Philadelphia Employers May Not Ask Wage History Questions Under New Ordinance

Q.  My company is based in Philadelphia.  We often set salaries for new employees based on the applicant’s wage history.  Are we still permitted to do this?

A.  Effective May 23, 2017, a new Philadelphia Ordinance makes it unlawful for employers in Philadelphia to inquire about a prospective employee’s wage history or require disclosure of wage history as a condition of employment.  The law was passed to encourage employers to base salary offers on the job responsibilities of the position sought, rather than on the applicant’s prior wages.  Employers will no longer be able to rely on the wage history of a prospective employee when determining the wages of that individual, unless the individual knowingly and willingly disclosed his or her wage history to the employer.

To ensure compliance with the Ordinance, employers who do business in Philadelphia should start thinking about revising their employment applications to delete any questions inquiring about an applicant’s wage history.  Recruiters, HR personnel and managers will need to be trained about the new law so that these individuals know not to ask wage-based questions during the interview process.  In addition, employers should consider revising their EEO policies to add wage history to the list of protected categories.

-Tracey E. Diamond

 

 

 

 

Layoffs and Business Closures: What to Consider Before Taking Action

Q: Unfortunately, I need to lay off some employees, and possibly close my business. What steps do I need to take to ensure I am in compliance with legal obligations?

A: There are many factors and obligations to consider when laying off multiple employees and/or closing a business. It is best to consider these aspects as early as possible, even if you think layoff/closure is only a possibility.

Obligation for Advance Notice

One of the most important steps is to determine whether the layoff/closure is covered by The Worker Adjustment and Retraining Notification Act (“WARN Act”), or a state equivalent. The WARN Act is a federal law, and applies to employers with 100 or more employees.  Employees who have worked less than 6 months in the last 12 months and/or who work less than 20 hours per week are not counted toward the 100.

The WARN Act requires covered employers to give 60 days’ advance notice of a mass layoff or site closure to employees, the State dislocated worker unit, and the chief elected official of the local government unit in which the layoff occurs. For mass layoffs, employers must give notice if 500 or more employees will be laid off during a 30-day period.  Employers must also give notice if 50 or more employees are laid off, and that group makes up at least one-third of the employer’s workforce.  Similarly, for site shutdowns, employers must give notice if a shutdown will result in an employment loss for 50 or more employees during any 30-day period.  An employment loss is defined as: (1) a termination; (2) a layoff exceeding 6 months; or (3) a reduction in hours of more than 50% in each month of any 6-month period.

Many states impose additional requirements upon employers. In New York, for example, the state WARN Act applies to employers with 50 or more full-time employees in New York State, and covered employers are required to provide 90 days of advance notice.  The obligation for notice is triggered by a layoff of 25 or more employees if that comprises at least one-third of full-time workers, or layoffs of 250 or more full-time employees at a business with 50 or more employees.  New Jersey’s rules mirror the federal law, but the penalties are different.  Pennsylvania does not have any state law requirement.

Ensuring No Discrimination in Layoffs

In addition to WARN Act considerations, when planning a layoff involving multiple employees, it is important to ensure that the company has documented, well-thought out reasons for the layoff, and that it has protected itself against potential claims of discrimination. One helpful way to do so is to analyze the protected categories that the laid-off employees fall under, and determine whether there is any disparate impact upon one particular group.  For example, would the layoff impact more women than men?  Would it impact more workers over 40 than under 40?

When courts examine claims of discrimination in a layoff, they often look at the following factors:

  • whether the business criteria utilized to select employees for termination makes sense, and whether that criteria was applied consistently;
  • whether procedures in personnel policies related to terminations were followed;
  • whether the employees’ responsibilities were fully eliminated – if not, what happened to the responsibilities; and
  • whether anyone was hired to fulfill the terminated employees’ duties.

It is important for employers to think about these types of factors before a layoff is implemented to ensure that the layoff is non-discriminatory, and can be vigorously defended if the need arises.

Proper Payout and Recordkeeping

Prior to the effective date for a layoff/termination, employers should ensure that they have reviewed all obligations (both legal and under employer-specific policies, such as handbooks and employment agreements) relating to termination pay. For example, some employee handbooks provide that unused, accrued PTO will be paid out upon termination, and some employees may be owed severance pay under an employment agreement.  When drafting severance agreements (which employers may want to consider regardless of whether they are obligated by contract to pay severance), employers should ensure that such agreements comply with legal requirements for releases, as well as any requirements by third parties such as insurance carriers.  For example, the Older Workers Benefit Protection Act (“OWBPA”) provides that for a valid release of age discrimination claims, the release must contain specific language, and the employee must be given a specific amount of time to consider the release and revoke their signature.  Employers should also be careful to abide by state laws governing the timing of final pay.

Employers are obligated to maintain many types of records, including employment records, post-layoff/closure. While recordkeeping obligations vary by state, generally they range from 3 to 7 years.

– Jessica Rothenberg

 

 

EEOC Issues Guidance Interpreting National Origin Discrimination

Q:  What does it mean to discriminate against someone based on their national origin?

A:  Title VII prohibits employers from acting in a way that would have the purpose or effect or discriminating against an employee because of his or her national origin.

But what does the term “discrimination based on national origin” really mean?

The Equal Employment Opportunity Commission (“EEOC”) recently issued an Enforcement Guidance on this subject. Although the EEOC’s position at times is broader than controlling case law, the Enforcement Guidance is helpful because it offers insight into how the EEOC will investigate claims of alleged national origin discrimination in the future.  It is significant that 11 percent of EEOC Charges filed in 2015 contained an allegation of national origin discrimination.

According to the EEOC, national origin discrimination means discrimination because an individual (or his or her ancestors) is from a certain place or has the physical, cultural, or linguistic characteristics of a particular ethnic group. National origin discrimination often overlaps with race, color, or religious discrimination because a national origin group may be associated with (or, according to the EEOC, perceived to be associated with) a particular religion or race.

Title VII prohibits an employer from using certain recruitment practices, such as sending job postings only to ethnically or racially homogenous areas or audiences, or requesting that an employment agency refer only applicants of a particular national origin group. Importantly, employers may not rely on the discriminatory preferences of coworkers or customers as the basis for an adverse employment action in violation of Title VII.  Thus, for example, a retail store may not reject an applicant for not fitting its “all American image.”

Social Security Numbers

The EEOC also addressed an issue that sometimes trips up employers. According to the EEOC, having a policy or practice of screening out candidates who lack a Social Security number implicates Title VII if it disproportionately screens out work-authorized individuals of a certain national origin, such as newly arrived immigrants or new lawful permanent residents, and thus has a disparate impact based on national origin. The EEOC has clarified that newly-hired employees should be allowed to work if they can show that they have applied for but not yet received a Social Security number.

Accents

Under Title VII, an employer may refuse to hire (or fire) an individual if his or her accent interferes materially with job performance. To meet this standard, however, an employer must be able to provide evidence showing that: (1) effective English communication is required to perform job duties; and (2) the individual’s accent materially interferes with his or her ability to communicate in spoken English. Likewise, an English fluency or English proficiency requirement is permissible only if required for the effective performance of the position for which it is imposed.

According to the EEOC, the key is to distinguish a merely discernible accent from one that actually interferes with the spoken communication skills necessary for the job. Evidence of an accent materially interfering with job duties may include documented workplace mistakes attributable to difficulty understanding the individual, assessments from several credible sources who are familiar with the individual and the job, or specific substandard job performance that is linked to failures in spoken communication.

Hostile Work Environment Claims

The EEOC’s Enforcement Guidance also issued an important reminder to employers that harassment based on an employee’s national origin could give rise to liability for a hostile work environment. A hostile work environment based on national origin can take different forms, including ethnic slurs, ridicule, intimidation, workplace graffiti, physical violence, or other offensive conduct directed toward an individual because of his birthplace, ethnicity, culture, language, dress, or foreign accent.  None of this behavior should be tolerated in the workplace.

Promising Practices

The EEOC lists several “promising practices” for employers to consider to avoid liability for national origin discrimination:

  • Use a variety of recruitment methods to attract as diverse a pool of job seekers as possible;
  • Identify your Company as an equal opportunity employer;
  • Implement clearly-defined criteria for evaluating performance;
  • Distribute a policy prohibiting harassment based on national origin and train employees regarding their rights and obligations under the policy.

Tracey E. Diamond

A New Year’s Present for New York Employees: Minimum Wage and Exempt Status Salary Threshold Increases

Q: As a New York employer, what do I need to know about the increases to the minimum wage and the exempt salary threshold?

A: This is a timely question, since both the minimum wage and exempt salary threshold increased, effective December 31, 2016.

 Minimum Wage

The minimum wage for many New York employers increased to $9.70/hour. The minimum wage for large employers in New York City (11 or more employees) increased to $11.00/hour, and to $10.50/hour for small employers in New York City (10 or less employees).  The minimum wage for employers in Nassau, Suffolk, & Westchester Counties is now $10.00/hour.

And that’s not the end. The minimum wage will increase each year until it reaches $15 in each location, pursuant to the following schedule:

Location 12/31/17 12/31/18 12/31/19 12/31/20 2021*
NYC – Large Employers $13.00 $15.00
NYC – Small Employers $12.00 $13.50 $15.00
Nassau, Suffolk, & Westchester Counties $11.00 $12.00 $13.00 $14.00 $15.00
Remainder of New York State $10.40 $11.10 $11.80 $12.50 *

Starting in 2021, the annual increases will be published by the Commissioner of Labor on or before October 1.

If an employee works in two or more different minimum wage locations, the employer may pay either the highest rate for all hours worked, or pay each hour worked in each location at the applicable minimum wage for that location.

Fast food workers and tipped food service workers are subject to different minimum wage rates and increases.

Overtime Exempt Salary Threshold

In addition to the minimum wage increases, the overtime exempt salary thresholds for New York administrative and executive employees were increased to a salary of $825/week ($42,900 annually) for large employers in New York City, $787.50/week ($40,950 annually) for small employers in New York City, $750/week ($39,000 annually) for employers in Nassau, Suffolk, and Westchester counties, and $727.50/week ($37,830 annually) for employers in other New York counties.

New York employers should be mindful that even though the federal increases in the exemption salary thresholds have been blocked for the time being, the New York increases are higher than the existing federal thresholds, and thus New York employers must follow the state’s higher thresholds. Thus, New York employers need to increase salaries for those exempt employees who do not meet the new threshold, or reclassify them as non-exempt.

The salary thresholds for exempt status in New York will continue to increase each year until they reach $1,125/week, pursuant to the following schedule:

Location 12/31/17 12/31/18 12/31/19 12/31/20 2021
NYC – Large Employers $975.00 $1,125.00
NYC – Small Employers $900.00 $1,012.50 $1,125.00
Nassau, Suffolk, & Westchester Counties $825.00 $900.00 $975.00 $1,050.00 $1,125.00
Other New York Counties $780.00 $832.50 $885.00 $937.50

Jessica Rothenberg