President Trump’s 2018 budget, released on May 23, proposes to merge the Office of Federal Contract Compliance Programs (OFCCP) with the Equal Employment Opportunity Commission (EEOC) by the end of FY 2018.  The proposed merger purports to result in “one agency to combat employment discrimination.”  The Trump administration asserts that the merger would “reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.”

Both business groups and employee civil rights organizations have opposed the measure, albeit for different reasons.  The OFCCP is a division of the U.S. Department of Labor, while the EEOC is an independent federal agency.  Although both deal with issues of employment discrimination, their mandates, functions and focus are different.  The OFCCP’s function is to ensure that federal government contractors take affirmative action to avoid discrimination on the basis of race, color, religion, sex, national origin, disability and protected veteran status.  The OFCCP, which was created in 1978, enforces Executive Order 11246, as amended, the Rehabilitation Act of 1973, as amended, and the Veterans’ Readjustment Assistance Act of 1975.  The EEOC administers and enforces several federal employment discrimination laws prohibiting discrimination on the basis of race, national origin, religion, sex, age, disability, gender identity, genetic information, and retaliation for complaining or supporting a claim of discrimination.  Its function is to investigate individual charges of discrimination brought by private and public sector employees against their employers.  The EEOC was established in 1965, following the enactment of Title VII of the Civil Rights Act of 1964.

Business groups oppose the OFCCP’s merger into the EEOC due to concerns that it would create a more powerful EEOC with greater enforcement powers.  For example, the OFCCP conducts audits, which compile substantial data on government contractors’ workforces, while the EEOC possesses the power to subpoena employer records.  Combining these tools could provide the “new” EEOC with substantially greater enforcement power.  Civil rights and employee organizations oppose the merger, believing that overall it would result in less funding for the combined functions currently performed by each agency.

Employers’ engagement of independent contractors has increased substantially in recent years.  Short-term projects and the gig economy have fueled the need for workers, who are not looking (or are unable) to find permanent employment, but otherwise possess critical skills or talents desired by start-up and well-established companies.  In light of this reality, New York City enacted the “Freelance Isn’t Free Act” (“FIFA”), which took effect on May 15, 2017.   FIFA applies to all engagements between the “hiring party” and independent contractor that have a value of $800 or more.

FIFA mandates a written agreement between the parties setting forth, among other things, the services to be provided as well as the rate and method of payment.  In addition, it requires that compensation for services be paid no later than 30 days after the completion of such services if the agreement fails to specify when payment is due.  FIFA prohibits a hiring party from conditioning timely payment on the freelance worker’s agreement to accept less compensation than the amount the parties agreed to prior to the commencement of services.   A hiring party is barred from retaliating against a worker for “exercising or attempting to exercise any right guaranteed” under FIFA.  In addition to preventing the harassment, discipline or denial of a work opportunity as retaliation, FIFA prohibits the hiring party from denying a “future work opportunity” to a worker who has engaged in protected activity.

A claim for violating FIFA may be filed with the newly created Office of Labor Standards or by filing a civil action within the appropriate statute of limitations.  A lawsuit for unlawful payment practices or retaliation must be brought within 6 years, while a claim for failing to provide a written contract in accordance with the law is subject to a 2 year limitations period.   In a civil action alleging that the hiring party failed to provide a written contract, the worker must allege that he or she actually requested a written contract before the work began.  FIFA provides for the recovery of reasonable attorneys’ fees and costs, statutory damages of $250, an amount equal to the value of the underlying agreement,  double damages, and injunctive relief for unlawful payment practices.

On May 4, 2017, Mayor Bill de Blasio signed a New York City Council bill that prohibits employers from inquiring about a prospective employee’s “salary history” during any stage of the employment process.  In addition, the new law prevents employers, who happen to be aware of a job candidate’s salary history, from relying on it in making compensation determinations.  The law is aimed at eliminating gender wage gaps, but protects all job applicants, regardless of gender.

The law defines “salary history” broadly to include all wages, benefits or other compensation, but does not include inquiring into a prospective employee’s revenue, sales, or other production reports.  Although employers will not be permitted to ask applicants what they were paid in prior jobs, they are permitted to inform applicants about the job position’s proposed or anticipated salary.  In addition, employers and job candidates can discuss compensation expectations as long as there is no disclosure of prior salary history.

The Local Law amends the Administrative Code of the City of New York, and the New York City Commission on Human Rights will likely issue regulations and guidance to further the law’s purpose.  The law will take effect on October 31, 2017.  Stay tuned for more developments.

 

Title VII prohibits employment discrimination because of sex.  It does not, however, expressly prohibit discrimination based on an individual’s actual or perceived sexual orientation.  Recently, federal courts have started to disregard this distinction in favor of concluding that discrimination on the basis of sexual orientation is a form of sex discrimination because it inherently involves gender stereotyping.  Although the U.S. Court of Appeals for the Second Circuit, which covers New York, Connecticut and Vermont, has been reluctant to find that sexual orientation discrimination is illegal under federal law, Chief Judge Katzmann of the Second Circuit explained just last month in Christiansen v. Omnicom Grp., Inc., that sexual orientation discrimination should be considered sex discrimination because “such discrimination is inherently rooted in gender stereotypes.”  A prior opinion from the Second Circuit suggested that stereotypical “notions about how men and women should behave will often necessarily blur into ideas about heterosexuality and homosexuality.”  In light of these statements from the Second Circuit, lower courts have started to accept that federal law does, in fact, prohibit sexual orientation discrimination.

Most recently, on May 3, 2017, Judge Alvin Hellerstein of the U.S. District Court for the Southern District of New York refused to dismiss a claim for sexual orientation discrimination under Title VII in Philpott v. State of New York, insisting that sexual orientation discrimination is a form of sex discrimination because “sexual orientation cannot be defined or understood without reference to sex.” In refusing to dismiss the claim, Judge Hellerstein stated that he “decline[d] to embrace an ‘illogical and artificial distinction between gender stereotyping discrimination and sexual orientation discrimination. . . .”  The court viewed the plaintiff’s allegations as supporting a claim of gender stereotyping discrimination.  These allegations included statements attributed to the President of SUNY Optometry that referred to the plaintiff as “sensitive,” “flamboyant,” and “frenetic.”  This same official told the plaintiff that “separate but equal treatment of gay people might be best,” and that upon learning that plaintiff’s relationship with his domestic partner had ended, this official told the plaintiff that “this marriage, or whatever you want to call it, is a distraction to the College.”

A finding that Title VII prohibits sexual orientation discrimination as a form of sex discrimination would not affect employers and employees in states such as New York, Connecticut and Massachusetts that already prohibit such discrimination.  Nevertheless, the federal court’s decision in Philpott highlights that even high-level management officials in states like New York, where sexual orientation discrimination is already illegal, require workplace training to instill that stereotyping is discrimination, and cannot form the basis for workplace decisions.

Earlier this week, I reported in Murtha Cullina’s Labor and Employment Group News that the Second Circuit, which covers New York, Connecticut and Vermont, clarified that a single racist comment could support a claim for a discriminatory hostile work environment on the basis of race, where the comment constituted a “severe racial slur.”  To read the full article, simply click on the following link:    A Single Racist Comment Can Create a Hostile Work Environment.

Last week the EEOC released data for FY2016 indicating that the number of workplace charges filed with the EEOC increased for the second year in a row.  According to the data, the EEOC received 91,503 charges of employment discrimination during FY 2016, which is a bit higher than the 89,385 charges it received in FY 2015.  The breakdown of charges reflects that once again more charges were filed alleging retaliation than any other category.  In FY 2016, there were 42,018 charges filed with the EEOC, which reflected 45.9% of all charges filed.  The newly released data also provides information about LGBT claims, and show that the number of LGBT filings in FY 2016 (1,768) were more than double those filed in FY 2013 (808).  The EEOC’s press release details other more specific information concerning charge resolutions and litigation.

It will be interesting to see the data for FY 2017 following the new administration’s EEOC priorities.  Yesterday, President Trump named Victoria Lipnic as acting chair of the EEOC.  Ms. Lipnic has been a Commissioner of the EEOC since 2010, and is well regarded by Democrats.  From 2002 to 2009, she was Assistant Secretary of Labor for Employment Standards under President Bush.  It is likely that she will ultimately be appointed chair because she is the only Republican Commissioner at the EEOC.

Over the last several years, federal courts have relied on the Federal Arbitration Act (“FAA”) in enforcing predispute mandatory arbitration agreements between employers and employees, which require an individual employee to waive his or her rights to assert employment related claims in court, in favor of arbitration.  Such agreements, however, do not by themselves mandate that class or collective actions be submitted in court or arbitration.  Consequently, employers have included class and collective action waiver provisions in such agreements; these waivers serve to  prevent employees from bringing class and collective claims in any forum.

The National Labor Relations Board (“NLRB”) has opposed class and collection action waivers, and has held that requiring employees to agree to such waivers as a condition of employment violates the National Labor Relations Act (“NLRA”).  Not surprisingly, there has been a split among the U.S. Circuit Courts of Appeal, with some disagreeing with the NLRB and others agreeing that class and collective action waivers violate the NLRA.

U.S. Circuit Courts Finding No Violation of the NLRA

On December 28, 2016, the New York State Department of Labor (“NYSDOL”) adopted final regulations scheduled to be effective, December 31, 2016, increasing the minimum salary thresholds for employees to be exempt from overtime under New York law.  Although the NYSDOL had proposed the regulations in October 2016, they garnered little attention due to the proposed increase of the minimum salary threshold under the federal Fair Labor Standards Act, which was higher and scheduled to become effective on December 1, 2016.  In light of a nationwide injunction granted by a federal court in Texas, the FLSA’s minimum salary threshold has not increased.  Nevertheless, the injunction had no effect on the NYSDOL’s proposed increases under New York law, which took effect on December 31, 2016– three days after the adoption of the final regulations.

As a result, New York employers are still required to increase the minimum salary thresholds for the executive, administrative, and professional exemptions under New York law, although the increases are not as high as those that were proposed under the FLSA.  The minimum salary thresholds for the overtime exemptions under New York law are now based on geographic location and in New York City, by employer size.  These thresholds are set forth in the New York State Department of Labor’s Wage Order Summary for Miscellaneous Industry.

In addition, the minimum wage for employees has also increased, effective December 31, 2016.  Although the basic minimum wage rate is now $9.70, in New York City large employers (of 11 or more employees) are required to pay a minimum hourly wage of at least $11.00, and small employers in New York City are required to pay $10.50 per hour.  Employers in Long Island and Westchester are required to pay an hourly minimum wage rate of $10.00.   The minimum wage rate is expected to increase each year until December 31, 2021.  Information on these rates and tip credits is set forth in the Wage Order Summary for Miscellaneous Industry.  The Hospitality Industry (including restaurants and fast food establishments) is subject to a separate Wage Order, and provides that as of December 31, 2016, Fast Food Workers are entitled to an $11.00 minimum wage in New York City, and a $10.70 minimum wage throughout the remainder of New York State.  This information, including the effect of tips on the cash wage paid, is set forth on the Wage Order Summary for Hospitality Industry.

On December 6, the New York Council introduced several bills as part of New York City’s “Fair Work Week” initiative.  The bills primarily apply to certain fast food employers, as well as some retail establishments.  These bills may never be enacted into law, and are still subject to negotiation and debate:

  • Int. 1384-2016 – Allows fast food employees to designate amounts from wages for contribution to a non-for-profit of their choice, and employers are required to remit such amounts.
  • Int. 1387-2016 – Bans “on-call scheduling” for retail employees, and prohibits providing retail employees with less than 20 hours of work during any 14-day work period (not counting time the employee voluntarily takes off).

Yesterday the U.S. Department of Labor issued a response to the recent federal court decision that blocked the Department of Labor from implementing the Overtime Final Rule on December 1, 2016.  We wrote about the decision earlier this week in Wage/Hour Alert: Court Issus Nationwide Block of Overtime Exemption Regulations.  According to the Department of Labor’s statement on its website:

On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016.  The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada ET AL v. United States Department of Labor ET AL No: 4:16-CV-00731). The rule updated the standard salary level and provided a method to keep the salary level current to better effectuate Congress’s intent to exempt bona fide white collar workers from overtime protections.

Since 1940, the Department’s regulations have generally required each of three tests to be met for the FLSA’s executive, administrative, and professional (EAP) exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).  The Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees.  The Department has updated the salary level requirements seven times since 1938.

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