This post was co-authored by Bruce D. Bagley, a Member in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.

As Americans across the country anxiously stare at their National Collegiate Athletic Association (NCAA) Division I Men’s Basketball brackets, the Northwestern University Wildcats are dominating the headlines in both the sports and labor law communities. In what many sports and legal commentators are calling a game-changing decision (pun intended), on Wednesday, March 26, the Regional Director for the Chicago Regional Office of the National Labor Relations Board (NLRB) ruled that certain players on the Northwestern University football team could seek to form a union. Perhaps more importantly, the Decision is quite expansive in its interpretation of the term "employee."

At the center of his Decision, the Regional Director found that scholarship recipients are actually "employees" of the University, as the term "employee" is defined in the National Labor Relations Act (NLRA). According to the Decision, "an employee is a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment." The Regional Director reasoned that Northwestern’s scholarship football players are employees because they sign a "tender" before each scholarship period, are granted scholarships (payment) in exchange for their services (playing football), are under the strict control of the University’s athletic department, and perform valuable services because they generated over $235 million for the school’s football program over a ten year period. The Director further argued that these scholarship football players are "paid" over $76,000 per year, in the form of tuition, fees, room, board, and books – and that this scholarship payment is directly tied to their performance "at work" on the football field. Notably, the Director concluded that non-scholarship and "walk-on" players do not meet the definition of "employee," because they receive no compensation for the services they perform.

So what happens next? Northwestern has indicated its intention to file a Request for Review of the Regional Director’s Decision with the full NLRB in Washington, D.C. If the Board grants the Request for Review, it will consider further briefings by the parties, and possibly oral argument. If the Regional Director’s Decision is upheld, the NLRB’s Chicago Office will conduct a secret ballot election in a voting unit consisting of "all football players receiving football grant-in-aid scholarships and not having exhausted playing eligibility" employed by Northwestern University.

If the Northwestern football players do eventually vote to form a union, this will give them the right to collectively bargain with their "employer", Northwestern University. There is no guarantee that they will receive additional payment or benefits at all – they could even conceivably find themselves with fewer benefits depending on the terms of an eventual collective bargaining agreement. And there are a number of potential downsides for the players – if the money they receive in scholarships is "income", the IRS could very well demand that players pay an income tax on the scholarship funds deemed payment for their athletic services. Note that, according to various press accounts, the players do not claim they wish to receive any additional compensation (at this point). As of now, they have indicated their primary concern is securing the coverage of medical expenses for current and former athletes with sports-related injuries.

The Regional Director’s Decision directly impacts only Northwestern University, although certainly players at other schools may be pursuing similar actions. Remember that the NLRB does not have jurisdiction over public universities such as Penn State, Ohio State, etc. Such state-related institutions would be under the jurisdiction of state labor relations boards. Remember, too, that the Northwestern Decision is fact-specific, and that other Division I football programs could be treated differently by the NLRB.

As expected, the NCAA and many of the major college sports conferences strongly disagree with the Decision. In a statement released shortly after the Decision was issued, the NCAA stated "We frequently hear from student-athletes, across all sports, that they participate to enhance their overall college experience and for the love of their sport, not to be paid." The NLRB concluded that scholarship football players were not "primarily students" because they spend most of their time participating in athletic endeavors. This is certainly an expansive reading of the statutory term "employee." Only time will tell if the federal appellate courts, including eventually the U.S. Supreme Court, will agree that federal labor law was intended to grant collective bargaining rights to student athletes, albeit ones that receive scholarships and whose college activities may indeed be tightly controlled by their coaches.
 

Beginning today, March 24, 2014, federal contractors and subcontractors have a number of new responsibilities. Contractors already have the existing obligation to collect demographic data regarding race and gender and take affirmative action to recruit, hire, and retain qualified minorities, women, individuals with disabilities, and protected veterans. Now contractors must take additional steps to recruit and hire individuals with disabilities and protected veterans, including the collection of data related to the status of applicants and employees as protected veterans and individuals with disabilities.

Specifically, federal contractors and subcontractors are required to:
• Invite applicants and employees to self-identify as individuals with disabilities or protected veterans;
• Track and analyze data related to applicants and employees who are individuals with disabilities and/or protected veterans;
• Notify subcontractors and vendors (and labor unions, if applicable) of their Affirmative Action requirements;
• Conduct written effectiveness evaluations to determine whether efforts to reach out to individuals with disabilities and protected veterans have been successful;
• Establish a 7% utilization goal for individuals with disabilities to measure the efficacy of affirmative action steps;
• Establish a hiring benchmark for protected veterans or adopt the 7.2% national benchmark to measure the efficacy of affirmative action steps; and
• much more!

Additionally, for the first time ever, construction contractors will be required to have written affirmative action plans for individuals with disabilities and protected veterans. While some in the construction industry were hopeful that the new regulations impacting individuals with disabilities would not apply to them, on Friday, the United States District Court for the District of Columbia rejected the Associated Builders and Contractors, Inc. challenge to the validity of the regulations. The Court concluded that the new rules are valid and the Office of Federal Contract Compliance Programs (OFCCP) has broad authority to interpret what it means to "take affirmative action."

Between these new rules and President Obama’s Executive Order to raise the minimum wage for employees of federal contractors, federal contractors are facing an onslaught of new regulatory requirements.

Stay tuned to the blog for more updates on issues that impact federal contractors, subcontractors, and all employers. Please feel free to contact me, Schaun Henry or any other McNees Labor & Employment attorney if you have any questions about how these new regulations may impact your business.

This post was contributed by Adam R. Long, a Member in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.

Yesterday, President Obama signed a Presidential Memorandum directing the Secretary of Labor to "modernize and streamline" the existing Fair Labor Standards Act (FLSA) overtime regulations, specifically with respect to the "white collar" exemptions. The FLSA’s white collar exemptions apply to covered professional, administrative, and professional employees. Last updated in 2004, the FLSA regulations on the white collar exemptions generally require that an employee receive a guaranteed minimum salary of at least $455 per week and meet one of the duties tests to qualify for an exemption to the FLSA’s minimum wage and overtime compensation requirements.

The Presidential Memorandum does not change the legal requirements currently applicable to employers. Instead, it merely directs the Department of Labor to "propose revisions" to the existing FLSA regulations. Any changes would need to go through a notice and comment period and the full rule-making process before taking effect. This process can take numerous months, if not years, to complete.

Until the Department of Labor issues proposed revisions to the existing FLSA regulations, we will not know how and to what extent the white collar exemptions may change. That said, comments made by the White House give some guidance on what we might expect. The Fact Sheet issued by the White House yesterday specifically references the $455 minimum weekly salary requirement. We can expect that any proposed changes would include a significant increase to the minimum salary threshold to qualify for these exemptions. Also, the Fact Sheet mentions convenience store managers, fast food shift supervisors, and office workers as examples of the types of workers the changes would address. As such, the proposed changes likely will reduce the applicability of these exemptions to lower-level supervisors and managers and office administrators. Finally, the Memorandum states that "[b]ecause these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage." To make millions of currently exempt workers eligible for overtime compensation, the changes to the regulations will need to be broad and significant.

It is important to note that the Presidential Memorandum, White House comments, and resulting media attention have made no changes to the current law or obligations on employers. However, we can now expect proposed regulations sometime during the remainder of the Obama administration that will propose significant changes to the current FLSA white collar exemptions. Stay tuned for more updates.
 

Recently, McNees issued its annual White Paper: The National Labor Relations Board Year in Review.  Please click here to view the full White Paper. 

From the looks of it, 2013 was a very rough year for the National Labor Relations Board! Last year, we reported that the National Labor Relations Board would face some serious legal battles in 2013. Some of those battles are over, and there are clear winners and losers. Many more battles are still being waged. All the while, the Board continued to pursue its heavily pro-union agenda.

To continue reading, click here. 

 

You may recall that we reported that United States Senator Bob Casey (D-PA) introduced the Pregnant Workers Fairness Act, which would adopt the reasonable accommodation framework of the Americans with Disabilities Act for pregnant workers and supplement the Pregnancy Discrimination Act.  Although the Pregnant Workers Fairness Act appears to have stalled in Washington (for now), other pregnancy accommodation laws are popping up.  Both New Jersey and the City of Philadelphia have recently passed such legislation.

On January 21, 2014, the New Jersey Pregnant Worker Fairness Act became law. The Act applies to essentially all employers in New Jersey. The Act provides additional protections for women working in New Jersey who may be affected by pregnancy, childbirth or related medical conditions. The Act adds pregnancy to the traits protected by the New Jersey Law Against Discrimination.

In addition, the Act requires employers to make reasonable accommodations for pregnant employees when it knows or should know that such accommodations are necessary, unless the proposed accommodation would cause an “undue hardship.’’  Potential accommodations may include restroom breaks, permission to carry a water bottle, periodic rest, assistance with manual labor, job restructuring, modified work schedules, or a temporary transfer to work that is less physically demanding or hazardous.

On January 31, 2014 the City of Philadelphia amended its Fair Practices Ordinance: Protections Against Unlawful Discrimination, to require that employers provide reasonable workplace accommodations for employees who have “needs related to pregnancy, childbirth or a related medical condition.”   As with the New Jersey law, the amended Ordinance prohibits employment discrimination on the basis of pregnancy, childbirth and related medical conditions.

The amended Ordinance also provides that an employer must provide reasonable accommodations that may be necessary due to to pregnancy, childbirth or a related medical condition.   The Ordinance states that a reasonable accommodation is an accommodation that will allow the employee to perform the essential functions of her job, unless the accommodation would pose an undue hardship.  Such accommodations could include restroom breaks, periodic rest for those who stand for long periods of time, assistance with manual labor, a leave of absence, reassignment and job restructuring.

Please note that the amended Ordinance also requires that employers in Philadelphia post a notice in conspicuous places, notifying employees of these rights.

Please make sure that you are aware of any state or local laws regarding the accommodation of issues related to pregnancy and childbirth in the areas in which you operate.  Also be on the look out for any additional workplace posting requirements that may be required.

This post was contributed by Kelley E. Kaufman, Esq., an Associate in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.

Yesterday, the Obama administration announced a partial delay in the effective date of one of the key requirements of the Patient Protection and Affordable Care Act (“PPACA”) – the employer “shared responsibility” requirements (a.k.a. “pay or play”). This marks the second delay of the effective date for these requirements, which was previously extended from January 1, 2014 to January 1, 2015. The shared responsibility requirements apply to "large employers" – i.e., those employers with 50 or more full-time equivalent employees, where "full-time" includes those employees working an average of 30 hours or more per week. Under the shared responsibility requirements, beginning January 1, 2015, large employers will be required to make a PPACA-compliant offer of health insurance coverage to all "full-time" employees and their dependents. Failure to comply with the shared responsibility requirements can result in significant penalties for employers.

Most notably, the final regulations, which will be formally published by the U.S. Department of the Treasury (the "Department") this week, grant an additional reprieve to certain mid-sized employers with 50 to 99 full-time equivalent employees. Those mid-sized employers will not be required to comply with the shared responsibility requirement until 2016, while employers with 100 full-time equivalent employees are generally required to comply by January 1, 2015. The final regulations contain many additional clarifications on the implementation of the shared responsibility rules, including transitional rules intended to help phase-in and assist employers with compliance, as well as clarifications on the application of the rules to various employee categories, such as volunteers, educational employees, adjunct faculty and seasonal employees. The Department’s Fact Sheet, summarizing key points of the final regulations, can be found here.

Stay tuned to this blog for a more detailed summary of the final regulations.

Questions regarding the shared responsibility requirements or other specific PPACA compliance issues may be addressed to any member of McNees Wallace & Nurick’s Labor and Employment Law and Employee Benefits Practice Groups.
 

This post was contributed by Adam R. Long, Esq., a Member in McNees Wallace & Nurick LLC’s Labor & Employment Practice Group in Harrisburg, Pennsylvania.

Most HR professionals in the private sector are aware of the risks presented by non-compliance with the overtime and minimum wage requirements of the federal Fair Labor Standards Act ("FLSA") and its state law companion, the Pennsylvania Minimum Wage Act ("PMWA"). Since 1974, the FLSA’s requirements have applied to virtually all state and local government employees and most federal employees, too.

A recent decision in the case of Morrow v. County of Montgomery illustrates this point. In Morrow, a class of correctional officers at the Montgomery County Correctional Facility filed a class action lawsuit against the County in the United States District Court for the Eastern District of Pennsylvania, alleging that they were not compensated for time spent working before and after their scheduled shifts. The plaintiffs in Morrow sought damages under both the FLSA and PMWA. On January 31, 2014, the Court issued a decision that (1) dismissed the plaintiffs’ PMWA claims, but (2) granted the plaintiffs’ motion to conditionally certify a collective action based on their claims under the FLSA. After noting that no court has directly ruled on the applicability of the PMWA to government entities, the Court concluded that government entities were not covered by the PMWA and dismissed the plaintiffs’ state law claims. However, the Court also held that plaintiffs met their initial burden of showing that the proposed class members were similarly situated and conditionally certified the class for purposes of an FLSA collective action. Thus, the class-based FLSA claims for unpaid overtime will move forward.

The Court’s holding in Morrow that the PMWA does not apply to government entities is certainly useful for public sector employers. That said, the remainder of the decision confirmed that, with a few limited exceptions, the FLSA applies to government entities in the same manner that it applies to private sector employers. Public sector employers face the same risks and threats of class-based litigation under the FLSA that have vexed the private sector for years. As such, it is important for all employers, public and private alike, to work to ensure compliance with the FLSA.
 

This post was contributed by Joseph S. Sileo, an Attorney in McNees Wallace & Nurick’s Labor & Employment Practice Group in Scranton, Pennsylvania.

The Third Circuit Court of Appeals recently issued a decision holding that an employer’s termination of an employee for violating a very broad and restrictive return to work agreement (RWA), which prohibited the employee from all drug and alcohol use during both work and personal time, was lawful.

In that case, Ostrowski v. Con-Way Freight, Inc., the employer maintained strict drug and alcohol screening policies, in compliance with federal motor carrier safety regulations issued by the Department of Labor, as well as an Employee Assistance Program. The employee, a Driver Sales Representative, requested a leave of absence under the Family and Medical Leave Act (FMLA) in order to voluntarily participate in a treatment program for alcoholism, which the employer approved. Following completion of his treatment program, the employee returned to work subject to a strict RWA by which he agreed to remain "free of drugs and alcohol (on company time as well as off company time) for the duration of [his] employment." Within only a month of his return to work, the employee relapsed and resumed drinking alcohol, leading him to once again admit himself into a treatment program. At that time, the employer terminated the employee for violating the RWA.

The employee filed a lawsuit in federal court claiming that his termination violated the Americans with Disabilities Act (ADA), the Pennsylvania Human Relations Act (PHRA) and the FMLA. More specifically, the employee alleged claims of disability discrimination, retaliation and failure to accommodate his disability under the ADA and PHRA and claims of retaliation, interference and unlawful denial of FMLA-protected leave. The District Court granted summary judgment in favor of the employer on all claims; the employee then appealed to the Third Circuit Court of Appeals.

In support of his ADA and PHRA claims, the employee argued that his violation of the RWA could not serve as a legitimate basis for termination because the RWA itself ran afoul of the ADA’s prohibition against applying employment qualification standards, tests or other selection criteria that screen out or tend to screen out an individual with a disability. In rejecting this argument, the Third Circuit agreed with court decisions in other jurisdictions, concluding that a return-to-work agreement which imposes employment conditions different from those applied to other employees does not necessarily violate the ADA. While acknowledging that the RWA did impose standards different than those applied to the employee’s co-workers, the court observed a nuanced but critical distinction that the difference in treatment resulted from the terms of the agreement rather than disability discrimination.

In addition, the court noted that the employee failed to demonstrate how the RWA subjected him to discrimination based on his alleged disability (alcoholism) as opposed to regulating his conduct (drinking alcohol). In this regard, the court reasoned that the RWA did not restrict or preclude individuals who may suffer from alcoholism from working for the employer, but simply prohibited an employee subject to its terms from drinking alcohol.

The court concluded, therefore, that because the RWA was not invalid under the ADA, the employee’s violation of its terms was a legitimate, non-discriminatory reason for the employer to terminate his employment. Moreover, because the employee failed to produce any evidence that his termination based on violation of the RWA was a pretext for disability discrimination, summary judgment dismissal of his ADA and PHRA claims was warranted.

The court also rejected the employee’s FMLA claims for similar reasons. More specifically, the court concluded that there was no evidence to suggest that the employee was terminated for requesting medical leave or for any reason other than his violation of the RWA. The court noted that there was no evidence to suggest that the employee would not have been terminated for violating the RWA if he had not requested FMLA leave. Moreover, the court rejected the employee’s argument that the RWA’s strict no alcohol requirement violated the FMLA because it had the effect of chilling and discouraging his right to request benefits and protections under the FMLA. The Court noted that the employer requested the RWA for a legitimate business reason, namely, pursuant to its obligations under DOT regulations to maintain strict drug and alcohol policies for covered employees. In our opinion, an employer that is not directly subject to DOT regulations presumably would also have the ability to impose a reasonable return to work agreement following an employee’s leave for alcohol or drug treatment, particularly if there are clear and established drug and alcohol policies in place prior to requiring such an agreement.

This decision was issued by the Third Circuit as a non-precedential (non-binding) decision. Nonetheless, the decision provides valuable insight and serves as a good indicator of how the Third Court and district courts within our jurisdiction will rule in future cases on this same issue. This case illustrates that carefully drafted and tailored return to work agreements can be used by employers to manage problematic employee conduct. Such conduct, if left unattended, can turn into lengthy and recurring ordeals that become costly, frustrating and drain valuable company resources. A suitable return to work agreement may be a very good option in certain cases. Beware, however, that not all return to work agreements are created equal. It is advisable, therefore, that counsel should be consulted in advance to ensure that any return to work agreement under consideration is properly drafted to protect the employer’s interests and legally compliant to the fullest extent possible.
 

By now, most federal contractors are aware of the new regulations that go into effect on March 24 requiring federal contractors and subcontractors to take affirmative action to recruit, hire, promote, and retain protected veterans and individuals with disabilities

What many contractors may not realize is that as of July 1, 2013, they also became covered by federal whistleblower regulations. The National Defense Authorization Act for Fiscal Year 2013 created a pilot program mandating that all employees working for contractors, grantees, subcontractors, and subgrantees be protected by federal whistleblower law for all federal grants and contracts entered into after July 1, 2013.

Essentially, contractors and subcontractors may not discharge, demote, or otherwise discriminate against an employee as a reprisal for disclosing to a government agent or body information about behavior that the employee reasonably believes constitutes:

• Gross mismanagement of a federal contract or grant;
• A gross waste of federal funds;
• An abuse of authority related to federal funds;
• A substantial and specific danger to public health or safety; or
• A violation of law, rule or regulation.

Contractors are required to inform their employees, in writing, of the rights and remedies provided under the whistleblower laws and that employees are subject to whistleblower rights and remedies. This four-year pilot program applies to all grants, contracts, subgrants, and subcontracts issued through January 1, 2017.

In order to be protected under the law, the employee must make a report to a Member of Congress, a representative of a Congressional Committee, an Inspector General, the Government Accountability Office, a federal employee responsible for contract or grant oversight at the relevant agency, an authorized official of the Department of Justice or other law enforcement agency, a court or grand jury, or a management official or other employee of the contractor, subcontractor, or grantee who has the responsibility to investigate discover, or address misconduct.

Employers with grants, contracts, and subcontracts from the federal government should take the time to make sure that their employees know they may report suspected fraud, waste, or abuse to the government without fear of retaliation by their employers.
 

In last night’s State of the Union Address, President Barack Obama announced that he planned to sign an Executive Order requiring that employees of federal contractors be paid at least a minimum wage of $10.10 per hour. This represents a $2.85 increase over the current federal and Pennsylvania minimum wage of $7.25 per hour. Specifically, the President said, "In the coming weeks I will issue an executive order requiring federal contractors to pay their federally-funded employees a fair wage of at least $10.10 an hour because if you cook our troops’ meals or wash their dishes, you should not have to live in poverty."

President Obama’s Executive Order will only impact new and renewed contracts so there will be no immediate impact on federal contractors. According to a report from the Associated Press, more than 90% of federal contractors already make over $10.10 and the Executive Order will only impact about 200,000 workers. It is expected that the President will use this Executive Order in an effort to goad Congress into raising the minimum wage for all American workers to $10.10 over the next three years and then index it to inflation thereafter. The President told Congress that raising the minimum wage for all will "give businesses customers . . . more money to spend. It does not involve any new bureaucratic program. So join the rest of the country. Say yes. Give America a raise."

14 states raised their minimum wage effective January 1, 2014. While Pennsylvania did not raise the minimum wage, neighboring Ohio raised the minimum wage to $7.95 per hour and New Jersey raised the minimum wage to $8.25 per hour. California will raise its minimum wage to $9.00 per hour in July and is scheduled to raise it to $10.00 per hour in January 2016. Washington has the highest state minimum wage at $9.32 per hour and San Francisco comes in with the highest minimum wage in the country at a whopping $10.74.

A recent Associated Press poll found that 55% of Americans support an increase in the minimum wage, 21% oppose it, and 23% are neutral.

Federal contractors and subcontractors should be aware of these new requirements and prepare and price their bids accordingly as they enter into and renew existing contracts with the federal government. All employers should follow the news closely in the coming months as Congress considers increases to the minimum wage nationwide.

In addition to the upcoming minimum wage changes, many federal contractors and subcontractors are aware that beginning on March 24, 2014, in addition to their responsibilities to collect employee and applicant demographic data regarding race, gender, and ethnicity, contractors will also be required to collect demographic data related to veteran and disability status. If you are a contractor and these changes sound completely foreign to you, be sure to attend the McNees Wallace & Nurick seminar entitled "Counting Heads: New Rules That Impact EVERY Federal Government Contractor and Subcontractor." Seminars will take place in Harrisburg, PA on January 30 and State College, PA on February 6. A seminar will take place in Scranton, PA on February 26 (details to be announced soon). See below for more information. To sign up, e-mail us here!