Laborsphere

Bad News for Whistleblowers: New Jersey Supreme Court Rules Theft of Confidential Documents for Self-Help in Employment Lawsuit Can Result in Jail Time

Does an employee have an unfettered right to take confidential documents from her employer to use in her discrimination and retaliation lawsuit against the employer? Not in New Jersey. The New Jersey Supreme Court recently ruled in State v. Ivonne Saavedra that the theft of a company’s confidential documents for self-help in an employment lawsuit can result in jail time.

Florham Park partner Lynne Anderson recently published an article in Law360 discussing the decision and its ramifications for employers and would-be whistleblowers.

Read “Woe To The NJ Whistleblower Who Whisks Away Documents” here.

An Employer’s Obligation to Follow up after Receiving a Medical Certification: Greater Than You Might Think

If an employee seeks FMLA leave, she typically needs to ask for it. Likewise, it goes without saying that if an employee is asked to provide a medical certification in support of her request (something employers are free to seek) and fails to provide that information – or worse provides a certification indicating that she does not qualify for FMLA leave – the employer has no obligation to provide that leave. Or does it?

In Hansler v. Lehigh Valley Hospital Network, the plaintiff, Ms. Hansler, asked for a two-day per week, one-month leave of absence to deal with certain medical issues, a condition that was diagnosed after her separation as diabetes. In support of her request, Ms. Hansler submitted a medical certification that referred to the length of the requested leave, but did not describe the nature or duration of her condition. The hospital network, instead of asking for clarification of the certification, terminated Ms. Hansler’s employment after she took several days off, contending that because Ms. Hansler was requesting only limited time off, her condition did not qualify as a “serious health condition” under the FMLA and entitle her to leave.

Ms. Hansler thereafter brought suit claiming that the hospital network interfered with her FMLA rights by terminating her employment and retaliated against her for requesting the leave, claims that the trial court dismissed on the ground that Ms. Hansler’s medical certification indicated on its face (by virtue the duration of leave requested) that Ms. Hansler did not qualify for FMLA leave. On appeal, the Third Circuit Court of Appeals reversed. The Court, in a 2-1 decision, held that the hospital network, rather than just acting on the information in the certification, should have asked Ms. Hansler for additional information, even though on its face the information indicated that Ms. Hansler did not qualify for FMLA leave.

In one sense the decision is predictable and understandable. After all, the hospital network with its sophisticated HR capabilities could easily have reached out to Ms. Hansler and asked her for additional information via an updated certification and Ms. Hansler, for her part, was later diagnosed with diabetes, a condition that does qualify as a “serious health condition.” Yet, the decision is not without concern. FMLA regulations provide that an employer “shall advise an employee whenever the employer finds a certification incomplete or insufficient, and shall state in writing what additional information is necessary to make the certification complete and sufficient.” But FMLA case law also holds that, where the certification indicates that the employee does not have a serious health condition, the employer need not follow up further with the employee about her need for leave. And, here, there was at least a decent argument that that was the case given the limited leave requested by Ms. Hansler.

So what is an employer to do when faced with an incomplete FMLA certification? If the certification clearly indicates that no leave is needed or that the employee otherwise clearly is not entitled to leave, it seems fair to say that the employer can rely on the certification and deny the leave request. If, however, the certification indicates that a leave of any length is needed, the employer would be wise to follow up with the employee and provide her an opportunity to submit additional information within the seven-day period contemplated in the FMLA regulations.

The DOL Announces Proposed Revisions to FLSA Regulations Doubling the Minimum Salary Requirement for Exempt Employees

More than 15 months after President Obama issued a Presidential Memorandum directing the Secretary of Labor “to propose revisions to modernize and streamline the existing [FLSA] overtime regulations,” the Department of Labor on June 30, 2015 finally issued a Notice of Proposed Rulemaking (NPRM) detailing its proposed revisions. These proposals include:

(1) Increasing the minimum salary requirement from $455 per week ($23,660 per year) to an expected $970 per week ($50,440 per year) in 2016;

(2) Increasing the minimum annual compensation requirement to qualify as a “highly-compensated” exempt worker from $100,000 to $122,148 annually;

(3) Creating a mechanism for automatically updating the minimum salary and compensation levels, by tying them to either (a) a fixed percentile of earnings for full-time salaried workers or (b) changes in the CPI-U (i.e., the Consumer Price Index for Urban Consumers).

Note that these are proposed revisions; they are not yet law. The NPRM will be published in the Federal Register and the public will be invited to comment on the revisions for a certain period (likely 60 days). After the comment period ends, the Department of Labor (DOL) may consider the comments; possibly make further revisions to the regulations; and publish a “Final Rule” in the Federal Register with an effective date on which it becomes law. Considering this timeline, it is likely that new regulations will not become law until mid-2016 or later. Usually, however, the “Final Rule” does not differ significantly from the NPRM, and thus employers now have a preview of the regulatory landscape they will face in 2016.

The DOL was widely expected to raise the minimum salary requirement, which has not been updated since 2004. However, most predicted that the DOL would couple a more modest (but still significant) increase with changes to the various “duties tests.” This speculation was based upon remarks made by the president and the Secretary of Labor indicating a concern that too many employees, particularly retail managers, were exempt under the regulations even though they spent a large portion of their time performing non-exempt duties.

The DOL has not, however, proposed any specific revisions to the duties tests. Essentially, the DOL seems to believe that a dramatic increase in the minimum salary and compensation requirements will, standing alone, ameliorate concerns about potential misclassification, noting in the NPRM that “[a]djusting the salary level upward to account for the absence of a more rigorous duties test will ensure that the salary threshold serves as a more clear line of demarcation between employees who are entitled to overtime and those who are not, and will reduce the number of white collar employees who may be misclassified . . .”

Even though the DOL has proposed fewer revisions than expected, it is nonetheless “seeking comments” on other potential changes. For example, the DOL has reiterated the concern that “in some instances the current tests may allow exemption of employees who are performing such a disproportionate amount of nonexempt work that they are not [white collar] employees in any meaningful sense” and it is thus “seeking comments on whether the [duties] tests are working as intended.” Similarly, it seeks comments on whether to allow nondiscretionary bonuses and incentive payments to satisfy a portion of the salary basis test. Revisions to the regulations in these areas may possibly appear in the Final Rule.

Although a Final Rule will not take effect until 2016, employers should now start evaluating their employee classification policies to ensure compliance with, at the least, the expected increase in the minimum salary requirements. Given the magnitude of the increase, it’s likely that most employers will need to transition some employees, for whom meeting the new salary basis test is not feasible, from a salary to hourly role.

Should you have questions about this alert, please contact the authors or any other member of Drinker Biddle’s Labor and Employment Group.

EEOC’s Proposed Rule on Employee Health Wellness Programs

On June 19, 2015, public comments were submitted for the EEOC’s much anticipated proposed rule to amend the Title I of the ADA to clarify how the statute applies to certain employee health wellness programs. The EEOC’s stated goal for the rule is to harmonize wellness programs’ use of incentives to encourage participation with the ADA’s requirement that disability-related inquiries and medical exams as part of a wellness program must be voluntary and not penalizing in nature.

The Issue: Incentivizing Wellness Programs

The ADA generally prohibits employers from making disability-related inquiries or requiring medical examinations, but provides an exception for voluntary medical examinations, including voluntary medical histories, which are part of a wellness program. The wellness program is voluntary so long as an employer neither requires participation nor penalizes employees who do not participate. Prior to the EEOC’s proposed rule, neither the statute nor EEOC regulations addressed the extent to which incentives for participation might affect the voluntary nature of a wellness program, but recent lawsuits filed by the Commission caused concern among employers regarding whether incentivizing wellness programs to any extent violated the ADA.

The Solution: The Proposed Rule

The EEOC drafted the proposed rule to be in line with current ACA and HIPAA regulations regarding wellness programs generally and the use of incentives specifically. The main points of the rule are as follows:

Incentives – Employers are allowed to offer incentives up to 30 percent of the cost of employee-only coverage to employees who participate in a wellness program without violating the “voluntary” requirement of the ADA. E.g., if the total cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum value of incentives for an employee under that plan is $1,500.
Confidentiality – Wellness programs that are part of a group health plan may generally comply with their obligation to keep medical information confidential by complying with the HIPAA. Specifically, medical information collected as part of a wellness program may be disclosed to employers only in aggregate form that does not reveal the employee’s identity.
Reasonable Accommodations – Employer must provide reasonable accommodations that enable employees with disabilities to participate and to earn whatever incentives the employer offers. E.g., an employer would need to provide wellness program materials in large print or Braille if necessary to accommodate a participant with vision impairment.

While there is not yet an anticipated date for a final rule, the Commission encourages employers to start complying with the proposed rule now.

Worth the Fight: Conditional Certification of FLSA Collective Actions is Not Automatic

Conventional wisdom holds that courts reflexively grant motions for conditional certification in Fair Labor Standards Act (“FLSA”) collective actions. As a result, some employers do not even oppose these motions. They are making a mistake. As two recent decisions demonstrate, an employer that opposes these motions has a chance to defeat them or, at least, narrow the scope of the collective.

The Allegations

Earlier this month, judges in the U.S. District Courts for the Southern and Eastern Districts of New York issued decisions on motions for conditional certification in Mata v. Foodbridge LLC, 2015 WL 3457293 (S.D.N.Y. June 1, 2015), and Anjum v. J.C. Penney Co., 2015 WL 3603973 (E.D.N.Y. June 5, 2015). The plaintiffs in both cases were non-exempt employees asserting claims for violations of the FLSA and New York Labor Law, alleging (among other things) that their employers failed to pay them overtime when they worked over 40 hours per week. In Mata, the defendants operated two restaurants and the plaintiff was a pizza counter worker. In Anjum, the defendants operated numerous department stores and the plaintiffs were former sales associates in a store in Staten Island.

The Standard

In order to obtain conditional certification, plaintiffs must establish that they and the putative collective action members are “similarly situated” with respect to an alleged violation of the FLSA. In both Mata and Anjum, the courts discussed the “lenient standard” that courts apply to this analysis, indicating that it requires only a “modest factual showing.”

The Mata Conditional Certification Motion

In Mata, the plaintiff filed a motion to conditionally certify a collective action of all non-exempt employees working at the defendants’ restaurants including “cooks, line-cooks, dishwashers, food preparers, cashiers, delivery persons, and counter persons.” In support of the motion, the plaintiff only submitted his own declaration, in which he described his employment and compensation at the defendants’ restaurants and further alleged that, “through observations of and conversations with other employees, he learned that they were subject to similar violations.”

In deciding the motion, the Mata court acknowledged that a single declaration may provide enough evidence for a court to grant a motion for conditional certification. In this case, however, the court determined that “the declaration actually submitted by Plaintiff in support of his motion does not suffice.” According to the court, the plaintiff attested that he observed other employees working, but provided “no actual support demonstrating knowledge of a common scheme impacting the diverse array of employees” he sought to include. Nor did the plaintiff include sufficiently detailed descriptions of his observations of and discussions with co-workers. Thus, the court concluded that “conditional certification would be inappropriate at this juncture.”

The Anjum Conditional Certification Motion

In Anjum, the plaintiffs filed a motion to conditionally certify a collective action of sales associates in all 47 of defendants’ New York State department stores. In support of the motion, the four plaintiffs and five additional opt-ins submitted declarations detailing their experiences working off-the-clock.

With regard to the declarations, the Anjum court explained that “each of the four Named Plaintiffs has personally attested to the violations they claim occurred during their employment as Sales Associates at the Staten Island Store, and they have identified by name similarly situated employees at both the Staten Island Store and the Manhattan Store, at least some of whom have since opted-in to the collective action.” The court concluded that the plaintiffs satisfied their burden to demonstrate that sales associates in the Staten Island and Manhattan stores were similarly situated. However, according to the court, the plaintiffs presented “no firsthand evidence” of violations at any other stores, relying instead on hearsay and their “belief” that the thousands of employees in the defendants’ other New York stores were subject to the same unlawful policies. Therefore, the court certified the collective action, but limited its scope to sales associates working in the Staten Island and Manhattan stores, excluding thousands of employees working in the employer’s other 45 locations.

Conclusion

Courts plainly grant more FLSA motions for conditional certification than they deny. Nonetheless, this first step in the two-step procedure that plaintiffs must follow in FLSA cases is not automatic. As courts often state, the plaintiff’s burden of proof at this stage is low, but “it is not non-existent.” Accordingly, employers should rarely, if ever, consent to conditional certification. As the Mata and Anjum cases demonstrate, employers have a real opportunity to defeat these motions or narrow the scope of the collective.

The DOL’s Upcoming Proposed Revisions to the FLSA’s White Collar Exemption Regulations

This month the Department of Labor is expected to propose, for the first time since 2004, revised regulations concerning the executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act. These revisions were prompted by President Obama’s March 13, 2014 memorandum to the Secretary of Labor, which stated that the exemptions “have not kept up with our modern economy” and which “direct[ed] [the DOL] to propose revisions to modernize and streamline the existing overtime regulations.” After the memorandum was issued, the agency began writing proposed regulations and announced on May 5, 2015, that it had completed drafting them and had submitted them (as required by Executive Order 12866) to the Office of Management and Budget for review.

Procedurally, the “proposed rules” will be published in the Federal Register (an action known as a “Notice of Public Rulemaking” or “NPRM”) for public comment following the OMB’s review, and the DOL has stated that it expects to take this step this month. After the public comment period closes, the DOL will consider the public comments in drafting “final rules;” submit them for a final review by the OMB; and then publish them in the Federal Register with an effective date on which they become law. Although implementation of the final rules may not occur until well into 2016, traditionally the final rules do not differ substantially from the proposed rules. Accordingly, employers should get a sense this month of what the future regulatory landscape will look like.

So what can we expect from these revisions? As an initial matter, it’s almost certain that the DOL will raise the $455 minimum salary requirement, which hasn’t changed since 2004. With regard to the other revisions, however, the DOL’s drafting process has been opaque, and official pronouncements have been largely limited to the Presidential Memorandum and the DOL’s description of the regulatory action on its Spring 2015 agenda, neither of which provide any specific detail. Nonetheless, unofficial pronouncements (including the Secretary of Labor’s remarks before the International Association of Firefighters on March 18, 2014) have repeatedly stressed the DOL’s position that the current regulations result in too many employees falling under the exemptions, particularly retail managers who spend a large portion of their time performing non-exempt duties. Accordingly, there is speculation that the DOL may eliminate the “concurrent duties” provision of 29 CFR 541.106, which provides that simultaneously performing both exempt and nonexempt duties will not automatically disqualify an otherwise exempt employee from the executive exemption. There is also speculation that the regulations may impose a set percentage cap on the amount of time an exempt employee may spend on non-exempt duties, similar to exemption provisions under some state laws (such as California and Connecticut) and to some provisions of the pre-2004 FLSA regulations.

In any event, one thing is certain – some employees who are properly classified as exempt under the current regulations will no longer be exempt under the new rules. Employers will shortly have a preview of just how drastic these changes will be, and should begin evaluating their compliance with the regulations well in advance of the implementation of the final rules.