Bill Strengthens Enforcement Powers of Philadelphia Commission on Human Relations

By Matthew A. Fontana

Philadelphia is poised to strengthen the enforcement powers of the Philadelphia Commission on Human Relations (“PCHR”), the City’s primary civil rights and anti-discrimination agency.  Under legislation that passed City Council on May 8, 2017, the PCHR would have the authority to issue cease and desist orders—closing a business’s operations for an unspecified length of time—if the agency determines the business has engaged in “severe or repeated violations” of the Philadelphia Fair Practices Ordinance (“the Ordinance”).  The authority to shut down a business’s operation is an unheard of remedy for employment related civil rights violation and—given the significant ramification for employers— it is critical for Philadelphia employers to be aware of the potential consequences of the PCHR’s enhanced powers for  their business operations

The Ordinance prohibits discrimination based on age, ancestry, color, disability, ethnicity, gender identity, sexual orientation, national origin, race, religion, and sex.  The Ordinance is enforced by the PCHR.  The PCHR’s enforcement powers are limited to traditional remedies for employment discrimination, including back pay, emotional distress damages, punitive damages and orders to eliminate or redraft a policy found to be discriminatory.  Prior to using its enforcement powers, the PCHR encourages parties to mediate their dispute or to reach a voluntary settlement.

In response to concerns about a pattern and practice of racial discrimination at bars and restaurants in the gayborhood—a neighborhood in Philadelphia that derives its name from its historic association with LGBTQ residents—Councilman Derek Green proposed legislation that would strengthen penalties against Philadelphia businesses found to discriminate against their employees, as well as against tenants or customers.  The bill gives the PCHR the authority to order a business to cease operations for an undefined “period of time” when the PCHR has issued a finding that the business has engaged in severe or repeated violations of the Ordinance and the business has refused to resolve the case by mediation or settlement.  While Rue Landau, executive director of the PCHR, provided some solace to employers by stating that “it would only be implemented under egregious circumstances after a full hearing by the PCHR,” he also stated that “[t]he law sends a strong message to business that the City will not tolerate discrimination … .”

The bill, which Philadelphia’s Mayor signaled he will sign into law, certainly sends a strong message.  The authority to shut down the operations of a business as a remedy for employment related civil rights violations is unprecedented.  No other employment civil rights agency has this type of authority.  Given the unique power being vested in the PCHR and its lack of any precedent, it is likely that the measure will be challenged in court.  However, until that happens, Philadelphia businesses need to be aware that a PCHR investigation can lead to serious consequences, particularly if the PCHR believes a pattern of discrimination is present.

The employment lawyers at Drinker Biddle will continue to monitor the implementation of the PCHR’s new cease and desist powers and provide any updates so that you can stay ahead.

 

Preparing for the Future of the Overtime Eligibility Rule

By Mark Foley and Matthew Fontana

One of the most significant wage and hour actions of the Obama administration—promulgating a new rule on overtime eligibility—remains frozen in legal limbo as the Trump administration decides whether to repeal and replace it or propose an alternative solution. With such uncertainty, what should employers do to ensure they are in compliance when the Trump administration finally takes action?

First, employers need to understand why the new overtime rule is not in effect. A federal district judge in Texas stayed the rule’s implementation on November 22, 2016, just nine days before it would have become effective nationwide. The judge held that the Department of Labor exceeded its regulatory authority by establishing a salary threshold under which employees were automatically overtime eligible regardless of their job duties. The Department of Justice appealed that decision, and the Texas AFL-CIO filed a pending motion to intervene in the event the Trump administration decides not to challenge the judge’s decision in the appeal’s court. After obtaining two filing extensions, the DOJ has until May 1 to file a brief stating its position on the appeal.

Second, employers should be aware of the Trump administration’s potential options. Its first decision is whether to defend the rule at the appellate level, first to the Court of Appeals for the Fifth Circuit, and then potentially to the U.S. Supreme Court. While that decision will not be publically announced until the May 1 filing, signs are suggesting that the DOJ will not defend the rule and will instead argue that the federal district judge’s opinion should stand.

The current administration’s second decision is whether the DOL should rescind the new overtime rule or promulgate a revised rule. Central to that decision is the perspective of the new proposed labor secretary nominee, Alexander Acosta. While it is unclear exactly what Mr. Acosta favors, multiple reports suggest a likely scenario that would involve the withdrawal of the current rule and the promulgation of a more modest proposed overtime rule with a reduced salary threshold. For example, some Republicans have discussed a new overtime salary threshold of $35,000 rather than $47,476. Because the new overtime rule is not effective, repeal and replacement of it can be accomplished by a notice published in the federal register rescinding the current proposed rule and providing a period of notice and comment for the administration’s new overtime rule.

Employers should continue to prepare for some type of increase in the overtime salary threshold. While it is unlikely that the Obama administration’s $47,476 overtime threshold will survive the current administration, it is probable that there will be a modest increase in the overtime threshold from its current $23,600. As a result, employers should be prepared to update plans to alter compensation and job duties of employees who could be implicated by an increase in the overtime threshold. The good news is that a more modest increase will likely affect fewer employees and cause employers less disruption. lowering employers’ compliance costs.

Drinker Biddle and Reath’s labor and employment attorneys will continue to monitor these developments and provide updates.