Employers are increasingly being faced with difficult issues with respect to COVID-19, including challenging labor and employment issues. Various federal and state statutes present compliance issues for employers, particularly given the recent enactment of the First Families Act and the CARES Act at the federal level. Existing federal statutes such as the National Labor Relations Act and Title VII of the Civil Rights Act also present labor and employment law challenges for employers. This three-part teleforum series will review federal and state labor and employment issues and options for employers to consider. Federalist Society Labor and Employment Executive Committee members, Tammy McCutchen and G. Roger King will be the speakers for this teleforum series. Ms. McCutchen is a Shareholder with the Littler Mendelson law firm and former head of the U.S. Department of Labor Wage and Hour Division. Mr. King is Senior Labor and Employment Counsel for the HR Policy Association and previously a Partner at the Jones Day law firm.
G. Roger King, Senior Labor and Employment Counsel, HR Policy Association
Tammy D. McCutchen, Principal, Littler Mendelson PC
This call is open to the public - please dial 888-752-3232 to access the call.
Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.
Greg Walsh: Welcome to The Federalist Society's Teleforum conference call. This afternoon's topic is titled "COVID-19 Labor and Employment Teleforum Series #2." My name is Greg Walsh, and I am Assistant Director of Practice Groups at The Federalist Society.
As always, please note that all expressions of opinion are those of the experts on today's call.
Today, we are fortunate to have with us G. Roger King, a Senior Labor and Employment Counsel at the HR Policy Association, and Tammy D. McCutchen, a Principal at Littler Mendelson PC.
After our speakers give their opening remarks, we will go to audience Q&A. As a reminder, the audience members can see the presentations that our speakers will be following along with on FedSoc's website on this event's page. Thank you all for sharing with us today. Mr. King, the floor is yours.
G. Roger King: Thank you, Greg. Good morning to all that have called in. I'm sheltering in place with my wife in Boise, Idaho, and I think, Tammy, you're in New York today?
Tammy D. McCutchen: I am.
G. Roger King: Tammy and I are going to go back and forth on our continuing series on COVID-19 labor and employment issues. We had our first segment a couple weeks ago. Had a great turnout and an even better turnout, as I understand it, on the follow-up podcast. We do encourage your questions and comments.
Tammy's going to lead us off today talking about Fair Labor Standards Act issues as they relate particularly to COVID-19 but also perhaps broader impact in the workplace. Besides Tammy being a Principal at Littler Mendelson, she has a very active HR consulting practice, and before that, was Wage and Hour Head at U.S. DOL. So, she's got just a great background; one of the foremost experts in the country on Fair Labor Standards Act issues.
So Tammy, let me turn it over to you.
Tammy D. McCutchen: Thank you, Roger. I'm blushing.
G. Roger King: It's all true. It's all true, Tammy. It's all true.
Tammy D. McCutchen: It goes without saying that where, how, and what work we are performing today during the COVID-19 crisis has changed just vastly because of COVID-19 since, really, last March.
At Littler, we have literally answered thousands of questions from employers as they attempt to maintain compliance with the FLSA and similar state wage and hour laws and especially because they have been forced to, by local and state governments, to shut down under these shutdown orders and the inevitable economic impact that has resulted from that. They have been forced to do things that are not very pleasant like employees, like cutting pay, laying off employees, terminating employees, providing paid leave—a new, of course, federal pay leave law for small employers, less than 500.
And now, if their businesses have survived, they're trying to get those employees back to work. It's a difficult time and made more difficult because of these critical decisions businesses are having to make, and because existing laws just never contemplated the situation that we're all faced with. I think many employers may have had wage and hour compliance failures as they are struggling to keep their businesses alive because of this unique situation.
What I want to do today is just issue spot for our listeners on the type of wage and hour issues and misses that I have seen over the last four months in three key areas: exemptions from overtime pay, failing to pay employees for all hours that they work, and failing to include all wages in the overtime calculations.
Then, I want to end by exploring the most important question of the day: Can we turn to Congress or to the DOL for help as employers struggle to comply with the FLSA?
Let me start out with the overtime exemptions. Each exemption, for our rookies in the audience, on the overtime pay requirements requires that employees be paid on a salary basis and that they perform certain job duties—a different job duty requirement for each of the exemptions.
Now, because of the way work has changed, some exempt employees over the last four months may have fallen out of exemptions. They no longer may qualify for an exemption because of COVID-19. Now, first of all, it's because of the salary test. As employers are forced to cut pay across the board, the salary of some exempt employees may have dropped below the required minimums. Not just the federal-required minimum salary of $684 per week, but California requires that exempt employees be paid $960 a week and $880 or higher in New York.
So, employers who have had to cut pay as revenues tanked due to government shutdowns could easily have just not thought about and not thought to ensure that the exempt employees continue to be paid that minimum required salary or to reclassify them as non-exempt and pay them by the hour if their hours are cut along with the cut in pay. Many employers also laid off or furloughed employees.
But for these exempt employees, the FLSA requires that they be paid their full salary for any week in which they perform any work, and that's just five minutes of work. So, if an exempt employee—and this is an employee not eligible for overtime—if that exempt employee spends five minutes looking at or responding to emails at home during a furlough, bam. They're owed their full salary for that work.
Any employee who's been on furlough who checked their emails, there could be a violation there. So, what employers should have done is, as I mentioned, is to reclassify the exempt employees to non-exempt while they were on furlough, and then, just pay them an hourly rate for all time they actually spent working. Most likely, of course, no overtime pay would've been due anyway for these furloughed employees because they're not working over 40 hours a week, so reclassifying them to non-exempt wouldn't have been any additional labor costs.
Now let's talk about duties. Many exempt employees probably saw their duties change. In order to be an exempt supervisor, you have to supervise at least two full-time employees or 80 hours of other people's work under your supervision. So, if supervisors saw their direct reports being furloughed or their hours being substantially reduced, then they did not continue to supervise that 80 hours of work each week, and, therefore, the question rises, are they still supervisors? Are you still supervising employees who are on furlough?
If forced by government shutdown orders to stay at home, are exempt outside sales employees still exempt? To be exempt as an outside sales employee, you actually have to spend some time every week calling on your customers. Well, what if the government didn't let you out of your house? As an employer, did you ask your exempt employees to take on more non-exempt work as the non-exempt employees had their hours cut or were furloughed?
To be exempt, employees must have what we call a primary duty of performing exempt work. But if exempt employees spent more than 50 percent of their time performing non-exempt work during the COVID crisis because non-exempt employees were furloughed, can they still qualify for any exemption?
The good news is, sort of, that there is a provision in the FLSA regulation. It's called 541.706, and I've reprinted it all in the PowerPoint that you can find posted at fedsoc.org. What this emergency provision says is that an exempt employee will not lose the exemption by performing non-exempt work because of the existence of an emergency that "threatens the safety of employees, a cessation of operations, or serious damage to the employer's property."
Now, most frequently this provision is used to allow exempt employees to perform non-exempt work during a strike. All your employees are out walking the picket line. There's nobody inside the manufacturing plant to run the lines. You can put an exempt worker on to do that non-exempt work without losing the exemption.
At Littler, our wage and hour experts have been debating for some weeks, months, on whether this emergency provision would apply to COVID-19, the changes for the work. And if it does apply, how long does an emergency last? Is it a month? Is it during the entire COVID crisis? We really found no clear answer either in DOL guidance or in case law.
But, kudos to DOL. They actually did attempt to provide us an answer on this emergency provision last week with new FAQs that were posted on their website. Just go to dol.gov/whd, for Wage Hour Division, and click on their COVID page, and then you'll see some FAQs for the FLSA.
What you're looking for to see this is Question No. 16. Thank you, thank you, the answer we got from the DOL is yes, COVID-19 is an emergency under this regulatory section, and the employees can be "temporarily required to perform non-exempt duties due to COVID-19 without losing the exemption." All right, is that the answer? Well, I think the FAQ is not complete protection for employers.
It's still a bit fuzzy on three key points. One, what is temporary? Does that mean that exempt employees can perform non-exempt work until the crisis ends everywhere in the country? Or does it end when the state or local government allows us to go back to business as usual?
The other thing is the FAQ says they can perform non-exempt work when that is caused by and due to COVID. What does that mean, "due to COVID?" Litigation incoming. What if an employer decides to lay off all non-exempt employees and then have the exempt perform their work? They decide to move all the work that they do out to the exempt and lay off all the non-exempt. Is that due to COVID? Or is that an employer or a choice that they chose to cut the non-exempts rather than cut the exempts?
Finally, weirdly and interestingly, the question in the FAQ that DOL says they're answering refers only to executive, administrative, and professional employees. The outside sales exemption is not in the question even though that regulatory section is in the Part 700 of the regulation and is a definition section that applies to every exemption, but it's not in the FAQ question. So, what about those exempt outside sales employees that have been prohibited by governments from actually going outside to visit clients? Does the FAQ apply to them?
To me, this is the biggest issue that I've been talking about, that my clients are concerned about, is whether or not outside salesmen can still be exempt if they can't go outside. So the question is why did DOL fail to put outside sales, list that, in the question that they were answering? Was that on purpose, or was it unintentional?
Also remember, of course, many states are not going to have a similar emergency provision and, thus, they are no help here for state law claims. Can we say California PAGA three times fast? So, you still have some areas of vulnerability under state law. Nonetheless, the FAQ is something; better than nothing. My advice is try to rely on this provision as little as an employer can, and be sure to document why changes in job duties were effectually caused by COVID. But there is some protection here.
I want to move now on to talk about your non-exempt overtime-eligible employee. Ensuring that employees are paid for all compensable work activities has always been a challenge. What is work? It seems like it should be a simple question, but there are thousands and thousands and thousands of case law on whether a particular activity is work or not. With more non-exempt employees working from home during the COVID crisis, off-the-clock work has become even more of a problem and more of a challenge to comply.
How are employees tracking time of non-exempt employees who are working from home? Did they create any new procedures or controls to ensure that employees are reporting all of their hours and that they're actually working those hours?
Perhaps, I mean, the biggest issue, more importantly as we return to work, there are new questions regarding what COVID-19 activities actually must be paid. Questions that I'm getting: We want to require our non-exempt employees on an unpaid furlough to check in and tell us whether or not they're willing to come back to work and to check in to see if we do have work for them. Do we have to pay for that?
A lot of employers now, of course, are requiring their employees to wear a mask at work and, perhaps, other personal protective equipment. Do you have to pay for that or not? Temperature checks and health screens. A lot of governments now are going to, when people reopen offices, they're going to require the employers to make their employees do temperature checks and health screenings.
And what about all that extra time it's going to take us to commute into work? A lot of buildings are requiring a very, very limited number of people in an elevator, so there's going to be a long line at elevators. There's going to be less capacity in our public transportation, so do we have to pay for that extra time?
Let me give you my view of these answers. On check ins to require your furloughed employees to check in to see if they want to work, I think the answer to that is totally unclear. Probably yes that employees must be paid for putting on required masks and other personal protective equipment. I hear you. You're saying, "But it's only a couple of seconds." Well, guess what? The California Supreme Court said there's no such thing as de minimis time; you got to pay for every second. And DOL's position is that to be de minimis and you don't have to pay an employee for the activity it has to be both small in time and activity that occurs sporadically and infrequently. So, DOL's position is if you know that they're going to take five seconds to put on their mask every day they're at work, then you got to pay for that time.
On the temperature checks and health screening, totally depends on the state law you're in. Under federal law, there was a case a couple years ago about checking bags for security and contraband at Amazon warehouses, and the Supreme Court said, "Nope. That's a preliminary activity that you don't have to pay for." So I think, federally, you don't have to pay if you require employees to temperature checks or health screenings. But in California, you bet you're going to have to pay for that.
There's a good handful of other states where you are going to have to pay for that time, and that is work time. You get all sorts of other questions. If you require them to do their temperature check at home, does that mean that starts the time clock and now they've got to be paid for their commute that happens after they take their temperatures?
In states like New York and California that have these reporting time pay requirements -- in California, if an employee starts work, you got to pay them for at least four hours. Somebody takes their temperature. The temperature is too high. You tell them, "You can't come to work." At least in California, you're going to probably have to pay them four hours for spending the three minutes to check their temperature.
And probably no for extra commuting time. Commuting time is generally not compensable work. It's considered just part of what everybody does to get into work, so additional time it takes you to commute, including waiting in line for the elevator, is not exempt.
Overtime pay calculations. A lot of employers are doing great things for their non-exempt employees, like paying them hazard pay when they're an essential worker and they have to go into work. Because of the $600 federal unemployment bonus we get for not working, a lot of employers are finding it hard now to get their employees back to work.
Of course, that unemployment federal $600 benefit ends tomorrow, but it looks like there is going to be some sort of different or additional unemployment support. But employers are actually paying people bonuses if they agree to come back to work, whether it's hazard pay or a hardship bonus, a return-to-work bonus. You have to pay overtime on those bonuses because they're part of the employee's wages.
What you do is you take a bonus, you divide it by the number of hours worked during the week, times .5, times the overtime hours worked in the week. So, you can owe extra overtime. Most people don't know about that requirement, so I have a feeling there's going to be some mistakes being made.
In case you're wondering, there are a lot of plaintiffs' lawyers out there who just do not care that companies are struggling to stay afloat, especially in the restaurant, retail, and hospitality, so we are already seeing COVID-19-related lawsuits being filed and expect more. The Cook County jail officers sued, for example, for the time that they were spending in additional sanitation and donning and doffing without getting paid.
All total—we tracked this at Littler—there have been over 400 COVID-related lawsuits that have been filed since mid-March alleging everything from wage and hour to safety to discrimination. The top states for these COVID lawsuits are California, Florida, New Jersey, and New York.
Before I let go of the mic and hand this back over to Roger, can Congress help? Can DOL help? Well, Congress is trying. You might have read a little bit about the next relief bill. The Senate version does include a liability shield, but I think there's -- and it's clear that that liability shield is to protect employers from accusations that employees have COVID-19 because of activities or inactivities by their employers.
Less clear whether or not this liability shield is going to be protecting employers who fail to pay an employee for time spent donning and doffing. How much of the liability shield is going to be actually liability from FLSA violations? For example, all those outside sales employee who are no longer qualify as outside sales employees.
I'm watching this closely. We haven't actually seen bill text yet, although, if you go to littler.com, you can find a summary of what we have heard from the Senate Republicans on the shield, but I think that FLSA is going to be left behind by the Senate. If the Senate Republicans have their way and actually do pass a liability shield, I very, very much doubt it's going to relieve employers from liability for FLSA violations.
Finally, can DOL help? Don't have time to go through this in detail, but it's in the PowerPoint that I posted on the fedsoc.org. I know, I know. I'm from the government, and I'm here to help. Believe it or not, DOL -- obviously, we need more FAQs, more opinion letters, more guidance for employers on these types of issues, but they also have what's called the PAID program, which the Trump administration officials at DOL started a couple years ago.
What this is is if you realize you've done something wrong—oops—you can take your oops to the DOL, tell them about it, tell them how much you think you owe the employee, and they will help you get those back wages back to the employees. Now why the heck would you want to do that? Well, because you're going to pay 100 percent of two years of back wages, but you are not going to pay the third year of back wages, liquidated damages that are equal to the amount of back wages you pay, civil money penalties of up to $2,000 per employee, and of course, you're going to get a waiver for any employee who accepts the back wages; they waive their right to sue. Just in back wages, liquidated damages, and civil money penalties, that's a 66 percent savings, let alone not having to face private lawsuits or pay those plaintiffs' attorney's fees.
Two other reasons that I encourage participation is, of course, the waiver, and then, during this process, DOL will give their approval to you on how you're paying your employees, which is basically a good faith defense. There's no way a plaintiff's lawyer is going to be able to get more money in the future when DOL has said you're doing the right thing.
The PAID website, in case you're interested, dol.gov/agencies/whd/paid.
Roger, I think I'm done.
G. Roger King: Well, not yet. I'm not going to let you off that easy. I have some questions and thoughts to share, and I'd like your reaction. Greg, do we have questions for Tammy? Any in the queue?
Greg Walsh: Let's turn on the -- let's go to audience questions. I also encourage callers to follow along with Tammy and Roger's linked presentations on the Teleforum's event page at fedsoc.org.
G. Roger King: Thanks, Greg.
Greg Walsh: Roger, it doesn't look like we have any questions off the bat. Do you want to ask some of yours?
G. Roger King: Well, yes. I do. And Tammy, great presentation. A lot of ground covered in a very short period of time. I want to emphasize something that Tammy mentioned and that's the Littler Mendelson website tracking COVID-19 labor and employment litigation around the country. Tammy, that's, I think, updated weekly and is quite comprehensive, right?
Tammy D. McCutchen: Yep, it is. It is, and you'll find it basically -- our COVID page, by the way, actually also tracks every single government shutdown and closure order. You can go there, click on /covid, and you'll find all of that.
G. Roger King: That's great stuff. It's one of the best resources, I think, that's out there on ongoing developments and also COVID-19 labor and employment litigation.
Tammy, what do you think the potential is for further guidance from DOL—more FAQs, more helpful thoughts from the government?
Tammy D. McCutchen: Well, I think Administrator Stanton wants to do more, but just as when I was there back in the Bush administration, even to put out one FAQ requires like ten people to approve it. So guidance has been slow in coming, and they're focusing on so many other issues. They have a new paid sick leave law to do FAQs on. Now, DOL's also getting, of course, other criticism about how the states are implementing the extra unemployment benefit and stuff. So there's just so much going on at DOL that answering these types of very specific questions -- I'm hopeful, but I'm not going to hold my breath.
G. Roger King: Right. Understood. A tremendous amount of work on DOL. A lot more than I think most people realize.
Tammy, you've touched upon the duties test as we were talking about exempt employees. Could you comment just a bit further, particularly as it relates to the California duties test? I think a lot of employers just don't have a good understanding of the duties requirements.
Tammy D. McCutchen: Yeah. I'm sorry. The problem is that the duties requirements are a legislative regulation rather than interpretive regulation. If it was an interpretive regulation, DOL could just come in and grant an exception, anything like that. But because these are legislative regulations that DOL was told by Congress to do, they can't change the regulations without another regulatory process. And we all know that's like a minimum of one year, if you're going superfast, normally two to three.
They could, and they have the power to, and they do, have non-enforcement policies where they say, "You know what, if you don't pay somebody for donning a mask, we're not going to enforce against that." But that does nothing for the private lawsuits. It's the private lawsuits that I'm worried about, not the current administration enforcing the FLSA in an unfair way given the current crisis. But you know these plaintiffs' lawyers, right? They'll sue for anything, and they don't care if your company is on the edge of bankruptcy.
G. Roger King: Right. And the duties test in California is particularly difficult. I know for our HR policy members. You want to comment just briefly on California and the duties test?
Tammy D. McCutchen: Yeah. California, they just -- the biggest difference is this. Let's take outside sales. For outsides sales, under the federal law, you have to customarily and regularly make sales away from any fixed placed of business or your home. There's a DOL opinion letter that says one or two hours a day, one or two days a week, that's enough.
In California, you have to be away from any fixed place of doing business a hard over 50 percent of the time. And then, of course, the worst thing about that is a violation in California costs so much because of the Private Attorney Generals Act.
I think it's like $250 per violation. That's not much, but a violation is every day for every employee. So, these PAGA penalties just poom. They explode, and they're the biggest part of it. So not only are the requirements more difficult to meet than the federal government, but the penalties are massive.
G. Roger King: Right. And penalties are a problem, and that 50 percent-plus test can be very challenging for sure.
With respect to exempt employees, I thought your comment was just spot on. If an exempt employee just does five minutes of emails at home while she or he is on furlough, you have triggered the salary requirement for that week. What about telling a furloughed employee, "We don't"—and I'm talking exempt—"We don't need you at all this week, so we are going to not pay you in one-week increments, okay?"
Tammy D. McCutchen: Right. Yep, it's in one-week increments. So, if they do indeed do nothing during a work week, then they do not have to be paid anything. So, for our perspective at Littler, the best practice is if you put an exempt, salaried employee out on furlough, you actually give them a written document that says, "Do not work. You are not required to work. Do not work."
I think it's actually safer, since there's not going to be any overtime pay due in this situation, just to reclassify them as non-exempt during their "furlough" and require them to report any work that they do, including checking of emails or telephone calls, and pay them for that time. Take their salary, divide it by 40, and that's their hourly rate, and pay them for that time.
And don't worry, Roger, because as soon as things go back to normal—they're back at the office, they're off of furlough, they resume their normal job duties—they can be reclassified back to exempt with no problems.
G. Roger King: Right. No, that's great counsel. Well, what about one-day increments? I know there's a wage and hour reg that if I voluntarily say, "Okay, I'm exempt. I won't work at all this day. You don't have to pay me, okay?"
Tammy D. McCutchen: Yep. And that is -- I can tell you where it is. It's 29 CFR 541.602, and unfortunately, the only sort of one-day or partial-day increments where you can not pay an employee is if they're out sick and you have salary replacement benefits, or if it's that they take a personal day. This is because this absence as a furlough is required by the needs of the business and is not something that the employee wants to take the day off. You cannot dock for a single day or a half a day. You have to pay the full salary if they perform work, any work, during the week.
G. Roger King: Right. So, it's back to this may be better to reclassify for a short period of time. I think that's just excellent counsel.
I want to ask you just a few questions about the de minimis exception. I know, based on my own private practice background, that sporadic, episodic, albeit de minimis not defined, perhaps get you in the discussion. Do you think COVID-19 makes any difference here on interpreting and applying the de minimis rule?
Tammy D. McCutchen: Right. Wouldn't that be great if DOL would issue us some guidance on that? It would be wonderful. Now, their guidance where they basically said -- it's a longstanding, but this is a special situation, so it would be great if they could issue guidance on that, especially because under -- if you look at the case law, not all federal circuits and courts follow this. You can find a lot of case law decisions where as long as it's just 30 seconds, a minute, regardless of whether it's regular or not, that the courts will say it's de minimis; you don't have to pay for it.
But again, California rears its head because there is no such thing as de minimis under California law as of last year.
G. Roger King: Right. Well, maybe we'll get something on de minimis. Stay tuned. Wouldn't that be great?
Start of the work day. I know we've been discouraging our members to have employees perform medical checks, temperature checks, what have you, fill out health questionnaires, or do something along those lines at their home before they report to work because of the potential fear of the start of the work day. Would you just expand on that just a moment? When does one's work day really start under the FLSA?
Tammy D. McCutchen: Well, it starts when you do the first activity that you do that is required and is part of your job. It does not start if you do a postliminary or preliminary activity. And that's that Supreme Court case that found that, for example, checking somebody's bags to make sure they're not stealing any product in the Amazon warehouse; that's not a principal activity. That's a preliminary/postliminary, so you don't have to pay for it. However, of course, California has come out the other way.
There have been some unsuccessful lawsuits before COVID for employees who were HVAC workers or maintenance workers who didn't have a fixed work location but went from store to store to store, and the question was, if they're at home and they check their emails to see where their first assignment is, does that start the work day? Those mostly have failed, but the lawsuits have been brought, and as you know, since the lawsuits have been brought, that's, what, $500,000 for the employer to get out of.
So, it's something that -- we're the same. I'd rather have injury at work. It doesn't help in New York and California when you have those reporting time pay requirements.
The other thing, too, I think it's worth to mention here, for your information. My other employer, Compliance HR -- compliancehr.com is the website where we write employment compliance apps. We have a brand-new app out where you can put out on an enterprise basis and the employee goes on their smartphone. They answer health screening questions that are required by the state or local government, and then, it tells them very quickly whether they can come into work or not. Takes only about 15 seconds to do it, and then, you have actually -- not only do you have documentation that they cleared the health screening test, but you have the amount of time they spent, which is one solution that we've developed for Littler and Compliance HR.
If it starts the work day, you're paying for the entire commute time, right? And you know what that can mean. A huge problem.
R. Roger King: Yeah. A potential big-time problem, right. That app sounds great. I think it's something that everybody on the call really ought to look at.
With respect to starting the work day, let's say, Tammy, I'm a non-exempt, hourly worker. I'm working from home, and I log in, get my computer started in the morning. Then I go make breakfast for the kids. Then I come back to my computer, do a little more work, and then I go outside to do a few chores. Then I come back in. Has my work day started when I logged in? What about people working at home? How do you track those hours for hourly non-exempt?
Tammy D. McCutchen: Well, unless you can track their computer usage, which is probably not that accurate anyway, it's tough. You're on honor system. People like to talk about what the FLSA is. You have to be paid whistle to whistle, from the start of your work day to the end of the work day. But it's not absolute.
For example, under FLSA most state laws, you do not have to pay employees for taking lunch breaks. You can have unpaid lunch breaks of at least 30 minutes. So, my opinion on this one is you do not have to pay them when they make those types of breaks. Now, here's the thing. Take that 30 minutes -- breaks under 20 minutes have to be paid; breaks over 30 minutes don't have to be paid, and that's what I would use.
Unfortunately, if mom goes away to quiet a crying baby and it takes her ten minutes, you just have to pay for that time. But if she's going out and spending a half an hour more to do stuff around the house, you don't have to pay for that time. But how do you know? Which makes it very difficult.
That's why telecommuting -- a lot of people are talking about, "Oh, COVID-19. We can all telecommute now. It’s changing." But the problem is how do you know how much you have to pay your employees? And there's a lot of businesses that can't afford to pay somebody for eight hours of work if they only worked two.
R. Roger King: Yeah, and that's spot on, Tammy. As we move toward the school year, in many parts of the country in August, and we have working moms and dads having to stay home, work from home, but yet also homeschool or at least monitor on a tele-education basis their children's education. How do you track hours accurately? And are we going to get differences of opinion, at least from the plaintiffs' bar? It's going to be a challenge, right?
Tammy D. McCutchen: It's going to be a challenge. There's going to be lots of litigation coming down the road. I think primarily the litigation we're seeing today is more safety and health related. I think the FLSA lawsuits and the California class actions are going to be coming in huge, big numbers moving forward.
You're not going to be able to track hours worked accurately. Basically, I don't see any solution except for accepting what the employee tells you they worked. So, you're going to have to be -- it means more management as you assess the quality and quantity of the work that they're completing in the time that they say they're working.
I think that's where the discipline and termination will have to come in. If somebody says, "Oh yeah, I worked ten hours today," and you look at the work they performed and it's like, "You could've done that in a half an hour." I think that's how you're going to have to manage these non-exempt employees.
R. Roger King: Let's just close out, and I totally agree. What about the time period for potential liability? Just the statute of limitations, at least under the federal law? How long should employers be concerned?
Tammy D. McCutchen: Well, this is a good thing because the statute of limitations under federal law is two years; three years if you have acted willfully. And I think we could all say there's not going to be any willfulness findings. Some states have longer statutes of limitations: six years in New York; four years in California.
But this is why the PAID program is so important. You can limit your liability just to that two years and, because we're talking about the last 46 months that these problems might have occurred, even in states like California and New York that have longer statute of limitations, you can correct what you're doing going forward and get all of the liability paid for four months to six months through the Department of Labor and get those waivers of claims.
There's no private settlements of FLSA like discrimination cases. The only way an employee can waive claims is through a court settlement or a DOL settlement, and that's why the PAID program is so important and so useful at this time for our clients that have made a mistake. They're struggling to survive; no concept that they made a mistake. You can go in, get it corrected, pay back wages for 46 months, get your waivers, and you're done.
Greg Walsh: We had a caller with a question, if you guys are ready to field one?
G. Roger King: Please, Greg. Please.
Caller 1: Yes, good afternoon. Thanks very much for the very enlightening discussion. I'm just curious. I realize this fall's election will probably be the most significant factor in it, but I'm wondering what your opinions are about the prospect of COVID-19 being the impetus for dragging the FLSA into the information age from the industrial age and getting away from the lunacy of hourly compensation as opposed to something more meaningful, like piece work?
Tammy D. McCutchen: Well, I think the election will have an enormous impact. You forget, during the Obama administration, they refused even to answer questions from employers about what the FLSA requires. That's called an opinion letter. And it was only with the Trump administration coming in which they actually started issuing opinion letters.
Also, the whole PAID program -- the Obama administration, no way would they do that. And many state attorneys general actually criticized the Department of Labor from trying to help employers to get it right. Because, of course, it's unfair that they only have to pay two years of back wages. You're letting them get away with not paying three years and then double damages. So, it will have a huge impact.
And this administration has does something. It's sort of a myth that if you're overtime eligible you have to be paid by the hour. That's not true. You can be paid on a piece rate. You can 100 percent commission. You can even be paid as salary. Now, you still have to calculate and pay overtime on whatever compensation that you pay the employee, in whatever form, for hours worked over 40.
This administration has actually helped. They have done regulations called the regular rate regulations that clarify what types of compensation have to be included in the overtime calculation. Most recently, they have clarified how to pay and calculate overtime for non-exempt employees paid on a salary. That has helped employers a lot so that they can look to alternative ways, like piece rate, daily rate, commissions, and salary to pay non-exempt employees. And I think that if the Democrats came back into the Department of Labor, that would all stop.
G. Roger King: The question's an excellent one. The election's going to potentially result in a major change in labor laws in this country. We can debate whether that's good or bad, and it depends on your perspective. But certainly, a big impact. Many people, of course, don't think about what we're talking about today—rules and regulations, Fair Labor Standards Act, other federal statutes—significant impact by election results.
Greg, do we have any other questions in the queue for Tammy and Fair Labor Standards Act?
Greg Walsh: We do not at the moment.
G. Roger King: All right. Well, please feel free to submit a question.
Let me now turn to the National Labor Relations Act. My slides, like Tammy's, are on The Federalist Society webpage, and I'm going to be following them as I make my remarks.
I, in all probability, will not go through all of my slides today. Tammy and I continue this three-part series on August 5, and there will be an announcement of that to The Federalist Society website. So, we will certainly complete the material, and then, per our outline that we put together for this entire three-part series, we will move to other subjects as we conclude on the third part of this series on August 5.
With my slides, if you're following, I'm on Slide 1. What I want to do here is set the stage about what kind of activity that employees engage in, whether it be at the workplace or away from the workplace, is protected from employer discipline, including potential termination? And the reason that I want to set the stage in that manner is that we have social justice protests, we have safety strikes, we have safety walkouts. We have a great deal of worker unrest in this country. It's evident from picking up any newspaper or listening to any newscast—a lot of agitation in the workplace, perhaps justifiable in certain circumstances.
The bedrock of this protection, if it's available, would be the National Labor Relations Act. Particularly, as you see on Slide 1, Section 7. If you go to the bottom of Section 7, Mutual Aid or Protection. Essentially, the Supreme Court and other federal courts and NLRB have interpreted Section 7 very broadly.
So, if two or more employees come together for their mutual aid and protection and have an issue, a dispute, a concern regarding terms and conditions of employment or enforcement of their collective bargaining agreement, those employees are in a protected zone. They're engaged in protected activity—protected, concerted activity.
Now, I want to stop there just for a moment. For those that might not be familiar with the National Labor Relations Act, this statute applies to the private sector employers in the country, except for rail and air. The NLRA does not apply to governmental workers, so do keep that in mind. But obviously, the reach and the scope of the NLRA is quite broad.
As you see at the bottom of the first slide, generally, there must be some type of link between the activity in question and the employees' terms and conditions of employment.
Let's go to the next slide. More specifically, under the NLRA, the National Labor Relations Board has extended protection to concerted political activity on certain cases if that activity can be connected, or has a nexus, with the interest of employees and their terms and conditions of employment. We're going to come back to that in a moment because this discussion of nexus and connection is particularly important when we talk about social justice strikes, social justice walkouts, and other, at least arguably, political activity.
As you see on the last bullet on Slide 2, the NLRA, therefore, has been deemed by many to be sort of the bedrock, if you will, of the free speech in the workplace discussion.
Let's move to the next slide, and it's Slide 3. What about potential disruptions in the workplace? Let's start with safety-related walkouts and strikes. As we all know, COVID-19 has brought about all kinds of safety issues for workers and third parties, customers, clients that come in contact with workers. What is going to be the proper protection in the workplace? Would it be PPE situations, social distancing situations, whether we have appropriate ventilation, etc.? Just a whole host of safety-related issues that are cropping up and correctly so.
For non-represented, non-union employees, again, I go back to Section 7 of the National Labor Relations Act and the right to refuse to work in conditions that these employees to be unsafe. So, what's the standard? It appears, from the case law, to be quite low, even potentially a subjective, non-evidence-based concern: that we don't have proper ventilation; these are not the right masks; we have too many people congregating in the lunchroom area, etc. Should there be a higher standard? Should there be some reasonable good faith standard? That's a potential litigation point. Watch that.
But I would stress to our audience, for non-unionized workers, be very careful because many courts would, and even the NLRB, really permit a really wide range of protection if safety issues are raised.
And can you replace, temporarily or permanently, employees that are engaging in a work stoppage or walkout on safety issues? Well, certainly, perhaps temporarily as you continue your operations. You can't terminate them because this is a protected concerted activity. Again, I would be very careful about that. What you're going to do on a short-range and long-range action plan should be reviewed with counsel for sure.
Let's keep moving through the slides. Let's go to the next slide. What about unionized, represented employees? Section 502 of the Labor Management Relations Act does come into play here, and refusals to work over unsafe conditions are not considered strikes. That's a very important distinction. If it were an economic strike—put aside the safety issue—and workers were striking, refusing to work because they believe they're not being paid appropriately, whether it be union or non-union, that's protected concerted activity, but that's an economic strike.
A worker, whether he or she is represented or not, has a right to refuse to work, withhold their labor, if you will, but the employer in an economic strike can not only temporarily replace those workers but also could permanently replace them. Not terminate them—a very important distinction—but could be permanently replacing them, subject to the strikers only having a right to return to work when and if their positions become available again.
However, and this is an important, however, in a safety situation, the employer would be prohibited from replacing the safety striking workers. Here, we do have a higher standard, a "ascertainable, objective evidence standard that creates abnormally dangerous conditions for work," as you see here on the slide. That's a standard that is applicable under Section 502. This could be done on an individual basis. It doesn't require two or more workers to trigger this protection. Again, as I mentioned, no termination of workers that engage in this area.
Even if the employer and its union contract—and I'd say virtually every contract I've ever seen has a no-strike clause in it—the no-strike clause may not be applicable here. In fact, it's probably not going to be applicable in the safety area. So employers should not just say, "Well, we've got a no-strike clause. You can't do what you're doing." That is not going to win the day in most instances.
Let's go to our next slide. What about the issue of social justice strikes? Where are we going to go in this country with respect to employees saying, "I think X. I think Y. Things are wrong, and I'm going to walk out. I'm not going to perform work because I have a strong belief regarding X," whatever X may be. And we certainly are seeing some very concerned workers, and perhaps with great justification, are raising these issues with substantial union support.
Does the National Labor Relations Act protect that kind of activity? As you see on Slide 6, there must be some nexus between the walkout or strike and the workers' terms and conditions of employment. We have virtually no case law or guidance in this area. The most analogous situation, in all probability, is the 2017 Day Without Immigrants protest and related activities.
There, a question was posed to the National Labor Relations Board Office of Legal Counsel, the chief lawyer, if you will, for the National Labor Relations Board. The NLRB members, at that time, did not vote on any case. This is just guidance from the legal office of the Board, if you will.
A question was posed as to whether a worker leaving her or his work station to go to an immigration protest was engaged in protected activity and could not be terminated. The associate general counsel of the Board at the time concluded there was a sufficient nexus between issues that were being raised by the immigration protests. You may recall immigration raids, INS raids, on employers' places of business, deportation of workers without appropriate credentials and authorization to work.
The Board’s general counsel—its lawyer's office, if you will—found in that circumstance there was a sufficient nexus, again, between the protests, the walkout, the dispute, and terms and conditions of employment.
Going back to some of the recent social justice movement, the eight-minute Floyd remembrance on the 20th of July, and other related walkouts. Unions that were sponsoring those activities were careful to put in the mix Fight for 15, $15 minimum wage issues, but were careful to put in the mix of discussion safety issues, safety in the workplace.
So I believe, in all probability, at least if I were writing a memo on this issue for a client, I would have to conclude there probably was sufficient nexus or justification for the work stoppage and the activity would be protected.
Now, all that said, workers under any situation don't have a right to put the employer's operation in jeopardy, whether it be a power plant, nurses in the operating room. There is some common sense that comes into play here. But my message to employers in this area is be careful before you take discipline if there is a social justice issue being raised.
Greg, let me stop there. It may be a good stopping point for this segment of our series of COVID-19 labor and employment. Do we have any questions or comments?
Greg Walsh: We don't have any questions.
Tammy D. McCutchen: Roger, I actually have one that I've been contemplating for a long time, and I'd love to ask an NLRB and traditional labor person like you. We've been hearing a lot about efforts to organize, ask for more wages at employers during COVID-19. In particular, we've been reading a lot about Amazon employees striking, demanding this and that.
With the high unemployment—like some 40 million people still out of work—is unionizing really going to be successful when there's so many people willing to step in? I'll raise my hand for the $15 an hour that Amazon is paying if you don't want to work there. I'd love to hear your views on unionization in the COVID age. Is it being successful, or is it like a really bad time for employees with jobs to complain about wages and conditions?
R. Roger King: Interesting question. A lot of discussion. Some in the union believe that they are in a golden age of organizing because they can raise safety-related issues in the workplace. They can raise social justice issues, Fight for 15 issues in the workplace and that workers will be very sensitized to that and decide to join a union. To date, that really has not happened.
Tammy, our unionization rate in the private sector in this country still is low single digits, depending on how you count unionized workers in non-governmental positions, six, seven percent range. Haven't seen a significant spike in petitions for an election.
I think, per your point, when I'm not secure in my job, I'm not sure I have a job, and/or I am laid off looking for work, and/or I have concerns about my son and daughter getting an appropriate education and how do we work from home—there's so many other issues that are facing all of us in this country that union representation may not be at the forefront.
But that said, some union leaders are working very hard, Service Employees International Union particularly, National Nurses United in the healthcare space. So I think the answer to your question remains to be seen. Everybody in this country, I think, in the spring of this year said, "Well, this is novel. This can't last. Let's all get through it and everything will be fine."
Well, as we approach the fall and particularly the school issue and everything else on the table, we're not so sure. And whether the union movement can capitalize on these uncertain times, check back. Let's talk about that maybe next spring, Tammy.
Tammy D. McCutchen: We'll have to do this again.
R. Roger King: Yes, we will. Greg, any other questions or comments from our audience?
Greg Walsh: We do not.
R. Roger King: Great.
Greg Walsh: So on behalf of The Federalist Society, I want to thank our speakers for the benefit of their valuable time and expertise today. We welcome listener feedback by email at email@example.com. I'd like to remind callers the third installment of this Teleforum series will be next week on August 5.
Thank you all for joining us. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.