State Minimum Wage Increases for 2014

Last week, California Governor Jerry Brown signed a bill that will increase the state’s minimum wage to $9 on July 1, 2014, and $10 at the beginning of 2016. (The state’s current minimum wage is $8.) So far, three other states have passed minimum wage increases that will take effect in 2014: Connecticut’s wage will increase to $8.70 for 2014, then $9 for 2015; New York’s wage will increase to $8 at the end of this year, then $8.75 at the end of 2014, then $9 at the end of 2015; and Rhode Island’s minimum will hit $8 at the beginning of 2014. (Nolo has minimum wage information for all 50 states and the District of Columbia at our Wage & Hour page.)

The federal minimum wage, currently $7.25 an hour, is now lower than the minimum wage in more than a third of the states. About half of the states have the same minimum wage as the federal government, and a handful of states either have a lower minimum wage or have no minimum wage at all. As a practical matter, this final group of states also uses the federal minimum wage. The federal wage rate is a floor, not a ceiling. States are free to adopt a higher minimum wage, and employers within the state must pay the higher rate. But in states with a lower minimum wage, employers must generally comply with the federal law unless they are so small and local as to not be subject to the Fair Labor Standards Act.

States generally adopt higher minimum wage rates to try to bring wages into line with the cost of living. But, according to the Center for Poverty Research at U.C. Davis, the federal minimum wage is not cutting the mustard. A full-time employee who works 40 hours a week for a full year, without taking a single unpaid day off, earns about $15,000 annually, just a few thousand dollars above the poverty level for a single person (and well below the poverty level for a family with one or more children).

President Obama has called for an increase in the federal minimum wage to $9; he also appointed a Secretary of Labor, Thomas Perez, who supports raising the minimum wage. However, based on the current climate in Congress (which today is on the verge of shutting the government down), it doesn’t seem likely that a federal wage increase will happen any time soon. And that means the real action will remain at the state and local level.

Hey, Wellness Programs: Reward Healthy Employees, Too

fitnessWorkplace wellness programs are booming: According to a recent study commissioned by Congress and conducted by the RAND Corporation, workplace wellness is a $6 billion industry (annually), with programs hawked by an estimated 500 vendors. (Unfortunately, Forbes reports that the study also reveals pretty minimal health benefits to employees and statistically insignificant cost savings for employers who adopt workplace wellness programs.)

The Affordable Care Act, better known as Obamacare, allows employers to adopt workplace wellness programs and reward employees who meet certain health goals. Understandably, the government has largely been concerned with making sure that employers don’t discriminate against employees whose medical conditions make it inadvisable to participate in certain activities or adopt certain health targets. (You can learn more about the final regulations on avoiding discrimination in our article, Final Rules for Wellness Programs Under Obamacare.)

Don’t get me wrong: I’m all in favor of employers offering programs to help employees improve their fitness, lower their cholesterol, lose weight, or stop smoking. And I understand that financial incentives are an effective motivation for most of us. But what about employees who are already fit and healthy? Many wellness plans offer an initial incentive to employees for taking a health assessment and participating in biometric screening, activities that are equally available to all. Beyond these measurements, however, some wellness plans offer additional rewards only to employees who need to change their behavior by, for example, participating in coaching programs, meeting certain health targets (such as achieving a particular BMI or cholesterol level), or participating in programs to monitor chronic health conditions, such as diabetes or hypertension. Employees who don’t need these types of assistance aren’t eligible for rewards.

Of course, good health is its own reward. But if money is being handed out, shouldn’t some of it go to the employees who are costing the company the least in insurance premiums? That’s what Eagle County, Colorado decided. According to an article at Workforce.com, the county’s HR director decided to reward the 25% of the county’s employees whom she described as “uber-athletes” with perfect health scores. She wanted to reward these employees and give them an incentive to motivate their coworkers. So, she gave them premium discounts on their health insurance and started paying their entrance fees for races and competitions; in exchange, they agreed to participate in workplace fitness teams, such as walking programs. Everyone wins, and the employees who are already costing the company less get to share a bit in the savings.

Controversy Over Criminal Background Checks

prisonLast year, the Equal Employment Opportunity Commission (EEOC) issued policy guidance on criminal background checks. The guidance pointed out that a blanket policy of refusing to hire anyone with an arrest record or a criminal conviction could have a disparate impact, based on our country’s racially skewed criminal justice system. The guidance cautioned against blanket or “bright line” policies that exclude everyone with any conviction, and provided three factors employers should consider in deciding whether to exclude a particular applicant based on a criminal record:

  • the nature and seriousness of the crime
  • how much time has passed since the offense, and
  • the nature of the job (how much supervision the employee will have, where the job is performed, and so on).

The EEOC also suggested that employers give applicants an opportunity to provide mitigating evidence. (See our article describing the guidance, Getting Hired With an Arrest or Conviction Record.)

Last month, the EEOC filed two lawsuits against employers alleging that their policies of excluding certain applicants with criminal records constituted disparate impact race discrimination. These lawsuits didn’t go unnoticed: Just a few days ago, the Attorneys General of nine states banded together to ask the EEOC to withdraw these lawsuits and dump its policy guidance. Among other things, the AGs argued that the EEOC was improperly intruding into state law, which in some cases require employers in certain fields to exclude applicants based on criminal history alone, and that conducting the individual inquiry into the facts behind every applicant’s record was too time-consuming and expensive. Essentially, the AGs believe it should be legal to have a blanket policy of excluding any applicant who is convicted of particular crimes. (You can read the letter through a link in this Mondaq article, State Attorney Generals Challenge EEOC Criminal Background Check Lawsuits.)

We’re a long way from knowing how this is going to play out. In the meantime, however, our country’s Attorney General, Eric Holder, has announced a policy change that could take care of some of the problem for future generations. He announced that the federal government will take steps to get out from under lengthy mandatory minimum sentences for drug offenses, to reduce the incarceration rate and to make alternatives, such as treatment programs, available to offenders. (The sentencing laws remain on the books; the administration’s strategy for avoiding them includes not listing drug quantities, which trigger the mandatory sentences, in indictments of lower level offenders.)

Employer Mandate: Headed to the Supreme Court?

supctThe past month has been chock full of developments on the employer mandate front, and there may be more to come. Last month, the federal Court of Appeals for the Fourth Circuit upheld the mandate, which requires larger employers to provide affordable healthcare coverage to full-time employees or pay a fine. (The opinion is Liberty University v. Jacob Lew et al.; there’s a nice explanatory piece about it over on SCOTUSBLOG.) The Fourth Circuit’s opinion upheld the employer mandate as a valid exercise of Congress’s powers to tax and to regulate interstate commerce.

Just a few days later, the Obama administration announced that it was postponing the employer mandate for a year, until the beginning of 2015.

Then yesterday, the Fourth Circuit issued a stay in the mandate case, to give Liberty University time to file a petition for certiorari asking the Supreme Court to hear the dispute. No tea leaves yet on whether the Court will agree to hear the case or how they will decide it if they take it up. Still, what a difference a month makes in the life of a new government program.

Wage and Hour Violations at Restaurants

A couple of days ago, the New York Times published an article about wage and hour violations at Urasawa, a very trendy — and expensive — sushi restaurant in Beverly Hills. According to the article, workers were not paid overtime and not allowed to take legally required breaks. An employee interviewed for the article also noted that he was required to buy his own $700 set of knives, at a time when he was earning between $9 and $11 an hour. (Although the article didn’t mention it, this is a separate violation of California law, which requires employers to bear the cost of uniforms, tools, and other items necessary for employees to do their jobs.)

Restaurants are too frequently in violation of wage and hour laws, from overtime and break rules to minimum wage, uniform, and tip requirements. If the violator is extremely upscale, like the restaurant cited in the Times article, employees are often willing to put up with substandard conditions in exchange for the opportunity to gain the experience and cachet that stem from working at a trendy spot. (Apparently, diners are also willing to put up with a lot to eat there, from a $1,000 price tag for dinner for two to rules about how the food must be treated that would make Sienfeld’s Soup Nazi blush.) At the other end of the spectrum, employees working at fast-food franchises and low-budget eateries often don’t know their rights and work for an owner who is operating on a financial shoestring.

In recent years, the Department of Labor has taken steps to remedy this situation, from revising the regulations on tip credits to partnering with the Subway restaurant chain to make sure that employees know their rights. Let’s hope it works! Because I don’t know about you, but for my own selfish reasons, I’d prefer to have my food prepared by workers who are allowed to go to the bathroom when they need to.

Religious Discrimination and Accommodation

cadleLast week, the Equal Employment Opportunity Commission (EEOC) announced that it had filed a lawsuit against United Cellular, Inc., of Alabama. The lawsuit claims that United Cellular discriminated against Charles Embry, a Seventh-Day Adventist, by scheduling him to work on his Sabbath day and then firing him when he didn’t show up for work. During his initial job interview, Embry told United Cellular that his religious beliefs prohibited him from working from sundown on Friday through sundown on Saturday.

Religion is unique among the characteristics protected by Title VII, in that it is not only a trait but also a system of beliefs that may require believers to engage in certain practices at work. Employers are required to provide reasonable accommodations to allow employees to practice their faiths, unless doing so would create an undue hardship. Common accommodations include schedule changes, exceptions to grooming or dress codes, and breaks or time off for prayer and religious observances.

Religious discrimination can be a tricky issue for employers, who are required both to disregard religion as a trait in making employment decisions and to take religion into account as a practice in providing accommodations. Especially difficult is figuring out whether and how to accommodate an employee whose religion requires public profession of faith or proselytizing, especially if other employees or customers would prefer not to be the audience.

Recognizing this, the EEOC in 2008 issued policy guidance and a question and answer series on “how to balance the needs of individuals in a diverse religious climate.” Apparently, however some questions remain: The number of charges filed with the EEOC alleging religious discrimination has more than doubled in the past 15 years, while total charges filed have increased by only 25% in the same timeframe.

In response to frequent questions and search interest in this topic, we’ve put together a Religious Discrimination page, with basic information and answers to common questions about discrimination and workplace accommodations.

 

Employers Win Retaliation Case in Supreme Court

supctThere were plenty of blockbuster decisions issued in the final week of the Supreme Court term that ended in June: Cases on affirmative action, voting rights, and of course same-sex marriage garnered most of the attention. But the Court also issued a couple of major employment decisions, which will have a significant effect on cases headed to trial.

In the first case, Vance v. Ball University, the Court limited the definition of “supervisor” in harassment cases to include only those who are authorized to take tangible employment actions (such as firing, demotion, promotion, or job reassignment) against employees. This case  immediately changed the burdens of proof in harassment cases going to trial across the nation, making it more difficult for employees to hold their employers liable for hostile environment harassment. (You can find out why in my post about the decision, Big Win for Employers in Supreme Court Harassment Case.)

In the second case, University of Texas Southwestern Medical Center v. Nassar, the Court ruled that employees who claim that they were retaliated against for complaining about discrimination have a higher burden of proof than employees who only raise discrimination claims. Although the current Supreme Court is generally considered very favorable to business interests, this pro-business decision is something of a surprise. Employees haven’t had much luck in other types of cases, but they had an unbroken win streak in retaliation cases, until a few weeks ago. (Don’t believe me? See Another Supreme Court Win for Employees in Retaliation Case, Oral Complaints Trigger Retaliation Protection, and Supreme Court Issues Another Retaliation Decision, for starters.)

In the Nassar case, the Court had to decide who has to prove what in a “mixed motive” retaliation case. A little background: To win a Title VII discrimination case, an employee has to prove that the employer took action (typically, firing the employee) because of the employee’s race, religion, or other protected characteristic. In 1989, the Court had to decide how to handle cases in which the employer had discriminatory intent, but also had other, nondiscriminatory reasons for its decision. The Court came up with this rule for these mixed motive cases: If the employee can show that his or her protected characteristic was a motivating factor in the decision, the employer could escape liability if it could prove that it would have taken the same action absent any discriminatory motive.

Congress tweaked the mixed motive rule in the Civil Rights Act of 1991, in favor of employees. Congress reasoned that discrimination is always wrong, and should subject the employer to penalties even if the employer had other reasons for its actions. On the other hand, if the employer really would have taken the same action for legitimate reasons, the employee can’t prove any out-of-pocket losses. For example, if an employee claims that he was fired because of his race, but the employer says “we would have fired him on the same day because of his billing errors,” the employee can’t show that his lost wages were caused by discrimination. So, Congress refined the rule to hold that an employee who proves that discrimination was a motivating factor can be awarded attorney fees, costs, and declaratory relief (a finding by the court that the employer discriminated). However, if the employer can prove that it would have taken the same action for legitimate reasons, the court will not order money damages or reinstatement.

The Nassar case turned on a retaliation claim. Nassar, a doctor who worked at the hospital and was on the faculty at the University, claimed that a supervisor (Dr. Levine) harassed him based on his national origin and religion. Nassar complained to his immediate supervisor (Dr. Fitz) about the harassment, and also tried to arrange to leave the faculty while still working at the hospital (an arrangement not usually allowed). After the hospital indicated that it would hire him, Nassar quit his teaching position and wrote a letter to Fitz, stating that he had resigned because of the harassment. Fitz was angry about Nassar’s allegations, stating that he had “publicly humiliated” Levine, who should be “publicly exonerated.” He contacted the hospital and asked them to retract their job offer; he pointed out that the rules required all physicians at the hospital to also be faculty members. The hospital obliged, which led to Nassar’s retaliation claim and a very clear mixed motives case. The facts demonstrate both that Fitz had a retaliatory motive and that the same action would have been taken anyway, for other reasons. So, the Court of Appeals applied the mixed motive framework explained above.

The Supreme Court said that was incorrect. The Court decided that Congress’s mixed motive framework applies only to claims of discrimination, not claims of retaliation. In a retaliation case, the employee always has the burden of proof, and must show that the employer took action “because of” a retaliatory motive. If the employer would have taken the same action for other reasons, the employee loses.

Why did the employee winning streak end in retaliation cases? The majority decision states that it’s simply a matter of reading the statute. Congress laid out the mixed motive framework only for discrimination cases, not retaliation cases. As the dissent points out, however, the Court has recently allowed retaliation claims under statutes that don’t mention retaliation at all. And, because vindicating the right to work free of discrimination necessarily requires that employees not be penalized for coming forward with these claims, it’s odd to adopt different standards for these two allegations that are so closely linked. Perhaps the real reason is revealed when the majority opinion points out the huge rise in retaliation charges in recent years: Allowing employees to proceed under the easier burden of proof for mixed motive cases would “contribute to the filing of frivolous claims, which would siphon resources from efforts by employer, administrative agencies, and courts to combat workplace harassment.”

 

 

 

Obamacare Employer Mandate Postponed to 2015

In an announcement that seemed to take everyone by surprise, the Obama administration yesterday issued a statement that it would not enforce the employer mandate of Obamacare until 2015. More specifically, the statement indicates that the Obama administration won’t enforce the law’s reporting requirements for employers or assess the “shared responsibility” payments (fines for failing to provide adequate, affordable healthcare) until 2015. These provisions were supposed to take effect at the beginning of 2014.

This change was billed as the administration’s effort to “listen to the business community.” However, the effects of the change could be much more widespread. The deadline for the individual mandate has not changed; we all still have to have insurance coverage by January 1, 2014, or pay a penalty. I will refrain from detailing my thoughts about the administration giving a break to the “business community” while the actual humans are still on the hook. But postponing the employer mandate will make the individual mandate more challenging. For example, whether subsidies are available to employed people who buy their own insurance depends on the quality and cost of insurance available to them at work. If employers aren’t required to report on that, how is the IRS going to know who is eligible for a subsidy?

Postponing the employer mandate and reporting requirements also, frankly, gives employers more time to come up with ways to get around the law by restructuring their workforces (look for more job openings for employees to work no more than 29 hours per week), coming up with ways to offer the least coverage possible and pay the lowest penalties (like this scheme, which came to light only a few weeks ago), and so on.

Here’s an additional complication: The administration doesn’t seem to have the authority to require this delay. As noted in this article in Forbes, the effective date of the mandate is statutory. Congress said, right there in the law, that it applies to “months beginning after December 31, 2013.” Although the administration could choose not to enforce this part (as they did with DOMA before the Supreme Court overturned it), they might face a lawsuit over their decision. And, unlike the DOMA situation, there will be real people who are harmed by this delay.

 

Big Win for Employers in Supreme Court Harassment Case

supctDo you have more than one supervisor? If so, you’re not alone. Plenty of people work for companies in which the power to hire, fire, promote, and discipline employees is vested in only a few employees, but many more employees are authorized to direct the work of others and actually keep the trains running on time. Well, the Supreme Court has news for the many lower-level employees who schedule, oversee, train, and direct the work of other employees: You’re not supervisors under Title VII.

In a racial harassment case (Vance v. Ball State University), the Supreme Court decided that employees count as supervisors under Title VII only if they are authorized to take tangible employment actions against an employee. A tangible employment action is a significant change in employment status, such as hiring, firing, promotion, or reassignment to a job with substantially different duties. In making this decision, the Court rejected the Equal Employment Opportunity Commission’s interpretation that employees who don’t have this authority might also be supervisors if they have the authority to direct an employee’s daily work activities.

The distinction between supervisors and regular employees is hugely important in determining an employer’s liability for harassment. An employee who is harassed by a coworker can hold the employer legally liable for the harassment only if the employer was negligent. This means that the employee has to show that the employer knew, or should have known, about the harassment and failed to take appropriate corrective action.

An employee who is harassed by a supervisor has an easier burden. If the supervisor’s harassment results in a tangible employment action (as defined above), the employer is strictly liable, period. If the supervisor’s harassment doesn’t result in a tangible employment action, the employer is liable unless it can prove that (1) it exercised reasonable care to prevent and promptly correct harassment (by, for example, training employees, adopting a policy prohibiting harassment, creating an appropriate complaint procedure, and investigating harassment complaints quickly and fairly), and (2) the employee unreasonably failed to take advantage of opportunities the employer offered to prevent or correct harassment (for example, by failing to make a complaint).

The distinction between supervisor harassment and coworker harassment takes into account the power an employer gives its supervisors. The employer’s decision to delegate authority to the supervisor is what makes this type of harassment possible, so it’s only fair to hold the company responsible for the actions of those who have this responsibility.

The practical effect of the Court’s decision is that fewer employees will qualify as supervisors and, therefore, that more victims of harassment will have to meet the more difficult negligence standard to win their cases. In other words, this case is a clear win for employers, who will have an easier time avoiding liability for harassment.

Interestingly, it’s much easier for an employee to qualify as a supervisor when that result benefits employers. For example, an employee is an exempt “executive” employee under the Fair Labor Standards Act – and, therefore, not entitled to earn overtime – if the employee directs the work of at least two other employees (among other things). The employee need not have the authority to hire and fire, as long as the employee’s suggestions or recommendations about personnel decisions like these are given “particular weight.” Similarly, under the National Labor Relations Act, an employee is a supervisor if he or she has the authority to perform one of 12 responsibilities, including assigning work and responsibly directing employees. If you’re a supervisor under the NLRA, you are not protected by the law and may not join a union.

Take This Internship and . . . Pay For It

blackswaneditLast week, two unpaid interns who worked on the film “Black Swan” won a lawsuit against Fox Searchlight Pictures. The interns claimed that they should have been paid for their work, which included such important cinematic tasks as taking out the garbage, ordering lunch, booking flights for their bosses, and assembling office furniture. The judge for the federal District Court in Manhattan agreed, finding that the two interns were treated as employees and were, therefore, entitled to compensation for their time.

These days, internships are an increasingly popular option, especially for students and recent graduates who can’t find paid work in their fields. CNN Money recently reported an 8.8% unemployment rate — and an almost 19% “underemployment” rate — among recent college grads, both rates still higher than before the economic downturn began. Many young people are willing (or desperate enough) to work without pay to get their foot in the door of their chosen profession. Of course, they’d rather get paid. But if the only way to break into a field is by doing grunt work day and night without pay, some people will take that deal.

This is where the law steps in to set some boundaries. Employment law pushes back against the metric of “whatever the market will bear” to require employers to pay at least the minimum wage, to protect employees from unsafe working conditions, and to prohibit harassment, for example — even if plenty of employees might tolerate mistreatment and subsistence wages just to get and keep a job. That desperate job seekers are willing to put up with almost anything in exchange for work doesn’t mean it’s legal.

That’s what Fox learned last week, and what employers in other popular industries are starting to understand. According to an article about the case in the New York Times, similar lawsuits have been filed against television, modeling, and fashion magazine employers, claiming interns should have been paid. Employers in these sexy fields have been some of the worst offenders in not paying interns, presumably because so many people are desperate to work in film and fashion.

There’s nothing shocking about desperate job seekers or employers willing to exploit them, sadly. There’s nothing surprising about the outcome of the case, either. The law about unpaid internships is very clear. Employers may hire people to work without pay only if the job meets a strict six-part test, including that the job must benefit the intern, must not provide the employer with an immediate advantage, must be closely supervised, and must not be a required stepping stone to a paid position. (You can find details on the six factors in Am I really an intern or just an employee who isn’t getting paid?) But Fox argued that the judge should forget the factors and instead simply weigh whether the intern or the employer gained more from the arrangement. If the intern benefitted more, then it’s a legal internship. The judge was not impressed by this argument, nor by the college credits offered for some internships, nor by the fact that the interns who sued undoubtedly did learn some things about the film industry during their unpaid time at Fox.

All beside the point, as the judge made clear. The six-part test is strict for a reason: Internships are a somewhat disruptive exception to the usual workplace exchange of labor for money. As such, they are intended to be rare.