Update on EEO-1 Part 2 Pay and Work Hours Data Collection

On April 25, the Federal District Court in Washington DC ruled that the EEOC shall collect employer compensation and work hours data for all U.S. employers with 100 or more employees.  The Court has ordered that two years of compensation and work hours data be submitted.  It is certain that employers must submit 2018 data.  The Court ordered EEOC to soon decide whether employers will submit either 2017 or 2019 data.  Although all details have not been fully determined, the Court’s ruling included the following specifics:

  1. April 29, 2019 – EEOC will announce on its website that employers are to undertake preparations for filing their 2018 compensation and work hours data by September 30, 2019.
  2. May 3, 2019 – EEOC will communicate to the Court and to the Plaintiffs a second year of data that will be collected.  Specifically, the Court has ruled that EOOC can either collect 2017 compensation and work hours data or 2019 compensation and work hours data.
  3. September 30, 2019 – This is the date that employers’ 2018 compensation data must be submitted.  Additionally, in the event that the EEOC requires 2017 data to be filed, it also must be filed by this same date.
  4. March 31, 2020 – If the EEOC elects to require 2019 compensation data to be filed, instead of 2017 data, the compensation and work hours data must be filed by this date.
  5. April 5, 2021 – The Court has extended the authorization to collect compensation and work hours data to April 5, 2021.  The Court has relied on “tolling” principles for the time that the original EEO-1 data collection form was stayed by OMB.
  6. Rolling 20-day reports – the EEOC is to provide the Court with status updates every 20 days and the court is retaining jurisdiction to oversee and supervise implementation.  Additionally, the Court specifically stated that if there was a shortfall in the expected participation rate by employers in providing compensation data, that the EEOC was to extend the filing period until the historical reporting percentages are achieved.

For the District Court’s decision, click here.

A special webinar hosted by FortneyScott and DCI has been scheduled on Tuesday, April 30th  from 12-1 pm ET to provide employers in understanding what this means for them.  Please reach out to your FortneyScott attorney with whom you work to assist with compliance with these requirements.

To register for this timely webinar, click here.

Update on EEO-1 Part 2 Pay and Work Hours Data Collection

On April 25, the Federal District Court in Washington DC ruled that the EEOC shall collect employer compensation and work hours data for all U.S. employers with 100 or more employees.  The Court has ordered that two years of compensation and work hours data be submitted.  It is certain that employers must submit 2018 data.  The Court ordered EEOC to soon decide whether employers will submit either 2017 or 2019 data.  Although all details have not been fully determined, the Court’s ruling included the following specifics:

  1. April 29, 2019 – EEOC will announce on its website that employers are to undertake preparations for filing their 2018 compensation and work hours data by September 30, 2019.
  2. May 3, 2019 – EEOC will communicate to the Court and to the Plaintiffs a second year of data that will be collected.  Specifically, the Court has ruled that EOOC can either collect 2017 compensation and work hours data or 2019 compensation and work hours data.
  3. September 30, 2019 – This is the date that employers’ 2018 compensation data must be submitted.  Additionally, in the event that the EEOC requires 2017 data to be filed, it also must be filed by this same date.
  4. March 31, 2020 – If the EEOC elects to require 2019 compensation data to be filed, instead of 2017 data, the compensation and work hours data must be filed by this date.
  5. April 5, 2021 – The Court has extended the authorization to collect compensation and work hours data to April 5, 2021.  The Court has relied on “tolling” principles for the time that the original EEO-1 data collection form was stayed by OMB.
  6. Rolling 20-day reports – the EEOC is to provide the Court with status updates every 20 days and the court is retaining jurisdiction to oversee and supervise implementation.  Additionally, the Court specifically stated that if there was a shortfall in the expected participation rate by employers in providing compensation data, that the EEOC was to extend the filing period until the historical reporting percentages are achieved.

A special webinar hosted by FortneyScott and DCI has been scheduled on Tuesday, April 30th  from 12-1 pm ET to provide employers in understanding what this means for them.  Please reach out to your FortneyScott attorney with whom you work to assist with compliance with these requirements.

To register for this timely webinar, click here.

In Another Explicit Win for Employers, Supreme Court Says that Class Arbitration Must Be Explicitly Authorized

On April 24, the U.S. Supreme Court ruled that absent explicit authorization, class arbitration cannot be compelled. In Lamps Plus, Inc. v. Varela, the Court issued a 5-4 decision in favor of an employer, who had challenged the lower court’s ruling compelling class arbitration. The majority opinion, written by Chief Justice Roberts, concluded that an ambiguous agreement cannot provide the necessary “contractual basis” for compelling class arbitration.

The ruling is a victory for Lamps Plus following years of litigation. In 2016, a hacker posing as a company official persuaded an employee of Lamps Plus to disclose the tax filings of approximately 1,300 employees. The hacker used the information to file a fraudulent tax return in the name of Frank Varela, a Lamps Plus employee. Varela subsequently filed a class action against Lamps Plus on behalf of employees whose information had been compromised. Relying on the arbitration agreement in Varela’s employment contract, Lamps Plus sought to compel arbitration on an individual rather than a classwide basis, and to dismiss the suit. The district court rejected the individual arbitration request but authorized class arbitration. Lamps Plus appealed but the Ninth Circuit affirmed in 2017. The Supreme Court granted Lamps Plus’ subsequent petition for writ of certiorari on April 30, 2018.

Justice Roberts, writing for the majority, underscored the principle of consent under the Federal Arbitration Act (FAA), writing that under the FAA, arbitration “is a matter of consent, not coercion.” Citing to an earlier decision of the Court in 2010, Justice Roberts emphasized that the courts may not infer an affirmative contractual agreement to arbitrate where the language is ambiguous. That case – Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp. – involved an agreement that was completely silent on the availability of class arbitration and the Court there found that silence was not enough. Using the rationale in Stolt-Nielsen, the Court here held that ambiguity, like silence, does not suffice and the courts should not infer consent when it comes to fundamental arbitration questions.

Additionally, the Court recognized that the Ninth Circuit reached its conclusion based on California’s state rule that ambiguity in a contract should be constructed against the drafter.  This notion was raised by Justice Kagan in a dissenting opinion, noting that the rule is a common principle of contract interpretation that resolves ambiguities against the party. In addressing and rejecting that point, Justice Roberts held that the rule in fact conflicts with the FAA and is “flatly inconsistent with the foundational FAA principle that arbitration is a matter of consent.”

Today’s ruling is just the latest in a line of Supreme Court decisions that have backed arbitration. The decision comes nearly a year after the seminal decision in Epic Systems Corp. v. Lewis, which affirmed employers’ use of class action waivers in arbitration agreements that employees must sign. The Lamps Plus decision now further signals and extends a pattern in favor of employers when it comes to the use and scope of arbitration agreements in the employment context.

If you have any questions, please contact your FortneyScott attorney.

OFCCP Proposes Revisions to its Scheduling Letter and Expanded Data Collection

On April 12, 2019, OFCCP proposed significant changes to the agency’s Scheduling Letter process, notably by modifying the existing Compliance Review letter and significantly expanding the document and data requests and creating Compliance Check and Focused Review Letters for compliance evaluations under Executive Order 11246, Section 503 of the Rehabilitation Act (Section 503), and Section 4212 of the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA). As proposed, the sub-regulatory changes will increase contractors’ burdens significantly by expanding the data and documents that are to be submitted to OFCCP during a desk audit.  Although presented as technical updates, the changes are substantive and adverse to federal contractors’ interests.

Fortunately, the proposed letters are subject to review and approval by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act.  The OMB process allows for comments to be submitted by June 11, 2019.  Because of the review process, the proposed letters likely will not be effective until later this year.  Because a number of the new provisions considerably expand contractors’ obligations, it is likely that OMB will receive comments addressing whether OFCCP’s proposed sub-regulatory changes should be authorized and implemented.

Please check back for updates as FortneyScott will be closely monitoring developments.  If you have any questions or would like to discuss submitting comments, please contact your FortneyScott attorney.

 

EEOC Proposes Expensive and Uncertain Processes if the Court Orders a Deadline of September 30 for Employer Pay Data

On Wednesday, April 3, 2019, the Department of Justice informed the Federal District Court that the EEOC could implement pay data collection procedures if the court  orders employers to submit the W-2 pay and hours worked data required by EEO-1 Component 2 by September 30, 2019. However, the pay data collection would have to be performed by a contractor at a cost of $3 million and would result in significant uncertainties on security and accuracy matters.

DOJ’s submission, which included a declaration by EEOC’s Chief Data Officer, was in response to US District Court Judge Tanya S. Chutkan’s requirement that the government provide her with their plan to collect the EEO-1 Component 2 data. Judge Chutkan ruled on March 4, 2019 that the OMB’s decision to stay the EEOC’s revised EEO-1 information collection known as Component 2 was invalid and that it should be implemented immediately. When the EEOC opened its EEO-1 portal on March 18, 2019 seeking only Component 1 data of race, gender, ethnicity by EEOC category, the court, upon the request of plaintiffs, told the government to provide it with a plan for collecting Component 2 W-2 pay and hours worked data.

The submission states that collecting the pay data from employers by September 30th poses a number of issues. First, the Declaration of Dr. Sam Haffer, the EEOC’s Chief Data Officer, states that the data processes the EEOC uses to collect EEO-1 demographic data “are not capable of collecting employers’ 2018 Component 2 data” and that “it would take nine months to modify the EEOC’s current processes to support the collection of large amounts of sensitive Component 2 pay data from 2018.” As a result according to Dr. Haffer, the EEOC has determined that using a data and analytics contractor is its only alternative although “there is a serious risks that the expedited data collection process may yield poor quality data because of the limited quality control and quality assurance measures that would be implemented due to the expedited timeline.”

Meanwhile, a number of employer groups including The Institute for Workplace Equality represented by FortneyScott filed an amicus brief with the court asking that the pay data collection be postponed until 2020.

FortneyScott will keep you informed on the latest news involving the collection of Component 2 data.

To read the EEOC’s response, click here.

Wage and Hour Proposes New “Joint Employer” Rule

At a critical moment in the simmering battle over the definition of “joint employer,” the Department of Labor’s Wage and Hour Division has entered the fray with an emphatic statement.

W&H has issued a proposed new rule on the subject – its first since 1958 – which seeks to cut through a growing thicket of proposals and counter-proposals from a variety of sources, chiefly the NLRB.  The core principles of the new rule return the DOL’s definition to one that had been the dominant understanding for decades.  Under the new rule, joint employer status
will be determined under a four-factor test.
 Who has the authority to:      

  • hire or fire the employee;
  • supervise and control the employee’s work schedules or conditions of employment;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

Since the Obama Administration’s attack on the pre-existing rules by elevating factors such as “indirect control” or “reserved rights,” there has been a concerted effort by employer groups to clarify the criteria by which “join employer” decisions will be made.  W&H has provided precisely the sought-for clarity by “explaining that ability, power, or reserved contractual right to act in relation to the employee is not relevant for determining joint employer status” and noting, further, that analyses of additional factors may be used to determine joint employer status, but only if “they are indicative of whether the potential joint employer is exercising significant control over the terms and conditions of the employee’s work.”

DOL Proposes Change on Regular Rate

On March 28, 2019 the U.S. Department of Labor announced a proposed rule to clarify and update the Fair Labor Standards Act (FLSA) regulations governing regular rate requirements. Regular rate requirements define what forms of payment employers should include and exclude in the “time and one-half” calculation when determining workers’ overtime rates. The proposed rule focuses primarily on clarifying what kinds of perks, benefits, or other miscellaneous items must be included in the regular rate. Because these regulations have not been updated in decades, the proposal would better define the regular rate for today’s workplace practices.

The Department proposes clarifications to confirm that employers may exclude the following from an employee’s regular rate of pay:

  • The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • Payments for unused paid leave, including paid sick leave;
  • Reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  • Reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System and that satisfy other regulatory requirements;
  • Discretionary bonuses, by providing additional examples and clarifying that the label given a bonus does not determine whether it is discretionary;
  • Benefit plans, including accident, unemployment, and legal services; and
  • Tuition programs, such as reimbursement programs or repayment of educational debt.

The proposed rule also includes additional clarification about other forms of compensation, including payment for meal periods, “call back” pay, and others.

The proposed rule was published in the March 29, 2019 Federal Register and comments are due on May 28, 2019.

Contact your FortneyScott attorney if you have any questions or would like to file a comment about the proposed rule.

Federal Judge Orders EEOC to Provide Update on Pay Data Collection by April 3

The EEO-1 Report Survey officially opened on Monday, March 18, 2019 allowing employers to only submit the race, gender, ethnicity of their employees by EEO category (Component 1). EEOC in a statement issued on Monday morning said that it was only seeking Component 1, but that it was “working diligently on next steps in the wake of the court’s order in National Women’s Law Center, et al., v. Office of Management and Budget, et al., Civil Action No. 17-cv-2458 (TSC), which vacated the OMB stay on collection of Component 2 EEO-1 pay data. The EEOC will provide further information as soon as possible.”

In response to EEOC’s failure to require employers to submit pay data, US District Court Judge Tanya S. Chutkan on Tuesday, March 19, 2019 ordered the agency to inform employers of its timeline for collecting Component 2 data by April 3, 2019.  By that date, the EEOC is to let employers know if the data will be required before the May 31, 2019 deadline and provide guidance on how to submit the information. Component 2 to the EEO-1 Report would collect W-2 pay data and hours worked from all employers with 100 or more employees in 12 pay bands by EEO Category.

 

OFCCP issues FAQs on Section 503 focused reviews

On Friday, March 8, OFCCP announced its Section 503 Focused Review Landing Page. The landing page includes information on the Section 503 regulations, the focused review directive, and resources on reasonable accommodations as well as best practices.

Also on that page, OFCCP published long-awaited FAQs on the agency’s Section 503 focused reviews. Three of the most interesting FAQs are:

4. The Section 503 focused review scheduling letter requests our Executive Order 11246 AAP as well. Will OFCCP review the Executive Order (EO) AAP during a 503 focused review?

No. OFCCP will not conduct a review of the Executive Order Affirmative Action Program (AAP) during a Section 503 focused review. While OFCCP will request the EO AAP as part of the Section 503 focused review, the EO AAP will only be used to help the OFCCP compliance officer get a clearer picture of the contractor’s organizational structure, confirm Section 503 job groups, and understand generally how the Section 503 compliance strategies fit with the contractor’s other affirmative efforts. OFCCP will not analyze data contained in the EO AAP to look for discrimination based on sex or race and ethnicity. If elements of the EO AAP document are missing or insufficient on their face, OFCCP will note those issues and take appropriate actions, beginning with technical assistance, to bring the contractor into compliance. For example, if the EO AAP job group analysis does not include a list of the job titles that comprise each job group, OFCCP will provide technical assistance and require the contractor to submit the missing information, which will then be noted in the closure notice.

9. Will OFCCP analyze personnel activity data during a Section 503 focused review?

OFCCP will not require the submission of personnel activity data other than the data described in 60‐741.44(k) at the onset of a Section 503 focused review. However, during the course of the review, OFCCP may request and review this information. OFCCP may request compensation and promotion data for individuals who identified as having a disability, are known to have a disability, and/or employees who requested a reasonable accommodation. Additionally, based on a review of data in response to 60‐741.44(k), OFCCP may request additional applicant flow data for job groups that had applicants with disabilities.

10. Will focused reviews take place at all contractor facilities?

The first round of Section 503 focused reviews will take place at contractors’ corporate headquarters locations. OFCCP will evaluate whether it wishes to schedule other establishments for focused reviews in the future.

Wrap Up

Now that OFCCP has provided its compliance assistance materials on Section 503 focused reviews, FortneyScott understands that the CSALs will be posted imminently.

If you have any questions, please contact your FortneyScott attorney.

U.S. Department of Labor Issues New Overtime Proposal

On Thursday, March 7, 2019 the U.S. Department of Labor (DOL) posted on its website a Notice of Proposed Rulemaking (NPRM) for its new overtime rule. The proposal would raise the salary threshold for employees to be exempt from overtime from the current $455 per week ($23,660 per year) to $679 per week ($35,308 per year).

Other key aspects of the proposal include:

  • Raising the highly compensated employee (HCE) test from $100,000 to $147,414 of which $679 must be paid weekly on a salary or fee basis
  • Inviting public notice and comment to consider updating the standard salary level and HCE total annual compensation threshold every four years through rulemaking
  • Allowing employers to satisfy up to 10 percent of the salary threshold amount of $35,308 by the payment of nondiscretionary bonuses, incentives, or commissions, paid annually or more frequently (although this will not apply to HCEs)

The salary threshold is substantially lower than the salary threshold of $47,476 proposed by the Obama Administration and enjoined by the federal district court in the Eastern District of Texas prior to its effective date. The new proposal would rescind the 2016 Overtime Rule. The proposal does not make any changes the “duties” test which many employers had hoped it would.

Comments will be due 60 days after the NPRM is published in the Federal Register. FortneyScott will keep you informed on any updates made by the DOL.  Contact your FortneyScott attorney if you have any questions or would like to file comments on the proposal.