Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others. If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.
- VACCINE MANDATES IN PRIVATE SECTOR STAYED BY HIGH COURT, UPHELD FOR HEALTH SERVICES INDUSTRY
- 4TH CIRCUIT COURT OF APPEALS HOLDS WARN ACT NOT APPLICABLE TO CONTRACTORS
- COURT PENALIZES EMPLOYER FOR CATEGORIZING OVERTIME AS “MILEAGE”
- UNION ORGANIZATION ON THE RISE
- Tip Of The Month
VACCINE MANDATES IN PRIVATE SECTOR STAYED BY HIGH COURT, UPHELD FOR HEALTH SERVICES INDUSTRY
The COVID-19 vaccination/testing mandate for private employers with 100 or more employees, which had been issued under an emergency temporary standard (ETS) by OSHA and recently validated by the Sixth Circuit Court of Appeals, has now been stayed by the United States Supreme Court as of January 13, 2022. This was not a decision on the merits of the case, though it certainly suggests that states, businesses and other organizations are likely to succeed in their legal challenges to the law. The Supreme Court’s 6-3 decision was based on the majority’s conclusion that OSHA likely exceeded its emergency and statutory authority to regulate occupational hazards when it issued mandates regulating hazards of daily (and not just workplace) life. Employers are still permitted to enact their own vaccination and/or testing requirements, but there is no federal mandate to do so in light of the Supreme Court’s decision.
On the same date, the United States Supreme Court upheld a vaccine mandate issued by the Centers of Medicare and Medicaid Services for all health care providers and facilities that receive Medicare or Medicaid reimbursement for care/services/products provided. Under this mandate, employers have until February 28, 2022, to create policies and procedures for making sure employees are vaccinated or qualify for a medical or religious exemption and all staff have received a full vaccination series (two doses of Pfizer and Moderna; one dose of Johnson & Johnson). No enforcement action will be taken by the agency if an employer has more than ninety percent of its staff vaccinated or exempt, and there is a plan to obtain 100% vaccination by March 28, 2022.
Further litigation in these cases is expected, but the decisions constitute the law as of today. Most do not expect the outcome of the decisions above to change even after the cases have been litigated on their merits. Thus, employers covered by the CMS mandate are recommended to comply as needed to avoid penalties and fines, while other private employers have the flexibility to implement COVID-19 vaccination/testing/masking requirements as desired or warranted, subject to local and state requirements for lesser mitigation measures like masking.
4TH CIRCUIT COURT OF APPEALS HOLDS WARN ACT NOT APPLICABLE TO CONTRACTORS
The Work Adjustment and Retraining Notification Act (“WARN Act”) requires employers to provide advance notice to employees of a plant closing or mass layoff. Generally speaking, the WARN Act requires employers with 100 or more full-time employees to notify employees 60 days prior to closing a facility/department or a lay off affecting at least 50 employees at a single site of employment. The notice must state whether the closure/layoff is expected to be permanent, the expected date of closure/layoff and contact information for the company. In a recent case arising from the construction of a nuclear power plant in South Carolina, employees of the contractors building the plant brought claims against the contractor and plant owner under the WARN Act when the project halted and thousands of employees were laid off without receiving notice. The federal district court dismissed the claims, holding that the plant owner did not have to provide notice to employees of contractors and no notice was required from the contractor because the situation fell within the “unforeseeable business circumstances” exception to the WARN Act requirements. The employees appealed to the 4th Circuit Court of Appeals, arguing that the plant owner was the plaintiff employees’ “employer” for WARN Act purposes, and that the contractor owed notice under the Act. The 4th Circuit upheld the dismissal of the employees’ WARN Act claims, concluding that though the plant owner had some control over its contractors, it was not the equivalent of a parent/subsidiary company relationship. Further, the Circuit Court concluded that the unforeseeable business circumstances exception applied because the contractor was unaware of the plant owner’s sudden decision to end the project. Thus, the contractor was only required to provide “as much notice as is practicable,” which it did according to the Court. The decision shows the importance of the WARN Act exceptions and that courts must recognize the different roles of owner and contractor in large projects.
COURT PENALIZES EMPLOYER FOR CATEGORIZING OVERTIME AS “MILEAGE”
Under the Fair Labor Standards Act (FLSA), “no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The FLSA also permits employers to make reasonable payments to employees which are not made as compensation for hours of employment, including reasonable payments for travelling expenses or other expenses. 29 U.S.C. § 207(e)(2). In a recent case, employee brought suit accusing employer of falsely categorizing payments to employees as “mileage” to avoid paying overtime. The employer was investigated by the Department of Labor’s Wage and Hour Division, which found employer failed to make, keep, and preserve accurate records in order to avoid paying employees overtime. Walsh v. All Temps. Midwest, 2021 U.S. Dist. LEXIS 176376 (D. Minn. Sept. 16, 2021). The court found the evidence demonstrated a mileage scheme implemented by employer to get around the FLSA’s overtime provisions, particularly because the “mileage” payments were based on a mathematical formula which would almost always result in employees being paid at the advertised regular rate for all hours worked. Id. Employer was ordered to stop categorizing payments to employees as “mileage” when these payments were not for travel expenses. However, employer continued the scheme throughout in violation of court order. Recently the court permanently enjoined and restrained employer from violating the FLSA and ordered employer pay more than $450,000 in unpaid overtime and penalties for willfully violating the court’s order. See Walsh v. All Temps. Midwest, 2022 U.S. LEXIS 5623 (D. Minn. Jan. 6, 2022).
UNION ORGANIZATION ON THE RISE
As everyone is aware, Union organization is being aggressively pursued and supported by the Biden administration. You need to be prepared, but it really involves a lot of commonsense on treating employees fairly and communicating with them. A good plan would include the following:
- Supervisors need to know what to say when confronted by employees and that basically should be very little or nothing. It should, however, be reported to management.
- Regular company meetings to tell employees about what is happening in a general way is important and listening to them when you do have these meetings to hear their concerns and when possible respond in a positive way.
- Employee communications are most important, and they should be reminded of your belief they have the best situation without paying any dues and allowing someone to make decisions for them and for the company. You need to really make sure you have competitive wages and benefits and positive communications.
- Supportive and positive company duties are difficult to maintain during a pandemic when many employees are working at home. The Employee Handbook needs to be reviewed on a regular basis and should include, in most instances, a non-solicitation policy, which means no solicitation by anyone, including non-profit groups, within the building.
A common misconception amongst many employees is that they cannot be disciplined or terminated while out on FMLA. That is not the case. First, employees on FMLA leave can be terminated if their position is in fact eliminated as part of a bona fide reorganization or downsizing. Employees on FMLA leave can also be terminated for performance or conduct-based reasons if the termination or discipline is based on events prior to the leave. In both cases, contemporaneous documentation of events prior to the FMLA leave are critical to contesting any FMLA interference or retaliation claim.
Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota. Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty. Richard Burns is now of Counsel.
The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice. The communication and receipt of this information is not intended to create an attorney-client relationship. Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.
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