Following weeks of piecemeal changes and updates, the Department of Family and Medical Leave (“DFML”) has now issued the final regulations (effective July 1, 2019). Click here for a revised Bello / Welsh alert, which has been updated to be consistent with both the final regulations and the bill passed last week. The most significant changes are as follows: Read more
On December 3, 2018, we posted about the new Massachusetts Paid Family and Medical Leave Law (“PFML”). Although the post was accurate at the time published, the Department of Paid Family and Medical Leave (the “Department”), has since pushed out some deadlines and made other changes. We will be posting substantive guidance shortly, but in the meantime the updated deadlines are as follows:
- April 29, 2019, the applications for private plan exemptions were made available online at MassTaxConnect.
- June 30, 2019, written PFML notices must be distributed to all employees and contract works (pay reported on IRS Form 1099-MISC)
- July 1, 2019
- PFML laws and regulations effective (note that final regulations are now expected to be published on July 1, the effective date)
- PFML posters posted
- Payroll tax deductions begin (unless the company has applied for and been granted a private plan exemption)
- September 20, 2019, applications for private plan exemption for Quarter 1 due
- October 1, 2019, first quarterly report filed through MassTaxConnect
- October 30, 2019, payments for Quarter 1 (July 1- September 30) remitted
- January 1, 2021, most benefits available
- July 1, 2021, all benefits available
Following a two-week trial, Bello Welsh has secured a major victory for a federal contractor in an enforcement action alleging gender-based pay discrimination brought by the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) under Executive Order 11246. The case, OFCCP v. Analogic Corporation, No. 2017-OFC-00001, is the first and only OFCCP case in the United States claiming gender pay discrimination to go to trial, and the decision is likely to have significant implications for OFCCP’s dealings with federal contractors going forward.
The origins of the case date back to an OFCCP compliance review that began in December 2011. Over two years later, in January 2014, OFCCP issued a Notice of Violation claiming that the contractor violated the federal Executive Order by paying females in two specific positions less than males in those same positions. A trial was held before Administrative Law Judge Colleen A. Geraghty in October 2017, and briefs were submitted in February 2018.
On March 22, 2019, Judge Geraghty issued a 43-page decision recommending that OFCCP’s pay discrimination claims be dismissed, rejecting the theory of discrimination presented by OFCCP’s expert, and finding instead that the contractor’s expert demonstrated that there was no such discrimination. In so ruling, Judge Geraghty held that OFCCP failed to prove a pattern and practice case of pay discrimination under either a disparate impact or disparate treatment analysis.
Judge Geraghty specifically found OFCCP’s disparate impact claim to be deficient because OFCCP never identified a specific policy or practice that caused the alleged pay disparity. Further, the statistical evidence offered by OFCCP’s expert to demonstrate a pay disparity was effectively refuted by the statistical evidence presented by the contractor’s expert.
Judge Geraghty also found OFCCP’s disparate treatment claim to be deficient because, again, OFCCP’s statistical evidence was rebutted by the contractor’s more persuasive statistical evidence. Judge Geraghty further determined that OFCCP had failed to present “anecdotal evidence” – that is, specific instances – of intentional discrimination, while the contractor offered substantial evidence that it did not discriminate against women.
A final decision in the case will be issued by the Department of Labor’s Administrative Review Board.
The import of this case is substantial, as it is likely to impact the types of statistical and other evidence that will be deemed sufficient to support a pattern and practice claim of pay discrimination, be it based on gender or any other protected status.
Bello Welsh will be providing a more detailed discussion of the decision and its potential implications in the coming weeks.
In October 2018, amendments to Massachusetts law concerning employer criminal history inquiries became effective. Under the previous version of the law, employers were prohibited from asking about: (i) an arrest, detention, or disposition regarding any violation of law in which no conviction resulted; (ii) a first conviction for any of the following misdemeanors: drunkenness, simple assault, speeding, minor traffic violations, affray, or disturbance of the peace; or (iii) any conviction of a misdemeanor where the date of the conviction or the completion of any period of incarceration resulting therefrom, whichever is later, occurred more than five years prior to the inquiry, unless the person had been convicted of any offense in the five years immediately preceding the inquiry. Also, employers seeking information about an applicant’s prior arrests or convictions have long been required to include specific language notifying the applicant that he or she may answer “no record” in response to an inquiry about a matter that is sealed and providing other disclaimers. Additionally, since 2010, Massachusetts employers have been prohibited from making any criminal history inquiries on the initial written employment application or prior to an interview.
The new law amends these restrictions in three ways: Read more
In June 2018, Massachusetts passed a law that will gradually raise the state minimum wage to $15.00 per hour and establish a paid family and medical leave program for employees in the state. The Massachusetts Department of Family and Medical Leave, a newly established state agency created to administer the leave program, recently issued FAQs for employers and employees, available here. The requirements of the new law, as clarified by the FAQs, are explained below. Read more
The Massachusetts Legislature has passed a major overhaul of non-compete law, known as the “Massachusetts Noncompetition Act.” Assuming Governor Charlie Baker signs the bill, it will apply to noncompetition agreements entered into on or after October 1, 2018. This alert summarizes the key provisions of the Act.
What is a noncompetition agreement?
The Act imposes minimum requirements that noncompetition agreements between employers and “employees” (broadly defined to include independent contractors) must meet to be valid and enforceable. For purposes of the Act, a “noncompetition agreement” means:
an agreement between an employer and employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee or expected employee agrees that he or she will not engage in certain specified activities competitive with his or her employer after the employment relationship has ended.
Notably, non-disclosure/confidentiality agreements, invention assignment agreements, employee non-solicit/no-hire provisions, and covenants not to solicit or transact business with customers, clients or vendors are not “noncompetition agreements” governed by the Act. Likewise, noncompetition agreements made in connection with the sale of a business are not covered (provided the signatory is a significant owner of the purchased business and will receive significant consideration from the sale), nor are noncompetition agreements made in connection with an individual’s separation from employment (provided the employee is expressly given seven business days to rescind acceptance).
Are noncompetition agreements with certain categories of employees prohibited?
Yes. The Act provides that noncompetition agreements are automatically unenforceable against four categories of employees: (1) employees who are considered non-exempt from overtime under the federal Fair Labor Standards Act; (2) undergraduate or graduate students who enter into an internship or other short-term employment relationship while enrolled in school; (3) employees age 18 and younger; and (4) employees who have been terminated without cause or laid off. The Act does not define the terms “without cause” or “laid off,” but Massachusetts cases arising in other contexts have defined the related terms “good cause” and “just cause” quite broadly from the employer perspective.
What requirements must noncompetition agreements meet to be valid and enforceable?
Noncompetition agreements must meet a number of requirements to be valid and enforceable, including the following:
- An agreement signed in connection with an employee’s hiring must be in writing and provided to the employee by the earlier of a formal offer of employment or 10 business days before the start of employment. As a practical matter, this means that an employee cannot begin working for 10 business days after receipt of an offer if the non-competition agreement is to be enforceable.
- An agreement entered into after the start of employment, but not in connection with separation from employment, must be supported by “fair and reasonable consideration independent from the continuation of employment” and notice of the agreement must be provided at least 10 business days before it is to become effective. The Act does not define the term “fair and reasonable consideration,” but it certainly requires more than a de minimus One potential option is a signing bonus directly attributed to the noncompetition agreement that is large enough to be (at least arguably) “fair and reasonable” under the circumstances.
- The agreement must be in writing, must be signed by both the employer and the employee, and must expressly state that the employee has the right to consult with counsel prior to signing.
- The agreement must be supported by a “garden leave clause” or “other mutually-agreed upon consideration between the employer and the employee, provided that such consideration is specified in the noncompetition agreement.” A garden leave clause is an employer’s agreement to pay an employee on a pro rata basis during the non-compete period at least half of the employee’s highest annualized salary in effect during the two years preceding the employee’s termination. Notably, the Act does not require noncompetition agreements to include expensive garden leave provisions. Mutually-agreed upon alternative consideration is acceptable, and the Act does not specify the amount or type of such consideration. That said, it does appear that noncompetition agreements signed at the start of employment likely need to be supported by some consideration above and beyond the mere hiring of the employee. An upfront agreement to pay an employee a lump sum at the time of separation from employment, for example, may suffice.
- The restricted period may not exceed 12 months from the end of employment (except the period may be extended to up to two years from the end of employment if the employee has breached his or her fiduciary duty to the employer or has unlawfully taken, physically or electronically, property belonging to the employer).
Apart from these specific requirements, noncompetition agreements must be reasonable in all respects and consonant with public policy, as is required under existing common law. The Act specifically provides that noncompetition agreements must be (1) no broader than necessary to protect the employer’s legitimate business interests in trade secrets, confidential information, and/or goodwill; (2) reasonable in geographic scope relative to the interests protected; and (3) reasonable in the scope of proscribed activities relative to the interests protected.
The Act creates certain presumptions of reasonableness. For example, a noncompetition agreement will be presumed reasonable in geographic scope if it is limited to the areas where the employee provided services “or had a material presence or influence” at any time during the last two year of employment, and it will be presumed reasonable in scope of proscribed activities if it is limited to the specific types of services provided by the employee at any time during the last two years of employment.
Can a court reform an overbroad noncompetition agreement?
Yes. As under existing law, a court may reform or revise an overbroad noncompetition agreement to render it valid and enforceable to the extent necessary to protect the employer’s legitimate business interests.
Can employers avoid the strict requirements of the Act with choice of law and forum selection clauses identifying a state other than Massachusetts?
No. The Act states that any choice of law provision that would have the effect of avoiding the requirements of the law is not enforceable “if the employee is, and has been for at least 30 days immediately preceding his or her cessation of employment, a resident of or employed in Massachusetts at the time of his or her termination of employment.” Additionally, the Act requires that all civil actions relating to covered noncompetition agreements shall be brought in the county where the employee resides or, if mutually agreed by the employer and employee, in the Superior Court of Suffolk County. It is not clear whether this provision is an attempt to limit enforcement of noncompetition agreements in federal court (for example in diversity cases), which may be subject to challenge.
What Should Employers Do Now?
Assuming the bill is signed by the Governor, employers should promptly review and revise any form noncompetition agreements to be used after October 1, 2018 and determine what consideration to offer employees in connection with such agreements. Employers may also wish to consider whether noncompetition agreements are necessary for certain employees or whether the same objectives can be achieved with other restrictive covenants outside the scope of the Act, such as provisions prohibiting solicitation of and doing business with customers. Employers should also review their hiring processes and severance agreements to maximize the enforceability of noncompetition agreements. We at Bello Welsh are available to assist and work with our clients on compliance with this new law.
On March 1, 2018, the Massachusetts Attorney General’s Office published guidance on the amendments to the Massachusetts Equal Pay Act (MEPA), as described below.
By way of background, the amendments, signed into law in 2016 and effective July 1, 2018, seeks to ensure that men and women are paid equal wages for comparable work. In sum, MEPA broadens the definition of comparable work, describes the limited circumstances in which variations in pay may be permissible, and prohibits employers from restricting discussions of wages or from seeking salary history from applicants. Importantly, MEPA provides employers with an affirmative defense against pay disparities if they have completed a good faith self-evaluation of its pay practices and can show that they have made reasonable progress towards remedying pay differentials.
The Guidance, titled “An Act to Establish Pay Equity: Overview and Frequently Asked Questions,” seek to provide employers with clarification around key issues including: Read more
The federal Department of Labor signaled this week that it is reversing course on Obama-era policies that had resulted in the risk of expansive employer liability with respect to worker classification and joint employment. The DOL’s withdrawal of two controversial guidance documents from 2015 and 2016 is one in a series of steps indicating that the Trump administration seeks to make good on campaign promises to loosen regulations on employers.
In 2015 the DOL had articulated its view of the definition of an employee under the Fair Labor Standards Act in the context of independent contractor misclassification. In an informal guidance known as an Administrator’s Interpretation (AI), the DOL reviewed the application of the so-called “economic realities” test used to determine whether a worker is an employee or an independent contractor. This multi-factor test is much broader than the common law “control” test, and as a result it sweeps more relationships under the label of “employment.” The DOL thus concluded that application of the test results in the finding that “most workers are employees under the FLSA.” Although the DOL purported to rely on established precedent in reaching this conclusion, its clear message to employees and businesses was that the Department would take the broadest possible view of employment relationships in investigation and enforcement proceedings going forward. Accordingly, the withdrawal of the guidance sends the message that the DOL will be softening its stance on this issue.
As we wrote at the time, in a subsequent Administrator’s Interpretation issued in early 2016, the DOL advocated an expansive definition of joint employment. The DOL asserted that joint employment could be either “horizontal” or “vertical,” and may exist when “an employee is employed by two (or more) employers and the employers are responsible, both individually and jointly, for that employee under the law.” While the AI’s description of “horizontal” joint employment largely conformed to the established approach, which looks to the common law “control” test to determine whether an employee is sufficiently controlled by two or more employers for joint employment to arise, the DOL’s definition of “vertical” joint employment represented a significant departure from this precedent. According to the guidance, “vertical” joint employment “exists where the employee has an employment relationship with one employer (typically a staffing agency, subcontractor, labor provider, or other intermediary employer) and the economic realities show that he or she is economically dependent on, and thus employed by, another entity involved in the work.” By announcing that vertical joint employment status should be evaluated using the multi-factor “economic realities” test, the DOL clearly intended to broaden the circumstances in which employers could be found jointly and severally liable for FLSA violations. Thus, the DOL’s withdrawal of the 2016 AI signals a return to the narrow common law focus on control as the touchstone for determining whether joint employment exists.
While it remains to be seen what specific impact the withdrawals of these interpretations will have, employers that had been wary of the Obama administration’s broad pronouncements in the area of wage and hour enforcement, and business groups that had urged the withdrawal of these interpretations, will welcome this change. These and other recent announcements—including the proposed 2018 federal budget, which contains a dramatic 21% funding cut for the DOL and proposes the merger of the OFCCP into the EEOC while also significantly cutting the OFCCP’s budget—may mean that the regulatory landscape for employers will experience significant loosening in the months and years to come. However, it is important to keep in mind that other regulatory or even Congressional action in other areas relating to the employer-employee relationship (most notably a possible increase to the minimum salary requirement for exempt employees on which the DOL will soon solicit public comment once again, according to a recent statement by Labor Secretary Alexander Acosta), may yet result in significant impact on businesses and individuals.
Now that a federal judge has issued a preliminary injunction staying implementation of the new DOL regulations revising salary thresholds for determining application of the white collar minimum wage and overtime pay exemptions, otherwise slated to go into effect on December 1st, what happens next, and how quickly will that occur? Here are the possibilities.
- An interlocutory appeal to the 5th Circuit Court of Appeals. How that comes out is anyone’s guess, but the case is vulnerable in its analysis, as detailed below.
- Congressional Action that renders the decision academic. On September 28, 2016, the House of Representatives passed H.R. 6094, titled Regulatory Relief for Small Business, Schools, and Nonprofits Act. The bill would have changed the effective date of the revised overtime regulations from December 1, 2016 until June 1, 2017. With a Republican majority in both the House and Senate, there is a very real possibility that some form of law will be filed and passed in 2017. The question of course is what will that bill look like – for examples, will it exempt “small business”, and will it change the minimum salary amounts and/or remove automatic indexing?
In a last-minute, and therefore surprising, decision issued today, a Texas Federal District Court judge has blocked enforcement of the revised federal overtime rule set to become effective December 1, 2016. The rule, issued by the federal Department of Labor, would require employers to pay a salary of at least $913 dollars per week (equivalent to $47,476 per year), to most employees treated as exempt from overtime pay under the Fair Labor Standards Act, a significant increase over the current $455 per week ($23,660 annually). The ruling came in response to cases filed in the last several weeks by certain groups of states, and the decision to issue the injunction has surprised some commentators.
Despite being issued by a single Texas trial court judge, the injunction ostensibly has nationwide effect, and completely prevents the DOL from enforcing the revised rule, just days before it was scheduled to take effect. It remains to be seen whether an immediate appeal will follow, and ultimately whether the injunction will be upheld. Employers that have not already implemented changes to employee pay or classifications will need to make decisions regarding whether to go ahead with changes in the face of this uncertainty. We will continue to provide updated analysis and will be available in the coming days to discuss these developments with any clients seeking guidance in making these decisions.
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