Contributing Research by Dori Kojima

On July 15, 2015, the U.S. Department of Labor (DOL) released an Administrator’s Interpretation addressing how to determine whether a worker is an independent contractor or employee under the Fair Labor Standards Act (FLSA). The FLSA is the primary federal law regulating minimum wage and overtime pay. The Interpretation puts employers on notice that the DOL is increasing efforts to curtail the misclassification of workers.

The “Economic Realities” Test Under the FLSA

To determine whether a worker is an employee or independent contractor under the FLSA, courts apply the “economic realities” test. The test focuses on whether the worker is economically dependent on the company or in business for himself or herself. The “economic realities” test has six factors:

Continue Reading Department of Labor Targets Use of Independent Contractors

A class of employees is suing Kmart in a California state court for allegedly engaging in unfair business and employment practices in its use of payroll debit cards.
Payroll debit cards have become popular, especially in the retail and fast food industries.  Instead of a paycheck or direct deposit, the employer loads funds onto a debit card held by the employee.  The employee then uses the debit card to withdraw cash and pay bills.
In the California lawsuit, the plaintiffs claim (among other things) that
• Kmart earns interest on the payroll funds not withdrawn from the debit card, thereby using employee wages for investment purposes.
• Employees must pay fifty cents each time they make a withdrawal, thus depriving them of their full wages.
• Employees face other limitations, such as not being able to withdraw all their wages at the same time.
The lawsuit seeks various kinds of relief, including restitution and punitive damages.
We previously summarized the legal issues surrounding payroll debit cards here.  We identified two sources of law affecting payroll debit cards in Washington State.
First, we described a bulletin issued by the Consumer Financial Protection Bureau (CFPB) that applies the Electronic Fund Transfer Act and Regulation E to payroll debit card accounts.  Under that Bulletin, the CFPB announced that
• Employers may not require their employees to receive wages by payroll card, but must offer a substitute method, such as direct deposit or paper check.
• Employees must be informed of all fees, limitations on liability, and requirements related to making electronic fund transfers with the payroll card.
• The payroll card issuer must disclose specified information about the employee’s account balance and transaction history.
• Employees are entitled to limited liability protections for the unauthorized use of their payroll cards and designated rights to correct account errors.
Second, we noted that the rules in Washington State are less elaborate.  We reported, however, the Department of Labor & Industries agrees with the CFPB on one essential point: if there are fees for using payroll cards, the employer must provide an alternative that allows access to wages without any fees or costs.
For more information about payroll debit cards, please contact Foster Pepper’s Employment & Labor group or Financial Institutions group.

A class of employees is suing Kmart in a California state court for allegedly engaging in unfair business and employment practices in its use of payroll debit cards.

Payroll debit cards have become popular, especially in the retail and fast food industries. Instead of a paycheck or direct deposit, the employer loads funds onto a debit card held by the employee. The employee then uses the debit card to withdraw cash and pay bills.

In the California lawsuit, the plaintiffs claim (among other things) that

  • Kmart earns interest on the payroll funds not withdrawn from the debit card, thereby using employee wages for investment purposes.
  • Employees must pay fifty cents each time they make a withdrawal, thus depriving them of their full wages.
  • Employees face other limitations, such as not being able to withdraw all their wages at the same time.

Continue Reading Kmart Sued for Use of Payroll Debit Card System

Medical and recreational marijuana is legal in Washington and Colorado; however, the highest courts in both states have ruled that employers can still discharge employees for using it.

Most recently, in Coats v. Dish Network, LLC, the Colorado Supreme Court ruled that Dish Network properly discharged an employee for failing a drug test. At the time of his discharge, Brandon Coats (who suffers from quadriplegia), held a valid Colorado license to consume marijuana for medical purposes. As a result of Coats’ positive test for marijuana, Dish discharged him for violating its zero tolerance drug policy. Coats did not use marijuana on Dish’s premises, he did not use it during working hours, nor was he under its influence while at work. Instead, Coats’ urine test detected traces of THC metabolites, the chemical residue of THC, which is the active ingredient in marijuana. These metabolites can remain in the body anywhere from several days to several weeks after last consuming marijuana.

Continue Reading Colorado Supreme Court Upholds Employer’s Right to Discharge Employee for Marijuana Use

On April 21, 2015, attorneys from the Foster Pepper Employment and Labor group presented a webinar titled “Is Your Employee Handbook Ready for Prime Time?” They discussed various updates that should be considered for employee handbooks including the following hot topics:

  • Avoidng NLRB attacks on employers’ social media policies
  • Assuring compliance with local ordinances; and
  • Amending drug policies in light of legalization of marijuana in Washington

If you missed the presentation, you can review the materials or listen to a recording of the webinar here. To find materials from other presentations on employment and labor topics, click here and scroll to the bottom of the page.

April 1 is implementation day for Seattle’s new Minimum Wage Ordinance. Starting April 1, large businesses with over 500 employees must pay workers wages of at least $11 per hour. Smaller businesses with 500 or fewer employees must pay either a flat hourly wage of $11, or a wage of $10 per hour with an additional $1 per hour in compensation comprised of tips or payments made to a qualifying medical-benefits plan.

The City of Seattle’s Office of Labor Standards, a new division within the Seattle Office for Civil Rights, has released the Final Administrative Rules for the new Ordinance, along with detailed set of Frequently Asked Questions.

If you have questions regarding compliance with Seattle’s Minimum Wage Ordinance, or any other wage and hour question, please contact Foster Pepper’s Employment & Labor group.  

At their best, handbooks can effectively communicate employer policies and culture, and provide a strong defense against employee claims. At their worst, handbooks can sow confusion or trigger liability.

Join attorneys from Foster Pepper’s Employment & Labor group to discuss updates that you should consider for your employee handbook. Topics will include:

  • Avoiding NLRB attacks on employers’ social media policies
  • Adjusting policies in light of marriage equality
  • Assuring compliance with local ordinances requiring paid sick and safe time
  • Assessing use of interns and independent contractors
  • Amending drug policies in light of legalization of marijuana in Washington
  • Adapting policies to new technologies
  • Altering language to preserve at-will employment

Continue Reading Upcoming Seminar: “Is Your Employee Handbook Ready for Prime Time?”

As we previously reported, the Seattle City Council enacted an ordinance that will raise the minimum wage for workers at many Seattle businesses.  The ordinance, which is scheduled to take effect in April, designated the Seattle Office for Civil Rights to interpret and administer the new provisions.  SOCR now has released proposed Administrative Rules.  Readers can visit SOCR’s website for details, including a press release and frequently asked questions about the new ordinance.

On December 11, 2014, the National Labor Relations Board (NLRB) issued a decision with major implications for employers that gives employees access to company email systems. While most employee handbooks prohibit personal use of company resources, employers commonly allow minor use of company email, such as employees selling Girl Scout cookies and charity raffle tickets or communicating about upcoming parties or events.

In Purple Communications, Inc. & Communication Workers of America, AFL-CIO, the NLRB acknowledged that workplace email has expanded to become a natural gathering place where employees communicate, and the agency declared that uneven enforcement of email policies that distinguish between union communications and other personal communications, violates the requirement that employers not discriminate against union-related activities. The NLRB therefore ruled that many employees have a statutory right to use company email to discuss a range of workplace issues, so long as they do it on their own time and do not hurt productivity or office discipline. As such, employers may no longer ban employees from using the company’s email system for union-related communications during non-work times.

Continue Reading NLRB: Employers Cannot Ban Employees From Using Company’s Email System for Union-Related Communications

We previously addressed the issue of whether an intern is entitled to be paid for time spent with a for-profit enterprise.  We reviewed the Department of Labor’s six-factor test:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

Continue Reading Paralegal Students Must Be Paid for Practical Job Experience at Law Firms

‘Tis the season for workplace holiday parties. Holiday parties can be a fun way to build camaraderie and boost company morale for the upcoming year, but they are also fertile ground for HR woes. Enjoy the festivities without the negative consequences by following these simple tips. 

  1. Spirit of the Season. Alcohol is the most common concern at company holiday parties. Alcohol-fueled corporate functions may result in accidents and sexual harassment complaints, but may also give rise to “social host” or “dram shop” liability, where an employer could be responsible for injuries caused by intoxicated individuals who were over-served at the company event. To avoid these risks, some employers decline to serve alcohol at all, especially if the event takes place during a work day. Other employers hold holiday events at a restaurant or other off-site location. If you do choose to serve alcohol on your premises, it is a good idea to hire professional servers, limit drinks with the use of drink tickets, and stop serving alcohol at least an hour prior to the end of the party. Moreover, when serving alcohol, be sure to serve plenty of non-alcoholic beverages and filling foods. Additionally, provide taxi vouchers and have sober HR managers or executives make sure those who are leaving are in shape to drive safely. Communicate to employees beforehand about transportation options and encourage them to plan ahead. 
  2. Comfort and Joy. Speaking of alcohol, high spirits (and lots of eggnog) can bring out the best and worst in employees. Intoxicated employees might become overly friendly or overly hostile. Some employees might engage in activities or show up in apparel that makes others feel uncomfortable. Warn employees that sexual harassment will not be tolerated or excused. Also, steer clear of holiday décor, like mistletoe, that may encourage unprofessional behavior.
  3. Voluntary Cheer. Inform employees that attendance at holiday events is voluntary. If holiday events are required, non-exempt employees might claim the right to be paid for the time. A good practice is to disassociate holiday functions from employee jobs by holding parties outside of normal business hours, and refrain from distributing bonuses or performance awards or conducting other business-oriented activities during the festivities. To avoid claims of religious bias, stay away from any references to religious holidays such as Christmas, Hanukkah or Kwanza. 
  4. Celebration Expectations. When sending out announcements or initiations to the holiday party, a brief rundown of the rules of the road can avoid confrontations at the event.

Happy Holidays to all of our clients and friends! 

If you have any questions regarding company-sponsored holiday parties, or any other employment law issues, please contact Foster Pepper’s Employment and Labor Relations Group.