DOL Joint-Employer Rule: What Employers Need to Know

Wednesday, February 5, 2020
Noon – 1:00 p.m. EST

The Department of Labor has issued its Rule on Joint Employer status, setting out the government’s position on this controversial issue.

Join subject-matter experts Nita Beecher and Burt Fishman from FortneyScott for a free, hour-long webinar as they discuss what employers need to know about the new Rule, including:

  • The 4 criteria to determine Joint Employer status;
  • The role of “reserved rights”;
  • The decrease of liability on franchisors and “the gig economy”;
  • Additional Joint Employer rules on the horizon; and
  • The next steps from Congress and the States in this volatile debate.

Register for this complimentary webinar here.

 

Department of Labor Issues Final Joint Employment Rule

On Monday, January 13, 2020 the Department of Labor issued its joint employment rule which will be effective on March 16, 2020. The rule adopts a four-part test for assessing whether a company is the joint employer of another company’s employees. The test – which reflects the rule prior to the Obama Administration – considers whether the alleged joint employer hires or fires; supervises or controls work schedules; sets pay rates; and, maintains employment records. According to DOL, the fact that the alleged joint employer has the right or ability to exercise any of the four factors is relevant but not conclusive. Instead, whether the employer actually uses the authority is more relevant to determining joint employment status. The rule thus establishes stiff criteria before franchisers and their franchisees will be found jointly liable for compliance with federal wage and hour laws.

FortneyScott is reviewing the final rule which is scheduled to be published on January 16, 2020 and will provide a more detailed analysis soon. Contact your FortneyScott lawyer for more information.

How to Conduct an Effective Pay Equity Analysis

Webinar:  How to Conduct an Effective Pay Equity Analysis
Date: December 11, 2019 at 2:00 pm ET
Hosted by: Jobfindah
Presented by: Mickey Silberman

The focus on pay equity is here and continues to grow. In response, more and more employers are making the decision to conduct proactive pay equity analyses, hoping to find unexplained pay gaps and make substantial pay adjustments in the hopes of closing those gaps. But too many employers are rushing to conduct – either themselves or by outsourcing to a consultant – analyses that produce inaccurate and often misleading results. And then they make pay adjustments that do not fix the underlying issues that created and perpetuate those gaps. Attorney Silberman’s presentation will focus on the actions employers can take to fix this.

There is no cost to attend but seats are limited.  CLICK HERE to reserve your spot.

Please note that the webinar is approved for 1-hour of HRCI credit.

FortneyScott 2019 Lunch & Learn Series – 2019 Employment Year in Review

FortneyScott 2019 Lunch & Learn Series – 2019 Employment Year in Review
Wednesday, December 18, 2019
Time: Noon – 1:00 p.m. EST
Cost: Complimentary

Join David Fortney and Mickey Silberman of FortneyScott for a complimentary, hour-long webinar as they review the many significant developments for employers in 2019, and look ahead to 2020. Topics covered will include:
• Recent Supreme Court decisions impacting the workplace,
• New executive orders and legislation,
• An update on EEOC and DOL enforcement, including OFCCP and the Wage & Hour Division,
• And more!

CLICK HERE to register.
By participating in this webinar, you will earn 1.0 PDCs towards SHRM recertification.

Report from the ABA/ Labor and Employment Meeting: Dir. Leen’s Plans for OFCCP Focused Reviews

OFCCP Director Craig Leen presented at the American Bar Association’s Annual Meeting of the Labor and Employment Section in New Orleans on November 8. Leen’s comments centered on 503 and VEVRAA focused reviews. That same day, OFCCP issued a second 2019 Corporate Scheduling Announcement Lists that included 500 VEVRAA focused reviews. Here are the key takeaways from Leen’s presentation:

  • 503 and VEVRAA focused reviews will include an analysis of “systemic” discrimination in promotions, terminations, and compensation. Leen stated that the agency will conduct regression analyses in order to ferret out such discrimination. Because most establishments do not employ a sufficient number of Individuals with Disabilities (IWDs) or protected veterans to conduct a statistical analysis, in all likelihood, an analysis of compensation or promotion practices will likely be based on individual comparators and anecdotal evidence. Leen also reported that all focused reviews, VEVRAA and 503, will include an on-site. He estimated the on-sites would last three to five days.
  • OFCCP plans to post on its website a list of the contractors who successfully completed a 503 or VEVRAA focused review without any adverse findings, as well as best practices identified in each review.
  • Leen urged attendees to review the list of 503 best practices posted on the agency’s website and considering implementing some or all of them. The 503 focused reviews will include an assessment of whether the contractor implemented any of the best practices. Leen also noted that OFCCP will be taking a hard look at the impact of assessments, particularly those using artificial intelligence, on IWDs and the basis for denying a requested accommodation. Leen asserted that virtually all requests should be granted since most accommodations cost less than $500. Finally, Leen wants to see an Accessibility Coordinator in every workplace.
  • Compliance officers conducting 503 focused reviews will ask for, at least, the following documentation:
    • Termination records
    • Personnel files
    • Flexible workplace polices
    • Response rate for self-identification surveys
    • Contractor’s efforts to increase self- id response rates
    • Job descriptions

Although Leen specifically referenced this list in connection with Section 503 focused reviews, this list could also apply to a VEVRAA review.

  • A revised version of the 503 self-identification form is pending approval with the Office of Management and Budget (OMB). The intent of the revisions is to make the form more welcoming to IWDs in an effort to increase response rates.
  • Leen’s comments focused primarily of compliance with Section 503. However, he did stress a new focus with respect to VEVRAA compliance – discrimination against military spouses. The VEVRAA regulations include a prohibition against associational discrimination similar to the Section 503 and the ADA. 41 CFR 60-300.21(e)

Leen also stated that contractors may implement hiring preferences for IWDs and Veterans. According to Leen, such programs are not discriminatory. This position appears to be contrary to the EEOC’s guidance on voluntary preferences. Before implementing such a hiring preference, please consult with counsel.

  • Finally, Leen announced that next year, OFCCP will launch additional types of focused reviews on disability accommodations and religious accommodations. Eventually, Leen also plans to implement compensation and promotion focused reviews.

For more information on preparing for or responding to a focused review, please contact your FortneyScott attorney or send us an e-mail with your questions.

Trump Rescinds Obama Executive Order Requiring Successor Employers to Offer Employment to Service Workers

On October 31, 2019, President Trump issued a new Executive Order that rescinded President Obama’s Executive Order 13495 (EO)—Nondisplacement of Qualified Workers Under Service Contracts—and its implementing regulations. The now rescinded EO required successor contractors to offer positions to qualified service workers and to provide employee notifications and workplace notice postings.

Additional Information on the Rescinded EO.      The recession is effective immediately. The former EO required that any contract or subcontract entered into by the federal government or its contractors covered by the McNamara-O’Hara Service Contract Act (SCA) include a clause that qualified workers currently on a covered contract be given the right of first refuse for employment with a successor contractor. The EO prohibited a successor contractor performing the same or similar services at the same location from hiring any new employees until qualified workers performing the prior contract were provided an opportunity to accept a job with the successor. The EO also required the predecessor contractor to provide written notice to eligible employees by either conspicuous workplace posting or by individual notices to employees. Federal contractors will no longer be required to post or provide EO notices as well.

Trump’s rescission order specifically terminates immediately any existing investigations or compliance actions based on EO 13495, and directs the Secretary of Labor and other heads of government agencies to promptly move to rescind any orders, rules, regulations, guidelines, programs or policies implementing or enforcing Obama’s executive order.

Of the three Executive Orders issued by President Obama which federal contractors sought to reverse—(1) Fair Pay and Safe Workplaces, (2) Nondisplacement of Qualified Workers under the Service Contracts and (3) Paid Sick Leave—only the Paid Sick Leave Executive Order is still in effect.

Contact your FortneyScott attorney who advises your company or email us at info@fortneyscott.com for additional information about the rescinded EO, and for advice on the impact that these changes have on your federal contracting compliance obligations.

OFCCP Issues Technical Assistance Guide for Educational Institutions

Today, OFCCP issued its long-anticipated Educational Institutions Technical Assistance Guide (“TAG”), designed to assist educational institutions with federal contracts “understand their obligations under the laws and regulations OFCCP enforces and to help them prepare for compliance evaluations.”

Acknowledging that educational institutions may face “unique challenges” in their compliance efforts, the TAG addresses a number of key issues, including:

  • Guidance for determining whether the institution should develop a single AAP (g., for the campus or the university) or multiple AAPs;
  • Clarification on when student employees should be included in, or excluded from, AAPs;
  • Methods for developing job groups for instructional and non-instructional employees;
  • Best practices for developing action-oriented programs;
  • Discussion of how OFCCP will review promotion data; and
  • Overview of OFCCP’s compensation analysis methodology.

While the TAG is useful, educational institutions must identify any content that goes beyond the regulatory requirements of Executive Order 11246, Section 503, and VEVRAA. OFCCP, as a matter of law, only can enforce the regulatory requirements, and the Agency cannot enforce any expanded obligations included in the TAG.

FortneyScott will provide a more in-depth analysis of the TAG for clients prior to the October 23, 2019 Town Hall OFCCP is holding for educational institutions.

For more information on the TAG or how educational institutions should respond to OFCCP compliance review, please contact your FortneyScott attorney or send us an e-mail with your question.

EEO-1 Component 2 Deadline Extended

Although the EEOC was scheduled to end the Component 2 data collection on Monday, September 30, 2019, the EEOC plans to keep the portal open in accordance with the district court’s order until it reaches approximately 72% of the employers who normally file EEO-1 Reports. On Friday, September 27, 2019 in its Status Report to the district court discussing post-September 30th activities the EEOC announced its plan to continue to accept Component 2 data for 2017 and 2018 in accordance with the judge’s order.  EEOC said that EEO-1 eligible employers should continue to submit and certify their Component 2 EEO-1 reports for 2017 and 2018 as soon as possible.

For more information on Component 2 pay data collection, see the EEOC’s portal for Component 2.

DOL Issues Long-Anticipated Update to Overtime Rule

This morning, the U.S. Department of Labor’s Wage & Hour Division (WHD) announced a final rule updating the overtime eligibility requirements for workers under the federal Fair Labor Standards Act (FLSA).

Most notably, the final rule bumps up the minimum salary threshold required for workers to be exempt under the FLSA’s “white-collar” exemptions—that is, the executive, administrative, and professional exemptions. The new threshold of $35,568 is a significant increase from the previous threshold of $23,660, an amount which has not been revised since 2004. However, the new threshold falls far short of the $47,476 level proposed in a scuttled Obama-era rule in 2016.

Very importantly, the final rule makes no changes to the current “duties test” for exemptions—a hotly debated subject during the rulemaking process. Nor does the final rule call for an automatic update of the salary threshold, another controversial feature in the blocked Obama rule.

Other significant components of the final rule include:

  • Updating the salary threshold for the “highly compensated employee” exemption from $100,000 to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and
  • Revising the special salary levels for workers in U.S. territories and in the motion picture industry.

According to a WHD press release, the final rule will make an additional 1.3 million American workers eligible for overtime pay.

Next Steps

While the rule is scheduled to go into effect on January 1, 2020, it is widely expected that it will be challenged immediately in federal courts by Democrats and worker advocate groups, with the intent of enjoining and invalidating the rule in favor of one more akin to the Obama rule.

The final rule’s release coincides with a Senate committee confirmation vote today on Trump nominee for Labor Secretary, Eugene Scalia. Scalia is expected to clear the committee vote and ultimately win confirmation by the Republican-controlled Senate.

FortneyScott will keep you updated on the status and impact of this final rule. If you have any questions, please contact your FortneyScott attorney, or e-mail FortneyScott.

OFCCP Issues FAQs for “Campus-Like Settings”

The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) provided guidance on how an “establishment” should be determined in a campus-like setting, such as a higher education institution or an office park.

Understanding what constitutes an “establishment” is the cornerstone of federal contractors’ EEO and affirmative action compliance obligations. Federal contractors, generally, are required to develop Affirmative Action Plans (“AAPs”) for each “establishment.” AAPs are proactive tools that monitor most personnel activity (e.g., hiring, promotions, compensation and terminations) to determine areas of potential discrimination and areas in which additional diversity efforts need to be focused. OFCCP conducts compliance evaluations and related enforcement activity based on individual “establishments” by reviewing the AAP and related supporting materials. When multiple buildings in a campus-like setting are combined in a single AAP, contractors risk including a larger number of dissimilar employees into a single AAP. This could reduce the effectiveness of the proactive analyses as well as create additional challenges during OFCCP audits.

Key Takeaways: Federal contractors with campus-like settings, including clustered office buildings and higher education campuses, should evaluate whether their AAP structures comport with the factors included in OFCCP’s guidance to minimize the risk of a challenge to the AAP structure and coverage by OFCCP. In particular, higher education federal contractors need to carefully evaluate whether to use a campus-wide approach for developing an AAP, or whether grouping buildings by departments or other related organizational units or functions is appropriate for AAPs. The development of AAPs is a critical component in a federal contractor’s compliance strategy, and federal contractors should secure legal advice on how their AAPs should be structured based on their specific facts and with appropriate consideration of OFCCP’s new guidance.

Additional Information for Higher Education Federal Contractors: OFCCP, in particular, focuses on assessing compliance by higher education federal contractors which began during the Obama Administration. Many reviews of the higher education contractors still are pending. Why? Because OFCCP and the higher education community cannot agree on a fundamental compliance point – the definition of an “establishment.”

“Establishment” is not defined in OFCCP’s regulations. Case law, OFCCP’s compliance manual, trial testimony of a Regional Director, and the agency’s long-standing practice, however, define an “establishment” as a brick and mortar building. Curiously, OFCCP has repeatedly, but not consistently, taken a different position when it comes to higher education contractors. According to OFCCP practice, typically an “establishment” in the context of a college or university is the entire campus.

Last Spring, OFCCP Director Craig Leen promised to issue technical assistance guidance (TAG) for colleges and universities covering a range of issues, including the scope of a higher education AAP. It appears, OFCCP has abandoned – or at least delayed – its promise of a comprehensive TAG in favor of FAQs for Campus-Like Settings generally. These FAQs apply more broadly than just higher education. The FAQs apply to any contractor with multiple buildings in a campus-type setting.

While the sub-regulatory guidance provided in the FAQs is generally phrased in the permissive – “OFCCP may consider” or “Contractors may determine,” the guidance sets forth several factors contractors “should” consider when determining whether multiple buildings “should” be in a single AAP (FAQ 4). Such factors include:

  • What is the function of the building, and how do the employees in the building interact with employees in other buildings?
  • Are employees across different buildings part of the same organizational unit, such as department, division, section, branch, group, job family, or project team?
  • Are the hiring, compensation, and other personnel decisions handled separately at each building or are those functions consolidated across the entire contractor or across multiple buildings on one campus?
  • Does each building handle its own recruitment or is that function consolidated across multiple buildings?
  • Do the buildings recruit from the same labor market or recruiting area?
  • To what extent are other human resources and Equal Employment Opportunity compliance functions operationally distinct for each building or group of buildings?
  • To what extent do certain employees perform work functions across various buildings?

OFCCP does not cite to any authority, legal or otherwise, to support these factors or the definition of an “establishment” as a group of buildings located in the same area. These FAQs are sub-regulatory guidance and, as such, it does not bind the contractor community or OFCCP. The structure and scope of an AAP is a critically important compliance decision. Contractors should certainly consider the various options available for structuring their AAPs – grouping multiple buildings in a single AAP per these FAQs; an AAP per building based on OFCCP’s long standing practice; or a Functional AAP per the regulations (41 CFR 60-2.1(d)(4)).  Specifically, in our experience involving higher education institutions, there have been limited instances in which OFCCP has accepted AAPs based on sub-campus groupings by departments or functions. OFCCP, however, generally expects that a single, campus-wide AAP will be prepared for colleges and universities, notwithstanding the lack of specific legal authority compelling such an AAP structure.

Please contact your FortneyScott attorney or email us at info@fortneyscott.com for more information about how the new OFCCP guidance applies to your AAP design and related matters.