Recently, much has been made about the government’s conflicting positions regarding whether sexual orientation is protected by Title VII of the Civil Rights Act of 1964. The EEOC (“Equal Employment Opportunity Commission”) has continued to assert its position that sexual orientation is protected under Title VII as a form of sex-based discrimination under the Supreme Court’s Price Waterhouse decision. At the same time, the Department of Justice (“DOJ”) has claimed that Title VII does not protect sexual orientation as it is not based on sex. Many have taken extreme umbrage at DOJ’s position as a complete reversal of the previous administration’s position as the Department filed an unsolicited amicus in the Second Circuit. However, as the DOJ’s civil division filed the brief, it presents a rare window into the “Jekyll/Hyde” dynamic within the government. As some agencies broadly seek civil rights protections, the federal government is also one of the world’s largest employers faced with the challenges of limiting countless claims. READ MORE
After Germany’s general election, a “Jamaica” alliance could soon rule Germany, being mathematically possible and, after the Social democrats SPD announced their return to opposition, only viable option not involving the right-wing AfD.
What’s in a Name?
A “Jamaica” alliance is named after the colors of the parties involved: Chancellor Angela Merkel’s conservative Christian Democratic Union/Christian Social Union (CDU/CSU) (black), the Free Democratic Party FDP (yellow) and the Green Party (green). The term likely also refers to the “exotic” nature of such an alliance (at least from a German point of view), even though there have been “Jamaica” governments on state level before. Such coalition certainly will face challenges to find a common ground – and a coalition agreement.
We provide a quick summary for employers of potential changes in employment law under “Jamaica”:
Currently, the German Working Time Act provides for a rather strict working time regime: Working time must, in principle, not exceed 8 hours per work day. This may be extended to up to 10 hours per work day, however, only if it does not exceed 8 hours per work day on the average. Only under certain conditions, collective bargaining agreements may provide for further extensions. Also, at the end of a work day, there must be an uninterrupted rest period of 11 hours. If taken seriously, this causes problems especially when employees check e-mail or have calls in the evening at home.
CDU has announced to modernize the Working Time Act. Employer’s associations and unions shall have more leeway and be able to develop and agree on more flexible working time schemes. However, this shall not result in an increase of the maximum overall working time per week of 48 hours. Also, in addition to the already existing claim for part-time work, employees shall have the right to return to full time unilaterally after having reduced hours, creating an entitlement to limited part-time.
Like the CDU the FDP wishes to provide more flexibility to employers and employees. The Liberals plan to abolish the maximum working time of 8 respectively 10 hours per work day and the mandatory rest period of 11 hours. Instead, in line with European directives, a weekly maximum working time of 48 hours shall be implemented.
The Greens plan on extending employee rights as regards working time. Employees shall have a rather far-reaching right to choose their working time between 30 and 40 hours per week. Within this range, as a rule, employees shall be entitled to determine their own working time scope, however, observing certain notice periods. Employers may reject a reduction or increase in hours in case of urgent operational reasons. Also, employees that have reduced hours shall be entitled to return to full time. Moreover, employees working on bank holidays or Sundays shall be entitled to receive mandatory supplement payments.
US employers are used to (increasing) minimum wage legislation. In Germany, a minimum wage has only been introduced in 2015 with transition period until the end of 2016. Since January 1, 2017, the minimum wage is set at EUR 8.84 gross per hour.
CDU and traditionally business-friendly FDP want to cut back on red tape and form-filling for employers related to the minimum wage. Both parties criticize the provisions of the Minimum Wage Act, in particular the extensive documentation obligations for employers, as being too bureaucratic.
The Greens are in favour of extending industry-specific minimum wage levels above the statutory minimum wage. When determining the minimum wage levels, protection of employees against wage dumping, safeguarding employment and fair competition shall be considered.
Digitalization and Mobile Working
German employment law is not exactly being considered to be up-to-speed with the digitalization of work. For example, despite several attempts, a comprehensive legislation on employee data protection is missing, so are specific provisions on mobile and remote work.
While the CDU’s program does not contain any specifics on the effects of digitalization on employment, the FDP plans to implement modern rules for mobile working, cut back red tape for remote working/home office and to abolish outdated workplace regulations.
The Greens stress the necessity of up-to-date occupational safety regulations and effective employee data protection. Requirements of today’s modern working world are to be aligned with the employees’ needs.
Under current legislation, fixed-term employment is lawful only where there is cause (e.g. temporary need, substitute employment during parental leave) or without cause only for a total period of up to 2 years, while contracts for a shorter period can be extended up to three times. In essence, companies can test new hires for a period of up to 2 years.
The Greens plan on abolishing fixed-term employment without justification. So any fixed-term employment would require cause.
FDP does not plan to implement any further restrictions for-fixed term employment, while the CDU’s program only states fixed-term employment may not be abused by employers to simply replace unlimited employment.
Agency work is already strictly regulated in Germany. Just recently a reform of the Act on Temporary Agency Work came into effect, limiting the maximum hire period of agency workers to 18 months and providing for equal pay for agency workers after 9 months.
The FDP is against any further regulation of agency work. The conservative CDU’s program refers to the recent changes in German law on agency work and does not provide for any stricter regulation.
The Greens advocate even further regulation of agency work, including entitlement to equal pay for agency workers from day 1.
The CDU’s program provides for more flexibility and leeway for the social partners – employers and employers’ associations on the one side, unions and works councils on the other side. Statutory provisions shall be amended accordingly, so there is more freedom for agreements on company and operational level.
In order to safeguard working conditions for employees, the Greens plan on implementation of a simplified procedure to declare collective bargaining agreements universally applicable and binding. Consequently, such collective bargaining agreements would apply even though neither the employer is member of an employer’s association nor the employee is union member.
FDP’s program does not contain any specifics, but the party, traditionally being liberal and business-friendly, is likely to oppose extension of collective bargaining.
So What’s Next?
It remains to be seen how the negotiations proceed in the coming weeks (and potentially months). Depending on the assertiveness of each of the three potential coalition partners, the coalition agreement and the legislative period will impact employers in Germany. Though this will likely not be comparable to the revolution of the French employment law under Macron, significant changes to German employment law appear to be likely in the very near future.
As Congress considers a bill to change the definition of joint employment under two federal statutes, the Supreme Court is poised to decide whether to take up the issue under the Fair Labor Standards Act, the U.S. Department of Labor has withdrawn administrative guidance issued by the prior administration, and several states have enacted or considered joint employment legislation. In this rapidly evolving legal landscape, companies may want to keep a close eye on a doctrine that can lead to unexpected legal exposure.
Under the concept of joint employment, multiple companies can be considered the employers of a single worker, and thus potentially jointly and severally liable for compliance with employment laws, such as wage-and-hour requirements. Joint employment can occur in two main contexts: “horizontal” joint employment, when a single employee works for two different but related entities, and “vertical” joint employment, which can arise when workers are obtained by an intermediary to work on behalf of some other entity (for example, when a company uses a subcontractor or a staffing agency). Surprisingly, there is no single test or source of law for determining whether companies are joint employers; rather, different tests exist under common law and various federal and state statutes. Even when applying the same statute, courts in different jurisdictions may use diverging standards, making joint employment a tricky and complex issue for companies to navigate.
For example, the federal courts have disagreed about the appropriate formulation of the test for determining joint employment under the FLSA, with different multi-factor tests in use by one or more circuits. In a case decided earlier this year, DirecTV v. Hall, the Fourth Circuit rejected the approach followed by a number of other circuits and applied a new test, holding that courts must focus on the relationship between putative joint employers, not just the relationship between each entity and a worker. Under the Fourth Circuit’s new test, joint employment may be found where two or more companies are “not completely disassociated” with respect to the worker’s work—a standard that could lead to widespread findings of joint employment. This approach could deter companies from using subcontractors or staffing companies or engaging in similar relationships, given the risk that that even indirect influence over a worker’s terms and conditions of work could lead to a finding of joint employment and ensuing liability. DirectTV has filed a cert petition in the case, and a number of business groups have filed amicus briefs urging the high court to grant the petition.
A brief for a group of organizations including the U.S. Chamber of Commerce, the National Association of Manufacturers, and the National Retail Federation highlights the divergence between the Fourth Circuit’s new approach and the tests followed in other circuits, urging the Supreme Court to resolve the circuit split. The brief argues that geographic consistency in the interpretation of the FLSA is particularly important for companies that do business in multiple regions, and contends that the Fourth Circuit erred by misreading a federal regulation in a manner that even the U.S. Department of Labor has disagreed with. Possibly signaling interest in taking up the matter, on September 20, 2017, the Supreme Court asked the respondents to file a response, which is due next month.
In the meantime, developments continue elsewhere. A year and a half after the Department of Labor’s Wage and Hour Division issued an Administrator’s Interpretation under the Obama Administration that took an expansive view of joint employment under the FLSA and the Migrant and Seasonal Agricultural Worker Protection Act, new U.S. Secretary of Labor Alexander Acosta recently announced the withdrawal of that interpretation.
A month later, lawmakers in the U.S. House of Representatives introduced the Save Local Business Act (H.R. 3441), which would amend the FLSA and the National Labor Relations Act to provide that a company can be a joint employer only if it “directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment.” On September 13, 2017, the House Committee on Education and the Workforce held a hearing on the bill, which remains pending.
The controversial 2015 Browning-Ferris decision by the National Labor Relations Board, which upended decades-old precedent on the test for joint employment under the NLRA, remains on appeal at the D.C. Circuit. Following that decision, a number of states have enacted or considered legislation to provide that a franchisor is generally not the employer of its franchisees or the employees of those franchisees.
Given the rapid pace of these developments, companies should pay close attention to the changing legal landscape and may wish to consult employment counsel for advice on avoiding liability as joint employers.
In a case highlighting the European Continent’s approach to worker privacy, the Grand Chamber of the European Court of Human Rights ruled that employers may violate employees’ rights when monitoring their electronic correspondence in the workplace. In Barbulescu v. Romania, the Grand Chamber reversed a prior decision from a smaller panel of the European Court of Human Rights (“ECtHR”) which had determined companies have far-reaching authority to monitor employees’ electronic communications—a similar standard to that which exists in the United States. READ MORE
When we last checked in on AB 1209, the Gender Pay Gap Transparency Act, the proposed legislation was making its way through the California Senate. After making a few key amendments, the Senate passed the bill on September 7, 2017. The California Assembly approved the amendments on September 11, 2017, and now the fate of AB 1209 lies in the hands Governor Jerry Brown. READ MORE
Effective January 1, 2018, San Francisco will expand available protections for nursing mothers working within city limits. California law currently requires employers to provide lactating employees with a reasonable amount of break time and to make reasonable efforts to provide the employee with a room, other than a bathroom, in close proximity to the employee’s work area to express milk. Similarly, federal law requires employers to provide a reasonable break time for an employee to express breast milk for one year after the child’s birth in a place, other than a bathroom, that is shielded from view and free from intrusion from co-workers and the public. Signed into law by San Francisco’s Mayor Ed Lee on June 30, 2017, the “Lactation in the Workplace Ordinance” will expand these requirements for San Francisco employers in the following ways.
On August 31, 2017, Judge Amos Mazzant of the United States District Court for the Eastern District of Texas, issued an order invalidating the Obama-era overtime rules. Finding that the Department of Labor rule exceeded its statutory authority under the Fair Labor Standards Act, the district court appeared to end the saga that had employers furiously determining whether they were going to adjust the pay of a wide swath of their workforces last Fall. However, the decision does not close the books on whether changes to the FLSA white collar exemptions are on the horizon. READ MORE
On September 6, 2017, Orrick announced the launch of its innovative online automated GDPR Readiness Assessment Tool. The tool helps organizations assess their state of readiness with the EU’s new General Data Protection Regulation (GDPR) that comes into effect on 25 May 2018. The tool segments the GDPR into 14 workable themes and takes users through a series of questions relating to each theme. READ MORE
Employers faced with discrimination claims must determine if summary judgment is a viable means to dispose of those claims. A recent Ninth Circuit decision provides some additional ammunition for employers moving for summary judgment going forward.
In affirming summary judgment on August 16, 2017, the Court in Merrick v. Hilton Worldwide, Case No. 14-56853, 2017 WL 3496030, held that “context is key when a plaintiff alleges age discrimination based on circumstantial evidence” and, on the facts before it, affirmed summary judgment for the employer. Id. at *8. Plaintiffs fond of quoting the standard for summary judgment articulated in Chuang v. Univ. of Cal. Davis, Bd. of Trs., 225 F.3d 1115, 1124 (9th Cir. 2000) – which held that a plaintiff in an employment discrimination case needs to produce “very little evidence” to defeat summary judgment – will need to contend with the more nuanced picture of summary judgment requirements that Merrick paints.
In Merrick, Plaintiff alleged that his employment was terminated in violation of the California Fair Employment and Housing Act (“FEHA”) when he was laid off as part of a reduction-in-force, allegedly because of his age. After concluding that Plaintiff had established a prima facie case and that Hilton produced evidence that it terminated Plaintiff’s employment for legitimate, non-discriminatory business reasons, the Court found that Plaintiff failed to produce sufficient evidence to allow a jury to conclude that age was a “substantial motivating factor” in the decision, i.e., that Hilton’s reasons for termination were false or the true reason for the termination decision was discriminatory. Specifically, “the evidence as a whole [was] insufficient to permit a rational inference that the employer’s actual motive was discriminatory” considering the substantial evidence the employer tendered supporting the business justification for his selection:
- lost profits during a preceding economic downturn
- a series of layoffs over several years, the overall age of the workforce
- the fact that Plaintiff survived previous layoffs despite having also been a member of a protected class at the time of those layoffs, and
- the business reasons for selecting his position for elimination.
Faced with this evidence, the Merrick court emphasized that a plaintiff “must do more than establish a prima facie case and deny the credibility of [the employer’s] witnesses”; if she does nothing more, summary judgment should be granted. Merrick, 2017 WL 3496030, at *5.
In affirming summary judgment, the Merrick court cited to a line of Ninth Circuit cases – Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000), Nidds v. Schindler Elevator Corp., 113 F.3d 912 (9th Cir. 1996); and Wallis v. J.R. Simplot Co., 26 F.3d 885, 891 (9th Cir. 1994) – that had affirmed summary judgment where a plaintiff failed to adduce adequate proof of pretext. This contrasts with the Chuang line of cases that could be read to suggest that less is required of plaintiff.
The Merrick decision thus underscores that the summary judgment standard for discrimination cases in the Ninth Circuit is not as lax as some plaintiffs may suggest. Merrick‘s analysis was predicated on the familiar McDonnell-Douglas burden-shifting framework—which the Court held applied to state law discrimination claims under FEHA just as it would to federal Title VII claims—and thus has implications for any claims in federal court analyzed under that framework.
Just the other week, in Jones v. Royal Admin. Servs., the Ninth Circuit reaffirmed the federal common law standard for distinguishing agents from independent contractors and upheld the independent contractor status of telemarketers providing direct sales services for a company, Royal Administration Services, Inc. (“Royal”).
At issue were telemarketers employed by All American Auto Protection, Inc. (“AAAP”), one of about twenty marketing vendors used by Royal to sell vehicle service contracts. Several recipients of these telemarketing calls filed suit, first against AAAP and then against Royal, alleging violations of the Telephone Consumer Protection Act (“TCPA”). The telemarketing call recipients alleged that Royal was vicariously liable because the AAAP telemarketers were Royal’s agents. Royal filed for summary judgment, asserting that the AAAP telemarketers were not its agents, but rather independent contractors. The district court granted summary judgment for Royal. READ MORE