EEOC Announces New Employer Pay Data Reporting Requirements

On Friday, January 29, 2016, the Equal Employment Opportunity Commission (EEOC) announced the agency’s intent to require a new obligation for employers with at least 100 employees to submit data on wages earned and hours worked to the agency in annual reports[1]. The intent of the new requirement is to make it easier for the EEOC to identify possible pay discrimination issues and assist employers in efforts to provide equal pay for employees.

 

The EEOC’s announcement would mean revisions to the Employer Information Report (EEO-1) already submitted by some private employers annually[2]. The report has historically collected information on employee ethnicity, race, and sex by job category[3]. The reporting obligation has previously depended on number of employees and whether the employer works on federal contracts[4]. Since 1966, private employers with at least 100 employees, and employers performing federal contracts and who have at least 50 employees have been required to submit the EEO-1 report annually. Small private employers with less than 50 employees have not been required to submit information regardless of whether they work on federal contracts.

 

Under the anticipated changes, employers including federal contractors with at least 100 employees will be required to report pay data on earnings and hours worked along with the previously required EEO-1 information on ethnicity, race, and sex. Employers that are federal contractors and have between 50-99 employees, and employers who do not perform federal contracts but have 99 or fewer employees will be free of EEO-1 reporting obligations.

 

If the proposed changes go into effect, employers will need to collect and report on employee earnings as measured by W-2 information for a 12 month period as measured between July 1st and September 30. The employer will be able to select the 12 month period within that window. For example, an employer may choose to determine W-2 earnings as paid to employees in the 12 month period as measured back from the second pay period in July. Along with W-2 earnings, employers will also need to report employee hours worked for all employees falling within the same pay range. The anticipation is that reporting hours worked within the same pay range will allow the EEOC to account for periods of time when employees are not working, such as part time employees or employees who only worked for part of the 12 month period.

 

EEO-1 reporting currently identifies ten job categories ranging from Executive/Senior Level Officials and Managers to Service Workers. There are seven potential race and ethnicity groups. The proposed pay data requirement anticipates twelve pay bands. The proposed pay bands start at a low of $19,239 and under and go to a high of $208,000 and over. As an example, an employer may be required to report that it has eight male Asian employees performing as Sales Workers, compensated in the sixth pay band, and who worked a total of 12,000 hours.

 

 

The full notice of the proposed revision to the EEO-1 is available online[5], and comments may be submitted until the comment period ends on April 1, 2016. The new requirements are anticipated going into effect in 2017, with pay data to be included in the EEO-1 reporting by the September 30, 2017 filing deadline. If the changes are put into effect this year as expected, the EEOC will post a notice on its official web site and will provide an additional written notice to existing EEO-1 recipients of the changes and need to submit pay data information with the 2017 EEO-1 information collection cycle. At present, the EEOC anticipates that because of the changes, EEO-1 information will not need to be reported until the 2017 cycle.

 

Going forward, there are several considerations for employers subject to reporting.

 

  1. Establish a regular measurement date for W-2 wages paid: Consistency in determining the 12 month period measurement date will likely be the most effective and convenient way for employers to gather the pay data needed for reporting. The window for assessment is relatively limited and must be measured using a date falling between July 1 and September 30 of the particular reporting year. It is likely that administratively the task of compiling the data across all employee pay bands will be most efficiently done using one consistent trigger date.

 

  1. Anticipate the need to organize and properly report the data: The EEOC anticipates that most if not all employers subject to the reporting requirement will already have the anticipated pay data information available, and that employers may face a short term and possible costs to integrate all the data for reporting. In anticipation of the first reporting period in 2017, it will likely be best to develop and put systems in place early to internally track and compile the necessary data.

 

  1. Use the requirement as a risk management tool: The data sought by the EEOC can also be utilized internally by employers to identify whether disparities exist, and if so, the reasons for any disparities. If disparities or unusual results are found, employers may wish to consult with counsel familiar with employment issues to determine whether legitimate business reasons exist to justify the results or to determine best options to address and fix a potential problem.

 

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Patrick Pearce is a member of Ogden Murphy Wallace, P.L.L.C., and practices in the firm’s Employment and Labor Law group. He can be reached at pspearce@omwlaw.com. The above article is a broad outline of a complex topic and should not be relied upon for purposes of legal advice.

 

 

[1] http://www.eeoc.gov/eeoc/newsroom/release/1-29-16.cfm

[2] A sample copy of the EEO-1 may be found at http://www.eeoc.gov/employers/eeo1survey/upload/eeo1-2.pdf.

[3] The reporting obligation resulted from regulations issued pursuant to Section 709(c) of Title VII of the Civil Rights Act of 1964, which required employers to make and keep records relevant to the determination of possible unlawful employment practices, preserve such records, and produce reports to the agency.

[4] http://www.eeoc.gov/employers/eeo1survey/2016_eeo-1_proposed_changes_facts.cfm

[5] https://www.federalregister.gov/articles/2016/02/01/2016-01544/agency-information-collection-activities-revision-of-the-employer-information-report-eeo-1-and

Proposed “Exempt” Status Risks for Health Care Employers

Health care providers need to be aware of significant anticipated changes to federal laws governing which employees may be treated as exempt from eligibility for overtime. Failing to account for the changes if and when they go into effect will expose health care employers to significant potential liability. Successful claims for improperly paid or unpaid wages carry the potential for both a doubled damage and an award of attorneys fees to a successful claimant. When multiple employees are affected, an employer may be faced with defending a class action.

The proposed regulatory changes are primarily focused on the threshold level of salary an employee must receive in order to potentially be ineligible for overtime. If the proposed changes are implemented, minimum salary for exempt employees would more than double. The changes may become effective as early as 2016.

The changes were posted by the United States Department of Labor’s Wage and Hour Division on July 6, 2015 and set forth proposed modifications to 29 CFR Part 541, the regulations addressing which employees will qualify as “exempt” for purposes of eligibility for overtime pay. The changes will apply to any employer covered by the Fair Labor Standards Act (FLSA), which includes hospitals, businesses providing medical or nursing care for residents, and public agencies. While doctors are not subject to the new regulations, the changes would apply to other health care providers and employees.

The current minimum salary threshold for most exempt employees was set in 2004 and requires at least $23,660 annually with at least $455 received per week. If effective in 2016, the regulatory changes would increase the minimum threshold to $50,440 annually with at least $970 received per week. The modifications anticipate setting the minimum salary level at the 40th percentile of weekly earnings for all full-time salaried workers. The proposed changes also anticipate incorporating a system for continuing adjustments to the necessary minimum salary in order to keep pace with living costs, either through linking increases to earnings percentile of all full-time salaried workers or through linking to changes in inflation as measured through the Consumer Price Index for all Urban Consumers (CPI-U).

The proposed revisions additionally anticipate modifying the exemption for highly paid employees. Currently, employees making at least $100,000 annually and receiving at least $455 weekly will be considered exempt if the employee customarily and regularly performs at least one of the primary duties or responsibilities of an executive, administrative, or professional employee as identified in the FLSA standard tests for exemption. Under the changes, the minimum salary for highly paid employees would be increased to $122,148 annually which corresponds to the 90th percentile of weekly earnings of all full-time salaried employees.

Employers have a window to voice positions on the proposed regulatory changes. Written comments will be accepted until September 4, 2015 and will need to reference Regulatory Information Number (RIN) 1235-AA11. Comments may be submitted online and additional information for how to submit a comment can be found here.

Health care employers should carefully evaluate the wages paid to all employees currently classed as exempt to identify which employees may be affected. Employers may wish to consult with counsel to most effectively plan for any necessary changes and identify potential pitfalls. Employers may also wish to submit comment prior to the September 4th deadline expressing positions and opinion on the proposed changes.

For questions regarding the anticipated changes, their impact, and potential options, please contact the author, Patrick Pearce.

Religious Accommodation & EEOC v. Abercrombie & Fitch – What You Don’t Know Can Hurt You

Health care providers should be aware that whether and how to provide accommodations for the sincerely held religious beliefs and practices of employees and job applicants is a fast-developing workplace legal issue. On June 1, 2015, the Supreme Court issued its decision in Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, Inc[1] (“Abercrombie”). For organizations with fifteen or more employees and therefore subject to federal anti-discrimination laws, providers and management involved in interviewing and hiring should note the guidance provided by the opinion.

In Abercrombie, the dispute arose in the context of organization dress code when a practicing Muslim female applied for a position. The assistant manager who interviewed the applicant found her to be qualified but observed that the applicant wore a headscarf. The headscarf was a concern for the assistant manager as the company had an existing “Look Policy” governing employee dress which prohibited wearing any “caps.” The term “caps” was not defined by the policy. The assistant manager sought guidance from the store manager noting that she believed the headscarf was worn by the applicant for religious reasons. The store manager concluded the headscarf violated the company Look Policy and directed that the applicant not be hired.

The EEOC brought suit on behalf of the applicant, arguing the refusal to hire violated federal protections for religious practices. The EEOC won at the trial court level, but was reversed on appeal. After reviewing the case, the Supreme Court rejected the appellate court’s rulings and like the trial court found in favor of the EEOC and Muslim applicant. The company had argued that to make a claim the employer had to have “actual knowledge” of the need for an accommodation. The Court rejected the argument, and instead ruled that the applicant need only show that the need for accommodation was a “motivating factor” in the employer’s decision. Justice Scalia summarized an employer’s obligations to avoid disparate treatment based on religion as follows:

“Thus, the rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward: An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions.”

The Abercrombie decision almost certainly applies to both employment applicants and existing employees, and has the potential to be expanded and applied to other anti-discrimination protections. In terms of immediate use, several practical points can be taken from Abercrombie.  First, the current Court will give religious beliefs and practices careful scrutiny in assessing treatment of an employee or applicant by an employer. As noted by Justice Scalia, “Title VII does not demand mere neutrality with regards to religious practices…[r]ather, it gives them favored treatment.”  Next, facially neutral policies may not constitute a defense for an employer’s decision. When an accommodation is required relating to an aspect of religious practice, per the Court “…it is no response…” that the subsequent action or inaction by the employer was due to an otherwise neutral policy.  Finally, Abercrombie establishes that an employer does not have to have actual knowledge of the possible need for religious accommodation in order to be under an obligation to provide it. The inclusion of religious beliefs or practices as a factor in the employer’s decision is the critical factor.

Providers and management involved in hiring and employee issues will be well served to carefully assess potential religious accommodation issues to determine whether a concern exists and if so, how best to handle particular employees or employment applicants. Organizations covered by federal employment laws should be aware of potential obligations to make efforts to allow an employee or applicant to observe sincere religious practices or beliefs regardless of what is provided in organization policies.

Patrick Pearce is a member in the Seattle office of Ogden Murphy Wallace where his practice emphasizes counsel and litigation regarding employment and labor issues, and serving as an independent workplace investigator. He can be reached at 206-447-7000 or ppearce@omwlaw.com

 

[1] http://www.supremecourt.gov/opinions/14pdf/14-86_p86b.pdf

Employees & Social Media Use

In the Three D, LLC d/b/a Triple Play Sports Bar and Grille decision issued on August 22, the National Labor Relations Board (NLRB) ruled against a non-union restaurant based on management terminating employees as the result of the employees’ Facebook postings.  The decision illustrates why both unionized and non-union employers need to be aware of the Board’s positions on employee use of social media.

Employee use of social media has become a hot button enforcement issue for the NLRB.  The basis for the NLRB aggressively pursuing the issue is the Board’s position that social media postings may constitute “concerted activity” protected by the National Labor Relations Act (NLRA).  The NLRA may apply regardless of whether the employer is union or non-union, and the Board enforces the Act based on its interpretations of the Act’s provisions.

In Three D, LLC, the non-union restaurant made a payroll mistake resulting in employees owing more in taxes than expected.  Unhappy employees posted comments to Facebook regarding the situation, and the employer responded by terminating employees who had posted.  The employer also interrogated one of the employees prior to termination, and threatened legal action based on the employee’s online comments.  The Board found these actions violated the NLRA’s protections for employees discussing their terms and conditions of employment including wages paid or owed.  Based on the violations, the Board ordered that the employees be reinstated and receive back pay, lost benefits, and removal of the discharge records from the employee personnel files.  As the employer based its decisions in part on the employer’s internal policies, the Board also ordered that the organization revise its policies and distribute the revised versions to workers.

There are several considerations for management following this decision:

1.            Be aware that regardless of union presence, the Board may have jurisdiction over an employer. The Board has been more aggressive in recent years in pursuing potential violations of the NLRA against non-union employers.  Employers need to know that simply lacking a union presence will not protect them against Board enforcement action if they are not acting in compliance with the NLRA.

2.            Be cautious when considering disciplining employees based on social media use.  Social media use and related policies have become hot topics for the NLRB.  Under the NLRA, employees are entitled to discuss terms and conditions of employment with other workers.  Employers need to be careful before taking action.  For example, a negative posting on hours or wages by one employee which is responded to by other employees may be protected as multiple workers are discussing protected issues making the discussions potentially protected “concerted activity.”  A negative posting by one worker that does not generate any responses or discussion may instead be considered “griping” and not protected under the NLRA.  Each situation will have to be assessed on its particular facts.

3.            Check and possibly re-write organization social media and communication policies.  The Board has been increasingly aggressive over the last several years in scrutinizing both union and non-union employer social media and communication policies and practices.  Three D, LLC is the latest decision in this recent string.  Many organizations have policies written before the Board began pursuing the social media issue.  These policies may not be in compliance with current Board interpretations of the NLRA and what employees are allowed to post or discuss online.  Employers should double-check to make sure that practices and policies are consistent with what is permissible under the Act as the Board interprets it.

Patrick Pearce is a member (equivalent to partner) at Ogden Murphy Wallace, PLLC, and practices with the firm’s Employment and Labor and Hospitality groups.  He is available at 206-447-7000 or ppearce@omwlaw.com to address questions on this or other employment and labor law issues.

 

 

CA Surgeon Stripped of Medicaid Funding for Failure to Treat HIV Positive Patient

On July 18th, the U.S. Department of Health and Human Services announced that a California surgeon who refused to treat a patient based solely on the patient’s condition as HIV positive would lose Medicaid funding.  The surgeon had refused to perform necessary back injury and a resulting investigation by the HHS Office of Civil Rights found the surgeon had discriminated against the patient in violation of federal laws.  The violation ultimately resulted in an action to ensure compliance with federal civil rights laws and eventually the surgeon’s loss of the federal funding.

The determination underscores the need for health care providers to make best efforts to ensure patients and prospective patients who fall within protected classes receive the same treatment and standards of care as any other patient.  Failing to do so can jeopardize federal funding and also expose the provider to a range of potential claims for violations of federal and state workplace laws.

The fundamental steps to help avoid claims and liability are:

●             Have effective policies:  Providers should have written policies prohibiting discrimination and harassment.  Having an effective policy notifies all employees that discrimination and harassment will not be tolerated, and helps set a tone for conduct in the workplace.

●             Train up supervisors and staff:  All supervisors and staff should be fully aware of workplace discrimination and harassment laws and how to respond to potential problems.  Training helps prevent claims, allows problems to be identified and addressed early on, and provides vital potential evidence that the employer took reasonable steps to prevent improper behavior.

●             Familiarize yourself and staff with Medicaid rules:  Washington State Medicaid provider requirements obligate participating providers to provide all services without discriminating on the grounds of “race, creed, color, age, sex, sexual orientation, religion, national origin, marital status, the presence of any sensory, mental or physical handicap, or the use of a trained dog guide or service animal by a person with a disability.”  In addition, WA Medicaid allows termination of a provider relationship for discriminating in furnishing health care services as prohibited by federal statute.

For more information regarding avoiding such liability please contact Patrick Pearce.