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.
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:
Interested employers are encouraged to weigh in on all of these important questions.
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:
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.
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.
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 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.
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 652.020; ORS 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.
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.
In June of this year, we reported that a judge in Texas issued a nationwide preliminary injunction blocking enforcement of the Department of Labor's controversial Persuader Rule, which would have required disclosures by any consultant -- including a company's attorney -- who engaged in activities for the purpose of directly or indirectly persuading employees in connection with their right to union representation. In a November 16 order, Judge Sam Cummings made the earlier injunction permanent, with nationwide effect. Judge Cummings' order notes that his preliminary injunction is currently on appeal to the U.S. Court of Appeals for the Fifth Circuit.
Given the upcoming change to a Republican administration, it seems unlikely that the Persuader Rule will be revived.
Our prior report on the Persuader Rule is available here.
The passage of Initiative Measure 1433 in Washington means that minimum wage workers who are at least 18 years old will see their wages increase from $9.43 to $11 per hour, effective January 1, 2017. Subsequent wage hikes each year will increase the minimum wage in Washington to $13.50 per hour by 2020, after which the minimum wage will be adjusted for inflation each year. Employers are precluded from counting any portion of tips or service charges toward the minimum wage.
In addition, beginning January 1, 2018, Washington employers will be required to provide paid sick leave to all employees. Sick leave will accrue at a rate of not less than one hour for each 40 hours worked by employees, who are entitled to carry over at least 40 hours of unused sick leave to the following year. Although employers are not required to pay out unused sick leave upon termination of employment, employees who terminate with sick leave on the books are entitled to have their unused balance restored if they return to work with the same employer within 12 months. Employers may permit the use of paid sick leave for other purposes. Consequently, an employer that provides more generous leave benefits may choose to modify its existing plan to cover paid sick leave obligations under the new law.