TEXAS BUSINESS CONFERENCE

1 TEXAS BUSINESS CONFERENCE Update on Recent Trends in Employment Law Michael Holland Holland & Holland, LLC 1250 N. E. Loop 410, Suite 808 San Antonio, TEXAS 78209 (210) 824-8282 (210) 824-8585 facsimile e-mail address: WHAT S HAPPENING OUT THERE? No new federal or state legislation Federal agencies very active - aggressive MISCLASSIFICATION OF EMPLOYEES Exempt from overtime? (Fair Labor Standards Act) Independent Contractor is your independent contractor really an employee? THE BIG QUESTION Is the employee exempt from the FLSA requirements concerning minimum wage and overtime compensation? Overtime Misconceptions Belief: Employees are entitled to overtime after working a certain number of hours in a particular day. Belief: Overtime is required for work on weekends or holidays. Belief: Only low paid, hourly wage employees are non-exempt.

2 Belief: Salaried employees are exempt Belief: All college-degreed workers are exempt Overtime All work after 40 hours during a particular workweek must be paid at times the regular rate of pay Exempt Employees Many exemptions industry specific Most common exemptions white collar Executive Administrative Professional Learned Professional Creative Outside Sales Executive Exemption Salary basis (as defined in the regulations) at a rate not less than $455 per week; Primary duty: Managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise; The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and The employee must have the authority to hire or fire other employees, or the employee s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

3 Morgan, et al v. Family Dollar Store (11th Cir 2008) 1400 store managers working 60-70 hours/wk Employer classifies all top store managers as exempt Executives Family Dollar Store Case Executive Store Managers? 80-90 % of time doing tasks like stocking shelves running cash registers unloading trucks cleaning the stores Closely supervised by district managers No authority to hire or fire store personnel and recommendations as to hiring and firing not given any particular weight Pay not significantly higher compared to non-exempt workers Family Dollar Store Case $35 million ( of it in liquidated damages for willful violation) Administrative Exemption Salary or fee basis (as defined in the regulations) at a rate not less than $455 per week; 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.

4 And Primary duty includes the exercise of discretion and independent judgment with respect to matters of significance. Rieve v. Coventry Healthcare, Inc. Coventry provides solutions to help its clients, including workers compensation insureds and employers, reduce the cost associated with workers compensation injuries, ensure quality care. Julia Rieve was a registered nurse and case manager for Coventry. She had many years experience as a case manager. Rieve was responsible for assessing and analyzing an injured employee to evaluate the medical needs required to facilitate the patient s appropriate and timely return to work. Rieve v. Coventry Healthcare, Inc. - 2 Job duties included: providing ongoing, day to day case management services for Defendant s customers with documenting the cost of care, preparing reports regarding a plan of care, and identifying and implementing medical services to meet the needs of Coventry s customers.

5 Rieve admitted in deposition that she spends more than 50% of her time communicating with doctors, patients, and claims adjusters in order to understand the patient s conditions, determine what medical care was being provided, and evaluate whether it was appropriate. Rieve v. Coventry Healthcare, Inc. - 3 Rieve received a guaranteed weekly salary of $1, and received little to no supervision from Coventry. The court held: employer fails to meet administrative exemption The professional exemption learned professional Salary or fee basis (as defined in the regulations) at a rate not less than $ per week; Primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment; The advanced knowledge must be in a field of science or learning; and The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.

6 The professional exemption creative professional: Salary or fee basis (as defined in the regulations) at a rate not less than $ per week; Primary duty must be the performance of work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor. Outside Sales Exemption The employees primary duty of making sales (as defined by the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and The employee must be customarily and regularly engaged away from the employer s place or places of BUSINESS . ALWAYS REMEMBER FLSA is arguably the most violated civil law in our country Burden of proof is on employer to prove exemption U. S. DOL is aggressively enforcing this law right now When in doubt err on the side of caution ALWAYS REMEMBER (CON T) There are many additional restrictions contained within this law, such as restrictions on child labor, home workers, and equal pay between men and women DOL has an excellent website (Note: will need to dig down by clicking on wages on right side of web page and then click on overtime pay and then look for Fair Pay Fact Sheet by Exemption ) MISCLASSIFICATION: Is your independent contractor really an independent contractor?

7 Second most violated employment law in our country Issues are decided on a case by case basis Several different tests are used by different agencies all with subparts MOST COMMON ELEMENTS USED IN THE TESTS TO DETERMINE INDEPENDENT CONTRACTOR STATUS: opportunity for profit or loss for employee Skill and initiative required in performing job Permanency of the relationship Tools, equipment, uniforms Insurance/benefits MOST COMMON ELEMENTS USED IN THE TESTS TO DETERMINE INDEPENDENT CONTRACTOR STATUS: Economic realities At-will discharge without liability Advertising by worker Training by employer MORE COMMON ELEMENTS USED IN THE TESTS TO DETERMINE INDEPENDENT CONTRACTOR STATUS: Schedule established by employer Contractor has own employees Who controls manner and details of work Regular BUSINESS of employer Use of written contract NOTE.

8 Holland & Holland, LLC has a form Independent Contractor contract available for review EEOC s Guidance on Use of Arrest and Conviction Records On April 25, 2012, EEOC issued Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 In January 2012 the EEOC announced a $ million settlement with Pepsi Beverages over its use of criminal background checks that adversely affected African-American job applicants On March 10, 2014, EEOC and FTC Offer Joint Tips on Use of Employment Background Checks March 2014 EEOC to Employees Even if the employer treated you the same as everyone else, using background information still can be illegal discrimination. For example, employers shouldn't use a policy or practice that excludes people with certain criminal records if the policy or practice significantly disadvantages individuals of a particular race, national origin, or another protected characteristic, and doesn't accurately predict who will be a responsible, reliable, or safe employee.

9 In legal terms, the policy or practice has a "disparate impact" and is not "job-related and consistent with BUSINESS necessity." (It doesn't matter whether or not the information was in a background report.) What s the Theory? EEOC s Guidance focuses on the use of criminal records under a disparate impact theory Disparate impact. The EEOC suggest that nationally, and in most areas, use of criminal records to screen out applicants will have a disparate impact on minorities Job-related and Consistent With BUSINESS Necessity Defense EEOC claims that using arrest records is almost never a BUSINESS necessity To satisfy this defense, the employer must prove an effective link exists between the specific criminal conduct and its dangers with the risks inherent in the job position How do You Satisfy the Effective Link Requirement?

10 An employer may deploy a targeted screen that considers the three Green factors: 1. The nature and gravity of the offense; 2. The time that has passed since the offense and/or completion of the sentence; and 3. The nature of the job held or sought. Derived from Green v. Missouri Pacific Railroad, 549 1158 (8th Cir. 1975), and has been the basis of the EEOC s guidance for many years. What is an Individualized Assessment ? Per the EEOC, it should be made by an employer in virtually all instances before the employer disqualifies an individual for employment based on past criminal conduct, using the following specific factors: 1. the facts or circumstances surrounding the offense or conduct; 2. the number of offenses for which the individual was convicted; 3. older age at the time of conviction or release from prison; 4.