Perusing LinkedIn, as I often do over morning coffee, I saw this plea on one of the human resources groups I follow. Not having the time to read it carefully, I put it aside in my “fodder for future blog posts” folder. Like most of the people who responded quickly with advice for the human resource professional who sought help from her colleagues, my first thought was “big red flag.” How can a company operate with all leaders and no workers, with all executives and no support staff? The reality is that very few businesses of any size can realistically classify all of its workers as exempt.
It took barely 24 hours before what is believed to be the first lawsuit under the Massachusetts Equal Pay Act (“MEPA”) to be filed. On Monday morning, July 2, suit was filed on behalf of Elizabeth Rowe, principal flautist for the Boston Symphony Orchestra, in Suffolk County Superior Court. Rowe was hired for the role by the BSO in 2004, and the lawsuit claims that she has asked for years to be paid the same as the principal oboe player, a male. She alleges that the role of principal oboe is the one most comparable to her position and that paying her some $70,000 less per year amounts to a violation of MEPA.
A bill just passed by the Massachusetts House and Senate, with uncharacteristic speed and bipartisan support, has been touted as a “grand bargain,” meant to circumvent political wrangling over several contentious ballot questions slated to be put before the voters this fall. The wide-ranging bill establishes paid family and medical leave, raises the minimum wage, and eliminates premium Sunday pay, among other things. The bill now goes to Governor Baker, who is expected to sign the measure into law. Continue Reading Massachusetts Legislators’ “Grand Bargain” Establishes Paid Medical Leave and Increases Minimum Wage
The U.S. Department of Labor recently initiated a nationwide pilot program referred to as the Payroll Audit Independent Determination (“PAID”) program. The stated purpose of the program is to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”). The expectation is that FLSA claims will resolve more expeditiously and without litigation thus improving employer compliance with wage and hour laws and getting back wages to employees more quickly.
This week, the Massachusetts Supreme Judicial Court ruled that unused accrued sick time does not constitute “wages” that must be paid upon termination under the Massachusetts Wage Act. This decision, Mui v. Massachusetts Port Authority, resolves a previously unsettled question in Massachusetts wage and hour law.
Last week, the Department of Labor issued new guidance on whether interns are “employees” covered by the Fair Labor Standards Act’s minimum wage and overtime provisions. In the updated guidance, the DOL has adopted the “primary beneficiary test,” first applied by the U.S. Court of Appeals for the Second Circuit in 2015, and used by a growing number of courts in recent years.
One of the key provisions of the new Massachusetts Equal Pay Act (which goes into effect on July 1, 2018) is that it prohibits employers from requiring prospective employees to disclose their salary history. The reasoning behind this provision is as follows: if employers are allowed to ask applicants about their salary history, and base compensation on the answers to those questions, applicants who have been on the receiving end of discriminatory pay practices in the past will continue to be hampered by past pay inequity throughout their careers. If employers cannot base pay on what an applicant made previously, so the thinking goes, employers will have to set pay based on what the job is worth.
The winter season presents employers with many weather related issues ranging from obligations to keep outdoor areas safe to deciding whether to close the business for all or part of the day. Closing the business due to inclement weather raises pay issues – what pay are employees entitled to when the business closes? It depends, in part, whether the employee is considered exempt or non-exempt and whether, the employee is paid on a salary basis. Continue Reading Winter Weather and Employee Challenges – To Pay or Not to Pay?
Typically with an incoming administration there is a waiting period of sorts before changes in pending and certainly existing regulations kick in. The current administration, however, appears to be working at an accelerated pace toward upending the status quo. So, it appears time for a quick check-in on where we are and what to expect.
On Inauguration day, White House Chief of Staff Reince Priebus Jan. 20 instructed federal agencies to freeze all pending regulations, a move that seems to include a number of labor and employment initiatives that were in the works under the Obama administration.
This type of freeze is not unusual when a new president takes office. An action of this nature does not necessarily mean that significant changes are coming, but given candidate Trump’s campaign promise to roll back regulation on business, we can at least predict that the administration will be in no rush to move on the pending matters. Continue Reading Two Weeks Into the Trump Administration: Where are we with Labor and Employment Regulations?
Upon a motion for preliminary approval of the class-action settlement for $100 million, a federal court found that the settlement between Uber and drivers in two states was “not fair, adequate and reasonable” and denied approval. It ordered the parties to confer about how they wanted to proceed. A joint status report is due on September 8th and a status conference is scheduled with the court for September 15th.
The litigation involves current and former Uber Technologies Inc. drivers in Massachusetts and California who brought claims alleging that they were improperly classified as independent contractors rather than as employees. The actions cover about 385,000 drivers. After three years of contentious litigation, and on the eve of trial earlier this year, the parties reached a settlement of these two class-action lawsuits. Among other terms, Uber agreed to pay $84 million plus an additional $16 million depending if the company went public. Drivers would remain classified as independent contractors and Uber agreed to institute certain processes and procedures internally. See my previous post about some of the settlement terms.
In his review of the proposed settlement, Judge Edward Chen of the U.S. District Court for the Northern District of California cited case law noting that “whether a settlement is fundamentally fair…is different from the question whether the settlement is perfect in the estimation of the reviewing court.” But “when…the settlement takes place before formal class certification, settlement approval requires a ‘higher standard of fairness.'” As the judge explained, in this case, “because the Settlement Agreement covers the claims of both certified class members and drivers who fall outside the class definition and thus have not been certified (for example, all Massachusetts drivers and the California drivers who drove for a third-party transportation company or under a corporate name), this Court must apply the more ‘exacting’ standard in determining whether this settlement is fair, adequate, and reasonable.”
Of primary concern to the court was that the $1 million allocated to California’s “Private Attorneys General Act” (PAGA) claim was modest. PAGA is a law that allows private citizens to seek civil penalties for labor violations. The judge noted that the settled PAGA portion was .1% of the potential $1 billion-plus statutory penalty against Uber claimed in the lawsuit. “Here, the court cannot find that the PAGA settlement is fair and adequate in view of the purposes and policies of the statute.” Essentially, the federal court found that the amount of the settlement allocation to the state was not large enough.
The court also ruled that the arbitration provision on appeal deserved further consideration. The appeal pending at the 9th Circuit Court of Appeals on an earlier decision by Judge Chen involves a determination as to whether certain arbitration agreements signed by drivers are enforceable. Judge Chen recognized that if he were reversed on appeal, it would have a significant impact on the case as many of the drivers would need to proceed through arbitration.
Both sides have reported their disappointment in the ruling. This ruling by the federal court, however, does not prevent the parties from reaching a new settlement which addresses the judge’s concerns, particularly as to the PAGA.
This case is being watched closely by those companies using on demand workers. It is also a good reminder about the potential class-action liability employers face for the misclassification of a group of employees. All employers should be reviewing their independent contractor classifications to make sure those persons are not really employees under an incorrect label.