Executive Summary: Recently, the US Department of Labor (DOL) announced that it will adhere to a new test for determining whether interns qualify as employees under the Fair Labor Standards Act (FLSA). The FLSA requires for-profit employers to pay “employees” for their work; however, whether interns or students qualify as “employees,” and, thus, are entitled to compensation for services provided, has been the subject of considerable litigation. In its statement, the DOL abandoned the six-factor test it instituted in 2010, and instead endorsed the “primary beneficiary” test which was established by the Second Circuit in Glatt v. Fox Searchlight Pictures, Inc. Further, the DOL stated that the Wage and Hour Division’s investigators will “holistically analyze internships on a case-by-case basis.” This is a strategic change in the DOL’s enforcement policies to align its procedures with several circuit court decisions.
End of the Year Updates from the Department of Transportation and Federal Aviation Administration
Executive Summary: The Department of Transportation (DOT) and Federal Aviation Administration (FAA) published a flurry of announcements to close out 2017. In addition to recapping several previous publications, the FAA released a new Advisory Circular on its voluntary disclosure reporting program.
Handbooks – NLRB Gives Some Control Back to Employers
Executive Summary: On December 14, 2017, in a 3-2 decision, the National Labor Relations Board (NLRB or Board) overruled the “reasonably construe” standard it established in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), to determine whether a facially neutral rule or handbook policy violates an employee’s Section 7 rights. See The Boeing Company and Society of Professional Engineering Employees in Aerospace, IFTPE Local 2001, Cases 19-CA-090932, 19-CA-090948, and 19-CA-095296.
New Jersey Commissioner of Labor Clarifies the Owner-Operator Exemption under the State’s Unemployment Law
Executive Summary: On December 11, 2017, the Commissioner of the New Jersey Department of Labor and Workforce Development, Aaron Fichtner (the “Commissioner”), ruled that the New Jersey Unemployment Compensation Law’s (NJUCL) exemption for owner-operators not only applied to the case at bar, but also that satisfaction of the IRS test for independence is sufficient to demonstrate that the services performed by owner-operators were exempt from NJUCL coverage. The Commissioner’s decision clarified the applicability of the owner-operator exemption for motor carriers, rejected the argument that a formal IRS determination is needed to satisfy the exemption, and reversed hundreds of thousands of dollars of assessments rendered by the New Jersey Department of Labor and Workforce Development (NJDOL).
NLRB Reverses Joint Employer Standard
Executive Summary: The National Labor Relations Board (“NLRB” or “Board”) has reversed the controversial joint employer standard created by the Obama Board in the Browning-Ferris Industries of California, Inc. (“BFI”) decision, restoring the traditional joint employer test that was in place for decades prior to BFI. On December 14, 2017, the NLRB issued its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) (“Hy-Brand”) in which a 3-2 majority overturned the controversial BFI decision.
Seventh Circuit Affirms Summary Judgment in Favor of Employer Finding That Required Mental-Health Examinations Did Not Violate the ADA
Executive Summary: Recently, the United States Court of Appeals for the Seventh Circuit in Painter v. Illinois Department of Transportation affirmed the district court’s grant of summary judgment to the employer in a lawsuit alleging a violation of the Americans with Disabilities Act (ADA), finding that a reasonable jury would have to find that the two mental-health examinations at issue were “job related and consistent with business necessity.”
The Trump Board Signals Changes to Come
Executive Summary: In the past two weeks, the National Labor Relations Board (NLRB) has made three important announcements that signal likely changes to come under the Trump administration.
Watch out for IRS letters: IRS Begins Enforcing Employer Mandate
The IRS has recently begun enforcing the “employer shared responsibility” (ESR) provisions of the Affordable Care Act (the “Act”), which require employers having 50 or more full-time employees (or full-time equivalent employees) to offer health insurance coverage to eligible employees and their dependents. Failure to offer qualifying coverage as required by the Act results in the employer being subject to a penalty, known as the “employer shared responsibility payment” (ESRP), which can be substantial. Notices of ESRPs for 2015 coverage – the first year for which the ESR requirements were effective – are being received by some employers now. The notices are not actual assessments, but the penalty will be assessed if appropriate action is not taken promptly.
DOL’s Proposed Rule Change to Give Employers Increased Flexibility to Distribute or Retain Tips from Employees Earning the Full Minimum Wage
Executive Summary: On December 5, 2017, the U.S. Department of Labor (DOL) published its Notice of Proposed Rulemaking (NPRM) to reverse the Obama Administration’s tip rule prohibiting the distribution of tips to anyone other than the tipped-employees who earned them (available here). The Obama-era rule has been lauded by employee-advocates as a needed protection from employer abuse, while criticized by employers for stifling their ability to share tips with other non-tipped employees. It has also created legal uncertainty throughout the country, and caused a split among federal courts. Although the DOL’s newly proposed rule will provide increased short-term certainty for employers, legal challenges on this issue are likely to continue.
Changes in Previously Announced COLAs
In October, the 2018 FICA taxable wage base (the maximum amount of an employee’s wages with respect to which the Old-Age, Survivor and Disability Income portion of FICA taxes is payable) had been announced as $128,700, up from this year’s $127,200. On November 27, the Social Security Administration announced that it was lowering the previously calculated amount, and that the 2018 taxable wage base would instead be only $128,400.
DOH Extends Deadline for Fiscal Intermediary Authorization Application to Dec. 15
Notice of Extension. The New York State Department of Health (DOH) has extended the deadline from November 30 to close of business on December 15, 2017 for currently operating Fiscal Intermediaries under the Consumer Directed Personal Assistance Program (CDPAP) to submit their Applications for Fiscal Intermediary Authorization.
OSHA Extends Date for Electronically Submitting Injury and Illness Reports
On November 21, 2017, the Occupational Safety and Health Administration (OSHA) extended the date by which employers must electronically report injury and illness data through the Injury Tracking Application (ITA) (https://www.osha.gov/injuryreporting/index.html) to December 15, 2017.
Department of Transportation Adds Four New Drugs to Testing Panel
Executive Summary: On November 13, 2017, the Department of Transportation (DOT) announced that it is amending its drug-testing program to require testing for synthetic opioids. The new DOT regulations now harmonize with the Department of Health and Human Services (HHS) Mandatory Guidelines for Federal Workplace Drug Testing Programs using Urine (HHS Mandatory Guidelines), published January 23, 2017.
Non-Compete News: Georgia Court of Appeals Confirms Lack of Geographic or Material Contact Limitation Does Not Invalidate Non-Solicitation of Employees Covenant
Executive Summary: Georgia’s recent Restrictive Covenant Act, enacted in 2011, does not directly address non-solicitation of employees a/k/a non-recruitment covenants, thereby leaving such provisions subject to the principles developed by courts through “common law” (i.e. case law). Because Georgia common law is not well developed on the requirements of employee non-solicitation covenants, employers often second guess the enforceability of such covenants. Fortunately, the Georgia Court of Appeals recently provided some clarification on these covenants in CMGRP, Inc. v. Gallant, No. A17A1168 (Ga. Ct. App. Oct. 4, 2017), where it made clear that non-solicitation of employees covenants do not require geographic or material contact limitations to be enforceable.
CDPAP Fiscal Intermediaries Must File an Application for Authorization With DOH or Cease Operations
Executive Summary. On November 1, 2017, the NYS DOH issued its “Application for Fiscal Intermediary Authorization” and implementation guidelines. Significantly, DOH imposed a very short timeframe, stating: “As of November 1, 2017, all existing FIs will have thirty (30) days to submit their FI Authorization application to the Department.” If no filing is made, the FI must cease operating under CDPAP. Those who wish to begin operating an FI may also want to file by this date. A copy of the application can be obtained at https://www.health.ny.gov/health_care/medicaid/redesign/mrt_10003.htm