Workforce Bulletin

As featured in #WorkforceWednesday: This week, on our Spilling Secrets podcast series, our panelists delve into the implications for employers following the recent blockage of the Federal Trade Commission’s (FTC’s) non-compete ban.

On August 20, 2024, the U.S. District Court for the Northern District of Texas invalidated the FTC’s non-compete ban, deeming it arbitrary and capricious and beyond the scope of the agency’s statutory authority.

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer, Erik W. Weibust, and Paul DeCamp tell us more about the court’s decision to block the ban, what legal challenges remain, and the key considerations for employers moving forward. 

As featured in #WorkforceWednesday®: This week, we’re highlighting a few state-level employment issues, including the legal challenges faced by Staples Inc. regarding the Massachusetts lie detector ban; New Jersey’s implementation of a gender-neutral dress code for businesses; and the varying voting leave policies across states in preparation for the November election.

The Tenth Circuit recently reaffirmed that employers may lawfully enforce a policy against surreptitious recordings.

In Spagnolia v. Charter Communications, LLC, the United States Court of Appeals for the Tenth Circuit unanimously affirmed a District of Colorado order granting employer Charter Communications, LLC’s (“Defendant”) summary judgment on claims filed by plaintiff Heather Spagnolia (“Spagnolia”), who asserted that she was fired in retaliation for making reasonable requests for lactation accommodations. The issue before the appellate court was whether Defendant’s proffered reason for terminating Spagnolia (secretly recording meetings with her supervisors in violation of company policy) was pretextual. 

Both courts agreed that Spagnolia’s violation of the policy against surreptitious recordings was a lawful basis for termination, and that Spagnolia failed to show that this was pretextual.

Background

In 2017, Spagnolia moved to Colorado to work for Defendant as a Regional Operations Center Specialist. From April to July 2019, Spagnolia took leave under the federal Family and Medical Leave Act to give birth to her second child. When she returned to work in July 2019, Spagnolia’s supervisor mistakenly permitted her to take paid lactation breaks, even though Defendant’s written policy provided for unpaid lactation breaks. During that time, Spagnolia’s lactation breaks lasted for an average of two hours per day, and sometimes up to three hours—in addition to her lunch break and regular paid breaks.

As featured in #WorkforceWednesday®: This week, we’re examining the repercussions for employers of a recent court decision that set aside the Federal Trade Commission’s (FTC’s) nationwide non-compete ban:

On August 20, 2024, the U.S. District Court for the Northern District of Texas blocked the FTC’s ban on non-compete agreements nationwide. What does this mean for employers?

Epstein Becker Green attorney Peter A. Steinmeyer tells us what employers should be doing now and outlines the implications of this decision on existing and future non-compete agreements.

A growing number of states and municipalities have passed “fair chance” laws that, to varying degrees, prohibit employers from inquiring into a job applicant’s criminal background during the hiring process or restrict employers from using certain criminal conviction information in connection with their hiring decisions. Recently, Los Angeles County joined this group and New York City is posed to again amend the rules for its existing law. The Los Angeles developments create new intricacies for employers, while the New York actions may be best understood as clarification of existing law. In either case, keeping up with the changes is important for employers who are hiring in those locations. 

Los Angeles County’s New Law

The Los Angeles County Fair Chance Ordinance for Employers (“FCO”) was adopted by the Los Angeles County Board of Supervisors on February 7, 2024, and becomes operative on September 3, 2024. The FCO was designed to complement California’s “Ban-the Box” law, called the Fair Chance Act (“FCA”), and introduces additional compliance requirements for covered employers, including, but not limited to, mandatory language for job postings and solicitations, and written notice requirements in connection with the extension of a conditional offer of employment.

On August 23, the United States Court of Appeals for the Fifth Circuit issued its much-anticipated decision in Restaurant Law Center v. United States Department of Labor.  In one of the very first federal appellate court rulings since the Supreme Court overruled Chevron USA Inc. v. Natural Resources Defense Council, Inc.  this year, the unanimous three-judge panel concluded that the Department of Labor’s 2021 Final Rule regarding tipped employees and the minimum wage, commonly known as the “80/20 Rule” or the “80/20/30 Rule,” is both contrary to the pertinent statutory text and  arbitrary and capricious.  As a result, the court vacated the rule.

Background: Minimum Wage, the Tip Credit, Dual Jobs, and 80/20

The Fair Labor Standards Act (the “FLSA”) allows employers to count a portion of tips received by a “tipped employee” toward satisfying the federal minimum wage obligation.  The statute defines a “tipped employee” as “any employee engaged in an occupation in which he customarily and regularly receives more than $30 a month in tips.”  That portion of the statute has been in place, largely unchanged, since 1966.  Whether an employee counts as a “tipped employee” determines whether the employer may pay a reduced hourly wage of as low as $2.13, so long as the tips suffice to make up the difference to minimum wage.  Employees who are not tipped employees must receive at least the full minimum wage directly from their employer.

In 1967, the Department of Labor issued a regulation positing that workers may have more than one job with an employer, one of which involves tips and one or more of which does not.  The example the Department used was a hotel employee who works some shifts as a server in the hotel restaurant and other shifts as the hotel’s maintenance person.  The so-called “dual jobs” regulation took the position that the employer may pay the lower hourly wage, known as taking the tip credit, for the time spent in the tipped occupation of server, but not for the time spent in the untipped maintenance occupation.

On August 22, 2024, the Michigan Department of Labor & Economic Opportunity (LEO) issued a press release on the heels of the Mothering Justice decision, about which we previously wrote, and which will drastically change the minimum wage, tip credit, and paid sick leave obligations for Michigan employers.

With respect to paid sick leave, LEO announced that it issued new guidance and FAQs on the Earned Sick Time Act, which goes into effect on February 21, 2025. We will be publishing an Insight shortly detailing all the mandatory changes.

With respect to the minimum wage and tip credit changes, on August 21, the state of Michigan’s Attorney General, LEO, and the Department of Treasury asked the Michigan Supreme Court for clarification on how the Treasurer should calculate adjustments for inflation to set new minimum wage rates, as directed by the July 31 decision. The motion outlines a proposed schedule of new minimum wages based on one interpretation of the Supreme Court’s order, but suggests that ambiguity in the order leaves room for interpretation and therefore lays out five options:

The U.S. Departments of Labor (DOL), Health and Human Services, and the Treasury (collectively, the “Tri-Departments”) published a Notice of Proposed Rulemaking (NPRM) on August 3, 2023, to propose new regulations for the Mental Health Parity and Addiction Equity Act (MHPAEA). In particular, the proposed rules would implement amendments to MHPAEA that were passed under the Consolidated Appropriations Act of 2021 (CAA) to require documentation of comparative analyses for Non-Quantitative Treatment Limits (NQTLs). We anticipate that the Tri-Departments will publish new regulations for MHPAEA that will finalize most provisions of the NPRM in the coming days or weeks.

We anticipate that most provisions of the new regulations will finalize the proposed requirements without significant modifications. However, robust public comments were submitted with regard to several key provisions that may cause the Tri-Departments to modify or rescind the proposed rules.

Three of the most controversial provisions from the proposed rules to watch for in the final rules are:

• Quantitative testing for Non-Quantitative Treatment Limits

  • Current guidance: Health plans must ensure that financial requirements (such as copays and coinsurance) and quantitative treatment limits (such as day or visit limits) that apply to benefits for the treatment of mental health and substance use disorders (MH/SUDs) are no more stringent than the predominant level of the financial requirement or treatment limit that applies to substantially all medical and surgical benefits. This is a mathematical test that has been well-established for these numerical limits since the first MHPAEA regulations were published in 2011.
  • Potential Change: The 2023 NPRM also proposed to apply this mathematical test to NQTLs. If finalized, this new requirement may effectively prohibit most applications of prior authorization, step therapy, and other forms of utilization management for outpatient and prescription drug benefits for MH/SUD conditions.

As featured in #WorkforceWednesday®: This week, we’re analyzing the U.S. Department of Justice’s (DOJ’s) new Corporate Whistleblower Awards Pilot Program and its impact on employers:

The DOJ’s new Corporate Whistleblower Awards Pilot Program introduces significant changes for employers, particularly those in private health care and financial institutions. So, what details do employers need to be aware of?

Epstein Becker Green attorney Gregory Keating describes how employers can protect their businesses and stay ahead of potential legal challenges.

Employers are generally required to pay nonexempt employees overtime compensation of at least one and a half times their regular rate of pay for hours worked over 40 in a workweek. While this is nothing new for employers, determining an employee’s regular rate is often more complex than one might think, and it is often a great cause of confusion for employers.

As we have previously discussed on this blog, the regular rate is a term of art that encompasses all nondiscretionary payments to an employee, and not just hourly wages—subject to certain exceptions. (For a discussion of what must be included in the regular rate, please see our prior post.) If, for instance, an hourly, non-exempt employee receives a productivity bonus, the regular rate for that employee is the hourly rate of pay plus the productivity bonus.

The Department of Labor Fact Sheet #56A explains the basic calculation of the regular rate in the following way:

Total compensation in the workweek (exclusive of statutory exclusions) ÷ Total hours worked in the workweek = Regular rate for the workweek