FLSA Amended To Require Breast Feeding Breaks

The new 2010 health care law, formally known as the Patient Protection and Affordable Care Act, will affect employers in a variety of ways in the coming years. One provision, which received virtually no attention during the months before passage of the new law, will surprise many employers now.

Section 4207 of the new law amends section 7 of the Fair Labor Standards Act (the federal law on minimum wages and overtime entitlement) to mandate now that employers provide “reasonable break time” for a mother to “express breast milk for her nursing child” for up to one year after the child’s birth. Importantly, the break time for this purpose does not have to be paid (unless applicable state law requires), but we expect that many employers will not want to undertake the effort to police employee time in this activity.

The FLSA amendment also requires employers to provide mothers a suitable place other than a bathroom for the purpose of expressing breast milk. The designated place, appropriately, must be private, shielded from view, and free from intrusion by others in the workplace.

The new law applies to all employers subject to the FLSA. However, an employer with less than fifty employees may side-step compliance if these requirements impose an undue hardship on the employer. Presumably, it will be the employer’s burden to show undue hardship by demonstrating significant difficulty or expense.


Posted by Thamer E. "Chip" Temple III

The Military Spouse’s Residency Relief Act

The new Military Spouse’s Residency Relief Act may raise questions for many employers about the tax treatment of wages for the spouses of active duty military personnel. The MSRRA could have a particularly notable impact in military heavy states like Virginia.

In short, the MSRRA exempts from state income tax the wages of the spouses of military personnel who move into a state to be with their service member spouse, even if that state otherwise would impose an income tax on the employee. The wages the employee earns will be exempt from state withholding. Additionally, even if the military spouse is outside the United States, the employee’s earnings are exempt from state withholding so long as the service member’s absence is in compliance with military orders.

The Act, as we understand it, is effective for any state or local income tax return beginning with a tax year that covers November 11, 2009.

(To ensure compliance with IRS requirements, readers are advised that any tax advice contained in this overview of the MSRRA was not intended to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or applicable laws, or promoting, marketing or recommending to another party any matter addressed herein.)

Posted by Thamer E. "Chip" Temple III

Gender Explicit Language Is Enough for Hostile Environment Case

The Eleventh U. S. Circuit Court of Appeals, in Reeves v. C. H. Robinson Worldwide, Inc., recently gave the go-ahead for a woman’s hostile work environment claim based on the pervasive use of sexually explicit language in the workplace. Of particular interest in the case, the offensive language was not directed at the claimant.

The claimant worked as a transportation sales representative for a shipping company. She was the only woman working in the sales area with six male co-workers. The work spaces were open cubicles. The sales workers could overhear each other.

The use of sexually crude and offensive language in the sales area was daily. Sexual jokes and comments and derogatory references to women (such as “f_ _ _ing b_tch”) were prevalent and casually used. The claimant overheard the men frequently discussing sexual antics of all kinds.

The men also listened to a raunchy morning radio program each day that routinely discussed pornography, erotic behavior, the breast size of female celebrities, and similar topics. The claimant was told she could change the radio station, but each time she did, the men changed the station back.

The claimant sought help from immediate supervisors and formally complained to upper management, but the atmosphere in the workplace did not change. The claimant then resigned her employment and initiated legal action alleging sexual harassment. The trial court surprisingly (to my thinking) granted summary judgment for the employer, dismissing the case, finding the offensive language was not directed at the claimant based on her sex and therefore was not actionable.

The appeals court reversed the trial court’s ruling. It recognized that offensive language need not be targeted at the claimant in order to support a hostile environment claim. Indeed, the Supreme Court has clearly established that race-based conduct which materially alters an employee’s job is illegal even if the conduct is not directed at the individual in question. Gender-based conduct, actionable under the same statute, should not be analyzed differently.

Incredibly, some commentators have criticized this decision on First Amendment free speech grounds. Such criticism ignores the well established legal principle that offensive language concerning protected characteristics can be restricted, particularly in private workplaces. Employees are not free to make pervasive race or religion-based comments in the workplace. Sex-based comments are no different. The workplace rarely, if ever, can be viewed as a public podium for unfettered free speech.

Ultimately, there is no legal substitute for employers to have a strong policy against this kind of workplace behavior, to enforce the policy, and to stop such conduct before it pervades the workplace.

Posted by Thamer E. "Chip" Temple III

An Example of Administrative Exemption Error

A few posts below, we discussed employer's periodic over-reliance on the overtime exemption for administrative employees under the Fair Labor Standards Act. As noted, among the four primary exemptions under that act, we have found that employers most frequently misapply this exemption.

A recent federal appeals court decision highlights this point. In Whalen v. J.P. Morgan Chase & Co., the U.S. Court of Appeals for the Second Circuit held that a loan underwriter at J. P. Morgan Chase was not exempt from overtime entitlement under the administrative exemption.

J.P. Morgan Chase maintained that its loan underwriters were covered by this exemption because they met the minimum salary requirement, performed office work directly related to the general business operations, and exercised the requisite discretion and independent judgement. The trial court agreed, but the appeals court reversed that decision.

Central to the appeals court's decision, the loan underwriter performed his duties according to detailed guidelines provided by the employer. He had no meaningful discretion to depart from those guidelines on his own. Thus, the appeals court said that the loan underwriter exercised no real independent judgment and discretion, which are key components of the exemption. Instead, the appeals court concluded that he was primarily involved in the "production" of the employer.

An employee primarily involved in the employer's production of goods or its provision of the services it offers, in most cases, will not meet the requirements of the administrative exemption.

Posted by Thamer E. "Chip" Temple III

COBRA Subsidy Extended

On December 19, 2009, president Obama signed into law the Fiscal Year 2010 Department of Defense (DOD) Appropriations Act. The 2010 DOD Act, among many other things, extended and expanded the COBRA subsidy program originally begun under the American Recovery and Reinvestment Act of 2009 (also known as the "Stimulus Bill").

Under the 2010 DOD Act, the Stimulus Bill's original COBRA premium subsidy period was expanded from nine to fifteen months - six additional months of subsidized coverage. The eligibility cutoff date for the subsidy also was extended from December 31, 2009 to February 28, 2010. (It is certainly possible that additional extensions may follow before this new deadline passes.)

The 2010 DOD Act also put in place a new sixty day retroactive period for payment of premiums for eligible employees and dependents whose subsidy period expired on November 30, 2009.

Lastly, the new law requires yet another special notice outlining these changes to all eligible individuals either on COBRA as of October 31, 2009, or who are terminated from employment with health insurance benefits after that date and up to February 28, 2010. We anticipate that the Department of Labor will issue a form notice in the coming weeks.

Posted by Thamer E. "Chip" Temple III

On-Call Time

It used to be that only emergency personnel (i.e., police, fire and emergency healthcare) were concerned about on-call time. Now, with technology such as BlackBerries, cell phones, Smart Phones, lap top computers and the like, the practical effect of having employees on-call is becoming widespread and crossing most industries. So, what constitutes compensable on-call time?

Supreme Court Standard

The United States Supreme Court has adopted a two-pronged test for determining what qualifies as compensable work activity. Under this test, time is compensable work activity if it is: (i) controlled or required by the employer, and (ii) pursued primarily for the benefit of the employer. Thus, waiting time, at least in some circumstances, is compensable work time. As the Supreme Court put it, if the employee is "engaged to wait," the time must be compensated, but if the employee is merely "waiting to be engaged," compensation is not required.

A Question of Control

In simple terms the issue of compensable on-call time is resolved by a determination of who primarily controls the time in question, the employer or the employee. Thinking about it is these simple terms comports with general principles of wage and hour law. For instance, an employee may be free to leave the work site and yet still be on working time (such as when the employee is running an errand or making a delivery for the employer) and the employee may remain on the work site and yet be off the clock (such as when an employee takes a meal break). In the former instance, the employer still controls the time in question. In the latter instance, the employee controls the time. The same concepts apply to on-call time.

DOL Regulation

The Department of Labor has provided basic parameters within which to analyze on-call time. Under 29 C.F.R. Section 785.17:

"An employee who is required to remain on call on the employer's premises or so close thereto that he cannot use the time effectively for his own purposes is working while 'on call'. An employee who is not required to remain on the employer's premises but merely required to leave work at his home or with company officials where he may be reached is not working on call."

Factors Considered

The DOL regulation provides some guidance but does not provide a bright-line test. There is no such test. Rather, on-call issues are resolved based on the particular facts in each case. A review of various cases and agency letter opinions reflects the following factors most frequently considered:

Frequency of Calls: While no particular factor is outcome determinative, courts and the DOL regularly look closely at the frequency of calls handled by an employee during the period of on-call time. The greater the frequency the more likely the time will be deemed controlled by the employer and there for compensable. It follows that infrequent calls during on-call time will tilt the balance toward non-compensable time.

Length of Duty: Is the on-call duty periodic and limited in length, long-term, or continuous? Generally, longer periods of on-call time impose more restriction on the employee, even in instances where there are fewer calls during the time in question.

Geographic Restrictions: An employee who is restricted to a very limited area, in many instance, does not control his or her own time. A tight geographic restriction suggests compensable time. Directly related to this, required response time of very short durations likewise restricts the employee substantially. A response time of less than thirty minutes is scrutinized closely. A response time of more than thirty minutes suggests the employee is substantially free in his or her own activities.

Pager/Cell Phone: An employee's use of a pager or cell phone during on-call time is a "two-edged sword." On the one hand, if the pager or cell phone is used frequently to contact the employee about work matters, the time is more likely deemed controlled by the employer and compensable. On the other hand, the use of a pager or cell phone gives the employee freedom to not be tied to a landline, which in turn allows the employee much more free use of his or her time. Employers should maintain records of such electronic activities for at least 2 years after the time in question.

Agreement/Policy: Is on-call time addressed in either an employment agreement or in company policies? It is always better to specify that on-call time is not compensable if the employer does not intend to compensate the employee for it instead of leaving the question solely for lawyers, courts, and government agencies.

Trading Call Time: The freedom to trade on-call time among responsible employees shows the employees retain another degree of control over the time. Significantly, however, whether an employee has volunteered for an on-call assignment does not appear to have had any impact in reported cases and opinion letters.

Limits on Activities: Lastly, the DOL and the courts will look at the overall extent to which employees' personal activities actually are limited. Reported decisions reflect considerations about whether the employee is free to leave their house or designated location, go to movies or shop, go to restaurants, exercise, sleep, do yard work, and entertain guests. Notably, in many cases, an employee's need to report to work for a call unimpaired leads to the argument that the employee is not free to consume alcohol. This limited restriction, however, has not changed the outcome of any decision found.

Posted by Thamer E. "Chip" Temple III

Over-Reliance on the Administrative Exemption

Section 13(a)(1) of the Fair Labor Standards Act exempts certain administrative employees from the Act's overtime pay requirements. Of the four primary exemptions under Section 13(a)(1), employers most frequently misapply, and thus over-rely upon, the administrative exemption test.

The Administrative Exemption Test

To qualify for the administrative employee exemption, all of the following must be satisfied:

• The employee must be compensated on a salary or fee basis at a rate of not less than $455 per week;
• The employee's primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers; and
• The employee's primary duty must include the exercise of discretion and independent judgment with respect to matters of significance.

According to the Supreme Court of the United States, this exemption must be "narrowly construed against employers" seeking to apply it, and its application must be "plain and unmistakable." Also, the burden of proving application of the exemption is on the employer, and the employer must establish the propriety of the application by clear and convincing evidence. Collectively, these standards mean that the employer will lose any dispute that involves a close call of either the facts or the law.

Areas of Over-Reliance

Employers frequently over-rely on the administrative exemption for office, clerical and non-production staff in one or more of four areas: primary duty, direct relationship to management, discretion and judgement, and significance.

Primary Duty

The primary duty of the employee in question must satisfy all aspects of the test. This means qualifying work with qualifying exercise of discretion and independent judgment must be the principal, main, major or most important duty that the employee performs. All too often, employers rely upon the administrative exemption if the employee performs any qualifying work. The performance of qualifying administrative work on occasion is insufficient.

Directly Related to Management

The primary duty in question must directly relate to management or general business operations. Tnis means those duties involved in running or servicing the business establishment as distingquised, for example, from those involved in production or selling the products or providng the services of the establishment.

Applying the administrative-production dichotomy can be more difficult in service-providing settings as compared to manufacturing. The key is that non-manufacturing employees should be considered "production" employees in those instances where their job is to create or to provide (or assist in this effort) the very services that the establishment offers to the public.

Employers frequently misapply the administrative exemption test when they focus on the indispensability or relative importance of the job in question. Someone with whom the business believes it "cannot do without" is often improperly deemed an administrative-exempt employee. This is the wrong focus. Application of the test depends upon the nature of the work involved, not the consequences of performance.

Qualifying work often is performed in the areas of finance and accounting, insurance, purchasing and procurement, advertising and marketing, human resources, information technology and legal compliance. However, this does not mean that all positions in these fields qualify or that other fields do not. A good rule of thumb is to identify people who have substantively helped develop, implement or conduct compliance with general business policies and objectives.

Discretion and Judgment

The routine application or enforcement of employer policies and procedures does not qualify as exempt administrative work. The employee must regularly exercise discretion and independent judgement. This involves the comparison and evaluation of possible courses of action or making a decision based on those courses of action. "Independence" requires that the employee be free from immediate direction or supervision. However, the employee need not have ultimate authority in all respects. Indeed, the fact that an employee's discretionary decisions may be revised or reversed after subsequent review does not mean that the employee is not exercising the requisite discretion and judgement. Factors to consider are:

• Whether the employee has the authority to formulate, affect, interpret or implement management policies;
• Whether the employee carries out major assignments in business operations;
• Whether the employee has the authority to commit the employer in matters that have a significant impact on operations; and
• Whether the employee has the authority to waive or deviate from established policies or procedures without prior approval.

Significance

The employee's exercise of discretion must be on matters of significance to the employer. Again, this focuses on the nature of teh matter, not the cvonsequences of the employer's failure to perform properly. For example, an employee responsible for formulating and implementing new benefits policies would be handling a matter of significance. An employee operating a piece of equipment with a $200,000 replacement cost on an improtant job would not be handling a matter of significance for purposes of this test.

Posted by Thamer E. "Chip" Temple III