Be Very Careful If You Discuss Wages and High-Level Hiring With Competitors, or You Might End Up in Jail

In 2016 the U.S. Department of Justice and the U.S. Federal Trade Commission released with little fanfare the Antitrust Guidance for Human Resource Professionals (Antitrust Guidance). Generally, the Guidance warned human resource professionals that agreements between competitors to set wages or to refrain from soliciting each other’s employees (“no-poach agreements”) could result in criminal prosecution under U.S. antitrust laws. Although the DOJ has pursued a number of civil cases since then, it did not obtain its first criminal indictment until December of 2020.

Wage Setting: In United States v. Neeraj Jindal, (E.D. Tex. Dec. 09, 2020) the U.S charged Neeraj Jindal, the former owner of a physical therapist staffing company, with violating the Sherman Act by conspiring with a competing physical therapist staffing company to fix wages for physical therapists and physical therapist assistants in the Dallas-Fort Worth metropolitan area. The DOJ specifically alleged that over a six-month period from March to August 2017, Jindal exchanged nonpublic information with his co-conspirators about the rates paid to physical therapists. The DOJ claimed that Jindal and his co-conspirators communicated about rate decreases, discussed and agreed to decrease rates paid to physical therapists, implemented rate decreases in accordance with the agreement reached, and paid physical therapists at collusive and noncompetitive rates. The DOJ produced numerous text messages between Jindal and his co-conspirators concerning the alleged conspiracy. (As I have said before, if you don’t want it read or seen in court, then don’t take a picture of it, text it or send it in an email.)

Non-Solicitation Agreements: In January of this year, the DOJ filed criminal indictment against Surgical Care Affiliates, LLC alleging that SCA, which owns and operates outpatient medical care centers across the country, entered into two separate bilateral conspiracies with other health care companies not to solicit senior-level employees, thereby suppressing competition for the services of those employees.

The DOJ alleges that beginning as early as May 2010 SCA and another company conspired to suppress competition between them by agreeing not to solicit each other’s senior-level employees. The DOJ also alleged that SCA conspired with another company to allocate senior-level employees through a similar nonsolicitation agreement. The DOJ claimed that SCA enforced its no-poach agreements by instructing recruiters not to recruit senior-level employees from the other two companies, by requiring senior-level employee applicants to notify their bosses when they were seeking other employment, by monitoring compliance with the no-poach agreements, and by refraining from soliciting each other’s senior-level employees. The DOJ has again provided emails between SCA and the other two companies admitting the existence of the agreements.

Take away: Employers, Executives and HR professionals, should be very careful when they communicate with their competitors regarding non-public information regarding wages and any sort of agreements not to attempt to hire away each other’s employees. While prosecution is far from common, we can count on the new administration to be much more aggressive in seeking criminal indictments for these types of activities.

Check Your Call-In Policies

A recent Third Circuit Court of Appeal decision provides great guidance on what a good call-in policy can look like. In this case the employer, Penn State Health, utilized a call-in policy that required employees to make two calls when they wanted to request FMLA leave: First, an employee had to call to a designated “call-off” line, and second, the employee was required to call the Company’s third-party administrator to report the need for FMLA leave.

In this case the employee, Ms. Kelly, failed to call one of the lines and consequently earned disciplinary “points”. When she reached the maximum allowed points, her employment was terminated.

Ms. Kelly sued Penn State Health alleging that her employer had retaliated against her for requesting FMLA leave and interfered with her ability to take FMLA leave. The District Court held that Ms. Kelly’s failure to comply with the Hospital’s absence-reporting policy defeated all of her claims, in part because she offered no reasonable explanation for her failure to follow them. In doing so, the District Court specifically stated that: An employee must comply with the employer’s requirements for requesting leave, unless those requirements conflict with a substantive provision of the FMLA. In this instance, the Hospital’s dual call-in requirements did not conflict with any substantive provision of the FMLA.

Employer take-away:

  • Implement and enforce a clear and specific written call-in policy that requires employees to call in to a specific person or line to report their absence and the reason need for leave within a certain time period. You should be able to require two calls – one to report the absence generally to the manager and another to an employer intake line, human resources, or a third-party administrator handling FMLA requests.
  • Evaluate your FMLA policies to ensure that they Include language regarding how you expect your employees to communicate with you regarding the need for leave of any kind. I would suggest that you also specify what type of information the employee must provide when they call in:
    • the specific reason for their absence with sufficient information to allow you to determine if the FMLA applies to the leave; 
    • when the leave will begin and when it is expected to end, and
    • a telephone number and email where the employee may be reached.

It is also a good idea to state that an employee will be required to provide a reasonable excuse if they fail to comply with the call-in procedures.

A Few Things to Consider if You Are Thinking of Requiring Your Employees to Get the COVID-19 Vaccine

Right now, a surprising number of eligible workers are declining to be vaccinated, with a similar percentage indicating that they will refuse once they become eligible. Depending upon whose numbers you believe, approximately one-half of the health care workers and first responders eligible to receive the vaccine have indicated that they will not do so. This is leading many employers to consider whether or not they should require or incentivize their workers to take the vaccine when it becomes widely available. There are a few things to keep in mind if you are considering doing so.

ADA/Title VII Right now, you CAN require your employees to get the vaccine. However, you must accommodate a disabled employee who is unable to take the vaccine (ADA) as well as an employee to objects to being vaccinated due to sincerely held religious beliefs (Title VII). If either the ADA or Title VII applies to your situation, you may not be able to force the employee be accept the vaccine. Rather, you might accommodate the employee by allowing her to work remotely or offer her an alternate schedule that does not require as much co-worker and client interaction.

The EEOC has already stated that getting the COVID-19 vaccine is not a medical examination, but questions asked in the vaccination process may well seek medical information in violation of the ADA. This information should remain with the vaccine administrator and not be provided to the employer.

FLSA You must consider if the time spent by your workers being vaccinated is compensable time under the FLSA. If you require that they be vaccinated, employees may have a legitimate claim to compensation for the time spent doing so. You can count on plaintiff’s lawyers challenging this in the form of FLSA class-actions. (Yet another reason to include an Alternate Dispute Resolution process disavowing any class or collective actions in your Handbook, but that is an issue for another article.) 

Workers Compensation/Civil Liability One of the primary concerns of employers is that they may open themselves to workers compensation and civil liability claims if an employee suffers an adverse reaction due to the vaccine. We obviously do not have sufficient law at this point to say with certainty whether or not these types of claims will succeed, but you can rest assured that employees will attempt to make claims under one or both theories.

“Voluntary wellness program” Many employers are considering offering employees come sort of incentive to encourage them to be vaccinated. Employers should carefully consider the ramifications of each type of incentive. A cash reward could be constitute a non-discretionary bonus that must be included in a non-exempt employee’s regular rate of pay for the period in which it was earned. In addition, employers must consider whether or not offering an incentive would constitute a “voluntary wellness program” that might be prohibited by the EEOC guidelines. (Keep in mind that last month the EEOC withdrew its proposed Rule that would have made it easier and safer to implement such a voluntary wellness program.) 

Bottom line: employers should carefully consider the risks and benefits of requiring or incentivizing employees to take the COVID-19 vaccine before they do so.

A Short Summary of How President Biden’s American Rescue Plan Could Impact Employers

President Biden’s almost $2 trillion “American Rescue Plan” is working its way through Congress. Several provisions of the Plan could significantly impact employers: 

Minimum wage: The Plan would raise the federal minimum wage to $15 an hour over four years and end the tipped minimum wage and the sub-minimum wage for people with disabilities. 

Worker safety: The Plan includes significant provisions designed to improve worker safety, including a COVID-19 Standard to be created by OSHA as well as additional funding for enforcement. 

Expanded FFCRA leave: The Plan would extend the paid sick and family leave benefits of the FFCRA to September 31, 2021 and would require all employers to offer FFCRA leave, including health care providers and those with fewer than 50 employees and those with more than 500 employees. The ARP also would require up to 14 weeks of paid sick and family and medical leave and expand the list of parental caregiving situations that will be covered. The Plan proposes to reimburse employers with fewer than 500 workers the full cost of providing the leave. 

Extended unemployment: The ARP would increase federal supplemental unemployment assistance by $100 a week, making it $400 a week instead of the $300 a week that was approved last year, through September of this year, and expand eligibility to independent contractors. 

Miscellaneous: The ARP would also:

  • Grant approximately $440 billion in support to “struggling communities,” including small businesses, Tribal governments, public transit, and essential workers;
  • Provide $130 billion to help schools safely reopen;
  • Expand the Higher Education Emergency Relief Fund;
  • Expand financial assistance to both childcare providers and families, including:
    • providing a fully refundable Child Tax Credit for one year, and
    • expanding the Earned Income Tax Credit for one year;
  • Provide another $1 billion for states for Temporary Assistance to Needy Families (“TANF”) recipients.

Employers need to keep an eye on this Bill as it winds its way through Congress.

Ninth Circuit Issues a Per Diem Ruling That is Worth Noting

On the 8th of this month the Ninth Circuit Court of Appeals issued a ruling that certain per diem payments must be included in an employee’s regular rate of pay. Although the Ninth Circuit covers only Alaska, Arizona, California, Guam and Hawaii, the ruling is nonetheless worth noting to those of us fortunate enough to live and work in the Fifth Circuit.

As you know, under the FLSA a non-exempt employee must be paid overtime at the rate of time and a half times the employee’s regular rate of pay. This fact begs the question: what constitutes the regular rate of pay?

The short answer is: it depends.

In the case before the Ninth Circuit, Clarke v. AMN Services, LLC, AMN, a staffing company sometimes placed its employees at facilities that required them to drive a long distance from their homes. In addition to their hourly rates, AMN paid the employees who traveled more than fifty miles from their homes per diems that were intended to reimburse them for the cost of meals, housing, and other expenses. Being aware of 29 CFR 778.217, AMN Services did not include the per diem payments in the traveling workers’ regular rates of pay when calculating their overtime.

29 CFR 778.217 states in relevant part that:

(a) General rule. Where an employee incurs expenses on his employer’s behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7(e)(2) is applicable to reimbursement for such expenses. Payments made by the employer to cover such expenses are not included in the employee’s regular rate (if the amount of the reimbursement reasonably approximates the expense incurred). Such payment is not compensation for services rendered by the employees during any hours worked in the workweek.

(b) Illustrations. Payment by way of reimbursement for the following types of expenses will not be regarded as part of the employee’s regular rate…

(5) The actual or reasonably approximate amount expended by an employee as temporary excess home-to-work travel expenses incurred (i) because the employer has moved the plant to another town before the employee has had an opportunity to find living quarters at the new location or (ii) because the employee, on a particular occasion, is required to report for work at a place other than his regular workplace.

The Ninth Circuit held that these per diem payments should have been included in the employee’s regular rate of pay because the structure of the payments suggested that they were more akin to wages rather than reimbursements. For example, the amount of the per diem payments depended in part on the number of hours worked by the employee rather than the expenses the worker incurred. In addition, AMN Services made identical per diem payments to its employees who were not required to travel more than 50 miles away from home on assignment. The company included these per diems in the local workers’ regular rates and expressly considered them to be part of their overall compensation package.

The Ninth Circuit’s opinion is not groundbreaking, but it is a good reminder that we should take a hard look at our per diem and reimbursement policies and practices to determine if they should be included in the regular rate of pay or not. Considering that the FLSA provides for 100% liquidated damages and the recovery of attorney’s fees, and that the Louisiana “payday” statute allows for the recovery of ninety day’s penalty wages and attorney’s fees, failing to properly calculate an employee’s regular rate of pay can be a very costly error.