Displaying 161 category results for Employment.x

Confidential sexual harassment settlements just got more expensive

By Stacey Mark
January 11, 2018

The Tax Cuts and Jobs Act, the sweeping new federal tax law enacted at the end of December 2017, contains a provision that will likely have a significant effect on how employers resolve claims involving sexual harassment.

Section 13307 of the Act eliminates the business deduction for: (1) any settlement or payment related to sexual harassment or sexual abuse that is subject to a confidentiality agreement; and (2) attorney fees related to such a settlement.  The provision applies to settlements, payments, and attorney fees paid or incurred after the date the law was enacted.    

Section 13307 leaves open questions as to whether deductions are eliminated for confidential settlements involving multiple employment claims, where only one of the claims is sexual harassment.  Also unclear is whether related claims arising out of sexual harassment or sexual abuse, such as assault, battery, and intentional infliction of emotional distress, are covered by Section 13307. 

In addition, while it seems unlikely, it is not clear that Section 13307 only affects the employer's tax deductions.  Although Section 13307 amends Section 162 of the Internal Revenue Code, which addresses the deduction of business expenses, it could result in the elimination of any deduction by the victim for attorney fees incurred that are paid by the employer.

Employers seeking to preserve their tax deductions for payments made and attorney fees incurred in connection with sexual harassment and related claims may do so by not including confidentiality provisions in their settlement agreements.  However, confidential settlements of multiple or related claims will require careful analysis to avoid running afoul of the new law.  Employers settling such cases are well advised to consult their legal and tax professionals before including any kind of confidentiality provision.

Ater Wynne's employment group can help with settlement and prevention strategies.

Are your company’s practices perpetuating sexual harassment?

By Stacey Mark
November 28, 2017

Scandals involving sexual harassment are nothing new.  The televised testimony of Anita Hill at the 1991 senate confirmation hearings on the appointment of Clarence Thomas to the U.S. Supreme Court increased public awareness of the issue when Ms.Hill testified to persistent and graphic instances of sexual harassment she endured while working for Mr.Thomas at the EEOC.  Her account was largely dismissed and Justice Thomas’ appointment to the Supreme Court was affirmed by the senate. 

Today, we hear almost daily news reports about sexual harassment as bad or worse than what Ms. Hill testified to almost 17 years ago.  One has to wonder, how there could be so little progress on the sexual harassment front? 

Historically, sexual harassment and sexual assault have been used as a tactic to keep women in their place.  Indeed, it has long been recognized that sexual harassment is more often about power than ignorance or lust.  It is precisely for this reason that sexual harassment remains rampant, despite laws and processes designed to protect employees from it.

To rid the workplace of sexual harassment, companies need to take a hard look at what they might be doing to perpetuate it.  Here are just a few practices that are contributing to the problem:

  • Maintaining policies that direct or require victims of harassment to tell the offending employee to stop. Some employers believe that most sexual harassers don’t realize their conduct is offensive and will stop if the victim speaks up.  This belief is misguided and sends the wrong message.  A victim of sexual harassment has sustained a real injury.  Forcing the victim to confront the perpetrator subjects the victim to further injury and discourages the victim from reporting in the first place.
  • Providing a vehicle for reporting sexual harassment, but without making a report mandatory for victims and bystanders. One of the many (not so) recent revelations about sexual harassment is how much of it goes unreported by victims as well as bystanders.  There are many reasons that people don’t report, including a genuine and often justifiable fear of being blamed, shamed, or retaliated against.  Bystanders may also experience a lack of emotional response or empathy with the victim, a concern about being the only one who makes an issue of it, or a feeling that nothing will be done about it.  Employers need to create a culture in which the entire workforce understands that by remaining silent, they are complicit.  One way to eliminate some concerns that inhibit reporting is to provide a hotline for confidential, anonymous reporting through an outside portal, such as ethicspoint.
  • Failing to promptly address sexual harassment every time it occurs. Another reason employees don’t report harassment is that they believe the information will fall on deaf ears.  Employers need to act promptly to remedy sexual harassment every time it occurs.  Failing to act or selective enforcement (e.g., excluding top executives, best performers, family members) significantly undermines any efforts to curb sexual harassment.
  • Entering contracts that fail to include sexual harassment as a “cause” for termination or forfeiture of termination benefits. It is not unusual for executive and professional employment contracts to permit termination only for “cause” and to provide substantial severance benefits in the event employment is terminated for any other reason.  Many such contracts don’t include sexual harassment in the definition of “cause,” which emboldens sexual harassers by immunizing them from the consequences of their behavior.
  • Failing to take any action in response to an unsubstantiated complaint.  When there are no witnesses to sexual harassment, employers unable to verify the complaint may choose to do nothing.  However, the inability to corroborate the event does not mean it didn’t happen or that the employer should not take any action to protect the alleged victim. 
  • Altering the job of the victim. Employers may respond to a complaint by reassigning the victim to another position, shift, location, or supervisor.  However, even if well-intentioned, imposing such changes on the victim may be perceived as retaliatory, especially if the perpetrator’s terms of employment remain unchanged. 
  • Failing to maintain records of complaints and unsubstantiated reports and purging disciplinary actions from personnel files. Whether or not a complaint of sexual harassment is substantiated, employers must maintain a record of all complaints that are received.  Especially when there is turnover in management, the failure to maintain such records may protect sexual harassers from appropriate scrutiny when there is a subsequent complaint.  Having a record of past complaints may reveal a pattern of sexual harassment that previously was not substantiated or warrants more serious discipline.
  • Dispute resolution procedures that allow reinstatement of a sexual harasser. Some employers, particularly in the union context, have been frustrated in their efforts to terminate employees for sexual harassment by arbitrators who ordered reinstatement, finding that the harasser’s behavior was not sufficiently egregious to warrant termination, the employer was inconsistent in its discipline of employees under similar circumstances, and even sometimes for technical reasons, such as the employer’s failure to act promptly when it learned of the harassment. Arbitrators may believe such decisions are fair from disciplinary perspective, but they are certainly not fair to the victims and do little to promote an environment that is free of sexual harassment.  In the absence of legislation to address this issue, employers and unions need to work together on disciplinary procedures that protect the victims and promote the employer's policy objectives.

Most companies have anti-harassment policies and complaint procedures.  Clearly, just having a policy and procedure in place is not enough in most cases.  Employers need to recognize that ridding the workplace of sexual harassment requires some serious introspection and a willingness to remedy whatever they may be doing to perpetuate the problem.

Ater Wynne's employment group can review your workplace policies and provide training and other solutions to prevent and address workplace harassment.

DOL increases fringe rate under Service Contract Act, issues reminder

By Stacey Mark
July 28, 2017

On July 25, the Department of Labor issued an all agency memorandum announcing an increase in the fringe rate contribution required under the Service Contract Act (SCA).  The rate will increase from $4.27 to $4.41 per hour, effective August 1, 2017.  The SCA sets prevailing wages and benefits that federal contractors who provide certain services to the federal government must pay to their employees.  

The memorandum also reminds federal contractors of their obligations under Executive Order 13706, which requires covered contractors to provide employees with up to 56 hours of paid sick leave annually.  Executive Order 13706 applies to new contracts with the federal government arising out of solicitations issued on or after January 1, 2017.  Sick leave paid to comply with Executive Order 13706 may not be credited to satisfy contractor obligations under the SCA.

DOL seeks comments on proposed federal overtime rule

By Stacey Mark
July 25, 2017

In response to court challenges to the federal overtime rule that was scheduled to go into effect on December 1, 2016, the Department of Labor (DoL) has decided not to advocate for the minimum weekly salary ($913) required by the final rule. Instead, the DoL plans to issue a Request for Information (RFI) to aid in formulating a proposal to revise the current overtime regulations contained in CFR Part 541.  In response to President Trump's Executive Order 13777, entitled "Enforcing the Regulatory Reform Agenda," the RFI is directed at reducing regulatory burden.  The RFI, which is scheduled to be published on July 26, 2017, asks for comment on the following questions:

  1. In 2004 the Department set the standard salary level at $455 per week, which excluded from the exemption roughly the bottom 20 percent of salaried employees in the South and in the retail industry. Would updating the 2004 salary level for inflation be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used? Alternatively, would applying the 2004 methodology to current salary data (South and retail industry) be an appropriate basis for setting the salary level? Would setting the salary level using either of these methods require changes to the standard duties test and, if so, what change(s) should be made?
  1. Should the regulations contain multiple standard salary levels? If so, how should these levels be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method? For example, should the regulations set multiple salary levels using a percentage based adjustment like that used by the federal government in the General Schedule Locality Areas to adjust for the varying cost-of-living across different parts of the United States? What would the impact of multiple standard salary levels be on particular regions or industries, and on employers with locations in more than one state?
  1. Should the Department set different standard salary levels for the executive, administrative and professional exemptions as it did prior to 2004 and, if so, should there be a lower salary for executive and administrative employees as was done from 1963 until the 2004 rulemaking? What would the impact be on employers and employees?
  1. In the 2016 Final Rule the Department discussed in detail the pre-2004 long and short test salary levels. To be an effective measure for determining exemption status, should the standard salary level be set within the historical range of the short test salary level, at the long test salary level, between the short and long test salary levels, or should it be based on some other methodology? Would a standard salary level based on each of these methodologies work effectively with the standard duties test or would changes to the duties test be needed?
  1. Does the standard salary level set in the 2016 Final Rule work effectively with the standard duties test or, instead, does it in effect eclipse the role of the duties test in determining exemption status? At what salary level does the duties test no longer fulfill its historical role in determining exempt status? 
  1. To what extent did employers, in anticipation of the 2016 Final Rule’s effective date on December 1, 2016, increase salaries of exempt employees in order retain their exempt status, decrease newly non-exempt employees’ hours or change their implicit hourly rates so that the total amount paid would remain the same, convert worker pay from salaries to hourly wages, or make changes to workplace policies either to limit employee flexibility to work after normal work hours or to track work performed during those times? Where these or other changes occurred, what has been the impact (both economic and non-economic) on the workplace for employers and employees? Did small businesses or other small entities encounter any unique challenges in preparing for the 2016 Final Rule’s effective date? Did employers make any additional changes, such as reverting salaries of exempt employees to their prior (pre-rule) levels, after the preliminary injunction was issued?
  1. Would a test for exemption that relies solely on the duties performed by the employee without regard to the amount of salary paid by the employer be preferable to the current standard test? If so, what elements would be necessary in a duties-only test and would examination of the amount of non-exempt work performed be required?
  1. Does the salary level set in the 2016 Final Rule exclude from exemption particular occupations that have traditionally been covered by the exemption and, if so, what are those occupations? Do employees in those occupations perform more than 20 percent or 40 percent non-exempt work per week?
  1. The 2016 Final Rule for the first time permitted non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. Is this an appropriate limit or should the regulations feature a different percentage cap? Is the amount of the standard salary level relevant in determining whether and to what extent such bonus payments should be credited?
  1. Should there be multiple total annual compensation levels for the highly compensated employee exemption? If so, how should they be set: by size of employer, census region, census division, state, metropolitan statistical area, or some other method? For example, should the regulations set multiple total annual compensation levels using a percentage based adjustment like that used by the federal government in the General Schedule Locality Areas to adjust for the varying cost-of-living across different parts of the United States? What would the impact of multiple total annual compensation levels be on particular regions or industries?
  1. Should the standard salary level and the highly compensated employee total annual compensation level be automatically updated on a periodic basis to ensure that they remain effective, in combination with their respective duties tests, at identifying exempt employees? If so, what mechanism should be used for the automatic update, should automatic updates be delayed during periods of negative economic growth, and what should the time period be between updates to reflect long term economic conditions?

Interested employers are encouraged to weigh in on all of these important questions.  


What Oregon’s expanded version of the Equal Pay Act of 2017 means for employers

By Stacey Mark
July 5, 2017

The Oregon legislature recently enacted an expanded Equal Pay Act designed to eliminate discriminatory pay practices based on race, color, religion, sex, sexual orientation (as defined in ORS 174.100), national origin, marital status, veteran status, disability, or age. 

Section 2 of the Act (amending ORS 652.220) prohibits discrimination in the payment of compensation based on protected class for work of "comparable character," defined as work requiring “substantially similar knowledge, skill, effort, responsibility and working conditions in the performance of work, regardless of job description or job title.”  To insure that employers do not perpetuate the effect of other employers' past discriminatory pay practices, the law precludes employers from screening applicants based on current or past compensation, determining compensation for a position based on an applicant’s current or past compensation, or seeking a salary history of an applicant until an offer of employment has been made.  

Differentials in pay for work of comparable character are permissible only when they are based solely on one or more of the following factors: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production, including piece-rate work; (4) workplace locations; (5) travel, if travel is necessary and regular for the employee; (6) education; (7) training; and (8) experience.  Amounts owed to an employee because of the failure of the employer to comply with the Act are defined as “unpaid wages.” 

Individuals may address violations of Section 2 by filing a complaint with the Commissioner of BOLI under ORS 659A.820, a civil action under ORS 652.230, or a civil action under 659A.885.  Violations of Section 4 of the Act, which makes it unlawful under Chapter 659A to request a salary history of an applicant, may also be addressed under ORS 659A.885.  Each of these options affords a prevailing plaintiff a different remedy:

  • In a private action under ORS 652.230, an individual may recover up to one year of back pay, an equal amount as liquidated damages, attorney fees and costs.
  • If the individual files an administrative complaint under ORS 652.820, the BOLI Commissioner is empowered to award the lesser of (1) two years’ back pay plus back pay for the period during which the complaint is pending, or (2) pay for the period the individual is subject to an unlawful wage differential plus the period during which the complaint is pending. 
  • Under ORS 659A.885, the remedies available are injunctive and equitable relief, including reinstatement or hiring with or without back pay, up to two years’ back pay, the greater of compensatory damages or $200, attorney fees, and costs. In addition, punitive damages are available if it is shown by clear and convincing evidence that the employer (1) engaged in fraud, acted with malice or with willful and wanton misconduct, or (2) was previously found to have violated ORS 652.220 in a proceeding under ORS 659A.885 or ORS 659A.850.  An employer may avoid liability for compensatory and punitive damages by showing that it completed an appropriate equal-pay analysis of its pay practices in good faith that related to plaintiff’s protected class, eliminated the wage differentials for the plaintiff, and made reasonable and substantial progress toward eliminating wage differentials for plaintiff’s protected class.  Evidence of such an analysis is not admissible in any other proceeding.

The potential ramifications of Oregon’s Equal Pay Act are significant.  An employer’s inability to substantiate a pay differential based exclusively on permissible factors may be sufficient to establish liability without the need to prove discriminatory intent.  This means that employers who have never intentionally discriminated, but historically set compensation by relying on salary history or other factors made impermissible under the Act could face monumental financial exposure.  Employers may not reduce the compensation of an employee to comply with their obligations under Section 2, so employers who wish to correct the results of past practices will presumably need to raise salaries of all of the employees who were negatively impacted.  Also, it is unclear whether a violation of ORS 652.220 may also result in a late payment penalty under Oregon’s final pay law, or whether an individual must elect between the available statutory remedies.  

The good news is that employers who want to get ahead of this issue have some time to comply.  The prohibition on requesting salary histories of applicants goes into effect 91 days after the end of the current legislative session, but the private right of action to enforce it does not go into effect until January 1, 2024.   The rest of the Act's provisions go into effect on January 1, 2019.  

Employers who need help analyzing their pay practices and complying with the Equal Pay Act may contact Ater Wynne's employment group for assistance. 

Are your confidentiality agreements up to date?

By Stacey Mark
April 27, 2017

The Defend Trade Secrets Act (DTSA) provides an important tool for protecting trade secrets from misappropriation by affording owners a federal right of action for misappropriation of trade secrets related to a product or service used, or intended for use in interstate or foreign commerce.  The DTSA provides a variety of remedies that track those available under state uniform trade secret statutes, such as actual damages, damages for unjust enrichment, royalties, injunctive and exemplary relief, and attorney fees.     

However, the DTSA differs from uniform state laws in some significant respects.  The DTSA provides, in extraordinary circumstances, for the ex parte seizure of property to prevent the propagation or dissemination of the trade secret.  The DTSA further expands trade secret protection by enabling trade secret owners to seek nationwide relief, without preempting state law remedies. Another significant feature of the DTSA is the immunity from criminal and civil liability it provides to whistleblowers who comply with the Act's reporting provisions.  

Employers are required to notify employees and contractors who are subject to confidentiality agreements of the DTSA's immunity provisions.  An employer may comply by including the notice in the confidentiality agreement, or by including a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for suspected violations of the law.  An employer that fails to comply with the notice requirement may not be awarded exemplary damages or attorney fees in an action under the DTSA.  The statute applies to contracts governing confidentiality entered into on or after May 11, 2016.

Confidentiality provisions are commonly included in employment and independent contractor agreements, confidentiality/proprietary rights agreements, noncompete and nonsolicitation agreements, and in separation/release agreements, among other employment documents. Employers who have written contracts with employees or contractors entered into on or after May 11, 2016, containing confidentiality obligations should consider adding the DTSA disclosure and perhaps also reviewing their handbook.

Employers may contact Ater Wynne's employment group for assistance with DTSA compliance.

Legislators introduce bill to address BOLI's new interpretation of manufacturing overtime rule

By Stacey Mark
March 7, 2017

We recently reported on BOLI 's new guidance overturning its long-standing interpretation of ORS 652.020, Oregon's overtime rule applicable to manufacturing establishments.   The Oregon Legislature has now weighed in on this issue.

Under ORS 652.020, nonexempt employees working in mills, factories, and manufacturing establishments must be paid overtime for hours worked in excess of 10 in any day and hours worked in excess of 40 per week.  BOLI's prior interpretation of that rule required employers to calculate overtime hours worked on both a daily and weekly basis and pay the greater of the two.  Under the new guidance, employers are required to pay both daily and weekly overtime.  

The revised BOLI guidance has raised many questions.  Not only has BOLI done an about-face, the timing of the new guidance is puzzling as the interpretation of the manufacturing overtime rule is the subject of a pending class action filed in Multnomah County Circuit Court, which is likely to resolve the issue.  

In an attempt to address the uncertainty created by the new guidance in the manufacturing sector, the Oregon Legislature introduced a bill last Thursday to put the issue to rest.  Under SB 984, manufacturers would only be required to pay the greater of the daily or weekly overtime.

Ater Wynne's employment group is available to answer questions regarding the application of the manufacturing overtime rule and other wage and hour concerns.


Federal legislators take steps to repeal Davis-Bacon Act

By Stacey Mark
February 3, 2017

Federal legislators have renewed steps to repeal -- or at least undermine -- the prevailing wage requirements under the Davis-Bacon Act, which mandates payment of prevailing wages and benefits to workers employed under federally-funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works.  

U.S. Senator Jeff Flake (R-Ariz.) recently introduced the Transportation Investment Calibration to Equality (TIRE) Act, which would eliminate prevailing wage requirements under the Davis-Bacon Act on all federal highway construction contracts.  In addition, U.S. Senator Mike Lee (R-Utah) introduced a bill to repeal all prevailing wage requirements under the Davis-Bacon Act (S. 244), and Representative Steve King (R-Iowa) re-introduced a companion bill in the House (H. 743), entitled the "Davis-Bacon Repeal Act."  

Federal law also requires federal contractors who provide certain services and manufactured goods to the Federal Government to pay prevailing wages under the McNamara-O'Hara Service Contract Act and the Walsh-Healey Public Contracts Act, respectively.  Although previous steps to repeal these laws failed (see., e.g., S. 1229 (1993), co-sponsored by Senator John McCain (R-Ariz.)), it seems likely that repeal efforts will be renewed under the current administration.   

Already complex prevailing wage requirements were expanded under the Obama administration.  Mistakes can be expensive and result in debarment. Federal contractors are, therefore, well-advised to stay informed and comply with their obligations.  Ater Wynne's labor and employment attorneys can provide assistance with your wage and hour questions.

BOLI Issues New Guidance Advising Manufacturers to Double Count Daily and Weekly Overtime

By Alexandra Shulman
February 1, 2017

In January, BOLI issued new guidance expanding the scope of overtime compensation owed to nonexempt employees who work in mills, factories, or manufacturing establishments.  The new guidance reverses BOLI's long-standing interpretation on this issue.

Under Oregon law, most nonexempt employees who work in mills, factories, and manufacturing establishments must be paid overtime for hours worked in excess of 10 in any day and hours worked in excess of 40 per week.  ORS 652.020ORS 653.261.  Until recently, BOLI advised manufacturers that "when employees who are entitled to daily overtime have worked more than 40 hours in the workweek and have also exceeded the maximum number of hours on one or more days, thereby earning daily overtime, the employer should calculate overtime hours worked on both the daily and weekly bases and pay the greater amount."  However, under the new guidance, BOLI states that covered employers must pay daily and weekly overtime compensation because "[t]he two statutes enact distinct overtime requirements and serve different purposes with respect to restrictions on hours worked by employees."

For example, if a manufacturing establishment employee works three daily overtime hours and one weekly overtime hour, under BOLI's previous interpretation of the overtime statutes, the employee should receive three hours of overtime compensation.  Under BOLI's new interpretation, the employee should receive four hours of overtime compensation.  Additional examples and information are available on BOLI's Technical Assistance website.

BOLI does not explain the reason for this sudden about-face, which is bound to catch many employers unaware.  In addition, the interpretation of the manufacturing overtime rule is currently being considered in a pending class action.  In light of these events, manufacturing companies in Oregon are well-advised to review their overtime practices with counsel.  Ater Wynne's employment group is available to assist with any questions on BOLI's new guidance.

Texas Court Issues Nationwide Injunction Against Overtime Rule

By Alexandra Shulman
November 22, 2016

Today, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking the U.S. Department of Labor ("DOL") from implementing its latest revisions to the Fair Labor Standards Act ("FLSA").

In March 2014, President Obama issued a memorandum directing the Secretary of Labor to "modernize and streamline" the existing overtime regulations for executive, administrative, and professional employees.  On May 23, 2016, the DOL published the Final Rule, increasing the salary level required to qualify for "white collar" overtime exemptions from $23,660 ($455 per week) to $47,476 ($913 per week).  Additionally, the Final Rule increased the total annual compensation requirement for "highly compensated employees" from $100,000 to $134,000.  The Final Rule was to take effect on December 1, 2016, with a mechanism for automatically updating the salary and compensation levels every three years.

A coalition of 21 states and more than 50 business organizations challenged the DOL's Final Rule in federal court, arguing that the Obama administration overstepped its authority.  The court ultimately concluded that the states established a prima facie case that the DOL's salary level under the Final Rule and the automatic updating mechanism are without statutory authority and issued a nationwide preliminary injunction.