The United States Department Labor recently issued a Notice of Proposed Rulemaking to enforce President Obama’s September 2015 Executive Order establishing paid sick leave for federal contractors. Now that we have been able to digest the lengthy proposed rules, we wanted to share some of our thoughts about the proposed rules with you.

What do the proposed rules say?

The proposed rules require certain federal government contractors and subcontractors to annually provide their employees with up to seven (7) days of paid sick leave. The leave can be utilized for the employee’s own illness, to attend a doctor’s appointment, to care for a sick family member, or for absences related to domestic violence, sexual assault, and stalking.

If finalized, when will the proposed rule go into effect?

If the proposed rule is not challenged, it is expected that the rules will apply to certain contracts entered into with the federal government on or after January 1, 2017.

Will this proposed rule impact every federal contractor?

No. It will only impact four types of contractual agreements: 1) procurement contracts for construction covered by the Davis-Bacon Act; 2) service contracts covered by the Service Contract Act; 3) concessions contracts for services on federal lands (i.e. the snack stand at a national park); and 4) contracts in connection with federal property or land rentals/leases. So, if your company manufactures widgets for the federal government, the proposed rule likely does not apply to you. However, if your company is constructing a building for the federal government, providing a service to the federal government, renting space from the federal government or vice versa, your company is probably covered by the new rule.

Does the proposed rule apply to all employees or just the employees servicing federal contracts?

The proposed rule only applies to persons engaged in performing work on a covered federal contract. The regulations provide that an employee who spends more than 20% of his/her working time performing services in connection with a covered federal contract is also covered under these rules. However, as a matter of practice, it may be difficult to explain to your workforce why some employees are entitled to paid sick leave and others are not.

Under the rule, will employees automatically be entitled to paid sick leave?

No. The rule requires contractors to allow employees to accrue at least one (1) hour of paid sick leave for every 30 hours worked on a covered federal contract. The proposed rule envisions that contractors will be able to limit the amount of paid sick leave to 56 hours each year but must permit employees to carry over accrued, unused paid sick leave from one year to the next. Even though rollover is required, a contractor can prevent an employee from accruing additional sick leave in excess of 56 total hours.

The proposed rule requires the contractor to provide employees with at least a monthly update on the amount of paid sick leave the employee has accrued but not used. Employees will be permitted to take sick leave in increments of no greater than 1 hour.

How does an employee request paid sick leave under the proposed rule?

The proposed rule requires that the employee request (orally or in writing) the ability to take leave at least 7 calendar days in advance of foreseeable leave and as soon as practicable in all other cases. Worried the employee is faking it? The proposed rules only allow a contractor to require certification from a physician or other provider if the absence is for three or more consecutive days.

Is this really a big deal?

Assuming the new rules apply to your business, probably! Most American business already provide some type of paid time off or paid sick leave to their employees—and most provide in excess of seven (7) days. The Department of Labor estimates that this new proposed rule will only impact a relatively small number of people—about 437,000 employees—who currently receive no paid sick leave. But, because the proposed rule provides specific instructions regarding accrual, use, requests for leave, and rollover, this rule could impact how many employers administer their PTO and/or sick leave policies. The provisions regarding domestic violence, sexual assault, and stalking are also unique.  If certain requirements are met, a contractor’s existing paid sick leave or PTO policy could meet the requirements of the rule.

How can I let the federal government know my feelings on the proposed rule?

Provide comments by clicking on this link. You have until April 12, 2016 to do so.

Interested in learning more? Check out this Department of Labor Fact Sheet, shoot us an email, or give us a call. As this proposed rule moves toward final implementation, we are happy to assist you in developing a sick leave and/or PTO policy that complies with the President’s Executive Order.

 

The Pennsylvania courts have delved into the “App Store,” addressing for the first time the use of smartphones and their applications in the context of illegal wiretapping.

Pennsylvania’s Wiretap Act forbids the “interception” of private conversations using an “electronic, mechanical, or other device,” unless all of the participants consent to that recording.  State laws like this one, as well as federal wiretapping laws, explain why you have often heard messages from telemarketers informing you that your call may be recorded “for quality assurance purposes.”  Such a warning, and your continued participation in the call, indicates that you have consented to the recording.  Without such consent, the recording of an otherwise private conversation constitutes illegal interception of a conversation, which is a felony criminal offense.

In 2014, in Commonwealth v. Spence, the Pennsylvania Supreme Court departed from this “dual consent” standard, finding that the Wiretap Act does not prohibit the surreptitious interception of private communications, so long as that interception is accomplished using a telephone rather than some other “device.”  In that case, a state trooper used an arrestee’s phone to call his drug dealer, then gave the phone back to the arrestee and instructed him to activate the speaker function.   The drug dealer incriminated himself during the phone call, and was arrested.  Challenging his arrest, the dealer argued that his private conversation with the arrestee had been illegally intercepted by the state trooper.  The court disagreed, finding that Pennsylvania’s General Assembly had deliberately excluded telephones from the definition of “electronic, mechanical, or other device.”  Because the state trooper had not used any “device” other than the telephone itself to record the call, the Wiretap Act did not forbid his actions.

In February, in Commonwealth v. Smith, the Pennsylvania Superior Court considered this exception for use of a “telephone” in light of “evolving technological advances of the modern day smartphone.”  In Commonwealth v. Smith, an employee was charged with interception of oral communications after he recorded a conversation he had with his former boss during a private meeting.  Without the boss’s knowledge or consent, the employee began recording the conversation with his iPhone’s “Voice Notes” app to capture statements regarding an ethics complaint.  After this recording was discovered during the employee’s wrongful termination lawsuit, the employee was charged with a felony violation of the Wiretap Act.

The Superior Court had to decide whether the Act’s exception for interception by use of a “telephone” encompassed today’s smartphone capabilities.  The court found the use of a smartphone app constituted the illegal use of an “electronic, mechanical, or other device” rather than the use of a “telephone” permitted by the exception to the wiretapping law.  The court ruled that, “[a]lthough [the employee] used an app on his smartphone, rather than a concealed tape recorder, to surreptitiously record his conversation with [his former boss], the result is the same. His actions constituted a violation of [the Wiretap Act].”

The case offers another example of the care that must be taken before recording a private conversation in Pennsylvania.  Without explicit consent from the participants, such recording is illegal.  This is true whether the conversation is captured on surveillance video, a tape recorder, or a smartphone app.

Devin Chwastyk is chair of the Privacy & Data Security group at McNees Wallace & Nurick.  He counsels organizations with regard to data security policies and in responding to data breaches.

There has been a lot of buzz recently about “ban the box” initiatives prohibiting employers from asking job applicants about their criminal records.  Proponents of these initiatives argue that employers should not consider an applicant’s old or minor criminal record to deny job opportunities.  On February 16, 2016, Pennsylvania took a different approach to this conundrum when Governor Wolf signed Senate Bill 166 into law.

The new law limits information that is released as part of employment-related criminal background checks in two ways.  First, it requires law enforcement agencies to remove records of arrests or the filing of criminal charges where at least three years have elapsed from the time of the arrest, no conviction occurred, and there are no pending proceedings seeking a conviction.  This requirement won’t have much of an impact on the hiring process; it only conceals an individual’s record of arrests that do not lead to conviction. Pennsylvania employers are already prohibited from rejecting an applicant because of an arrest without a conviction.

The second change implemented by the new law is farther-reaching.  Individuals with criminal records can now petition their county’s Court of Common Pleas to enter an order granting limited access to their criminal record.  In order to obtain such an order, a person must be either free from arrest for 10 years, or released from incarceration for 10 years, whichever occurred later.  The order will direct law enforcement agencies to withhold any information relating to second or third degree misdemeanor convictions and ungraded offenses that carry a prison term of less than two years.  It will be binding on all state and local law enforcement agencies in Pennsylvania.  Police agencies will still be able release information regarding misdemeanor convictions for witness intimidation, intimidation or obstruction in child abuse investigations, and information relating to sex offender registration status.  Felony convictions will also be included in criminal history reports, regardless of how long ago they occurred.

The implications for employers are obvious; even if a criminal background check is performed, some or all of an applicant’s criminal history may not be provided.  Under the new law, individuals will be able to prevent employers from gaining access to misdemeanor convictions relating to offenses such as DUI, drug possession, reckless endangerment, retail theft, and others. For example, a retailer who has a policy of rejecting applicants with a history of retail theft may now not be made aware of an applicant’s retail theft conviction if the applicant obtained an order granting limited access to his or her criminal record.

Unless prohibited from doing so by local ordinances, Pennsylvania employers may still continue to require job applicants to submit to criminal background checks.  Under the new law, however, they may not receive as much information about an applicant’s criminal history.

The federal government’s enforcement efforts relating to equal pay are intensifying after President Obama’s recent announcement that the Equal Employment Opportunity Commission (EEOC) will begin to collect expanded information on pay data and hours worked from employers with 100 or more employees completing the annual EEO-1 form.

As we have previously reported on this Blog, the Obama Administration has taken unprecedented action over the past two years to increase the number of requirements imposed upon companies with federal contracts or subcontracts. These requirements have ranged from increasing the minimum wage for employees of federal contractors/subcontractors to $10.10/hour (now $10.15), new protections for LGBT workers, mandatory paid sick leave, and new regulations regarding pay transparency. Experts expected that the Administration would announce a rule for collection of pay data from federal contractors but most were floored when the President announced on January 29, 2016 that all businesses with 100 or more employees would need to provide pay data to the EEOC and the Office of Federal Contract Compliance Programs (OFCCP).

The EEO-1 report is an annual survey completed by most federal contractors and all employers with at least 100 employees. The survey requires employers to provide data on employees by job category, sex, race, and ethnicity. The EEOC announced that beginning with the report due on September 30, 2017, the EEO-1 report will be revised to include expanded information on pay data and hours worked. Pay Data will also be collated based on gender, race, and ethnicity. The new Section of the form can be found here. Per the EEOC, once the information is gathered, the data will be used to investigate discrimination complaints, identify pay discrepancies among males/females and minorities/non-minorities across various industries and job classifications, and to discover discriminatory pay practices. The Commission also intends to aggregate and publish the data in order to allow employers to evaluate their own pay practices to ensure compliance.

Secretary of Labor Thomas E. Perez said that the government cannot ensure equal pay unless it has “the best, most comprehensive information about what people earn.” We sincerely doubt that this new burden will do much to combat pay discrimination and that the information will have no practical utility in combating pay disparities. Those familiar with the EEO-1 form know that employees are divided up into 10 incredibly broad job categories. Within these broad categories, the EEOC has identified 12 pay bands for purposes of government reporting.

Comparing the W-2 wages of employees based on these broad categories, without the opportunity to demonstrate legitimate, non-discriminatory reasons or any context for pay decisions, will surely raise a red flag with the EEOC and could result in unnecessary and unproductive investigations. For example, your company might place all engineers into the “Professionals” category. If you have a female engineer who has worked for your company for 5 weeks making $129,000/year and a male engineer who has worked for your company for 5 years making $163,000/year, the EEOC’s metric will surely indicate potential gender discrimination when it is clear that no such discrimination has occurred (because the male has 5 more years of experience than the female).

Continue Reading EEOC Announces Proposed Collection of Pay Data with EEO-1 Reports

To mark the 80th birthday of the National Labor Relations Act, the National Labor Relations Board apparently decided to make history in 2015. The Board did just that,  issuing several ground breaking decisions, and in the process addressed facts and circumstances that could not possibly have been contemplated in 1935. The ramifications of the Board’s agenda will certainly have both short and long term impact on employers and labor unions.

For an overview of major labor law developments in the past year, check out our McNees White Paper entitled The National Labor Relations Board 2015 Year in Review.

Employers are faced with an ever-increasing body of state and federal law governing a variety of labor and employment issues – from anti-discrimination laws, to medical leave and accommodation laws, to wage and hour laws, and much more. Do your supervisors and managers understand your organization’s legal obligations?  Do they understand that their actions may result in liability for not only the organization, but potentially themselves?  Do supervisors and managers understand how they can help minimize your organization’s risk of exposure to legal claims?

Periodic, targeted training can give your supervisors and managers the tools they need to understand the organization’s legal obligations and their obligations to the organization.  This will, in turn, help minimize your Company’s exposure to legal claims in the labor and employment arena.  Learn more about the benefits that proactive training programs can have for employers by viewing our brief podcast by clicking here.

For employers covered by the Fair Labor Standards Act (“FLSA”), the debate in Congress over the minimum wage has been a hot button issue. Interestingly, 29 states in addition to Washington D.C., have already enacted legislation that imposes a minimum wage rate that is higher than the minimum wage under existing federal law. Pennsylvania is one of only 14 states with a minimum wage matching the minimum established by federal law, which went into effect in July of 2009. In states without a minimum wage law or with a minimum wage lower than the federal minimum, the federal law controls and supersedes the state law for all employers covered by the federal law.

While the heated contest in Washington, D.C. continues over what constitutes a “living wage,” the last two years have shown steady growth in middle- and high-paying job markets as opposed to jobs paying minimum wage, according to the Department of Labor’s “2015 Round-Up: 10 Things to Know About the Labor Market.” For Dr. Heidi Shierholz, the Labor Department’s chief economist, “[t]his is a shift. In the first few years of the recovery, we were disproportionately adding low-wage jobs. But over the last two years, as the labor market has strengthened, the pattern of strong growth in very low-wage jobs has shifted to a pattern of strong growth in middle- and high-wage jobs.” Anecdotally, this trend, while not rooted in the federal government’s push to increase minimum wage requirements across the board, nonetheless illustrates that employers are finding value in paying higher wages.

Why pay higher wages to low-skilled positions if you don’t have to?

Although many smaller businesses shudder at the thought of a new law requiring significantly higher hourly wages, one of the tangible benefits to taking the plunge early and raising the minimum wage rate for low-skilled positions is the ability to phase in stepped raises over a period of time (provided the federal government and state legislatures don’t force your hand first!), giving your business the opportunity to adjust and budget accordingly rather than suddenly facing potentially significant jumps dictated by legislation.

Another plus recognized by businesses is that raising the minimum wage puts more cash in employees’ pockets, allowing those individuals to then increase their discretionary spending. This domino effect positively impacts businesses by increasing sales of products and services that were not previously affordable for the minimum wage earner.

From a workforce development perspective, raising the minimum wage can amount to a triple play for your organization. Raising wages often increases workforce morale, which can boost productivity and, in turn, boost your bottom line. Higher wages will also increase your company’s chances when competing for talent. The retail industry, for example, sees the labor pool for minimum wage-paying jobs shrinking, and national retailers such as WalMart, TJ Maxx, and Target have responded by raising their minimum wage to enhance recruitment efforts in competing for applicants. Finally, staying competitive with wages can enhance your retention of talent, eliminating the costly need to continuously seek, hire, orient, and train new employees to replace the ones who left for a job with better pay.

While the battle over the federal minimum wage rages on, both public and private employers across the nation have recognized the realities of the labor market and the tangible value of voluntarily raising the minimum wage paid to employees.  There are various ways your organization can orchestrate such changes to achieve new heights of quality and productivity along with recruitment and retention success, all positively impacting your organization’s performance.  Contact us with questions or for guidance, and we would be happy to work with you on your organizational development goals.

A recent federal court decision in Pennsylvania affirmed the risks incurred by employers if they treat brief rest breaks as unpaid for non-exempt employees. In Perez v. American Future Systems, Inc. d/b/a Progressive Business Publications, the U.S. Department of Labor filed suit against the employer, a Pennsylvania publishing company, and its principal owner under the FLSA, claiming that the employer unlawfully required non-exempt sales employees working in its call center to log off and not be paid for any break time taken by the employees during the work day. These unpaid breaks included rest and bathroom breaks that lasted only a few minutes on occasion.

The employer’s policy permitted employees to take “personal breaks at any time for any reason.” The policy went on to state that such personal break time is unpaid. The employer also required the sales employees to log off its computer system (and be off the clock) unless they were on a sales call, recording the results of the call, or engaged in training, administrative, or other work-related activities. In other words, any time spent not working during the work day was unpaid, regardless of the length of the time spent not actively working.

In a decision issued in this case last month, Judge Restrepo of the U.S. District Court of the Eastern District granted summary judgment in favor of the DOL, finding both the employer and its principal owner liable for unpaid wages under the FLSA and an equal amount in liquidated damages, in an amount to be determined but estimated by the DOL to be at least $1.75 million. The Court found persuasive and applied the following DOL regulation (29 C.F.R. § 785.18) to the facts of the case:

Rest periods of short duration, running from 5 minutes to about 20 minutes, are common in industry.  They promote the efficiency of the employee and are customarily paid for as working time.  They must be counted as hours worked.  Compensable time of rest periods may not be offset against other working time such as compensable waiting time or on-call time. 

The Court also rejected the employer’s argument that another DOL regulation regarding off-duty time (29 C.F.R. § 785.16) applied, finding that breaks of 20 minutes or less during the work day did not constitute unpaid “off-duty” time for FLSA purposes.

This decision emphasizes that breaks for non-exempt employees of 20 minutes or less should be treated as compensable hours worked for minimum wage and overtime compensation purposes under the FLSA.  Employers who try to save some costs on wages (or discourage employees from taking such breaks) by treating such breaks as unpaid face risk of FLSA liability in the event that this practice is challenged by an employee or the DOL.