Independent Contractor vs. Employee — The Tug of War Continues

Two recent developments have occurred in the seemingly constant struggle regarding the classification of independent contractors versus employees. The developments are examples of two very divergent paths that are being taken by various governmental entities and administrations. Some are tightening the requirements for independent contractor status. Others, however, are creating a more business-friendly loosened standard.

On Monday, April 29, 2019, the Wage and Hour Division of the United States Department of Labor (DOL) issued an opinion letter (“Opinion Letter”) regarding the classification of independent contractors under the Fair Labor Standards Act (FLSA). This first opinion letter on the topic under the Trump administration is in stark contrast with the DOL guidance issued during the Obama administration (and later withdrawn by the Trump administration in 2017). The Obama era guidance took the position that most workers should be classified as employees under the FLSA, while the new Opinion Letter is more employer friendly.

EEO-1 Pay Data Reporting Deadline Set

Pursuant to an April 25 court order, employers with annual EEO-1 reporting requirements will now have until September 30, 2019 to provide the new Component 2 pay data.

Background

As we discussed in our recent update, the Equal Employment Opportunity Commission (EEOC) requires employers with at least 100 employees and federal contractors with 50 or more employees and contracts of $50,000 or more to file annual EEO-1 reports. The EEO-1 report collects, through its Component 1 requirements, the demographic makeup of the employer’s workforce by race, gender, ethnicity, and job category. In February 2016, the EEOC published a federal notice announcing its intention to revise the EEO-1 form to collect pay demographics through a Component 2 requirement. The Office of Management and Budget (OMB) approved the pay data collection in September 2016, and data collection was set to begin in 2017 and be reported to the EEOC in March 2018.

NYC Prohibits Pre-Employment Marijuana Testing—Is Minnesota Next?

On April 9, 2019, the New York City Council passed a city ordinance that prohibits employers from requiring applicants to submit to drug tests for marijuana. The city’s Mayor is expected to sign the ordinance in the next few weeks and it would take effect one year after it is signed into law. Importantly, the ordinance only applies to job applicants—it does not apply to current employees. This is the first law within the U.S. to prohibit employers from drug testing for marijuana.

EEO-1 Pay Data Reporting Update

Employers with annual EEO-1 reporting requirements can soon expect to have new pay data reporting requirements for 2018. The reporting deadline could be as early as May 31, 2019, but the deadline is more likely to be set for later this year.

Background

The Equal Employment Opportunity Commission (EEOC) requires employers with at least 100 employees and federal contractors with 50 or more employees and contracts of $50,000 or more to file annual EEO-1 reports. The EEO-1 report collects, through its Component 1 requirements, the demographic makeup of the employer’s workforce by race, gender, ethnicity, and job category. In February 2016, the EEOC published a federal notice announcing its intention to revise the EEO-1 form to collect pay demographics through a Component 2 requirement. The Office of Management and Budget (OMB) approved the pay data collection in September 2016, with data collection to begin in 2017 and be reported to the EEOC in March 2018.

DOL Issues Long-Awaited Proposed Overtime Rule

On March 7, 2019, the U.S. Department of Labor issued its new proposed rule on the white-collar exemptions under the federal Fair Labor Standards Act. The proposed rule (“New Rule”) sets new proposed parameters for the white-collar exemption salary requirements and would replace the final rule issued in 2016, which was blocked after a Texas court issued a permanent injunction. The New Rule would set the minimum white-collar salary at $679 per week ($35,308 annually) and is expected to become effective in January of 2020. For more information about the proposed New Rule, read our client alert found here.

New Discrimination Laws Take Effect in New York and Portland

The trend of location specific employment laws is continuing. A new discrimination law and guidance have taken effect, respectively, in the state of New York and New York City, and a new discrimination law will take effect next month in the city of Portland, Oregon. Employers with multijurisdictional operations should continue to monitor location specific developments that may affect their operations.

New York’s Gender Expression Non-Discrimination Act

Employers with New York operations should take heed of New York’s Gender Expression Non-Discrimination Act (GENDA), which took effect on February 24, 2019. GENDA prohibits employment discrimination on the basis of “gender identity or expression.” The law defines “gender identity or expression” as “a person’s actual or perceived gender-related identity, appearance, behavior, expression, or other gender-related characteristic regardless of the sex assigned to that person at birth, including, but not limited to, the status of being transgender.” The New York State Division of Human Rights had previously issued regulations stating that sex discrimination includes discrimination on the basis of gender identity and the status of being transgender. Under GENDA, gender identity or expression is now an explicitly protected characteristic in New York.

Federal Appeals Court Issues Rare FCRA Decision (Spoiler Alert: It’s Not Good for Employers)

The practice of running background checks on prospective and current employees has become commonplace in many industries. Companies should be careful, however, to ensure that their process complies with the hyper-technical requirements of the federal law governing the use of these background checks — the Fair Credit Reporting Act (FCRA). Under the FCRA, before an employer may obtain a background check from a third party vendor for a fee, it must make a written disclosure to the subject of the background check. That written disclosure must be a stand-alone document that consists only of the statutory disclosure language. The subject of the background check must then provide written authorization for the employer to obtain a background check. Many states — including Minnesota — have their own procedural requirements, either tracking with the FCRA or potentially including add-on requirements.