U.S. DOL Issues Proposed Minimum Wage Regulations for Federal Contractors

On June 17, 2014, the U.S. Department of Labor (DOL) released its proposed regulations relating to Executive Order 13658, which established a minimum wage for federal contractors. The Executive Order – signed by President Obama on February 12, 2014 – raises the minimum wage on covered federal contracts from $7.25 to $10.10 per hour, beginning January 1, 2015. Thereafter, the Secretary of Labor will be required to set the amount of increase to take effect on January 1 of each year, indexed to inflation. The Notice of Proposed Rulemaking (NPRM) establishes procedures for implementing and enforcing the Executive Order.

The Executive Order applies to contracts for construction covered by the Davis-Bacon Act that exceed $2,000; contracts for services covered by the Service Contract Act that exceed $2,500; concessions contracts (for food, lodging, fuel, souvenirs, newspaper stands, or recreational equipment on federal property); and contracts to provide services, such as child care or dry cleaning, in federal buildings. In procurement contracts where workers’ wages are governed by the Fair Labor Standards Act (FLSA), the Executive Order applies only to contracts that exceed $3,000.

The NPRM defines key terms used in the Executive Order, including “contracts,” “contract-like instruments,” “concessions contracts,” and “workers.” A “contract” or “contract-like instrument” is defined as an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. A “concession contract” is a contract under which the federal government grants a right to use federal property, including land or facilities, for furnishing services. The proposed regulations use “worker” in a broad sense and covers those who would not otherwise be “service employees” under the SCA or “laborers” under the DBA.

Further, the NPRM establishes standards for contractors to apply in determining whether their employees are covered by the Executive Order. The regulations also contain recordkeeping requirements and directions for finding the required rate of pay for all workers, including tipped workers and workers with disabilities.

DOL plans to adopt existing mechanisms used for enforcing prevailing wage laws to enforce the provisions of the Executive Order. Under the proposal, any contractor who DOL determines has failed to pay the proper minimum wage will be notified and asked to remedy the violation. Additionally, the contracting agency may be directed to withhold payments under the contract. If a notice of violation is issued, the contractor may appeal to an administrative law judge.

This summary only scratches the surface of the propose rule. It is important for any employer who might be affected by the Executive Order to review the NPRM carefully. DOL will accept comments on the proposed rule until July 17, 2014, at http://www.regulations.gov. The regulation identification number is 1235-AA10. DOL expects to issue the final rule by October 1. If you have questions about whether this will apply to you, contact your employment law attorney.

Kembra Sexton Taylor

 

 

 

 

Kembra Sexton Taylor, a partner located in the firm’s Frankfort office, practices in the areas of labor and employment, personnel, administrative, regulatory, appellate, and insurance defense law. She has extensive experience in representing clients regarding wage and hour, OSHA, state personnel, and other regulatory matters. She can be reached at taylor@mmlklaw.com or (502) 223-1200.

This article is intended as a summary of federal and state law and does not constitute legal advice.

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An Important New Decision Affects Non-Compete Agreements in Kentucky

The Kentucky Supreme Court recently reversed the Kentucky Court of Appeals’ holding in Creech, Inc. v. Brown, and declared that continued employment, standing alone, is no longer sufficient consideration to justify or support enforcement of a non-competition agreement. In the course of reaching its decision, the Court clarified prior case law dealing with the issue of whether non-competition agreements may be executed in exchange for merely retaining one’s job. While the case has an intricate and complex set of facts, this post focuses on the consideration requirement only.

The case arose out of a dispute between Charles T. Creech, Inc., Standlee Hay Company, Inc., and Donald Brown. Both companies provided hay and straw to horse farms in Kentucky and other states. Donald Brown was hired by Creech as an employee in 1990. Sixteen years later, in 2006, Creech approached Brown and asked that he sign a document entitled “Conflict of Interest” (herein “the Agreement”) which, in relevant part, would prohibit Brown from “work[ing] for any other company that directly or indirectly competes with the company for 3 years after leaving Creech, Inc. without the companies[sic] consent.” Brown signed the Agreement but, shortly after signing, Brown was transferred from his job as a salesperson to a dispatcher position. The transfer resulted in the same salary but decreased responsibilities.

In 2008, Brown resigned from Creech to take a job with Standlee. After hearing rumors that Brown had contacted Creech’s customers, employees, and suppliers while at his new job, Creech filed suit against Brown and Standlee alleging, among other things, breach of contract. Creech also simultaneously sought injunctive relief. In response, Brown argued, among other things, that he had received no consideration for signing the Agreement.

The trial court entered a temporary injunction against Brown and Standlee, finding that Brown’s continued employment by Creech constituted consideration for the Agreement. Brown immediately appealed the trial court’s decision to enter the injunction. The trial court was subsequently overturned on appeal. On remand, the trial court awarded summary judgment to Brown and Standlee. Creech appealed the order and the case went to the Court of Appeals for the second time.

At the Court of Appeals, the trial court’s summary judgment was reversed. The Court proposed a six-factor test to be applied by the trial court in determining whether the non-competition portion of the Agreement was enforceable. The Court also held, as a matter of law, that Brown’s continued employment with Creech constitutes sufficient consideration to support the Agreement. All parties sought discretionary review from the Kentucky Supreme Court.

On review, the Court declared the Agreement unenforceable and reinstated the trial court’s summary judgment in favor of Brown and Standlee. In their Opinion, the Court distinguished the two cases Creech primarily relied upon in his argument, Higdon Food Service, Inc. v. Walker and Central Adjustment Bureau Inc. v. Ingram Associates, Inc.[1] According to the Court, the common thread running through Higdon and Central Adjustment Bureau, but not in the case at hand, was the fact that after the non-competition provision was signed, whether as a larger employment contract or stand-alone document, the employment relationship between the parties changed. In Higdon, the employee became more than an at-will employee. In Central Adjustment Bureau, the employees received specialized training, promotions, and increased wages. Brown, in contrast, remained an at-will employee with no promotion, no increase in wages, or specialized training. In fact, he actually received decreased responsibilities, which could be considered a demotion.

From a best practice standpoint, employers must now be sure that non-compete agreements, if presented after employment, are coupled with adequate consideration. What constitutes adequate consideration will vary depending upon the factual circumstances applicable to the employee and the industry he/she is employed in. Analysis of the prevailing factual scenario is critical. We highly recommend consultation with legal counsel before asking your employees to execute a non-competition covenant.

[1] 641 S.W.2d 750 (Ky. 1982); 622 SW.2d 681 (Ky. App. 1981).

 

J. Woodall

 

 

 

 

Jon A. Woodall, a member of the firm, joined the McBrayer team in 1994. Mr. Woodall has a broad range of legal experience gained through 18 years of practice throughout the Commonwealth of Kentucky and the various states where his clients conduct business. Mr. Woodall’s practice is concentrated in the areas of construction law and commercial litigation. He counsels his clients on issues relating to contract formation and performance as well as the litigation of complex construction and commercial disputes (including water intrusion/mold claims) at the state, federal, and administrative levels. He can be reached at jwoodall@mmlk.com or (859) 231-8780, ext. 260.

 

B. Yates

 

 

 

 

Brendan R. Yates is an associate in the Lexington office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Brendan is a member of the firm’s Litigation Department, where he focuses his practice on construction and real estate litigation, workers’ compensation defense litigation, insurance defense and commercial litigation. He has successfully defended his clients in state and federal courts, the Kentucky Court of Appeals, the Kentucky Supreme Court, and in administrative agency proceedings in Kentucky. He can be reached at byates@mmlk.com or (859) 231-8780, ext. 208.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

 

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NLRB Decision Limits Employer’s Off-Duty Policy, Part II

Earlier this week, we provided information relative to the NLRB’s decision in Piedmont Gardens, 360 NLRB No. 100 (2014).The issue in the case was the employer’s ability to regulate off-duty employee access to the property, a nursing home. The company handbook contained a provision that generally prohibited off-duty access, unless such access was previously authorized by a supervisor. The NLRB found the “unless previously authorized” caveat to be unlawful because it gave supervisors an unlimited scope in determining when and why employees could access the building.

What is especially interesting about this case is that Piedmont Gardens argued its access policy was lawful because, although the company handbook may have used broad “unless previously authorized” language, in practice, employees were only permitted to enter the nursing home while off-duty for three specific reasons: to pick up a paycheck, attend a scheduled meeting with human resource representatives, or to arrive early for the night shift. The NLRB found the argument unconvincing because the employer could not show that those were the only circumstances in which employees were allowed to enter the building. The Board declined to rule whether the nursing home’s policy would be unlawful if it clearly stated the three reasons for which employees would be granted off-duty access.

The Piedmont Gardens case highlights an important reminder for employers: a handbook should reflect the realities of real-world procedures. While Piedmont Gardens had established specific circumstances in which employees could access the facility, the handbook language did not outline these and instead relied on an overly-broad provision that was in violation of the National Labor Relations Act. Too often, what is stated in a company handbook does not reflect the employer’s day-to-day practices. In litigation, both written policies and employer/employee testimony will be used. Employers must ensure their policies are lawful and, further, that they are implanted accordingly.

Off-duty access policies should be broad enough to cover the employer’s concerns, but not so broad that they restrict employees’ Section 7 rights. In addition, all policies must be disseminated, applied, and enforced even-handedly. If you are an employer and need help crafting an off-duty policy, contact a labor and employment law attorney today.

B. Koch

 

 

 

 

 

Brittany Blackburn Koch, Esq., is an associate attorney practicing in the Lexington office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She is a native of Pikeville, Kentucky, and a graduate of Centre College and the University of Kentucky College of Law. Ms. Koch’s practice focuses primarily on family law, employment law, criminal law and civil litigation. She may be reached atbkoch@mmlk.com or at (859) 231-8780, ext. 300.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

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NLRB Decision Limits Employer’s Off-Duty Policy

The National Labor Relations Board (NLRB) recently issued a decision in Piedmont Gardens, 260 NLRB NO. 100 (2014) regarding the legality of an employer’s off-duty access policy. Piedmont Gardens is a nursing home. Many employers, especially those in health care or other highly-regulated industries, have policies that prohibit against employees lingering around the job site when not working. Off-duty employees can not only be a disruption to the business and create security risks, but can also increase an employer’s liability. After the newest NLRB decision on the issue, however, employers should review their policies to ensure that they do not run afoul of federal law.

The NLRB first dealt with off-duty access in 1976, in the case of Tri-County Medical Center, 222 NLRB 1089 (1976). It was decided then that policies limiting after-hours access to the workplace are lawful, provided they:

  1. Limit access solely to the interior of the facility and working areas (parking lots or other areas that are outside the building cannot be restricted);
  2.  Are clearly disseminated to all employees; and,
  3.  Apply to off-duty employees seeking access to the facility for any purpose, and not just to those engaging in union activities.

It is critical to note that Section 7 of the National Labor Relations Act (NLRA) allows all employees (even those in non-unionized workplaces) to engage in concerted activity for mutual aid and protection and to form, join, assist  organize or communicate about matters relating to labor unions or working conditions. Any potential interference with Section 7 in a workplace can lead to an unfair labor practice under NLRA Section 8(a)(1).

Citing to the precedent established in Tri-County Medical Center, the NLRB found Piedmont Gardens’ policy to be unlawful. Although the employee handbook generally prohibited employees from remaining on the premises after their shifts ended (in accord with the rules established in Tri-County Medical Center), it contained the exception, “unless previously authorized by a supervisor.” This exception, according to the NLRB, gave supervisors unlimited discretion to determine “when and why employees may access the facility.” Such unfettered discretion is contradictory to a general prohibition, in the eyes of the NLRB.

For more on this case and some best practice pointers related to off-duty access, check back on Wednesday.

B. Koch

 

 

 

 

Brittany Blackburn Koch, Esq., is an associate attorney practicing in the Lexington office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She is a native of Pikeville, Kentucky, and a graduate of Centre College and the University of Kentucky College of Law. Ms. Koch’s practice focuses primarily on family law, employment law, criminal law and civil litigation. She may be reached atbkoch@mmlk.com or at (859) 231-8780, ext. 300.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

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JOIN US FOR A FREE EMPLOYMENT LAW SEMINAR!

Lessons in Workplace Liability Seminar

FREE EVENT HOSTED BY MCBRAYER & LOUISVILLE BUSINESS FIRST

DATE: June 10, 2014

TIME: 7:30 a.m. – 8:00 a.m. -breakfast

8:00 a.m – 9:30 a.m. -seminar

WHERE: University of Louisville Shelby Campus

There are so many acronyms today that employers must be familiar with, but they all can mean the same thing: Discrimination Claims!

  • GINA
  • ADAAA
  • EDNA
  • LGBT Rights

Join McBrayer employment law attorneys Amy D. Cubbage and Cynthia L. Effinger as they explain how to protect your profits and learn the best practices for your company. We hope to see you there!

Amy Cubbage

 

 

 

 

Amy D. Cubbage is Of Counsel in the Louisville office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She concentrates her practice in litigation in the areas of employment, complex tort and commercial litigation, including class actions, toxic torts and mass torts. Ms. Cubbage may be reached at (502) 327-5400, ext. 308 or acubbage@mmlk.com.

Cindy Effinger

 

 

 

 

Cynthia L. Effinger is an Associate of  McBrayer, McGinnis, Leslie & Kirkland, PLLC. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.

This article is intended as a summary of state and federal law and does not constitute legal advice.

 

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Guidelines for Hiring Summer Interns

Summer is upon us. For employers, that means so is the prospect of hiring summer interns. Each year, clients contact McBrayer employment attorneys about the legality of their internship programs. Hiring interns gives employers access to highly motivated, educated young workers who bring a fresh perspective to the office and (sometimes) have little to no expectation of pay in return. It seems like a win-win situation, but in recent years, the practice of hiring unpaid interns has become increasingly scrutinized by the Department of Labor. In fact, there have been several high-profile cases wherein unpaid interns have sued employers (including Conde Nast Publications, Sirius XM Radio, and Warner Music Group), alleging violations of the Fair Labor Standards Act (“FLSA”), which establishes minimum wage and overtime compensation requirements for non-exempt employees.

According to the National Association of Colleges and Employers Class of 2013 Student Survey, only 38.1 percent of unpaid internships worked by 2013 graduating seniors were conducted in the for-profit, private sector, which is governed by the federal Fair Labor Standards Act (“FLSA”) regulations. That is because internships in the “for-profit” private sector will most often be viewed as employment, unless six, specific criteria are met – rendering interns as employees and subject to certain protections.

If you are considering hiring unpaid interns, but want to avoid legal liability, take a moment to see if your internship program (and its interns) will meet each of the following:

1)      The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;

2)      The internship experience is for the benefit of the intern;

3)      The intern does not displace regular employees, but works under close supervision of existing staff;

4)      The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;

5)      The intern is not necessarily entitled to a job at the conclusion of the internship; and,

6)      The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If one of the above factors is not met, the intern must be paid minimum wage and overtime compensation for hours worked over forty in a workweek.

Before hiring an intern, be sure to develop an intern policy and define the job, duties, and expectations of the position carefully. Be sure to explain the compensation structure (or, alternatively, clearly express the internship is unpaid), eligibility requirements, and the intern’s status as an at-will employee. If you have any questions about your internship program, give us a call today.

B. Johnson

 

 

 

 

Brandon K. Johnson is an Associate in the Louisville, KY office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Johnson practices primarily in the areas of insurance defense, employment law, and general litigation. He can be reached at bjohnson@mmlk.com or at (502) 327-5400.

This article is intended as a summary of state and federal law and does not constitute legal advice.

 

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The EEOC in 2014

Last year was a record-breaking year for the Equal Opportunity Commission (“EEOC”), which obtained approximately $372 million for workers alleging workplace discrimination. In the EEOC’s annual report, the agency asked for $75 million to support their litigation efforts in 2014…thus, they show no sign of slowing down. According to EEOC Commissioner Constance Barker, “Since we’ve got so much authority delegated to the agency’s general counsel, 2013 really became the year of litigation, and I think 2014 will continue that trend…I think private companies ought to expect to see more aggressive use of the litigation process, more aggressive pursuit of systemic discrimination cases and more cases bypassing the commission’s review and vote.”

The EEOC is approximately halfway through its FY 2012-2016 Strategic Enforcement Plan (“SEP”), which is a road map for the agency’s enforcement and litigation strategy. The SEP identifies six major priorities for the Commission, including:

  1. Eliminate barriers in recruitment and hiring.
  2. Protect immigrants, migrants, and other vulnerable workers.

3. Address emerging & developing issues. Specifically, these three:

    1. Reasonable accommodation under the ADA.
    2. Accommodation for pregnancy-related limitation under the ADA and Pregnancy Discrimination Act.
    3. Coverage of LGBT individuals under Title VII’s sex discrimination provisions.

4. Enforce equal pay laws.

5. Preserve and improve access to the legal system.

6. Prevent harassment.

It is my prediction that the EEOC will focus heavily on sexual orientation and gender discrimination in the coming year and begin pursuing more genetic discrimination cases pursuant to GINA, which was passed several years ago but is now just becoming a hot-button topic.

If you are an employer and would like more information about policies and best practices that can help protect you and your business from EEOC claims, contact an employment law attorney today.

Cindy Effinger

 

 

 

 

 

Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.

This article is intended as a summary of state and federal law and does not constitute legal advice.

 

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