Labor and Employment Law Alert: Congressional Amendments, State Law Cloud DOL's New Rules
6/1/2004

Congressional Amendments, State Law Cloud DOL's New Rules

The Department of Labor's new overtime rules announced in April were summarized in April's Client Alert. The new rules, which are slated to take effect August 23, 2004, may be curtailed by two recent U.S. Senate amendments as well as some states' wage and hour laws.

The Republican-sponsored Gregg Amendment guarantees that 55 specific job classifications will continue to have their exempt status determined based on the old regulations in effect on March 31, 2003. The Democrat-sponsored Harkin Amendment rolls the new regulations back even further, prohibiting the Department of Labor from making any additional job classifications exempt. It does allow the increased minimum salary requirement of $455 per week to go into effect on August 23. Both amendments face uncertain prospects in the House. Many states also regulate overtime pay, including Alaska, California, Colorado, Hawaii, Montana, Oregon and Washington. None of these states has yet determined whether to conform its overtime rules with the new federal regulations.

HR Action Item:
Employers should consider the impact of the new rules on their workforce, especially the increased minimum salary. However, before taking any action, determine whether Congress has modified them, consider the impact of applicable state wage and hour laws, and affirm your conclusions with your employment attorney.

Since 1975, unionized employees have had the protection of so-called Weingarten rights. Under a long line of National Labor Relations Board (NLRB) authority, a unionized employee has the right to request a coworker's presence at a workplace interview when the employee reasonably believes the interview might result in discipline.

The same has not always held true for nonunion employees. Instead, as U.S. Presidents and political appointments to the NLRB change, it has reversed itself a number of times on this issue. This past June, the pendulum swung again (IBM Corp., 341 NLRB No. 148, reversing Epilepsy Foundation of Northeast Ohio, 331 NLRB 676 (2000)). In IBM, the NLRB ruled that nonunion employees do not have Weingarten rights, contrary to its finding in Epilepsy Foundation. The finding was based in part on a determination that a nonunion employee's right to a coworker's presence is outweighed by an employer's right to conduct prompt, efficient, thorough and confidential workplace investigations. The NLRB's new decision is good law unless it is appealed and overturned by a federal court - or until the NLRB changes its mind again.

Although this is a victory for nonunion employers, bear in mind that certain aspects of the National Labor Relations Act and the NLRB's interpretations of the act apply to all employers, regardless of whether they are unionized. This case has no effect on any employee's right to engage in protected concerted activities such as striking, organizing a union or speaking with each other or collectively with their employer about terms and conditions of employment.

HR Action Item:
Nonunion employees have no right to have a coworker sit in on an investigatory interview. Employers should inform managers of this change in the law and train managers how to respond to such requests as well as how to carry out effective investigations.

Wal-Mart, the world's biggest retailer and largest private employer, is now the defendant in the largest workplace discrimination suit in history, a nationwide class action that includes 1.6 million current or former female employees. This case is one of the latest in an epidemic of class-action litigation concerning overtime, meal and rest breaks, equal pay, and discrimination in pay or promotions.

The Wal-Mart litigation will explore whether women systematically were paid less than men for the same work and denied promotion opportunities due to a subjective, "tap on the shoulder" promotion process. The plaintiffs' statistical expert asserts that women were paid five to 15 percent less than men in similar positions and that, while 65 percent of Wal-Mart's hourly employees are women, only about 33 percent of its managers are. The publicity of this case and others like it will cause many employees and plaintiff's lawyers to scrutinize employer wage and promotion practices.

HR Action Item:
Employers should carefully review their pay and promotion practices in order to determine whether they are vulnerable to such scrutiny. If potential problems are identified, legal counsel should be consulted concerning what remedial options exist and how to best implement any changes.

The U.S. Supreme Court has ruled that employers may have a defense when employees quit due to supervisor harassment. Under Title VII, employers are strictly liable for a supervisor's harassment where a tangible employment action results, e.g., pay cut, demotion or termination. In a constructive discharge case, the employee claims to quit because of intolerable working conditions.

In Pennsylvania State Police v. Suders, a female police communications officer alleged she quit due to her supervisors' harassment. The Supreme Court held that in a constructive discharge case involving supervisor harassment, an employer may be able to raise the Ellerth/Faragher affirmative defense if there is no other tangible employment action by the employer. In such cases, an employer may avoid liability if (1) the employer exercised reasonable care to prevent and promptly correct any harassment (such as good policies and practices to respond to harassment complaints) and (2) the employee unreasonably failed to take advantage of the employer's policies for preventing or addressing harassment before quitting.

HR Action Item:
The Supreme Court's decision is yet another warning to employers that they must proactively prevent and promptly correct harassment in their workplaces. Employers should adopt antidiscrimination and antiharassment policies that provide for effective reporting of a violation and no retaliation, should educate their workforce about the policy and its prohibitions, and should monitor and train supervisors.

Stoel Rives was recently named a leading firm in labor and employment law by the prestigious legal directory Chambers USA. The 2004-2005 edition of the independent and objective directory listed Stoel Rives lawyers and offices throughout the region and cited the firm's "depth and expertise," "solutions-oriented approach" and "aggressive representation." View press release.

For more information about the issues in this bulletin, please contact the Stoel Rives attorney with whom you regularly consult. View a list of all attorneys in the Labor and Employment Group.

This is a periodic publication of Stoel Rives Labor and Employment Group for the benefit and information of clients and friends. This newsletter is not legal advice or a legal opinion on specific facts or circumstances. The contents are intended for information purposes only.