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.

When it comes to using temporary employees, the set-up is all too familiar.  An employer engages a staffing firm, which hires, pays, and places temps to meet the employer’s needs.  The employer’s costs are fixed and payable to the staffing firm, and all of the liability risks that are part and parcel to the employment relationship remain with the staffing firm.  Or do they?

The Third Circuit’s recent decision in Faush v. Tuesday Morning, Inc. suggests otherwise.  In that case, Tuesday Morning, a retail store, engaged a staffing firm to provide workers to unload shipments of merchandise, stock store shelves, and set up product displays.  Upon arriving to begin work, Matthew Faush, an African American, and two other minority temporary workers, were allegedly ordered to work in the back of the store cleaning up trash.  When Mr. Faush complained about the assignment, he was purportedly told by the store manager that the minority temps were not allowed to work the floor due to concerns about theft.  Mr. Faush was allegedly terminated shortly after the exchange.

Mr. Faush filed a complaint against Tuesday Morning, alleging that he was discharged and discriminated against on the basis of his race, in violation of Title VII and the Pennsylvania Human Rights Act.  Pointing to its engagement of a staffing firm, the company denied that it was liable to Faush because he was not an employee.  The district court agreed and granted summary judgment, finding that Tuesday Morning was not Mr. Faush’s employer, and as such, could not be liable under the discrimination statutes.  Mr. Faush appealed to the Third Circuit.

The Third Circuit examined the following factors to determine whether Tuesday Morning could be held liable to Mr. Faush as a “joint” employer:  the skill required to do the job, the location of the work, the right of the company to assign additional projects, the duration of the relationship, the method of payment and the provision of employee benefits.  The Third Circuit reversed the District Court, holding that because the company indirectly paid Faush’s wages, had the power to demand replacement workers, gave assignments and directly supervised temporary workers, provided all necessary job-specific training and equipment, and dictated the number of hours worked, a reasonable jury could find that Tuesday Morning was Faush’s employer (and a joint employer along with the temporary agency).  In other words, Tuesday Morning could be liable for discrimination against Mr. Faush.

So what does this all mean for Pennsylvania employers?  First, the fact that a worker is provided through a staffing firm isn’t a “get out of jail free card” to easily defeat a discrimination claim.  Rather, the precise nature of the relationship between the employer, the temp, and the staffing agency will be examined to determine if a joint employer relationship exists.  These questions are fact issues, and it is therefore unlikely that an employer can win such a case on summary judgment.  Second, employers that use staffing agencies should carefully review their contracts and ensure that those agreements provide protection from liability.  Including adequate indemnity language will help to ensure that the financial impact of any claim filed by a temporary employee is reduced or eliminated altogether, even if joint employer liability is established.

Recently, an agricultural company faced more than $100,000 in fines after U.S. Immigration and Customs Enforcement (ICE) auditors identified more than 100 substantive violations – each carrying a $1,100 maximum penalty.

Not only did the fine impact the company’s bottom line, but the violations created the likelihood of more stringent oversight from the government and the possibility of steeper fines for future errors pertaining to an employee’s work status.

The federal government has again begun to crack down on companies that employ undocumented workers, and the financial consequences for businesses can be catastrophic.

Employees are required to confirm workers’ eligibility for employment by completing Form I-9, but there are ways undocumented workers can circumvent this process, including fraud and identity theft. Businesses that rely on subcontractors, such as employment agencies, face even greater risks because they often cannot independently review and confirm each employee’s eligibility. Nondiscrimination laws can also make it difficult for businesses to dig too deeply into an employee’s status when a potential I-9 discrepancy is identified.

The federal E-Verify program was created in 1997 to help businesses determine employment eligibility.  Many business owners believe participating in E-Verify offers them protection against prosecution, but that is not always the case. E-verify creates a rebuttable presumption that you have not knowingly violated the law.

Using this system essentially enters a company into a contract with the federal government, and a business must be aware of all of its responsibilities under this agreement. A business that fails to meet program requirements is just as susceptible to corrective action as a company that elects not to use the system.

Here are three ways you can limit the threat to your company from the hiring of undocumented workers:

1. Conduct regular I-9 reviews

Many businesses fail to review I-9 forms until an ICE audit is scheduled. At that point, an assessment is too late. Businesses should establish an ongoing internal review plan to be conducted at regular intervals. Larger companies that might have trouble reviewing all I-9 forms each year can still show a reasonable commitment by creating a policy to review 10 to 15 percent of forms annually.

In addition to identifying potential mismatches, a regular review process might be helpful in demonstrating to federal investigators that the company is taking meaningful steps to prevent violations.

2. Establish a policy to terminate employees who misrepresent employment status

A written policy calling for the termination of employees who are not honest during the hiring process also signals a good-faith effort to comply with the law. A lack of a clear policy can create the appearance that a business is complicit in employing undocumented workers, which will lead to larger fines and increased scrutiny.

It is crucial for employers to implement the policy consistently to minimize the risk of violating anti-discrimination laws. Navigating this legal gray area might require the advice of an attorney who understands the complexities of immigration and employment law.

3. Include an indemnification clause in labor contracts

Temporary employment agencies are responsible for determining a person’s eligibility for employment, but businesses that use their services can be held financially responsible and may even be considered joint employers, if the employment agency doesn’t perform its due diligence. However, a business can take steps to protect itself by including a clause in the contract that holds a contractor financially responsible for any damages resulting from the co-employment of an undocumented worker.