Employment Law

Patchwork Expands as More Cities Adopt Paid Sick Leave

Why it matters

Following the recent example of Los Angeles and adding to the current patchwork of jurisdictions providing paid sick leave across the country, two other cities have enacted mandatory sick leave for employees. Beginning July 1, 2017, employers in the city of Chicago must provide eligible employees up to 40 hours of paid sick leave in each 12-month period of employment. Employees are entitled to the leave if they perform at least two hours of work within city limits during any two-week period and work for a covered employer at least 80 hours in any 120-day period. Workers can carry over half of their unused leave to take time for themselves or a family member. A similar law passed in Minneapolis, which will also take effect on July 1, 2017, with employers in that city required to provide workers with one hour of “sick and safe leave” for every 30 hours worked to a maximum of 48 hours per year. Where possible, employers may require advance notice for use of such time and request medical documentation for absences longer than three days, while Minneapolis employees may roll over unused hours for a maximum of 80 hours in a given year. With the passage of the new ordinances, employers with a national presence face additional complications to achieve compliance with the various laws.

Detailed discussion

Joining a growing number of jurisdictions—including Los Angeles, New York, and the state of California—Chicago and Minneapolis jumped on the paid sick leave bandwagon.

“Paid sick leave has a positive effect on the health of not only employees and their family members, but also the health of fellow workers and the public at large,” according to Chicago’s Paid Sick Leave Ordinance. “Employees in every industry occasionally require time away from the workplace to tend to their own health or the health of family members.”

As of July 1, 2017, employees who work a minimum of two hours during any two-week period within city limits and work for a covered employer at least 80 hours in any 120-day period can accrue at least one hour of paid sick leave for every 40 hours worked, up to a maximum of 40 hours per year. Employers—defined to include all that employ at least one part-time or full-time employee within city limits and maintain a business within the city limits or are subject to city licensing requirements—may set a higher limit.

Leave begins to accrue on the first day of work (or the effective date of the ordinance, whichever is later) and employees must be allowed to use their leave no later than 180 days after starting employment.

Leave may be used not only for the worker’s own purposes but also for the illness or injury of the employee’s family member, including receiving medical care, treatment, diagnosis, or preventative medical care. Leave is also permitted where the employee or the employee’s family member is a victim of domestic violence or a sex offense, if the employee’s place of business is closed due to a public health emergency, or for the care of a child whose school or place of care is closed due to a public health emergency.

The ordinance broadly defined a “family member” to include a “child, legal guardian or ward, spouse under the laws of any state, domestic partner, parent, spouse or domestic partner’s parent, sibling, grandparent, grandchild, or any other individual related by blood or whose close association with the Employee is the equivalent of a family relationship.”

Employees are permitted to carry over half of their accrued, unused paid sick leave to the following year and must be allowed to carry over up to 40 additional hours of accrued paid sick leave to be used only for Family and Medical Leave Act (FMLA) purposes. For employers covered by the FMLA, that means a maximum of 60 hours per employee that can be rolled over each year. Accrued but unused paid sick leave does not have to be paid out upon an employee’s termination.

If leave is “reasonably foreseeable” (such as a prescheduled appointment with a healthcare provider or a court date in a domestic violence case) an employer may require up to seven days’ notice; otherwise, notice must be given “as soon as is practicable” by phone, e-mail, or text message. An employer may require certification that the leave was authorized under the ordinance if it lasts more than three consecutive work days.

Notice of workers’ right to paid sick leave must be provided in two forms: posted in a “conspicuous” place at each facility located within the city and a copy provided to each employee with his or her first paycheck. The Department of Business Affairs and Consumer Protection will develop the notices.

Employees were provided with a private right of action for violations of the ordinance and can recover three times the full amount of sick leave denied or lost, plus interest and attorneys’ fees, if a violation is established.

The ordinance is short on exemptions. Construction industry employees who are covered by a collective bargaining agreement are exempt, and the requirements of the new law do not take effect for unionized employees until the expiration of the collective bargaining agreement in place at the time the ordinance takes effect. Once July 1, 2017 passes, a union and employer may agree to waive the requirements of the city’s law in the new collective bargaining agreement.

Minneapolis’ ordinance contains many similarities.

Pursuant to the Sick and Safe Time Ordinance, employers within the city limits with six or more employees must provide eligible workers with one hour of leave for every 30 hours worked up to a maximum of 48 hours per year. Employers with five or fewer employees are also required to provide 48 hours of leave per year but as unpaid time. A new company may provide unpaid leave during its first year of business before paying for leave if it has six or more employees beginning the second year.

Covered employees—those that work at least 80 hours per year in Minneapolis—are permitted to carry over unused leave up to a maximum of 80 hours. Employees may take leave to care for themselves or for family members due to illness or domestic violence as well as take care of their children on days when school is cancelled.

Where possible, employers may require advance notice for the use of leave and medical documentation for absences that last longer than three days. The ordinance provides that employers who already offer a paid leave policy to their workers that “meets or exceeds, and does not otherwise conflict” with the Minneapolis law do not need to provide additional time.

Written notice of the new law, set to take effect July 1, 2017, must be provided to employees in handbooks as well as postings at worksites, and employers also have an obligation to maintain records of accrued and used sick and safe leave. These records need to be provided to employees upon request, either electronically or in writing.

Violations of the new ordinance are subject to an administrative process before the Minneapolis Department of Civil Rights. Penalties escalate over time, with a first violation resulting in a warning and notice to correct. Subsequent violations can trigger penalties ranging from reinstatement and back pay to crediting an employee for wrongfully withheld leave plus the payment of double the value of the unpaid sick and safe time or $250, whichever is greater, to up to a $1,500 administrative penalty or administrative fine of up to $50 per day.

To read the Chicago ordinance, click here.

To read the Minneapolis ordinance, click here.

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EEOC Victory on Pattern or Practice Suits

Why it matters

Siding with the Equal Employment Opportunity Commission (EEOC), a panel of the Fifth Circuit Court of Appeals determined that the agency could bring a pattern or practice suit against an employer based on representative liability under Section 706 of Title VII. The Commission issued a charge that Bass Pro Outdoor World discriminated against African-American and Hispanic applicants at its stores across the country. The employer moved for summary judgment, countering that the EEOC can only bring pattern or practice claims under Section 707 of Title VII. A federal district court denied the motion and the federal appellate panel affirmed. While Section 707 specifically authorizes pattern or practice actions, the court said nothing prevented the EEOC from proceeding under Section 706. Further, the agency was not required to identify any aggrieved individuals by name to satisfy the requirement of conciliation prior to bringing suit. The EEOC informed the sporting goods retail chain about the class it allegedly discriminated against, the panel said, and the parties had meetings about the charges, so Bass Pro was clearly on notice as to the claims against it.

Detailed discussion

In February 2007, the Equal Employment Opportunity Commission (EEOC) issued a Commissioner’s Charge stating that the agency had “reason to think” Bass Pro Outdoor World had discriminated against African-American applicants and employees on the basis of their race at retail stores and facilities nationwide dating back to November 2005. An amended charge expanded the allegations to include Hispanic and Asian applicants and employees.

Following an investigation, the EEOC issued a Letter of Determination in April 2010 that it had “good cause” to believe the allegations were true, launching the conciliation process. The agency told Bass Pro it had identified about 100 individuals who were victims of discriminatory hiring, but it did not provide specific names. Although the parties exchanged several letters and met in person, the EEOC declared conciliation unsuccessful in April 2011.

The agency then filed suit in Texas federal court in September 2011 alleging Bass Pro had a pattern or practice of discriminatory hiring against minority applicants in violation of Title VII. The EEOC did not identify aggrieved individuals and stated its intent to proceed under the framework established in the U.S. Supreme Court decision in International Brotherhood of Teamsters v. U.S.

Under that two-part framework, the agency would first establish that unlawful discrimination was a regular procedure followed by the employer with a subsequent remedial phase to determine the scope of individual relief.

Bass Pro moved to dismiss, arguing that the EEOC was not allowed to bring a pattern or practice claim under Section 706. The district court agreed and tossed the case. The EEOC then filed an amended complaint featuring the names of more than 200 aggrieved minority individuals the agency characterized as “exemplars” of the employer’s pattern or practice of discrimination. Bass Pro moved for summary judgment.

The district court denied the motion and reversed its previous decision, ruling that the EEOC could proceed within the Teamsters framework to prove a pattern or practice claim under Section 706. Bass Pro appealed to the Fifth Circuit Court of Appeals.

Although the federal appellate panel recognized that Section 706 of Title VII does not explicitly authorize pattern or practice suits—as Section 707 does—the Fifth Circuit relied upon a 1980 U.S. Supreme Court case emphasizing that Congress granted the EEOC “broad enforcement powers” “to advance the public interest in preventing and remedying employment discrimination.” To further that goal, the Justices stated themselves reluctant to disable the agency from advancing the public interest and allowed the agency to pursue the case with an order bifurcating the issue of class liability from individual damages.

“We heed the Court’s reluctance,” the Fifth Circuit wrote. “We conclude that Congress did not prohibit the EEOC from bringing pattern or practice suits under Section 706 and, in turn, from carrying them to trial with sequential determinations of liability and damages in a bifurcated framework. Bifurcation of liability and damage is a common tool deployed by federal district courts in a wide range of civil cases—well within its powers under Rules 16 and 26. We decline to imply limits upon the trial court’s management power that not only cannot be located in the language of the statute but also confound the plain language of the Federal Rules.”

Bass Pro’s other arguments also failed to persuade the court. Allowing pattern or practice suits under Section 706 would not render Section 707 functionally superfluous, the panel said, as the two provisions have multiple differences, such as the right of private individuals to intervene in Section 706 actions not found in Section 707 and the agency’s access to trial by a three-judge panel when proceeding under Section 707, but not Section 706.

The employer challenged the use of the Teamsters model, arguing that it would offend both its due process and Seventh Amendment rights. If it were to be found liable in the first stage of the process, Bass Pro argued, it could then be exposed to damages for the thousands of individuals the EEOC claimed were discriminated against without the opportunity to present distinct defenses to damages against each aggrieved person.

“But pattern or practice suits characteristically involve allegations of discrimination on a large scale—and the pressure to settle that attends such extensive litigation—whether they are brought under Section 706 or Section 707,” the court said. “The pressure remains a concern in the cost/benefit analysis inherent in settlement decisions, but necessary risks do not offend due process as long as the risk enhancements flow from structures that do not themselves offend due process.”

This argument also slighted the management tools at the hand of the district court, the panel wrote, unimpressed by the purported complexities of the case. While the EEOC’s pursuit of compensatory damages may prove difficult to administer, the agency “may conclude that its obligation to enforce Title VII is best discharged by not pursuing in this hiring case the relatively nuanced and elusive compensatory damages,” the court suggested. “The administration of this litigation is a challenge, but one best left for the able district court.”

Finally, the Fifth Circuit addressed Bass Pro’s concern that the EEOC failed to fulfill its mandatory administrative prerequisites to filing suit under Section 706 by neglecting to name specific aggrieved individuals and investigate and conciliate their individual claims. Citing a Ninth Circuit decision interpreting the U.S. Supreme Court’s recent holding in Mach Mining v. EEOC, the panel held that the EEOC can meet its conciliation and investigation requirements without naming individual class members.

“Efforts began in April 2010, when the EEOC informed Bass Pro that it had reasonable cause to believe that Bass Pro had engaged in discriminatory practices,” the court said. “Even if the EEOC did not initially provide the names of specific victims, it informed Bass Pro about the class it had allegedly discriminated against—African-American, Hispanic, and Asian applicants. The parties negotiated for eleven months, via letters and face-to-face meetings about the charges. These efforts clearly put Bass Pro on notice as to the claims against it.”

The EEOC’s reliance on statistical and anecdotal evidence—rather than evidence about specific aggrieved individuals—did not demonstrate the agency neglected its investigation duties, the panel wrote, with its review limited only to whether an investigation occurred and not its sufficiency.

An investigation clearly occurred, the court said, with the exchange of numerous letters and meetings and production by Bass Pro of over 230,000 pages of documents. “This investigation meets the EEOC’s statutory burden,” the panel said. “Since the EEOC is authorized to bring a pattern or practice suit under Section 706, the fact that it focused on pattern or practice evidence instead of individual claims during the investigation and conciliation process is of no consequence. Our review is only to determine whether the EEOC engaged in these steps, which it did.”

To read the opinion in EEOC v. Bass Pro Outdoor World, click here.

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PAGA Changes for California Employers

Why it matters

California employers, take note: As part of a budget bill signed by Governor Jerry Brown, changes were made to the Private Attorneys General Act (PAGA) that have already taken effect. Intended to provide increased oversight and enforcement by the California Labor and Workforce Development Agency (LWDA), the amendments give the agency more time to investigate and issue citations for Labor Code violations, an opportunity to review proposed PAGA settlements, and additional funds. Specifically, the LWDA now has 60 days to review PAGA notices (twice the former 30-day period) and a PAGA plaintiff cannot commence a civil action until 65 days after sending notice to the agency (almost double the previous standard of 33 days). The agency must be served with a copy of any PAGA complaint filed in court and provided with a proposed settlement agreement of any PAGA claims. The “scope and frequency” of recent PAGA filings led the Governor to propose the tweaks in an attempt to push for more administrative handling of the claims to reduce the burden on the courts. The changes took immediate effect upon the Governor’s signature on June 27.

Detailed discussion

A piece of legislation added to the state’s budget could have an impact on employers. Senate Bill 836 contained multiple amendments to the Private Attorneys General Act (PAGA) intended to provide the California Labor and Workforce Development Agency (LWDA) with greater oversight and increased enforcement of PAGA claims.

The statute provides employees in the state with the right to sue their employer for violations of the Labor Code on behalf of the LWDA after the agency has the chance to investigate. PAGA claims have become an increasingly popular addition to plaintiffs’ complaints, particularly after the California Supreme Court ruled that a class waiver in a mandatory employment arbitration agreement does not apply to representative actions under the statute.

Governor Jerry Brown suggested the changes earlier this year. “The administration is committed to reducing unnecessary litigation and lowering the costs of doing business in California to support a thriving economic environment,” he wrote in his proposal. “Given the scope and frequency of PAGA filings, there is a great opportunity to increase the rate of administrative handling of cases versus the courts.”

To effectuate the changes, the amendments provide the LWDA with 60 days to review PAGA notices, up from the prior 30 days. A plaintiff asserting PAGA claims must now wait almost twice as long to file a complaint with the court, with the bill extending the time from 33 days to 65 days after sending notice to the agency. The LWDA’s time to notify a plaintiff and employer of its intent to investigate was similarly stretched to 65 days from 33 days, as was the agency’s power to extend its deadline to issue citations up to 180 days.

Going forward, a copy of any PAGA complaint filed in court must also be served on the LWDA and any proposed settlement of PAGA claims must be submitted to the agency at the same time it is provided to the court for approval. Any order that approves or denies a PAGA settlement must be given to the LWDA.

To ease the submissions process, the bill mandated that PAGA notices (and an accompanying $75 filing fee) as well as PAGA cure notices from employers must be provided to the LWDA online. The filing fee will boost the agency’s funding.

With Gov. Brown’s signature on June 27, the bill took immediate effect.

To read SB 836, click here.

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Sandwich Maker Agrees to Noncompete Ban

Why it matters

Restaurant chain Jimmy John’s promise not to require workers to sign noncompete agreements sealed the deal in an action brought by the New York Attorney General. AG Eric T. Schneiderman launched an investigation into the fast food restaurant’s agreements in December 2014 that prohibited sandwich makers from working for a competitor of the fast food chain for a two-year period. Characterizing the agreements as “unconscionable,” the AG reached a deal requiring Jimmy John’s to stop providing the agreements (which defined a “competitor” as an establishment that made more than 10-percent of its revenue through sandwich sales located within two miles of a Jimmy John’s location) to franchises in the state. The agreements “limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued,” the AG said in a statement, indicating that similar cases could follow. “Companies should stop using these agreements for minimum-wage employees.”

Detailed discussion

In December 2014, the New York Attorney General’s Office launched an investigation into restaurant Jimmy John’s, expressing concern about the national fast food chain’s use of noncompete agreements.

According to the AG, the parent company distributed the agreements to franchises throughout the state for use with restaurant workers and delivery drivers. The agreements prohibited the workers from working at any establishment within a two-mile radius of a Jimmy John’s location that made more than 10 percent of its revenue from sandwiches for a period of two years.

Not all of the franchises used the noncompetes, the AG’s investigation determined, but Jimmy John’s agreed to stop using the agreements for minimum-wage workers in the state.

In a statement, the company said it would inform franchisees in the state that the agreements are no longer enforceable. “We worked closely with the [AG’s Office] and provided assurances that, as a franchisor, we would not support the enforcement of a franchisee’s noncompete agreement against an in-store employee,” a spokesperson for Jimmy John’s said.

Schneiderman’s office has kept a close eye on the use of noncompetes in the state, reaching a similar deal with a legal news media company in June. New York law only permits the use of noncompete agreements in “very limited” circumstances, the AG noted, such as to protect trade secrets or in relation to employees with special skills. Some states—including California and Oregon—prohibit the use of noncompetes altogether.

“Noncompete agreements for low-wage workers are unconscionable,” Schneiderman said in a statement. “They limit mobility and opportunity for vulnerable workers and bully them into staying with the threat of being sued. Companies should stop using these agreements for minimum-wage employees.”

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First Sexual Orientation Discrimination Settlement With EEOC Totals $200K

Why it matters

In the first settlement of charges brought by the Equal Employment Opportunity Commission (EEOC) that an employer engaged in illegal discrimination on the basis of sexual orientation, Pallet Companies agreed to pay almost $200,000 to a former worker and make a $20,000 donation to the Human Rights Campaign. The agency filed suit on behalf of Yolanda Boone after her supervisor allegedly made comments about her appearance and sexual orientation, such as “I want to turn you back into a woman” and “you would look good in a dress.” A few days after she complained about the comments and other inappropriate behavior, she was terminated, the EEOC said. To settle the charges in the Maryland federal court complaint, Pallet will pay Boone $7,200 in back pay and $175,000 in nonpecuniary compensatory damages, as well as establish a training program regarding sexual orientation and gender identity in the workplace. Although the company did not admit liability under Title VII, Pallet is additionally subject to an injunction against a hostile work environment based on sex and sexual orientation, as well as retaliation against employees who complain about discrimination. Addressing emerging and developing issues—including coverage of lesbian, gay, bisexual, and transgender individuals under Title VII’s sex discrimination provisions—is one of the agency’s stated priorities. “This consent decree marks EEOC’s first resolution of a suit challenging discrimination based on sexual orientation under Title VII,” EEOC General Counsel David Lopez said in a statement. “EEOC is committed to ensuring that individuals are not subjected to discriminatory treatment in workplaces based on their sexual orientation and looks forward to the day that this fundamental right is widely recognized.”

Detailed discussion

A forklift operator at Pallet Companies in Baltimore, Maryland, Yolanda Boone’s sexual orientation as a lesbian was known to most, if not all of her coworkers, the Equal Employment Opportunity Commission (EEOC) stated in a complaint against her former employer. Initially working the first shift, Boone began to pick up hours on the night shift about three months into her employment.

Immediately the night shift supervisor began harassing Boone. In addition to comments such as “I want to turn you back into a woman” and “you would look good in a dress,” he quoted biblical passages to Boone that a man should be with a woman and would grab his crotch while staring at her on multiple occasions, the EEOC said. After weeks of harassment, Boone complained to her other supervisor, but nothing changed.

On another occasion the night supervisor blew a kiss to Boone and then stuck out his tongue and circled it in a suggestive manner at her. She immediately contacted human resources through a hotline to file a complaint, but was fired on her next scheduled work day, the EEOC said.

In one of the first two lawsuits alleging discrimination based on sexual orientation filed by the EEOC, the agency’s Maryland federal court complaint alleged that the employer ran afoul of Title VII by unlawfully discriminating against Boone on the basis of her sex as well as retaliating against her when she complained about the harassment.

The employer elected to settle the suit, agreeing to pay Boone $7,200 in back pay and $175,000 in nonpecuniary compensatory damages. In addition, Pallet will provide her with a positive letter of reference and ensure that inquiries from potential employers will receive a positive reference concerning Boone.

For each of the two years the consent decree will be in effect, the employer will contribute $10,000 to the Human Rights Campaign Foundation to support the organization’s Workplace Equality Program.

The agency also obtained injunctive relief, with Pallet enjoined from engaging in sex discrimination by creating or maintaining a hostile work environment on the basis of sex as well as being subject to a prohibition on retaliating against any individual for asserting her or his rights under Title VII or otherwise engaging in protected activity.

The company’s equal employment opportunity policy and wallet cards with a toll-free number for the Speaking Up hotline will be distributed to all employees. Training was also a term of the consent decree, with Pallet promising to retain a subject matter expert on sexual orientation, gender identity, and transgender training to help develop a new program on LGBT workplace issues.

Once the EEOC has approved the training module, plant management, human resources, and all other employees will take part. Pallet will provide the agency with written documentation that the training occurred, including a list of participants and job titles.

The EEOC’s second case alleging discrimination on the basis of sexual orientation remains pending in Pennsylvania federal court. That dispute involves a supervisor at Scott Medical Health Center who allegedly used epithets to refer to a gay employee and made offensive comments about his sexuality and sex life.

To read the consent decree in EEOC v. Pallet Companies, click here.

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