Fiscal Year 2017 EEOC Statistics are Here (and So Is Retaliation!)

Last week the EEOC released its annual report breaking down charges received during the fiscal year. In fiscal year 2017, the agency received 84,254 charges and took in $398 million between voluntary resolutions and litigation.

What’s striking is the number of retaliation charges – with 41,097 charges it is an overwhelming 48.8% of total charges filed in 2017. In second place was race with 28,528 charges, followed closely by disability in third place with 26,838. Charges based on sex were not far off with 25,605 charges in the year. The EEOC received 6,696 sexual harassment charges, which is a slight drop from fiscal year 2016’s 6,758 charges.

As employers face more internal complaints of harassment – this retaliation number further highlights the critical importance of a robust and well-honed investigation process. Employers need to handle investigations very carefully, and be mindful that the complainant (and the witnesses) may also be the source of your next retaliation complaint. Investigators and managers must be carefully trained to avoid situations which can lead to complaints or retaliation.

Overall, the EEOC resolved close to 100,000 charges in fiscal year 2017 (99,109), reducing the charge workload to the agency’s lowest inventory in a decade.

Predictive Scheduling: New York (State) of Mind

Retail employers beware: New York City’s predictive scheduling law went into effect on November 26, 2017, and now New York State is now getting in the mix. The New York State Department of Labor (“NYSDOL”) recently released draft regulations that would amend the rules for scheduling employees covered by the Minimum Wage Order for Miscellaneous Industries and Occupations. The NYSDOL comment period recently came to a close on January 22, 2018. Likely on the heels of the NYSDOL’s issuance of a final rule, we break down what employers need to know. But before diving into the proposed NYSDOL draft regulations, let’s recap the New York City predictive scheduling law that recently went into effect.

New York City Predictive Scheduling Law
On November 26, 2017, New York City’s “Fair Workweek” legislation went into effect, which is a collective of laws aimed to protect fast food and retail workers. This blog focuses on the provisions for retail workers. The following Q+A provides an overview of the law’s key provisions applicable to retail businesses:

  • Does the new law apply to all retailers? No. The law applies to “retail businesses” which are defined as entities with 20 or more employees engaged primarily in the sale of consumer goods at one or more stores within New York City.
  • Does the new law apply to all employees? Almost all. This law applies to full-time, part-time, and temporary workers. This law does not apply to employees covered under a valid collective bargaining agreement.
  • What kind of notice is required? Employers must provide each individual employee with a final schedule at least 72 hours before the employee’s schedule begins. Employers can provide employees with their schedules in the manner in which they usually contact employees so text or email works. Employers must also post the schedule in-store in an area where all employees can view it.
  • On-call outlawed? Yes. What used to be a standard industry practice is now outlawed; an employer cannot require an employee to call in fewer than 72 hours before a shift beings to determine if he or she should come to work.
  • Can you add a shift? Not with less than 72 hours’ notice. However, this does not prohibit an employer from asking an employee if he or she would be willing to do so. If the employee is willing, the employer must obtain the employee’s written consent.
  • Can you cancel a shift? Not with less than 72 hours’ notice except under limited circumstances including: 1) threats to employees or the employer’s premises; 2) public utility failure; 3) shutdown of public transportation; 4) fire, flood, or other natural disaster; or 5) a government-declared state of emergency.
  • I have to keep what for how long? An employer must retain employee work schedules for at least three years. An employer is also required to provide employees with their work schedules for any previous week worked for the past three years within 14 days of the employee’s request.

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Employer Vaccine Programs: A Case Where Religion is NOT a Factor

This year flu season came early and with a vengeance. As we mentioned in our October post, The Rise of Employee Religious Discrimination Claims, mandatory flu vaccines present a common pitfall for employers. As employers seek to avoid flu outbreaks in the workplace, they may unknowingly head toward a flu case in the courtroom. Issues arise when employees present sincerely held religious beliefs, or medical issues, that may preclude their flu vaccine. This is a particular challenge in hospitals.

A recent Third Circuit decision should be heartening to employers who are trying to manage vaccination programs. In Fallon v. Mercy Catholic Medical Center of Southeastern Pennsylvania, No. 16-3573, LINK the Third Circuit affirmed the dismissal of a complaint by an employee who was fired for refusing a vaccine, concluding that an employee did not have a valid religious objection and could be lawfully fired.

The plaintiff, Paul Fallon, had worked at Mercy Catholic since 1994. It was only in 2012 that Mercy Catholic began requiring employee vaccinations. In both 2012 and 2013, Fallon submitted requests for exemption that were approved. Each time Fallon submitted his exemption request, attaching a twenty-two page essay outlining his “sincerely held beliefs” that the vaccine was harmful. However, in 2014, Fallon submitted his same request and received a denial in response, along with an explanation that Mercy Catholic had changed its standards for the exemption. Mercy Catholic requested a letter from a clergyperson supporting his exemption request. Fallon was unable to provide a letter and was ultimately terminated.

Following termination, Fallon filed suit in federal court alleging disparate treatment, religious discrimination and failure to accommodate his religion. After the District Court granted Mercy Catholic’s motion to dismiss, Fallon appealed the decision to the Third Circuit which affirmed the dismissal. In doing so, the Third Circuit undertook an examination of whether Fallon’s beliefs were “religious,” ultimately concluding they were not. Continue Reading

New Tax Law Impact on Employee Benefits and Compensation

At the end of 2017, President Trump signed into law The Tax Cuts and Jobs Act (the “Act”) that includes significant changes in the employee benefits area, most of which became effective on January 1, 2018. The following is a brief description of some of the notable changes, and we expect additional guidance on many of the Act’s provisions.

Executive Compensation

IRC §162(m) Changes for Public Companies. The Act repeals the performance-based compensation exception to the $1 million pay cap under IRC §162(m) and expands the definition of “covered employee” to include anyone who holds the CEO or CFO position at any time during the tax year plus the three highest paid executive officers for the year. Under the new rules, once a covered employee, always a covered employee with respect to compensation paid in future years – including compensation that becomes payable following retirement (e.g., severance and deferred compensation) and amounts payable to beneficiaries. Under a transition rule, compensation payable pursuant to a written binding contract in effect on November 2, 2017 that is not materially modified thereafter is exempt from the new requirements.

Qualified Retirement Plans

Loan-Offset Rollovers. Previously, a terminated participant who defaulted on a plan loan was deemed to have taken a taxable distribution for the outstanding loan balance unless that amount was contributed to another qualified plan or IRA within 60 days of termination. The Act extends the 60-day period to the due date (including extensions) for filing the participant’s tax return for the year the loan default occurs.

2016 Disaster Relief. Much like the relief provided by the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (see our previous Client Advisory), the Act provides individuals impacted by major disasters in 2016, including Hurricane Matthew, with penalty-free access to retirement funds through qualified distributions of up to $100,000, allows the amount distributed to be repaid over 3 years, and allows taxpayers who cannot repay the distribution to spread out any income inclusion over 3 years. Plan amendments implementing these provisions must be adopted on or before December 31, 2018 (for calendar year plans).

Hardship Withdrawals. Defined contributions plans that allow for safe-harbor hardship withdrawals should examine the extent to which hardship withdrawals may be permitted due to casualty losses as the Act restricts what may be classified as a casualty loss.

To read the full advisory, click here.

 

The Rising Cost of “Hush Money” – Congress Strips Tax Incentives for Sexual Harassment Nondisclosure Agreements

You can count Congress among the institutions caught in the ground swell of the #MeToo movement, and they’re using the tax code to prove it.

Buried in the various changes of the new tax bill, Congress included Section 13307, titled “Denial of Deduction for Settlements Subject to Nondisclosure Agreements Paid in Connection with Sexual Harassment or Sexual Abuse.” Specifically, Section 13307 amends the Internal Revenue Code Section 162(q) to state:

No deduction shall be allowed … for (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.

Effective for amounts paid or incurred after December 22, 2017, this deceptively complex provision will have broad impact for businesses attempting to resolve sexual harassment claims.

Generally speaking, the old language of Section 162 allowed payments made under settlement agreements and attorneys’ fees paid in connection with the defense of an action as tax deductible for businesses as a business expense.

However, from the plain language of this new provision, businesses faced with the prospect of settling a sexual harassment claim will now have to make a choice – are they to choose between their bank account or their public image?

It is likely that confidentiality will still be the prevailing factor in the majority of these decisions.

Additionally, the language of Section 162 is unclear how this provision will treat the settlement of employment-related claims when an employee asserts multiple claims and some claims are not related to sexual harassment. Will the provision apply to the entire settlement payment? Should the payment be apportioned according to the separate claims? Will businesses also have to apportion their attorneys’ fees in a similar fashion?

It is also uncertain how this provision will affect settlements of non-sexual harassment related claims where an employee will agree to a general release of all unasserted claims against the business (including unasserted sexual harassment claims). If the agreement includes a confidentiality provision, will the payment trigger Section 162(q) and these payments cannot be deducted?

Until the IRS provides further guidance on how they will be enforcing this provision, businesses will have to proceed with caution when settling employment-related claims, especially sexual harassment claims.

The New Year Brings New Rules to New York

As January draws to a close, New York employers are confronting the reality of many new laws and regulations that govern the employment relationship – from the new Paid Family Leave law, to the new federal tax law. We are also tracking several newly-signed and proposed pieces of legislation, which could further complicate the employment relationship in New York.

Here is what there is so far:

New York Paid Family Leave

As we previously reported, effective January 1, most employers in New York State will be covered by the new Paid Family Leave law (“PFL”). Under the PFL, employers will need to provide eligible employees with 8 weeks of family leave with salary reimbursement capped at 50% of the state’s average weekly wage. This will increase on an annual sliding schedule until 2021 when employees will be entitled to 12 weeks of family leave with salary reimbursement capped at 67% of the state’s average weekly wage.

Eligible employees will be permitted to take leave to care for a qualified family member’s serious medical condition, to care for the birth or placement of a child, or for a qualified military exigency. Leave under the PFL will overlap with an employee’s leave under the Family and Medical Leave Act under certain circumstances.

For a more extensive analysis of the PFL, its requirements (including employer notice requirements), and suggested steps for compliance, we encourage you to read our previous blog post on this law: “A New Headache – New York’s Paid Family LeaveContinue Reading

New Sexual Harassment Requirements for Illinois Lobbyists

Take action now to meet the new policy, training, and certification requirements.

Beginning January 1, 2018, Illinois lobbyists and their employers must comply with new sexual harassment compliance rules. Governor Bruce Rauner signed into law Public Act 100-0554 (the Act) to combat sexual harassment in the state legislature. The Act imposes sweeping new requirements on lobbyists even if they are the victims. Press reports detail a number of allegations involving legislators, including some made by lobbyists and activists. One allegation forced the Senate majority leader to step-down from his post. In addition, hundreds of women signed an open letter to bring attention to this pattern of abuse in the state capitol. It appears that discussion of sexual harassment will continue into 2018.

Before the Act, only the Legislative Inspector General could investigate allegations of legislators’ sexual misconduct. That position, however, has been vacant since 2014. Notably, more than two dozen allegations sat uninvestigated on an empty desk. Now, state law authorizes the Secretary of State Inspector General to investigate allegations and the State Executive Ethics Commission to enforce the rules. The legislature, in policing itself, requires lobbyist employers to follow much the same requirements as state agencies in combatting sexual harassment.

Kelley Drye has followed this issue closely and is advising clients on proactive steps they can take to prevent sexual harassment. Stopping the “Harveys in our midst” before they can harm our colleagues or our businesses is more important than ever before. Relying on a generic HR sexual harassment policy is not enough. Employers—not just their registered lobbyists—face new requirements with only weeks to comply. Continue Reading

A “Smoky” Legal Issue for 2018 – Medical/Recreational Marijuana In the “Workplace”

Marijuana remains illegal under federal law. However, there are many states, and a few cities, which have legalized medical and recreational marijuana – creating challenges for employers, as these laws “sprout up” (pun intended) across the country.

Also, prior to now, the caselaw was quite clear – an employer could discipline an employee for lawful use of marijuana. See Coats v. Dish Network, LLC, 350 P.3d 849 (Colo. 2015). But the law appears to be changing, as recent cases indicate that courts are beginning to recognize that employees who are lawful users of marijuana are entitled to some protection.

It is a trend that employers need to watch. Continue Reading

A New Headache – New York’s Paid Family Leave

With the end of the calendar year in sight, employers must shift focus to ensure compliance with the New York State’s new Paid Family Leave (“PFL”) law, which goes into effect on January 1, 2018.

The Good News – The PFL, which applies to all employers (of any size) does not require employers to pay salary during a family leave. Generally, employees on family leave will get limited salary coverage paid through an employer’s insurance policy, much like the current State Disability benefits program.

The Bad News – The law now gives employees some salary continuation during certain FMLA – leave periods (including leave to care for a family member), which prior to this law were usually unpaid leaves. As many employers know, FMLA leave is a very popular benefit, even when it is unpaid. Family leave will most surely become an even more popular benefit, now that some salary will be covered.

COVERAGE

What Employers Are Covered? The new PFL law applies to any employer, of any size, including out-of-state employers who have employees working in New York State. The State intends for the PFL program to provide benefits to any eligible employee who works in New York, regardless of the employer’s headquarters or the employee’s place of residence.

What Employees Are Covered? Any employee who regularly works 20 or more hours per week and has worked at least 26 consecutive work weeks, preceding the first day of their PFL leave, is eligible for the PFL benefits.
Employees who work fewer than 20 hours per week will be eligible for PFL benefits after working 175 “working days” (not calendar days) in their position. Continue Reading

WHERE’S YOUR HARVEY? How To Keep Your Company Out of the Headlines

Over the past year, we have all watched the garish spectacle of various sexual harassment scandals take down powerful men in media, Silicon Valley, and most recently Hollywood, where allegations of Harvey Weinstein’s lurid conduct have engulfed the industry.

And we have read a lot of typical advice from law firms in the wake of all this: make sure you have the right policies in place, train your managers and staff, have a robust complaint procedure, and investigate all claims and respond promptly when harassment is reported.

Here’s the rub: pretty much every organization languishing under sexual harassment allegations in the past year had all that. You can bet that every company ensnared in these scandals had the right policies and procedures in place, had done sexual harassment training, had an HR department that was ready to respond. And all that preparation avoided . . . absolutely nothing. So your human resources people and legal professionals may be thinking, “We’ve got policies and complaint response procedures in place, so we’re set, right?”

Wrong.

Where is the disconnect? Why do these things keep happening? And with the orgy (pun intended) of recent publicity, what do you do to keep your company from being the next media pariah?

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