President Biden’s Recent Executive Order on Promoting Competition in the American Economy Differs Significantly From President Obama’s Approach to A Similar “Problem”
President Biden’s July 9, 2021, executive order, in which he urged the Federal Trade Commission to explore enacting rules to curtail the use of non-competes and other agreements that impede worker mobility, marks a change in approach and scope from President Obama’s efforts to address the same issue. First, in his October 2015 “State Call to Action on Non-Compete Agreements,” President Obama urged state governments to eliminate the use of non-competes for certain classes of workers based on earnings, particular occupations (public health/safety), and the circumstances of the employee’s separation from employment (lay-offs, termination without cause). Perhaps in response to President Obama’s efforts, or because of the prevailing trend against non-competes, since 2016 at least 16 states have taken action to limit the use of such agreements. Maryland is one of those states. In 2019, Maryland enacted legislation prohibiting the use of non-competes for low-wage employees. More recently, the District of Columbia banned the use of non-competes in virtually all circumstances. The goals of President Biden’s recent order, by contrast, include having a federal agency severely curtail, if not banned altogether, the use of non-competes and pursuing federal enforcement actions against employers who violate the regulations. In light of the general movement by state governments to protect employees from unnecessary or onerous non-competes, it is unclear whether there was any practical need for President Biden to make non-competes a federal issue (other than his campaign promise to do so). Whatever President Biden’s motivation, any rules proposed by the FTC almost certainly will be met with blistering pushback from the business/corporate community during the required public notice and comment period. Any ultimate enactment also is likely to result in a flurry of litigation over the constitutionality of the federal government attempting to regulate private employment contracts. It remains to be seen whether the FTC’s implementation of President Biden’s order will resemble Maryland’s more limited approach, which focused on protecting more vulnerable workers with limited bargaining power, or D.C.’s blanket ban on non-competes. Either way, Luchansky Law‘s attorneys will be monitoring developments closely and will be available to explain how any new regulations affect your company’s non-compete agreements. We can be reached at (410) 522-1020 or at www.luchanskylaw.com.
Courts’ Decisions in FFCRA Cases Offer Guidance to Employers Facing FFCRA Claims
With 14 months having passed since the Families First Coronavirus Response Act (FFCRA) took effect, the number of decisions by U.S. District Courts relating to claims arising from violations of that law is increasing. The arguments made by employers and employees in these cases, and how courts have addressed those arguments, can provide valuable insight to employers facing similar claims. In a decision issued on May 28, 2021, a federal court in Missouri considered an employer’s argument that an employee could not recover back pay, front pay or punitive damages arising from an FFCRA retaliation claim. The employer argued that FFCRA regulations incorporated regulations arising from the Fair Labor Standards Act which allowed recovery of “lost wages,” and thus the employee could only recover minimum wage and liquidated damages. The court disagreed with the employer and found that, while “lost wages” is not defined under the FLSA, it is an open-ended term which could include back pay and front pay. The court did conclude, however, that punitive damages were not recoverable in an FFCRA retaliation claim. An employer’s qualification for the “small employer” exemption to the FFCRA, applicable to employers with fewer than 50 employees, may not be enough to support dismissal of a complaint. One Florida employer argued that the claim against it should be dismissed because “it would qualify for an exemption” from the FFCRA’s leave requirements because it employed fewer than 50 people and that enforcement of the law against it would jeopardize its viability as an ongoing business. The court denied the motion to dismiss because the complaint did not include allegations that would demonstrate that the employer had taken the statutorily required steps to qualify for the exemption or that it qualified for the exemption. Significantly, this decision does not foreclose an employer from demonstrating, in an early motion for summary judgment, that there is no dispute of material fact that it had made the necessary determination that it was eligible for the exemption. In a Kentucky case, a federal court granted an employer’s motion to dismiss because the complaint did not allege that the quarantine instruction or the employee’s other communication with the employer at the time of the leave request included a proposed end to the leave. Furthermore, the quarantine instruction relied on by the plaintiff was signed by a registered nurse who did not come within the statute’s definition of “health care provider,” and the notice did not include the employee’s name because it was issued to the employee’s spouse, though it was to apply to the entire family. The lesson here is that employers faced with FFCRA claims should carefully go back and re-examine all documentation submitted by an employee in support of their request for leave. In another Florida case, an employer argued that its termination of its employee, who generally worked as many hours as needed, while he was awaiting the results of a Covid test could not serve as a basis for recovery because it would not have had work for him even if he was available due to a reduction in its workforce caused by Covid. The court denied the employer’s motion for summary judgment, concluding that even though it was undisputed that the employer had reduced its workforce, there were still issues of fact as to whether the employee would have been given some work had he not been terminated. The take-away from this case is that an employer that plans to argue that an employee would have been terminated for reasons other than FFCRA-protected conduct must be prepared to support that argument with specific, detailed evidence. At Luchansky Law, our lawyers can provide valuable advice and representation to employers facing FFCRA claims. Please give us a call at 410-522-1020 if we can be of service
Federal Court Rejects Employees’ Attempts to Recover Unpaid Wages and Overtime Under Maryland Law for Workweeks in Which They Did No Work in Maryland
In a recent decision that appears to address the issue for the first time, U.S. District Court Judge Peter Messitte ruled that Maryland wage and hour statutes did not entitle members of a class of cable/telephone/internet technicians to recover unpaid wages and overtime earned during workweeks in which they did not perform any work in Maryland. In the case, styled Boyd, et al. v. SFS Communications, LLC, many of the class-member plaintiffs had performed work in multiple states and/or the District of Columbia during the relevant timeframe and sought to recover under Maryland law for all hours for which they had not been fully compensated regardless of where the work been performed. They argued that as long as the defendants were Maryland employers that were subject to liability for violating Maryland law, all unpaid wages and overtime they had earned during the relevant time frame could be recovered under the Maryland Wage Payment & Collection Law and the Maryland Wage & Hour Law. Had that argument been successful, the plaintiffs would have been able to seek treble damages (which are not available under the Fair Labor Standards Act) for all work they performed. The court rejected the employees’ argument, noting that Maryland’s wage and hour statutes were modeled after the FLSA, which permits recovery only for workweeks in which an employee performed work in the United States. Thus, by analogy, Maryland statutes only permit recovery of unpaid wages or overtime associated with workweeks in which at least some work was done in Maryland. The court also cited Maryland’s general presumption against application of Maryland statutes outside of Maryland absent specific language indicating the legislature’s intent that the statute’s reach be so extended. This is an important decision for Maryland employers that face wage and overtime claims from employees who perform work both inside and outside of Maryland. If employees cannot demonstrate that they performed work in Maryland during a particular workweek, a strong argument can be made that they cannot recover treble damages arising from that workweek even if they prove that the failure to pay was not the result of a bona fide dispute. The decision also demonstrates the importance of an employer of maintaining records of where its employees performed their work. Of course, employees whose claims encompass some workweeks in which they worked in Maryland and others in which they worked exclusively in another jurisdiction can bring claims under the laws of both jurisdictions in addition to their FLSA claims. At Luchansky Law, our attorneys are continuously monitoring federal and state developments related to wage and hour claims and have significant experience litigating such claims. If you have questions about the classification of or compensation due your employees or have received a claim letter or lawsuit alleging the violation of wage and hour laws, we can help. Please call us at 410-522-1020.
How to Improve Your Workplace
Complying with harassment legislation is a job you should assign your employment law attorney to ensure that you’re insulated against claims. Find out how compliance works here.
Do You Need to Review Your Business’s Employee Policies?
If your policies haven’t been changes in a while, a review and some revisions by an employment law attorney are essential.
Sexual Orientation Discrimination In The Workplace
SUPREME COURT HOLDS THAT CIVIL RIGHTS ACT OF 1964 PROHIBITS DISCRIMINATION IN EMPLOYMENT BASED UPON SEXUAL ORIENTATION In a 6-3 decision that decided three pending cases, the Supreme Court held that the prohibition in the Civil Rights Act of 1964 of discrimination in the workplace based upon “sex” prohibits discrimination based upon sexual orientation as well. The three cases which led to the decision were brought by two men who alleged they were fired because they were gay and a transitioning transgender worker who was fired after informing her employer that she would no longer present as a man. The decision is significant because there is no federal statute explicitly protecting the employment rights of LGBT workers and less than half of the states had passed laws prohibiting discrimination based upon sexual orientation. If you have are an employer facing an employment discrimination claim, please call Luchansky Law at 410-522-1020 to arrange a consultation.
Employee To Employee Discrimination
In a recent unanimous published opinion, the United States Court of Appeals for the Fourth Circuit held that an employer cannot be liable for discriminatory conduct by an employee toward a co-employee for purposes of a Title VII hostile working environment claim, if the employer promptly imposes discipline on the offending employee that is reasonably calculated to stop the discriminatory conduct. In Erika Bazemore v. Best Buy, Case No. 18-2196, the appellate court affirmed the decision by the U.S. District Court for Maryland granting Best Buy’s motion to dismiss the claim brought by Ms. Bazemore, an African-American employee, arising from her co-employee’s use of a racial slur. The court refused to “micromanage” Best Buy’s disciplinary procedures, holding that, because Best Buy promptly issued the offending employee mid-level discipline in the form of a “Final Write-Up” when it became aware of the conduct, and the discipline was effective in stopping the discriminatory conduct, the employee’s offensive conduct could not be imputed to Best Buy. The court rejected Ms. Bazemore’s arguments that mid-level discipline was insufficient, that termination was warranted and that a store-wide statement that discrimination would not be tolerated was necessary. Significantly, the court’s decision would not necessarily apply in a situation where a supervisor had committed the discriminatory act or where the discipline was insufficient to stop the offensive conduct. If you are an employer facing a hostile work environment claim, please call Luchansky Law at 410-522-1020 to arrange a consultation.
A Lower Hurdle for Federal Employees
In a recent decision, the United States Supreme Court held that federal employees face a lower hurdle in proving age discrimination than those in the private sector. In an 8-1 decision in Babb v. Wilkie, 18-882 (October Term 2019), the Court reversed the Eleventh Circuit’s decision and held that, because the plain language of 29 U.S.C. §633a(a), applicable to federal employees, mandates that personnel decisions must be made “free from any discrimination based on age,” a federal employee can prevail in an age discrimination claim by proving that age was but one factor in the employment decision. Thus, even if the federal agency had legitimate reasons for the challenged personnel action, such as, for example, that the employee that received the position or promotion instead of the claimant was more qualified, if age was a factor in the decision, the personnel action is unlawful. An employee in the private sector who alleges age discrimination under the ADEA, by contrast, still must prove that but for the employee’s age, the challenged personnel decision would not have been made. If you believe you have been the victim of age discrimination, please call Luchansky Law at 410-522-1020 to arrange a consultation.
TREASURY, IRS AND LABOR EXPLANATION OF TAX CREDITS FOR NEW PAID LEAVE
As you know, the Families First Coronavirus Response Act that was signed by President Trump on March 18, 2020 requires businesses with up to 500 employees to provide additional paid leave to their employees. Many businesses understandably were concerned whether they could withstand the potential financial impact of the legislation, as well-intentioned as it may be. In theory, the law included a mechanism for financial relief by providing employers with a dollar-for-dollar tax credit to offset the money paid to employees in accordance with these requirements. But many questions loomed – including how quickly employers would be able to utilize these tax credits. The Treasury, IRS, and Labor Departments now have issued a helpful explanation of the process for claiming these tax credits, with more guidance to be released imminently. Businesses will be pleased to know that they will be permitted to take these tax credits on a current basis by offsetting them against the regular payroll taxes that employers pay in each payroll. The notice explains: “When employers pay their employees, they are required to withhold from their employees’ paychecks federal income taxes and the employees’ share of Social Security and Medicare taxes. The employers then are required to deposit these federal taxes, along with their share of Social Security and Medicare taxes, with the IRS and file quarterly payroll tax returns (Form 941 series) with the IRS. “Under guidance that will be released next week, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. “If there are not sufficient payroll taxes to cover the cost of qualified sick and child care leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS expects to process these requests in two weeks or less. The details of this new, expedited procedure will be announced next week.” You can review the IRS’s full explanation of these provisions – including a potential Small Business Exemption for businesses with fewer than 50 employees — at the following link: https://www.irs.gov/newsroom/treasury-irs-and-labor-announce-plan-to-implement-coronavirus-related-paid-leave-for-workers-and-tax-credits-for-small-and-midsize-businesses-to-swiftly-recover-the-cost-of-providing-coronavirus. As always, if you have any questions, do not hesitate to contact Luchansky Law by email, or by calling 410.522.1020.
The Families First Coronavirus Response Act
President Trump signed into law the Families First Coronavirus Response Act, an economic stimulus plan aimed at addressing the impact of the COVID-19 outbreak. The new law, which goes into effect on April 2, 2020, impacts all businesses with fewer than 500 employees by requiring employers to provide employees additional paid sick leave for illnesses relating to the coronavirus, and by amending the Family and Medical Leave Act to require a blend of unpaid and paid leave for employees who must care for children whose schools and day care providers have closed. Here is a brief summary of the new law’s provisions. Temporary FMLA Expansion The new law does not make a wholesale change to the FMLA. Employers with fewer than 50 employees still do not have to comply with the standard provisions of the FMLA. But all employers with fewer than 500 employees have to comply with the new provisions of the FMLA summarized below. The new law now require employers to provide employees with up to 12 weeks of leave where the “employee is unable to work (or telework) due to a need for leave to care for [a] son or daughter under 18 years of age . . . if the school or place of care has been closed” because of the COVID-19 emergency. While the first 2 weeks of that leave can be unpaid, the remaining 10 weeks of the leave must be paid at 2/3 of the employee’s regular wages, up to a cap of $200 per day with a $10,000 maximum. There are some provisions in the Act that are designed to protect small businesses. For example – If an employee goes out on leave under this provision, and the employer cannot afford to hire him or her back because of economic conditions or other changes in economic conditions, the business only has to make reasonable efforts to restore the employee to the former position, but does not have an absolute obligation to do so. The Department of Labor will have the authority to exempt small businesses with fewer than 50 employees from these additional requirements when compliance with them would jeopardize the viability of the business as a going concern. Tax credits will be permitted in the amount of paid leave provided. These expanded provisions will terminate on December 31, 2020. Emergency Paid Sick Leave In addition to the expansion of the FMLA for childcare coverage described above, the new law also requires employers with up to 500 employees to provide additional paid sick leave to an employee who: Is subject to mandatory quarantine for COVID-19. Has been advised by a health care provider to self-quarantine because of COVID-19. Is experiencing symptoms of COVID-19 and is seeking a medical diagnosis. Is caring for an individual who is subject to mandatory quarantine or has been advised to self-quarantine. Is caring for a son or daughter because their school has closed or child-care provider is unavailable because of COVID-19. Is experiencing any other substantially similar condition specified by the government in connection with the emergency. Employers are required to provide full-time employees with 80 hours of paid sick time, and part-time employees with a number of hours of sick time equal to the number of hours that such employee works, on average, over a 2-week period. This sick leave may not carry over from year to year. The Act prohibits employers from discharging, disciplining, or otherwise discriminating against an employee for taking leave under the new law. Tax credits will be permitted in the amount of paid leave provided subject to a cap of $511 per day per employee unless the leave is used for caring for a family member or child in which case a daily cap of $200 per employee applies. Employers will be required to post a notice of these rules, which the DOL will be issuing in the coming weeks. Details and Questions There are many details of the new law, of course, that require further explanation. Please contact us with any questions you have, either about the law in general, or about how it will affect your business. These issues continue to develop, and we will continue to keep you apprised of them.