COVID-19: Families First Coronavirus Response Act Signed Into Law [SUPERSEDED]

By Bello Welsh LLP

This Alert has been superseded.  The updated Alert may be found here.

On March 18, 2020, President Trump signed the Families First Coronavirus Response Act (the “Act”), which aims to address the impact of the COVID-19 pandemic by, among other things, providing a limited period of paid sick leave for employees affected by COVID-19 and expanding the Family and Medical Leave Act (“FMLA”) for a public health emergency.  The paid sick leave and Emergency FMLA provisions of this new law apply to employers with fewer than 500 employees.  For employers with more than 500 employees, the new law does not impact or change existing legal obligations under the FMLA or other federal employment laws, which remain as is.

Read more

COVID-19: Employer Leave Requirements and Tax Provisions

The House Ways and Means Committee has published an overview of employer leave requirements and tax credit provisions under the Families First Coronavirus Response Act.  You can access that chart here.

USCIS Publishes New Version of Employment Eligibility Form (Form I-9)

By Martha J. Zackin

On Jan. 31, 2020, the U.S. Citizenship and Immigration Services (USCIS) published a new version of Form I-9: Employment Eligibility Verification.  Although employers can and should begin using the new Form I-9 immediately, the old Form I-9 will not become obsolete until April 30, 2020.

Background.  The law requires employers, certain agricultural recruiters and referrers for a fee (all referred to as “employers”) must verify the identity and employment authorization of each individual they hire for employment in the United States on Form I-9, Employment Eligibility Verification.

As described in a notice published by USCIS, Form I-9 collects identifying information about the employee (and preparer or translator if used), and requires the employee to attest to whether he or she is a U.S. citizen, noncitizen national, lawful permanent resident, or alien authorized to work in the United States.  Form I-9 also collects identifying information about the employer and information regarding the employee’s identity and employment authorization. The employee must present original documentation evidencing his or her identity and employment authorization, which the employer must review.

Employers must maintain Forms I-9 for as long as an individual works for the employer and for the later of three years after the employee’s date of hire or one year after the date employment ends.  Various government agencies, including the Department of Homeland Security, the Immigration Rights Section in the Department of Justice’s Civil Rights Division, and the Department of Labor, have right to inspect an employer’s Forms I-9.  An employer’s failure to ensure proper completion and retention of Forms I-9 may subject the employer to civil money penalties, and, in some cases, criminal penalties.

Changes to Form I-9.  The paper version of the new Form I-9 has not changed, but the electronic version has been modified, as follows:

  • Added Eswatini and North Macedonia to the Country of Issuance and foreign passport issuing authority fields, to reflect these countries’ recent name changes
  • Clarified who can act as an authorized representative on behalf of an employer
  • Updated USCIS website addresses
  • Provided acceptable document clarifications
  • Updated the process for requesting the paper Form I-9
  • Updated the DHS Privacy Notice

As always, please reach out to your regular employment lawyer with questions.

DOL Issues New Overtime Rule for Exempt Employees

By Alexandra D. Thaler

With the U.S. Department of Labor’s new overtime rule becoming effective in less than two months, on January 1, 2020, employers are well advised to be working now to implement any needed changes by the new year.

This fall, the DOL issued its final rule affecting pay requirements for exempt executive, administrative and professional employees (the so-called “white collar” exemptions) under the Fair Labor Standards Act (FLSA).  The rule:

  • Raises “standard salary level” required for the white collar exemptions to $684 per week (annualized to $35,568), up from the $455 per week level that has been in place since 2004;
  • Raises the annual compensation requirement for “highly compensated employees” (those who have at least one exempt duty) to $107,432 per year, up from $100,000;
  • Allows nondiscretionary bonuses and incentive payments (including commissions) to be used to satisfy up to 10% of the standard salary level, including in a one-time catch-up payment, if certain conditions are met; and
  • Revises certain special salary levels applicable to workers in U.S. territories and the motion picture industry.

Employers that elect to transition currently exempt employees into overtime-eligible status, and decide to change from salary to hourly pay, will need to determine a method for setting the pay rate.  While the “reverse engineering” method, which uses the current salary to arrive at an hourly rate, may address business needs in some cases, employers should note that use of this method may be constrained in states with stringent Equal Pay laws.  Employers interested in using the 10% allowance to meet the new pay obligations are advised to consult with counsel before proceeding, as failure to meet the conditions in the new rule results in loss of the exemption and therefore liability for overtime pay.

Employers that decide to move forward with the shift from exempt to non-exempt status should plan ahead to address likely logistical and employee relations challenges, for example:

  • Ensuring accurate recording and timely reporting of hours of work for a new cohort
  • Ensuring compliance with meal and rest break requirements in certain states
  • Changing wage payment timing, in states where non-exempt pay must be more frequent
  • Devising appropriate messaging to deal with such issues as potential concerns of employees who view the change as a demotion or reduction in status, or who have questions about past practices

As a reminder, businesses must also comply with state and local overtime pay requirements and exemption standards.   Where those standards already exceed the new FLSA levels, such as in New York, California, and Alaska, the new DOL rule will have little practical impact on exempt employees’ pay.  More generally, however, companies should track overtime pay obligations on the state and local level to ensure these obligations are met as to non-exempt employees.  For example, California, Colorado, and several other western states have daily (not just weekly) overtime pay requirements.  In addition, some states do not recognize the same exemptions from overtime as are available under the FLSA, while others apply different duties tests when determining whether an exemption applies.

While the DOL rule appears fairly simple at first glance, it can raise complicated compliance issues, which should be considered carefully before changes are implemented.  At the same time, employers that have been considering changes to employee classifications may find this is a logical time to implement them.  Your Bello Welsh, LLP counsel is available to advise you on these matters and to work with you to determine available options, assess legal and business risk, and implement an agreed plan.

Massachusetts Paid Family and Medical Leave Act: Updated

By Martha J. Zackin and Hayley Cotter

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

New Deadlines Established for Massachusetts Paid Family and Medical Leave Law

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

Administrative Law Judge Recommends Dismissal of Department of Labor’s Pay Discrimination Claims Against Federal Contractor

By Justin L. Engel

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.

Amendments to Massachusetts Law Concerning Criminal History Inquiries

By Justin L. Engel

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

Massachusetts Raises Minimum Wage and Establishes Paid Family and Medical Leave

By Jennifer Belli and Justin Engel

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

Massachusetts Legislature Passes Non-Compete Legislation

By Jennifer Belli

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.