Author Archives: Tara Ingalls

DOL ISSUES GUIDANCE EMPHASIZING ITS FOCUS ON MISCLASSIFICATION

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By: Laurie A. Petersen and Samantha J. Wood

The U.S. Department of Labor (“DOL”) has issued new guidance reiterating its focus on misclassification of employees as independent contractors and warning employers that “most workers are employees.”

The DOL has asserted that the purpose of its guidance is to provide clear direction to employers regarding the classification of workers as independent contractors. It asserts that employers should apply the multi-factorial “economic realities,” test, which focuses on whether the worker is truly in business for him or herself. Under this test, employers should consider and weigh the following factors: (1) the extent to which the work performed is an integral part of the employer’s business; (2) the worker’s opportunity for profit or loss depending on his/her managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. The DOL asserts that all of the factors should be considered and weighed together in each case, and that no one factor, such as the control factor, is determinative.

While the guidance does not announce a new standard to be applied in analyzing whether a worker is an employee or independent contractor, it asserts that the application of the economic realities test should be guided by the Fair Labor Standard Act’s definition of the term “employ.” The FLSA provides an expansive scope of the employee-employer relationship by broadly defining the term “employ,” to mean “to suffer or permit to work.” Applying the economic realities test to the broad scope of the employee-employer relationship, the DOL concludes that most workers should be classified as employees under the FLSA.

In light of this guidance, employers should carefully examine their classification of workers to prepare themselves for DOL audits and protect themselves from costly misclassification litigation and liability. Indeed, if it is found that an employer misclassified employees as independent contractors, the financial consequences could include the following: liability for employment withholding taxes, failure to pay tax penalties, minimum wage, overtime compensation, unemployment insurance, workers’ compensation, and ACA penalties for failing to provide minimum essential health-care coverage.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

DOL’S PROPOSED CHANGES TO THE OVERTIME REGULATIONS SEEK TO RAISE THE SALARY THRESHOLD FOR EXEMPT EMPLOYEES TO $970 A WEEK

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By:  Laurie A. Petersen and Samantha J. Wood

As directed by President Obama in March 2014, the Department of Labor (DOL) has issued a proposed rule regarding the Fair Labor Standard Act’s overtime regulations.

The rule focuses primarily on updating salary and compensation levels.  It proposes increasing the standard salary threshold level for exempt employees from $455 a week to approximately $970 a week.  This increase would set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers (nationwide) in 2016.  While the standard salary level was set at the 20th percentile of weekly earnings for full-time salaried workers in 2004, the DOL states that an increase is necessary to fully account for the simplified duties test that was created in the DOL’s 2004 changes.

The rule also proposes salary increases to the “highly compensated employee” exemption.  Currently, the regulations provide an exemption for employees if they earn at least $100,000 in total annual compensation and customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee.  The DOL is proposing increasing this figure to $122,148, which would set the salary standard at the 90th percentile of all full-time salaried workers.

Furthermore, the DOL has proposed a mechanism for annually updating the salary and compensation levels going forward.  It is considering and is seeking commentary on two possible methodologies: (1) annually updating the thresholds based on a fixed percentile of earnings for full-time salaried workers, or (2) annually updating the thresholds based on changes in the Consumer Price Index for all Urban Consumers (CPI-U).

Despite these drastic changes, the DOL has included a silver lining for employers.  The DOL has proposed allowing non-discretionary bonuses and incentive payments, such as bonuses tied to productivity and profitability, to count toward 10% of the standard weekly salary level of $970, for the executive, administrative, and professional exemptions.  In order to include the bonuses within the salary, the bonuses would have to be non-discretionary and employees would need to receive the bonuses more frequently than annually (i.e., monthly or quarterly, rather than a yearly “catch-up” payment).

While the DOL is not proposing any specific changes to the standard duties tests, it is seeking commentary to determine whether, in light of the salary level proposal, changes to the duties tests are necessary.

Upon publication of the proposed rule, the public is encouraged to provide commentary through the online portal at www.regulations.gov under Rule Identification Number 1235-AA11.  After considering the comments, the DOL will make revisions to its rule and will issue a Final Rule sometime thereafter.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

State Bar of Wisconsin’s 2015 Health, Labor, and Employment Law Institute

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Our very own Daniel Finerty, Douglas Feldman and Laurie Petersen are speakers at the State Bar of Wisconsin’s 2015 Health, Labor and Employment Law Institute on August 20-21, 2015 at the Wilderness Hotel and Golf Resort in Wisconsin Dells. Lindner & Marsack is sponsoring a Thursday evening social hour. Choose from more breakout sessions than ever before, covering the latest developments in health, labor, and employment law. Earn CLE and EPR credits as you select the combination of topics to best fit your practice needs, then kick back and relax with your friends and colleagues during the extended cocktail reception. Plus, you’ll have the opportunity to find your happiness with an optional CLE luncheon that will help you find and identify your perfect work-life balance. Click here for more information or to register.

2015 Kids’ Chance of Wisconsin Golf Outing

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PLEASE JOIN US FOR
THE 3RD ANNUAL KIDS’ CHANCE OF WISCONSIN
GOLF OUTING 

Lindner & Marsack’s worker’s compensation defense practice is well recognized as an industry leader in providing work injury defense services to many of Wisconsin’s largest employers and insurance carriers.

Doug Feldman heads the Firm’s highly regarded work injury defense team and is a founding Board Member and current President of Kids’ Chance of Wisconsin. Kids’ Chance is a non-profit organization that provides scholarships to children of seriously injured workers in Wisconsin.

Kids’ Chance of Wisconsin’s 3rd annual charity golf outing will be held on Friday August 21, 2015 at the Oaks Golf Course. Funds raised at the event will directly support the Kids’ Chance mission of providing financial support, in the form of scholarships, to children of parents who have been seriously injured at work.

If you are interested in attending or sponsoring this event, click here for more information, Kids’ Chance of Wisconsin – Golf Outing.

Lindner & Marsack owes much of its success to its good friends and clients in Wisconsin and is proud to be able to support this worthy endeavor and give back to the community in such a meaningful way. We hope you will consider sponsoring a hole or joining us for this entertaining event.

 

SUPREME COURT CLARIFIES RELIGIOUS ACCOMMODATION OBLIGATION

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On June 1, the United States Supreme Court issued its decision in EEOC v. Abercrombie & Fitch Stores.  The issue in the case was the scope of an employer’s obligation to accommodate the real or perceived religious beliefs and practices of employees and applicants.

Samantha Elauf was a practicing Muslim who wore a headscarf to her interview with Abercrombie.  During the interview there was no discussion of her headscarf or her religious beliefs.  The interviewer assumed Ms. Elauf wore the headscarf for religious reasons.  Abercrombie determined the headscarf would violate its dress code and rejected Ms. Elauf’s application for that reason.

The Supreme Court ruled that Abercrombie’s decision was religious discrimination prohibited by Title VII.  Religious discrimination occurs if the real or perceived need for a religious accommodation is a motivating factor in an employer’s decision.  It does not need to be the sole reason.  It is not necessary for an employer to have actual knowledge of the religious beliefs or practices of the employee or applicant.  An employer’s perception that the relevant behavior is religious will be enough.  The Supreme Court also stated that employers must accommodate the religious beliefs or practices of applicants and employees unless the accommodation would create an undue hardship.

Following this decision, employers may want to treat real or perceived religious practices and beliefs the same way they treat real or perceived disabilities.  For example, employers may want to present applicants with all relevant job requirements and expectations, including such expectations as adhering to a dress code policy or working on Saturdays and Sundays.  Employers can ask applicants if there is any reason he/she cannot perform these job duties.  Employers can also ask whether an applicant believes he/she will need an accommodation.

When an applicant or employee has a religious belief or practice which is inconsistent with his or her job duties, employers must explore possible accommodations.  If no accommodation is possible, employers should consider how they can prove the necessary accommodation would create an undue hardship.

If you have any questions about how this decision may impact your organization’s hiring or accommodation practices, please contact John Murray or any other Lindner & Marsack attorney.

 

Employers May Force Existing Employees to Sign Non-Compete Agreement

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Under Wisconsin law, for a non-compete agreement, or any other form of restrictive covenant, to be enforceable it needs to be supported by adequate consideration (something of value received by the employee). While Wisconsin courts have previously decided that the execution of a restrictive covenant at the commencement of the employment relationship constitutes adequate consideration, the law was unclear whether continued employment constituted adequate consideration where an existing at-will employee was required to sign a restrictive covenant. A decision by the Wisconsin Supreme Court last week, however, addressed this issue and clarified when requiring current employees to sign restrictive covenants would be enforceable under Wisconsin law.

The issue was addressed in Runzheimer Int’l, Ltd. v. Friedlen, 2015 WI 45, which involved an employer (Runzheimer) that sued a former employee (Friedlen) for violating a non-compete agreement after Friedlen was fired and began working for a competitor. Friedlen had worked for Runzheimer for 15 years as a business development consultant when Runzheimer required him to sign a non-compete agreement. Runzheimer gave Friedlen two weeks to consider the agreement, but told him he would be fired if he did not sign it. Friedlen signed the agreement, but was terminated approximately one year later. The issue before the Supreme Court was whether the non-compete agreement was enforceable and supported by adequate consideration.

Friedlen argued that the non-compete agreement was invalid because he had not received any additional consideration when he signed the agreement, while Runzheimer argued it had provided Friedlen consideration by continuing his employment and not exercising its right to terminate him. The Supreme Court struggled with the notion that an employer could require an existing employee to sign a non-compete agreement, and then turn around and terminate that employee. The Court nevertheless held that an employer can lawfully require an existing at-will employee to sign a non-compete agreement as a condition of further employment without providing any further consideration or benefit to the employee.

This decision represents a significant victory for employers who desire to protect their business interests by ensuring that former employees do not unfairly compete or solicit their customers after ending the employment relationship. Employers can now compel existing at-will employees to sign such agreements in exchange for continued employment without providing any further monetary consideration to the employee. The employer must be willing to terminate the individual, however, if the employee refuses to sign the restrictive covenant.

There is a caveat. Employers must be careful to ensure that the promise of continued employment is not illusory. As noted by the Supreme Court, under its interpretation of the law, an employer could require an employee to sign a restrictive covenant and then immediately fire the employee, as the employee remains an at-will employee. The Court recognized the employer’s right to terminate the employment relationship at any time, but cautioned that employers must be careful in exercising that right. The Court noted that if Runzheimer had fired Friedlen shortly after he signed the non-compete, Friedlen could have sued Runzheimer for “fraudulently inducing” him to sign the non-compete, violating its “duty of good faith and fair dealing,” and voided the non-compete agreement.

The bottom line is that employers can force existing at-will employees to sign non-compete agreements and need not offer any consideration other than promising not to fire the employee at the time they sign the agreement. The Supreme Court, however, did not define how long an employer must continue to employ the employee after he or she signs the restrictive covenant to avoid such a claim. An employer that requires an existing at-will employee to sign a restrictive covenant and then shortly thereafter seeks to terminate the individual must be mindful of the risks associated with that decision.

If you have questions about this material, please contact Oyvind Wistrom by email at owistrom@lindner-marsack.com or by phone at (414) 273-3910, or any other attorney you have been working with here at Lindner & Marsack, S.C.

PROPOSED EEOC WELLNESS PLAN REGULATIONS FOCUS ON COVERAGE, INCENTIVES AND VOLUNTARINESS OF PARTICIPATION

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On April 20, 2015, the Equal Employment Opportunity Commission published its proposed regulations regulating employer wellness plans under the Americans with Disabilities Act.  The proposed rules attempt to strike a balance between allowing wellness plans to offer incentives for employee participation while, at the same time, limiting incentives to defined percentages in order to prevent economic coercion that could render a participant’s provision of medical information involuntary.

While the proposed rules will be reviewed in depth on April 28, 2015 at our Annual Compliance/Best Practice Seminar (please register by clicking here), here are some of the basics regarding the proposed rules:

  • The proposed rules re-assert the EEOC’s position that employee health programs that include disability-related inquiries or medical examination (including inquiries or medical examinations) that are part of a health risk assessment or medical history must be voluntary in order to comply with the Americans with Disabilities Act. By contrast, employee health programs that do not include disability-related inquiries or medical examinations are not covered by the proposed rules. While a smoking cessation program that asks participants if they smoke and provide information regarding how to quit is not subject to the proposed rules, a biometric screening or other medical examination that tests for nicotine or tobacco is a medical examination.
  • The proposed rules adopt the already existing HIPAA limitation, as amended by the Affordable Care Act, on wellness plan incentives. The proposed rules clarify that an employer may offer limited incentives up to a maximum of 30% of the total cost of employee-only coverage to promote an employee’s participation in a wellness program that includes disability-related inquiries or medical examinations as long as participation is voluntary. Note that the EEOC does not distinguish between whether the incentive is provided in the form of a reward or penalty. While the proposed rules acknowledge the HIPAA/ACA limitation which permits plans to offer incentives as high as 50% of the total cost of employee coverage for tobacco-related wellness programs, such as smoking cessation programs, the proposed rules are clear that such programs are not covered by the regulations. Again, programs that do not contain disability-related inquiries or medical examination are not covered by the proposed rules.
  • The proposed rules specifically define “voluntary,” a critical term to the ADA analysis. Companies should ensure their wellness plans that includes disability-related inquiries or medical examinations are be voluntary and comply with the ADA by ensuring the plan:
    • Does not require employees to participate;
    • Does not deny coverage under any of its group health plans or particular benefits packages within a group health plan for non-participation or limit the extent of such coverage (except pursuant to allowed incentives); and
    • Does not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees within the meaning of Section 503 of the ADA, at 42 U.S.C. 12203.
  • In addition, in order to be voluntary, a plan must provide notice to participants that:
    • Is written so that employees from whom the information is being gathered are reasonably likely to understand it;
    • Describes the type of medical information that will be obtained and the specific purpose for which it will be used; and,
    • Describes the restrictions on disclosure of the employee’s medical information, the employer representatives with whom the information will be shared and the methods the employer will employ to prevent improper disclosure of the medical information including HIPAA-related protections.
  • Employer wellness plans should provide opportunities for reasonable accommodation for employees with disabilities to fully participate and earn any reward or avoid any penalty offered by the plan, absent undue hardship, by providing a reasonable alternative standard for the employee or providing an individual waiver. For example, if an employer’s wellness plan’s outcome-based program requires employees to achieve an average blood sugar level of 140 or less, the employer may have to provide a reasonable alternative standard to allow participation by diabetic employee for whom that goal is not achievable.

More information regarding the proposed rules and best practices for ensuring your Company’s wellness plan complies with the proposed rules will be provided on April 28, 2015. We will also present an annual review of developments in labor and employment law and discuss the National Labor Relations Board’s “quickie” election rules which went into effect on April 15, 2015, among other topics. Please register to join us for the half-day educational seminar by clicking here.

Registration is Still Open!

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Registration and a continental breakfast will be served beginning at 7:30 a.m.  Click here to register.

April 28, 2015

8:00 a.m. – 12:00 p.m.

Sheraton Milwaukee Brookfield Hotel

375 South Moorland Road, Brookfield, Wisconsin

This FREE half-day event will address current topics in labor, employment, benefits and worker’s compensation law and provide employers across industries with practical and creative solutions for addressing their toughest workplace legal challenges.

SESSION TOPICS INCLUDE:

  • Annual Labor & Employment Update (Plenary)
  • Wellness Plans – Ensure ADA Compliance & Avoid EEOC Litigation
  • Steps To Avoid The Retaliation Claim Trap
  • Worker’s Compensation Update
  • The National Labor Relations Board And Its Impact On Non-Union Employers

With Same-Sex Marriage Permissible In Many States, Plan Sponsors Should Clarify the Rights Of Affected Children

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By: Alan M. Levy and John E. Murray

Two years ago, in United States v. Windsor, the U.S. Supreme Court held that the Defense of Marriage Act (“DOMA”) is unconstitutional in its requirement that “marriage” be defined as restricted to heterosexual couples.  After that, regulations were issued which treated same-sex married couples as entitled to the same federal benefits and rights as opposite-sex couples, such as joint tax returns, classification of dependents for health and retirement benefits governed by federal law, and FMLA rights.  Now, either by legislation or judicial determination, 37 states and the District of Columbia permit the same treatment as the federal rule.

Recently, several ramifications of these rules have become apparent.  For example, if a health plan covers dependents of employees, the child of an employee’s same-sex marriage is a dependent.  Similarly, an employee’s same-sex spouse is entitled to a survivor pension, which includes both payment upon the employee’s death and the requirement of the spouse’s written agreement if the employee declines joint and survivor benefits to maximize the retirement benefit during his/her own lifetime.

Some plans may be able to provide these spousal and dependent benefits under their present language.  Others may require amendments to plan documents and summary plan descriptions.  While some issues about same-sex marriage are scheduled for Supreme Court consideration this term, that case will not affect the federal rules which limit the application of DOMA to ERISA plans.

Plan administrators and fiduciaries are encouraged to review their programs and make all necessary modifications to comply with these rules.  If there are any questions about the rules, existing benefit documents, or practices, please contact Alan Levy or John Murray here at Lindner & Marsack, S.C.  We will be happy to assist you in this activity.

Supreme Court Alters Pregnancy Accommodation Requirements for Employers

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By Kristofor L. Hanson

The U.S. Supreme Court on March 25, 2015, issued a decision that alters the landscape for employers under the Pregnancy Discrimination Act (“PDA”).  In the decision, the Court held that employers are now required to assess their ability to accommodate a pregnant employee’s restrictions in a manner consistent with efforts to accommodate other employees under similar restrictions.

The case, Young v. UPS, Inc., No. 12-1226 (March 25, 2015), involved a pregnant UPS employee, Peggy Young, whose pregnancy restricted her lifting to 20 pounds, then again to 10 pounds, as her pregnancy progressed.  Her job required her to lift items as heavy as 70 pounds and to assist in moving packages weighing up to 150 pounds.  UPS had a policy that called for light duty assignments for employees injured on the job, employees with suffering from conditions that qualified as disabilities under the Americans with Disabilities Act, and for those employees who had lost their Department of Transportation license.  Young sought an accommodation similar to those the company had provided for employees with similar restrictions.  UPS said that she was not entitled to an accommodation because pregnancy did not fall within one of the three categories for which it provided accommodations.

The District Court dismissed Young’s case, determining that UPS’s decision complied with the PDA, because Young could not demonstrate that she was “similarly situated” to employees in the three categories for whom UPS provided accommodations: 1) she was not injured on the job; 2) she was not legally restricted from working like those who lost or had suspended their DOT certifications; and 3) she was not disabled under the law.  The 4th Circuit Court of Appeals upheld the District Court’s decision and stated that Young more closely resembled “an employee who injury his back while picking up his infant child or . . . an employee whose lifting limitation arose from her off-the-job work as a volunteer firefighter,” neither of whom would qualify for an accommodation under UPS’s policy.

Young presented facts that showed that UPS was able to accommodate other employees who had lifting restrictions similar to hers.  She also presented evidence that other employees had indicated they were willing to assist her with lifting and moving packages.  In addition, a shop steward testified that UPS had no issues with accommodating employees except when a pregnancy situation arose.

The PDA provides, in relevant part, that employers must treat “women affected by pregnancy . . . the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.”  The Supreme Court’s analysis determined that this language is intended to provide pregnant women with accommodations provided to other employees who are similarly limited in their work.  Because Young provided evidence that other employees with similar restrictions were regularly accommodated by UPS, the Supreme Court overturned the lower courts and remanded the case.  The District Court will now analyze whether Young presented sufficient evidence to move her case beyond summary judgment under the new standard articulated by the Supreme Court.

The decision places an onus on employers to treat a pregnant employee as they treat other employees who have restrictions similar to the pregnant employee.  Previously, employers were not required to do that.  Rather, employers could limit accommodations as UPS did.  Employers must now analyze pregnant employees’ restrictions on a case-by-case basis to determine whether they are offering accommodations to other employees with like restrictions.  If they are, employers should do the same for pregnant employees.  As the Supreme Court asked, “[W]hen the employer accommodated so many, could it not accommodate pregnant women as well?”  According to the Supreme Court, the answer to that question could very well be, “Yes.”

If you have questions about this material, please contact Kristofor Hanson by email at khanson@lindner-marsack.com or by phone at (414) 273-3910, or any other attorney you have been working with here at Lindner & Marsack, S.C.