September Surprise? Two Federal Lawsuits Attack the Validity of the New FLSA Overtime Rule.

off the clock

The effective date for the revisions to the U.S. Department of Labor (DOL) overtime regulations is less than 80 days away, and employers continue to struggle with the challenges created by changes to the existing rule.  On September 20, 2016, federal court lawsuits were filed by two disparate groups, each attempting to put off or halt the implementation of the revisions.

Declaratory Judgment Action Filed by 21 States:

First, a group of 21 states, led by Nevada and Texas through their Attorneys General, filed a “Complaint for Declaratory and Injunctive Relief” in federal court in Texas. The complaint, filed against the DOL, its wage-and-hour division, Secretary of Labor Thomas Perez, and David Weil and Mary Zeigler, as Administrator and an Assistant Administrator of the Wage & Hour Division, respectively, challenges the revised regulations on three bases, alleging that:

  1. The DOL “disregarded the actual requirements” of the Fair Labor Standards Act and instead simply increased the minimum salary threshold without regard to employees’ actual duties;
  2. The final rule’s automatic indexing mechanism (which automatically increases the threshold salary every three years) evades statutory language requiring notice and comment before such changes; and
  3. The new rule exceed Constitutional authorization by effectively “imposing the federal Executive’s policy wishes on State and local governments.”

The lawsuit claims that the new rule could force state and local governments, as well as private businesses, to increase employment costs and cut services or lay off employees, and asks the U.S. District Court to declare that the “new overtime rules and regulations are unlawful” because they exceed statutory rights, were enacted “without observance of procedure required by law,” are arbitrary and capricious, and are unlawful as applied to the States and their employees.

While the lawsuit asks for this declaratory relief, it also goes further and asks for a “permanent injunction preventing the defendants from implementing, applying, or enforcing the new overtime rules and regulations.” However, the potential impact that the lawsuit may have on private employers is unclear. The arguments made in the Complaint focus primarily on states’ rights and state employees; there are no private employers named as plaintiffs in the lawsuit.

Business Groups Jump into the Fray:

Within hours, a similarly focused lawsuit was filed in the same federal court, this time by a coalition of over 50 business groups, including the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation, National Automobile Dealers Association, and the National Federation of Independent Business. That action is brought under the Administrative Procedure Act (APA) and alleges that:

The new Overtime Rule defies the mandate of Congress to exempt executive, administrative, professional, and computer employees from the overtime requirements of the FLSA. The [new] rule raises the minimum salary threshold so high, that the new salary threshold is no longer a plausible proxy for the categories exempted by Congress. As a result, the exemption is effectively lost for entire categories of salaried executive, administrative, professional, and computer employees whose job duties qualify them to be treated as exempt . . . .

The Complaint spells out the effects of the new rule on businesses:

The costs of compliance will force many smaller employers and non-profits operating on fixed budgets to cut critical programming, staffing, and services to the public. Many employers will lose the ability to effectively and flexibly manage their workforces upon losing the exemption for frontline executives, administrators and professionals. Millions of employees across the country will have to be reclassified from salaried to hourly workers, resulting in restrictions on their work hours that will deny them opportunities for advancement and hinder performance of their jobs – to the detriment of their employers, their customers, and their own careers.

This lawsuit specifically asks the court to “vacate” the Overtime Rule; but importantly, it specifically asks the court to “postpone the effective date of the Overtime Rule and to maintain the status quo pending the Court’s review of this case . . . .”

The DOL’s response:

Secretary Perez issued a statement in response to what he has labeled as “partisan” lawsuits, expressing his confidence in the legality of the final rule which, as he stated, was the result of “a comprehensive, inclusive rule-making process.” He criticized the “obstructionist tactics” used by the two groups of plaintiffs and said that he will “look forward to vigorously defending our efforts to give more hardworking people a meaningful chance to get by.”

Now what?

While it is impossible to determine what the federal courts will do with these parallel cases, the choices are fairly black-and-white. The DOL can immediately assert either a vigorous defense and justification to convince these courts not to postpone or enjoin the implementation of the rule – which will lead to prolonged disruptive and expensive litigation, all the while leaving employers in complete confusion about the validity of the December 1 implementation date – or it can work with these two groups of plaintiffs to come to a negotiated “stand-still” agreement and postponement of the December 1 kick-off to a later date certain, allowing the substantive issues to be heard and decided by the court in the interim.

Of course, either of those paths creates difficulties for various employer groups. While many employers have not taken the final steps toward reclassification or re-setting wages of employees affected by the new rule, many employers already have done so, and now face the question of whether to inform their employees that the promised higher wages or re-evaluated job duties will be delivered or delayed.

We’ll be following developments in these cases closely, and will continue to provide details as they become available.

Recent Enforcement Guidance provides insight into EEOC’s assessment of retaliation claims.

Magnificent Seven

Retaliation claims are asserted in nearly half of the charges received by the Equal Employment Opportunity Commission (EEOC), according to its Chair, Jenny Yang, and now comprise the most frequently alleged basis of discrimination. On August 25, 2016, the EEOC issued its Enforcement Guidance on Retaliation and Related Issues. The guidance, which replaces the EEOC’s 1998 Compliance Manual section on retaliation, addresses retaliation issues under the federal statutes enforced by the EEOC, which include:

  • Title VII of the Civil Rights Act of 1964;
  • Age Discrimination in Employment Act (ADEA);
  • Americans with Disabilities Act (ADA);
  • Section 501 of the Rehabilitation Act;
  • Equal Pay Act (EPA); and
  • Genetic Information Nondiscrimination Act (GINA).

The guidance goes into detail on these issues:

  • A broad definition of “retaliation,” with specific examples as clarification;
  • Employee activity protected by the law;
  • Legal analysis to be used to determine if evidence supports a claim of retaliation;
  • Available remedies for retaliation; and
  • Detailed examples of employer actions that may constitute retaliation.

While most of the examples used by the EEOC to illustrate its guidance are straightforward, there are a few that may create come confusion. For instance, the guidance explains that “opposing” a perceived unlawful EEOC practice could include “refusing to obey an order reasonably believed to be discriminatory.” Because most employers have policies against insubordination, such refusal by an employee who believes an order to be discriminatory will require clarification or discussion prior to any disciplinary action being taken, in order to avoid the risk of a subsequent retaliation claim.

Besides the guidance, the Commission has issued on-line resource documents, comprising a question-and-answer page that summarizes the guidance, and a short Small Business Fact Sheet that condenses the major points in the guidance in non-legal language.

The guidance also provides, as an additional resource, a link to a document which it says includes “suggestions for reducing incidences of retaliation” – the document is entitled Retaliation – Making it Personal .

While the guidance is not new information, it is a compilation of information with which employers should make themselves familiar. The guidance does not have the force of law, but it is certain to be used by the courts to interpret anti-discrimination statutes and related regulations and therefore, employers should add this document to its training toolbox for managers and supervisors to minimize the risk of retaliation claims related to disciplinary actions or employee complaints.


Photo is from a movie poster for the 1960 United Artists version of The Magnificent Seven. (While it’s a stretch to interpret the Seven’s actions against the marauding bandits as “retaliation,” it’s close enough for me to use this poster.)  In 2013, the film was selected for preservation in the United States National Film Registry by the Library of Congress as being “culturally, historically, or aesthetically significant”.

PA and DOL Collaborate in Employee Misclassification Enforcement Efforts.


This post was written by Jennifer G. Betts of Ogletree Deakins’ Pittsburgh Office.


On August 4, 2016, the Pennsylvania Department of Labor and Industry signed a three-year Memorandum of Understanding (“MOU”) with the U.S. Department of Labor’s Wage and Hour Division (“DOL”). The MOU was designed to prevent the misclassification of employees as independent contractors, and to preclude other wage-and-hour violations. The agreement contemplates the following collaborative enforcement activities between the two agencies:

  • joint investigations of misclassification and other wage & hour issues within the Commonwealth of Pennsylvania;
  • coordination with and assistance from the DOL regarding enforcement activities within the Commonwealth; and
  • referrals of potential violations of each other’s statutes.

Pennsylvania is the 32nd state to enter into such an arrangement with the DOL. The other states are: Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New Hampshire, New Mexico, New York, Oregon, Rhode Island, South Dakota, Texas, Utah, Vermont, Virginia, Washington, Wisconsin and Wyoming.

The DOL believes these collaborations are “making a difference,” citing more than $74 million in back wages collected for over 102,000 workers in fiscal year 2015 alone. To support the MOU, the PA Department of Labor and Industry announced that it would launch a statewide misclassified workers public awareness campaign to begin in fall 2016.

Coupling Pennsylvania’s awareness campaign with the new federal overtime threshold regulations that go into effect December 1, 2016 could lead to wage-and-hour headaches for Pennsylvania employers. Companies with employees in Pennsylvania should expect heightened scrutiny over misclassification issues beginning this fall and lasting well into 2017, and also should recognize that such investigations will include both state and federal agencies.

To avoid these costly, time-consuming, and distracting investigations, employers who do business in Pennsylvania (or states with other similar agreements) should look carefully at all of the workers they have classified as overtime exempt and/or as independent contractors and evaluate whether the classification is appropriate.


BUG OFF! Six tips for dealing with Zika questions and concerns.


As of August 17, 2016, and according to the Center for Disease Control (CDC), there are 2260 cases of Zika virus in the United States, 14 of which were “locally acquired mosquito-borne cases” (all 14 of those are in Florida), and the remainder of which are “travel associated.” The CDC also reports 8035 cases of the virus in U.S. Territories; of those, 8000 are locally acquired, with the remaining 35 labeled as travel associated.

Clearly, it is time for employers to become more fully educated on this situation, both to protect employees and to be able to answer questions and concerns that those employees raise about working in an environment in which mosquitos might be present. Here at six tips, in an easy-to-remember format (BUG OFF!), for dealing with Zika:

  • Become knowledgeable about available resources and pass that information along to employees on a regular basis. The primary information source currently is the CDC’s website, which is updated frequently and includes factual information, posters for easy reference, and links to other useful sites.
  • Use mosquito repellent that includes an FDA-approved repellent ingredient, such as DEET, and make sure that such repellent is available for employees who work outside, especially in areas which have been designated as high risk.
  • Get rid of standing water on work sites, as such areas frequently are breeding grounds for mosquitos. Mosquitoes breed in standing water, not just in puddles, cans, bottles, and flower pots, but any still water that is not made inhospitable to breeding. This makes it critically important to maintain appropriate chlorine levels in pools and water storage tanks, as mosquitos will not breed in chlorinated water.
  • Offer information and guidance to allow employees to make informed decisions about travel to areas in which Zika is prevalent. Both the CDC’s website and the website and blog of OSHA contain helpful and easy-to-understand information.
  • Form a team to monitor workplace areas for instances of potential exposure, and to minimize those possibilities. Instruct team members that questions related to absenteeism for Zika-related reasons (real or perceived) should be directed to Human Resources in order to avoid complaints of lack-of-accommodation for health-related reasons.
  • Find alternatives, when necessary and possible, for outdoor work in mosquito-infected areas. Some possible alternative might be switching work from daylight to night-time hours (when mosquitos are less aggressive), supplying mosquito repellent (both in individual form and in broader work areas), and allowing pregnant woman to temporarily move into other open positions (if such a move is requested) to avoid mother-to-fetus infection.

Employers who implement the above six steps will be able to avoid or control much of the potential exposure to employees.

In addition, OSHA/NIOSH has suggested – but not yet mandated – that employers consider delaying employee travel to Zika-affected areas, especially for workers who are or may become pregnant or whose sexual partners may become pregnant. (CDC is recommending that pregnant women in any trimester not travel to an area in which active Zika virus transmission has been reported.)

CDC has published Zika Travel Information by region, which provides information in making travel-related decisions or implementing precautions when traveling.

OSHA suggests that all travelers – whether feeling sick or not – returning to the United States from an area in which Zika has been reported should take steps to prevent mosquito bites for three weeks so they do not pass Zika to mosquitoes that could spread the virus to other people.

Title VII’s pre-requisite that employee meet employer’s legitimate expectations may not be set in stone.


In an unpublished decision, one federal appellate court has penned an opinion that goes to the heart of how discrimination cases are analyzed under Title VII by re-interpreting the prima facie case requirements set by the U.S. Supreme Court in the McDonnell Douglas Corp. v. Green case in 1973.

Elements of a prima facie case under Title VII:

To support a discrimination claim under Title VII, an employee must show he or she is meeting the employer’s legitimate business expectations. Earlier this year, the 7th U.S. Circuit Court of Appeals held that test to be “flexible” and unnecessary where the issue is whether the employee was “singled out” for discipline based on a prohibited factor. Ismail v. Brennan, 7th Circ., No. 15-2701, June 28, 2016 (unpubl.).

Procedural background:

Yousef Ismail, a postal worker born in Israel and who grew up in Jordan, was suspended without pay for walking on a snowy sidewalk to deliver mail after the local postmaster told him to walk on the street instead.

Upon initial review of Ismail’s subsequent lawsuit, a district court concluded that Ismail could not bring discrimination or retaliation claims because he was fired for disobeying a direct order. That insubordination meant that Ismail was not meeting the legitimate expectations of his employer and, therefore, could not support a prima facie case under Title VII.

On appeal, the Seventh Circuit reversed that dismissal, noting that although an employee usually must show he or she was meeting the employer’s legitimate expectations in order to support a Title VII claim of discrimination, that standard is “flexible” and need not be applied if the issue is whether the employee was “singled out for discipline” because of a protected characteristic – in this case, Ismail’s Middle Eastern national origin. The court also implied that the test may be unnecessary where the person judging the employee’s performance is the same individual accused of discrimination.

Factual background:

Ismail began working for the US Postal Service (USPS) in 2001 as a letter carrier. In 2003, Ismail filed a lawsuit against the USPS, alleging that the local postmaster harassed and disciplined him because of his race and ethnicity. That lawsuit ended when summary judgment was granted in favor of the USPS by a district court.

Ismail claimed that the postmaster “became emboldened” after that decision and that the harassment and discrimination continued. In December 2010, events came to a head when the postmaster conducted an observation of Ismail on his mail route. During that observation, the postmaster saw that Ismail was about to walk on a snow-covered sidewalk and “began screaming at” Ismail that he should walk on the street where there was less snow. Ismail “believed that walking in the street was dangerous, so he took a couple of steps on the sidewalk” to avoid some snow-covered bushes and then walked back into the yard of the customer to whom he was delivering the mail. For that incident, Ismail was put on “emergency placement” and sent him home for 17 days of unpaid leave.

Ismail filed an EEOC charge based on that incident, alleging race and national origin discrimination. In June 2012, Ismail filed another EEOC charge after the postmaster issued a “letter of removal” to Ismail for a confrontation with a coworker, although Ismail grieved the letter and ultimately was reinstated to employment.

In July 2012, after the second EEOC charge, Ismail was approached by the postmaster, who said “good morning” to him multiple times. When Ismail failed to reply, the postmaster confronted Ismail with the workplace rules handbook and pointed out a section that required “courteousness in the workplace.” After that exchange, the postmaster then called the police, claiming that Ismail threatened to kill him. A police officer interviewed both men, as well as Ismail’s immediate supervisor, who stated that although he had been in the immediate vicinity, he had heard no threat. The police determined there was insufficient evidence to arrest Ismail. The postmaster then put Ismail on administrative leave and the police officer escorted Ismail from the building.

In December 2012, Ismail amended his EEOC charge to include those incidents and to add a claim of retaliation. He ultimately filed a lawsuit, which was dismissed by the district court. The basis for that dismissal was that Ismail could not show he was meeting the USPS’ legitimate business expectations because he had disobeyed the postmaster’s directive in 2010. The district court held that Ismail could not support a prima facie case of discrimination, and that USPS was entitled to summary judgment.

The Seventh Circuit reversed that decision and reinstated Ismail’s claims, finding that the lower court erred in requiring Ismail to establish that he was meeting his employer’s legitimate expectations. It determined that ordinarily, that factor must be established by an employee seeking to state a prima facie case of discrimination. However, the fact that the postmaster was judging Ismail’s performance, but also was the same person accused of discrimination weighed against applying that test inflexibly. Ismail’s lawsuit was allowed to continue.

Take-away for employers:

While this decision should not stop employers from disciplining or firing employees for performance-related issues, it adds a level of review, suggesting that such discipline should be conducted or corroborated by managers unrelated to any prior claims of discrimination made by the employee in order to avoid being linked to allegedly discriminatory behavior.




Photo of mailbox in Anchorage, Alaska from March 26, 2012 blog entry re: Life in Alaska (

Is proposed legislation likely to slow the implementation of the new overtime regulations? Probably not.

Formal clocking in

On May 18, 2016, the Department of Labor (DOL) announced the publication of a final rule, updating its existing overtime regulations. The updated regulations are scheduled to become effective on December 1 of this year and are predicted to extend overtime pay protections to over 4 million workers within the first year of implementation. The updates include a provision under which employees are eligible for overtime compensation if they work over 40 hours in a week and earn less than $47,476 per year – an over 100% increase from the current salary threshold of $23,660.

To soften the impact of those new regulations, State Representative Kurt Schrader (D-Ore.) introduced a bill – the “Overtime Reform and Enhancement Act (“OREA”) – that would add to the regulations a “phase-in” provision which would increase the salary threshold in steps over the next three-years, and would remove a current provision that increases the threshold salary automatically every 3 years without going through the normal rulemaking process specified under the Fair Labor Standards Act (FLSA).

If Representative Schrader’s proposed bill succeeds, the threshold salary number would be increased only to $35,984 on December 1, 2016. The threshold would increase incrementally each year until reaching the $47,476 amount on December 1, 2019, which then would be the ceiling until a formal rulemaking process was engaged in to revise it further.

This proposed bill has the support of, among other groups, the National Retail Federation, the American Bankers Association, the Society for Human Resource Management, the U.S Chamber of Commerce, the National Restaurant Association, and numerous non-profit organizations that have stated that the new regs will force them to serve a reduce number of recipients by causing labor costs to rise so dramatically and precipitously.

To become law, the OREA would have to be approved by both houses of Congress, and would then have to survive a presidential veto (or garner enough support to override such a probable veto). None of that is likely to proceed quickly. Congress now is on recess until after Labor Day, so any action on this issue cannot take place for at least 6 weeks.

Even if OREA were to be signed into law after that, it would not automatically overturn the rule scheduled to take effect in December. Instead, it would require the Secretary of Labor to further rewrite the existing regulation, which could take a substantial period of time (the last rewrite took nearly a year), which would not be finalized before the final rule’s current effective date of December 1, 2016.

Therefore, employers should continue planning for the existing rule change. They should be aware of the change in threshold salary (to $47,476), and should plan to pay overtime wages to employees who fall under that threshold. They should work closely with human resources departments and legal counsel to effectively reclassify workers where necessary or revise wage levels to maintain current classifications.


Photo taken from the AHS (Antiquarian Horological Society) website.


Wellness Programs’ Notice Form Provided by the EEOC.

Joe crack-climbing 2010

New rules were published by the Equal Employment Opportunity Commission (EEOC) on May 17, 2016, under the Americans with Disabilities Act (ADA) for employers that have instituted “wellness programs.” Under the rules, employers must make sure participation in those programs is voluntary, and that the programs are reasonably designed to promote employee health.

The rule requires employers to provide to covered employees a notice describing what information will be collected as part of a wellness program, who will receive it, and how it will be used. Importantly, the rules require that employee medical information solicited for such programs is kept confidential.

The required notice must be provided on the first day of a covered health plan year that begins on or after Jan. 1, 2017. Once the notice requirement becomes effective, the EEOC’s rule does not require that employees get the notice at a particular time, but mandates that employees must receive the notice before providing any health information, and with enough time to decide whether to participate in the program. Waiting until after an employee has completed a wellness program’s health risk assessment (HRA) or medical examination to provide the notice is illegal.

On June 16, 2016, the Equal Employment Opportunity Commission (EEOC) posted a sample employee notice to assist employers with wellness programs to comply with those rules, by offering a specific notice form for use by such employers, and which includes all of the required provisions, along with non-retaliation language.

The Notice is written in a fill-in-the-blank format so any employer can use it by simply adding the specific information into the form provided, and providing it to employees. Employers should note that employees with disabilities may need to have the notice provided in an alternative format (large print version, electronically formatted for screen readers, etc).

The EEOC also has posted a question-and-answer document that describes the ADA rule’s notice requirement and how employers should use the sample notice.

For more information, including EEOC guidance regarding which plan to use in calculating wellness program incentives, refer to EEOC’s questions and answers on the ADA rule and the Genetic Information Nondiscrimination Act (GINA) rule.



Photo of Joe G getting healthy in the Adirondacks.


EEOC report suggests “rebooting” workplace harassment prevention efforts.


On June 20, 2016, the EEOC published the Report of its “Select Task Force on the Study of Harassment in the Workplace.” (Check out an executive summary of the Report here.) That Task Force, formed in January 2015, also impaneled a group of outside experts to examine the causes, effects, and prevention of workplace harassment.

While the group could have focused on additional ways for the EEOC to identify, investigate, and penalize incidents of harassment, it instead resulted in a report – written by its co-chairs, Chai R. Feldblum and Victoria A. Lipnic – that provides much more than that. The report, which is nearly 90 pages long with attachments, includes the usual section headings like: “Workplace Harassment Remains a Persistent Problem” and “”Leadership and Accountability are Critical.” But it goes beyond those standard phrases and ideas, and includes doses of social science, behavioral psychology, and common sense.

Besides pages of statistics (including these: 1/3 of the charges filed with the EEOC in 2015 alleged “harassment” rather than discrimination; 45% of those alleged sex harassment; 35% of LGB-identified employees report having been harassed in the workplace), the report includes one striking fact: that the least common response of either men or women to harassment is to take formal action.

The report lists the actions employees typically take rather than make a formal complaint of harassment (such as denying/downplaying the gravity of the situation; attempting to “avoid” the harasser; reporting to families or trusted others), and points out that according to workplace studies, only about 30% of employees who experience harassment or sexually coercive behavior speak with a supervisor, manager, or union representative about it. If that fact is accurate, the potential adverse effect on productivity and morale should be enough to grab every employer’s attention and concern.

What should employers do to create a more efficient, productive, and healthy workplace? The Task Force’s list of things-to-do includes many points about which employers already are aware, instructing that employers should:

  • Adopt and maintain a comprehensive anti-harassment policy;
  • Ensure that the policy is communicated frequently to employees;
  • Offer reporting procedures that include multiple points of contact, and multiple methods for reporting harassment;
  • Be alert for signs of retaliation; and
  • Impose prompt and proportionate discipline where harassment is found to have occurred.

However, it also includes a few suggestions not typically in the mix, by suggesting that:

  • An employer should periodically “test” its reporting system to determine how well that system works;
  • Training should increase trainees’ knowledge about what specific conduct the employer considers unacceptable in the workplace;
  • Employers should dedicate sufficient resources to train middle management and first-line supervisors on how to respond effectively to harassment they observe, that is reported to them, or of which they otherwise have information; and
  • “Bystander intervention training” should be included as a harassment prevention strategy.

The report should not – as has been recently reported – be viewed as a statement that harassment training is ineffective in all forms, or that employers should abandon efforts to train its managers or employees. Instead, the report can be used as both a roadmap and a report card for assessing employers’ training efforts and the effects of existing anti-harassment training.

If a 90-page report seems intimidating, simply look at the 5-page “Summary of Recommendations,” which includes not only suggestions for employers, but commitments from the EEOC on its plan to make information and statistics available to assist employers in developing credible training programs. Or just read through the 4 pages of Checklists, which provide a free and advance look at how the EEOC will assess harassment prevention programs, written policies, and investigation techniques going forward.

Governmental agencies produce a lot of written materials and guidance, and opinions differ on the effectiveness of much of it. However, the Task Force’s report, which urges a more holistic approach to harassment prevention, just might move the ball closer to the goal of making real change toward a safer, more civil, and genuinely productive workplace.

What (and why) should US employers know about Brexit?

Don't panic

On June 23, 2016, citizens of the United Kingdom (UK) voted to exit (or “Brexit”) the European Union (EU). While far-reaching, that decision wasn’t made in a vacuum, so it makes sense to understand some background of how the EU came about:

  • The precursor of the EU was established after World War II when, in the 1950’s, the European Coal and Steel Community (which became known as the “Common Market”), consisting of Belgium, France, Germany, Italy, Luxembourg and the Netherlands, began to work cooperatively with the goal of avoiding the chaos created by two consecutive world wars;
  • Through the 1970’s and ‘80’s, 6 additional members joined – including the UK – and the Single European Act was signed, creating a Single Market across member borders;
  • In the 1990’s, Austria, Finland and Sweden join the group (which by 1993 was being referred to as the European Union), and citizens of member countries gradually become able to travel without having their passports checked at the borders;
  • During the 2000’s, 12 additional countries joined, and EU countries came together to fight crime and work cooperatively on economic issues;
  • In 2012, the then 28-member European Union was awarded the Nobel Peace Prize;
  • The rise in religious extremism in the Middle East, and the ensuing refugee crisis, affected British public opinion related to the efficacy of the EU and, in February 2016, Prime Minister David Cameron set a referendum for June 23, 2016, allowing UK citizens to vote on whether to stay in the EU, or to leave (“Brexit”);
  • On June 23, nearly 17.5 Brits voted to sever ties with the EU, while just over 16 million voted to stay in that group; the decision resulted in the resignation of Prime Minister Cameron.

While the votes have been counted, the decision leaves many questions unanswered. Here are a few:

  • Why did so many UK citizens vote to “Brexit” the EU? Voters cited fear of being “overrun” by immigrants, and also pointed to the EU as a hindrance to market globalization.
  • What is the impact of the decision on other countries and on US companies? Scotland and Northern Ireland – each of which heavily supported remaining in the EU – could attempt to exit the United Kingdom. In addition, the vote may complicate transatlantic data transfer for US companies with locations in the UK, coming so soon after the demise of the Safe Harbor Framework. Third, the effect of immigration law for citizens of EU countries working in the UK remains to be seen.
  • Is Brexit a “done deal”? While the referendum is not legally binding, the voters have spoken, the Prime Minister has resigned, and a transition team has been established. However, the actual separation requires the UK to invoke Article 50, a provision of the EU’s governing treaty that would formalize the results of the vote. That action will be spearheaded by Cameron’s successor.

In the meantime, there have been several efforts toward reconsidering the referendum, including one proposal to topple the results if the voter turnout was less than 75%, and another suggesting that London secede from the rest of the UK.

If Britain delays invoking Article 50, the current global economic uncertainty could continue. Employers with employees in the UK should remain in touch with developments, and should be in communication with their European legal advisors to stay ahead of the expected transition.



Photo of European Space Agency astronaut, Tim Peake, on Towel Day (May 25, 2016) at the International Space Station.

Watch for increased penalties (for failure to post required notices).

hockey penalty

Every “employer, employment agency, labor organization, and joint labor management committee controlling an apprenticeship or other training program” covered by Title VII, the Americans with Disabilities Act (ADA), or the Genetic Information Non-Discrimination Act (GINA) must post notices describing the pertinent provisions of Title VII, ADA, or GINA. Such notices must be posted in “prominent and accessible places” where notices to employees, applicants, and members are customarily maintained.

With little fanfare, no preliminary notice, and no request for public comment, the EEOC issued a Final Rule on June 2, 2016 which raised the maximum penalty for violating that posting requirement from $210 to $525 per violation.

The Final Rule, which takes effect in 30 days, adjusts the penalty for inflation, pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act).

Under the 2015 Act, the EEOC, along with other federal agencies, is required to issue annual notices that adjust the maximum civil penalties that can be imposed for violations of certain regulations and laws. The 2015 Act specifies that if the initial inflation-adjusted penalty amount is larger than a 150 percent increase over the previous maximum penalty, then the increase will be limited to 150 percent.

According to the EEOC, the maximum penalty for a posting violation, adjusted for inflation since the initial penalty amount was set in 1997, should be $765. But because that amount exceeds a 150 percent increase, the penalty is capped at the 150 percent increase, or $525 per violation. That amount will be readjusted next year (and in each subsequent year) to account for further inflation.

According to the EEOC, because most employers covered by the regulations comply with the posting requirement, the economic impact of this Final Rule should be minimal, affecting only those who fail to post required notices in violation of the regulation and statue.

However, companies with multiple locations and multiple notices required should be aware of this $315 increase in penalty for each separate offense, and should check to assure that all posting requirements are met at every facility and in a way consistent with the regulation, to avoid unintended consequences.


Photo of the Pittsburgh Penguins is from the Pittsburgh Post Gazette.