This article was originally posted on Kelley Drye’s Labor Days Blog.

IRC §162(m) limits a publicly held corporation’s ability to take a tax deduction for compensation paid to covered employees in excess of $1 million. As mentioned in our January 2018 Client Advisory, the Tax Cuts and Jobs Act (“Act”) repealed the exception to §162(m) for qualified performance-based compensation and expanded the applicability of §162(m) by broadening the definitions of covered employee and publicly held corporation. These changes generally apply to tax years beginning on or after January 1, 2018, but certain payments are exempt under a transition rule. The IRS recently issued Notice 2018-68 (“Notice”) to provide guidance on the identification of covered employees and the operation of the transition rule. This Client Advisory highlights some of the guidance provided.

Covered Executives
For purposes of determining covered employees for any tax year, the Act provides that any executive (i) who is the principal executive officer (“PEO”) or principal financial officer (“PFO”) of the publicly held corporation at any time during the taxable year, or an individual acting as such, or (ii) whose total compensation for the taxable year is required to be reported to shareholders under SEC rules by reason of such executive being among the three highest compensated officers for the taxable year (other than the PEO or PFO, or an individual acting in such capacity), is a covered executive. Moreover, any individual who was a covered employee for tax years beginning on or after January 1, 2017, remains a covered employee for subsequent tax years.

The Notice provides that an executive does not have to serve as an executive officer at the end of the taxable year to be a covered employee, and that an executive whose compensation is not required to be disclosed under SEC rules may nevertheless be a covered employee – e.g., where an employer delists its securities and does not have to file a proxy statement for the year in question or where an employer is subject to the scaled disclosure rules for smaller reporting companies or emerging growth companies. The Notice also provides that, for tax years beginning before January 1, 2018, covered employees are determined under pre-Act provisions.

To read the full advisory on the Kelley Drye website, click here.

  • 08/29/2018 – Region 4 OSHA News Release – Florida Roofing Company Faces Penalties For Exposing Employees to Fall and Other Safety Hazards
  • 08/28/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Thorpe Plant Services and Steel Dust Recycling After Employee Hospitalized For Fall
  • 08/24/2018 – Region 8 OSHA News Release – U.S. Department of Labor Cites Two Colorado Construction Companies For Safety and Health Hazards after Worker’s Fatal Fall
  • 08/22/2018 – OSHA Trade Release – U.S. Department of Labor Posts New Frequently Asked Questions and Videos on OSHA Standard for Controlling Silica in Construction
  • 08/21/2018 – Region 3 OSHA News Release – U.S. Department of Labor and Texas-Based Builder Partner to Promote Workplace Safety During Northwest D.C. Construction Project
  • 08/16/2018 – Region 4 OSHA News Release – U.S. Department of Labor Joins Partnership to Promote Worker Safety During Construction of Georgia Development Project
  • 08/16/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Ohio Tool Manufacturer After Employee Suffers Amputation

 

  • 08/14/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Florida Construction Company After Employee Suffers Serious Laceration
  • 08/09/2018 – Region 5 OSHA News Release – U.S. Department of Labor Forms Safety Partnership with Builder and Unions on Potawatomi Hotel Expansion Project
  • 08/08/2018 – OSHA Trade Release – U.S. Department of Labor Extends Some Compliance Dates For General Industry Beryllium Standard
  • 08/07/2018 – Region 4 OSHA News Release – U.S. Department of Labor and Alabama Auto Dealership Settle Safety Citations and Penalties Following Fatal Fire
  • 08/06/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Tennessee Contractor After Two Employees Burned at Nuclear Power Plant
  • 08/06/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Florida Construction Company After Fatal Trenching Incident
  • 08/06/2018 – Region 6 OSHA News Release – U.S. Department of Labor Cites El Paso Construction Company For Trenching and Excavation Safety Hazards
  • 08/03/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Illinois Manufacturer For Health and Safety Violations
  • 08/03/2018 – Region 6 OSHA News Release – U.S. Department of Labor Cites Texas Dollar Tree Store For Exposing Employees to Safety Hazards
  • 08/02/2018 – OSHA National News Release – U.S. Department of Labor Announces $10.5 Million in Funding Opportunities for Susan Harwood Training Grants to Support Worker Safety and Health
  • 08/02/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Ohio Manufacturer For Exposing Employees to Excessive Noise and Other Hazards
  • 08/02/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Ohio Recycling Company for Safety Violations
  • 08/02/2018 – Region 10 OSHA News Release – U.S. Department of Labor Cites Idaho Lumber Company For Exposing Employees to Safety Hazards
  • 08/01/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Florida Paving Company After Employee Sustains Fatal Injuries

 

This article was written by Kate Visosky and Christina Nordsten and originally posted on Kelley Drye’s Labor Days Blog.

In July, the California Supreme Court issued its opinion in Troester v. Starbucks Corp., holding that the federal wage laws that excuse companies from paying workers for de minimis work, i.e. small amounts of time that are difficult to record, do not apply under the California wage and hour standards.

The de minimis rule has been applied by the federal courts for more than 70 years. The doctrine excuses the payment of wages for small amounts of otherwise compensable time upon a showing that the time is administratively difficult to record. For example, courts have held that time spent by employees booting up their computers and shutting down and clocking out are de minimis and not compensable. See e.g. Chambers v. Sears Roebuck and Co., 428 Fed. Appx. 400 (5th Cir. 2011).

In Troester, the California Supreme Court stepped away from the de minimis approach holding that an “employer that requires its employees to work minutes off the clock on a regular basis or as a regular feature of the job may not evade the obligation to compensate the employee for that time by invoking the de minimis doctrine.” Troester, (2018) 5 Cal. 5th 829, 847. The plaintiff in Troester “had various duties related to closing the store after he clocked out” and that “on a daily basis, these closing tasks generally took [plaintiff] about 4-10 minutes.” Id. at *21. The Court said this time must be compensated.

Notably, while the Court declined to apply the de minimis standard under the facts of the case, it did not reject the doctrine completely. Indeed, it noted there could be instances involving tasks “so irregular or brief in duration that it would not be reasonable to require employers to compensate employees for the time spent on them.”  Troester, 5 Cal. 5th at 848. Thus, the key notion to take away from this case is that off-the-clock work considered significant and regular must be compensated, while insignificant and irregular time could still be considered de minimis. As to the application of the rule, Justice Leondra Kruger wrote a separate concurring opinion offering some concrete examples for when the de minimis rule could apply:

  • Time spent turning on a computer and logging in to an application in order to start a shift and the process takes longer because of a rare and unpredictable software glitch.
  • Time spent reviewing schedule changes notified by e-mail or text message during off hours.
  • Time spent waiting at work for transportation at the end of the day during which time a customer may ask the employee a question not realizing the employee is off duty.

Justice Kruger noted that requiring an employer to accurately record this type of time would be impractical and unreasonable.

What does this ruling mean for California employers?

Although the Troester decision limits the de minimis standard in California, it does not fully reject it. Realistically there will be situations where some work will be impossible to record. The Court made note of this. Therefore, while entities doing business in California can be confident that highly unusual and irregular time spent off-the-clock may not be found compensable, the Troester decision may still have an impact on their business. This is especially true for companies in the service industry such as retailers and restaurants who employ a large number of the hourly workers in our state. These companies may want to conduct a review of their policies, practices, and procedures that impact their employees’ timekeeping. Below are a few examples of what employers in California can do in light of Troester.

  • Review pre-shift and post-shift practices to ensure that there is no regularly occurring off-the-clock work. For example, “post-shift” practices that include locking up the business should be done on the clock.
  • Keep in mind that technological advances can streamline timekeeping practices. For example, many companies employ smartphone applications that can measure time worked to the split of a second.
  • Update handbooks and written policies to ensure compliance. For example, policies should strictly prohibit off-the-clock work and provide employees with a process for submitting claims of off-the-clock work.
  • Train employees, including supervisors, and managers, in their updated policies and procedures.

Although the Troester decision has limited the application of the de minimis doctrine in California, it remains to be seen how it will be applied to other cases moving forward. In the meantime, employers can limit their exposure by proactively reviewing and revising their policies and procedures in light of the decision.

This article was originally published in Lawyer Monthly on August 31, 2018.

This post was written by Matthew C. Luzadder and Janine Fletcher and originally posted on Kelley Drye’s Labor Days Blog.

Medical marijuana occupies a gray space within the United States. Marijuana is an illegal drug under federal law and is included on the Drug Enforcement Administrations’ Schedule I, along with heroin and LSD. The drugs on this schedule are considered to have “no currently accepted medical use and a high potential for abuse.” In spite of the federal prohibition, thirty states have passed some form of legislation allowing for the medical use of marijuana.

This conflict between state and federal law may cause employers confusion—especially in states with expansive disability protections. For example, the New Jersey Law Against Discrimination (“NJLAD”) which provides extensive protections for individuals with disabilities. The New Jersey Compassionate Use Medical Marijuana Act (“NJCUMMA”) supplements the NJLAD by stipulating that employees using marijuana for a medicinal purpose are considered to have a disability and such use is protected. These protections, of course, do not force employers to allow employees to use marijuana at work but do pose a dilemma when it comes to workplace drug testing. Many companies require employees to pass drug tests for federally prohibited narcotics. However, the NJLAD requires employers to provide reasonable accommodations to disabled individuals. Since the NJCUMMA classifies medical marijuana users as disabled, is a drug test a violation of their accommodations?

Continue Reading Altered State: Navigating the Haze Around Medical Marijuana in the Workplace

This post was written by Barbara E. Hoey and Steven R. Nevolis and originally posted on Kelley Drye’s Labor Days Blog.

As the summer reaches its peak, New York employers may be more concerned with juggling employee vacation schedules than drafting new policies. But with New York’s recent anti-sexual harassment legislation coming into effect this October, and continuing into the spring for New York City, employers need to begin rolling out new policies and ensuring that training is in place to meet these new standards. This alert provides a brief summary of the new requirements so that employers aren’t left without guidance during the dog days of summer.

New York State
On April 12, 2018, Governor Cuomo signed into law New York State’s newest anti-sexual harassment requirements, which will come into effect on October 9, 2018. For the first time, the state is mandating both a written policy and annual training for all employers.

New York City
For employers operating within the five boroughs with 15 or more employees, effective April 1, 2019, these employers will have to comply with Mayor de Blasio’s Stop Sexual Harassment in New York City Act. Like the New York State legislation, this law requires employers to complete annual employee training on sexual harassment. There is no requirement in this law regarding a written policy.

To read the advisory on the Kelley Drye website, click here.

This post was written by Barbara E. Hoey and originally posted on Kelley Drye’s Labor Days Blog.

On Friday, July 27, after a 3 week trial in Manhattan , a jury awarded $1.25 million in damages to Enrichetta Ravina, a former professor at Columbia University Business School, who claimed that she was denied tenure and forced to resign in retaliation for complaining that a senior professor, Geert Bekaert, had sexually harassed her.  Professor Bekaert will owe her $500,000 in punitive damages, and Columbia will owe $750,000 in punitive damages.

Ravina first prevailed Thursday on her retaliation claims against Bekaert and against Columbia based on his conduct.  The jury also held Thursday that Bekaert, but not Columbia, could be held liable for punitive damages.  Jurors rejected Ravina’s gender discrimination claims against both.  The money verdicts then came in on Friday.

Interestingly, the jury found that there was no sexual harassment or gender discrimination.  The verdict was on the retaliation claims.  The jury also did not give the plaintiff the back pay and front pay she had sought.  They awarded only punitive damages, against both defendants.

This was a hard fought case, and both the university and Professor Bekaert continue to vigorously deny plaintiff’s allegations.  Very briefly, plaintiff, who had once worked closely and claimed that she was mentored by Bekaert, alleged that the relationship went sour after she rejected his sexual advances.  She claimed that he unfairly stalled her research, criticized her, and derailed her bid for tenure.  This all began in 2014, and by 2016 her tenure bid was over and she was forced to leave.

She alleged that she reported the harassment to Columbia, but that the university did not do enough to address it.

Columbia and Professor Bekaert denied there was any romantic relationship, and maintained throughout that the plaintiff was using the allegations as an excuse for her poor academic performance and reviews.  Once she saw that she was not getting tenure, according to defense attorneys, this was her ‘backup plan’.  The Defendants’ position has been consistent, that they did nothing unlawful and Columbia noted that its decision to deny Plaintiff tenure was upheld as lawful.

However, one key piece of evidence seemed to be a series of emails which Bekaert had written about the plaintiff, where he made very critical comments about Ravina and her work.

Plaintiff was also able to secure a good position at Northwestern University, where she earned more than when she left Columbia.  That is likely why the jury decided not to award her compensatory damages.

Ravina’s attorney, David Sanford of Sanford Heisler Sharp LLP, said in a statement Friday that the award “should send a clear message to Columbia University and the world of higher education that workplace retaliation and abuse of power in academia will not be tolerated.”

On that point – I agree with plaintiff’s counsel.  This verdict should send a message, not just to academia, but to all employers :

What is that message?

  1. All companies and institutions need to be on notice that behavior that could be perceived as ‘harassing’ or ‘bullying’, particularly when directed by a superior against a lower level employee of another race or gender, is a red flag.  What the boss may regard as ‘tough’ or ‘harsh’, a jury could see as discrimination or harassment.
  2. Be careful with email and text messages.  These can be preserved, and abusive words preserved in an email will hold a lot of sway with a judge or jury. Emails remain the most potent piece of evidence in employment litigation today , and everyone needs to be cautious about what they say via email and text.  One “nasty” email can influence a jury, as may have happened here.
  3. Employers need to learn to empower their bystanders.  An employer cannot always prevent a bad actor from behaving badly.  However, an employer can empower those who are aware of or witness that behavior to report it, before it goes too far.
  4. Be sure to investigate and respond to internal complaints promptly, and carefully document those investigations.  No one knows what happened at Columbia except those involved in that situation, but again – juries today will be expecting to see evidence that there was a prompt and thorough response to any claim.  Now, even more than before the “ME Too” era, consider bringing in outside experts to investigate when necessary, in order to avoid the appearance of bias.  And, where there is bad heavier take effective action to stop it.
  5. Individual executives need to remember that New York State and City law (like many other local laws) allows for individual liability if you are found to have engaged in harassment, discrimination, or retaliation.  Like the defendant professor in this case, you could be looking at a sizeable award against you personally, if a jury believes that you broke the law.
  6. Finally, be careful of retaliation claims, as they are serious business and present real liability.  Again, without commenting on what happened here, clearly the jury felt that this plaintiff was treated poorly after she made her complaint – even though they did not credit the complaint itself!  That is very frustrating.  This is not the first (and will not be the last) case where a jury find that there was NO discrimination, but also finds that the plaintiff was unlawfully retaliated against for making the complaint.

In conclusion, the only real solution here is education and training.  Beginning this fall, New York mandates sexual harassment training for all employees. Take this message and if you have not already done so, invest in live training for your executives. It will be well worth the time and effort.

  • 07/30/2018 – Region 6 OSHA News Release – U.S. Department of Labor Cites Three Companies in Oklahoma After Five Employees Fatally Injured by Explosion and Fire
  • 07/30/2018 – Region 7 OSHA News Release – U.S. Department of Labor Cites Kansas Grain Bin Operator
  • 07/27/2018 – OSHA Trade Release – The Department of Labor Proposes Rule to Better Protect Personally Identifiable Information
  • 07/26/2018 – OSHA Trade Release – The Department of Labor Plans to Propose Rule to Better Protect Personally Identifiable Information
  • 07/26/2018 – Region 6 OSHA News Release – U.S. Department of Labor and Manhattan Construction Company Partner To Enhance Safety and Health at Texas Ballpark Project
  • 07/26/2018 – Region 6 OSHA News Release – Corrected: U.S. Department of Labor Cites East Texas Countertop Company for Safety and Health Violations
  • 07/25/2018 – Region 6 OSHA News Release – Court Orders Contractor to Pay $250,000 for Safety Violations Following Fatal Fall at Dallas Apartment Complex
  • 07/24/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Alabama Manufacturer For Exposing Employees to Workplace Hazards
  • 07/24/2018 – Region 4 OSHA News Release – U.S. Department of Labor Finds Safety Violations Following Fatal Kentucky Shipyard Towboat Explosion
  • 07/20/2018 – Region 4 OSHA News Release – U.S. Department of Labor Joins Partnership to Promote Workplace Safety During Georgia Construction Project
  • 07/20/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Alabama Auto Parts Manufacturer For Exposing Employees to Safety Hazards
  • 07/19/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Wisconsin Contractor For Repeatedly Exposing Workers to Falls
  • 07/18/2018 – OSHA Trade Release – U.S. Department of Labor Seeks Comments on Proposal Regarding Railroad Construction Equipment in Cranes and Derricks Construction Standard
  • 07/18/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Missouri Excavating Company After Observing Employees Working in Unprotected Trench
  • 07/17/2018 – Region 2 OSHA News Release – U.S. Department of Labor Cites New York Flooring Manufacturer for Exposing Employees to Mechanical, Chemical, and Other Hazards
  • 07/16/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Southeast Georgia Manufacturer After Employee Amputation

 

This post was written by Michael Gallion and David Van Pelt and originally posted on Kelley Drye’s Labor Days Blog.

In a noteworthy decision last week, the Ninth Circuit ruled that fast food workers in California can voluntarily bargain away some of their meal period rights in exchange for discounted meals. The unanswered questions are how much employees can trade away, and in exchange for what.

The case (Rodriguez v. Taco Bell) challenged Taco Bell’s policy of offering discounted food to employees to be eaten during their meal breaks, as long as the employees agreed to remain in the store. Taco Bell’s reason for adopting the policy was apparently to prevent employees from leaving the premises and giving the food to friends or family. California law requires that during employees’ required meal breaks, employees must be relieved of all duty and be free to leave the premises.

The Court rejected the employee’s argument that by being required to remain in the store, the employee was “under the control” of Taco Bell and the meal period was invalid. The Court noted that purchasing the discounted food was “entirely voluntary,” and Taco Bell did not interfere in how the employee spent the meal break.

The obvious question is how far the reasoning in this case can be extended. The California Supreme Court held years ago that an employer is not liable if employees voluntarily choose not to take their meal break. Does this mean that employees can trade away their right to take meal periods or rest breaks in exchange for a company gift card, for example? What about a monthly bonus? Employees in California can waive their meal periods under certain circumstances. Can they also trade them away, and be required to work an eight-hour shift with no meal period, in exchange for a benefit?

In our view, a significant expansion of this case is unlikely. California courts are simply too protective of employee rights (or perhaps paternalistic, depending on your viewpoint) to permit employees themselves to trade away significant rights. The Court in this case suggested that if the employee had been “under the control” of Taco Bell during the meal period, even voluntarily as part of receiving discounted meals, the practice would have been struck down. Indeed, California law provides that even if an employee prefers to work (and be paid) during his/her meal period, an employer can only do so if the nature of the job makes it necessary.

Still, this case does provide an opportunity that California employers may use to their advantage. Companies might consider ways to lessen the inconvenience that comes with certain legally-protected employee rights (such as the right to leave the premises during a meal period) in exchange for a benefit. Employers should just be aware that any limitation on employee rights will be viewed with suspicion by California courts.

  • 07/13/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites North Carolina Shipyard After Towboat Worker Drowned in Storm
  • 07/12/2018 – OSHA Trade Release – U.S. Department of Labor Kicks Off Safe + Sound Week on August 13th
  • 07/12/2018 – Region 7 OSHA News Release – U.S. Department of Labor and Alberici Healthcare Sign Safety Partnership During Construction of Saint Louis Hospital
  • 07/10/2018 – Region 7 OSHA News Release – U.S. Department of Labor Seeks to Stop Increase in Worker Fatalities In Kansas, Missouri, and Nebraska
  • 07/10/2018 – Region 7 OSHA News Release – U.S. Department of Labor Enters Partnership to Promote Safety During Omaha Construction Project
  • 07/09/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites North Florida Shipyard for Safety Violations Following Employee Drowning
  • 07/09/2018 – Region 4 OSHA News Release – U.S. Department of Labor Joins Partnership to Promote Workplace Safety During Alabama Construction Project
  • 07/05/2018 – Region 5 OSHA News Release – U.S. Department of Labor Cites Illinois Pallet Manufacturer After Employees Are Sickened from Unsafe Carbon Monoxide Levels
  • 07/03/2018 – OSHA Trade Release – U.S. Department of Labor Extends Enforcement Date of Certain Provisions of the Beryllium Standard to August 9
  • 07/03/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites South Florida Manufacturer for Exposing Employees to Safety Hazards
  • 07/03/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Miami Commercial Bakery For Exposing Employees to Electrical and Fall Hazards
  • 07/03/2018 – Region 4 OSHA News Release – U.S. Department of Labor Cites Bluewater Construction Solutions For Exposing Employees to Falls at Two Florida Worksites
  • 07/03/2018 – Region 6 OSHA News Release – U.S. Department of Labor Renews Alliance to Help Prevent Construction Injuries and Illnesses in West Texas
  • 07/02/2018 – OSHA Trade Release – U.S. Department of Labor Confirms Effective Date of the Direct Final Rule Revising Beryllium Standard for General Industry
  • 07/02/2018 – Region 4 OSHA News Release – U.S. Department of Labor Finds West Virginia Roofing Contractor Exposed Employees to Fall, Electrocution, and Other Workplace Hazards