FMLA is not a tool an employee can use to delay or avoid a termination.

The Family and Medical Leave Act (FMLA) makes it unlawful for an employer to “interfere with, restrain, or deny the exercise of or the attempt to exercise” an individual’s rights under the FMLA, or to retaliate against an employee for the exercise of rights under the FMLA. However, according to at least one federal appellate court, an employee’s use of FMLA to avoid an anticipated firing is not a valid exercise of those rights.

The 1st U.S. Circuit Court of Appeals recently held that a termination decision made after numerous attempts to accommodate an employee’s health issues, but prior to that employee’s formal request for FMLA leave was sufficient to support dismissal of the individual’s FMLA retaliation claim. Germinowski v. Patricia Harris, et al, 1st Circ., No. 16-1306 (April 12, 2017).

In that case, Heidi Germanowski – an employee of the Berkshire Middle District Registry of Deeds for over 10 years – claimed that her supervisor fired her because she requested leave protected by the FMLA. A federal district court dismissed Germanowski’s claims, and she appealed to the First Circuit, which upheld the dismissal. The facts are:

  • During the initial years of her employment, Germanowski initially worked with another employee, Patricia Harris;
  • In 2013, Harris became Germanowski’s supervisor;
  • The relationship between the two began to deteriorate, with Germanowski claiming to experience “stress and anxiety accompanied by fatigue, hair loss, aches, and gastrointestinal pain” that left her unable to work at times;
  • Harris allowed Germanowski to take time off when needed, with pay, when Germanowski requested it;
  • In October 2014, Germanowski suffered a nervous breakdown at work;
  • Subsequently, Germanowski made specific claims of mistreatment by Harris, including that Harris was “out to get her”;
  • Germanowski received a sport pistol from her husband as a gift;
  • She informed Harris of the gift, as Harris knew of Germanowski’s sport shooting hobby;
  • Harris expressed her discomfort with the gift, wondering whether Germanowski would carry the gun to work (there is no specific evidence that she did or would have);
  • On Friday, January 30, when Germanowski attempted to enter the workplace, she was denied access to the building;
  • On Monday, February 2, 2015, Harris left a message for Germanowski, directing her not to return to the workplace;
  • Fearful that her job was “in jeopardy,” Germanowski sent an e-mail to Harris on February 3, stating that she would be “out sick for the week” and was scheduled to visit her doctor;
  • On February 5, Germanowski’s doctor provided a letter to her, advising her to take a medical leave of absence to pursue treatment;
  • There is no evidence that the letter was provided to Harris or the employer;
  • On February 6, Germanowski received a voicemail message from the chief court officer in which she was told that her employment was being terminated effective immediately;
  • Germanowski sued Harris and the Commonwealth of Massachusetts, including a claim of FMLA retaliation;
  • The lower court dismissed all claims, including the FMLA claim, finding that Harris had no knowledge of Germanowski’s intent to take FMLA leave and therefore, could not have interfered in that right or retaliated because of it;
  • Germanowski appealed the dismissal to the First Circuit, which upheld the lower court’s decision to dismiss the claims.

To support its decision, the First Circuit listed the actions that the employer had taken in the year prior to the firing, including the facts that Harris consistently accommodated Germanowski when Germanowski felt unable to work; that absences allowed by Harris were fully paid; and those absences were not counted against any available leave time.

While Germanowski argued that the temporal proximity between her February 3 e-mail informing Harris she would be “out sick” for a week and her firing on February 5 was sufficient basis for her retaliation claim, the Court disagreed. Instead, it pointed out the “emotionally fraught and longstanding dispute” between Harris and Germanowski, the fear expressed by Harris about the possibility of Germanowski bringing a gun into the workplace, and the subsequent “lock out” of Germanowski based upon that fear. According to the Court:

To think that an employer in such a case fired Germanowski because she asked for some time off while she was already locked out is to suggest that common sense borne of real world experience has no role to play in the plausibility analysis.

Going further, the Court quoted the lower court’s statement that the “FMLA is not a tool an employee can use to delay or avoid a termination.” Therefore, while there was evidence that Harris and Germanowski had a troubled working relationship and that Germanowski believed that Harris was “out to get” her, such evidence does not support a causal connection between the exercise of rights under the FMLA and a subsequent termination – in fact, according to the First Circuit, those facts mitigate against FMLA liability.

This decision is interesting because it does not focus on the issue typically dealt with by courts: whether notice of serious illness provided by an employee automatically requires FMLA protections. Here, Germanowski’s e-mail that she needed to be out for a week – in light of her past medical issues – could arguably have been read as notice of a serious health condition, triggering FMLA protection. However, the First Circuit decided the case on an alternate ground: that the e-mail did not trigger the firing, which already had been in the works prior to the February 3 notice.

The salient issue for the Court was that the FMLA does not protect an employee for every reason while she is on that leave (or requesting it); it protects her only from firing because she requests or takes the leave. Here, while there was evidence of an “emotionally fraught and longstanding dispute” between Harris and Germanowski, there was, according to the Court, no evidence that Germanowski was terminated in retaliation for asserting rights under the FMLA.


Photo from Rachel Simmon’s Website (“Fiona’s Blog, How to Fight with your Best Friend.”)


Title IX may provide legal basis for sexual harassment claims.

The 3d U.S. Circuit Court of Appeals may have expanded the mechanisms available for individuals who plan to bring claims of sexual harassment or discrimination against an employer that conducts educational programs or activities, specifically including private teaching hospitals.

Recently, the Third Circuit found that a private teaching hospital could be held liable – under Title IX of the 1972 Education Amendments  (“Title IX”) – to a female medical resident who claimed sexual harassment by the director of her radiology program. Doe v. Mercy Catholic Medical Center, 2017 BL 69883, 3d Cir., No. 16-1247, March 7, 2017.

Employers know that Title VII of the Civil Rights Act (“Title VII”) prohibits discrimination against employees on the basis of sex. Under Title VII, an individual must first undertake and complete administrative prerequisites before filing a lawsuit. Fewer employers understand that under Title IX, an education “program or activity” that receives federal funds cannot discriminate on the basis of sex. Further, there are no administrative prerequisites to a lawsuit filed under Title IX.

Medical residency education programs, during which physicians prepare for independent practice after graduating from medical school, are expensive. The federal government funds direct and indirect graduate medical education payments through Medicare thereby, arguably, bringing those entities within the realm of Title IX protections for employees.

Jane Doe joined the diagnostic radiology residency program of Mercy Catholic Medical Center in 2011 as a second year resident. Doe took classes at the associated university (Drexel), attended lectures, and sat for exams to assess her competency. During her residency, Doe was approached by the director of the residency program, who told Doe he was attracted to her and wished to pursue a sexual relationship. When Does rebuffed the advances, the director allegedly gave unwarranted poor reviews of her performance and downplayed her abilities to other faculty members.

Doe ultimately was dismissed from the residency program and filed a federal court lawsuit under Title IX. The Title IX claims were dismissed by the lower court; the court held that Mercy was not an “education program or activity” and that Doe couldn’t use Title IX to circumvent Title VII’s requirement to file an administrative charge with the EEOC prior to a lawsuit. The Third Circuit reversed the dismissal, allowing Doe’s case to move forward, and holding that Title IX applied to Doe’s claims.

The Third Circuit specifically found that the residency program was an “education program or activity” because the program was affiliated with Drexel’s College of Medicine, and because Doe was required to learn and train under faculty members. The Court also held that the requirement regarding federal funding should be determined by looking at the entity as a whole, rather than at one specific program. Therefore, the fact that Mercy’s Medical Center received Medicare payments brought its radiology program under Title IX’s purview.

This case is important to employers who:

  • Deal with individuals in joint student-employees roles (similar to the resident in this case);
  • Have joint educational and business purposes (such as the teaching hospital here or, arguably, an on-the-job training center);
  • Participate in governmental programs, while simultaneously providing educational or training opportunities (for example, a pharmaceutical company that conducts research funded by federal grants, and at the same time provides training or education to its participants).

While Title VII of the Civil Rights Act allows an employee to claim discrimination and/or harassment under that statute, it does not preclude the filings of those claims under other laws. Importantly, the Third Circuit pointed out that the mere fact that an individual is an “employee” does not limit that person’s claims to Title VII – allowing individuals in positions similar to Jane Doe in this case two options for legal action.

Most education-related entities (primarily colleges and universities) understand that they are obligated to comply with Title IX. But this Third Circuit decision may lead to an expansion of the use of that statute in gender discrimination/harassment cases, should other federal circuits follow this Court’s lead. Employers who may fall within the parameters set forth in this case – even tangentially – should recognize that Title IX also includes requirements such as the appointment of a Title IX coordinator, and the structuring of an internal grievance procedure. It would be wise for such institutions to review the criteria used by the Third Circuit to determine that the program in this case was subject to Title IX.


Photo of The Count on Cloud 9 from Sesame Street (

Internet scammers are trolling for employee data . . . and HR inadvertently may be providing it.

Every January 31, employers who are scrambling to meet the deadline for mailing W-2 forms to their employees have discovered that scammers are trolling for that very information.

This year, a new iteration of an old W-2 phishing scam has surfaced. In the 2017 version, scammers posing as a company’s CEO or other high-level executive target human resources (HR) and payroll professionals with email messages requesting certain W-2s or all of a company’s W-2s.

The email messages appear authentic and the associated email address actually looks like the email address of an executive authorized to receive such information. Hitting reply and attaching W-2s, however, sends the requested W-2s directly to the scammer, who then can use the W-2s themselves and all of the information they contain in a myriad of nefarious ways.

This scam and others like it became so popular in 2016 that the Internal Revenue Service (IRS) alerted payroll and HR professionals to be aware of the threat. At that point, the IRS noted that, “Criminals using personal information stolen elsewhere seek to monetize data, including by filing fraudulent tax returns for refunds.” Unfortunately, the IRS’s notice and last year’s incidents of the scam have not prevented its recurrence, and similar spoofing email messages are rampant again this tax season.

To protect your company from the liabilities associated with these scams, the business disruption caused by testing the efficacy of your data breach response plan (your company has one, right?), and the hit to employee productivity that such events cause, employers should consider promptly taking some of the following steps:

  • Share this article – or at least the basic factual information – with all employees who have access to personally identifiable information (PII) so they know about the scam and can avoid becoming the next victim.
  • Ensure that all employees who have the ability to send PII by email refrain from replying to email messages seeking PII. Instead, require that they always draft new email messages in which they personally type the email addresses of the recipients or pull the recipients’ email addresses from their own contacts.
  • Limit transmission of PII to encrypted email messages, and communicate the encryption code by a method other than email.
  • Require that transmission of PII occur only after two employees have evaluated the request and confirmed the request’s authenticity and appropriateness.
  • Train employees so that they are familiar with the steps they can take to determine not only the published name of the sender but also the sender’s actual email address.
  • Ensure that your company constrains authorization to access PII with effective technical, physical, and logistical barriers.

Be prepared to take the following steps if you encounter this scam or any data breach:

  • Ensure that you respond as legally required within the applicable time frames.
  • Thoroughly investigate and document the incident.
  • Promptly remedy the circumstances that led to your breach. Implement protective, multi-disciplinary, physical, logistical, and policy/process controls to prevent further disclosures and mitigate future risk.
  • Provide law enforcement with required notices.
  • Provide legally required notices to any individuals whose PII was disclosed.
  • Provide identity-theft protection to affected individuals.


Dani Vanderzanden, author of this article, is a Shareholder in the Boston office of Ogletree Deakins and is Co-Chair of the firm’s Data Privacy practice group. She devotes a large portion of her practice to helping employers to reduce their potential for liability to their employees and third parties regarding issues of the type mentioned in this article. She is CIPP/US certified by the International Association of Privacy Professionals and provides advice regarding cybersecurity and privacy matters, including applicable state, federal and multi-national privacy and information security requirements.  In 2015, the National Law Journal selected Dani for inclusion on its inaugural list of “Cybersecurity & Data Privacy Trailblazers.”  This article was originally posted on the Ogletree website.

Who decides whether a job function is “essential” for purposes of the ADA?

In a recent unpublished opinion, the 11th U.S. Circuit Court of Appeals issued a carefully considered and well-structured instruction for those who want to further understand the concept of “essential functions” of a position in cases under the Americans with Disabilities Act (ADA). Bagwell v. Morgan County Commission, No. 15-15274 (11th Cir., January 18, 2017). There, the Court made it clear that an employer sets the essential functions of a position, based on business needs.

Under the ADA, a qualified individual with a disability is someone who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires. To support an ADA claim, a person must show either that s/he can perform essential function without assistance, or can perform those functions with some reasonable accommodation. An individual who cannot make this initial showing is not qualified for protection under the ADA.

Therefore, in reviewing a lawsuit under the ADA, a court’s first step is to determine the “essential functions” of the job – the fundamental job duties of the position. If the plaintiff in an ADA lawsuit is unable to perform those functions on his or her own, or with a reasonable accommodation, the lawsuit cannot go forward.

In the case under review by the Eleventh Circuit, Katrina Bagwell had sued her employer, Morgan County, Alabama. She claimed that her ADA claim was wrongly dismissed by a trial court, and contended that the park groundskeeper position she had held involved far fewer essential functions than were listed in the job description. Her argument was based on the fact that because some functions were “infrequently performed” – a fact not disputed by the County – they could not have been “essential.”

The Eleventh Circuit disagreed, stating that the “nature of the groundskeeper position required the employee’s duties to shift based on [the park’s] specific needs,” and not every function had to be continuously performed. Because Bagwell suffers from a medical condition exacerbated by traversing uneven and wet surfaces, walking, and standing for periods of time, she could not undertake those functions during a flare-up of her condition. Because her job required picking up trash and tree limbs, traversing the park daily, and cleaning park bathrooms regularly, her periodic inability to undertake those functions kept her from being a “qualified individual” protected under the ADA.

While an analysis of the essential functions of a particular job must be done on a case-by-case basis, this opinion indicates that it is the employer’s view of a job’s responsibilities that carry the strongest significance. According to this Court, although an employer may be required to restructure a particular job by altering or eliminating marginal functions, “an employer is not required to transform a position into another one by eliminating essential functions.”


Photo of Delano Park, from Morgan County, AL Convention and Visitors Bureau website (

Employee exceeding 12 weeks of FMLA leave loses right to job restoration.

According to a federal judge in Pennsylvania, employees are not entitled to the job restoration protections of the FMLA after the statutory leave has expired, even where the employee has received permission from the employer to extend that leave. Wevodau v. Commonwealth of Pennsylvania, et al, 2017 BL 1246 (MDPA, January 4, 2017).

Kevin Wevodau, a former FBI employee, was hired in 2013 by the office of Pennsylvania’s Attorney General, Kathleen Kane, as a Special Agent in Charge of the Bureau of Criminal Investigations. In 2014, Wevodau’s relationship with the Attorney General was made complicated by the fact that Kane cancelled a “sting” operation that Wevodau believed was valid and necessary, and after which Kane refused to bring charges.

In December 2014 and January 2015, Wevodau testified before a grand jury investigating allegations of wrongdoing within Kane’s administration. Subsequently, the relationship between Kane and Wevodau became more strained when an undercover agent involved in the earlier sting operation filed a defamation suit against Kane and Wevodau, which then publically spotlighted the disagreements between those two regarding the operation.

In June, a meeting was held between Kane and Wevodau after which Wevodau claimed that Kane threatened him and told him to resign. Within days, Wevodau applied for a 12-week leave of absence under the FMLA for “personal health issues,” and the leave was granted. Five weeks after the expiration of that leave, Wevodau attempted to return to work, but was told that to return, he would have to undergo a fitness for duty examination. Wevodau failed to return to work at any subsequent point – but explained that his failure was because he was not told exactly what he needed to do to complete the evaluation, and not on any medical inability to return. Although he remained on a paid administrative leave, Wevodau was no longer on FMLA leave.

After over eight months on administrative leave, Wevodau filed a state court lawsuit which included an FMLA retaliation claim, arguing that the Commonwealth’s “refusal” to allow him to return to work was retaliation. The lawsuit was removed to federal court, and the Commonwealth moved to dismiss the FMLA claim, arguing that Wevodau lost his entitlement to job restoration once his FMLA leave expired. In response, Wevodau claimed that the fact that his employer had provided additional, non-FMLA leave extended his job restoration rights.

The district court held in favor of the employer here, and cited multiple decisions of the Third Circuit, each of which included the same holding: employees are not entitled to the job restoration protections of the FMLA after the statutory leave has expired, even where the employee was given express permission to extend the leave beyond the 12 weeks allotted by the FMLA.

In this case, there was no complicating factor – as there might be in some cases – where the employee’s delayed return could be viewed as an accommodation under the ADA during which some medical issue is resolved. Here, Wevodau was medically released to return to work at the conclusion of his FMLA leave, but did not do so. The court did not agree with his assertion that the permission to extend his leave also extended his right to job restoration and instead, relied on Third Circuit precedent to dismiss the FMLA retaliation claim.

Are discussions between in-house counsel and former employees always protected by attorney-client privilege? One court says No.

The attorney-client privilege is sacrosanct to most attorneys, especially those attorneys who hold in-house positions. The privilege often – and appropriately – is asserted by in-house counsel to protect communications that were conducted with certain individuals while those individuals were employed by the company, regardless of their employment status at the moment.

However, what happens to that protection if the in-house counsel opens new discussions with an individual who no longer is employed by the company? In a holding that has gotten the attention of in-house attorneys nation-wide, one state’s supreme court decided that the attorney-client privilege “does not broadly shield counsel’s postemployment communications with former employees.” Newman v. Highland Sch. Dist., No. 90194-5 (Wash., Oct. 20, 2016). Here’s what happened in that case:

  • A high school football player suffered a permanent brain injury at a football game in 2009, one day after he sustained a head injury during football practice;
  • Subsequently, the player and his parents sued the school district for negligence;
  • Prior to trial, the school district’s attorney interviewed several former coaches, and then appeared and represented those coaches at their depositions;
  • Plaintiff’s motion to disqualify the attorney from representing the former coaches at the depositions was denied;
  • Plaintiff then sought discovery related to the communications between the school district’s attorney and the coaches during the period after the coaches left employment, but before they were represented by the attorney at their depositions;
  • The school district filed a motion for protective order, arguing that the attorney-client privilege protected counsel’s communications with the former coaches;
  • The trial court denied the motion, and the school district appealed to the Washington State Supreme Court, which upheld the denial.

The Washington State Supreme Court framed the issue as “whether postemployment communications between former employees and corporate counsel should be treated the same as communications with current employees for purposes of applying the corporate attorney-client privilege,” and then answered that issue by finding that “the privilege does not broadly shield counsel’s postemployment communications with former employees.”

The Supreme Court affirmed the lower court decision and ordered discovery to go forward, allowing the plaintiff’s attorneys to seek information about discussions between the former employees and the school district’s counsel that occurred prior to the deposition.

The Court in this case addressed three stages of communication between the school district’s attorney and the coaches, and applied the attorney-client privilege to two of them:

  1. There was no dispute about the fact that communications with counsel, if any, conducted during the coaches’ employment would be protected by the privilege;
  2. Plaintiff did not appeal the trial court’s order denying disqualification of counsel from representing the coaches at the depositions, so communications at and for purposes of the deposition were protected; but
  3. The Court declined “to expand the privilege to communications outside the employee-employer relationship” in this circumstance.

The decision here – to allow the plaintiff’s counsel in this case to delve into recent discussions between the school district’s attorney and the former coaches – has induced some level of anxiety among in-house counsel. Because the case implicated Washington State’s attorney-client privilege, as set forth in that state’s applicable statutes, one might argue that the holding is limited. However, the Court referenced, as a starting point in its analysis, Upjohn Co. v. United States, 449 U.S. 383 (1981), the leading U.S. Supreme Court case addressing attorney-client privilege, meaning that this holding may well be picked up by other courts.

For now, in-house counsel should be made aware of this decision and should seek to establish, at an early stage in litigation, formal legal representation of any former employee/witnesses who may be viewed as speaking on behalf of the company, unless that representation creates a conflict of interest.

Employers are not yet required to pay overtime in accordance with the revised FLSA regs . . . but proceed with caution.

By now, employers know that on November 22, 2016, federal court Judge Amos Mazzant in Texas issued a preliminary injunction that has blocked – temporarily – the implementation of the revised white collar overtime regulations issued by the Department of Labor (DOL) earlier this year. Those regulations, which have been the focus of concern, controversy, and downright panic, were set to become effective on December 1, 2016.

The judge’s granting of the preliminary injunction, which was premised on his finding that the legal challenges to the new regulations have a substantial likelihood of success on the merits, means that pending further appeal/review and until a final ruling is entered, the existing regulations will remain in place. There is no date set for a final hearing on the issue.

Obviously, this has created a real dilemma for employers, who spent recent weeks and months getting up-to-speed on implementing the changes required by the new regulations. Where do they go from here? Here are a few of the most frequently asked questions, and the responses based on currently available information:

  1. What is the next step in the injunction process?

The injunction can (and most likely will) be appealed, and could, in addition, become the subject of an emergency motion for stay of the injunction pending that appeal. If such an emergency motion is granted, the preliminary injunction would be lifted, and the regulations would proceed, with the December 1 implementation date in place.

An additional twist is that any appeal taken now may not reach a final conclusion, because the incoming administration could drop the appeal after January 20, 2017 if the issue has not been fully decided before the inauguration. In that instance, the DOL’s rules never will be implemented . . . at least in their current form.

  1. If the injunction ultimately is vacated, will the new DOL rules be applied retroactively to overtime that was worked after December 1?

If the injunction ultimately is vacated (and the new regulations are put back on the table to be implemented, effective on the original December 1 implementation date), it is an open question whether employers can be liable for the time between December 1, 2016 and the date of that act. It is prudent to plan for claims of that nature, and therefore to keep track of overtime hours worked by individuals whose classifications would change from exempt to non-exempt under the new regulations.

  1. What are other employers doing?

Most employers who raised salaries to the new minimum threshold will leave those raises intact. Rescinding the raises now will likely create a significant morale issue. Conversely, most employers who have not yet announced such changes are putting them on hold until a determinative outcome has been reached by the courts. Many employers are in the middle. That is, changes to salary levels to assure that managers stay exempt have been announced but not yet implemented. Most employers in this category are notifying employees that the changes now are on hold. 

  1. What – and how – should we tell employees?

Any announcement will depend upon where the company is in the implementation process, including what changes have been announced to employees, and what steps have been taken to this point. Here is sample language that would be appropriate for employers putting implementation plans on “hold” for the time being:

As you know, the Department of Labor’s new regulations on who should be paid overtime and who should not were scheduled to go into effect on December 1, 2016. As a result, the company made plans to reclassify your position from exempt to non-exempt effective by that date. However, a federal district court judge recently halted enforcement of those new regulations, which may affect that re-classification. Therefore, plans regarding reclassification of jobs now are on hold pending resolution of the legal issues. In the interim and until a final resolution, you will be paid as you always have been paid. During the coming weeks, we will (with your help and input) keep track of your working hours and will determine pay revisions, if any, when a final legal determination is made by the courts. Please contact your HR manager with questions that you have.

  1. What if some workers whose jobs were planned for reclassification to non-exempt need to be reclassified anyway, regardless of the DOL’s new rules. Should we reclassify them?

Some employers have decided to make classification changes to individuals who DO NOT perform exempt duties, and are using this opportunity to assure compliance with basic FLSA classification requirements. In that instance, Meg Alli in our Detriot office has suggested language like this:

We notified you previously that you would become overtime eligible effective December 1, 2016. Despite recent legal rulings in Texas of which you may have become aware, we are writing to confirm that we have not changed our direction or course. As of December 1, you will be eligible for overtime after working over 40 hours in a week [or 8 in a day if state law requires]. You also will be expected to keep track of your working hours each day and timely report them to [the designated person in the designated way]. We value your commitment to our Company. Moving forward with our changes is the right thing to do and recognizes your extra work on behalf of the Company.

  1. What is the overall advice being provided to companies at this point?

In summary:

  • If changes already have been implemented, it is more practical and less disruptive to leave them in place and continue to monitor the situation for possible future action.
  • If changes have not been implemented (even if previously announced), everything can be put temporarily on hold; but
  • Record hours for the employees who were going to be reclassified, in case that data is needed later; and in either instance,
  • Evaluate what to tell employees and notify them quickly, as state law pay notification requirements may come into play.

This is a circumstance in which management, legal, and human resources should work carefully and in concert to assure that actions are carefully considered and planned before being implemented.

What the FTC/DOJ’s Recent “Antitrust Guidance for HR Professionals” Means for Employers.

On October 20, 2016, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) jointly issued a publication entitled “Antitrust Guidance for Human Resource Professionals” which, according to the opening paragraphs, is “intended to alert human resource (HR) professionals and others involved in hiring and compensation decisions to potential violations of the antitrust laws.”

The three bold-face headings within the guidance provide a roadmap for the messages being sent to employers by the DOJ/FTC, and the actual “take-aways” of which employers should be aware:

  1. “The antitrust laws establish the rules of a competitive employment marketplace.”
    • Message: Federal antitrust agencies plan to take enforcement action against employers who agree – expressly or implicitly – with other companies not to compete for employees.
    • Take Away: Employers should avoid communicating hiring or recruiting policies to other companies, regardless of whether the companies provide the same products or services. The effect of this guidance on non-compete agreements remains to be seen. But a hint may have come from the Obama administration’s statement, on October 26, which urged states to ban non-compete agreements in circumstances other than those proposed before a job is offered or promotion is accepted.
  2. “Agreements among employers not to recruit certain employees or not to compete on terms of compensation are illegal.”
    • Message: An HR person (and, therefore, the employer/company) risks action by the DOJ if an agreement is made between companies regarding salary or other terms of compensation; this applies regardless of whether the agreement is written or verbal, formal or informal.
    • Take Away: The DOJ views most stand-alone wage-fixing or “no poaching” agreements among employers as per se illegal under the antitrust laws. Expect the DOJ to increase its criminal prosecutions of both individuals and companies involved in such agreements.
  3. “Avoid sharing sensitive information with competitors.”
    • Message: According to the guidance, evidence of periodic exchanges of current wage information in an industry with a relatively low number of employers could establish an antitrust violation – even without an express or implicit agreement among companies.
    • Take Away: Exchanging competitively sensitive information may create implicit evidence of illegal antitrust-based agreements, and may be viewed by the DOJ as having an anticompetitive effect.

The DOJ will be stepping up its efforts in this arena, and has established a specific “business review process” to enable companies to determine how the DOJ’s Antitrust Division will respond to any proposed joint ventures or other business activity, and has provided a list of “Antitrust Red Flags” for HR professionals. The FTC has established a process for obtaining an advisory opinion on antitrust issues, as well.

The guidance also includes several Q & A scenarios, and a list of resources to assist HR in reporting “potential violations” of the antitrust laws, including a statement that:

Through the Division’s leniency program, corporations can avoid criminal conviction and fines, and individuals can avoid criminal conviction, prison terms, and fines by being the first to confess participation in a criminal antitrust violation, fully cooperating with the Division, and meeting other specific [but unspecified] conditions.

This issue underscores the importance of cooperation and interaction among legal, HR, and corporate compliance departments in companies, regardless of size, geographic location, or type of business. Expect scrutiny on this issue to continue – and consider limiting huddle time with other companies, especially regarding competition for employees.


December 1, 2016 implementation date for overtime regs remains unchanged. Are you ready?

One question is being asked by employers on a nearly daily basis: “Do we really have to meet the December 1, 2016 effective deadline for the revisions to the U.S. Department of Labor (DOL) overtime regulations?” Short answer is: Yes.

Attempts are being made to delay, change, soften, and eliminate the December 1 implementation date, but so far, without success. Here is a summary of some of the legal and legislative actions that have taken place since the May 18, 2016 publication of the new regulations:

  • In June, Senator Lamar Alexander (R-Tenn.) and 43 other Senate Republicans filed a “motion of disapproval” under the Congressional Review Act (CRA), an Act that allows lawmakers to vote to roll back controversial regulations. Under the CRA, Republicans would need only a simple majority in both chambers to block the overtime rule. But President Obama could veto their attempt to block it, and Republicans do not have enough support on their own to override a veto. To date, no further action has been taken on that motion.
  • On July 14, 2016, in an attempt to soften the impact of the new regulations, Congressman Kurt Schrader (D-Ore.) introduced a bill – the Overtime Reform and Enhancement Act (OREA) – to add to the regulations a phase-in provision which would phase in the increase in the salary threshold in steps over the next three years, and remove a current provision that increases the threshold salary automatically every three years. After its introduction in the House, the Bill was referred to the House Committee on Education and the Workforce; no further action has been taken.
  • On September 20, with less than 80 days left before the effective date for the revisions to the new regulations, two federal court lawsuits were filed in Texas to put off or halt the implementation of the revisions. On October 14, motions were filed by both plaintiff groups, asking for expedited resolution. To date, neither has resulted in any concrete change in the trajectory of the implementation of the new rules.
  • On September 28, 2016, the U.S. House of Representatives passed H.R. 6094 Regulatory Relief for Small Businesses, Schools, and Nonprofits Act by a vote of 246 to 177. This bill would delay the December 1, 2016 effective date of the new salary level test in the final overtime rule for six months until June 1, 2017. While H.R. 6094 passed the House, it is not clear whether the Senate will vote on its parallel Senate bill (S. 3462).  Even if the Senate were to vote on that and pass it, the White House has made it clear in a Statement of Administration Policy dated September 27 that the president will veto it.
  • On September 29, 2016, another bill (S. 3464) was introduced by Senator Lamar Alexander, along with four other senators. That bill is similar to the House bill introduced in July by Rep. Schrader (D-OR) to phase in the overtime rule incrementally. The Senate bill includes a five-year phase-in (as opposed to Rep. Schrader’s 3-year period), but also a provision requiring an independent study of the rule after the first year of implementation, which – should the rule be found to negatively impact American workers and the economy – exempt nonprofit groups (including colleges and universities), state and local governments, and many Medicaid and Medicare-eligible facilities from any further increases under the rule.

Before recessing for the November elections, Congress signaled that the overtime rule will merit Congressional  attention when it returns to work for its lame-duck session beginning in mid-November.  In the meantime, business and industry groups, including the Society for Human Resource Management (SHRM) will continue to develop strategies for use when Congress returns to Washington following the elections.

However, because of the number of steps that must be taken prior to an change in the December 1 effective date (which actually is earlier, since the rule requires the changes to be in place for the pay period that includes December 1), that date is unlikely to change. Be prepared.


P.S. This blog has been nominated as a “best blog” by The Expert Institute.  If you like what you’ve been reading, please favor me with a vote, here: (click on Employment Law Matters). Thanks.


Photo from 2012 London Olympics at daily


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

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.