One present employers don’t want landing on their doorstep this holiday season is an employee lawsuit.
This is a busy time for employers, especially for those in industries like retail. In preparing for the retail rush and production demands, companies often hire additional workers and extend work hours. As a result, it’s also a time employers are particularly susceptible to potential legal liability.
During these peak months, the workforce may consist of a mixture of different classifications of workers, including permanent employees, temporary employees, seasonal workers and independent contractors. Employers must concurrently manage overtime pay and holiday pay for these various types of workers, as well as comply with various anti-discrimination laws.
Due to the heightened risk of costly litigation for alleged violations of state and federal law, one holiday wish for employers is compliance.
Kelly S. Hughes, shareholder at Ogletree Deakins’ Charlotte office and co-chair of the firm’s retail industry group, illuminated some employment law considerations that employers should keep in mind at this most wonderful time of year.
Bloomberg BNA: What employment laws should employers and their counsel be particularly cognizant of during the upcoming holiday season?
Hughes: Employers should be aware of the following applicable federal, state and local laws during the upcoming holiday season:
With respect to the hiring and utilization of temporary holiday workers, federal anti-discrimination laws apply regardless of whether the employee is temporary or permanent. These laws apply to applicants as well. Employers must abide by Title VII, the American with Disabilities Act, the Genetic Information Nondiscrimination Act and the Age Discrimination in Employment Act.
Notably, while Title VII hasn’t yet been amended to add explicit protections against discrimination on the basis of gender identity or sexual orientation—and federal courts haven’t uniformly interpreted Title VII as protecting such—many states and localities have laws prohibiting discrimination on these grounds.
The Fair Labor Standards Act applies to both permanent and temporary workers. While the FLSA doesn’t require holiday pay, premium pay for holiday work or sick pay, several states have enacted such laws.
The ADA and comparable state laws may require an employer to provide breaks, reduced hours or time off as a reasonable accommodation—even during the holiday season. Likewise, employers who are covered by the Family and Medical Leave Act and/or similar state laws must continue to provide job-protected leave to eligible employees for their own qualifying serious health conditions or to care for family members with such conditions.
It’s also important to note that the FLSA was amended by the Affordable Care Act to provide reasonable break time for nursing mothers to pump breast milk. States may have more generous protections than this federal law provides.
Employers also should prepare written policies to address break policies, work hours, timekeeping and pay during the holiday season.
Bloomberg BNA: Are all employers required to pay overtime to workers during the holidays?
Hughes: Pursuant to the FLSA, employers are required to pay overtime to nonexempt workers for any hours worked over 40 in a workweek, regardless of whether the time is worked during the holidays.
Many workers will be working longer hours during the holiday season so proper recordkeeping will help ensure compliance with overtime rules. Records of all hours worked must be maintained for nonexempt employees.
State laws also may impose premium pay requirements (i.e., one-and-one-half of the regular rate) that go beyond the FLSA, such as for work on Sunday or on a seventh consecutive day.
Bloomberg BNA: What should employers and their counsel keep in mind when hiring temporary workers for the holiday season?
Hughes: While vetting and training seasonal workers can seem daunting and expensive, defending a lawsuit is more so. Employers should consider that although temporary workers may not be working at the company for long, acts or omissions during the brief period of employment can create the opportunity for legal claims.
In addition to the litigation minimization risks, employers should keep in mind that temporary workers often count towards the employee minimum thresholds when determining whether an employer is covered by a particular law.
Bloomberg BNA: Does it matter if a temporary employee is hired through a “temp agency” for the holiday season?
Hughes: Generally, engaging a temporary employee through a staffing agency can eliminate the burdens and costs associated with payroll expenses, unemployment insurance and workers’ compensation.
However, there’s a risk that the temporary worker in some circumstances will be deemed to be “jointly employed” by both the staffing agency and the worksite employer. Joint employment may affect other benefits, such as FMLA eligibility. Typically, a staffing agency is the primary employer and the worksite employer is the secondary employer. However, this isn’t always the case.
Bloomberg BNA: What steps should employers and their counsel take prior to hiring temporary holiday workers as independent contractors?
There are new legal challenges daily alleging misclassification of temporary workers as independent contractors across various industries. Most cases are brought as FLSA collective actions. These cases are both incredibly expensive and extremely time-consuming.
Independent contractors can provide several benefits to a business, but employers should take steps to ensure that the individual is properly classified as an independent contractor as opposed to an employee. This minimizes the likelihood of an employer having to defend a misclassification lawsuit.
Prior to entering into any independent contractor arrangement, an employer should understand who is and isn’t an independent contractor within the meaning of controlling law. Employers and their attorneys should become familiar with the applicable law in the jurisdiction(s) in which they operate, as well as the factors outlined by the Department of Labor regarding an individual’s independent contractor status within the meaning of the FLSA.
A written agreement or contract between an employer and purported independent contractor may not carry the day on the misclassification issue. Courts care less about what’s in a written document and more about how the actual arrangement operates in fact.
Different courts may consider slightly different factors. It’s best to seek outside legal counsel to render an opinion as to the applicability of the controlling law to the specific facts presented.
Bloomberg BNA: Are there different employment law implications for exempt and nonexempt permanent employees working during the holidays?
Hughes: Employment laws differ for exempt and nonexempt employees during the holidays in some ways. The FLSA doesn’t require nonexempt employees be paid for a holiday on which he or she doesn’t work. An employer can’t dock the salary of exempt employees for a holiday on which he or she doesn’t work without risking loss of the exempt status.
Bloomberg BNA: Is there a prevailing issue employers are currently facing when complying with employment laws?
Hughes: Break time for nursing mothers to express breast milk can be a difficult issue. This is exacerbated during the holiday season. Many retailers have small stores located within malls or shopping centers and may not have an office or other room within the confines of their assigned space to comply with the FLSA. Complying with this law and with more generous state protections can require some creativity.
The DOL has stated that, “where it’s not practicable for an employer to provide a room, the requirement can be met by creating a space with partitions or curtains.” The DOL also has suggested having “designated shared space to be used by employees of the various tenant businesses.” I’ve never had an instance where a solution couldn’t be reached.
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