Window Washers and Telegraph Operators Beware: DOL Eliminates Specific Retail and Non-Retail Examples Under Overtime Exemption RuleFor those of you craving a non-COVID-19 issue to chew upon, the Department of Labor opened the floodgates of debate by withdrawing the partial lists of establishments that could either be “recognized as retail” or “having no retail concept” under the FLSA’s overtime exemption for certain commissioned employees. Of course, we are being sarcastic (kind of). However, this slight change should encourage employers who use commissions as part of their wage system to re-examine whether they meet the exemption.

It’s All About the Commissions

Under the FLSA, certain commission-paid employees in retail and service industries are exempt (and not eligible for overtime). To qualify for the exemption, (1) the employee’s pay has to be in excess of one and a half times the minimum wage and (2) more than half the employee’s pay in a month has to be paid in commissions on goods and services. This exemption, however, is only available for employees employed by a “retail or service establishment.” There’s the rub: What does that mean?

In its regulation, the DOL defined “retail or service establishment” as having a “retail concept” and “selling goods and services to the general public.” Such an establishment performs skills and dispenses goods in “small quantities” and “does not take part in the manufacturing process.”  If the employee works for a business that meets that definition and the employee’s wages meet the other requirements, the employer does not have to pay them overtime.

Give Me an Example!

Since 1961, the regulation’s somewhat muddy definition of retail or service establishment has been further explained by two non-exhaustive lists of businesses that don’t qualify. The first list contained 89 types of establishments that the DOL felt were “lacking in a retail concept” and therefore probably wouldn’t meet the exemption requirements. In 1970, DOL added another 45 types of businesses to the list. What sort of establishments presumptively didn’t qualify? Tax preparers, laundries, roofing companies and travel agencies are some examples. But the list didn’t stop there! Other “well-known” businesses such as “photostating establishments,” “stamp and coupon redemptions stores” and “telegraph companies” were also listed as not retail enough to claim the exemption.

However, the DOL didn’t feel that was even enough. The same rule also had a list of 77 establishments that “may be recognized as retail.” This list included storage shops, household refrigerator services and massage establishments. It also included “fur repair,” “reducing establishments,” “scalp-treatment establishments,” and taxidermists.

Strangely, the regulations provided no explanation of why any of the businesses were included on either of the lists.

End of the Lists

The DOL decided to withdraw both lists: those that had no retail concept and those that “may” have a retail concept. (You can hear the collective sigh of relief from the photostating and scalp-treatment industries.) Instead, the DOL will simply apply its own case-by-case interpretations to determine whether a business has a retail concept and qualifies for the exemption. The DOL stated that this will better suit how industries change over time. Another reason for dropping the lists were the growing number of courts that characterized them as an “essentially mindless catalog” or “without any rational basis explained in the regulations.” (Tell that to your local fur repairer!)

I’m Neither a Taxidermist nor a Telegraph Company – How Does This Affect Me?

If you have employees you are paying on commission, and you are not paying them overtime, this would be a good time to make sure that employees meet requirements for the FLSA exemption. Do they meet the amount of the wage required? Do they make half their pay in commissions? Can you make the argument that your business has a retail concept? Since the DOL has eliminated its long list of things it didn’t used to consider fitting the retail description, you may find some employees who now meet the exemption. Updating your job descriptions, especially if they haven’t been examined in a long time, may help in this process.

Consider the Circumstances: What to Expecting When You’re Expecting Employees to Return to Work and They RefuseAs states begin to ease COVID-19 restrictions and individuals start to determine their own levels of acceptable risk, employers face yet another set of issues related to getting employees back to work. After many of you quickly pivoted to remote work to comply with stay-at-home orders, you are now reverse-engineering solutions to a new problem: employees who cannot (or will not) return to the workplace.

The bad news: there is no one-size-fits-all solution to this problem. The good news: the EEOC has issued some guidance you can follow to keep employees safe, keep your business running, and, hopefully, limit your liability. Before considering this guidance, however, your first step in any of these situations is to determine why the employee refuses to return to on-site work. This is a fact-intensive analysis and must be done on a case-by-case basis. We will address four scenarios that are cropping up in our practice and will outline a general approach.

Scenario 1: An employee is medically compromised, or lives with an individual who is and doesn’t want to return to the workplace.

Your employee does not want to work on-site because he or she is medically compromised, or lives with someone who is medically compromised. Does the employee have a disability under the Americans with Disabilities Act (ADA)? If so, you cannot discriminate against the employee based on that disability. Not only that, but you have an affirmative obligation to consider what, if any, reasonable accommodations will allow the employee to continue to perform the job’s essential functions.

(1) Your first question is can we provide a reasonable accommodation that will allow the employee to safely return to on-site work? Here are some things you should consider:

    • What about the on-site work poses problems and what reasonable accommodations (other than remote work) may address those problems for this particular employee?
    • Consider the employee’s own request — while you are not obligated to honor this request, you must at least consider its feasibility and try to find an equally effective alternative if possible.
    • Can you get creative with physical changes in the office to address these issues? Can you
      • require/provide the employee with PPE (e.g., mask, gloves, face shield)?
      • require/provide workers who interact with the employee with PPE?
      • provide physical barriers (plexiglass, etc.) at the employee’s workstation?
      • reconfigure the employee’s workstation (e.g., move to an office with a door, a spot with less traffic, etc.)?
      • have the employee participate in meetings virtually (within the office) or in a bigger meeting space?
    • If physical changes will not work, can you adjust the employee’s schedule to reduce number of interactions at work?

(2)  your answer to number (1) is NO (i.e., there is no way to accommodate the employee on site), can the employee perform all of his or her essential functions remotely?  During the shutdown, many companies permitted employees to work remotely just to keep people on payroll. In this instance, you can consider whether remote work actually works for this job or for your business.

    • If remote work is a workable option, you can temporarily approve work from home as a reasonable accommodation for this employee’s disability. Put a time limit on it and require periodic updates based on the employee’s health, performance, and CDC guidance.
    • If remote work is not a great option, consider whether the employee can work remotely part of the day/week, with short, intervals on site for some duties.
    • With either option, be up front that this is a temporary approval and is subject to change, with the ultimate goal that the employee is back on site full-time.

(3) If your answer to number (2) is also NO, consider leave (paid or unpaid) as a reasonable accommodation.

    • Can the employee take paid time off based on your company policy?
    • Is the employee eligible for FMLA leave?
    • Are there short-term disability benefits that might be available?

Keep in mind, if unpaid leave goes on for an extended period of time, it may be beneficial for the employee to consider termination or a temporary furlough so he or she can seek unemployment benefits.

Scenario 2: An employee is over 65 and does not want to return to on-site work.

While age is not a disability under the ADA, there may be older employees whose doctors provide medical reasons for refusals to return to work that disclose a disability. If this is the case, refer to the questions and guidance in Scenario 1 above.

Notwithstanding the above, you should approach concern from an employee over 65 in the same manner you would an employee with a disability. The current CDC guidance clearly states that individuals who are 65 years or older — regardless of underlying health conditions — are high risk for severe illness from COVID-19. You should not assume an older worker doesn’t want to return to on-site work but if they raise this concern, work with the employee to determine if there are accommodations you can make that will allow them to return to work safely. (Be sure to not assume the concern is disability-related and do not request any unnecessary medical information.)

The questions to answer in Scenario 2 are the same as those listed above in Scenario 1. Like with the ADA, here you do not have to give the employee the requested accommodation but you still need to engage in the interactive process with the employee.

You could get questions from younger workers who are not in the CDC high risk group about why they can’t work from home like these older workers. Under the federal Age Discrimination in Employment Act, there is no reverse age discrimination claim (i.e., I am not being treated as well as older comparators). However, rather than simply telling a younger worker it is none of their business (which is often tempting but rarely well received), engage in the same interactive process with the employee, considering all factors (including the CDC guidance on high risk groups) and make a separate determination about remote work.

Scenario 3: The employee is scared and does not want to return to on-site work.

Although fear of the coronavirus is not yet considered a disability under the ADA (unless the employee provides medical information that indicates he or she is being treated for anxiety, etc.), our default should not be to terminate an employee who says he or she is scared to return to work.  Instead, let’s find out why they are afraid and try to address their fears and concerns.

Go through the analysis in Scenario 1 — but this is to be a good employer, not because you have to provide the accommodation.  If there are physical changes to the work environment that limit exposure, etc., offer them. If the employee still refuses to return to on-site work, consider remote work if you want to. You may skip that option and go straight to leave (paid or unpaid depending on your policies).

Disciplinary action should be a last resort. Although you do not have to pay them if they refuse to come to work, you also don’t want to be “that company” that fired someone who was afraid to come to work during the pandemic. Leave the employee on unpaid leave. Document your offers of accommodation and let the employee know you may need to hire someone to do the job if they don’t return.

Scenario 4: The employee simply prefers to work from home.

This scenario should be handled just like any other request to work from home. Given the uncertainty and fear we are all facing during these unprecedented times, it is probably best to give employees a longer-than-usual on-ramp to return to on-site operations.  If employees refuse even after this, you should apply your attendance policy as you would under any other circumstance. Again, make clear that the job is on-site (not remote) and give the employee plenty of chances to return before terminating employment.

One caveat to this scenario is IF you have fewer than 500 employees AND the employee wants to work from home because usual childcare is unavailable because of COVID-19. Now you are in Families First Coronavirus Response Act (FFCRA) territory. Remember that employees have up to 12 weeks of paid leave (2/3 regular salary but capped at $200 per day) and this is available until the end of this year. If they can work remotely, they are not entitled to this leave. It is up to you to determine if they can effectively work remotely or if you want to provide the leave. If you find yourself in the FFCRA spot, check out our blogs here and here.

Conclusion

We recognize that these four scenarios by no means exhaust the list of employee circumstances you are going to face. We all know the crazy stuff that comes up in the employment world and the COVID-19 pandemic has made it crazier. However, these scenarios should serve as your starting place when planning for and dealing with the problem of employees who refuse or are reluctant to return to the workplace. Document your efforts and consider the circumstances.

Remember: there is no one-size-fits-all solution. (Sorry.)

Business Re-Entry – What Should Employers Be Considering Before Opening Their DoorsWe recently presented to the Nashville Area Chamber of Commerce via webinar on “Business Re-Entry – What Should Employers Be Considering Before Opening Doors?” The link to the webinar is below. In this webinar, we discussed developing a plan for re-opening, communication tips for employees regarding returning to work, and screening considerations for employees returning to work, as well as an update on the Paycheck Protection Program. Here are a few takeaways from the webinar:

  • Excluding employees of a certain age or high-risk employees from returning to work may cause issues under the Age Discrimination in Employment Act and the Americans with Disabilities Act. Employers cannot discriminate against employees on the basis of age. Under the ADA, before excluding a high-risk employee from returning to work, employers should determine whether there is a direct threat to the employee or others, and if so, whether that direct threat can be reasonably accommodated by allowing the employee to work at home.
  • The EEOC is permitting employers to take employees’ temperatures during the COVID-19 pandemic, but developing a policy on return to work/COVID-19, identifying symptoms that employees are prohibited from working with, and then trusting employees not to come to work with those symptoms may be a more practical approach.
  • When communicating with employees on returning to work, it is important to stay positive and make employees feel like they are returning to a safe work environment by explaining that employee safety is a top priority, explaining the workplace policy on trying to prevent the spread of COVID-19, explaining steps you have taken to protect employees, and explaining the screening policy.

Click the below .pdf version of this blog post to use as a reference guide as you’re developing your re-opening plans

Business Re-Entry – What Should Employers Be Considering Before Opening Their Doors

 

 

 

 

 

 

 

Download the PDF version of this presentation