The Rocky Mountain Employer

This week, the United States Supreme Court issued a much-anticipated decision regarding whether service advisors working at a car dealership were exempt from the overtime pay requirements of the Fair Labor Standards Act (“FLSA”).  In a 5-4 decision, the Court in Encino Motorcars, LLC v. Navarro ruled that service advisors are exempt from overtime pay requirements under the “salesman, partsman, or mechanic” exemption to the FLSA, and thus rejected the Department of Labor’s Obama-era interpretation of that exemption.  In making this decision, the Court rejected the long-standing “narrow construction” principle that the FLSA’s exemptions should be interpreted narrowly, ruling instead that such exemptions should be given a “fair reading.”

Pervez Rashid, a Muslim of Pakistani descent and manager of Washington Metropolitan Area Transit Authority (“WMATA”), received satisfactory performance reviews under a prior manager.  Rashid received a new manager, his job title and duties changed and his performance decreased, resulting in WMATA firing him.  Rashid sued for religious discrimination, but lost because, although he satisfactorily performed under the prior manager (an argument Rashid made), “when a district court evaluates the question of whether an employee was meeting an employer’s legitimate employment expectations, the issue is not the employee’s past performance but whether the employee was performing well at the time of [his] termination.”  

 We recently reported that the National Labor Relations Board (“NLRB”), in its Hy-Brand Industrial Contractors decision, had restored the “traditional test” for determining whether two or more businesses are joint employers (whereby two or more entities will be deemed joint employers where one entity actually exercised control over another entity’s employees) and rejected the Obama-era Browning-Ferris decision (in which a business can be deemed a joint employer if it merely had indirect or potential control over another entity’s employees, even if it never exercised such control).  In the past two weeks, the NLRB has (1) vacated its Hy-Brand decision on procedural grounds; and (2) asked the U.S. Court of Appeals for the District of Columbia Circuit to continue its review of the Browning-Ferris decision, which was pending before that court at the time the NLRB issued its decision in Hy-Brand.

Companies seeking to protect trade secrets from former employees’ misappropriation will have to show evidence of irreparable harm in order to obtain a preliminary injunction, based on a Tenth Circuit decision disallowing courts from presuming such harm simply because the company brings claims under the Defend Trade Secrets Act (the “DTSA”) or the Colorado Uniform Trade Secrets Act (the “CUTSA”). The First Western Capital Management Co. v. Malamed decision marks a significant change from previous Tenth Circuit law, and practically makes it harder for a party to get a preliminary injunction in trade secret misappropriation lawsuits.

In January, Colorado lawmakers convened for the 2018 state legislative session. Below is a summary of three noteworthy proposed bills that would impact Colorado employers.

A federal court has vacated the Equal Employment Opportunity Commission’s (“EEOC”) rules that allow employers to provide incentives of up to 30% of the cost of an employee’s health insurance premiums for employee participation in wellness programs. The effective date of the ruling is January 1, 2019, which gives employers just under a year to ensure compliance.

The United States Department of Labor (“DOL”) has proposed new regulations which would allow employers who do not take a tip credit to open tip pools to non-tipped employees.  Employers use tip credits to pay the tipped minimum wage (an amount lower than federal or state minimum wage) and rely upon the tips employees receive to cover the difference between the employees’ tipped minimum wage and the state or federal minimum wage.  Under current federal law, employers can require tipped employees to pool or share tips only among employees who regularly and customarily receive tips (i.e., servers, bartenders, and bussers).  At the federal level, the current restriction applies regardless of whether the employer claims a tip credit.  The DOL proposal would still prevent employers who use tip credits from pooling tips with non-tipped employees. 

The National Labor Relations Act’s (NLRA) test for determining whether multiple businesses are joint employers has been restored to its traditional interpretation by the Republican-Majority National Labor Relations Board (NLRB).  In Hy-Brand Indus. Contractors, Ltd., the NLRB overruled Browning-Ferris Indus., one of the Obama-era NLRB’s more contentious rulings, in a 3-2 decision, calling the Browning-Ferris decision “a distortion of common law as interpreted by the Board and the courts.”

The newly Republican-majority National Labor Relations Board (“NLRB” or “Board”) has wasted no time setting aside controversial Obama-era Board decisions. This week’s blog focuses on last week’s decision in The Boeing Company, which concerns the legality of employee handbook rules.  Next week we will discuss the Board’s reversal of the Obama-era rule governing joint employer status.