There Is More to This than Meets the Eye: Why an Under-the-Radar DOL Wage and Hour Bulletin Is Good News for EmployersThe U.S. Department of Labor issued a Field Assistance Bulletin on June 24, 2020, announcing that it will not routinely assess pre-litigation liquidated damages as part of the settlement process for claims under the Fair Labor Standards Act. Although this announcement has largely gone “under the radar,” it actually has historic significance. The bulletin is an important development and excellent news for both employers and employees as it will likely result in the expedited resolution of many wage and hour claims before the DOL. More importantly, this announcement completes the circuit of the DOL’s return to normalcy after nearly a decade where it was widely perceived as openly anti-employer.

What Does the Field Assistance Bulletin from June 24 Say? 

Effective July 1, 2020, the DOL will not assess pre-litigation liquidated damages if any one of the following circumstances exist:

  • There is not clear evidence of bad faith and willfulness;
  • The employer’s explanation for the violations show that the violations were the result of a bona fide dispute of unsettled law under the FLSA;
  • The employer has no previous history of violations;
  • The matter involves individual coverage only;
  • The matter involves complex issues of white collar and motor carrier exemptions (under section 13(a)(1) and 13(b)(1) exemptions); or
  • The matter involves state and local government agencies or other non-profits.

Furthermore, each request for pre-litigation liquidated damages under the FLSA must be submitted to and approved by both the Wage and Hour Division administrator and the solicitor of labor (or either of her designees) on an individual basis.

A Little History

Once upon a time (prior to 2009), the DOL used a three-pronged approach to address the FLSA’s wage and hour requirements. Prong one was to educate employers about the law and provide advice and assistance when asked. One of the primary ways the DOL accomplished this was by allowing employers to submit questions about wage and hour (or FMLA) issues, which the DOL answered with opinion letters. The FLSA is technical and full of grey areas, but employers could rely on opinion letters from the DOL to make decisions. As long as an employer asked, and followed the direction provided, it did not have to worry about liability. Prong two of the DOL’s approach was to investigate alleged violations and try to resolve them without litigation. The DOL was often able to expedite settlements because it did not seek liquidated damages (double damages) or attorney fees, both of which drive up the cost of litigation and resolution in federal court actions. Employers could resolve claims with the DOL, avoid litigation, and incur less cost. Employees could receive payment relatively quickly and without litigation when they settled cases through the DOL process. Prong three, which was the last resort, was for the DOL to sue employers for alleged violations. DOL litigation was the exception.

Things changed in 2009. After nearly 70 years of issuing opinion letters to answer questions, the DOL stopped the process, withdrew pending letters, and instead began issuing “general guidance” on topics of its choosing. The general guidance was almost always decidedly anti-employer. Not only could employers no longer ask questions about the FLSA and rely on the DOL’s response, but at the same time the DOL was fashioning guidance that often required employers to change existing practices or face liability. The DOL also changed its practice of not assessing liquidated damages during the settlement phase and began demanding that employers pay double damages to settle or the DOL would sue. The DOL was no longer seen by employers as an option for resources and education and instead was viewed as an agency with a clear anti-company agenda.

Why This Is Good News

The DOL’s recent decision to reinstitute opinion letters and this announcement to not seek liquidated damages in all matters are more than just a blip on the radar. These decisions signal an important return to normalcy and suggest that perhaps the DOL will approach matters in a less litigious manner. Of course, the DOL will still look for and pursue violations. With this new turn of events, however, perhaps it will allow employers to avoid and fix mistakes more effectively.

Can You Rely on an Employee’s Prior Salary as a Defense to a Pay Discrimination Suit? The Supreme Court Refuses to Enter the FrayIn hiring employees, can you just give them a salary bump or must you look at their soon-to-be coworkers to decide the correct amount? This is a hotly debated issue right now, and, as with many things, it depends on where you live. In Rizo v. Yovino, Fresno County Superintendent of Schools, the Ninth Circuit (which covers the West Coast) ruled that an employer could not consider salary history. Although not all courts agree on this point, this week the U.S. Supreme Court declined to take the appeal, denying certiorari, and leaving the Ninth Circuit’s decision in place.

How Did We Get Here?

In this current case, in 2009, the Fresno County Office of Education hired Aileen Rizo as a math consultant and, like it did for all employees, set her salary by adding 5% to her last salary. When she learned she was making less than male colleagues hired after her, she filed a complaint under the Equal Pay Act and various state laws. For more details on Ms. Rizo’s case, read our prior blog post.

After a circuitous route (which included a trip to the Supreme Court in light of one of the judges dying before a decision was released), Ms. Rizo’s fate was still up in the air. In February 2020, the Ninth Circuit again ruled in her favor, holding that a “factor other than sex” had to be job related and her prior salary was not. While many courts have ruled similarly to the Ninth Circuit, some have read the “factor other than sex” defense more broadly.

At least for now, the Supreme Court is not going to clear this up.

Now What?

It is not uncommon for an employer to set a new employee’s pay by looking at his or her prior salary and increasing it some. Some people argue that is smart economically and relies on a “factor other that sex.” Others, including the EEOC, argue that this practice results in a pay gap between men and women performing the same job. You should re-evaluate this practice as it could land you in court. Here are a few tips:

  • Check your jurisdiction to see if you can consider prior salary as a “factor other than sex.”
  • Check your state and local laws, as many now prohibit inquiries about prior salary.
  • Consider doing a pay equity audit (with the assistance of counsel) to identify if you have a ticking time bomb just waiting for the right plaintiff to come along.

Getting Clean, Back to Routine and Ready to Be Seen: New OSHA and CDC Guidance on Employees Returning to Worksites After COVID-19 ShutdownsOSHA and the CDC have each recently issued new guidance for employers as more and more employees make their way back to on-site work following the COVID-19 shutdown. Here are a few tips to consider to ensure that you are providing a safe and healthy workspace.

First, check the building facilities to ensure that they are ready for employees to return (especially if the building has been vacant for the past few months). This includes ensuring that ventilation and air conditioning systems are operating properly. You should also take steps (if it won’t create other safety or operational risks) to increase outside air circulation by opening windows and doors and by utilizing fans.

Second, identify where and how workers might be exposed to COVID-19 while at the workplace. Conduct a hazard assessment (both the CDC and OSHA have specific guidance on how to do this) to identify potential hazards that might increase the risk of spreading COVID-19. This involves considering all tasks performed by employees to determine which tasks potentially involve heightened exposure to COVID-19. Identify all work areas, such as common areas, hallways, and break rooms, where employees might not be able to maintain social distancing.  Include all employees in communication plans regarding the re-opening of the office, so that everyone understands and has been trained regarding the precautions being taken to prevent the spread of COVID-19.

Third, develop engineering and administrative controls to reduce the spread of COVID-19 among employees. Engineering controls help isolate employees from the hazards of COVID-19 and could include modifying the placement of furniture or workstations to maintain six feet between employees or installing shields or other physical barriers where social distancing is not possible (such as in reception areas). Consider using signs or other visual cues to remind employees and visitors to maintain social distancing in high traffic areas. If you have a breakroom, consider using pre-packaged, single-serve items rather than traditional coffee pots and water coolers.

Administrative controls change the way in which people work and could include regularly reminding employees that if they have symptoms of COVID-19 or have a sick family member at home, they should notify their supervisor and stay home. If an employee appears to have symptoms while at work, immediately separate him from others—send him home with instructions to follow-up with his healthcare professional. You may want to perform daily health checks of employees (either in person or virtual) before they enter the workplace. Think about whether to stagger shifts and break times to reduce the number of employees in common areas at a given time. Post signs around the office reminding employees and visitors of best practices to prevent the spread of COVID-19. If jobs can be done remotely and effectively, telework opportunities could continue to help fight the transmission of COVID-19 and protect workers who may be at higher risk.

While the way we interact in the workplace may look different as we continue to fight the spread of COVID-19, it does not have to affect the workplace culture that you have worked so hard to build.