Category: Employment Law

Confidentiality in Workplace Investigations

NLRB Restores Confidentiality in Workplace Investigations

A December 16, 2019 NLRB decision reinstated employers’ discretion to maintain confidentiality in workplace investigations. In 2015 the federal Labor Board had found that employees’ rights to communicate with each other generally trumped company secrecy in this area. The new ruling allows investigatory confidentiality to be the default, rather than the exception.

Previous Standard

In 2015, an Obama-era NLRB panel with a Democrat majority held companies to the burden of demonstrating a specific need for confidentiality regarding a particular investigation. In other words, the default was the employers could not force employees to keep quiet about an ongoing internal inquiry.

Under the Banner Estrella Medical Center ruling, employers could only require confidentiality upon affirmative evidence that:

  • witnesses need protection;
  • evidence is in danger of destruction;
  • testimony is in danger of fabrication; or
  • there is a need to prevent a cover-up.

In that decision, the Board found that, absent these factors, employees’ rights under Section 7 of the National Labor Relations Act outweighed company interests in preserving the integrity of an investigation. Section 7 of the NLRA protects employees who engage in concerted activity for their mutual aid and protection regarding terms and conditions of employment.

Concern with Lack of Confidentiality

A strenuous critique of the Banner Estrella Medical Center decision was that it was inconsistent with EEOC guidance encouraging confidentiality in workplace investigations. Specifically including investigations of sexual harassment, the EEOC has long emphasized that employer procedures for resolving internal complaints “should ensure confidentiality as much as possible. . . .”

Over the past few years, the EEOC and NLRB have attempted to reconcile their inconsistent stances. The new NLRB position eliminates the conflict between these federal agencies.

Changing the Presumption (Back)

The NLRB’s 3-1 decision in a case involving Unique Thrift Store once again permits employers to ask their employees to keep investigations confidential. They can do so as the default, without first evaluating prescribed criteria.

Unique Thrift Store maintained the following work rules for employees:

  • “Reporting persons and those who are interviewed are expected to maintain confidentiality regarding these investigations.”
  • “The following list . . . are examples of behaviors that . . . may lead to disciplinary action, up to and including termination . . . . Refusing to courteously cooperate in any company investigation. This includes, but is not limited to, unauthorized discussion of investigation or interview with other team members . . . .”

The Board majority overruled the Banner Estrella standard, in part, for its failure “to consider the importance of confidentiality assurances to both employers and employees during an ongoing investigation.”

Open Question on Investigatory Confidentiality Rules

The NLRB’s 2019 Unique Thrift Store decision didn’t actually determine whether the above rules are lawful. The Board withheld ultimate judgment in that regard because the rules themselves weren’t clearly limited to the duration of an investigation. In other words, they arguably required employees to keep quiet even after the company had completed its investigation.

The Board did not feel it had enough information to evaluate whether Unique Thrift Store had sufficient justification for requiring post-investigation confidentiality. So, it sent the case back down for further proceedings regarding that question.

Impact on Employers

Under this new ruling, companies can go back to directing employees to maintain confidentiality during an investigation. They can generally implement and enforce written rules to that effect. But they should be careful in the wording of such rules and directives. Requiring employees to stay silent even after an investigation has concluded may be more problematic. In that situation, your company should evaluate the specific circumstances and, ideally, consult with an experienced labor attorney.

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Click for the full decision in:

Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019)

Banner Health System d/b/a Banner Estrella Medical Center, 362 NLRB 1108 (2015)

FLSA Regular Rate

U.S. DOL Clarifies FLSA Regular Rate

For the first time in over 50 years, the U.S. Department of Labor updated its interpretation of “regular rate of pay” under the Fair Labor Standards Act (FLSA). The new DOL rule takes effective January 15, 2020. The changes address new, more complicated perks and benefits. These include wellness plans, fitness classes, nutrition classes, and smoking cessation classes. The new rule will make it less costly for employers to provide additional benefits to employees. This, in turn, may increase workplace morale and employee retention.

The FLSA Regular Rate

The Fair Labor Standards Act is the federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards. The FLSA covers most employees in the private sector and federal, state, and local governments.

Under the FLSA, an employee is eligible for minimum wage and overtime unless they qualify for a statutory exemption.

The employer must pay “non-exempt” employees at least minimum wage and compensate them for overtime at a premium rate of 1.5 multiplied by the employee’s “regular rate of pay” for all hours worked over 40 in a “workweek.”

Under current regulations, the “regular rate of pay” includes all remuneration for employment paid to or on behalf of an employee for hours worked, except for specific categories that were excluded under the FLSA. This “regular rate” includes the hourly wages and salaries for non-exempt employees, most bonuses, shift differential pay, on-call pay, and commission payments. The regular rate of pay is generally calculated by adding the employee’s includible compensation each week and dividing it by the number of hours worked within the workweek.

For more details on performing the FLSA regular rate calculation, read Calculating the Overtime ‘Regular Rate’.

New Rule on Regular Rate of Pay

The new rule clarifies that the following perks may be excluded from the calculation of an employee’s regular rate of pay, effective January 15, 2020:

  • The cost of providing parking benefits, wellness programs, onsite specialist treatments, gym access, and fitness classes, employee discount on retail goods and services, certain tuition benefits and adoption assistance;
  • Payment for unused paid leave, including paid sick leave and paid time off;
  • Certain penalties incurred by employees under state and local scheduling leave laws;
  • Business expense reimbursement for items such as cellphone plans, credentialing exam fee, organization membership dues and travel expenses that don’t exceed the maximum travel reimbursement under the Federal Travel Regulation system or the optional IRS substantiation amounts for certain travel expenses;
  • Certain sign-on and longevity bonuses;
  • Complimentary office coffee and snacks;
  • Discretionary bonuses (the DOL noted that the label given to a bonus doesn’t determine whether the bonus is discretionary); and
  • Contributions to benefit plans for accidents, unemployment, legal services, and other events that could cause financial hardship or expense in the future.

The DOL has also expanded the circumstances where employers can exclude call-back pay from the regular rate. Such payments no longer must go into the regular rate unless they are scheduled and prearranged.

Regular Rate Pitfalls

Overtime Must Be Calculated Weekly

Under the FLSA, an employer is responsible for determining the official workweek. Employers have considerable leeway in doing so. However, the workweek must consist of a fixed reoccurring 168 hours that contains seven, 24-hour workdays.  The workweek and workday start and end times must remain consistent unless employees receive advance notice of the changes.

Non-exempt employees must be paid overtime for all hours worked over 40 in a workweek (or as otherwise described by applicable law). Employers may not average the number of work hours worked by an employee over a two-week period, even if the employer has their payroll set up biweekly, to avoid paying overtime. For example, if an employee works 45 hours in week 1 and 35 hours in week 2, the employer may not average the hours worked over the two weeks resulting in a payment of zero overtime hours. Instead, the employee would be due 5 hours of overtime for week 1 and no overtime hours for week 2. Many employers make this mistake that could result in an extensive and expensive audit or litigation.

Employees Can’t Waive Overtime Pay

Non-exempt employees cannot waive their right to receive statutory overtime pay. This is true even for collective bargaining agreements or other written employment contracts.

Private Companies Can’t Use “Comp Time” Instead of Overtime Pay

Companies cannot provide employees with compensatory time (comp time) in exchange for payment for overtime hours worked each week. There are some exceptions to this rule for government workers.

Salaried, Non-Exempt Employees Are Still Eligible for Overtime Pay

An employer could pay a non-exempt employee a weekly salary that will represent pay for all regular hours of work. But if the employee works overtime during the workweek, the employer must pay additional premium compensation above and beyond the weekly salary for each overtime hour worked.

Example: An employee earns a weekly salary of $700 each week and works 43 hours. This employee’s regular rate of pay for this week would be $700/43=$16.28. The extra premium pay owed for the overtime hours can be determined by dividing the regular rate of pay in half. The employee should receive the normal weekly salary of $700, plus (3 hours x premium pay of $8.14) = $724.42.

State Overtime Laws

This new rule relates specifically to the FLSA. Many states have separate minimum wage and overtime laws. Employers often must satisfy both state and federal laws in this area. The “regular rate” concept may differ in some states. Therefore, be sure to consider the laws of your state in addition to the FLSA.

What Employers Should Do Next

Employers should conduct an overall audit to review what they include in their regular rate calculations. Companies using a third-party payroll provider should ask for clarification as to how overtime is calculated each week.

The FLSA is a complex law with many nuances beyond those described here. An experienced employment attorney can evaluate your pay practices and consult with you on overtime compliance. They might be able to identify alternative work schedules or payroll practices that comply with the wage and hour laws.

 

The new FLSA regular rate regulations are available here.

Reproductive Health Decisions

New York State Protects Employee Reproductive Health Decisions

In January 2019, the New York Legislature passed a bill banning employment discrimination based on reproductive health decisions. The bill passed with bipartisan, though not unanimous, support. Governor Cuomo signed the bill into law on November 8, 2019, and it took effect immediately.

Rationale for the New Law

In December 2018, the New York City Council added “sexual and other reproductive health decisions” to the list of protected categories under the New York City Human Rights Law.  Following New York City’s lead, the NYS Legislature has added a new section 203-e to the New York State Labor Law.

The Legislative sponsors of the law expressed concern that:

“While federal and state laws have been enacted which demonstrate a commitment to protect individuals against employment discrimination, loopholes exist which leave employees vulnerable to discrimination based on their reproductive health decisions.”

New Legal Protections for Employee Reproductive Health Decisions

No Access

Employers may not, without the employee’s prior informed written consent, access personal information regarding employees’ or their dependents’ reproductive health decisions. That includes their use of or access to drugs, devices, or medical services.

No Discrimination

Even if they legally obtain information regarding reproductive health decisions, employers may not discriminate against an employee with respect to compensation or other terms and conditions or privileges of employment based on such information.

No Waivers

An employer is not authorized to require an employee to sign a waiver of these rights. This includes any document purporting to deny an employee the right to make their own reproductive health care decisions.

Penalties

Under the law, an employee may bring a civil lawsuit against a violating employer. The court may award damages, including back pay, benefits, reasonable attorney’s fees and costs.

The court could award injunctive relief against any employer that violates or proposes to violate the provisions of this section. A court could even reinstate the employee to their job.

The new section of the law does not limit any rights of an employee under any other provision of law or contract.

Prohibited Retaliation

Employers may not retaliate against an employee for exercising their rights under this law.

Retaliation includes discharging, suspending, demoting, or otherwise penalizing an employee for any of the following:

  • making or threatening a complaint against an employer, co-worker, or public body that violated this law;
  • initiating or filing a legal claim under or related to this law; or
  • providing information to or testifying before any public body conducting an investigation, hearing, or inquiry into any such violation.

Employee Handbooks

The new law requires employers with employee handbooks to include a notice of these employee rights and remedies. This is a relatively unusual requirement among employment laws, but perhaps a developing trend in New York.

Act Now

With this law already in place, employers must ensure that human resources personnel and managers are aware of these new legal parameters. Companies with employee handbooks must update them promptly.

 

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