Martha Zackin

COVID-19: Department of Labor Issues Guidance on Families First Coronavirus Response Act

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By Bello Welsh LLP

The Department of Labor’s Wage and Hour Division has issued materials providing guidance (the “DOL Guidance”) on the Families First Coronavirus Response Act (“FFCRA”).  These materials, which include Q&A documents and fact sheets for employers and employees, can be found here.  The same page also includes links to the notices that employers must post. For a detailed summary of the paid sick leave and Emergency FMLA provisions of the FFCRA, please refer to our earlier alert, available here.  Read more →

Martha Zackin

COVID-19: DOL Publishes Required Poster Regarding Rights Under FFCRA

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The United States Department of Labor has published the new required notice relating to paid sick leave and expanded FMLA under the Families First Coronavirus Response Act (FFCRA).  The poster may be found here.

 

FAQs about this required notice may be found here.  Importantly now with most workplaces operating on a remote basis, an employer may satisfy this requirement by emailing or direct mailing this notice to employees, or posting this notice on an employee information internal or external website.  Employers are not required to send the notice to recently-laid off employees.

Read more →

Martha Zackin

COVID-19 Challenges: Updated Q&As for Employers [SUPERSEDED]

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By Bello Welsh LLP

This Alert has been superseded.  The updated Alert is available here.

On March 20, 2020, we posted a series of frequently asked questions and answers, which you may access here.  The following are additional questions that have been raised since; we will continue to update as developments warrant.

Question 18:  Our organization is covered by the FFCRA.  We have reduced a number of employees to part-time in response to the current situation, with some working only one day per week.  Will those employees still be eligible for the paid public health emergency FMLA leave and paid sick time under the FFCRA?

Answer 18:  Yes.  There is no minimum hours threshold to receive paid public health emergency FMLA (“E-FMLA”) leave or paid sick time under the FFCRA.  The amount of paid sick time granted to part-time employees is not the full 80 hours, but rather the average number of hours the employee works over a two-week period.  For E- FMLA leave, pay is pro-rated based on the number of hours the employee would otherwise be regularly scheduled to work.

If an employee does not have a regular schedule, the amount of FMLA leave pay is calculated based on the average number of daily hours over the six months preceding leave (or, for newer employees, the reasonable expectation of the employee at the time of hiring of the average number of hours that the employee would be normally scheduled to work).

Note that employees must have been employed for at least 30 days to be eligible for the public health emergency FMLA.

Question 19:  We have employees currently on furlough.  If an employee is called in to work for a few days during the furlough period, does the employee become eligible to receive paid public health emergency FMLA leave and paid sick time under the FFCRA?

Answer 19:  Most likely, yes.  Nothing in the FFCRA excludes situations like this.  However, the amount of pay would be pro-rated as described in Q&A 18.

Question 20:  We are temporarily laying off employees.  We don’t know how long the layoff will last, but we expect the employees will come back to work in the future.  Do we need to pay out employees’ accrued, unused vacation at the start of the layoff?

Answer 20:  State laws regarding the payout of accrued vacation vary, so be sure to check the law in all states where you are conducting temporary layoffs.

In Massachusetts, state law requires that “any employee discharged from . . . employment shall be paid in full on the day of his discharge.”  M.G.L. c. 149, §148.  While this language could support the position that accrued vacation need not be paid in connection with a temporary layoff, as opposed to a permanent termination, the Massachusetts Attorney General’s Office very recently released COVID-19-related guidance to the contrary.  The Massachusetts Attorney General’s Office guidance (available here) states that “when an employee is temporarily laid off, they have a right to be paid all of their earned wages, including all accrued vacation pay, on that same day.”  The Attorney General’s Office has indicated it will not take enforcement action for untimely payment of vacation pay if an employee voluntarily agrees to save accrued vacation for later use.  However, the Attorney General’s Office notes that it does not have control of private litigation, and employees who agree to defer vacation payment now would technically still have the legal right to sue later.

Based on the Attorney General’s Office guidance, the conservative approach is to either pay employees accrued, unused vacation upon layoff or allow the individual to voluntarily defer the payout, especially since Massachusetts wage laws provide automatic triple damages and attorneys’ fees for violations.

Question 21:  Can employees use paid sick time under the FFCRA if we cannot provide them any work hours due to a government-ordered closure of non-essential businesses or a “stay-at-home” order?

Answer 21:  The answer is not clear.  Paid sick time under the FFCRA may be used if “[t]he employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.”  The term “isolation order” could be read broadly to refer to stay-at-home orders and government-ordered business closures, or narrowly to refer to an isolation order specific to a particular individual, for example related to that individual’s actual or potential exposure to the virus.  We will monitor for guidance on this point.

Question 22:  Can our organization continue to provide medical and dental insurance to employees who are on furlough or temporary layoff?

Answer 22:  Yes, as long as you follow the requirements of your insurance plans or the provisions of COBRA, as explained below.  As a first step, you should check your insurance plans, as most contain a requirement that employees work a minimum number of weekly hours to be eligible for coverage.  Insurance plans may also limit coverage for individuals who have been laid off, even temporarily.  If your furloughed or laid off employees do not meet the technical eligibility requirements of the plans, you can request an exception from your insurer to maintain active coverage.  We understand that insurers are being flexible in granting exceptions to eligibility requirements due to the unusual circumstances caused by the pandemic.

If your insurer does not allow you to maintain regular coverage for furloughed or laid off employees, then the COBRA law provides an alternative method to continue such coverage.  COBRA notices should be issued to each affected individual, who will need to elect COBRA to continue coverage.  Employees are typically permitted to elect COBRA for up to 18 months, far longer than expected layoffs.  While individuals generally pay the full premium for COBRA coverage, employers may choose to pay some or all of the premium instead.  If you do so, be sure to clearly communicate to employees any time limits or other restrictions on the premium payments the organization is willing to provide.

Note that small employers not covered by COBRA may be subject to state laws concerning continuation of health coverage, such as the Massachusetts mini-COBRA law.

Martha Zackin

Massachusetts Legislature Passes Non-Compete Legislation

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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.

               

 

Martha Zackin

Overtime Update: Will the Texas Decision Invalidating the DOL Overtime Rule Survive and What Should Employers Do Now?

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By Kenneth M. Bello

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?

Read more →

Martha Zackin

EEOC Publishes Strategic Enforcement Plan for Fiscal Years 2017-2021

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By Martha J. Zackin

EEOC recently published its Strategic Enforcement Plan (SEP) for Fiscal Years 2017-2021, in which it outlines the areas in which it intends to focus its strategic litigation and enforcement activities in the coming years.  Not surprisingly, the EEOC indicates that it intends to expend significant resources on understanding and protecting temporary employees and members of the gig workforce.

As described in the SEP, EEOC’s substantive priorities for Fiscal Years 2017-2021 are: Read more →

Martha Zackin

Final Rule and Guidance Issued Implementing Fair Pay and Safe Workplaces Executive Order

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On August 25, 2016, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) issued a Final Rule amending the Federal Acquisition Regulation (FAR) to implement Executive Order 13673, the Fair Play and Safe Workplaces Executive Order (also known as the “blacklisting rule”).  The Department of Labor (DOL) also issued Final Guidance to assist the FAR Council and federal contracting agencies in the implementation of EO 13673.

Signed on July 31, 2014, and as described here, EO 13673 requires prospective and current federal contractors and subcontractors to disclose all violations of federal labor laws that result in administrative merits determinations, arbitral awards or decisions, or civil judgments. The Order also requires contractors and subcontractors to disclose specific information to workers each pay period regarding their wages and prohibits contractors from requiring that their workers sign arbitration agreements that encompass claims of sexual assault or harassment.

The Final Rule is effective October 25, 2016, which is earlier than had been expected. Fortunately, certain obligations under the Final Rule are now phased in, meaning that contractors and subcontractors have time in which to come up to full compliance. Contracts valued at or under $500,000 are excluded from the Final Rule, as are subcontracts for goods that are “commercially available off-the-shelf” items.

Disclosure. When fully implemented, contractors will be required to disclose violations of fourteen federal workplace laws from the previous three years – including laws addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. The provision of EO 13673 requiring contractors to disclose violations of “equivalent” state laws has been paused, pending the DOL’s release of a comprehensive list of state laws covered by the Order; when released, this list will be subject to notice and comment before becoming effective.

Certain information pertaining to violations contractors disclose will be made public. These include: (1) the law violated; (2) the case number, charge number, docket number, or other unique identifier; (3) the date of the decision finding a violation; and (4) the name of the court, arbitrator, agency, board or commission that rendered the decision. Any other information provided voluntarily or at the request of the contracting officer (including information pertaining to mitigating factors and steps taken to achieve compliance) will not be made public unless the contractor chooses to make it so.

The process by which violations will be assessed is set forth in the Final Rule and Guidance. Initially, a new type of government official – an Agency Labor Compliance Advisor (ALCA) – will review the nature of the violations, to determine if any are serious, willful, repeated, or pervasive. After weighing any such violations against the severity of the violations, the size of the contractor, and any mitigating factors, the ALCA will provide his or her recommendation to the contracting officer.  As before, the decision to award or extend a contract rests with the contracting officer, who must determine whether the contractor is responsible and has a satisfactory record of integrity and business ethics.

Pay Transparency. The Final Rule also requires contractors to provide workers with detailed wage statements every pay period, which must include: (1) total number of hours worked per pay period; (2) any overtime hours worked; (3) rate of pay; (4) gross pay; and (5) itemized additions to or deductions from gross pay. Contractors must also provide employees with written notice of their status as exempt or non-exempt from the overtime compensation requirements of the Fair Labor Standards Act. Workers treated as independent contractors must be notified, in writing, of this status.

Arbitration. In addition, the Final Rule prohibits pre-dispute arbitration agreements that cover claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of claims of sexual assault or harassment. These disputes may be arbitrated, but only by voluntary consent given after any such dispute arises.

Implementation Schedule. The Final Rule sets forth a “phased-in” reporting requirement as follows (and as summarized by DOL here):

  1. September 12, 2016: Preassessmentbegins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  2. October 25, 2016: Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. At first, the reporting disclosure period is limited to one (1) year and will gradually increase each year to a maximum disclosure period of three (3) years by October 25, 2018. Also, contractors and subcontractors whose contracts are valued at more than $1,000,000 are prohibited from requiring employees to sign pre-dispute arbitration clauses covering claims arising out of Title VII or claims for sexual assault or harassment.
  3. January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements, notice of overtime status, and notice of any independent contractor relationship to their covered workers.
  4. April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance drops to $500,000.
  5. October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000 (other than subcontracts for commercially available off-the-shelf items).

Action Items. Even with a phased-in implementation schedule, there is much to be done.  For example:

  1. Current or prospective contractors should decide whether to participate in the DOL’s preassessment process. According to information provided by DOL (here), using the published Final Guidance, if a contractor that has been assessed by the DOL as responsible subsequently submits a bid, the contracting officer and the ALCA may use the DOL’s assessment that the contractor has a satisfactory record of labor law compliance unless additional labor law violations have been disclosed.
  2. Contractors (and subcontractors) should begin developing and implementing processes for capturing information required by the Final Rule.
  3. Existing arbitration agreements should be reviewed for compliance.
  4. Existing training and compliance programs should be reviewed and revised, as appropriate, or new programs developed. A well-educated workforce can help minimize the risk of violations that must be reported
Martha Zackin

Workshop: Employment Law Basics for Start-Ups and Small Businesses

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On October 29, 2014, Bello Welsh will present a session on HR and Employment Law Issues for Start Ups and Small Businesses at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA.

Start-up companies focus on developing their idea and bringing their product or service to market.  Small existing businesses work to implement their core business goals and strategies.  In either case, there is often little inclination or staff to pay close attention to day-to-day employee issues.    After all, how difficult can it be to manage a workforce comprised of a relatively few employees?  The answer is “very.” HR is a complicated patchwork of federal, state and local laws, regulations and requirements, most of which apply in some form to employers of all types and sizes.  HR problems can surface when least expected, and can be extremely time consuming and costly.

In this discussion, you’ll learn how to manage the complexities of Small Business HR and to minimize the risk of preventable lawsuits, penalties, and time-consuming employee-relations issues.  For example, you’ll learn about:

  • Creating and maintaining appropriate documentation, including job descriptions, offer letters, personnel policies, and other personnel documents;
  • Managing employee performance and terminations;
  • Managing leaves of absence;
  • Dealing with wage & hour issues; and
  • Handling internal complaints and investigations

The session will be held on October 29, 2014, 6:00 p.m. to 8:00 p.m. , at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA, in the Charles River Room (14th Floor).

Please register at the following site:  http://tinyurl.com/qjmk3ez