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Category Archives: Employment Law In Focus

Independent Contractors – New DOL Guidance and Good News for Employers

Employment Law In Focus

Perhaps no other issue being pursued by the U.S. Department of Labor is as publicized these days as whether workers are properly classified as employees rather than independent contractors.  The issue has especially been developing since 2015 when the DOL issued a new Administrator’s Interpretation on the existing “economic realities” test for whether an individual should be an employee rather than contractor, summarizing the relevant case law by stating, “In sum, most workers are employees under the FLSA’s broad definitions.”

Although current Labor Secretary Alexander Acosta withdrew that Interpretation in June 2017, the DOL has not issued any further guidance on the employer v. independent contractor issue for over a year.  The good news for employers is that this changed in July when the DOL issued Field Assistance Bulletin 2018-4, entitled Determining Whether Nurse or Caregiver Registries Are Employers of the CaregiverDespite its specific circumstance of determining whether caregivers placed by a registry are employees or contractors of that registry, the 2018 Bulletin provides employers with a new perspective regarding factors the DOL now deems important in making that determination.  And the bottom line is that this new perspective provides a number of guidelines that should help those employers who want to maintain independent contractor status with certain workers.

First, a quick review of the “economic realities” test

In short, the “economic realities” test consists of six primary factors, none of which alone are likely controlling but all of which should be considered in deciding whether an individual is an employee or an independent contractor:

  1. Is the work an integral part of the employer’s business? [The less integral the better for independent contractor status.]

2. Does the worker’s managerial skill affect the worker’s opportunity for profit or loss? [The more workers manage their own business regarding profits and losses, the better for independent contractor status.]

3. How does the worker’s relative investment compare to the employer’s investment? [The smaller the worker’s investment the better for independent contractor status.]

4. Does the work performed require special skill & initiative? [The more specialized the skill & initiative, the better for independent contractor status.]

5. Is the relationship between the worker and the employer permanent or indefinite? [The more indefinite (and generally short-term), the better for independent contractor status.]

6.What is the nature and degree of the employer’s control? [The less control over the worker the better for independent contractor status.]

Notice that whether or not an individual has an independent contractor agreement isn’t even an itemized consideration.  The reason is that while agreements like that can certainly help – and are generally recommended – the critical inquiry is how individuals are actually treated and conduct themselves in the workplace.  In other words, the “economic realities” of the relationship, not what someone is called by agreement or otherwise.

“Totality of the circumstances” approach

The 2018 Bulletin says that the Wage and Hour Division “will consider the totality of the circumstances to evaluate whether an employment relationship exists… Because the analysis does not depend on any single factor, and because caregiver registries operate in a variety of ways, [the Division] will evaluate all factors…to reach appropriate conclusions in each case.”

According to the 2018 Bulletin, “consistent with the WHD’s longstanding position, a registry that simply facilitates matches between clients and caregivers – even if the registry also provides other services, such as payroll services – is not an employer under the FLSA.”  However, in the registry and caregiver context the employment determination “requires a thorough analysis of…business model[s] and operations  . . .  [and] no one factor is dispositive.”

Specific issues related to the health care registry industry

The 2018 Bulletin consists of two parts, with Part I among other things reiterating how the “economic realities” of the circumstances control with no single factor conclusively determining the employee v. independent contractor issue.  Part II addresses common registry business practices that are generally analyzed when making that determination, and cites the following as a non-exhaustive list:

Conducting Background and Reference Checks: Performing a background check to confirm a caregiver’s credentials and collect objective information, such as a criminal history and credit report, by itself does not indicate an employment relationship. However, a more detailed selection process that includes subjective criteria, such as interviewing a candidate to screen for a certain personality trait, may in fact do so.

Hiring and Firing: Generally, a registry does not exercise control over hiring and firing a caregiver. Rather, the registry informs its client that a potential caregiver meets the client’s parameters and preferences, and then the client may choose to hire the caregiver. However, if the registry takes a more active role in the hiring and firing process, it may indicate control over that process and suggest an employment relationship.

Scheduling and Assigning Work: While a registry often facilitates initial communications between a client and a caregiver, the subsequent conversations to structure the terms of the working relationship are normally independent of the registry.  In those circumstances, the registry is not an employer of the caregiver. That being said, if a registry is more involved in the process, such as offering specific work assignments to a subset of caregivers based on its discretion and judgment, an employment relationship might exist as the caregiver may economically depend on the registry’s subjective preferences and decisions.

Controlling the Caregiver’s Work: A registry usually does not exercise control over a caregiver by monitoring the caregiver’s work habits, providing training, establishing policies for providing services in a particular manner, or evaluating performance. However, the more any such control does exist then the more likely an employment relationship might exist.

Setting the Pay Rate: A registry may provide advice concerning typical pay rates to serve as a benchmark during wage negotiations or may act as a liaison between a client and a caregiver during such negotiations, but the client and caregiver usually independently determine the caregiver’s rate of pay. If a registry designates a set wage range or offers tailored direction concerning what a caregiver should charge for specific services, an employment relationship may exist.

Receiving Continuous Payments for Caregiver Services: A registry may charge clients a one-time, upfront fee for the service of matching the client and a caregiver. It may also charge fees for administrative functions, such as processing payroll or producing tax documents. Any such charges do not indicate that a registry is a caregiver’s employer – however, if the caregiver’s pay depends in part on the amount the registry charges then those charges may indicate that the registry is the caregiver’s employer.

Paying Wages: A registry may perform payroll functions on behalf of a client without becoming an employer of the caregiver. However, a registry’s direct payment of its own funds to a caregiver may indicate an employment relationship, even if the client reimburses the registry.

Tracking Caregiver Hours: A registry may collect time sheets from caregivers or offer an electronic time verification system without suggesting an employment relationship. However, a registry’s active creation and verification of a caregiver’s time records may indicate an employment relationship.

Purchasing Equipment and Supplies: A registry’s operational expenses (e.g., investments in office space, payroll software, timekeeping systems, etc.) do not alone indicate an employment relationship. Similarly, a registry may provide caregivers the option to purchase discounted equipment or supplies without indicating an employment relationship.  However, a registry making an investment in a caregiver’s training, licensure, insurance, or other tools necessary for the caregiver to perform the job may indicate an employment relationship.

Receiving EINs or 1099s: The fact that a registry requires an Employer Identification Number issued by the Internal Revenue Service or distributes an IRS 1099 form to a caregiver is immaterial in ascertaining whether the registry is an employer of the caregiver under the FLSA.

Regardless of its specific focus on the relationship between registries and caregivers, the DOL’s July 2018 Bulletin at least indicates that the Department is returning to a “totality of the circumstances” standard for determining whether an individual is an employee or independent contractor.  If so, that’s good news for employers, and the Bulletin provides a useful general framework for any company seeking to maintain an independent contractor relationship with certain workers.

Contacts for Additional Information:

Ken Carlson – Winston-Salem Office
Constangy, Brooks, Smith & Prophete, LLP
[email protected]; (336) 721-6843

Ellen Kearns, Chad McDaniel – Boston Office
Constangy, Brooks, Smith & Prophete, LLP
[email protected]; [email protected]; (617) 849-7870

Employment Law in Focus – What the ‘Masterpiece Cakeshop’ Decision Means for Employers

On June 4, the U.S. Supreme Court held in Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission that the Colorado Civil Rights Commission violated the constitutional right of free exercise of religion of a Christian bakery owner who refused to make a custom-designed wedding cake for a same-sex couple. The Commission had decided that the baker violated Colorado’s law prohibiting public accommodation discrimination based on sexual orientation.

The majority opinion, written by Justice Anthony Kennedy, said that the Commission decision was tainted with “impermissible hostility” against the religious beliefs of Jack Phillips, the bakery owner. But the Supreme Court decision avoided important issues, including whether custom creation of a cake is “artistic expression” protected by the First Amendment’s free speech protections and, more generally, how to resolve the tension between constitutional protections for LGBT rights, on the one hand, and the First Amendment’s protection of the free exercise of religious beliefs and practices, on the other.

In addition to having a relatively narrow holding, the Supreme Court’s decision may not be directly applicable to many employers, similar to its Hobby Lobby decision in 2014 (finding that a privately held company for which the owners had sincere religious objections was not required to offer health care coverage for certain contraceptives under the Affordable Care Act). However, the Masterpiece Cakeshop decision is yet another indication that our court system will continue to be a proving ground for religious beliefs in the workplace. In particular, balancing the devout religious beliefs of certain business owners that may be at odds with evolving concepts of equality, marriage, and morality – not to mention the potential of accommodating employees with faith-based objections to certain company initiatives or other practices.

The Masterpiece Cakeshop Decision

A gay couple filed a charge of discrimination with the Colorado Civil Rights Commission after Mr. Phillips refused to make a custom wedding cake for them because of his religious beliefs about same-sex marriage. Interestingly, the refusal occurred in 2012, before the Supreme Court’s decision in Obergefell v. Hodges (recognizing same-sex marriage as a constitutional right), and even before the state of Colorado recognized same-sex marriage. An Administrative Law Judge found in favor of the couple, and the Civil Rights Commission affirmed. Mr. Phillips was ordered to “cease and desist” from treating same-sex couples any differently from opposite-sex couples. He was also ordered to have staff training on the state Anti-Discrimination Act, amend his company policies, and submit “quarterly compliance reports” for two years.

During the hearings before the Commission, certain Commissioners expressed open hostility toward Mr. Phillips’ religious beliefs. In one instance, a Commissioner commented that freedom of religion had been used to justify intolerable actions throughout history, and was “one of the most despicable pieces of rhetoric that people can use.”

The Colorado Court of Appeals upheld the Commission’s decision, and the U.S. Supreme Court agreed to review.

The Supreme Court Decision

In the majority opinion (joined by Chief Justice John Roberts and Justices Samuel Alito, Stephen Breyer, Neil Gorsuch, and Elena Kagan), Justice Kennedy opined that “[w]hen the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires.” He emphasized that anti-religious bias is inappropriate for a commission that is supposed to fairly and neutrally enforce Colorado’s anti-discrimination law.

Justice Kennedy focused on two points in the record before the Court. First, he noted the open hostility to the bakery owner’s religious views described above. Second, he commented on past cases in which the Commission had found in favor of bakers who had refused to bake cakes with anti-gay messages. The Commission’s differential treatment in the two situations, Justice Kennedy said, “elevates one view of what is offensive over another and itself sends [a] signal of official disapproval of the [bakery owner’s] religious beliefs.” As already noted, the majority opinion avoided ruling on the free speech argument. According to Justice Kennedy, “[t]he outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.”

In a concurring opinion, Justice Clarence Thomas (joined by Justice Gorsuch) said that he would have found in favor of the bakery on free speech grounds in addition to the religious ground. Justice Kagan (joined by Justice Breyer) said that she was finding in favor of the bakery only because of the Commission’s expressed anti-religious animus. (Justice Gorsuch wrote a concurrence as well, and was joined by Justice Alito.)

The Dissent

Justice Ruth Bader Ginsburg dissented, joined by Justice Sonia Sotomayor. She argued that cake decorating is not “speech” worthy of First Amendment protection, and that Mr. Phillips’ actions violated the law because he had refused to create a cake that was regularly made and sold to others “for no reason other than [the couple’s] sexual orientation.” In addition, Justice Ginsburg argued, the anti-religious comments of the Commissioner were not so severe as to have deprived the bakery of its rights.

What Should Employers Do Now?

As some commentators have noted, the majority in Masterpiece Cakeshop “kicked the can down the road” in terms of certain key religion-at-work issues, which may have been necessary to keep Justices Kennedy, Breyer, and Kagan in the majority. However, it would have been helpful if the Court had provided more concrete guidance on how business owners may lawfully operate when their religious beliefs conflict with applicable human rights laws.  Employers also need guidance regarding how to promote corporate goals such as diversity and inclusion in the workplace without interfering with the religious rights of employees.  In that sense – and absent such guidance –Masterpiece Cakeshop actually does little beyond reinforcing long-standing law that employers should be wary of mandating employee participation in certain programs or requiring employees to “affirm” behavior that may conflict with their religious beliefs, not to mention of unduly prohibiting religious discussions or materials in the workplace (unless or to the extent they also prohibit other non-work related discussions or materials, which is usually impractical if not impossible).

Employers should also stay up to date on the employment laws of the jurisdictions where they operate. Respectful dialogue with employees on various issues related to equal employment opportunity, including diversity in the workplace and accommodation of religious beliefs & practices, are always recommended and generally help foster a vibrant and effective workforce.  In the meantime, watch for future decisions from the Supreme Court to further clarify these issues and to hopefully provide the kind of religion-at-work guidance that simply wasn’t in the recipe of Masterpiece Cakeshop.

Contacts for Additional Information:

Ken Carlson – Winston-Salem Office
Constangy, Brooks, Smith & Prophete, LLP
[email protected]; (336) 721-6843

David Phippen – Metro Washington, DC, Office
Constangy, Brooks, Smith & Prophete, LLP
[email protected]; (571) 522-6105

Employment Law In Focus – August 2017

Employee v. Independent Contractor Status and North Carolina’s New “Employee Classification” Law

One of the “hottest” topics in federal and state wage & hour law continues to be the proper classification of workers. In short, are they “employees” subject to W-2 withholdings, company-provided benefits and state workers’ compensation laws, or are they “independent contractors” paid under an IRS Form 1099 without withholdings, benefits or workers’ comp coverage from the company?

On August 11, Gov. Roy Cooper signed into law the North Carolina Employee Fair Classification Act, N.C. Gen. Stat. § 143-761 et seq., which beginning December 31 takes our state further down the path of determining this key classification issue. Although the new legislation does not change existing definitions of “employee” and “independent contractor”, it does create an Employee Classification Section of the North Carolina Industrial Commission which, among other duties, administers our state’s workers’ compensation law. This Section will be empowered to receive and investigate reports of worker misclassification, and to provide for information sharing among various state agencies, including the Department of Labor, the Division of Employment Security, the Department of Revenue, and the Industrial Commission.

In short, the law provides a mechanism for workers to make complaints and may make it easier for affected state agencies to pursue employers who misclassify their workers. State licensing boards will be required to ask applicants to disclose investigations for employee misclassification and the outcome for a period of time to be determined. Failure to comply will result in denial of the license or permit.

Employers will be required to post a notice that includes the following information:

* That workers must be treated as employees unless they are independent contractors.
* That workers who believe they have been misclassified have the right to report the alleged misclassification to the Employee Classification Section.
* The physical and email addresses and telephone number where alleged misclassifications can be reported.

The classification provisions apply to “employees” as defined in the North Carolina Wage and Hour Act, the Employment Security Act, the Workers’ Compensation Act, and Chapter 105 of the General Statutes (Taxation). Elsewhere, the legislation also authorizes the Industrial Commission to adopt guidelines for the use of opioids and pain management treatment for compensable workplace injuries and illnesses.

All of which brings us to a quick reminder of how our courts and the United States and North Carolina Departments of Labor generally determine whether an individual is an “employee” or an “independent contractor.” The issue reached new heights when the US DOL in July 2015 issued a new Guidance on the existing “economic realities” test for making that determination. To help the inquiry, the DOL established six primary factors, none of which alone are likely controlling but all of which should be considered:

1) Is the work an integral part of the employer’s business? [The less integral the better for independent contractor status.]

2) Does the worker’s managerial skill affect the worker’s opportunity for profit or loss? [The more a worker manages his or her own business regarding profits and losses, the better for independent contractor status.]

3) How does the worker’s relative investment compare to the employer’s investment? [The smaller the worker’s investment the better for independent contractor status.]

4) Does the work performed require special skill & initiative? [The more special the skill & initiative, the better for independent contractor status.]

5) Is the relationship between the worker and the employer permanent or indefinite? [The more indefinite (and generally short-term), the better for independent contractor status.]

6) What is the nature and degree of the employer’s control? [The less control over the worker the better for independent contractor status.]

Notice that whether or not an individual has an independent contractor agreement isn’t even an itemized consideration. The reason is that while agreements like that can certainly help – and are generally recommended – the critical inquiry is how individuals are actually treated and conduct themselves in the workplace. In other words, the “economic realities” of the relationship, not what someone is called by agreement or otherwise.

Needless to say, the potential liabilities for employee misclassification can be tremendous, ranging from back payments for minimum wage obligations, overtime and benefits to FICA contributions and certain employer-employee tax requirements. All the more reason why every company should closely examine whether any worker engaged as an independent contractor satisfies the above six factors, taking appropriate corrective steps as needed.


This article was written by Kenneth P. Carlson, Jr. and Robin Shea of Constangy, Brooks, Smith & Prophete, LLP.

Employment Law In Focus – July 2017

An Evolving Tension: The NLRB, our Federal Courts and Civility in the Workplace

So what do a government agency, our federal court system and civility in the workplace have in common?  More than you might think, and this month’s Employment Law in Focus is intended to provide at least a beginning road map for navigating those issues.

It should first be said that the National Labor Relations Board (“NLRB” or the “Board”) is a federal agency whose sole existence is based on the employer-employee relationship.  In its own website words, the NLRB is “vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.”  In addition to those lofty goals, the NLRB has – according to many employers – unfortunately been an agency whose rulings over the past number of years have virtually endorsed incivility in the workplace.  How?  Simply stated, by shielding certain employee actions from disciplinary consequences under an ever-broadening interpretation of “protected, concerted activity” under the federal National Labor Relations Act (“NLRA” or the “Act’).

Protected, concerted activity refers to a provision in the NLRA that protects employees from adverse employment consequences based on having exercised certain workplace rights in a “concerted” manner (two or more individuals) to act for their mutual aid or protection regarding the terms and conditions of their employment.  Those terms and conditions are typically understood as wages, safety, policies & procedures, and other workplace conditions.  Significantly, those rights exist in both unionized and non-unionized workforces – so with the ever-declining union membership in the United States, the NLRB has revitalized its relevancy by addressing matters that don’t depend on whether a union actually represents employees of a particular company.  Combined especially with the impact of social media, where statements and writings by employees can be broadcast with the click of a computer mouse or a finger on a smartphone, then shared instantaneously with untold numbers of co-workers, management and individuals with no connection to either, certain actions that once existed only internally now have implications far beyond the walls of a corporate building.

So how has this led to civility concerns in the workplace?  Primarily through a series of NLRB opinions regarding disciplinary action taken against employees who, at least according to the employees and any union standing behind them, have done nothing more than exercise their purported protected, concerted activity “rights.”   However, certain examples of exercising those “rights” have also involved conduct that employers and even casual observers of common sense and decency have considered an outrage – all of which has led to courts upholding or reversing the disciplinary action, depending on the court, the law and the circumstances.

This tension between actions and comments that are protected by the NLRA and those that aren’t protected is perhaps best summarized by a well-settled principle that employees’ disparaging actions and comments lose the protection of the NLRA when they are “misleading, inaccurate or reckless or otherwise outside the bounds of permissible speech.”  Endicott Interconnect Technologies, 345 NLRB 448, 450 (2005) enf. denied in part on other grounds by Endicott Interconnect Techs., Inc. v. NLRB, 453 F.3d 532, 533 (D.C. Cir. 2006); see also Radisson Muehlebach Hotel, 273 NLRB 1464 (1985) (holding that an employer may lawfully maintain a rule that prohibits “malicious statements,” i.e. statements deliberately and maliciously made, with knowledge of their falsity or with reckless disregard of the truth.”).  Moreover, employers are entitled to establish rules to maintain a civil workplace, with the primary validity test being whether a reasonable employee would view a particular rule as supporting that proposition rather than viewing it as unlawfully prohibiting protected, concerted activity.  Costco Wholesale Corporation, 358 NLRB No. 106 (2012). 

All of that being said, a recent opinion from U.S. Court of Appeals for the Second Circuit (covering New York, Connecticut and Vermont) helps illustrate the dynamics that affect court interpretations of what constitutes protected, concerted activity – and in the process, it provides some helpful guidance for employers.

In Pier Sixty, LLC, an employer discharged an employee for the “protected concerted activity” of cussing about a supervisor on Facebook two days before a union election. Among other things, the employee posted, “Bob [the supervisor] is such a NASTY MOTHER F***ER don’t know how to talk to people!!!!!! F**k his mother and entire f***ing family!!!!What a LOSER!!!! Vote YES for the UNION!!!!!!!” (Asterisks not in original.)

The NLRB, after adopting an administrative law judge’s factual findings, had applied a “totality of factors” standard to determine whether the conduct warranted protection under the NLRA or was so vulgar and offensive as to lose the Act’s protection.  Perhaps surprisingly to many in the business world, the Board majority found the outburst protected – and here are the primary reasons:  (1) the employer had previously tolerated similar comments without imposing disciplinary action; (2) none of the comments actually disrupted anything involving customers; and (3) according to the Board majority, the employer had already shown enough hostility to the union that it transformed the comments into part of the campaign debate about management conduct itself.

Although the Second Circuit did not endorse the “totality of factors” standard, and even though it acknowledged that the conduct at issue was “at the outer bounds of protected, union-related comments,” it nevertheless gave deference to the Board’s interpretation and its finding that the conduct was not so vulgar or offensive that it lost the NLRA’s protection.  The court also allowed for how the Board could have reasonably determined the conduct was part of the union campaign debate, how the employer had previously tolerated similar conduct,, and how Facebook was a key means for employee communications in the union organizing efforts. Despite the public social media posting, the court also found that it was reasonable for the Board to determine that the employee had not done anything disruptive in front of customers.

While that decision might prompt outrage in the business community, it should also serve as a reminder of how important it is for employers to have and consistently enforce rules regarding employee misconduct and insubordination.  Both the NLRB’s and the Second Circuit’s outcome may have been different if the employer had been able to demonstrate consistent disciplinary consequences for similar vulgar and offensive behavior, all of which depends on appropriate employer policies, procedures and their consistent enforcement in the workplace. 

Helping that potential, and what should give employers a bit more hope for more favorable Board and court determinations, is that a change in majority on the NLRB from Democrat to Republican should give employers a more level playing field in the future.  And that change may occur soon.  In fact, on June 20, 2017, President Trump announced the nomination of attorney Marvin Kaplan to fill one of the two open NLRB seats expected to go to Republican nominees.  Mr. Kaplan is counsel for a commissioner at the Occupational Safety Health and Review Commission, which hears occupational safety and health (OSHA) matters. Earlier this week, the Trump administration also announced the nomination of William Emanuel, a management-side labor and employment lawyer, to fill the other vacancy. After the nominees’ anticipated confirmation by the Senate, the five-member Board will have a Republican majority.  In addition, Chairman Philip Miscimarra, a Republican appointed by President Obama, has a term ending in December 2017, and he could accept another term if nominated.


This article was written by Kenneth P. Carlson, Jr. of Constangy, Brooks, Smith & Prophete, LLP with contributions by David Phippen of Constangy’s Washington DC Metro Office.

Employment Law In Focus – June 2017

Immigration, OSHA, the Supreme Court and the White House – Navigating the Most Recent Developments

Two of the most recent developments under the Trump administration affecting employers include the Supreme Court’s allowance of a limited “travel ban” for travelers to the United States from certain countries based on potential terrorism concerns, and a delay and further potential changes regarding OSHA’s new requirement to electronically submit injury summaries.  The following are brief summaries of both developments that should help navigate them.


What the Supreme Court’s “Travel Ban” Means for Employers
By Will Krasnow, Boston Office – Constangy, Brooks, Smith & Prophete, LLP

The U.S. Supreme Court issued a preliminary ruling on June 26, 2017 in the Trump Administration’s challenges to lower court decisions on the “travel ban.” The Administration had sought to:

* stay preliminary injunctions issued against the revised travel ban issued March 6 and upheld by U.S. Courts of Appeal for the Fourth and Ninth Circuits; and
* seek Supreme Court review on the merits of the Court of Appeals decisions.

In its ruling, the Court granted the Administration’s request for a stay of the preliminary injunctions, but only in part. The Court also granted the Administration’s petition for certiorari and directed that the cases be consolidated and set for argument in the first session of its October 2017 term.

The revised travel ban applied to foreign nationals of six countries – Iran, Libya, Somalia, Sudan, Syria, and Yemen – with certain exceptions, including ones for lawful permanent residents of the United States. The revised travel ban was a moderated version of the original ban, which was issued on January 27 and was almost immediately enjoined by a federal court in Washington State, which was affirmed by the Ninth Circuit. After the revised travel ban was issued in March, the revised ban was enjoined in part by a federal court in Maryland (affirmed by the Fourth Circuit) and in total by a federal court in Hawaii (affirmed in large part by the Ninth Circuit). The Government is seeking Supreme Court review of the Fourth Circuit decision and the Ninth Circuit decision related to the Hawaii case.

The Supreme Court said that the injunctions would remain in place (meaning that the travel ban will not be enforced) where the foreign national from one of the six designated countries has “a credible claim of a bona fide relationship with a person or entity in the United States.” Personal relationships could include family members in the United States. Relationships with entities could include employment, or acceptance or enrollment at a university, in the United States. According to the Court, relationships with entities “must be formal, documented, and formed in the ordinary course, rather than for the purpose of evading [the revised travel ban].”

To this extent, the majority on the Court agreed with the lower courts that the harm to the affected U.S. family members and entities resulting from enforcement of the revised travel ban arguably outweighed the Government’s national security interests.

On the other hand, with respect to foreign nationals who lack these bona fide relationships with persons or entities in the United States, the Court stayed the injunctions (meaning that the travel ban will be enforced), finding that “the balance tips in favor of the Government’s compelling need to provide for the Nation’s security.”

Justice Clarence Thomas, joined by Justices Samuel Alito and Neil Gorsuch, dissented in part, arguing that the injunctions should have been stayed in their entirety.

What is the practical impact of the Court’s decision?

Until the Supreme Court issues a final decision after arguments in the fall, the revised travel ban will not be enforced with respect to foreign nationals from the six designated countries who are coming to the United States pursuant to a “close relationship” with a family member in the United States or a documented, pre-existing relationship with a U.S. entity.

The revised travel ban will be enforced with respect to foreign nationals from the six countries who do not have these relationships, including – for example – “a nonprofit group devoted to immigration issues” that “contact[s] foreign nationals from the designated countries, add[s] them to client lists, and then secure[s] their entry by claiming injury from their exclusion.”

These same distinctions will apply to the refugee cap in the revised travel ban.

There is some concern that U.S. Customs and Border Protection officials at the port of entry will be burdened with deciding in some cases whether the applicant (e.g., a person entering on a tourist visa) has a sufficiently documented connection to a U.S. source. That decision making may slow the entry process and could lead to further litigation when entries are denied.

However, it does not appear that this will be a problem in clear cases, such as students with student visas, or individuals with family or employment-based visas.


OSHA Proposes To Give Employers Until Dec. 1 to Electronically Submit Injury Summaries — and Will Propose Changing Other Parts Of The Rule.
By Bill Principe and Pat Tyson, Atlanta Office – Constangy, Brooks, Smith & Prophete, LLP

The Occupational Safety and Health Administration (OSHA) announced some time ago that it was going to require certain employers to submit their Form 300A annual injury and illness summaries electronically. This requirement was part of the Agency’s new final rule to “Improve Tracking of Workplace Injuries and Illnesses,” promulgated during the Obama Administration. Electronic versions of the Form 300A summaries for 2016 would have been due July 1, 2017.

However, the Agency published a Notice of Proposed Rulemaking in the June 28, 2017 Federal Register to extend the July 1 deadline for five months, until December 1, 2017. In addition to proposing the five-month delay, OSHA announced in the Notice that it intends to issue a separate proposal to reconsider, revise, or remove other provisions of the new injury and illness tracking rule. Besides the electronic submission requirement, that new rule, issued on May 12, 2016, also includes controversial new anti-retaliation requirements that OSHA interpreted as restricting post-injury drug testing and incident-based safety incentive programs. Also controversial, and likely to be part of OSHA’s planned reconsideration, was the Obama Administration’s plan to post the injury and illness information submitted by employers on OSHA’s website. OSHA will accept comments on the due date extension proposed in this most recent Notice until July 13, but will not yet consider any comments on other provisions of the new rule.

Primarily, the new injury and illness tracking rule requires larger establishments with at least 250 employees at any time during the previous calendar year to submit their OSHA 300 Logs, 301 Incident Reports, and 300A Annual Summaries to the Agency through a new website that would allow, with very limited exceptions, for public access to that information. Smaller establishments, with at least 20 employees, in certain industries with high injury and illness rates, are required to submit the information from their 300A Annual Summary to the new OSHA injury and illness website each year. These electronic submission requirements were to be phased in over a two-year period. Before this proposed extension, both larger and smaller establishments would have been required to submit their 300A Forms – but not the OSHA 300 logs or the 301 Incident Reports – by July 1.

This article was written by Kenneth P. Carlson, Jr. of Constangy, Brooks, Smith & Prophete, LLP

Employment Law In Focus – May 2017

Nine Traits of a Bang-Up Investigation

What makes a workplace investigation so good that you can’t wait to show the EEOC investigator or a plaintiff’s attorney what you did?  All right, maybe nothing would make it that good – but here are nine things employers can do to help ensure that they at least won’t be ashamed of their workplace investigations:

No. 1:  The investigator is unbiased.  And ideally doesn’t have extensive, intimate knowledge about all of the personalities involved. An investigator who knows too much may have a hard time keeping an open mind. That’s one reason why larger companies often send in someone from the corporate office to investigate. Smaller companies may find it more difficult to find an investigator with that blissful ignorance. But they can consider bringing in someone from outside, like a lawyer or an HR consultant. If that isn’t possible, then the investigator will just have to temporarily put aside what he knows, to the best of his ability, while the investigation takes place.

No. 2:  The investigator doesn’t have a “conflict of interest.” In this context, that means the investigator has authority over everyone involved in the alleged incident, including the authority to take appropriate action against whomever is determined to be the wrongdoer. She should be in a position to “let the chips fall” and to recommend corrective action without having to fear retaliation.

No. 3:  The investigator knows how to conduct a workplace investigation. Oh, the horror stories we’ve seen! Here’s one: Employee accuses supervisor of sexual harassment. “Investigator” asks supervisor whether he did it. Supervisor says no. OK! Case closed! If your investigator is inexperienced, have him read points 4-9 below – or attend a seminar. You won’t regret it.

No. 4:  The investigator talks to everybody who might know something. This would obviously include the accuser and the accused. But it also includes any witness identified by the accuser or the accused. It also includes any witness identified by the witnesses. And any witnesses identified by the witnesses’ witnesses. Yes, this could go on for some time.  But you don’t ever want to be accused of failing to follow all possible leads that might reasonably generate relevant information. And if during the process you get an admission or other conclusive evidence, then you may be able to stop before having to talk with everyone.

No. 5: The investigator knows the difference between a “fact” and a “conclusion,” and knows that “facts” are better. Which of these tells you what you need to know? (1) “Joey is a sleazebag” (a conclusion), or (2) “Joey grabbed Mary on Friday, and I saw him do it” (a fact — or, at least, a specific factual allegation)?

No. 6:  The investigator knows to review other evidence as applicable. This could include things like personnel records, work schedules, financial records, security camera footage, voice mail messages, and emails and other IT information. And much more, depending on the circumstances. The investigator should not be afraid to ask for help from a qualified expert (such as an IT professional) when she needs it.

No. 7:  The investigator frequently refers to the applicable company policy while conducting the investigation to make sure he is following it.  Plaintiffs’ attorneys love to get copies of employer policies, and then point out all the ways the employer didn’t follow them. (Often referred to as “shooting fish in a barrel.”) For this reason, if no other, whoever conducts a workplace investigation should frequently refer to any applicable policy as an investigation “checklist” of sorts – and especially if the policy itself is on conducting investigations.

No. 8:  The investigator maintains confidentiality as much as practicable.  Perfect confidentiality is not possible — otherwise, how would it be possible to investigate anything? But the investigator can refrain from sharing information with those who do not have a legitimate need to know. And witnesses should also be cautioned to keep the investigation confidential, identifying only the investigator or certain designated management officials for contacting in the future if the witness thinks of any additional information.  (Note: Our National Labor Relations Board has been challenging certain “confidential” designations like this – but we’ll see if that continues under the current administration.)

No. 9:  The investigator consults with others as needed during the course of the investigation and in determining what happened. This may include legal counsel, but it might also include other experienced Human Resources personnel, the employee’s manager and supervisor, “experts,” and others, depending on the nature of the investigation.

This article was written by Robin E. Shea of Constangy, Brooks, Smith & Prophete, LLP

Employment Law In Focus – April 2017

Covenants Not to Compete and Trade Secrets: Protecting Your Company Against Unfair Competition

It always seems to happen when you least expect it.  Employment ends for a valuable worker who soon transforms into the corporate version of Benedict Arnold. But instead of a country, it’s a company being betrayed – and instead of military secrets, it’s financial data, customer lists, marketing strategies or other confidential information being taken or used.  Not to mention the act of suddenly going to work for a direct competitor.

So management meets and the question is asked:  “Can we stop this?”  The answer, of course, is usually the truest words spoken in trade secret and covenant not to compete law:  “It depends.”

There are two main strategies to protect a company against unfair competition and the misappropriation of trade secrets.  First is the more traditional approach of using and enforcing covenants not to compete – also known as noncompetition or noncompete agreements – which often include confidentiality and nondisclosure provisions as well.  Second is implementing a trade secret protection program, or at least taking reasonable steps to preserve the secrecy of confidential information, so you can at least argue the information is a “trade secret” when litigating a misappropriation claim in the future.

Both strategies have advantages and disadvantages, and depending on the circumstances, can be quite valuable in protecting customers and confidential corporate information.  This article provides a general overview of the most critical points for companies to be aware of in this rapidly developing area of law.

Covenants Not To Compete

Contrary to popular belief, covenants not to compete are enforceable in North Carolina and most states.  The key is whether they’re in writing, signed by the employee, supported by valuable “consideration” (such as new employment, a monetary payment or other tangible benefit), reasonable as to time and territory, and whether they satisfy any other particular requirements of the applicable state.  But it is also true that courts consistently look for ways to defeat noncompete agreements, placing the factual and legal burden squarely on the company to have drafted and executed these restrictive covenants in a proper manner.  If so, then the chance of enforcement is usually good.  If not, then count on a difficult time before a judge or jury.

Assuming that valuable consideration has been provided through the act of employment or another form of payment, the critical inquiry is whether a noncompetition agreement protects only the “legitimate business interests” of a company.  This inquiry is extremely fact-specific, and is usually a function of whether the time and territory restrictions, and any definitions of “competition,” are reasonable enough to enforce or unenforceable due to being unreasonably broad.  As a general rule, time and territory are considered in tandem, with the longer the time period the smaller the territory in order to be valid – and vice-versa.  In North Carolina, two years is usually considered the outer limit for an enforceable covenant not to compete in the employer-employee context, and the geographical territory should usually be tailored to only where the company actively conducts a significant amount of business.  In addition, North Carolina law has developed in such a way that former employees should only be restricted from actually working in those areas of their new employer that are actually competitive with the former employer, and preferably to only those areas of business in which the employee was formerly actively engaged.

Closely linked to noncompetition agreements are “nonsolicitation” restrictive covenants.  These are often part of the same written agreement, but can also be executed independently or instead of a more traditional noncompete.  Nonsolicitation agreements usually protect against a former employee soliciting to sell or selling to a company’s customer base for a limited period of time (two years again being a general maximum), with the key legal inquiry being: (1) whether the customers at issue are narrowly enough defined; (2) whether the activity being prohibited is truly competitive in nature; and (3) whether the former employee actually had material contact with the customers, or at least held a high enough position in the company (such as a vice president of sales) to where he or she regularly received confidential information regarding them, or had broad authority over other employees responsible for soliciting them.

As with noncompete agreements, the more limited the restriction the more likely a nonsolicitation agreement will be enforceable.  Unlike noncompete agreements, however, nonsolicitation restrictions usually do not require a geographical territory – rather, they’re primarily based on where the company’s customers are located.  In this sense, many courts consider nonsolicitation agreements to be a more limited, and therefore more enforceable, form of restrictive covenant, provided of course that the other requisites for an enforceable agreement are met.

Unfortunately for companies, what may be reasonable and legitimate in one set of circumstances may be quite unreasonable and illegitimate in another.  This inquiry is also governed by state law, which can be a hidden trap for multi-state corporations that use “form” noncompete agreements, as what works in one state might not work in another.

As a general rule, multi-state covenants not to compete should be avoided in favor of state-specific agreements – or at least fine-tuned for a specific state’s law if they’re used.  However, if a single format is implemented, the noncompete agreement should be drafted to satisfy the law of the most conservative state – i.e., the state where it is most difficult to enforce them.  In short, if that state’s requirements are satisfied, then odds are the requirements of less restrictive states will also be met.  But since taking this approach may sacrifice certain restrictive covenant goals that are quite valid in other states, extra care should be given to help ensure that the concern for enforcement in general does not override any critical interests which might justify state-specific formats.

If the noncompetition agreement has confidentiality and nondisclosure provisions, this can also be a helpful avenue for protecting trade secrets.  That way, even if the noncompete portion of the agreement is for some reason unenforceable, the confidentiality section might remain in effect and provide another type of breach of contract action for protecting the company.

But what happens when there is no covenant not to compete?  Or when the noncompete agreement and its confidentiality provisions are unenforceable or not comprehensive enough to adequately protect the company?  Enter the world of trade secret protection – a rapidly growing area of intellectual property law that’s usually quite separate from the traditional intellectual property fields of patent, trademark and copyright law.

Trade Secret Protection

Trade secret law frequently overlaps with enforcing covenants not to compete, but is so distinct that it can and often does stand alone.  In fact, if trade secrets truly are at issue, it can be the preferred avenue for litigation, especially in light of a poorly drafted or improperly executed noncompete agreement that probably is not enforceable.

Unlike covenants not to compete, which are usually governed by a state’s common law, trade secret law is often governed by statute.  In fact, all but two states have now adopted some version of the Uniform Trade Secrets Act, including North Carolina.  Unlike covenants not to compete, a written agreement is helpful but not required to protect trade secrets.  Therefore, trade secret law has much more flexibility than litigation involving covenants not to compete — assuming, of course, that you can prove trade secrets actually exist and have been misappropriated.

On this point, think of the Venn diagrams you probably learned in ninth grade geometry.  Then place a small circle consisting of trade secrets within a larger circle of information your company considers confidential and proprietary.  This illustrates the first key principle in trade secret law:  All trade secrets are confidential, but not all confidential information is a trade secret.  Which directly leads to the second key principle:  No matter how confidential the trade secret, if not properly cared for and protected it may lose its “trade secret” status.

Although case law varies as to what constitutes a “trade secret”, courts have generally held that it can include such diverse information as pricing, cost and other financial data, marketing strategies, product design information, research & development, feasibility forecasts, compilations of commonly known information into a unique formula, and in certain circumstances, even customer lists.  In short, trade secrets can consist of virtually any information, process, method or system if it has “independent actual or potential commercial value” and reasonable steps have been taken to preserve the very secrecy from which its value derives.

Once a trade secret is proven, then for legal action it must also be “misappropriated.”  Again, what constitutes misappropriation varies according to state law.  Typically, misappropriation is defined as the acquisition, disclosure or use of someone else’s trade secret through improper means or at least without express or implied authority or consent – unless the trade secret was arrived at by independent development, reverse engineering, or was obtained from another person with a right to disclose it.  To establish a valid claim of misappropriation, a party usually must show that the defendant knew about the trade secret and had a specific opportunity to acquire it for disclosure or use, or did in fact acquire, disclose, or use it through improper means or without the trade secret owner or possessor’s authority or consent. 

Because confidential information is not always a trade secret, the stories are legion of companies that fail the initial requirement of demonstrating a trade secret exists, regardless of whether the information has been “misappropriated.”  In addition, this realization often comes too late – after the company sues for misappropriation only to have its opponent show how reasonable steps were never taken to maintain the information’s secrecy.  In other words, if a company is going to allege trade secrets, it must be proactive from the start.  Long before a lawsuit is filed to protect them.

One of the best methods for designating confidential information as trade secrets is to implement a corporate program to achieve this objective – and since “reasonable steps to preserve secrecy” are critical to proving that trade secrets, those measures should be taken sooner rather than later.  The steps in a trade secret protection program may vary by company and the type of information being protected, but in general the process involves at least the following:  (1) identify and classify all information you consider “confidential”;  (2) improve internal and external physical security [from passwords and confidential markings to limiting facility access];  (3) address employee relationships by implementing internal confidentiality policies, noncompete agreements and/or other security measures; and  (4) protect against third-party disclosures by taking appropriate confidentiality measures with vendors, suppliers, co-manufacturers and visitors.


Although much more can and should be considered about covenants not to compete and implementing a trade secret protection program, this article provides a general overview of the key concepts in drafting restrictive covenants and protecting against unfair competition.  Always remember, though, that each company’s situation is different and should be analyzed separately with agreements and programs tailored to its specific needs.  Although the burden is squarely on employers when enforcing noncompete agreements and pursuing trade secret claims, the good news is that unfair competition can be avoided, and that customers, marketing strategies, financial data and other confidential information can be protected.  The key is doing it in the right manner at the right time – and unlike Benedict Arnold, for all the right reasons.

This article was written by Ken Carlson of Constangy, Brooks, Smith & Prophete, LLP

Employment Law In Focus – March 2017

Religion at Work – Rights & Responsibilities

Every year at this time of year, with Christmas and Hanukkah behind us and Easter just weeks away, employers often receive questions about religion at work that may not be raised at other times.  So it might be helpful to summarize certain rights and responsibilities of both employers and employees when addressing religion in the private workplace.

First, most work-related issues concerning religion normally fall under three areas:  discrimination, harassment and accommodation.  Claims under each of those areas have risen dramatically through the years – to the point that last year, various federal agencies announced a new interagency initiative to oppose religious discrimination and promote religious freedom in the workplace.  Those agencies at least included the United States Equal Employment Opportunity Commission (EEOC), Department of Justice and the Department of Labor’s Office of Federal Contract Compliance, with the EEOC taking the lead due to its role in enforcing Title VII of the Civil Rights Act of 1964, our primary federal law prohibiting religious and other forms of discrimination at work.

Concerning Title VII – which only applies to employers with at least 15 employees – the main provision expressly addressing religion at work is Section 2000e-2.  This section states (with emphasis added):

(a) It shall be an unlawful employment practice for an employer –

(1) to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin; or

(2) to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.

Like many employment laws prohibiting workplace discrimination, however, the devil is in the details with religion.  For example, “religion” under Title VII is not just the primary religious faiths most encountered in the United States, such as Christianity, Judaism, Islam, Buddhism and Hinduism, but rather any “sincerely held belief” or practice.  This standard is generally interpreted quite broadly to include any belief system addressing ultimate ideas about life, death and the purpose of existence – including belief systems that are comparatively “new” or “uncommon.”

Workplace protections also apply to conduct motivated by religion, such as prayer, worship, clothing and personal hygiene, which can and often do have a direct impact on commonly accepted practices such as work hours, work schedules and dress codes.  Although in limited circumstances an employer may satisfy the “religious organization” or “ministerial” exception that enables preferring one religion or religious faith over another (such as being Methodist in order to be hired as the director of Christian education at a Methodist church), most employers and job positions do not satisfy that standard.  Rather, like society at large, most workplaces are quite diverse and secular enough in practice that Title VII’s mandates and prohibitions apply.

Perhaps the best way to understand an employer’s obligations not to discriminate against employees on the basis of religion is to summarize Title VII’s legal requirements for stating one of the most commonly alleged claims – failure to “reasonably accommodate” the individual’s religious practices.  To state a failure to accommodate claim, the employee-plaintiff must generally demonstrate:  (1) a bona fide religious belief that conflicts with the employer’s requirement; (2) that he or she informed the employer of that belief; and  (3) that he or she was disciplined, not permitted to engage in a particular religious practice, or suffered some other adverse action for not complying with the conflicting employment requirement.

Assuming those elements can be shown, the employer-defendant must generally demonstrate that it did, in fact, provide the employee with a reasonable accommodation that sufficiently allowed the employee’s religious practice or observance, or that it could not provide such an accommodation without creating an “undue hardship” on the company.  Significantly, any reasonable accommodation that adequately addresses the situation will satisfy the employer’s obligation – and it does not need to be the employee’s “preferred” accommodation.  However, it will also be difficult to deny a particular accommodation as an undue hardship unless it adversely affects seniority rights concerning certain workplace practices (such as time off or work schedules), or if its effect imposes “more than a de minimis [minimal] cost or burden on business operations.” (EEOC Questions and Answers: Religious Discrimination in the Workplace,  In making that determination, the EEOC usually considers “administrative costs” for enabling work assignment rescheduling to be only de minimis, factoring in the costs expended relative to the employer at issue along with the number of employees that would be accommodated.  In addition, other factors that can show “undue hardship” include at least the following:

* Diminishing efficiency or impairing safety
* Infringing on other employees’ rights or benefits
* Making co-workers carry the employee’s share of potentially hazardous or burdensome work
* Conflicting with another law or regulation

Examples of potential religious discrimination provided by the EEOC include the following, which also serves as a good overview of the type of issues that employers often face with employees or applicants:

Religious observances or practices include, for example, attending worship services, praying, wearing religious garb or symbols, displaying religious objects, adhering to certain dietary rules, proselytizing or other forms of religious expression, or refraining from certain activities. Whether a practice is religious depends on the employee’s motivation. The same practice might be engaged in by one person for religious reasons and by another person for purely secular reasons (e.g., dietary restrictions, tattoos, etc.).

Discrimination based on religion within the meaning of Title VII could include, for example: not hiring an otherwise qualified applicant because he is a self-described evangelical Christian; a Jewish supervisor denying a promotion to a qualified non-Jewish employee because the supervisor wishes to give a preference based on religion to a fellow Jewish employee; or, terminating an employee because he told the employer that he recently converted to the Baha’i Faith.

Similarly, requests for accommodation of a “religious” belief or practice could include, for example: a Catholic employee requesting a schedule change so that he can attend church services on Good Friday; a Muslim employee requesting an exception to the company’s dress and grooming code allowing her to wear her headscarf, or a Hindu employee requesting an exception allowing her to wear her bindi (religious forehead marking); an atheist asking to be excused from the religious invocation offered at the beginning of staff meetings; an adherent to Native American spiritual beliefs seeking unpaid leave to attend a ritual ceremony; or an employee who identifies as Christian but is not affiliated with a particular sect or denomination requests accommodation of his religious belief that working on his Sabbath is prohibited.

. . . .

Religious harassment in violation of Title VII occurs when employees are: (1) required or coerced to abandon, alter, or adopt a religious practice as a condition of employment (this type of “quid pro quo” harassment may also give rise to a disparate treatment or denial of accommodation claim in some circumstances); or (2) subjected to unwelcome statements or conduct that is based on religion and is so severe or pervasive that the individual being harassed reasonably finds the work environment to be hostile or abusive, and there is a basis for holding the employer liable.

 EEOC Questions and Answers: Religious Discrimination in the Workplace,

As a practical matter, most religion-at-work issues involve the following concerns, with employer responses guided by the principles discussed above along with other issue-specific variations:

1. Clothing, Jewelry, Makeup & Body Piercing – Employer considerations include at least safety and dress code issues, and can be influenced by factors such as regulatory compliance, manufacturing or production requirements, and in certain situations even community standards, public image or customer relations concerns. For example, an employee in a safety-sensitive job operating dangerous machinery could be prohibited from wearing a flowing religious robe or headdress due to safety rules, provided that other forms of loose-fitting clothing, hats or headgear are also prohibited.  That same prohibition, however, might not apply to a receptionist, sales person or administrative assistant because their positions do not have similar safety-related issues.  And given their relatively non-intrusive nature, it could be quite difficult if not impossible to legally prohibit certain forms of makeup, perfumes, facial markings or body piercings based on a sincerely held religious belief or practice.  However, such a prohibition could occur if they’re offensive in content or otherwise violate a reasonable community-based standard, or if they could reasonably be seen as adversely affecting the employer’s public image or customer relations in a manner that has nothing to do with unlawful discriminatory behavior.

2. Speaking About Religion or Religious Views – As a general rule, and surprisingly for many people, if an employer allows other non-work related discussions at work (which virtually all employers permit), it cannot have a blanket prohibition against religious discussions. However, there are limits – and those limits usually involve crossing an often unclear line from merely discussing religion to actual evangelism or proselytizing, which generally can be prohibited (especially if complained about by other employees).  Employers can also open the door to Title VII liability if they have employer-mandated religious practices, such as prayer sessions or Bible readings, or allow a work environment to exist that arguably pressures employees to participate in those practices even if not actually “required.”

3. Accommodating Religious Practices with Work Schedules and During Working Hours – Employees who ask not to work on a particular day because it’s their Sabbath or other day of worship (such as a Sunday or Saturday), or on specific shifts (such as Wednesday evenings that might interfere with a weekday service or Bible study), may need accommodating – provided, of course, that their request is based on a “sincerely held” religious belief or practice. Normally, employers facing such requests are required to provide any reasonable adjustment that allows the employee to practice his or her religion without undue hardship to the employer.  Those adjustments could at least include the following: flexible scheduling, voluntary substitutions or swaps, job reassignments and lateral transfers, providing short breaks and a private room for daily prayer (unpaid time for hourly, nonexempt employees), modifying workplace policies or practices (such as dress code and personal appearance policies), or other “de minimis” steps that are reasonable under the circumstances.

Certain “red flags” in the workplace can also be helpful in terms of recognizing potential Title VII problems:  (1) if religion is being used as a basis for hiring, raises, promotions or discipline; (2) if the employer refuses to consider any accommodation for religious preferences; (3) if any evangelism, proselytizing or other religious action is unwelcome; or (4) if an adverse employment action is based on a customer preference based on religion. 

To summarize, as a general rule employers must allow religious talk and activities to the extent they allow other non-work related discussions and behavior in the workplace.  While employers can be vocal about religious preferences, they cannot require or take adverse action against employees who do not agree with or subscribe to those preferences.  Employers should also avoid actions that could reasonably be understood as creating implied pressure for employees to conform to a specific religion or religious view.

In addition, any complaint about religion, religious practices or religious behavior in the workplace, or any request to accommodate an employee’s religious faith or observance, should be promptly addressed.  It is especially important that employers take every such complaint or request seriously, investigating or considering it as appropriate.  If reasonable accommodations are requested, and can be made in accordance with Title VII, then those steps should be taken.  If not, the employee should be informed as to the legitimate business reason why their accommodation request is being denied.  If a complaint or concern is made over religious discrimination, harassment or other inappropriate actions based on religion, then it should be properly investigated.  If the complaint or concern is found to have merit, then prompt remedial action should be taken.  Employers should also have a strong policy against religious discrimination and harassment in the workplace, distributing it to their employees and enforcing it as needed.  Not only are those steps the “right” thing to do under federal law and for purposes of proper employee management, they can also provide certain key defenses if the employer is ever sued.

In short, religion in the workplace can be a minefield of sorts, often due to its somewhat ill-defined nature as any “sincerely held” belief or practice.  But the minefield can be successfully navigated, and the rights and responsibilities as discussed above – of both employers and employees – hopefully help that process.  Not only throughout, but especially at, this time of year.

This article was written by Ken Carlson of Constangy, Brooks, Smith & Prophete, LLP

Employment Law In Focus – February 2017

So Whose Employee Are You Anyway?

With little if any fanfare, the U.S. Court of Appeals for the Fourth Circuit recently established a new legal “test” that will impact federal wage & hour and likely other Department of Labor (DOL) obligations in North Carolina and other states within its jurisdiction.  The test is for when two business entities should be considered “joint employers” of the same employee, at least for minimum wage and overtime purposes of the Fair Labor Standards Act (FLSA) – and its primary effect will likely be most evident in contractor-subcontractor and temporary help services arrangements.

In Mario Salinas v. Commercial Interiors, Inc., the Fourth Circuit reversed a lower federal district court in Maryland which had granted a pre-trial summary judgment motion to the defendant contractor and led to the case being dismissed.  However, due to the reversal, the contractor was now liable for wages, including overtime wages, of the defendant subcontractor’s employees due to being a “joint employer”, as the subcontractor had since gone out of business leaving a large number of workers unpaid for work performed.

The case was decided on January 25, 2017, and essentially began by noting a number of facts that demonstrated the contractor’s direction and control of the subcontractor’s employees.  Those facts at least included daily supervision by the contractor, regular required meetings in which the subcontractor’s employees were provided instructions on the projects they needed to complete and the methods for doing so, and the contractor’s ownership and providing of virtually all the tools, equipment and material needed for the employees to complete their tasks.

The Fourth Circuit then discussed how “the joint employment doctrine: (1) treats a worker’s employment by joint employers as ‘one employment’ for purposes of determining compliance with the FLSA’s wage and hour requirements and (2) holds joint employers jointly and severally liable for any violations of the FLSA.”  The Court then provided six factors that will now control the joint employer determination, none of which are all-controlling or all-inclusive:

“(1) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to direct, control, or supervise the worker, whether by direct or indirect means;

(2) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate the power to—directly or indirectly—hire or fire the worker or modify the terms or conditions of the worker’s employment;

(3) The degree of permanency and duration of the relationship between the putative joint employers;

(4) Whether, through shared management or a direct or indirect ownership interest, one putative joint employer controls, is controlled by, or is under common control with the other putative joint employer;

(5) Whether the work is performed on a premises owned or controlled by one or more of the putative joint employers, independently or in connection with one another; and

(6) Whether, formally or as a matter of practice, the putative joint employers jointly determine, share, or allocate responsibility over functions ordinarily carried out by an employer, such as handling payroll; providing workers’ compensation insurance; paying payroll taxes; or providing the facilities, equipment, tools, or materials necessary to complete the work.”

The Court further emphasized that since these six factors are not exhaustive, additional facts may also apply to any joint employer determination.

So, in what situations can employers expect this new test to be applied? In answering that question, the Court started with the DOL’s regulations, which draw a distinction between “separate” or “entirely independent” employment versus “joint” employment (when “two persons or entities are ‘not completely disassociated’”) (citing 29 C.F.R. § 791.2(a)). In making that distinction, the Court observed how the DOL also identifies several “nonexclusive scenarios in which joint employment, as opposed to separate employment, generally exists:

(1) Where there is an arrangement between the employers to share the employee’s services, as, for example, to interchange employees; or

(2) Where one employer is acting directly or indirectly in the interest of the other employer (or employers) in relation to the employee; or

(3) Where the employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer.”

In short, the new Salinas joint employer test will apply to any business setting in which employees are shared between employers, where one employer acts in the interests of the other in a manner that affects the employee(s) at issue, where there is direction and control by one employer over the other employer’s employees, or where there is enough “common control” by one employer of the other to effectively “associate” the two entities in such a manner that joint employment may occur. Employers that do not want “joint employer” status in any of these settings would be wise to consult with their labor and employment counsel to proactively institute measures that take into account the new “six factors”. And which, if properly implemented in their specific situation, might avoid such a determination if an employee’s “separate” status is ever challenged before the DOL or in court.

This article was written by Ken Carlson of Constangy, Brooks, Smith & Prophete, LLP

Employment Law In Focus – January 2017

DON’T GO AWAY! What President Trump’s Immigration Executive Order means for employers and the foreign nationals they employ.

This month’s Employment Law in Focus addresses President Trump’s recent Executive Order entitled “Protecting the Nation From Foreign Terrorist Entry Into the United States.”  Signed last Friday, January 27, 2017, the Order has caused days of chaos at the nation’s airports, numerous protests in this country and abroad, reprisals by at least one foreign state, the termination of the acting U.S. Attorney General, and at least four federal courts to enjoin portions of its mandates.

Although a partial reversal and some clarification was issued on Sunday evening, much about the Order is still in a state of flux.  So this article is intended to provide at least some employer guidance as to what the Executive Order actually does and doesn’t mean for them and their foreign nationals – as of January 31, that is.  It’s written by two of Constangy’s top immigration attorneys, Will Krasnow in Boston [(617) 849-7878; [email protected]] and Jeanette Phelan in Jacksonville, Florida [(904) 357-2663; [email protected]], with a major caveat in mind:  stay tuned.

In summary, the best guidance at this point for employers of non-immigrant visa holders from the countries specifically identified in the Order is to caution those employees to stay in the United States if they are already here. Indeed, even if the individual is a permanent lawful resident (holder of a green card) or is from a Muslim-majority country that is not on the list, non-essential travel outside the United States should be avoided, as will be discussed in more detail below.

Key provisions of the Executive Order

Rationale. The stated rationale for the Order is to prevent terrorists and terrorist sympathizers from coming to the United States. Section 2 of the Order says, “The United States must be vigilant during the visa-issuance process to ensure that those approved for admission do not intend to harm Americans and that they have no ties to terrorism.” The Order also says that immigrants coming to the United States should share “American” values – that is, they should not hold “violent ideologies,” “engage in acts of bigotry or hatred” based on religion or sex, or advocate “oppression” based on “race, gender, or sexual orientation.”

Suspension of admission to United States. Section 3 of the Order directs the Secretary of Homeland Security to determine what information is needed from countries to confirm the identity of the person seeking a “visa, admission to the United States,” adjudication, or other “benefit” under the Immigration and Naturalization Act, and to determine that the person “is not a security or public-safety threat.” The DHS report is due 30 days from January 27, the date of the Order

In the meantime, entry of individuals (both immigrant and non-immigrant) from seven specified countries is suspended for a period of 90 days from the date of the Order.  The affected countries are Iran, Iraq, Libya, Somalia, Sudan, Syria, and Yemen. A “Practice Alert” from the American Immigration Lawyers Association notes that the Order does not define “from.” “Thus, in an abundance of caution,” the AILA publication says, “it may be best to interpret the term broadly to include passport holders, citizens, nationals, dual nationals, etc.”

The Order did not make an exception for individuals from these countries who were already lawful permanent residents of the United States. However, Section 3(g) of the Order allows the State and Homeland Security departments to make exceptions to the suspension “on a case-by-case basis” “in the national interest.”

On Sunday evening, after several courts had enjoined various parts of the Order, John Kelly, Secretary of Homeland Security, apparently taking advantage of the Section 3(g) exception, issued a statement saying that admission of “lawful permanent residents” was determined to be “in the national interest.” In the statement, Secretary Kelly also said that “absent the receipt of significant derogatory information indicating a serious threat to public safety and welfare, lawful permanent resident status will be a dispositive factor in our case-by-case determinations.”

This indicates that green card holders – even if they are from one of the seven “suspended” countries – should now be admitted into the United States notwithstanding the 90-day suspension.

Section 3 of the Order provides that, once the Secretary of Homeland Security determines what information is needed to “vet” foreign nationals, the Secretary of State will notify the affected countries and give them 60 days to begin complying. After that 60-day period, State and Homeland Security will prepare a revised list of “suspended” countries. The Order authorizes State and Homeland Security to revise the list as needed, and to add other countries to the list.

Refugee suspension. Section 5 of the Order also suspends the U.S. Refugee Admissions Program for 120 days. During this period, the State and Homeland Security departments are directed to review the relevant procedures and determine what more needs to be done “to ensure that those approved for refugee admission do not pose a threat to the security and welfare of the United States, and shall implement such procedures.” Section 5(c) of the Order specifically suspends the admission of Syrian nationals.

Other provisions. Some other noteworthy provisions of the Order provide for accelerating “the completion and implementation of a biometric entry-exit tracking system for all travelers to the United States”; suspension of the Visa Interview Waiver Program, meaning that “individuals seeking a nonimmigrant visa undergo an in-person interview,” which could result in delays; and a review of reciprocity agreements.

Recommendations for employers of foreign nationals

The following is obviously subject to change, depending on what happens in the future. But as of now, here are some recommendations for employers trying to assist foreign nationals:

*Non-immigrant visa holders from the seven “suspended” countries should not travel outside the United States because it is possible that they will not be admitted back. This would include, for example, holders of F-1, L-1, and H-1B visas.

*Non-immigrant visa holders who are not from the seven “suspended” countries but who are from Muslim-majority countries should avoid non-essential travel outside the United States. Because the admission ban can be expanded at any time and without prior notice, it is possible that another Muslim-majority country will be added to the list while the visa holder is out of the country, preventing him or her from being admitted back – as happened with many travelers this weekend.

*Permanent legal residents, likewise, should avoid non-essential travel outside the United States. Green-card holders may be protected by Secretary Kelly’s statement, but there are no guarantees because the statement is not entirely consistent with the terms of the Order First, the Order appears to authorize admissions “in the national interest” only if the determinations are made on a “case-by-case basis,” not on a “blanket” basis. Second, Secretary Kelly did not say that green card holders were “exempt” from the Order, and the Order by its terms does not exempt them.

*Delays are likely. As already noted, the requirement that visa interviews be conducted in person are likely to result in delays.