Be Careful When Using Biometric Information

Posted in Recordkeeping

User placing finger on fingerprint scanner

While not strictly speaking a wage and hour issue, here is a heads-up to any employers that use timekeeping systems featuring biometric security, like a thumbprint or fingerprint scanner:

You might want to read this recent Crain’s Chicago Business article about a class action lawsuit recently filed against the Mariano’s chain of grocery stores under the Illinois Biometric Information Privacy Act (BIPA). In this lawsuit, a former pharmacy employee claims that Mariano’s violated his rights under BIPA by requiring him and other employees to check in and out of work using a fingerprint scanner without providing the disclosures mandated by the law.

BIPA requires any “private entity” in possession of “biometric identifiers or biometric information” to, among other things:

  • Develop and make publicly available a written policy for retention and destruction of biometric identifiers and information;
  • Dispose of such information once the purpose for collecting it has been satisfied or within 3 years of the individual’s last interaction with the entity, whichever occurs first;
  • Provide a written notice to and obtain a written release from an individual before collecting or obtaining their biometric information or identifiers;
  • Treat any biometric data “in a manner that is the same as or more protective than” the manner in which it the entity “stores, transmits and protects other confidential and sensitive information.”

The law provides a private right of action against any private entity that violates it, and allows individuals to recover liquidated damages of $1,000 per violation for negligent violations, or $5,000 or for intentional or reckless violations, in addition to attorneys’ fees and court costs.

While it’s not at all clear that the law was written with employee timekeeping in mind, it’s provisions are certainly broad enough to cover those systems, and it applies to just about every organization other than state and local governments and certain financial institutions.

BIPA is an Illinois law, but other states have either considered or adopted similar legislation. For example, Texas Business and Commercial Code Sec. 503.001 imposes similar requirements. For a relatively recent overview of the law in this area, check out this article by Ted Claypoole and Cameron Stoll in Business Law Today.

If your organization uses biometric security for its timekeeping system, building access, information security, or any other purpose, either make sure that you’re complying with the law in your jurisdiction, or consider turning those features off and securely deleting any data that you may have collected.

 

 

DOL Brief in Overtime Rules Case Leaves New Uncertainty

Posted in *New Exemption Rules

On June 30, the U.S. Department of Labor filed its long-awaited brief announcing the new administration’s position on the ongoing litigation over the FLSA overtime exemption rules published last May. As readers may recall, the new rules would have increased the minimum salary for exempt employees from $455 per week to $913 per week. The rules were blocked by a preliminary injunction from a U.S. District Court just days before they were to take effect last November. The Department of Labor appealed that injunction ruling to the 5th Circuit Court of Appeals shortly before President Obama left office. That appeal has been on hold while the new administration reviewed its position on the regulations and the lawsuit.

In its new filing, the DOL tries to walk a fine line. On the one hand, the agency argues that the District Court’s ruling went too far by suggesting that the DOL could not include any minimum salary requirement in its test for exempt status. The DOL further argues that the state plaintiffs’ claims that the DOL regulations violated the 10th Amendment should be rejected. However, the DOL ask that the Court of Appeals not address the “validity of the specific salary level set by the 2016 final rule,” stating that it has “decided not to advocate” for that level, and that it instead “intends to undertake further rulemaking to determine what the salary level should be.”

While the DOL under Secretary Acosta seems to be taking a more business-friendly approach to the salary level issue than that of the prior administration, this latest move still leaves employers nationwide in an uncertain situation. If the Court of Appeals agrees with the DOL and reverses the District Court’s order imposing the preliminary injunction, the result might be that the 2016 final rules will take effect immediately. Further, the courts may hold that if the injunction is lifted, the rules take effect retroactive to their original effective date of December 1, 2016.  Clearly this outcome would be a serious concern for the thousands of employers nationwide who held off making changes in response to the new rules in light of the injunction. To be sure, this is a worst-case scenario that might be avoided depending on how the courts rule. For example, if the Fifth Circuit agrees with the DOL’s position, the District Court might issue a new injunction focusing on the specific $913 per week salary level used in the 2016 rules, rather than the broader reasoning used in its initial ruling. The likely protests of employers nationwide may also be enough to prompt Congressional intervention.

In the meantime however, employers remain where they have been since November – in limbo, waiting for a resolution.

 

Opinion Letters Are Back!

Posted in DOL News

DOL image included with announcement regarding reinstatement of opinion letters.The U.S. Department of Labor’s Wage & Hour Division announced today that it is bringing back the WHD Opinion Letter.

Opinion letters have long been one of the most useful resources for lawyers and HR professionals trying to figure out how to comply with the laws enforced by the WHD, including the Fair Labor Standards Act and Family and Medical Leave Act. Through the opinion letter process, a requester could submit a letter to the WHD asking for an opinion on how the law applies to a given set of facts. The WHD would respond to those questions and publish the responses so that they could be used by others as guidance.

In 2010, the DOL dropped this practice in favor of issuing broad “Administrator Interpretations” announcing the Department’s views on various issues. This was seen by many – both fans and critics – as an effort by the DOL to exert greater influence over development of the law without recourse to time-consuming rulemaking or the legislative process. Unfortunately, it also meant that employers seeking to comply with the FLSA and FMLA lost a useful source of guidance. While prior opinion letters remained generally available (unless they were expressly withdrawn), no new letters were issued after the change in policy.

The DOL website has been updated with information on where and hour to submit opinion letters. Anyone who wishes to request an opinion letter can find this information at https://www.dol.gov/whd/opinion/opinion-request-1.htm (as of 6/27/2017). While employers can certainly seek guidance on their own, they can also submit a request through their legal counsel in order to preserve their anonymity.

The opinion letter process was never perfect – responses often took many months and were sometimes less than helpful for employers seeking clear, definitive guidance. However, they were and are a useful tool. While the content of any new opinion letters remains to be seen, at least in principle their return is likely a good thing both for employers that want to comply with the law and the workers who will benefit.

Here is the DOL’s announcement, for those of you who aren’t on the Department’s e-mail list:

The U.S. Department of Labor will reinstate the issuance of opinion letters, U.S. Secretary of Labor Alexander Acosta announced today. The action allows the department’s Wage and Hour Division to use opinion letters as one of its methods for providing guidance to covered employers and employees.

An opinion letter is an official, written opinion by the Wage and Hour Division of how a particular law applies in specific circumstances presented by an employer, employee or other entity requesting the opinion. The letters were a division practice for more than 70 years until being stopped and replaced by general guidance in 2010.

“Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” said Secretary Acosta. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.”

The division has established a webpage where the public can see if existing agency guidance already addresses their questions or submit a request for an opinion letter. The webpage explains what to include in the request, where to submit the request, and where to review existing guidance. The division will exercise discretion in determining which requests for opinion letters will be responded to, and the appropriate form of guidance to be issued.

DOL Withdraws Obama Era Interpretations On Independent Contractors and Joint Employment

Posted in DOL News, Independent Contractors, Joint Employment
Former link to AIs on U.S. DOL website returns "Page Not Found"

Former link to AIs on U.S. DOL website returns “Page Not Found”

On June 7, Secretary of Labor Alexander Acosta announced the withdrawal of two Administrator Interpretations (“AIs”) issued under the Obama administration regarding joint employment and independent contractors. We previously discussed the AI on independent contractors here, and the AI on joint employment here and here. Critics of the AIs argued that they amounted to an attempt by the Department of Labor to expand employer liability under the Fair Labor Standards Act without Congressional action or notice-and-comment rule making. For its part, the Obama Labor Department took the position that it was merely providing guidance on existing legal standards.

The DOL gave little in the way of explanation for Secretary Acosta’s withdrawal of the AIs, offering only a three sentence press release:

WASHINGTON – U.S. Secretary of Labor Alexander Acosta today announced the withdrawal of the U.S. Department of Labor’s 2015 and 2016 informal guidance on joint employment and independent contractors.  Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.

So what does this mean for employers? For most, probably not much. Withdrawal of the AIs certainly indicates that the DOL under Secretary Acosta will be less aggressive in pushing the boundaries of existing law through its enforcement efforts and in court. Businesses that rely on franchise models, temporary employees and contractors can likely breath somewhat easier.

However, as the DOL’s press release notes, withdrawal of these AIs “does not change the legal responsibilities of employers under the Fair Labor Standards Act.” While the AIs represented a broad view of the employment relationship, they were still rooted in existing law and based their analysis on well-established tests for joint employment and independent contractor status. Those basic tests have not changed, and courts were never bound to follow the DOL’s preferred interpretations of the law. Private litigants can still pursue joint employment and independent contractor misclassification claims based upon the interpretations in the withdrawn AIs, and courts may accept some of their arguments. Further, the U.S. DOL’s actions have no direct effect on employer’s parallel obligations under state or local laws governing minimum wage or overtime.

 

 

 

Do I have to pay employees to run a 5K? [Wage & Hour FAQ]

Posted in Wage and Hour FAQs

Race shutterstock_271417229Q. Our company would like to enter a team in a local 5K charity race to do some good for the community and provide some positive PR for the company. Do we have to pay employees for time spent in this activity?

A. With the summer season upon us lots of employers are thinking about civic engagement, whether it is entering a 5K, joining a charity golf tournament, or getting a group together to perform volunteer work. Some employers conduct these activities during the workday and pay employees for their time as the employer’s contribution to the community. Others, however, may want to encourage employees to participate in additional activities outside of the workday, perhaps by paying entry fees, providing team T-shirts, or making charitable donations in support of the event. If we’re talking about employees who are properly classified as exempt executive, administrative or professional employees, then no, employers don’t have to pay extra for this time. For non-exempt employees, the answer depends on the facts.

29 C.F.R. 785.44 says the following with respect to employees engaged in civic and charitable work:

Time spent in work for public or charitable purposes at the employer’s request, or under his direction or control, or while the employee is required to be on the premises, is working time. However, time spent voluntarily in such activities outside of the employee’s normal working hours is not hours worked.

So, to break it down: if employees voluntarily form a team for a local race or get together to volunteer at the food depository outside of working hours, you don’t have to pay them for their time. The company can even provide some support and sponsorship without running afoul of the law, again as long as the activity is completely voluntary and outside of working hours.

However, if the activity occurs during an employee’s normal workday, or if the employer goes beyond offering support to actually request or direct an employee to participate, it may cross the line from voluntary charitable activity to work.

For example, suppose that upon deciding that you want to enter your team in the 5K, you specifically ask one employee if she would head up the effort of recruiting and organizing a team. She agrees and does so. While the other employees running in the race may be volunteers, your team leader is arguably participating “at the employer’s request,” and should therefore be paid for her time.

Or suppose that after volunteers sign up for the race, you specifically ask one of the participating employees, who you know to be a photo enthusiast, to take photos of the event and an after party for the participants for use in on the company’s social media pages. The employee does as requested and spends additional time after the event editing the photos. Again, because the work is requested by the company, this may constitute work time for which the employee is to be paid.

So, how can employers avoid having charitable activities classified as work time?

  • Schedule charitable or civic activities outside of employees’ normal work hours.
  • Make it clear that participation is completely voluntary. Inviting participation is OK, but don’t single out individuals to ask them to participate, and don’t make participation a component in performance evaluations, compensation, or other employment decisions. Also make sure that your managers understand that what they see as a “request” might feel more like a directive to employees.
  • Avoid asking employees to perform tasks associated with a charitable event that are mainly for the benefit of the company, such as hosting an employee social event, engaging in promotional activities for the company, or taking photos or video. This doesn’t mean that you have to pay every employee who happens to share a selfie of the event on Facebook, but employees who put in more than de minimus work for the company’s benefit  should be paid for their time.
  • If the company does need someone to perform work related to an event, tap bona fide exempt employees for those tasks, or hire outside help.

 

 

Restaurants: Do your employees know that you take the tip credit?

Posted in Tip Credit

Tip-Hand11366723.jpgIf not, you might have a problem.

In 2011, the U.S. DOL published a regulation mandating that restaurants who count tips toward the minimum wage as permitted under the Fair Labor Standards Act have to notify employees that they are taking the credit. (See U.S. DOL Fact Sheet #15 for more information on the current requirement.) Last week, a federal district court in Pennsylvania ruled that a former bartender at Cadillac Ranch All American Bar & Grill could move forward with a hybrid state law / FLSA class/collective action, alleging that the restaurant chain violated the DOL’s notice regulation by failing to tell tipped workers that their wages would be calculated using the tip credit. According to the court’s opinion, the class includes approximately 220 current and former tipped employees. Koenig v. Granite City Food & Brewery, Ltd.

In and of itself, this decision is not particularly surprising or ground-breaking, but that is exactly why it should worry restaurants and other employers of tipped employees. There are certainly areas of business where an informal, “good enough” approach is in fact good enough. Wage and hour law is not one of those areas. The FLSA and state wage and hour law are all about technicalities, which is why they are perfect traps for unwary employers and great sources of business for lawyers.

So, restaurant owners and operators, take heed: If you are not presently notifying all of your employees that you will be taking a tip credit to comply with minimum wage requirements under the FLSA, you may owe all of your tipped employees the difference between the “tipped” minimum wage ($2.13 per hour) and the minimum wage for non-tipped employees ($7.25 per hour), or a total of $5.12 for every hour worked. Over a period of two to three years. Plus liquidated damages (doubling the amount owed) and attorneys’ fees. State law may further increase the liability. If this situation sounds familiar, reach out to your employment counsel today to find out how to protect your business.

 

Do School Employees Get Overtime For Occasional Extra Duty? [Wage & Hour FAQ]

Posted in Overtime, Public Employees

FAQs17489126.jpgQ. Our school district has hourly, non-exempt employees who occasionally perform extra work for the district – for example, chaperoning a school dance, or taking tickets at home games. Do we need to track the hours that employees perform on these tasks and pay them overtime if their total work hours go over 40 for a single week?

A. Usually, when an employee works more than one job for an employer, the rule under the FLSA is that the employer must aggregate all of the employee’s work hours for each workweek. If the employee’s total hours go over 40, they’re entitled to overtime pay, even if the extra work was in a separate job and completely voluntary on the part of the employee. (See our earlier post on this subject for a more detailed discussion.)

However, Section 7(p)(2) of the FLSA creates a limited exception to this rule for state and local government employees. Three conditions have to be met in order for this exception to apply: Continue Reading

Trump Names New Nominee for Secretary of Labor

Posted in Trump Administration

Yesterday, President Trump’s then nominee for Secretary of Labor, Andy Puzder, withdrew his nomination ahead of his confirmation hearing given the increasing opposition to his nomination by both parties. Less than 24 hours later, President Trump announced Alexander Acosta as his new choice for Secretary of Labor. Mr. Acosta is currently the dean of Florida International University College of Law but has experience in both the public and private sector. Some of Mr. Acosta’s prior positions include being appointed by President George W. Bush to serve as a member of the National Labor Relations Board, his appointment to the role of Assistant Attorney General for the Civil Rights Division of the Department of Justice, and a high profile role as U.S. Attorney for the Southern District of Florida. If confirmed, Mr. Acosta will be the first Hispanic member of President Trump’s cabinet.

It’s too early to tell what type of agenda we could see from the DOL if Mr. Acosta is confirmed but he likely will be a little more worker-friendly than Mr. Puzder. We will continue to update you as more information becomes available regarding Mr. Acosta.

Trump leaves DOL OT rules on life support - For Now

Posted in *New Exemption Rules, Trump Administration

President Trump has had a busy week since his inauguration: ordering construction of a wall, starting to unwind the ACA, arguing with the media about how many people attended his inauguration – the list goes on. One thing that he has not yet gotten to is the U.S. DOL’s stalled overtime exemption rules. Right now the rules remain in limbo, temporarily suspended by order of a U.S. District Court in Texas. That order is now on appeal to the 5th Circuit Court of Appeals. Earlier this week, the Department of Justice, representing the DOL in the case, asked the 5th Circuit to extend the due date for the government’s brief in the appeal by 30 days “to allow incoming leadership personnel adequate time to consider the issues.” The coalitions of states and business groups opposing the new rules, not surprisingly, did not oppose that request.

While the new administration has not yet taken an express position on the issue, President Trump has railed against regulations seen as hampering business, and he nominated a vocal critic of the rules, fast food CEO Andy Puzder, to lead the Department of Labor. However, because the rules were passed through a process of “notice and comment” rulemaking, the Trump Administration cannot simply reverse them with the stroke of a pen without going through the same lengthy process of publishing proposed rules, seeking public input, and then issuing final regulations. One way to avoid that process would be to direct the Department of Justice to drop its defense of the pending lawsuit and admit that the rules were improper, allowing the court’s injunction to become final. However, even that might not be the end of the story, as the AFL-CIO has asked for leave to step in and defend the final rules should the government try to bow out.

In short, employers are still stuck right where they’ve been since November. The rules are on life support and it’s likely that the Trump Administration or Congressional Republicans will pull the plug in one way or another sometime soon. But we don’t know exactly when, and we can’t yet completely rule out the possibility of an unexpected recovery that would allow the rules to take effect – possibly retroactive to December 1, 2016.

For more on how changes ushered in by the new administration will affect the workplace, check out our firm’s Navigating Change portal. 

So Long, Secretary Perez: DOL Head's Goodbye Message

Posted in State Regulation, Trump Administration

Last week, outgoing Secretary of Labor Thomas Perez released a farewell “Memorandum to the American People.” It mostly reads as a recap of the DOL’s news releases over the past several years, touting various DOL initiatives and advocating for further changes, like increasing the minimum wage and mandating paid family leave. The memo must strike a bittersweet note for proponents of the current DOL’s direction. One can pretty safely infer that most of the progressive proposals discussed in the memo – other than perhaps some form of paid maternity leave – are going precisely nowhere under the incoming Trump administration. To the contrary, most observers expect the DOL to roll back many Obama-era changes under the leadership of Trump’s pick for labor secretary, fast-food executive Andy Puzder. If, that is, Congressional Republicans don’t beat them to the punch.

That reality is certainly what prompts the most interesting part of the farewell memorandum, which is its repeated references to action at the state and local levels. For example, the memorandum lauds the fact that 18 states have increased their minimum wages since President Obama called for a minimum wage hike in 2013. It also applauds new state and local family and sick leave laws, noting that the DOL has supported state and local action through “several rounds of paid-leave analysis grants to hep state and local officials examine the feasibility of establishing or expanding paid leave policies.”

Secretary Perez goes on to encourage state and local governments to continue this trend:

While we wait for Congress to act, City and state governments should continue their progress in these areas, and voters should continue to exercise their voices in favor of higher wages and more supportive workplace policies, as voters in several states did this year.

In this area at least, Secretary Perez is likely to get his wish, at least in certain parts of the country. This is a legal blog, not a political one, so I’ll leave the debate over whether paid leave and increased minimum wages are good public policy to the economists and politicians. What I can say with some degree of certainty is that this growing patchwork of state, county and city mandates is making things more complicated for employers. Greater complexity means greater opportunity for errors, greater legal risk, and higher legal costs. All of this may or may not benefit workers and the economy, but it’s at least good news for employment lawyers.

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