This week, in workplaces across America, millions of employees—up to 50 million of them by some estimates—will be filling in brackets and participating in “March Madness” office pools.  The amount of money wagered in these office pools each year is believed to be as much as $3 billion.  Beyond the losses in productivity associated with these office pools, which can be substantial, employers have another concern about these activities: are they illegal?  The short answer is, yes, that office pool is against the law.

Only Nevada permits wagering on college sports.  And while the provisions of the laws vary widely, statutes in most states prohibit the type of wagering associated with March Madness and Super Bowl office pools, and fantasy football leagues.  Federal regulations also prohibit workers on government-owned property from engaging in gambling.  Legislatures in some states have considered easing restrictions on these types of small-scale, social betting activities.  However, these proposals have generally failed to gain much traction.  A bill to legalize March Madness and Super Bowl gambling pools has been proposed in the Massachusetts Legislature on multiple occasions without success.

While there have been some cases, like this one in Rhode Island, and this one in North Attleboro, Massachusetts, where people have faced charges in connection with betting on sports at work, arrest and prosecution for organizing or participating in an office pool is unlikely.  Just the same, employers should not condone, and certainly should not organize or facilitate, illegal betting at work.  Among the risks that could face employers who are aware of, and turn a blind eye to, illegal gambling in the office are potential charges of hostile work environment by employees who feel that they are intimidated or ridiculed for choosing not to participate in the office pool, or a claim of retaliation by an employee who tries to “blow the whistle” on other employees’ gambling activities.

 

It has been a long, cold winter this year with the Polar Vortex and record snowfall in many parts of the country.  And while spring will arrive eventually, winter’s not over yet.  (Remember what they say about March coming in like a lion….)

Sometimes, severe weather conditions lead employers to make the decision to shut down their business operations for all or part of a day.  What are employers’ obligations with regard to payment of wages when employees are sent home early, or told to stay home all day, because of inclement weather?  This question raises issues under both federal and state law, and the answer is not always easy.

When it comes to non-exempt employees, the Federal Fair Labor Standards Act (“FLSA”) only requires that these employees be paid for hours actually worked.  State statutes that provide for “report-in” pay, may come into play in cases where an employer decides to shut down its operations for part of a day and send employees home.  For example, Massachusetts regulations (455 C.M.R. § 2.03(1)) provide that when an employee who is scheduled to work three or more hours reports for duty at the time set by the employer, and that employee is not provided with the expected hours of work, the employee shall be paid for at least three hours on such day at no less than the basic minimum wage.  New Hampshire’s “report-in” law, RSA 275:43-a, requires that employees who report to work at the employer’s request be paid no less than two-hours pay at the regular rate of pay.

For exempt employees, the FLSA does not permit employers to make deductions from employees’ pay for partial day, or even whole day closures.  The only exception is when the employer’s facility is shut down for an entire week, and exempt employees do not perform any work at all during the shutdown.  But, if exempt employees are still checking emails and making phone calls from home while the office is closed, they would still be entitled to be paid.  For most employers, there will be a duty to pay exempt employees as usual during a weather-related shutdown.

Employers may permit, or even require, employees to use accrued paid time off in connection with inclement-weather closings.  However, if employees don’t have enough accrued paid time off, employers cannot make up the difference by charging against future unearned vacation time unless this is specifically provided for in the company’s vacation policy.

It always makes sense to prepare for a storm, whether that means checking to make sure that you have enough milk in the refrigerator, or reviewing your payroll and personnel policies for compliance with applicable federal and state laws.

Apparently Patrick Snay never gave his daughter the sage advice my father, a naval veteran of World War II (OK, he went in after the war and made it as far as Jamaica, but the point still stands) gave me.  Dad always reminded me to be cautious in sharing information with the world because as the old adage goes “loose lips sink ships.”  Dad was never exposed to the viral world of Facebook, and in my college years I couldn’t have shared private information with 1200 friends unless I took out an ad in Boston Globe.  But it was still good advice.

Mr. Snay wasn’t so lucky.  When his contract as the Headmaster of a school in Florida was not renewed, he filed a complaint of age discrimination against Gulliver Schools, Inc.  He was able through his attorneys to negotiate a nice settlement consisting of $10,000 in back wages, $80,000 in compensatory damages and $60,000 in attorney’s fees.  The settlement agreement contained a very specific and very strict confidentiality provision by which Snay agreed not to disclose even the existence of the settlement to anyone but his attorneys, professional advisors or spouse.  Unfortunately, Snay told his college aged daughter, an alumna of Gulliver, that the case settled and that he was pleased with the result.  Within days the daughter posted the following on Facebook:  “Mama and Papa Snay won the case against Gulliver.  Gulliver is now officially paying for my vacation to Europe this summer.  SUCK IT.”  The post was open to her 1200 friends, many of whom had also attended Gulliver.

Not surprisingly Gulliver did not take kindly to this very clear breach of the agreement and declined to pay the $80,000.  After all, the information they wanted to keep secret was broadcast to just the audience from which they most wanted to keep it.  The Third District Court of Appeal in Florida sided with Gulliver.  The court found that the plain and unambiguous meaning of the confidentiality paragraph, which was central to the settlement, was that neither Snay nor his wife would disclose “either directly or indirectly” any information regarding the existence or terms of the parties’ agreement.  Snay told his daughter, and she told the world.  And now Snay is out $80,000, and one might imagine that the daughter never made it to Europe for the summer.

 

The US Supreme Court, in a unanimous decision, affirmed that unionized employers do not have to pay employees pursuant to FLSA Section 203(o) for time changing clothes when the “clothes” are not integral to the employees’ job performance and when the amount of time employees spend changing non-clothes is de minimis.

In Sandifer, employees, subject to a collective bargaining agreement, spent a majority of their time changing in and out of clothes (flame-retardant jackets, pants, hoods, hardhats, snoods, wristlets, work gloves, leggings and steel-toed boots) which fell within the meaning of the term “clothes” and was, therefore non-compensable time. However, the Court said that glasses, earplugs and respirators did not fall within the definition of “clothes,” but because the time the workers spent changing into those items was de minimis, it was not compensable.

It is important to note that U.S. Steel was following the terms of its collective bargaining agreement when it did not pay its employees for time spent changing clothes, triggering the application of FLSA Section 203(o). Non-unionized employers cannot rely on the provisions of FLSA Section 203(o) and must pay their employees time spent changing into protective gear if that gear is integral to their principal work activities.  This case is a good reminder for employers to review their policies and procedures to confirm they are paying employees properly.

The New Hampshire Legislature is hard at work addressing a variety of proposed bills which would impact the states’s workplaces, large and small.  On January 28, the Senate Commerce Committee rejected  on a 4 to 1 vote the first of those bills on which a recommendation was made.  SB 302, entitled “An Act Relative to Public or Private Criticism of Employers by Employees” simply stated that criticism of an employer by an employee could not be grounds for termination.

The Committee’s discussion of the Bill,  sponsored by Sen. David Pierce, D-Lebanon, centered around the balancing of an employee’s right to free speech and an employer’s right to protect the reputation of its business.  Concerns were also expressed about watering down the proposition of “at-will” employment.

Ultimately, the scant language of the Bill provided little guidance as to what might constitute “criticism.”  Although this Bill will likely not be resurrected during this legislative session,  employers should bear in mind that employees do have protections under federal law, specifically the National Labor Relations Act, which make it difficult for a business to fire an individual for speaking out against an employer with regard to conditions of work.  Even non-union employees are protected when they engage in “concerted activity” which has been defined broadly enough to include complaining about work assignments on Facebook or discussing wages and benefits with fellow employees.

Employers are free to establish policies and have employees sign agreements to protect trade secrets and business information and to prevent employees from engaging in harassment or defamation.  It is well worth the time and effort to review those agreements and policies periodically to make sure they provide sufficient protection.

The start of a new year is always a good time for employers to review their HR policies.  As part of this process, employers can conduct self-audits of their wage and hour practices to determine compliance with the law.  The NH Department of Labor just recently posted the top ten most common labor law violations from last year.  The list is a tool to assist businesses in uncovering any concerns with compliance with wage and hour rules.

The following are the 2013 Top Ten wage and hour violations by employers in New Hampshire:

10.Failure to pay minimum wage for all hours worked.  * RSA 279:21

9. Illegal deductions from wages. *RSA 275:48 and Lab 803.02(b),(e),(f)

8. Illegal employment of workers under 18 (not having proper paperwork, hours violations, or working in a hazardous environment).  *RSA 276-A: and Lab 1000

7.  Failure to pay 2 hours minimum pay at their regular rate of pay on a given day that an employee reports to work at the request of the employer.  *RSA 275:43-a and LAB 803.03 (h),(i)(j)

6.  Failure to provide written notice to employees of their wage rate, pay period, pay day and a description of fringe benefits, including any changes.  *RSA 275:49 and Lab 803.03

5.  Failure to secure and maintain workers compensation coverage and misclassification of employees.  *RSA 275:42 I & II and RSA 281-A

4.  Employing Illegal Aliens (not having proper documentation).  *RSA 275-A:4-a

3.  Failure to have a written safety plan, joint loss management committee and safety summary form filed biennially, as required.  *RSA 281-A:64 and Lab 602.01, 602.02, 603.02, and 603.03

2.  Failure to keep accurate record of all hours worked.  *RSA 279:27 and Lab 803.03

AND THE #1 MOST COMMON VIOLATION IN 2013

1.  Failure to pay all wages due for hours worked, fringe benefits, breaks less than 20 minutes, etc.  *RSA 275:43 and Lab 803.01.

Do not become a statistic in 2014.  For more information, visit the NH DOL website at www.nh.gov.

 

The National Labor Relations Board did not appeal to the US Supreme Court two federal court decisions invalidating the NLRB’s Notice Posting Rule.  The rule would have required many private employers to display a pro-union notice of employee rights in the workplace.  This means most employers can now shelve the posters they printed in 2011.

We previously posted the U.S. Court of Appeals for the D.C. Circuit decision that struck down the NLRB poster rule in May 2013.  A month later, the U.S. Court of Appeals for the Fourth Circuit also invalidated the rule.  While the NLRB could have appealed those decisions, it chose not to challenge the rulings.

But not all employers can discard the posters just yet.  The U.S. Department of Labor requires all federal contractors and subcontractors to post the NLRB notice, which can still be found on the NLRB’s website.  This rule was created by the President through an executive order and went into effect on June 21, 2010.  This executive order is currently being challenged in the courts.

In a statement issued on January 6, 2014, the NLRB reported that it “remains committed to ensuring that workers, businesses and labor organizations are informed of their rights and obligations under the National Labor Relations Act. Therefore, the NLRB will continue its national outreach program to educate the American public about the statute.”   Thus, while there may be no poster, we can continue to expect decisions from the NLRB that affect most private employers in 2014.

Have you ever gotten lost on the way to work and found yourself in another state or had your car swarmed by bees so that you just couldn’t get to work?  Some employees have had those days and called in sick from work.

CareerBuilder’s annual survey on absenteeism in the workplace reveals some of the most creative excuses employees used this year when calling in sick.  The online survey included 2,099 hiring managers and human resource professionals and 3,484 full time employees.

Up two percent from last year, 2013’s survey shows that 32% of workers called in sick when they were not actually ill.   The majority of employees, however, use sick days to recover from being ill.  After that, the most common reasons employees do not come into work in statistical order include:   just don’t feel like going; felt like they needed to relax; doctor’s appointment; wanted to catch up on sleep; or errands to do.

What are some of the more interesting excuses employers reported hearing this year?

  • Employee’s false teeth flew out the window while driving down the highway
  • Employee’s favorite football team lost on Sunday so needed Monday to recover
  • Employee said that someone glued her doors and windows shut so she couldn’t leave the house to come to work
  • Employee bit her tongue and couldn’t talk
  • Employee claimed a swarm of bees surrounded his vehicle and he couldn’t make it in
  • Employee said the chemical in turkey made him fall asleep and he missed his shift
  • Employee got lost and ended up in another state
  • Employee couldn’t decide what to wear

See the full list of excuses reported by CareerBuilder.com.

So what are employers to do?  The best practice is to have clear policies on paid or unpaid time off from work.  Policies may specify different types of time off (for example, sick, personal, or vacation) while others may allow a general amount of time off.  There may also be limitations or conditions to taking such time (for example, a notice requirement or a doctor’s note).  Employees need to know what is allowed and not allowed.  Employers need to confirm they are complying with any federal or state law as to requested time off and that they are applying their policies consistently.

This year’s survey further revealed that some employers follow up on employees who call in sick.  Of those responding, 64% had required a doctor’s note, 48% had called the employee at home some time during the day, 19% had checked the employee’s social media posts, 17% had another employee call the employee, and 15% had driven past the employee’s house.  Employers also reported that while they allow flexibility for reasons to take the day off from work under their policies, no fewer than 16% had terminated employees who used false reasons for being out.

Even when an employer takes prompt remedial action to defeat a sexual harassment claim, it may still be liable for retaliation.  A NH employer was reminded of this recently in Rand v. Town of Exeter (11-CV-55-PB) (10/2/13).

Brenda Rand worked as a solid waste transfer operator for the Town’s Highway Department.  Rand alleged that a coworker sexually assaulted her one morning at the transfer station when both were alone.  Rand confided in a coworker 5 days after the incident and then reported it to the HR Director and her supervisors.

To prove sexual harassment by a coworker, an employee must show that the employer knew or should have known of the harassment yet failed to take prompt remedial action.

On a motion for summary judgment filed by the employer, the federal trial court found that the Town had taken prompt and remedial action when it learned of Rand’s complaint.  As the Court explained, the company HR Director conducted an investigation into the allegations, prohibited the alleged harasser from going to Rand’s worksite during the investigation, and had interviewed 3 of the witnesses within 3 days of learning of the complaint and had a report prepared 5 days after the final interview.  The Town informed Rand of the investigation outcome two weeks later.

The Court noted that while Rand disagreed with the Town’s internal investigation outcome, the issue as to employer liability is whether the employer is negligent in allowing the harassment to occur and whether the employer took reasonable steps to respond.  Here, the Town had an anti-discrimination policy, no reason to anticipate the alleged assault, and took prompt and effective action to respond to and investigate Rand’s complaint.  As a result of the steps taken by the employer, the federal Title VII and state harassment claims were dismissed.

As this case shows, anti-discrimination policies and effective internal investigations play important roles in protecting companies from workplace liability.  Taking complaints seriously, dealing with them objectively and promptly, and taking appropriate remedial measures, if necessary, following the investigation may shield employers from claims.

Unfortunately for this employer, the case is not done.  While the harassment claims were dismissed, the Court allowed Rand’s retaliation claims to continue.   Rand had produced sufficient evidence to support her complaint, including negative performance reviews and reprimands after her complaint and evidence employees were told to avoid her.  Additionally, the Town placed Rand on administrative leave and refused to turn over her personnel file shortly after Rand filed an EEOC complaint.  As the Court explained, motive and intent are better suited for the jury, and a trial has been scheduled for February 2014.

With retaliation at the top of the list of discrimination filings, employers must take heed.  An employee may lose on the underlying discrimination claim and still be successful on the retaliation claim for conduct occurring after the complaint. Employers should have strong policies against retaliation and should train all supervisors and employees on this prohibited conduct.  Do not learn this lesson the hard way.

 

On September 23, 2013, the IRS released Notice 2013-61 which provides special rules for employers making claims for refunds or adjustments of Federal Insurance Contributions Act (FICA) and federal employment taxes resulting from the United States Supreme Court’s decision in Windsor.  In Windsor, the Court found that Section 3 of the Defense of Marriage Act (DOMA), which defined marriage as only between a man and a woman, was unconstitutional.

In the wake of Windsor, the IRS first released Revenue Ruling 2013-17 and adopted a “place of celebration” test for determining whether same-sex couples are considered legally married for federal tax purposes (which is more fully discussed here).  Under the “place of celebration” test, once a couple is married in a state that recognizes same-sex marriage, the IRS considers them married for all purposes going forward, even if they move to a state where same-sex marriage is not recognized.

Prior to Windsor and Revenue Ruling 2013-17, an employer who made benefits available to a same-sex partner of an employee was required to impute the value of those benefit as income to the employee, and then withhold and pay FICA and employment taxes based on that imputed income amount.  As a result of Windsor and Revenue Ruling 2013-17, however, employers no longer need to impute income to employees with same-sex partners who are validly married.

Revenue Ruling 2013-17, which took effect on September 16, 2013, is retroactive to all open tax years (2010, 2011, 2012).  Individual taxpayers may amend their previously filed tax returns back to 2010 to change their filing status and recalculate their federal income tax to exclude imputed income based on benefits provided to a same-sex spouse.  Like individual taxpayers, employers may also claim a refund or make an adjustment for any excess FICA and employment taxes paid.  With Notice 2013-61, the IRS eased the process for employers seeking such an adjustment.  Rather than filing a Form 941-X for each calendar quarter for which a refund or adjustment is needed (including 2013), an employer may file a single Form 941-X for each calendar year for which a refund or adjustment is desired.  Notice 2013-61 also provides employers with two optional methods for correcting 2013 overpayments.  The first correction method allows an employer to use its 2013 fourth quarter quarterly tax return (IRS Form 941) to correct any overpayments made during the first three quarters of 2013. The second correction method allows an employer to file one amended employer’s quarterly tax return (IRS Form 941-X) for the fourth quarter of 2013 to correct overpayments of FICA taxes for all four quarters of 2013.

Employers should be aware that these special rules are optional.  If an employer desires to use regular procedures for correcting employment tax payments instead of the special administrative procedures (e.g., submitting amended returns for each quarter), it may still do so.