Deep Breaths about Wage Theft

As of July 1, 2019, Minnesota’s new Wage Theft Law will go into effect.  If you read anything about this new law, it is easy to assume it places many, many new obligations on employers.  But, like many things, take a deep breath.  The new law isn’t nearly as onerous as you might think.

First, the new law requires employers to follow old laws.  Employers have to pay employees.  Employers have to pay at least minimum wages.  Employers have to pay overtime.   Employers have to have paystubs with a bunch of information on it that specific how the employee earned pay (pay period dates, what is regular pay, what is overtime, what deductions are for, employer name, address, and telephone number, etc.).  None of this is new.  What is new is the amount of penalties that accompany failure to follow these laws.  Those have increased and failure to follow the law could include very real criminal penalties.

Second, if you have offer letters, much of the new “notice” requirements are already in your offer letters.  Start date, how much the employee earns, basis of pay (salary or hourly), when employees will get paid (weekly, biweekly, twice monthly, etc.), exempt vs. nonexempt status, any commission structure (if applicable), what shift the employee is assigned (if applicable), PTO or vacation and sick time accrual, deductions to pay, employer address, and telephone number – these should already be in your offer letter.  The only “new” pieces are when the first payday will be, any allowances (like meals and lodging), and an offer to put the offer letter in a different language if needed.

Third, when employers roll out new policies, you need employees to acknowledge them.  Prior to the new law, employers could roll out new policies without employee acknowledgements.  Now you need them.  To avoid piecemeal acknowledgements, it may be best to review your handbook annually and when updates are necessary, require employees to acknowledge the changes all at the same time once per year.  More frequent changes are going to require more frequent acknowledgements.  This could be a bit of a pain to both do and track.

Fourth, when you change wages, employees need to acknowledge those changes too.  For example, if Jimmy is going to get a raise, you give him a writing (email, letter, performance review) that his wages are increasing and have him acknowledge the increase.  Again, most employers already do this, but now it is mandated by law.

That’s it!  The Wage Theft Law looks like it could be hard to comply with.  But, in reality, it is not as big of a deal as it has been made out to be.  Take a deep breath, you got this.

 

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Happy Equal Pay Day?

Today is Equal Pay Day.  According to Institute for Women’s Policy Research, white women make only 80.5 cents for every dollar men make.  The wages are even lower for Black and Hispanic women.  (Hispanic women will have to work an additional 232 years for pay parity!)  We all know that something has to be done about it.  So how is the wage gap going to change?

Salary History Bans.  According to HRDive, seven states and six localities have prohibited employers from asking candidates about their current or previous salary histories.  The theory supporting the bans is that if an employer sets an employee’s wage based upon what she previously made, the new employer may be perpetuating the wage gap.  If an employer can’t ask the previous salary history, then the employer will be setting the wage on either the market rate for the position or based upon what the employee desires – a question that is not prohibited.

For reasons that remain a mystery, some are vehemently opposed to salary history bans.  Michigan passed a law prohibiting any localities from enacting salary history bans while others have initiated a lawsuit to prohibit the law from going into effect.  Their arguments for asking the question and as such against the bans are stopping title inflation, salary histories actual verify previous performance, or we already have laws that prohibit wage disparity.  However, we still have significant wage disparity.  So if we can’t ask one question, will our entire recruiting process fall?  (Spoiler:  No.)

Yes, there are detractors to salary history bans.  They argue that salary history bans will hurt women in the long-run given our poor salary negotiation skills.  However, if we set salaries based on the market and our own payroll, then the job pays what it pays.  No negotiation necessary.  Try the Ellen Pao method.

Reinterpret Existing Law.  Yesterday – one day before Equal Pay Day – the Ninth Circuit Court of Appeals held that a candidate’s previous salary cannot be a defense to an Equal Pay Act claim.  Specifically, Judge Stephen Reinhardt (in what may be his last opinion) wrote, “To hold otherwise—to allow employers to capitalize on the persistence of the wage gap and perpetuate that gap ad infinitum—would be contrary to the text and history of the Equal Pay Act.”  This decision is a big deal for a couple of reasons:  (1) an employee’s previous salary could have been used as a defense to a wage gap previously – this decision stops that, (2) the decision bolsters salary history bans, and (3) the decision limits employer discretion in determining pay to only job-related criteria for determining pay.  This alters the law in a way that may reduce the wage gap.

Market Rule.  I, like many others, encourage employers to use market rates.  This means that employers have to invest and participate in salary surveys.  That said, the benefit of paying the market rate without regard to what a candidate used to make levels the playing field for employers and candidates.  Employers can feel confident that they are going to find candidates and differentiate themselves from their competition based on workplace culture.  Candidates can differentiate between employers without regard to pay.  They can find the workplace that fits them best.

When it comes to the wage gap and Equal Pay Day is that we have to do better.  Use market rates, don’t ask salary history questions (on applications or in interviews), review your payroll to determine if gaps exist, and work with your friendly neighborhood employment attorney to help do the right thing.

If you’d like more information or to read some opinion on Equal Pay Day, check out Lilly Ledbetter’s take.

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Happy Birthday, tHRive!

Today is a big day!  Today, tHRive Law & Consulting turns one.  In just the past year:

Human resources and employment law are ever-changing and exciting.  Our work touches nearly everyone, making it incredibly meaningful and challenging.  This is why I love it.  I can’t think of another area of business or law I’d rather be in.

tHRive Law & Consulting made it through one of the most significant milestones of any start-up – the first year.  I could not have done it without the support of so many and the confidence of my HR tribe.  For that, I am eternally grateful.  Thank you!

Now, onto the challenges of year two!

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Issues for HR Compliance Students

Wednesday marks the start of Mitchell Hamline School of Law’s HR Compliance Certificate program.  As one of the Adjunct Professors, I’m pumped!  With a cohort of HR folk from around the country, we get to analyze, theorize, and hash out business and HR compliance issues that can pop up in every company. We also get to chat about current HR compliance events.  Here are a few we’ll touch on:

“Google’s Ideological Echo Chamber”

Over the last few days, a “manifesto” written by a male Googler went viral.  The 10-page document recounts how the genders are different and diversity and inclusion programs have only resulted in more discrimination.  (His words, not mine.)  Here’s a snippet:

We always ask why we don’t see women in top leadership positions, but we never ask why we see so many men in these jobs. These positions often require long, stressful hours that may not be worth it if you want a balanced and fulfilling life.

Status is the primary metric that men are judged on, pushing many men into these higher paying, less satisfying jobs for the status that they entail. Note, the same forces that lead men into high pay/high stress jobs in tech and leadership cause men to take undesirable and dangerous jobs like coal mining, garbage collection, and firefighting, and suffer 93% of work-related deaths.

Yonathan Zunger, a former Googler, wrote a well-reasoned response to the manifesto discussing how it makes it harder for Google to operate.  Google’s brand new Vice President of Diversity, Integrity & Governance also weighed in, writing “Part of building an open, inclusive environment means fostering a culture in which those with alternative views, including different political views, feel safe sharing their opinions. But that discourse needs to work alongside the principles of equal employment found in our Code of Conduct, policies, and anti-discrimination laws.”

Google is in the midst of a gender discrimination action brought by the OFCCP.  The action has already garnered a great deal of attention.  This manifesto makes the action even more interesting.

Uber

Last session, HR compliance had an easy mark in Uber.  Gender discrimination, sexual harassment, former United States Attorney General investigation, HR leader encouraging hugs, a new performance review, ousted CEO, you name it, Uber has an HR compliance issue for you!

Uber’s compliance issues have not gone away nor have they really calmed down.  Following a petition from employees to return embattled and controversial CEO Travis Kalanick, Mr. Kalanick appears to want control of his company.  He has made such comments that he is “Steve Jobs-ing it” and has hired a CEO-consulting company to help him regain control.  While his success remains to be seen, he poses interesting HR risks.

While both of these issues come out of Silicon Valley, they are not new to HR.  Every sector has issues, and every company could have a PR nightmare like these.  I’m particularly interested in how students would try to attack these issues.  So, how would you respond?

 

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Twin Cities Sick & Safe Time

For those of us HR and employment law nerds, the goings-on about paid sick leave in Minnesota has been fascinating and at times, nail-biting.  Minneapolis reached its ordinance first, St. Paul quickly followed suit, the Republican-controlled Legislature got really, really upset, and then Governor Dayton squashed the Legislature’s hopes.  Ah, the drama!  Now, that the legislative kerfuffle is over, it’s time to focus.  If you do business in the Twin Cities or you have employees who spend more than 80 hours a year working here, these ordinances require your attention.

What the Ordinances Do

The ordinances are called “Sick and Safe Time” ordinances, designed to give employees time off for illness (their own and their immediate family members), time off when an employee (or family member) has been the victim of domestic abuse or stalking, certain public health emergencies, inclement weather, and other closures due to loss of power or HVAC operations.  Minneapolis and Saint Paul want to employers to provide this time to promote employee well-being and improve the overall health of each city.

The similarities between the ordinances are many, but both have their own quirks.  Here is a breakdown of each ordinance:

Minneapolis

Saint Paul

Employers with 5 or fewer employees need only provide time off, the time does not need to be paid Employers of all sizes must provide paid time off.  However, for employers with 23 or fewer employees, the ordinance does not go into effect until January 1, 2018
Employees accrue 1 hour of time off for every 30 hours worked Employees accrue 1 hour of time off for every 30 hours worked
Employers may impose a cap of 48 hours Employers may impose a cap of 48 hours
Employees can carry over time, but an employer can cap the amount of available time to 80 hours Employees can carry over time, but an employer can cap the amount of available time to 80 hours
Employers may grant the leave in advance (i.e. employers can front-load the time) Employer may grant the leave in advance (i.e. employers can front-load the time)
Employers can prohibit employees from using the time in the first 90 days of employment Employers can prohibit employees from using the time in the first 90 days of employment
Employees may use the time in a manner consistent with business/payroll practices, provided the time is no more than 4 hours at a time Employees may use the time in a manner consistent with business/payroll practices, provided the time is no more than 4 hours at a time
Startups (under a year old) can provide unpaid time in their first year (until July 1, 2022) Startups (within six months of hiring employee number 1) can provide unpaid time.  After six months, the employer must provide paid time off.
Minneapolis has a notice provision and a poster Saint Paul has a notice provision and a poster
Employees can lodge complaints of violations with the City of Minneapolis Department of Civil Rights Employees may lodge complaints with the City of St. Paul or may bring a private action (litigation) in court

The Saint Paul ordinance’s private right of action provision is controversial and a big deal.  If the employee is successful in bringing a claim, the employee may also get attorneys’ fees and costs.  (Spoiler alert:  Attorneys are not cheap.)   Minneapolis’ ordinance does not provide for such a right and instead, employees can only lodge a complaint with the Minneapolis Department of Civil Rights, which can determine how to handle the complaint.  While the availability of a private lawsuit shouldn’t sway an employer to implement policies consistent with the ordinance, it should give an employer pause.

Some Challenges

The ordinances are a bit of a challenge to implement.  Many (if not most) employers grant time off based upon years of service, not on hours worked.  This presents the challenge of counting the hours, making sure the way the employer grants time is equal to or greater than the ordinance allotment.  Another challenge may require employers to revise or rewrite their policies.  Depending on the employer, this may involve drafting a detailed list of how an employee may use the time to be consistent with the ordinances.  A policy doesn’t have to list all the ways, leaving room for some flexibility, but that said, some employers may want to be more explicit to make compliance clear on the surface of the policy.

Here are a few scenarios that you may be facing:

  • If you offer paid time off (PTO) and your PTO policy allows employees to take time off for the same reasons the ordinances allow employees to take time off and in equal amounts or greater amounts than what the ordinances require, you don’t need to take any action. Your PTO policy is probably already compliant.
  • If you offer sick time separate from vacation, you will need to review your sick time to make sure you grant the same amount (or more) than the ordinances and you permit employees to use the time for the same reasons the ordinances allow employees to use the time.
  • If you offer unlimited time off, your program is probably in compliance provided you are providing payment for the time off and encourage employees to take the time.
  • If you don’t offer any sick time (or PTO), the ordinances provide a framework to offer time.

For more information, take a look at the resources available for employers from both Minneapolis and Saint Paul.

The Injunction

Both ordinances attempt to extend beyond their own borders by covering any employee who works more than 80 hours a year within the respective city.  For example, if an employer was headquartered in a suburb, but employees regularly work in the big city, the employer would have to provide paid leave to those employees too.  Businesses were really upset by this and the Minnesota Chamber of Commerce challenged the Minneapolis ordinance in court.  The Chamber was partially successful and obtained an injunction on this issue, which it is up on appeal.  The hearing on the injunction is scheduled for July 11, 2017 – ten days after the ordinance goes into effect.  While we probably will not get a decision until September or later, risk-adverse employers whose employees only occasionally work in the Twin Cities may want to still implement sick leave while the appeal is pending.

New laws are always a challenge for employers.  These ordinances are no different.  While Minneapolis promises not to “enforce” the ordinance for the first year, employers should be looking at their policies, updating where necessary, and identifying where we could offer more benefits where compliance would require it.  Your friendly neighborhood employment attorney is here to help.  Use us.

Selling Compliance

No one in HR wants to be considered a Peter from Peter and the Wolf.  But yet, when it comes to compliance issues, it is easy to fall into that trap.  We are often running around saying “we can’t do that!  We’ll get in trouble!”   After a while, leaders start to tune us out.  To be effective, we have to seize a case for compliance in terms of business.

Consider this:  What if we looked at employment laws and regulations like best practices with teeth?  Now, I get that this is controversial.  Very, very few people would design a diversity program like the OFCCP’s affirmative action regulations and other examples certainly exist, but bear with me.  What if we looked at the underlying reason for a particular law and compared that with a business goal?  Wouldn’t they be similar in most cases?  Would that make it easier to sell compliance?  The answer: You betcha!

Take for example, paid sick leave.  As of December 31, 2016, 37 jurisdictions (mostly cities, counties, and some states) had enacted paid sick leave laws.  While paid sick leave is certainly a trend at the local and state levels, many employers have understood that they needed to provide sick leave to employees for decades.  These businesses knew that if they didn’t offer the paid time, they would not get the talent they were looking for and employees might leave if they didn’t have the time to care for themselves and their families.  While paid sick leave is now law in some areas, it has long been a recruitment and retention tool for employers.

For an employer in a jurisdiction with a paid sick leave law who doesn’t offer it, HR is now in a position where it needs to sell the benefit as a legal requirement.   HR could package a proposal like this – paid sick leave is needed to get and keep the talent we need and the new ordinance provides a framework to do that.  Would that be an easier sell?

What about sexual harassment?  We know that anti-harassment laws were designed to protect women in the workplace so women could be productive, safe, and contribute our skills.  These laws also try to create workplaces built on the respect for all employees.  These are business goals.  When there is a culture rife with disrespect or disharmony, productivity comes to a near halt.  Turnover increases.  Employees are disengaged.  No business leader wants this to happen.  Preventing and then stopping harassment in its tracks protects the workplace and protects the business from legal claims and PR nightmares and keeps the focus on where it should be – the organization’s mission.

CEOs care about talent.  They care about finding the best talent the can and holding on to the great talent they have. According to PwC’s 2017 CEO survey, talent remains a top priority and as does diversity.  When we view employment laws and regulations as things that can be aligned with business goals, it becomes easier to get buy-in from the top.

This works for every employment law.  If you can’t come up with a business goal, try me.  I believe there is a business goal attached to nearly all employment laws.  I’ll accept the challenge to find one for your organization!

 

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