President Obama to Issue Executive Order Mandating Paid Sick Leave for Federal Contractors

We recently learned that President Obama plans to issue an Executive Order mandating paid sick leave for employees of federal contractors and subcontractors. This comes as no surprise as the President has utilized his power over the contracting community in recent years to further his policy goals that have stalled in Congress (such as increasing the minimum wage of federal contractors to $10.10 per hour and prohibiting discrimination based on sexual orientation and gender identity). We took a look at the proposed Executive Order. Here are the key takeaways:

  • Contractors would be required to provide a minimum of 56 hours of paid sick leave per year and employees would be able to accrue at least 1 hour of paid sick time for every 30 hours worked. Any accrued paid sick time would carry over from year to year.
  • Paid sick leave could be used for an employee’s medical condition, obtaining care from a doctor, or caring for a child, parent, spouse, domestic partner, “or any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” While the Executive Order is still in draft form, it seems that one could arguably take paid sick leave to care for a close friend.
  • Paid sick leave could also be used for absences “resulting from domestic violence, sexual assault, or stalking, if the time absent from work is to seek medical attention, obtain counseling, seek relocation, seek assistance from a victim services organization, or take related legal action, including preparation for or participation in any related civil or criminal legal proceeding.”
  • Employers paying employees fringe benefits under the Service Contract Act and Davis-Bacon Act would not be able to receive credit toward prevailing wage or fringe benefit obligations by providing sick leave to satisfy the Executive Order.
  • Contractors would only be able to require certification from an employee (such as a doctor’s note) if 3 or more consecutive workdays were missed.
  • Here is one employer-friendly provision: contractor’s would have no obligation to pay out the value of unused sick time to employees upon separation of employment.
  • Detailed regulations would be issued by the Department of Labor no later than September 30, 2016.

Will this Order apply to your company? If you have federal service or construction contracts or subcontracts, the answer is almost definitely yes. However, (like with the Executive Order mandating a $10.10 minimum wage for employees of federal contractors), it does not appear that this Order is drafted to apply to manufacturers of materials and supplies.

We stress that the above anakysis is based off of a draft Executive Order obtained by The New York Times. While it seems likely that the President will soon issue an Executive Order, nothing is set in stone. The new regulations would go into effect on January 1, 2017, just 20 days before the end of President Obama’s second term.

We’ll keep you updated. Stay tuned. In the meantime, if you have concerns, please consider contacting your local Chamber of Commerce, Representative, or Senator.

Commonwealth Court Expands the Scope of Good Samaritan Amendment to the Workers’ Compensation Act

In 2003, the Pennsylvania General Assembly amended Section 601 of the Workers’ Compensation Act to expand the definition of the word “employee” to include employees who, while in the course and scope of their employment, provide aid to a person in order to (1) prevent the commission of a crime, (2) apprehend someone suspected of having committed a crime or (3) render emergency care, first aid or rescue at the scene of an emergency.  77 P.S. §1031(a)(10).  This amendment is commonly referred to as the Good Samaritan amendment and has historically been limited in its application – applying to volunteer emergency personnel only.  Recently, however, the Commonwealth Court rejected this limitation and effectively expanded the Good Samaritan amendment to apply to any employee who provides “Good Samaritan” type aid while in the course and scope of his or her employment.

In Pipeline Systems, Inc. v. WCAB (Pound), the Claimant was injured when he responded to a call for help – “man down. Jack fell.”  Claimant was assisting with the installation of pipelines and manholes at a borough sanitation plant.  Near the pipeline installation was a concrete pit.  On the day of the incident, Claimant and others responded to the call for help and found a borough employee lying at the bottom of the pit.  Claimant and others descended a ladder into the pit in an effort to help the man, but unfortunately discovered that the man had died in the fall.  While climbing out of the pit, Claimant lost consciousness and fell 20 feet, injuring his left leg, knee, foot, ribs, back and lung.  He sought workers’ compensation benefits, but the employer denied that he was entitled to benefits, arguing that Claimant went outside the course and scope of his employment when he decided to be a Good Samaritan.  Employer relied on the Supreme Court’s decision in Kmart Corp. v. WCAB (Fitzsimmons).   In Kmart Corp., the Supreme Court held that a Kmart employee was not in the course and scope of her employment when she was injured while rendering aid to a fellow employee, who was in the Kmart food court on her lunch break and was being attacked by her estranged boyfriend.  In litigation, the employer also argued that the Good Samaritan amendment to the Act did not apply to Claimant, as Claimant was not volunteer emergency personnel.

The Commonwealth Court, in Pipeline Systems, rejected the employer’s arguments, citing the Good Samaritan amendment, which was adopted three years after the Supreme Court decided the Kmart case.  The Court found that the amendment was not limited to volunteer emergency personnel and could apply to any employee who renders aid to another while in the course and scope of his/her employment.  In this case, the Court found that Claimant was within the course and scope of his employment when he was injured, because he was “in the midst of his work” when he responded to the call for help, climbed into the pit, and fell.

In light of this ruling, employers will be unable to deny benefits for injuries sustained by Good Samaritan employees (as defined in Section 601), unless they can show that the employee was outside the course and scope of employment when the Good Samaritan aid was provided.  Under most circumstances, this will be a difficult burden for the employer to meet.  Accordingly, it is our recommendation that employers consider adopting Good Samaritan policies.  Employees should be told to refrain from putting themselves or others at risk and instead follow protocols for contacting emergency personnel and reporting the emergency to the appropriate person within the company.  Having such a policy in place may not preclude an employee from receiving benefits if he or she violates the policy, provides aid and is injured but it could dissuade employees from intervening in dangerous situations that they are not trained to deal with, thereby helping to reduce the possibility of an injury being suffered.  Additionally, under the right set of facts, the employee could be disciplined for violating a positive work rule, which may preclude him or her from receiving workers’ compensation wage loss benefits.

Next on DOL’s Agenda: Mobile Device Use Outside Work Hours

It appears that the U.S. Department of Labor intends to remain busy through the rest of the summer.  After releasing in June a Notice of Proposed Rulemaking seeking public comment on proposed changes to the Fair Labor Standards Act’s  “white collar” overtime exemption regulations, the DOL now has indicated that it will formally seek public input on the thorny issue of mobile device use by non-exempt employees outside their working hours.

The now seemingly ubiquitous use of mobile devices like smartphones and tablets has changed our culture and impacted our work in many ways.  Many employees, including both exempt and non-exempt employees, now have remote access to work-related e-mail, voice-mail, text messages, and telephone calls.  This 24/7 access creates the risk of unpaid overtime for employers if they have non-exempt employees performing work in the form of e-mail, telephone calls, and texting “off-the-clock” outside their normal working hours.  For FLSA purposes, employers are required to count such time for compensation purposes if they “knew or should have known” the non-exempt employees were engaged in such work-related activities, regardless of whether they actually asked the employees to perform such tasks.  Looking the other way can create real liability, and this issue may become the next wave of wage and hour class action lawsuits.

While courts and the DOL recognize that employers are not liable under the FLSA for “de minimis” uncompensated work time, there exists little guidance on what constitutes “de minimis” for these purposes.  Because the time spent to check and respond to e-mail on a mobile device can take as little as a few seconds, it may appear to be de minimis.  However, what if the employee is engaged in such activities five times an hour for hours on end?  The law is unclear on where the line is drawn between de minimis and compensable hours worked, and this lack of clarity is especially problematic when addressing the subject of mobile device use outside work hours by non-exempt employees.

(To make matters worse, Pennsylvania courts have not even recognized a de minimis exception under the Pennsylvania Minimum Wage Act.  Thus, liability for unpaid overtime may exist in Pennsylvania even if employees spend a very small amount of time accessing work-related materials outside of work hours.)

A DOL spokesperson confirmed that the DOL intends to issue a request for public information on this subject by the end of August, setting the stage for possible new regulations sometime in 2016.

In the meantime, the risk of liability is real for employers who have a sizable number of non-exempt employees with remote off-hours access to work-related e-mail, text messages, and telephone calls.  Such employers should consider the following:

  1. Determine whether and to what extent the operational benefits offered by giving off-hours access to work e-mail and telephone systems by non-exempt employees exceed the potential costs of class-based claims for unpaid overtime.  This practice is not risk-free, and employers should give such access to employees only where the benefits exceed the potential risks.  This analysis may result in reducing the number of non-exempt employees who have such access, which would help avoid the issue altogether.  Even if it is determined that certain non-exempt employees need remote access at certain times (such as when on-call), the employer may want to consider blocking remote access by these employees at all other times, to help reduce the potential risks.
  2. Have in place a policy for non-exempt employees that addresses working remotely and outside of normal work hours.  The policy should require employees to report all time spent working and provide a procedure to do so.  Also, to the best extent possible, the policy should confirm for employees when they may (and may not) access their devices or otherwise work remotely.  The employer then must enforce the policy.
  3. Continue to monitor legal developments in this area, which hopefully will provide greater clarity regarding what is and isn’t compensable time worked.

DOL Reminds Businesses: Make Sure Your Contractors And Employees Are Properly Classified!

The U.S. Department of Labor Wage and Hour Division recently released new guidance for businesses in an attempt to provide clarity and notice to organizations that may have individuals performing services for them who are improperly classified as independent contractors. The unsurprising summary? The DOL believes that the vast majority of such individuals performing services for employers are “employees” under the Fair Labor Standards Act (FLSA), and the DOL will pursue employers who it believes have misclassified “employees” by labeling them as “contractors.”

Per the guidance, the key question to ask when determining whether somebody is an employee under the FLSA is whether the individual is truly in business for himself/herself (a contractor) or if he/she is dependent upon the employer for work (an employee). Merely calling someone a “contractor,” having the individual sign an independent contractor agreement, and/or giving the individual a Form 1099 does not make the individual an independent contractor. In order to actually determine whether someone is an independent contractor or an employee under the FLSA, courts use a multi-factor “economic reality” test. While different courts have applied different permutations of these factors, courts generally ask:

  • Are the services being performed an integral part of the employer’s business? If you are operating a restaurant, your cooks and wait staff are going to be employees. The person who comes and fixes the oven a few times a year? That person probably may be properly classified as an independent contractor. DOL warns that those teleworking at home or utilizing a flexible work schedule can still be “integral” to the employer’s business and thus employees.
  • Does the individual’s managerial skill affect his/her opportunity for profit or loss? Can the individual lose money by performing services for you? If so, there is a good chance they are a contractor. Here courts will consider whether the individual can make decisions that impact how much profit or loss he/she realizes.
  • How does the individual’s relative investment compare to the employer’s investment? If the individual has not made any type of investment in the work (such as providing his/her own tools or workspace), then the individual is likely an employee. But just because individuals provide their own tools does not automatically make them an independent contractor.
  • Do the services performed require special skill or initiative? Does the individual demonstrate managerial and business skills indicative of an independent contractor? Does the individual market his/her own services, determine when to order materials, and determine when to fulfill orders or requests? If yes, the individual more likely could be properly classified as an independent contractor.
  • Is the relationship between the individual and the employer permanent or indefinite? Is the individual performing services on one small project or does the individual perform services continuously and repeatedly for the same employer? Does the relationship continue indefinitely until one party decides to end it? If yes, the individual is likely an employee. Part-time workers and temporary workers are still employees if hiring such individuals is an operational characteristic intrinsic to a particular industry.
  • What is the nature and degree of the employer’s control? Does the employer control the hours of work, manner of dress or how the individual performs a particular job or service?

In considering these questions, each factor is analyzed in relation to one another and no single factor is determinative. The factors should not be looked at as a “checklist” and are to be considered in their totality.

Properly classified independent contractors are typically not entitled to minimum wage, overtime, benefits, unemployment compensation, or workers’ compensation. We expect that the Plaintiff’s Bar will attempt to use the DOL memo as a basis to file more lawsuits on behalf of individuals allegedly improperly classified as “contractors” in an effort to recover unpaid wages and benefits. Keep in mind that the DOL believes that almost all those performing services for a business are employees rather than contractors, so in the event that the DOL comes knocking, you already know how they will view the relationship.

What can you do to ensure your independent contractors are truly “contractors” in the eyes of the law? We recommend that you audit your practices by considering the relationship you have with all contractors and reviewing the duties of those classified as such. Attorneys in the McNees Labor & Employment Group regularly conduct audits to make sure that such individuals are properly classified and that employers are complying with the requirements of the FLSA and applicable state wage and hour laws.