New York Now Prohibits Hairstyle Discrimination

Q: I heard New York prohibits employers from discriminating based on hairstyle.  What does that mean?

A: In July 2019, New York State passed legislation that amended the definition of race under the New York State Human Rights Law (“NYSHRL”) to include “traits historically associated with race, including, but not limited to, hair texture and protective hairstyles.” “Protective hairstyles” include, but are not limited to, braids, locks, and twists.  The legislation became effective upon signing.

Although employees previously could allege that employer grooming and dress code policies were discriminatory based on race, the burden was on the employee to show the link between the prohibited hairstyle and race. The legislation eases this burden by making the connection explicit.

The New York state legislation follows the lead of New York City, which released legal enforcement guidance in February 2019 that specifically prohibits workplace grooming policies that may discriminate against Black people, and more generally prohibits workplace grooming policies that target communities of color, religious minorities, or other communities protected under the New York City Human Rights Law. For more details on New York City’s enforcement guidance, please see our previous post here.

California recently passed similar legislation, which goes into effect on January 1, 2020. The Creating a Respectful and Open Workplace for Natural Hair Act (“CROWN”) amends the definition of race under the Fair Housing and Employment Act to include “traits historically associated with race, such as hair texture and protective hairstyles,” including “braids, locks, and twists.”  CROWN also amends California’s Education Code to prohibit such discrimination in public schools.

To ensure compliance with these laws, employers should review personal appearance and grooming policies to ensure they are facially neutral and are applied in a uniform manner. For example, in a workplace where hair must be tied back for hygienic and/or safety reasons, a policy should simply state that hair longer than a certain length must be tied back, rather than prohibiting or calling out specific styles.  As another example, employers must ensure that a policy that requires “professional” hairstyles is not written or enforced in a manner that disproportionately affects people of any particular race.

Jessica Rothenberg

Agreement Between the Parties Dictates Whether a Third Party Bonus Should be Included in the Calculation of Overtime Pay

Q.  A client of my company asked whether it could offer production bonuses to our employees who deliver their work product prior to the deadline.  Does the FLSA require my company to account for these third-party bonuses when calculating the regular rate of pay for overtime purposes?

A.  The answer to your question depends on the particular circumstances, according to the Third Circuit. In a case of first impression, Secretary U.S. Department of Labor v. Bristol Excavating, the Third Circuit Court of Appeals addressed the question of whether an employer must treat bonuses provided by third parties as “remuneration for employment” when calculating employees’ overtime rate of pay.

The defendant in the case, a small excavation company, contracted with a natural gas company to provide equipment, labor, and other services at a number of drill sites in Pennsylvania. At the drill sites, the defendant’s employees frequently worked twelve-hour shifts, often for two-week periods without a day off.  The natural gas company maintained a bonus program by which its own employees received “Pacesetter” bonuses for completing their work quickly, along with other safety and efficiency-related bonuses.  Following inquiries by the defendant’s employees, the gas company offered to extend the program to the defendant’s employees and the defendant acquiesced.  The defendant agreed to handle the administrative chores necessary for its employees to receive the bonuses, specifically, by rolling the bonuses into its regular payroll process and distributing payment to its employees after making the routine payroll deductions.  However, the defendant did not include the bonus payments from the gas company when calculating the regular rate of pay for overtime purposes.

The U.S. Department of Labor (DOL) audited the defendant’s offices as part of a routine inspection to assure that it was properly calculating overtime compensation. The auditor determined that the bonuses should be added to the calculation of the employees’ regular rate of pay.  When the company refused, the DOL filed suit, alleging that the company violated the FLSA’s overtime provisions.

Under the Fair Labor Standards Act (“FLSA”), employers must pay employees one-and-a-half times their regular rate of pay for all hours worked above 40 in a work week. “Regular rate” includes “all remuneration for employment paid to, or on behalf of, the employee.”  However, “remuneration for employment” is not defined in the overtime provisions or elsewhere in the FLSA.

The DOL asserted that employers must include bonuses from third parties in the regular rate of pay when calculating overtime pay, regardless of what the employer and employee may have agreed. Agreeing with the Department of Labor, the district court concluded that the incentive bonuses should have been included in the regular rate of pay because they were remuneration for employment and did not qualify for any of the statutory exemptions.

On appeal, however, the Third Circuit decided otherwise. The court held that a third-party payment qualifies as a remuneration for employment only when the employer and employee have effectively agreed that it will.  In the absence of an explicit agreement between the parties, the courts should look for an implicit agreement based on a holistic consideration of the particular facts of each case.  Factors for the court to consider include: (i) whether the specific requirements for receiving the payment are known by the employees in advance of their performing the relevant work; (ii) whether the payment itself is for a reasonably specific amount; and (iii) whether the employer’s facilitation of the payment is significantly more than serving as a pass through vehicle.  The more involved an employer becomes in facilitating the bonus or dictating its terms, “the clearer it becomes that the employer is invested in the arrangement in a way that could be called an implicit agreement with the employees.”

With these points in mind, if your company does not wish to include third-party bonuses in the regular rate of pay calculation for overtime purposes, the employer should have the employee agree in writing that such bonuses do not qualify as remuneration for employment. In addition, employers should analyze each payment carefully to ensure that it satisfies the Third Circuit test.  In any event, the less involvement the company has in facilitating bonus payments, the better, given that “an employer’s role in initiating, designing, and managing the incentive bonus program will likely be of high importance.”  We recommend consulting with counsel about how the Third Circuit’s decision in Bristol Excavating applies to your specific situation.

Rogers Stevens

 

New DOL Overtime Rule Takes Effect January 1, 2020

Q.  Has the salary threshold increased for exempt status under the Fair Labor Standards Act?

A.  On September 24 — more than five years after the Obama administration first proposed updating the overtime regulations of the Fair Labor Standards Act (FLSA) — the U.S. Department of Labor (DOL) released the final version of its long-anticipated rule expanding overtime eligibility for certain employees making less than $35,568 per year. The final rule is largely unchanged from the proposed rule released in March 2019, and the dollar amounts for the exemptions are lower than those in the rule published by the Obama administration in May 2016 — a rule that was enjoined shortly before it was scheduled to go into effect.

For more information, click here.

Christopher J. Moran and Lee E. Tankle

California Adopts Strict Independent Contractor Test

Q.  What is the standard for whether an individual is an independent contractor under California law?

A.  On September 11, the California Assembly passed AB 5, a bill that codifies and expands the application of the strict independent contractor test (the “ABC test”) set forth in last year’s decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (2018). If Governor Newsom signs the bill, as expected, it will go into effect on January 1, 2020.

AB 5 creates a presumption that workers are employees unless the “hiring entity” can meet the ABC test by demonstrating that each of the following three conditions is satisfied:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.

For more information, click here.

Susan K. Lessack

New York and New Jersey Ban Salary Inquiries

Q.  Is my company allowed to inquire about an applicant’s salary history when considering him or her for employment?

A.   The growing trend to eliminate inquiries into a job applicant’s salary history continues. In July, New York and New Jersey became the latest states to enact legislation that will restrict employers from obtaining and utilizing an applicant’s salary history information during the hiring process.

For more information, click here.

Leigh H. McMonigle