Since the rise of the #MeToo movement, employers are facing increased challenges – changed employee expectations, allegations of “old” harassment or renewed attention to previously “resolved” claims, and a heightened attention to such things as bullying, off-site conduct, and workplace romances.

Join our panel of Hogan Lovells lawyers for a discussion on what’s new in this area, as well as some of the thornier issues employers have long faced, including:

  • What constitutes harassment in the first place, and should employers be concerned about conduct that is not legally prohibited?
  • When alleged harassment occurs, who should investigate, and how do employers know when an outside investigator should be brought in?
  • What if an alleged victim does not want to cooperate?
  • Are an employer’s obligations different when a high-level manager or executive is accused?
  • How do you impose corrective action without over or under doing it?
  • In addition to policies and training, what best practices can help improve a workplace culture to prevent harassment?

The panel will take place on April 26, 2018, from 9:00 to 10:30 a.m. in Hogan Lovells’ Washington D.C. office. Registration, networking, and a light breakfast will begin at 8:30 a.m. CLE credit is pending.

Kindly RSVP by April 23, 2018.

We look forward to seeing you.

Agenda
8:30 a.m. – 9:00 a.m. Breakfast and networking
9:00 a.m. – 10:30 a.m. Panel Discussion

Contact

Trevor Godley
trevor.godley@hoganlovells.com

Employers and employees entering into separation or settlement agreements have traditionally agreed to nondisclosure clauses that prohibit disclosure of the agreement or the circumstances leading to its execution. Although these clauses have not previously been subject to much controversy and considered to provide valuable closure for employer and employee, the #MeToo movement has generated much criticism of such clauses when related to allegations of sexual harassment, arguing they have the detrimental effects of silencing victims and enabling repeat offenders.  This criticism has led to new trends in the law which discourage such nondisclosure clauses and agreements.

The most significant change so far is in federal tax law, which has created a disincentive to nondisclosure provisions in settlements of sexual harassment or abuse claims. Specifically, Congress’s recently enacted Tax Cuts and Jobs Act prohibits employers from deducting as a business expense (under Internal Revenue Code Section 162)  “(1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.”

At the state level so far, California, New Jersey, New York, Pennsylvania and Washington have introduced legislation aimed at curtailing the use of nondisclosure provisions that restrict discussions or disclosure of workplace sex harassment. Each state proposal has its own specifics, but in general they render invalid the use or enforcement of non-disclosure provisions related to sexual harassment, either as part of any nondisclosure agreement, or in the context of settlement agreements, or both.  As of the date of this article, legislation is still pending in California, New York, and Pennsylvania, and New Jersey’s bill did not pass in the state’s last legislative session.  Washington’s bill was enacted into law on March 21, 2018 with an effective date of June 7, 2018 and covers nondisclosure agreements entered into as a condition of employment, but permits confidentiality provisions in settlement agreements.  The text of the Washington law can be found here.

Employers should stay up to date concerning applicable laws in connection with nondisclosure agreements. And when nondisclosure agreements exist, employers should remember that they may not interfere with an employee’s right to file a charge with or communicate with U.S. Equal Employment Opportunity Commission (“EEOC”).  Although a settlement agreement can bar an individual from seeking monetary or other individual relief at the EEOC, courts and the EEOC have invalidated agreement terms that interfere with an individual’s nonwaivable right as a matter of public policy to file a charge or otherwise communicate with the EEOC.

For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.

 

Last week, both houses of the New Jersey Legislature passed a sweeping equal pay bill that Governor Phil Murphy is expected to sign promptly. When passed into law, it will be one of the most strict equal pay statutes in the country.

The legislation—the “Diane B. Allen Equal Pay Act”—would be effective July 1, 2018, and would prohibit employers from compensating any employee “who is a member of a protected class” at less than the rate paid to employees who are not members of the protected class “for substantially similar work, when viewed as a composite of skill, effort and responsibility.”  The Act would allow employers to pay different rates of compensation only if the differential is made pursuant to a “seniority system” (which is not defined), a “merit system” (which also is not defined), or the employer makes a five-prong showing that includes:

  1. That the differential is based on non-protected factors, such as training, education or experience, or the quantity or quality of production;
  2. That such factors “do not perpetuate” compensation differentials based on protected characteristics;
  3. That each factor “is applied reasonably”;
  4. That such factors “account for the entire wage differential”; and
  5. “That the factors are job-related with respect to the position in question and based on a legitimate business necessity” and that “there are [no] alternative business practices that would serve the same business purpose without producing the wage differential.”

Compensation comparisons “shall be based on wage rates in all of an employer’s operations or facilities.” Further, employers would be prohibited from reducing the compensation of employees to comply with the Act.

The Act—broad, ambiguous and demanding—is virtually certain to increase equal pay litigation in New Jersey if and when it becomes law. With other states and localities likely to follow suit, employers should proactively evaluate their compensation structures to determine whether and why there are compensation differentials among similarly situated employees.

We blogged in February about two Seventh Circuit cases pending before the Supreme Court that would have given the Court the opportunity to provide guidance as to whether, and if so to what extent, the ADA requires employers to provide disabled employees who have exhausted their FMLA and other employer-provided leave with additional leave as a reasonable accommodation.  The Supreme Court recently denied review in both of those cases, so the issue will continue to percolate in the lower courts.  What does this mean for employers?  Given the unsettled state of the law, and as further explained in our prior blog, employers should continue to evaluate disabled employees’ requests for additional leave on a case-by-case basis.  The length of the leave request, whether the employee’s doctor can provide a reasonably certain return date, and the impact of the request on coworkers and operations are all relevant considerations.

We previously blogged about the requirements of Maryland’s new paid sick leave law, the Maryland Healthy Working Families Act. That law took effect on February 11, 2018, despite efforts by a number of lawmakers to delay it. As required by the law and in response to thousands of questions received, the Maryland Department of Labor recently issued a frequently asked questions document, three sample policies, and an employee notice poster available in English and Spanish.  The guidance provides information on topics such as how to count your employees to determine whether you meet the 15-employee threshold for mandatory paid leave (employers with fewer than 15 employees are required to provide only unpaid leave); how the law applies when you have part-time employees, or a collective bargaining agreement; and whether you can use a different method of leave accrual for different types of employees (the answer is yes).

The Department’s guidance should prove useful to employers in complying with Maryland’s new law. If you already have a sick leave policy in place, it should be carefully reviewed to ensure it meets all of the statutory requirements, and if it does not, you should amend it or add a new policy, accordingly. In addition, if you have other leave policies such as vacation leave, PTO, parental leave, or FMLA leave, your sick leave policy will need to be coordinated with your existing policies.  Employers should also bear in mind that the Department issued its guidance with the caveat that it is only preliminary; so continue to stay tuned for further developments, including potential regulations that may be promulgated by the Department.

In advance of the July 1, 2018 implementation of extensive amendments to the Massachusetts Equal Pay Act (“MEPA”), the Attorney General (“AG”) issued its Guidance on March 1, 2018. While the Guidance does not have regulatory effect, the state’s highest court, the Supreme Judicial Court, has generally afforded substantial deference to such statutory interpretations by enforcing authorities. Massachusetts was the first state in the country to pass an equal pay law and the 2018 amendments make MEPA one of the strongest pay equity laws in the country, intended to close the 84.3.% pay gap for working women in Massachusetts.

MEPA OVERVIEW

MEPA prohibits employers from paying different wages to employees of different genders who perform comparable work, unless variations are based on one or more of six statutory factors. MEPA defines “comparable work” as work that requires substantially similar skill, effort, and responsibility, and is performed under similar working conditions. An employer may not determine comparability based on job titles alone. Wages are defined as “all forms of remuneration for employment.”

MEPA also imposes three additional restrictions on employers. First, employers generally may not seek salary or wage history from prospective employees. Second, employers generally may not prohibit employees from discussing their pay or that of co-worker. Third, employers may not retaliate against any employee for an exercise of rights under MEPA. Further, salary history is not a defense to liability. Nor is intent to discriminate based on gender required to establish liability.

MEPA covers nearly all Massachusetts public and private employees and those with a primary place of work in the Commonwealth.

GUIDANCE HIGHLIGHTS

The Guidance sets forth and further defines the key terms for determining “comparable work” as follows:

  • “Skill” includes “such factors as experience, training, education, and ability required to perform the jobs.”
  • “Effort” is described as “the amount of physical or mental exertion needed to perform a job.”
  • “Responsibility” is explained as encompassing “the degree of discretion or accountability involved in performing the essential functions of a job, as well as the duties regularly required to be performed for the job.”
  • “Working conditions” mean “environmental and other similar circumstances customarily taken into account in setting salary or wages.” These can include physical surroundings and hazards. Working conditions may include the day or time of work, such as the types of scheduling differences that are taken into account in establishing shift differentials.

The Guidance defines that “substantially similar” means that skill, effort, and responsibility “are alike to a great or significant extent, but are not necessarily identical or alike in all respects.”

The Guidance sets forth and further explains the six statutory factors that employers may use to explain wage differentials between employees of different genders who perform comparable work:

  1. a seniority system;
  2. a merit system;
  3. a system which measures earnings by quantity or quality of production, sales, or revenue;
  4. the geographic location in which a job is performed;
  5. education, training or experience to the extent those factors are reasonably related to the job; or
  6. travel, if the travel is a regular and necessary condition of the job.

The Guidance explains MEPA’s statutory Affirmative Defense for “Good Faith” Self-Evaluation. A “complete defense” exists for employers have, within three years of a claim, conducted a legally sufficient self-audit of their pay practices, provided that the self-audit is reasonable in detail and scope, and the employer establishes that it has made reasonable progress towards eliminating any prescribed gender-based wage variations discovered in the audit. Even deficient self-audits done in good faith can prevent liability for double damages, but will not provide a complete defense to MEPA.

The Guidance explains that whether an evaluation is “reasonable in detail and scope” depends on the “size and complexity of an employer’s workforce,” in light of factors including “whether the evaluation includes a reasonable number of jobs and employees,” and is “reasonably sophisticated.” If disparities are not yet eliminated, the employer must show that they will be “in a reasonable amount of time.”

The Guidance includes resources for employers in appendices including 1) a guide for conducting self-evaluations, 2) a pay calculation tool, and 3) a checklist to consult when assessing whether existing policies and practices comply with MEPA. Employers should consult with counsel before conducting any self-evaluation which may be discoverable in litigation or in government investigations.

The Guidance can be found at:

https://www.mass.gov/files/…/03/…/AGO%20Equal%20Pay%20Act%20Guidance.pdf

 

Most employers are required to post the familiar EEO Is the Law poster.  This is a friendly reminder that the OFCCP (Office of Federal Contract Compliance Programs) also requires federal contractors and subcontractors subject to Executive Order 11246 to post two other posters in addition to the EEO Is the Law poster: the EEO Is The Law Poster Supplement, which, among other things, advises employees and job applicants that Executive Order 11246 now prohibits discrimination based on sexual orientation and gender identity; and the Pay Transparency Nondiscrimination Provision, which generally states that employees and applicants may not be discriminated against for discussing, disclosing, or inquiring about compensation.

All three posters need to be physically posted where they can be readily seen by employees and applicants, and they must be made accessible to individuals with disabilities. If you recruit job applicants online, you must include the posters electronically with each electronic job application, or include a prominent link to the posters with each electronic application, including a brief explanation of what the link connects to, so it is conspicuous to applicants.  For employees who work remotely and have computer access, you can also make all three posters available electronically, for example by posting them on your company intranet.

Remember that in addition to these posting requirements, the OFCCP’s regulations also require that the Pay Transparency Nondiscrimination Provision be incorporated into your employee handbook or manual.  Your handbook or manual must include the precise language prescribed by OFCCP.

During a Congressional hearing on March 6th, Labor Secretary Alexander Acosta unveiled a six-month pilot program intended to encourage employers to self-audit and self-report accidental violations of the Fair Labor Standards Act (“FLSA”). Under the program, called Payroll Audit Independent Determination (PAID), the Wage and Hour Division (WHD) of the U.S. Department of Labor will attempt to facilitate settlement agreements between employers who self-report and affected employees.  Employers who qualify for PAID and agree to pay back wages due will not be subject to liquidated damages or civil penalties and attorneys’ fees (all of which an employee could get if he or she files a lawsuit) under the FLSA.  Affected employees will have the right to choose whether to accept back payment in exchange for a release of claims.

There are several open questions about PAID that employers should keep in mind at this time. First, what effect, if any, will an employer’s participation in PAID have on potential claims under applicable state and local law, even if a settlement is reached?  Second, will employees apprised of potential violations by WHD be inclined to accept a settlement agreement that does not include liquidated damages or interest?  Third, is there anything preventing such employees from using the information gleaned from a self-reporting employer to file a lawsuit?  Fourth, will the information and data employers provide to the WHD be discoverable and deemed an admission in future lawsuits, especially by employees who choose not to participate?  Finally, it is not clear whether and to what extent WHD will examine a self-reporting employer’s records for violations in addition to what is self-reported, and whether employers should open themselves up to that scrutiny.

All of these open issues will likely limit the amount of employers who voluntarily self-report wage and hour violations during the six-month pilot period. After PAID’s six-month pilot period is complete, the Labor Department will evaluate the program’s effectiveness and determine whether to continue with the program in its current form, make necessary changes or end the program entirely.

Hogan Lovells invites you to a panel discussion focused on best practices for addressing workplace sexual harassment allegations.

Most companies have anti-harassment policies, but do employees and managers know what these policies really mean? Are these policies enforced consistently across the organization? What are the employer’s obligations when the allegation involves a high-ranking manager or executive? And what if the allegations are true?

Join our labor & employment and internal investigation attorneys as they answer these and other thorny questions on this important topic. In addition, our panelists will discuss the following:

    • When to, how to, and who should conduct an internal investigation
    • Legal liability and other consequences for both the company and the harasser, including the potential impact on separation, settlement and non-disclosure agreements
    • Public relations considerations and the impact of social media in the current climate of harassment
    • International implications, including complications relating to foreign employees and U.S. employees abroad

The panel will take place on March 22, 2018 from 5:00 – 6:00 p.m. in the Hogan Lovells’ New York office. Registration begins at 4:30 p.m. CLE credit is pending. A reception with light food and refreshments will follow the discussion.

Kindly RSVP here.

We look forward to hosting you.

Agenda
4:30 p.m. – 5:00 p.m. Registration
5:00 p.m. – 6:00 p.m. Panel Discussion
6:00 p.m. – 7:00 p.m. Reception

Contact

Matthew Rimi
matthew.rimi@hoganlovells.com

As we previously reported, the National Labor Relations Board (Board) on December 14, 2017 issued a decision in Hy-Brand Industrial Contractors scrapping a broad and controversial “joint employer” standard in favor of a narrowed test that made it more difficult to link affiliated business as joint employers.   Recently, however, the Board unanimously vacated Hy-Brand because of ethics questions raised by member William Emanuel’s participation in that case.

For now, the Board’s broad Browning-Ferris test for determining joint employment is once again the applicable standard. Employers may recall that under Browning-Ferris, a company could be required to bargain with another employer’s union and/or face liability under the National Labor Relations Act if the company merely reserved the right to exert control over those employees’ terms and conditions of employment, however attenuated or indirect the right may be.

It is not clear how long Browning-Ferris will remain in place.  The original Browning-Ferris decision had been appealed to the U.S. Court of Appeals for the D.C. Circuit, but that court sent the case back to the Board for further consideration in light of Hy-Brand.  On March 1, the Board’s General Counsel asked the Court of Appeals to take Browning-Ferris back under review.  Thus, the future of the Browning-Ferris doctrine remains uncertain.

The Hogan Lovells Employment Team will continue to monitor the situation and provide updates as they develop. For more information or for any other employment matter impacting your business, please contact the authors of this article or the attorney you regularly work with at Hogan Lovells.