United States: Employment, Labor & Benefits Update - July 2017

WEBINAR: Wage and Hour Compliance (in Japanese)

On Tuesday, August 29, 2017, Masa Katsumi will present a webinar from 12:00 – 1:00 p.m. CDT on wage and hour compliance. The webinar will cover the overtime rules, how to properly classify employees, and several common wage and hour challenges. The entire webinar will be presented in Japanese. Invitations will be distributed by the end of July.

SAVE THE DATE: September 28, 2017 - Annual Seminar

On Thursday, September 28, 2017, the Employment, Labor and Benefits group will hold its annual seminar at the Doubletree Hotel, 75 West Algonquin Road, Arlington Heights, Illinois. Registration begins at 8:00 a.m. The program, which will run from 8:30 a.m. to 11:30 a.m., has been submitted for 2.5 hours HRCI and MCLE general recertification credit.

The program will include panel discussions on the Trump Administration's impact on various employment and employee benefit laws, the significant increase in employee fraud and embezzlement, and protecting your company's confidential information or trade secrets from improper disclosure or theft.

Please Save the Date in your calendar and look for additional information.  

The Seventh Circuit Provides Guidance on Involving an Infrequently Litigated Type of Employer Practice

By Chaelin Shin (Summer Associate)

It is a struggle for employers to go through various discrimination complaints brought against them by employees, especially when the complaints involve an infrequently litigated category under Title VII. The AutoZone case provides guidelines on how to deal with those cases.

Recently, the Seventh Circuit granted summary judgment for AutoZone in a Title VII case, where the plaintiff, an African American employee at AutoZone, alleged to have been discriminated against. One of the stores that he was stationed in was located in a neighborhood where the population consisted largely of Hispanics. The plaintiff sued AutoZone alleging that he was transferred out of that store in an effort to make it a "predominately Hispanic" store.

The governing provision in this case was subsection (2) of 42 U.S.C. § 2000e-2(a), which specifies an employment practice to be unlawful if an employer "limit[s], segregate[s], or classif[ies]" employees by "race, color, religion, sex, or national origin" "in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect" the employee's employment. Title VII cases are not often litigated under this subsection, but rather under subsection (1) ("it shall be an unlawful employment practice for an employer to fail or refuse to hire or to discharge" or "to discriminate against any individual ... because of ... race, color, religion, sex, or national origin."). For those who are unfamiliar with subsection (2), it might be difficult to discern the difference between the two subsections. The Seventh Circuit, in AutoZone, provided guidance as to how the two subsections could be different.

First, the Court pointed out a major difference between the subsections, which is that an employer can violate the second subsection, but not the first, if its action "tend[s] to deprive any individual of employment opportunities." This means that an employer can still be liable even if the action it engaged in does not specifically entail an "adverse employment action," as long as it had some tendency to deprive an employee of any employment opportunities.

However, the Court emphasized an employee must provide evidence that the employer's action in question had at least some detrimental effect on her working conditions, such as demotion, or reduction in pay or benefits. Therefore, it must be noted that a "purely lateral transfer" will not be deemed to have even a tendency of deprivation and consequently will not violate subsection (2). Because the working conditions of the plaintiff in AutoZone was virtually unchanged after his transfer, the Court concluded that a reasonable jury could not have found that AutoZone is liable under Title VII due to lack of evidence.

As a result, employers should understand that they will not be completely off the hook simply because they did not engage in any "adverse employment action." The scope of subsection (2) is broad so as to include even a tendency to deprive employment opportunities as violation of Title VII. In order to refrain from falling within the ambit of subsection (2), employers should be wary of their actions that could create negative impacts on an employee's working conditions.  

An Increase in the Salary Level - Still a Likely Possibility

By Frank Del Barto

On June 27, 2017, the U.S. Department of Labor ("DOL") sent a Request for Information ("RFI") related to the overtime rule to the Office of Management and Budget for its review. When published, the RFI will provide the public an opportunity to comment. As a result of this RFI, there is still a very good chance that the current salary level for an exempt employee ($23,660 per year) will increase in the near future.

Recall that the DOL published a Notice of Proposed Rulemaking in July 2015, and invited interested parties to submit comments. The DOL received and reviewed over 270,000 comments before issuing a Final Rule that was to become effective on December 1, 2016. As we discussed in several client webinars, the Final Rule increased the salary level for the executive, administrative and professional employee exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year), increased the salary level for the highly compensated employee exemption from $100,000 per year to $134,004 per year, and established a mechanism that would automatically increase these salary levels every three years, beginning on January 1, 2020.

In order to prepare for the December 1, 2016 compliance date, many clients spent a significant amount of time reviewing all employee salary levels and job duties. Then, on November 22, 2016, a Texas court enjoined the implementation of the Final Rule. As this litigation proceeded, the DOL asked for several extensions to file briefs in the case in order to better understand the new Secretary of Labor's (Alexander Acosta) position on the salary-level increase requirement. On June 7, 2017, Secretary Acosta testified before an appropriations committee that he agrees that the salary level should be increased, but he disagreed with how the Obama administration implemented the change. In short, the salary level will increase in the near future.

Once the RFI is published, because it will likely cover other wage-related topics, we encourage all clients to review the RFI, and consider commenting on those areas that impact their business and their ability to attract and retain employees while competing in the global economy. Along the way, the Firm will continue to provide guidance for planning purposes. Please continue to look for additional articles and webinars on this topic as information becomes available. 

The Department of Labor Will Issue Opinion Letters Again

By Masanari Katsumi

Companies never have a shortage of questions when it comes to their compliance with the federal wage and hour laws. Companies desire guidance that takes into account their specific situations so they can be assured that they are (or will be) doing the right thing(s) to comply. In order to aid companies with their compliance efforts, the Department of Labor ("DOL") announced that it will start issuing inquiry-specific Opinion Letters again. In 2010, the DOL ceased issuing Opinion Letters and instead began to issue more general explanations in Administrator Interpretations.

Opinion Letters are an official response from the DOL's Wage and Hour Division ("WHD") that contain detailed explanations regarding how certain laws such as the Fair Labor Standards Act ("FLSA") and the Family and Medical Leave Act ("FMLA") apply to the fact-specific scenarios presented by employers.

On June 27, 2017, the Secretary of Labor (Alexander Acosta) declared that the DOL will reinstate its Opinion Letter practice. According to Mr. Acosta, issuing Opinion Letters shows the DOL's commitment "to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs."

This development is important for employers because they now have an additional means to check their compliance with certain federal statutes. Even if an employer does not make a request on its own, examining the Opinion Letters issued to other employers can provide some insight into how the DOL may consider your specific wage and hour compliance concerns.

Supreme Court to Decide Fate of Class Action Waivers During October, 2017 Term

By David J. Stein

You, the Human Resources Director, just got called down the hallway to the President's office. You walk down the hallway. "Shut the door," he says. "We were just served with a class action complaint claiming that we have misclassified all of our mid-level plant managers across the country as exempt employees."

The Complaint was filed by a single, disgruntled employee in your Central Illinois plant, but asks for a certification of all similarly situated individuals across the nation. The President tells you to call Masuda Funai and ask them what the company's exposure is based on the filing of a class action complaint.

Luckily, the employment agreements for all mid-level plant managers contain an arbitration clause stating that any disputes must be resolved through binding arbitration in Chicago, Illinois. The arbitration clause also contains a provision whereby the employee has waived his right to bring a class action against the company, and has also waived his right to participate in any class actions against the company. You think you are safe from the worst, a national class action case under the Fair Labor Standards Act. The employee should only be able to proceed on an individual claim, in arbitration, significantly reducing the company's monetary exposure. Not so fast, the lawyers say. It is unclear whether class action waiver provisions in arbitration clauses are enforceable. Luckily, the United States Supreme Court will provide some clarity during its October, 2017 term this fall.

The dispute over the enforceability of class action waiver provisions began several years ago, when the National Labor Relations Board ("NLRB") declared such provisions unenforceable in two cases, called, D.R. Horton and Murphy Oil. The NLRB ruled that the class action waivers are unenforceable because such provisions violate an employee's right to protected, concerted activity (i.e. organizing with other employees). The Fifth Circuit Court of Appeals, based in Texas, reversed the NLRB's ruling in both cases, holding that despite the protections of the NLRB, the Federal Arbitration Act ("FAA") permits employers and employees to enter into enforceable agreements containing an arbitration provision with a class action waiver. Several other courts across the country agreed with the Fifth Circuit.

In May, 2016, the Chicago based Seventh Circuit issued its opinion in the Lewis v. Epic Systems case, where it disagreed with the D.R. Horton and Murphy Oil decisions. The Seventh Circuit sided with the NLRB, declaring that class action waiver provisions were unenforceable. Shortly thereafter, the California based Ninth Circuit agreed with the Seventh Circuit in Ernst & Young v. Morris.

Luckily for employers, the Supreme Court agreed to resolve the dispute in January, 2017. The Court declined to hear argument in the case during its Spring, 2017 term because of the potential for a 4-4 tie vote. Now, with Justice Neil Gorsuch providing the ninth vote, the Court is set to decide the case this fall. Given the makeup of the Supreme Court with Justice Gorsuch now on the bench, look for employers to score a victory with the Supreme Court rejecting the Seventh and Ninth Circuit, and accepting the Fifth Circuit's view permitting enforcement of class waiver provisions. Regardless of the outcome of the case, this important issue is one that all employers must be aware of heading into the fall of 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions