Complying with the Department of Labor’s Proposed Overtime Regulations

Q.  I heard that the United States Department of Labor is planning to raise the salary threshold for exempt status again. What is the new rule and when does my company have to comply?

A.  On March 7, the U.S. Department of Labor issued its long-anticipated proposed rule that would expand overtime eligibility under the Fair Labor Standards Act (FLSA) to include a significant number of additional workers. The proposal will be open to public comment for 60 days, with the final rule set to take effect around January 1, 2020.

Under current regulations, in effect since 2004, employees with a salary below $455 per week, or $23,660 annually, are nonexempt and must receive overtime pay for hours worked over 40 hours per week, regardless of whether their duties fall within one of the FLSA exemptions. The new rule would raise the salary threshold from $455 to $679 per week, or $35,308 per year, meaning that employees who earn less than those thresholds will be automatically nonexempt and eligible for overtime on the effective date. Employees earning salaries in excess of either threshold may still be nonexempt and eligible for overtime based on their job duties.

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Hair Styles May Be Protected Under Discrimination Laws

Q: Is it lawful to require employees or applicants to style their hair in a certain manner?

A: As with most employment-related questions, the answer is it depends.  While employers are generally allowed to adopt basic grooming policies, employers should seek to adopt policies that do not have a disparate impact on minorities and other persons protected by anti-discrimination laws.

In February 2019, the New York City Commission on Human Rights (“Commission”) generated headlines by releasing a legal enforcement guidance on race discrimination on the basis of hair.  The guidelines are designed to prohibit workplace grooming policies that may discriminate against Black people.  The Commission defines the term “Black people” to “include those who identify as African, African American, Afro-Caribbean, Afro-Latin-x/a/o or otherwise having African or Black ancestry.”  Per the Commission: “Bans or restrictions on natural hair or hairstyles associated with Black people are often rooted in white standards of appearance and perpetuate racist stereotypes that Black hairstyles are unprofessional.”  The Commission takes the position that the New York City Human Rights Law (“NYCHRL”) protects the right of Black people to maintain their natural hairstyle, which “includes the right to maintain natural hair, treated or untreated hairstyles such as locs, cornrows, twists, braids, Bantu knots, fades, Afros, and/or the right to keep hair in an uncut or untrimmed state.”

According to the Commission, grooming or appearance policies that ban, limit, or prohibit natural hair and hairstyles often associated with Black people violate the NYCHRL anti-discrimination provisions, including the section prohibiting discrimination in employment. Employers prohibiting employees from wearing their hair in cornrows, Afros, and other hairstyles associated with Black people risk facing liability under the NYCHRL.  The Commission stated: “Black hairstyles are protected racial characteristics under the NYCHRL because they are an inherent part of Black identity.”  Under the NYCHRL, it is therefore discriminatory to refuse to hire a Black applicant with cornrows because the hairstyle does not project the “image” that a Company is trying to represent—and companies may not use customer preference or health and safety concerns as an excuse for a prejudiced policy.

The Commission noted in a footnote of its legal enforcement guidance that grooming or appearance policies that “generally target communities of color, religious minorities, or other communities protected under the NYCHRL are also unlawful.” The Commission gave as examples: (i) a Sikh applicant being denied employment because of his religiously-maintained uncut hair and turban, (ii) an Orthodox Jewish employee ordered to shave his beard and cut his payot (sidelocks and sideburns), (iii) a salesperson being required to shave his beard despite a medical condition that makes it painful to do so, (iv) an older employee with gray hair being threatened that she will lose her job if she does not color her hair, and (v) a male server being ordered to cut his ponytail where similar grooming policies are not imposed on female servers.

This is not the first time a government agency has attempted to remedy employment discrimination related to Black hairstyles. In 2013, the United States Equal Employment Opportunity Commission (“EEOC”) unsuccessfully brought suit against an Alabama insurance claims company because the insurance company allegedly violated Title VII of the Civil Rights Act by discriminating against a Black applicant because she wore dreadlocks. See EEOC v. Catastrophe Mgmt. Sols., 852 F.3d 1018 (11th Cir. 2016).  In that case, Plaintiff Chastity Jones was offered a position as a customer service representative.  Prior to her start date, Ms. Jones was advised that the company did not permit dreadlocks and that she needed to cut them.  When Ms. Jones refused to cut her hair, her job offer was rescinded.  Although recognizing that dreadlocks were a common hairstyle worn by Black people, the Eleventh Circuit Court of Appeals (covering employers in Alabama, Florida, and Georgia) ultimately concluded that dreadlocks were not an immutable characteristic, and that the EEOC could not state a claim for intentional race discrimination against a company seeking to enforce its “race-neutral” grooming policy.  The United States Supreme Court declined to hear Ms. Jones’ appeal.

Although the NYCHRL only covers employers with four or more employees in New York City, employers nationwide should pay close attention to the Commission’s guidance as it could influence courts and other government agencies throughout the country. Before implementing any grooming policies—including those that could adversely impact individuals in a protected category of employment—Human Resources professionals should consult with qualified legal counsel to adopt lawful policies that do not create a “hairy” situation.

–Lee Tankle

Pros and Cons of Mandatory Arbitration Policies for Employment Disputes

Q.  Our company has a policy providing for mandatory arbitration of employment claims. I heard recently that some companies are moving away from these types of policies.  What are the pros and cons of requiring all employees to submit their employment claims to arbitration?

A.  There are a number of issues to consider regarding whether a company should require its employees to submit all employment claims to arbitration. These types of policies have been in favor since the 2018 United States Supreme Court opinion in Epic Systems Corp. v. Lewis, which endorsed mandatory arbitration agreements even where they resulted in employees waiving their rights to pursue claims in a class or collective action.

In light of the #MeToo movement, however, federal and state legislatures have taken steps to ban private resolution of sexual harassment claims. For example, New York State recently passed a law prohibiting not only the use of mandatory arbitration for sexual harassment claims, but also non-disclosure agreements relating to settlement of those claims.  Similar laws were passed in Washington and Tennessee in 2018, and comparable legislation has been introduced in several more states.  At the federal level, Congress currently is considering a bill called the Forced Arbitration Injustice Repeal (FAIR) Act, which would ban mandatory arbitration in employment and consumer agreements.

In addition, some companies have scaled back their mandatory arbitration policies in the face of employee resistance. In November 2018, for example, about 20,000 Google employees made their case against mandatory arbitration in a very public way when they walked off the job in protest of the company’s arbitration policy, which required employees to bring all claims for sexual harassment to arbitration.  Google waived the policy with respect to those claims only, but the employees pressed the company to abandon the policy for all employment-related claims, and Google eventually acquiesced.  On February 21, 2019, Google announced not only that it would end the mandatory arbitration policy altogether, but also that it would no longer require agreements that deny employees the right to bring class actions against the company.

Since that time, Facebook, Airbnb and eBay followed suit by modifying their policies to allow employees to bring sexual misconduct and harassment claims in court. Twitter also made a announcement touting that it has never required employees to submit employment claims to arbitration.

In the face of these developments, should companies compel their employees to submit all employment claims to arbitration?

There are certain advantages to arbitration as a process for resolving employment claims. First, in light of the Epic Systems decision, companies can require employees to bring their claims individually in arbitration, rather than banding together to pursue claims as a class or collective action.  Second, arbitration is a private proceeding and therefore provides an advantage to employers who would rather avoid the public embarrassment of what sometimes can be salacious allegations.  Third, the arbitration proceeding is a way to avoid having disputes heard by a jury, which may be more willing to award substantial sums to sympathetic plaintiff-employees.  Fourth, when compared with traditional litigation, the arbitration process is at least supposed to be a faster resolution of the dispute at a reduced cost.

However, companies are finding that, in practice, arbitration proceedings sometimes can be as lengthy and costly as court proceedings, particularly since the employer usually is responsible for the arbitrator’s fees on top of its own legal fees and expenses. In addition, arbitrators rarely grant summary judgment and are often more likely to split a decision down the middle, rather than rule completely in the employer’s favor.

With this in mind, your company should consider carefully whether mandatory arbitration is appropriate, giving thought to the company’s culture, industry standards and the evolving legal framework. If the company does decide to put a mandatory arbitration policy in place, it is important that it is drafted carefully with the assistance of counsel, taking into consideration state laws of your jurisdiction, to ensure that the provision will be found fair and enforceable.

Rogers Stevens