Hunton Employment & Labor Perspectives

The Senate Committee on Health, Education, Labor, and Pensions has announced that it will conduct a hearing on Thursday, June 17, 2010 on the Employee Misclassification Prevention Act, which was introduced in both the Senate and House on April 22, 2010.  The Act seeks to amend the Fair Labor Standards Act so that worker misclassification is a violation of federal law.  The act also requires employers to maintain records reflecting hours worked and wages paid to independent contractors.  See our previous post for a detailed discussion of the legislation.

A recent Eleventh Circuit Court of Appeals decision upheld the validity of noncompetition and nonsolicitation covenants in an employment agreement governed by Georgia law.  In H&R Block Eastern Enterprises, Inc. v. Morris, the Eleventh Circuit reversed the United States District Court and ruled that provisions in H&R Block’s employment agreement with its former employee, Vicki D. Morris, were valid and enforceable restrictive covenants under Georgia law.  This decision provides additional guidance to employers attempting to draft enforceable employment agreements to protect legitimate business interests.  It also highlights why the Georgia General Assembly recently passed legislation attempting to offer clarity in this area of the law.

The Secretary of Labor has finalized implementing regulations under Executive Order 13496, which requires federal contractors and subcontractors covered by the National Labor Relations Act (NLRA) to post a new notice advising employees of their rights under the Act.  Note that most employers in the private sector are covered by the NLRA; the Order is not limited to companies with union activity or representation.

The regulations are codified at Title 29, Part 471 of the Code of Federal Regulations.   The Department of Labor (DOL) also provides a helpful fact sheet about the new requirement.

The NLRB's General Counsel, Ron Meisburg, recently announced his anticipated resignation, effective June 20, 2010.  Meisburg's departure now frees President Obama to appoint Meisburg’s successor.  While a number of names as replacement GC have surfaced, no clear front runner has emerged.

For years, employers wrestling with thorny wage and hour issues under the Fair Labor Standards Act (“FLSA”) have used the Wage & Hour Division’s (“WHD”) opinion letters for fact-specific guidance.  To the extent a particular issue was not addressed by a current opinion letter, the employer could submit a request for an opinion letter and obtain definitive guidance from WHD.  Employers who relied on opinion letters were immune from FLSA liability under the Portal Act’s safeharbor provision, which allows an employer to avoid liability for FLSA violations if the employer relied on a written interpretation of the WHD.

On Monday, the United States Supreme Court ruled that claims brought by African American firefighters who had sued the City of Chicago alleging that a hiring test was discriminatory were not time barred.  Lewis v. City of Chicago, No. 08-974, 560 U.S. ___ (2010).  The City conceded that its use of the hiring test was unlawful, but argued that the firefighters claims were untimely.  Addressing only the statute of limitations issue, the Court issued a unanimous decision in favor of the firefighters, holding that the firefighters timely filed a disparate impact claim based on the continued use of the hiring test.

The proposed 2011 fiscal year federal budget signifies a renewed commitment to combating employee misclassification, as it contemplates funding an additional 4,700 investigations into worker misclassification issues.  With penalties for worker misclassification being quite steep -- including back taxes, interest, and even punitive fines -- employers should audit their workforce to ensure that their independent contractors are properly classified.

Unfortunately, there is no bright line test to determine whether a particular worker has been properly classified as an independent contractor.  In fact, the precise definition of an independent contractor not only varies between federal and state law, but can also vary from state to state and even statute to statute.  

The Department of Labor has recently announced a regulatory initiative that would narrow the “advice exception” to the reporting requirements of section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA).  Section 203 requires employers to annually report via Form LM-10 any agreement or arrangement with a third-party consultant to persuade employees as to the collective bargaining rights, or to obtain certain information about the activities of employees or a labor organization involved in a labor dispute with the employer.  The retained consultant must also file a report concerning the agreement or arrangement (Form LM-20).  However, one of the statutory exceptions in section 203(c) provides that no report need be filed when the consultant gives “advice” to the employer.

In yet another pro labor move under the Obama administration, the National Mediation Board (“NMB”), which oversees labor affairs of airlines and railroads, has issued a final rule that will make it easier for unions to organize airline and railroad employees.  Under the new rule, unions must obtain votes from a majority of all workers who cast ballots in order to be recognized.  This is a significant change from the old rule, which had governed these elections for the past 76 years.  In the past, unions had to obtain votes from a majority of all workers eligible to cast ballots in order to be recognized.  Essentially, the old rule allowed workers who did not cast a ballot to effectively count as a “no” vote.  As a result, in most cases the new rule will decrease the number of votes unions must obtain to win recognition.  Most companies, which are governed by the National Labor Relations Act, follow the same majority requirements as the new rule.

Andrew Stern’s sudden resignation as International President of the Service Employees International Union (“SEIU”) took the labor world by surprise and sparked debate about his legacy and the future of the nation’s largest and most politically powerful labor union.  The selection of SEIU Executive Vice-President Mary Kay Henry as his successor has sparked an equally intense debate about the direction she is likely to take SEIU in the future.  Many had assumed that Anna Burger, SEIU’s Secretary − Treasurer and Chair of Change to Win − not to mention Stern’s longtime protégé − was all but guaranteed the job.  However, Henry’s candidacy grew support among the members of SEIU’s Executive Council when she promised to “heal rifts” within the union caused by internal debate over Stern and the long-term viability of his organizing philosophy. The SEIU Executive Council’s rejection of Burger seemed to signal a desire at the top of SEIU for a genuine change of direction.  Yet, in the days following her election, Henry has sent mixed signals about her true intentions.