United States: US Employment Litigation Round-Up For June 2019

New York Strengthens Protections for Employees and Job Applicants to Combat Pay Inequality

Over the past several years, state legislatures have been increasingly active in passing a variety of worker protection laws to combat gender discrimination and harassment in the workplace and address pay inequality. We covered many of these developments in the May 2019, April 2019, February 2019, August 2018 and April 2018 Round-Ups. Continuing the trend, New York recently enacted new legislation to combat pay inequality in the workplace—Senate Bills 5248A and S6549, which Governor Andrew Cuomo signed into law on July 10, 2019.

Pay Equity:

Senate Bill 5248A, which takes effect on October 8, 2019, expands New York's equal pay act, which currently applies only to gender, to any "protected class." Specifically, the law prohibits "differential[s] in rate of pay because of protected class status"—i.e., age, race, creed, color, national original, sexual orientation, gender identity or expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, or domestic violence victim status.

The new law also expands the manner in which pay disparity is to be assessed by including in the analysis employees who perform "substantially similar work." As a result, under the amended law, employees within one or more "protected classes" may not be paid wages at a rate less than employees who do not have status within the same protected class in the same establishment for:

  1. equal work on a job that requires equal skill, effort and responsibility and that is performed under similar working conditions; or
  2. substantially similar work "when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions."  

The law does not amend the portion of the existing law providing that a pay differential is permitted if it is based on a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor other than status within one or more protected classes that is job-related and consistent with business necessity (such as education, training or experience). Employees can overcome this exception by demonstrating that:

  1. the employment practice causes a disparate impact based on membership in a protected class;
  2. an alternative employment practice exists that would serve the same business purpose and would not produce such a differential; and
  3. the employer refused to adopt that alternative practice.

Salary History Inquiries:

Similarly, Senate Bill S6549, which takes effect on January 6, 2020, seeks to limit employer salary history inquiries. Specifically, it prohibits employers from:

  1. seeking, requesting or requiring employees or applicants to provide information regarding their wage or salary histories as a condition of being interviewed, considered for an offer of employment, or for actual employment or promotion;
  2. making employment or compensation decisions based on salary history; or
  3. refusing to interview, hire or promote or otherwise retaliating against applicants or employees based on prior wage or salary history or the refusal to provide that information.

The new law does not prohibit applicants and employees from voluntarily disclosing or verifying their wage or salary history, including for purposes of negotiating their wages or salary, provided that they are not prompted to do so by the employer. Notably, employers are permitted to confirm wage or salary history information provided by an applicant or employee if the applicant or employee provided that information in response to an offer of employment in order to negotiate a higher wage or salary.

Ninth Circuit Revives Employee "Off the Clock" Bag Check Lawsuit

Decision: In Rodriguez v. Nike Retail Services, Inc., the United States Court of Appeals for the Ninth Circuit held that the federal de minimis doctrine—which precludes Fair Labor Standards Act ("FLSA") claims for compensation of "minor" or "irregular" work time—does not apply to California wage and hour claims. The plaintiff in Rodriguez was a former retail store employee who was required to submit to "exit inspections" every day after he had punched out on the store's time clock. The plaintiff filed a putative class action against his former employer alleging that the employer did not compensate him or other employees for "off the clock" time associated with these inspections. The parties disagreed as to precisely how long the exit inspections typically lasted but agreed that each inspection took less than a few minutes. The employer argued that exit inspections lasting no more than a few minutes were "minor" and administratively difficult to record and that this time was therefore de minimis and did not need to be compensated. The district court agreed and dismissed the case.

On appeal, the Ninth Circuit reversed the trial court's dismissal. Citing the California Supreme Court's recent decision holding that California's wage and hour statutes and regulations did not adopt the FLSA's de minimis doctrine, the Ninth Circuit held that the federal de minimis standard did not apply to wage and hour claims under the California Labor Code. Although the California Supreme Court had left open the possibility that California wage and hour claims might be barred "where compensable time is so minute or irregular that it is unreasonable to expect the time to be recorded," the Ninth Circuit found that, in this case, the defendant's inspection of employees for "measurable amounts of time" every time they exited the workplace did not meet that potential exclusion. The court also rejected the bright-line rule proposed by the defendant that work should last at least one minute or more to be compensable.

Impact: Rodriguez reaffirms that California law requires employees to be compensated for all time they are subject to the employer's control, even if they are "off the clock"—and even if that "off the clock" work lasts less than a minute. Although Rodriguez suggests that there may be situations where work time is "so minute or irregular" that compensation is not recoverable, Rodriguez gives little guidance about when those situations would arise. The inference from the decision is that work-related activities that occur daily may not qualify for the exception. Accordingly, California employers should ensure that their clock-in and clock-out policies—including the location of time clocks—record and compensate employees for all work activities that occur on a regular basis, regardless of how brief those activities might be.

Eighth Circuit Holds That Judicial Approval of Attorneys' Fee Awards Is Not Required in FLSA Wage Claim Settlements

Decision: In Barbee v. Big River Steel, LLC, the United States Court of Appeals for the Eighth Circuit held that the Fair Labor Standards Act ("FLSA") does not require judicial review of an attorneys' fees settlement reached in connection with an employee's FLSA wage claim. In Barbee, the plaintiff filed a putative collective action under the FLSA for unpaid overtime. After the parties notified the district court that they had settled the dispute, the court ordered them to submit the settlement for court approval, including the proposed agreement and any attorney billing records. The district court ultimately approved the substantive terms of the settlement with respect to the wage claim but unilaterally reduced the attorneys' fees amount. On appeal, the Eighth Circuit vacated the fee reduction, holding that the district court lacked authority under the FLSA to review the parties' attorneys' fees settlement. The court held that "any authority for judicial approval of FLSA settlements in 29 U.S.C. § 216(b) does not extend to review of settled attorney fees." The court explained that the interpretation of Section 216(b) is consistent with the public policy behind requiring court approval of FLSA wage claim settlements because "[w]hen the parties negotiate the reasonable fee amount separately and without regard to the plaintiff's FLSA claim, the amount the employer pays the employees' counsel has no bearing on whether the employer has adequately paid its employees in settlement." The court noted, however, that courts do retain the authority to ensure that the attorneys' fees in an FLSA settlement were in fact negotiated separately and without regard to the plaintiff's FLSA claim and that there was no conflict of interest between the attorney and his or her client.

Impact:   The Eighth Circuit's decision regarding attorneys' fees is instructive in how to structure FLSA settlements, as parties settling attorneys' fees should ensure that they are able to demonstrate that the attorneys' fees were negotiated separately, without regard to the settlement amount for the plaintiff's FLSA wage claim.  While the Eighth Circuit's decision is helpful to parties that wish to settle FLSA claims, there remains a circuit split as to whether the FLSA requires judicial approval of all settlements of wage claims. While the Fifth Circuit has held that judicial approval is not required, several other circuit courts, including the Second and Eleventh Circuits, have held that judicial approval is required.

NLRB Allows Employers to Prohibit Nonemployee Union Solicitation in Public Areas

Decision: In UPMC and SEIU, 368 NLRB No. 2(June 14, 2019), the National Labor Relations Board ("NLRB") recently issued a decision finding that "an employer does not have a duty to allow the use of its facility by nonemployees for [union] promotional or organizational activity." The Board found that the fact that a cafeteria located on an employer's private property is open to the public does not mean that an employer must allow nonemployees access to that property for any purpose, provided the employer does not discriminate between nonemployee union representatives and other nonemployees.

In so ruling, the NLRB overruled previous Board law that had created a "public space" rule requiring employers to permit nonemployee union organizers to engage in promotional or organizational activities in cafeterias and restaurants that are open to the public if the organizers use the facility in a manner consistent with its intended use and are not disruptive. The NLRB explained that the National Labor Relations Act "requires only that the employer refrain from interference, discrimination, restraint, or coercion in the employees' exercise of their own rights. It does not require that the employer permit the use of its facility for organization when other means are readily available." The Board further decided to apply the standard announced in its decision retroactively to all pending cases.

Impact: Under the NLRB's decision, employers may enact blanket no-solicitation/no-distribution on company grounds policies or practices if these policies or practices are applicable to and enforced with respect to all third parties. In enacting these policies or practices, employers should ensure they are treating all third-party promotional or solicitation activities in the same manner.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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