses fare in court under the FFCRA?  The answer depends upon how well they have been prepared by legal counsel for the prospect of  such litigation.

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.

What Employers Can Learn From The Coronavirus Suit Against Princess Cruises

Posted on by Robert G. Chadwick, Jr.

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

On March 9, 2020, Ronald & Eva Weissberger sued Princess Cruise Lines, Ltd. in the U.S. District Court for the Central District of California. Mr. & Mrs. Weissberger are passengers aboard the Grand Princess which departed out of San Francisco on Feb. 21, 2020, and has been anchored off the coast of California since March 4, 2020 since March 4, 2020 as a result of an outbreak of COVID-19.

Two unique aspects of the suit are worthy noting.

First, the only causes of action actually plead are negligence and gross negligence (likely to invoke insurance coverage). The allegations nevertheless also support a claim of intentional misconduct. In this regard, the suit alleges: “Defendant PRINCESS chose to place profits over the safety of its passengers, crew and general public in continuing to operate business as usual, despite their knowledge of the risk of actual injury to Plaintiffs, who are elderly with underlying medical conditions.”

Second, neither of the plaintiffs has actually contracted COVID-19. Their alleged damages stem only from the actual risk of immediate exposure to the virus. The suit specifically alleges: “… Plaintiffs are suffering from emotional distress, are traumatized from the fear of developing COVID-19 as they sit minute after minute in their confined cabin on an infected vessel, and this emotional harm will continue to plague them.”

Frankly, the suit against Princess Cruises may have dubious merit. Still, the suit must now be defended, even if frivolous, at considerable expense. This expense, along with unwanted media attention, means the suit has settlement value. The plaintiffs likely had no problem finding an attorney willing to file a lawsuit under such circumstances.

Now that Coronavirus litigation has begun, other potential plaintiffs will soon join the party. They will see the suit against Princess Cruises as a model even as to persons who never contracted the virus.

So, why should employers be worried? After all, worker’s compensation insurance generally provides a shield from liability to employers not available to cruise lines. This shield can be especially formidable for injuries which are mental and emotional in nature. Still, there are circumstances in which this shield may not be available.

In Texas, for instance, an employer can opt out of worker’s compensation insurance coverage for its employees. A non-subscriber Texas employer, therefore, is not shielded from negligence claims, such as those asserted against Princess Cruises, for failure to provide a safe workplace.

In Illinois, moreover, the Worker’s Compensation Act provides the exclusive remedy only for “accidental injuries” that occur in the workplace. As recognized in 2018 by the U.S. District for the Northern District of Illinois in Phillips v. Exxon Mobil Corporation, there are circumstances in which a claim for intentional infliction of emotional distress is not barred by worker’s compensation insurance. An Illinois employer, therefore, is not shielded from claims, such as those effectively asserted against Princess Cruises, for intentional misconduct in the face of COVID-19.

As long as end-arounds exist to state worker’s compensation laws, employers should anticipate the tremendous incentive for employees exposed to the threat of contracting COVID-19 to exploit them. They will likely find no shortage of attorneys willing to try an end-around as to such a high-profile subject matter. Even if frivolous, a suit making claims, such as those asserted against Princess Cruises, will still need to be defended.

How can the risk of such a lawsuit be mitigated by employers? Follow the advice of the CDC on the webpage specifically developed or business and employers. This webpage can be accessed here. The more proactive an employer is in safeguarding the health of its employees, the lower the risk of an unfortunate lawsuit.

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.

New DOL Rules Regarding Tips and Joint Employment Face Uncertainty In Courts

Posted on by Robert G. Chadwick, Jr.

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

The Fair Labor Standards Act (“FLSA”), which governs minimum wage, overtime pay, equal pay and child labor, expressly authorizes the Secretary of Labor to promulgate rules interpreting the Act. Historically, such rules have received deference in court if the statutory language is ambiguous and the interpretation is reasonable.

In 2016, however, the U.S. Supreme Court determined in Encino Motorcars, LLC v. Navarro that a rule recently promulgated by the U.S. Department of Labor (“DOL”) was not entitled to deference. At issue was a 2011 rule interpreting an FLSA exemption from the overtime  pay requirement for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles” at a covered dealership. In justifying its decision, the Court explained the DOL had not given adequate reasons for the new rule which was a substantial departure from an earlier rule.

Tips

On October 8, 2019, the DOL published a Notice of Proposed Rulemaking. regarding the FLSA’s tip credit. 29 U.S.C. 203(m). Under the proposed rule, the 20% limitation on non-tip producing work, which has historically been followed by the agency in determining the availability of the tip credit, will be replaced by a task-based limitation. The proposed rule follows a 2018 opinion letter from the Wage & Hour Administrator offering a similar interpretation.

So, will this new rule, if implemented, be afforded deference by the courts or suffer the same fate as the 2011 rule at issue in Navarro? Recent court cases indicate a brewing battle regarding this question.

Several courts have already rejected the interpretation offered by the 2018 opinion letter, instead opting to enforce the 20% limitation. See Cope v. Let’s Eat Out, Inc., 354 F.Supp.3d 976 (W.D.Mo. 2019); Esry v. P.F. Chang’s China Bistro, 373 F.Supp.3d 1205 (E.D.Ark. 2019); Spencer v. Macado’s, Inc., 399 F.Supp.3d 545 (W.D.Va. 2019); Belt v. P.F. Chang’s China Bistro, Inc., 401 F.Supp.3d 512 (E.D.Pa. 2019); Flores v. HMS Host Corp., 2019 WL 5454647 (D.Md. Oct. 23, 2019); Berger v. Perry’s Steakhouse of Illinois, LLC, 2019 WL 7049925 (N.D.Ill. Dec. 23, 2019).

Other courts have already accepted the interpretation offered by the 2018 opinion letter. See Matusky v. Avalon Holdings Corp., 379 F.Supp.3d 657 (N.D.Ohio March 29, 2019); Shaffer v. Perry’s Restaurants, Ltd., 2019 WL 2117639 (W.D.Tex. April 3, 2019).

To be sure, an opinion letter is entitled to less deference than a DOL rule.  Still, the proposed rule is a substantial departure from the 20% limitation historically used by the DOL and courts. Employers should thus expect the cases above to be a precursor of the challenges to the proposed rule, if implemented.

Joint Employment

On January 16, 2020, the DOL published a new rule purporting to update and revise the agency’s interpretation of joint employer status under the FLSA; the rule is scheduled to be effective March 16, 2020. In the rule, the DOL provides a four-factor balancing test for determining FLSA joint employer status.

Many courts, however, have already developed their own tests in determining joint employer status under the FLSA. Indeed, there is a notable split amongst circuit courts after the Fourth Circuit in Hall v. DirecTV, LLC, 846 F.3d 757 (4th Cir. 2017) set a low bar for establishing joint employment.

Many courts, therefore, will be faced with the choice of following their own precedent regarding joint employment or deferring to the new DOL rule.  Only time will tell which choice courts will make.

Takeaway For Employers

DOL rules often provide reliable guidance to employers for compliance with the FLSA. As to the issues of tip credits and joint employment, however, it is advised employers consult legal counsel rather than the DOL rules. As to these two issues, following DOL rules may actually be a risky option.

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.

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The Thinning Tightrope For Harassment Investigations

Posted on by Robert G. Chadwick, Jr.

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

As many employers already know, sexual harassment claims are often disputed. A female victim alleges improper behavior by a male supervisor or co-worker. The accused male denies the allegations and suggests a possible ulterior motive for a false harassment claim.

If the employer is even slightly biased toward the accused as to a sexual harassment claim, the risk is a costly legal claim by the accuser. This risk remains even if the claim is of questionable credibility. In the wake of the #metoo movement, siding with the accused also risks a social media firestorm and poor female employee morale, especially if the employer has historically decided for accused harassers in sexual harassment investigations.

If the employer is even slightly biased toward the accuser as to a sexual harassment claim, the risk again is a costly legal claim by the accused. Again, this risk remains even if the accused harasser’s story is of questionable credibility.  In the wake of last year’s Kavanaugh hearings, siding with the accusers risks a social media backlash and poor male employee morale, especially if the employer has historically decided for accusers in sexual harassment investigations.

It is not an overstatement, therefore, to describe the challenge faced by an employer presented with a disputed sexual harassment claim as a legal tightrope.  Only by conducting a thorough and unbiased investigation can the employer successfully navigate the tightrope.

As indicated by lawsuits stemming from sexual harassment claims, however, some employers have decided they have more to fear from accusers than accused harassers. Rather than conducting thorough and unbiased investigations, these employers instead made rushes to judgment against accused harassers. From these lawsuits has developed a body of law outlining the frameworks by which accused harassers can sue under federal, state and municipal laws prohibiting sex discrimination in employment.

Menaker v. Hofstra University, 935 F.3d 20 (2nd Cir. 2019)

In this suit filed on March 6, 2017, a male coach who had been hired by Hofstra University as its Director of Tennis and Head Coach of the men’s and women’s varsity tennis teams alleged he was terminated in response to allegedly malicious allegations of sexual harassment by a female student who was a member of the tennis team. The male coach alleged sex discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”), the New York State Human Rights Law and the New York City Human Rights Law.

The U.S. District Court for the Eastern District of New York granted Hofstra’s motion to dismiss for failure to state a claim. On August 15, 2019, the Second Circuit reversed.

According to the Second Circuit, it is sufficient for an accused harasser to state  a prima facie case of sex discrimination, if he can show (1) an adverse employment action against the employee, (2) in response to allegations of sexual misconduct, (3) following a clearly irregular investigative or adjudicative process, (4) amid criticism for reacting inadequately to allegations of sexual misconduct by one sex.

The Second Circuit declined to define precisely what sort of irregularities would support a prima facie case of sex discrimination, but did cite two examples of irregularities which would be sufficient. For instance, “[w]hen the evidence substantially favors one party’s version of a disputed matter, but an evaluator forms a conclusion in favor of the other side (without an apparent reason based in the evidence), it is plausible to infer (although by no means necessarily correct) that the evaluator has been influenced by bias.” Similarly, where decision-makers choose “to accept an unsupported accusatory version over [that of the accused], and declined even to explore the testimony of [the accused’s] witnesses,” this too “gives plausible support to the proposition that they were motivated by bias.”

Sassaman v. Gamache, 566 F.3d 307 (2nd Cir. 2009)

A male former employee sued his former employer for sex discrimination after being forced to resign in response to a sexual harassment complaint. According to the plaintiff, he was told by his supervisor:

“I really don’t have any choice. [She] knows a lot of attorneys; I’m afraid she’ll sue me. And besides you probably did what she said you did because you’re male and nobody would believe you anyway.”

The U.S. District Court for the Southern District of New York granted the employer’s motion for summary judgment.  On May 22, 2009, the Second Circuit reversed.

According to the Second Circuit, genuine issues of material existed as to whether the male former employee was a victim of “an invidious sex stereotype”:

“We appreciate that employers who fail to address claims of sexual harassment expose themselves to civil liability. However, fear of a lawsuit does not justify an employer’s reliance on sex stereotypes to resolve allegations of sexual harassment, discriminating against the accused in the process. To be sure, Title VII requires employers to take claims of sexual harassment seriously [citation omitted]. It also requires that, in the course of investigating such claims, employers do not presume male employees to be ‘guilty until proven innocent’ based upon invidious sex stereotypes.”

The Second Circuit elaborated:

“… when an employer considers how to respond to an employee’s allegation of discrimination, it may take into account the risk that the complaining employee might file an action against the employer. Indeed, it is in part the threat of such action that helps ensure the rights Title VII was enacted to protect. That said, an employer may not rely on a fear of a lawsuit as a reason to shortcut its investigation of harassment and to justify an employment decision adverse to the putative harasser that in itself violates Title VII. Indeed, just as the lack of an investigation of a reported claim of harassment may factor into the determination of an employer’s liability for discrimination against the complainant, so too may it indicate discrimination by an employer whose adverse determination against the putative harasser otherwise bears indicia of prohibited discrimination.”

Kelman v. Woolrich, Inc., 2002 WL 356389 (D.Md. March 5, 2002)

In response to an allegation of sexual harassment by a female employee, a male employee was terminated by Woolrich, Inc.  In his exit interview, the male employee was allegedly told: “It doesn’t matter. You’re a man, she’s a woman. She’s right, you’re wrong.” The male former employee sued for sex discrimination under Title VII in the U.S. District Court for the District of Maryland.

In denying Woolrich’s motion for summary judgment, the court said:

“The court concludes that a jury could infer that the comment “You’re a man, she’s a woman. She’s right, you’re wrong” reflects a stereotype that when men are accused of sexual harassment, the charges more likely than not (if not always) are true. Further, a jury could infer from the fact that [the manager] made the comment in the same conversation in which he informed plaintiff he was terminating him because of accusations of sexual harassment by a woman (who said she was going to sue Woolrich unless plaintiff was fired), that the decision was based on a discriminatory motive.”

Final Thoughts

By showing biases in favor of the accusers in the aforementioned cases, the employers did more than risk the lawsuits ultimately filed against them; they allowed federal courts to develop precedent for future lawsuits filed by alleged harassers.  In 2019, federal courts have now moved beyond stereotypical comments as a basis for finding sex discrimination. It is now possible for an alleged harasser to proceed with a sex discrimination based upon more circumstantial evidence.

In other words, even a slight bias toward the accuser is now riskier than ever. The thinning legal tight rope of sexual harassment investigations brought about by employers taking shortcuts is to blame.

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What Does The Future Hold For Severe Obesity Claims Under The ADA?

Posted on by Robert G. Chadwick, Jr.

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

The Fall Edition of Professional Liability Defense Quarterly, published by the Professional Liability Defense Federation, features an article by Robert G. Chadwick, Jr. entitled “What Does The Future Hold For Severe Obesity Claims Under The ADA?

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.

Combating Sexual Harassment By Narcissists

Posted on by Robert G. Chadwick, Jr.

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

Much has been written recently about the rise of individualism in America. Some psychologists have even posited that the most severe form of individualism, narcissism, has become an epidemic in this country. See The Narcissism Epidemic: Living in the Age of Entitlement, by Jean M. Twenge, Ph.D., and W. Keith Campbell, Ph.D. (2010).

The term “narcissism” has both clinical and subclinical meanings. The clinical meaning is set forth in the DSM-IV-TR, which defines Narcissistic Personality Disorder (NPD) as “an all-pervasive pattern of grandiosity (in fantasy or behavior), need for admiration or adulation and lack of empathy ….” Drs. Twenge and Campbell estimated 1 in 16 of the general population have experienced NPD.

The broader subclinical meaning of narcissism is self absorption to the point of having little or no empathy for others. Some studies estimate that around 17% of the general population have experienced subclinical narcissism. Some industries, such as the financial sector, may have an even higher percentage.

One consequence of narcissism is intolerance for information which challenges a person’s belief system. In a May 31, 2017 article, Tom Nichols, a Professor at the U.S. War College and the Harvard Extension School, opined that this disregard isn’t just human nature, but a product of growing narcissism: “Surrounded by affluence, enabled by the internet, and empowered by an educational system that prizes self-esteem over achievement, Americans have become more opinionated even as they have become less informed, and are now utterly intolerant of ever being told they’re wrong about almost everything.”

Another consequence of narcissism is disregard for other people’s sensitivities. Indeed, exploitation of others is classic narcissistic behavior.

Predictably, these consequences of narcissism present formidable obstacles in traditional sexual harassment training. Such training normally aspires to achieve four goals – (1) increased awareness of types of gender discrimination, (2) increased awareness of the laws against discrimination and harassment, (3) review of the employer’s sexual harassment policy (including how to file complaints), and (4) alteration of employee attitudes about what type of behaviors in the workplace are wrong.  These are the four goals achieved by an online sexual harassment training video developed by New York City in 2018 for private employers.

For the narcissist, the reaction to such traditional training can be apathy, boredom, amusement or even ridicule. Worse, the training may lead him or her to believe sexual harassment is not a big deal.

Indeed, one study found that men who score high on a likelihood to sexually harass showed greater acceptance of sexual harassment after training than before training. See Lori A. Robb & Dennis Doverspike, Self-Reported Proclivity to Harass as a Moderator of the Effectiveness of Sexual Harassment-Prevention Training, 88 Psychol. Rep. 85 (2001). Another study indicated that men who completed harassment training were more likely to believe that both parties contribute to inappropriate sexual behavior. See Shereen G. Bingham & Lisa L. Scherer, The Unexpected Effects of a Sexual Harassment Educational ProgramThe Unexpected Effects of a Sexual Harassment Educational Program, 37 J. Applied Behav. Sci. 125 (2001). Still another study showed that personal attitudes of participants toward sexual harassment were minimally changed or completely unchanged after training. See Vicki J. Magley et al., Outcomes of Self-Labeling Sexual Harassment, 84 J. Applied Psychology, 390 (1999).

So, how can an employer overcome these shortcomings of traditional harassment training for employees inclined to narcissism?

The short answer may be as simple as a reminder of the personal stake of all employees in maintaining a work environment free of sexual harassment. This personal stake can include continued employment with the employer and personal liability under certain state laws. For the self-absorbed personality, self preservation may be the only interest which motivates compliance with an employer’s sexual harassment policy.

In fact, Jonathan Segal is quoted in the June 2016 Report of the EEOC Select Task Force on the Study of Harassment in the Workplace as advocating such an approach to all sexual harassment training. In describing this approach, he said: “[Compliance training] is not training to change your mind. It is training to keep your job.”

Of course, an employer must follow through on any warning that compliance with sexual harassment policies is essential to continued employment. In the training itself, it is helpful to cite examples of other (unnamed) employees being disciplined, terminated or sued for harassment. If the training is exposed to be a bluff, the reaction of a narcissist may be more dire than if the training never occurred.

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

Why Your Workforce Should Not Be Debating Trump’s Tweets

Posted on by Robert G. Chadwick, Jr.

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

In a tweet on July 27, 2019, President Trump described Representative Elijah Cumming’s Congressional District in Baltimore as “a disgusting, rat and rodent infested mess.”

On July 14, 2019, President Trump also tweeted: “So interesting to see ‘Progressive’ Democrat Congresswomen, who originally came from countries whose governments are a complete and total catastrophe, the worst, most corrupt and inept anywhere in the world (if they even have a functioning government at all), now loudly… and viciously telling the people of the United States, the greatest and most powerful Nation on earth, how our government is to be run. Why don’t they go back and help fix the totally broken and crime infested places from which they came.”

Not surprisingly, these tweets are a hot topic of debate across America. On one side of the debate are those who describe President Trump’s tweets as racist. On the other side of the debate are those who describe the accusations of racism as hypocritical, partisan or unfounded.

So, why should such debates be avoided in the workplace? The answer is two-fold:

First, the debates themselves may be cited as part of a charge or lawsuit alleging race discrimination or harassment under Title VII of the Civil Rights of 1964 (“Title VII”), the Civil Rights Act of 1866 or state or local law.

To illustrate this point, consider the debate which continues today regarding the 1995 murder trial of O.J. Simpson. Workplace remarks stemming from such debate are still cited as evidence in cases alleging race discrimination or harassment in employment. In Chattman v. Toho Tanex America, Inc., 686 F.3d 339 (6th Cir. 2012), for example, the claim that a human resources manager was racially biased included a joke as to O.J. Simpson’s innocence. A racially-charged disagreement as to the O.J. Simpson verdict was also at the heart of a race discrimination claim in Campbell v. Hamilton County, 2001 WL 1322785 (6th Cir. Oct. 17, 2001).

Other racially-charged debates have been referenced in race discrimination cases. In David v. Trugreen Partnership, Ltd., 1999 WL 288686 (N.D. Tex. May 5, 1999), it was a debate regarding the trial of police officers who had allegedly beaten Rodney King. In Neal v. Whole Foods Market Company, Inc., 2018 WL 2219362 (E.D.La. May 15, 2018), it was a discussion regarding Bill Cosby’s alleged sexual misconduct.

Second, the very nature of the debate surrounding President Trump’s tweets forecloses any argument the debate is benign as a matter of law.

Take for example the evidence at issue in EEOC v. WC&M Enterprises, Inc., 496 F.3d 393 (5th Cir. 2007).  In this case, the plaintiff was an Indian and practicing Muslim who alleged a hostile environment at work. The U.S. District Court for the Southern District of Texas granted summary judgment in favor of the employer, but the Fifth Circuit reversed. As grounds for reversal, the Fifth Circuit said sufficient evidence existed to support the claim that the plaintiff was discriminated against on the basis of national origin and religion. This evidence included the taunt: “Why don’t you just go back where you came from if that is what you believe?”

In Siam v. Porter, 2006 WL 1530155 (N.D.Cal. June 5, 2006), a Title VII case alleging race and national origin discrimination, a federal court cited evidence that a decision-maker harbored prejudices against Asians generally, and Filipinos in particular. Such evidence included a complaint by the decision-maker that an Asian family had moved in next door and caused a cockroach infestation.

To be sure, not all remarks made during a racially-charged debate will support a claim of race bias. As many employers already know, however, even frivolous lawsuits cost money to defend.

Especially as to a newsworthy racially-charged debate, such as President Trump’s tweets, the urge to take a side can be overwhelming. Where the debate spills into the workplace, however, the risk to an employer is a costly claim or litigation. Employer inaction or acquiescence only increases this risk.

Prudent risk management thus dictates that an employer include debates rooted in race amongst prohibited activities in the workplace. Better yet, such a prohibition should be part of the employer’s discrimination and harassment training program.

[This post is an update from a May 2018 post entitled “Why Your Workforce Should Not Be Debating Roseanne’s Demise!]

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

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: On July 30, 2019 a lawsuit was filed in the U.S. District Court for the Eastern District of Texas to stop the Dallas ordinance from taking effect].

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. Unlike the ordinances in Austin and San Antonio, this ordinance is now effective as of August 1, 2019. There is no corresponding Texas state law which mandates paid sick time in the private sector.

In July, the City of Dallas published rules for the administration of the ordinance.

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 within the geographic boundaries of 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.

An employee does not lose earned paid sick time upon transfer to a work site outside the geographic boundaries of the City of Dallas.

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.”  Family members include “step parents, step-sibling, step-children, step-grandparents, step-grandchildren, anyone who can be claimed as a dependent, and anyone who can claim someone as a dependent.”

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.

Rules published by the City of Dallas address the calculation of paid sick time for piece rate employees, salaried employees, employees whose hourly rate of pay fluctuates and employees who are scheduled to work shifts of indeterminate length.

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].

Unlawful retaliation may include the following: “considering use of paid sick time in performance reviews or setting wages … reporting or threatening to report an employee or employee’s family member to law enforcement in connection with the use of paid sick time, or discouraging … employees from using their accrued paid sick leave.”

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 poster in a conspicuous place or places where employee notices are customarily posted. The prescribed poster can be found here.

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.