New Jersey Hoteliers Required To Provide Panic Devices to Employees

Q: I operate a hotel in New Jersey and heard New Jersey law now requires me to provide panic devices to certain hotel employees. What do I need to know?

A: New Jersey recently enacted legislation that requires hotel employers to provide a “panic button” to individuals “performing housekeeping or room service duties at a hotel” and is employed by a hotel or subcontractor of a hotel. The new law only applies to hotels and other similar establishments containing at least 100 guest rooms. The law became effective on January 1, 2020.

The state legislature found that because of “the unique nature of hotel work, hotel employees are particularly vulnerable when working alone in hotel guest rooms” placing them at increased risk of assault, sexual assault, and sexual harassment. The legislature also found that many hotel employees are “ marginalized members of society with limited means to support themselves and their families, and without adequate support, may feel intimidated to report inappropriate and criminal conduct for fear of repercussions or retaliation from their employers.”

Under the law, a “panic device” is defined as a “two-way radio or other electronic device which is kept on an employee’s person when the employee is in a guest room, and that permits an employee to communicate with or otherwise effectively summon immediate on-scene assistance from a security officer, manager or supervisor, or other appropriate hotel staff member.”

Hoteliers must provide a free panic device to employees assigned to work in a guest room without any other employees present and permit the employee to use the panic device if the employee believes there is an ongoing crime, immediate threat or assault, harassment, or other emergency. Upon activation of a panic device, an appropriate hotel staff member must “respond promptly to the location of the hotel employee” and no adverse action may be taken against an employee who utilizes their panic device.

In addition, hoteliers must:

  1. Keep a record of accusations it receives that a guest has committed an act of violence, harassment, or other inappropriate conduct against a hotel employee and maintain that name on a list for five years; and
  2. Notify employees assigned to work in rooms occupied by guests on the list referenced above and provide employees with the option of servicing that room with a co-worker or not servicing the room at all; and
  3. Report any incident involving alleged criminal conduct to law enforcement.

Hoteliers also must educate their employees about the panic device program and their rights under this new statute. Furthermore, hotel guests must be advise of the panic device program. Hoteliers who fail to provide panic devices are subject to fines of up to $5,000 for first time violations and $10,000 for subsequent violations.

Lee Tankle

New York State To Eliminate Tip Credit For Many Employees Beginning June 2020

Q:  I heard New York is changing its rules around tip credits for some types of employees.  What do I need to know?

A:  A tip credit is a concept permitted under the Fair Labor Standards Act (“FLSA”) and many state laws.  A tip credit allows employers to pay employees a cash wage of less than the minimum wage and take a tip credit up to a set amount.  For example, under the FLSA, employers can pay tipped employees a minimum cash wage of $2.13 per hour, and take a tip credit of $5.12 per hour.  If employees receive less than $5.12 an hour in tips, the employer must pay the employee the difference so that an employee always earns at least $7.25 (the minimum wage) per hour.  Regardless of whether an employer takes a tip credit, all tips are the property of the employee.  So, if an employer takes a tip credit and the employee makes more than $5.12 per hour in tips, the additional amount belongs to the tipped employee.

Currently, New York employers are permitted to take a tip credit for employees in miscellaneous industries. Employees covered by the miscellaneous industries wage order are those employees who are not covered by any of the other wage orders (hospitality, agricultural, non-profit, and building services).  Common types of employees covered by the miscellaneous wage order include employees in hair salons, nail salons, and car washes, as well as door-persons, tow truck drivers, valet parking attendants, and dog groomers.  The amount of the tip credit varies depending on: (1) where the employee is (New York City, Long Island & Westchester, or the remainder of New York); and (2) the average amount of tips the employee receives per week.  There is a “low” and “high” tip credit – if an employee’s average weekly tip earnings fall below the low scale, then the employer cannot take a tip credit.  If an employee’s average weekly tip earnings fall between the low and high scale, the employer can apply the low tip credit.  If the employee’s average weekly tip earnings exceed the high scale, then the employer can apply the high tip credit.

Governor Cuomo recently announced that New York is eliminating the tip credit for the miscellaneous industries. The decision is fueled by the New York Department of Labor’s (“NY DOL”) findings that the miscellaneous industries are often those in which wage theft is most prevalent.  In addition to malicious action by employers to underpay employees, the NY DOL found that there is generally confusion about tip credits among both employers and employees, making it difficult to ensure it is properly utilized.

The elimination will occur in two phases – on June 30, 2020, the difference between the minimum wage and current tip wages will be cut in half, and on December 31, 2020, the tip credit will be completely eliminated. For example, for a miscellaneous industry employee in New York City, an employer can currently pay a cash wage of $11.35 – $12.75, and take a tip credit of $2.25 to $3.65, depending on the employee’s weekly tip average.  Beginning June 30, 2020, the employer must pay a cash wage of $13.15 – $13.85 per hour, and can only take a tip credit of $1.15 – $1.85, depending on the employee’s weekly tip average.   Beginning December 31, 2020, the employer must pay a cash wage of $15.00 per hour, and cannot take any tip credit.

Jessica Rothenberg

Two New NLRB Decisions Allow Employers to Limit Use of Its Email System and Preserve Confidentiality of Workplace Investigations

Q: What is the current rule on whether an employee can use our company’s email system to distribute union material? Also, are we permitted to require employees to keep workplace investigations confidential without running afoul of the National Labor Relations Act?

A: There are actually two issues that arise from your question, and both were recently addressed by the National Labor Relations Board in its reversal of two Obama-era decisions. Essentially, employers may now beef up restrictions on their employees’ use of company-owned email and other communications systems, subject to certain exceptions. Furthermore, employers may now implement rules requiring confidentiality during the course of workplace investigations, and depending on the circumstances, even beyond the close of the investigation.

In the first case, Caesars Entertainment d/b/a/ Rio All-suites Hotel and Casino, the Board found that an employer’s right to control the use of its email systems supersedes the right of employees to use such systems for union-related communications. This decision overturns Purple Communications, Inc., a much-maligned 2014 decision in which the Board held that workplace rules prohibiting employees from using employer-owned email systems for union business were presumptively invalid. According to the current Board, Purple Communications “impermissibly discounted employers’ property rights in their IT resources while overstating the importance of those resources to Section 7 activity.”

The Caesars Entertainment dispute arose when the union, representing approximately 3,000 employees at a Las Vegas hotel and casino, filed a charge alleging that the employer’s handbook rules violated Purple Communications by prohibiting employees from using the employer’s email system to “send chain letters or other forms of non-business information,” which presumably included union-related emails and other communications. After an administrative law judge rejected the employer’s handbook rule under the Purple standard, the Board issued a call for the parties and interested amici to address several questions, including whether Purple should be overturned, and if so, what standard should replace it. The Board suggested the possibility of returning to the standard introduced in 2007 in Register Guard, where the Board held that employees have no statutory right to use employer equipment.

In a sense, the Board’s rationale for returning to the Register Guard standard is a product of the changes to society at large brought on by technology. As the Board in Caesars explained, employees have other options for union-related communications, given that “in modern workplaces employees also have access to smartphones, personal email accounts, and social media, which provide additional avenues of communication, including for Section 7–related purposes.” As such, the Board found “no basis for concluding that a prohibition on the use of an employer’s email system for non-work purposes in the typical work-place creates an ‘unreasonable impediment’” to employee Section 7 rights. However, the Board recognized that, in certain circumstances, an employer’s email system might be the only viable means of communication among employees. In that case, “an employer’s property rights may be required to yield in such circumstances to ensure that employees have adequate avenues of communication.” The Board declined to clarify the scope of this exception, instead leaving it “to be fleshed out on a case-by-case basis.”

In another case affecting employee Section 7 rights, Apogee Retail LLC, the Board held that a workplace rule requiring employees to maintain confidentiality in the context of an ongoing workplace investigation is presumptively lawful. After the Board’s 2015 decision in Banner Estrella Medical Center, employers were obligated to make a case-by-case determination about whether imposing a particular confidentiality rule during an internal investigation would infringe upon an employee’s Section 7 rights. Reversing that decision, the Apogee Retail Board explained that such confidentiality rules would now be subject to the analysis introduced by the Board in 2017 in Boeing Co., which provided a new standard for determining whether the maintenance of a facially neutral workplace rule is unlawful.

Under Boeing, when analyzing a facially neutral rule that might interfere with the exercise of employee Section 7 rights, the Board considers (1) the nature and extent of the potential impact of the rule on NLRA rights, and (2) the employer’s legitimate justifications for deploying the rule. Following this analysis, the Board places the rule in question in one of three categories—either lawful or unlawful, or somewhere in between. For those rules that present a close call, the Board balances the rule’s effect on employee rights with the employer’s business justifications for the rule.

In Apogee Retail, the workplace rule in question required employees who reported misconduct or otherwise participated in an investigation of such misconduct to maintain confidentiality with respect to the investigation. Employees were warned that violations of the rule could result in disciplinary action. In analyzing the rule, the Board first determined that it, “when reasonably interpreted, would potentially interfere with employees’ exercise of their Section 7 rights” to discuss employee discipline in the workplace “where doing so is not mere griping but rather looks towards group action.” However, when balancing the potential impact on Section 7 rights with the employer’s business justifications, the Board found the employer’s interests outweighed the interests of its employees. Specifically, the employer’s interest in preventing theft and responding quickly to misconduct, as well as in maintaining employee privacy and the integrity of its investigations, benefitted both employers and employees and therefore carried the day.

In addition to finding that it is presumptively lawful for an employer to impose a confidentiality rule during the course of an ongoing investigation, the Board in Apogee Retail took the further step of holding that an employer can impose confidentiality even after an investigation is complete without violating labor laws if its legitimate reasons for requiring confidentiality outweigh the impact on an employee’s Section 7 rights. In other words, rules that extend confidentiality beyond the close of an investigation will be subject to the Boeing analysis.

These two decisions represent a distinct shift away from the Obama-era Board’s positions on these issues. Following Purple Communications, many employers scrambled to rewrite their policies regarding employee email use. Now, after Caesars Entertainment, employers can implement rules that prohibit employees from engaging in any non-work-related use of company technology, unless the use of an employer’s communication systems is the only reasonable means for employees to communicate about union matters. Employers may now require confidentiality during ongoing investigations, although rules that extend confidentiality beyond the close of the investigation will be scrutinized on a case-by-case basis.

In any event, while the more-relaxed standards announced in these two decisions will provide some relief for employers, given the politically mercurial nature of the NLRB, employers may want to file away their Purple and Banner Estrella-compliant policies for future use. As Caesars Entertainment and Apogee Retail illustrate, the Board’s views on any given issue are subject to change with the political winds. As always, it is prudent to consult with a qualified attorney before changing any workplace rules that could impact employee rights under the National Labor Relations Act.

Rogers Stevens

Pennsylvania Supreme Court Confirms That Employers Cannot Use Fluctuating Workweek Method of Calculating Overtime

Q: I heard that the Pennsylvania Supreme Court recently issued a major ruling regarding overtime pay. What do I need to know?

A: On November 20, 2019, the Pennsylvania Supreme Court rejected the application of the fluctuating workweek method (“FWW Method”) of calculating overtime under the Pennsylvania Minimum Wage Act (PMWA) and its corresponding regulations. As a result, Pennsylvania employers must pay salaried, non-exempt employees an additional one and a half times the employees’ regular rate of pay for every hour worked over 40 in a workweek. See Chevalier v. Gen. Nutrition Ctrs., Inc., Nos. 22 WAP 2018, 23 WAP 2018 (Pa. Nov. 20, 2019).

Background

In general, non-exempt employees must be paid overtime at one and a half times their regular rate of pay for every hour worked in excess of 40 in a workweek. However, regulations implementing the federal Fair Labor Standards Act (FLSA) specifically permit employers to pay salaried, non-exempt employees using the FWW Method when their number of hours worked fluctuate from week to week. See 29 C.F.R. § 778.114. Under the FWW Method, an employer and employee can agree that the employee will receive a fixed weekly salary as straight time pay, regardless of the number of hours worked in a workweek. In addition to this base straight time salary, the employee is entitled to overtime pay at a rate of one-half the employee’s regular rate of pay. The overtime calculation of one-half the regular rate (rather than one and a half times the regular rate) is based on the principle that the employee’s underlying salary already covers all straight time due for the actual hours worked.

Unlike the regulations implementing the FLSA, however, nothing in the PMWA or its implementing regulations specifically authorizes the use of the FWW Method. In recent years, three different Pennsylvania federal courts rejected the FWW Method under state law, instead holding that employers must pay Pennsylvania employees overtime equal to one and one-half times the employee’s regular rate of pay. Pennsylvania’s highest court had not weighed in on the issue—until now.

The Case

Plaintiff represented a class of non-exempt store managers who were paid a fixed weekly salary plus commissions, regardless of the number of hours they worked in a week. To determine overtime compensation, the defendant utilized the FWW Method. The defendant calculated each manager’s “regular rate” by dividing the manager’s fixed weekly salary by the actual number of hours worked, and then paid overtime at one-half times that regular rate for all hours worked in excess of 40. Plaintiff argued that the FWW Method was not permitted by Pennsylvania law and that she should have been paid one and a half times her regular rate for all hours worked in excess of 40.

The Court held that the FWW Method is not permissible under state law and that salaried non-exempt employees must be paid one and a half times their regular rate for all overtime hours. In coming to its conclusion, the Court cited to the PMWA and its implementing regulations which explicitly provide that each “employee shall be paid for overtime not less than 1-1/2 times the employee’s regular rate of pay for all hours in excess of 40 hours in a workweek.” The Court also found that the promulgation of certain FLSA regulations by the Pennsylvania Department of Labor and Industry regarding other methods of overtime calculation, combined with the Department’s failure to adopt the FWW Method regulation, were strong evidence that the FWW Method is not a permissible means of calculating overtime under Pennsylvania law.

Going Forward

The FWW Method of paying overtime in Pennsylvania has been of questionable legality for some time. The latest Supreme Court decision confirms that employers should not be utilizing the FWW Method of compensation in Pennsylvania—despite the fact that it remains permissible under federal law.

Coincidentally, on the same day that the Supreme Court issued its decision, the Pennsylvania Senate passed a bill amending the PMWA that would, among other things, insert a provision into the Act providing that the wage and hour requirements in the PMWA “shall be applied in accordance with the minimum wage and overtime provisions of the” FLSA and its regulations, “except when a higher standard is specified” under state law.

Since the PMWA does not specifically address the FWW Method, this piece of legislation may ultimately have the effect of making the FWW Method a viable option for Pennsylvania employers to use when calculating overtime pay for their non-exempt salaried employees. While we expect the legislation to ultimately pass the Pennsylvania House and be signed by the Governor, until that happens, Pennsylvania employers should heed the Chevalier decision and not utilize the FWW Method of calculating and paying overtime.

Lee Tankle and Jonathan Gilman

 

New Pennsylvania Medical Marijuana Lawsuit May Someday Provide Guidance to Employers

Q: Are there any new cases involving Pennsylvania’s Medical Marijuana Act in the context of employment?

A: Given that state-sanctioned use of medical marijuana is relatively new, there are few cases interpreting Pennsylvania’s medical marijuana law with regard to employment. This is why a recently filed Pennsylvania lawsuit could have a far-reaching impact on employers.

On October 10, 2019, Derek Gsell of Moon Township, Pennsylvania filed a lawsuit against a Pennsylvania electric company (the “Company”) in the Court of Common Pleas of Allegheny County, Pennsylvania, docketed as No. GD-19-014418. Mr. Gsell alleges that the Company improperly rescinded a job offer because he tested positive for THC (the active ingredient in marijuana) in a pre-employment drug test. As he informed the Company, Mr. Gsell possesses a Pennsylvania medical marijuana card, which allows him to legally purchase and use marijuana for medical purposes.

According to the complaint, the Company offered Mr. Gsell employment in August 2019; however, the offer was “contingent upon successful completion of a criminal background check, reference check, and pre-employment drug screen.” Mr. Gsell underwent a pre-employment hair follicle drug test and he was informed that he had “failed” the test due to the detection of THC. The complaint states that written correspondence from the Company informed Mr. Gsell that the job offer was rescinded and the position was “no longer available due to your positive drug screen results.”

In his complaint, Mr. Gsell claims that the Company acted with “malice or reckless indifference” to his rights under Pennsylvania’s Medical Marijuana Act (“PMMA”), which established the state’s medical marijuana program in 2016. Mr. Gsell alleges that his job offer was rescinded solely because he was certified to use medical marijuana, noting that he did not seek to use medical marijuana on the Company’s property or to be under the influence of marijuana while at work.

The PMMA permits the use and possession of medical marijuana in authorized forms by patients with a practitioner’s certificate who suffer from a serious medical condition. Possession is lawful for patients and caregivers who have a valid identification card. The Act provides protections for employees certified to use medical marijuana and in particular, it prohibits employers from discriminating or taking an adverse action against an employee “solely on the basis of the employee’s status as an individual who is certified to use medical marijuana.”

Given the limited issues presented in Mr. Gsell’s one-count complaint, this lawsuit will likely be a good test case for enforcing an employee’s (or a prospective employee’s) rights under the PMMA. The Company has not yet filed a response to the complaint.

We will continue to monitor the case’s progress.  In the meantime, if one of your employees or a prospective employee is a user of medical marijuana and you have concerns about your company’s obligations and/or responsibilities with regard to such use, contact any member of the Pepper Hamilton Labor & Employment team for guidance and advice.

— Leigh McMonigle