Legislators Again Propose Banning Noncompetition Agreements in Massachusetts

Despite past failures, including the defeat of bills proposed by former Governor Deval Patrick in 2014, the Massachusetts Legislature is again taking up the idea of banning noncompetition agreements in the Commonwealth. Several proposals were submitted at the start of the new session in 2015. Given proponents’ track record, success this year seems unlikely.

One proposal would apply prospectively to ban the enforcement of new agreements that block employees from working for competitors. The bill would not, however, prevent employers from otherwise restricting the activities of their former employees in important areas. These include the solicitation of employees, independent contractors and, perhaps most importantly, customers. The proposal would also exempt non-competes that derive from business sales or other non-working relationships.

Competing bills were also filed, as were several bills regarding trade secrets.

 

Massachusetts Amends Maternity Leave Act to Cover Both Men and Women

It’s official: men are equal to women when it comes to maternity leave in the Commonwealth. Some 6-plus years after the Massachusetts Commission Against Discrimination (MCAD) announced that it would treat men as entitled to leave under a state maternity leave law that expressly provided it only to women, the legislature finally acted. It amended the Massachusetts Maternity Leave Act to apply to every employee, not just those who happen to be “female.”

The amendments to Mass. Gen. L. ch. 149, §105D were signed by outgoing Governor Deval Patrick on January 7, just before he left office; they will take effect on April 7, 2015. In addition to making the statute gender neutral, they broaden the purposes for which leave may be taken by replacing the phrase “for the purposes of giving birth or for adopting a child” with  broader language that covers both adoption placement and “placement of a child with an employee pursuant to a court order.” The statute continues to permit up to 8 weeks of leave time. It applies to employers with 6 or more workers, and leave may be with or without pay, in employer discretion.

Employers should review policies for compliance going forward. The law requires covered employers to post notices describing maternity leave rights. It permits employees to pursue legal action with the MCAD for failures to comply with its terms.

New Domestic Violence Law Provides 15 Days of Leave to Covered Employees

Employees of large companies who experience domestic violence, either directly or through family members, now enjoy greater legal protection as the recently enacted domestic violence protection law enters its first full year. The new law, which took effect last August, requires employers of 50 or more workers to provide up to 15 days of leave annually to allow employees to address domestic violence issues.

To qualify for this benefit, employees must first use all vacation, personal or sick leave available to them to cover a domestic violence-related absence. They must provide advance notice of their absences, though they can avoid this requirement when a threat of imminent danger exists. Domestic violence leave can be used when three conditions are met: a situation of domestic violence exists, as defined by the statute; the leave is used to address the effects of the violence; and the employee is not the perpetrator of the domestic violence. Leave can be paid or unpaid, in employers’ discretion. [Read more…]

Searches for Reasonable Accommodations Require Good Faith from Employer and Employee Alike

When it comes to reasonably accommodating employees with disabilities, the process of determining what can be done is a two-way street, at least at the federal level. So says a recent decision from the U.S. Court of Appeals that determined the question whether Kohl’s department store met its obligation to engage in the legally required interactive process aimed at determining what accommodations it could make for its diabetic employee. Over the dissent of one of its members, the Appeals Court awarded summary judgment to Kohl’s because, it found, the employee acted unreasonably.

The case pitted a woman with Type I diabetes against the large department store, which altered its scheduling to require irregular shifts for some of its employees. The schedule was a problem for the employee, Pamela Manning, who asked for an accommodation in the form of a regular work schedule. When Kohl’s delivered a message through its store manager that it could not provide one, the employee abruptly quit her job, citing the detriments to her health of an erratic work schedule, and stormed out of the office. She rebuffed her manager’s plea that she reconsider, delivered both at the office that day and in a conversation by telephone 10 days later, and filed suit. Finding against Ms. Manning, the court wrote, “We must emphasize that it is imperative that both the employer and the employee have a duty to engage in good faith….If an employer engages in an interactive process with the employee, in good faith…but the employee fails to cooperate in the process, then the employer cannot be held liable under the ADA for a failure to provide reasonable accommodations….”

A dissenting justice found Kohl’s negotiating tactics were unfair to its employee and were not conducted in good faith for discrimination law purposes. “A jury could certainly find that Kohl’s did not make reasonable efforts to provide accommodations based on the information it possessed,” the dissent wrote. Harshly criticizing the reasoning of his fellow jurists, the dissent opined that Ms. Manning’s case should have been decided by a jury. The case is EEOC v. Kohl’s Department Stores, Inc.. It was decided on December 19, 2014.

New Minimum Wage Takes Effect

The first phase of Massachusetts’ new state minimum wage law is now in effect. As of January 1, all employees in the Commonwealth must be paid at least $9 per hour. The minimum wage rate was previously set at $8/hour.

The law also requires increases in the rate paid to tipped employees, and the total amount they earn when tips are added must meet or exceed the state’s minimum rate. That rate will increase to $10/hour on January 1, 2016 and to $11/hour on January 1, 2017. Massachusetts is one of several states that recently increased its minimum wage rate after years without changes.

In Massachusetts, paying employees what they earn and are due is particularly important because of harsh penalties in the state’s Wage Act. Failure to meet a number of requirements — including timely payment of minimum wages, commissions, and other sums that may be due to employees — carries a mandatory triple-damages penalty. Employers who lose suits under the Wage Act must also pay legal fees their workers accrue in the collection process.

Another Strike Against Using Independent Contractors in Massachusetts

If the provisions of the Massachusetts Independent Contractor law are not enough to persuade employers they are better off classifying their workers as employees whenever possible, a recent decision against FedEx Home Delivery may help get them there. Earlier this Fall, the National Labor Relations Board decided that FedEx misclassified 20 of its delivery drivers as independent contractors. The NLRB did not apply Massachusetts law and heard the case in Connecticut. Applying what it likely a far easier standard for employers to satisfy, it nonetheless ruled against FedEx, determining that it had too much control over its drivers to treat them as contractors.

Control over a worker’s job duties/performance is one of three elements in the Massachusetts Independent Contractor statute; employers must prove they don’t exercise such control, then satisfy two other elements in order to beat back misclassification claims under this state’s law. Unless they do so, employers are automatically liable for three times the value of any wages, commissions and, perhaps, benefits the workers would have received but for their improper treatment as contractors. In addition, losing employers must pay their workers’ legal fees. Damages can be quite high when multiple employees are involved, as the recent $2 million settlement reached in a wage case by the Massachusetts Attorney General demonstrates. To make matters worse, workers who agree they are contractors cannot be held to their bargain, even when documented in writing.

Misclassification claims are quite common in Massachusetts, and large employers often must deal with them as class action suits that apply to large numbers of employees. Given the risks, all should take care to carefully analyze their employment practices to ensure compliance with the independent contractor statute and other wage-related laws, many of which carry the same triple damage/legal fee penalties.

 

Government Agency Learns Hard Way the Potential Cost of Retaliating for a Wage Complaint

Not even a government agency, it seems, can escape the potentially dire consequences of violating the Massachusetts Wage Act, even when an employee enjoys civil service protection that many thought, at least, provides the sole remedy for covered workers.

In a decision issued last week, the SJC upheld a large judgment for retaliation against the Attleboro Housing Authority. A jury found that the Authority improperly laid off its employee about a month after he filed a seemingly minor complaint that his hourly pay rate should have been higher than it was. The jury awarded a mere $2,300 in lost wages based on the hourly rate discrepancy, then added $130,000 for retaliatory discharge under the Act. The court tripled both figures and awarded legal fees to the employee, as it must under Mass. Gen. L. ch. 149, s. 150, and the award against the Housing Authority exceeded $400,000 before interest at 12% was added.

The moral of this story is patent: when an employee has made any claim regarding the payment of his/her wages, discretion dictates that employers approach layoffs and other job terminations with extreme caution. In the Attleboro Housing Authority case, the poignancy of this lesson is heightened by the fact that the Authority took the plausible position that the Wage Act did not apply because the employee enjoyed the protection of the civil service system, which provides a wholly separate avenue for redress of job terminations like the one at issue. Both the lower court and the SJC concluded, however, that civil service employees have a choice to pursue their claims under the Wage Act.

Voter Initiative Leads to New Sick Leave Rights for All Massachusetts Employees

Passage of the sick leave law by voters on November 4 will have tangible effects on virtually all Massachusetts employers. Though the statute might not require companies that already have written sick leave policies to change things very much, its varied provisions will nonetheless require a careful review of those policies to ensure statutory compliance. Employers who don’t now have formal sick leave rules will need to adopt them by July 1, 2015, when the statute will take effect.

As of that date, all employers must provide for the accrual of sick leave at the rate one hour for every 30 hours worked, up to a maximum of 40 hours per year. Companies with 11 or more workers must pay employees at their regular hourly rates when time is used; those with 10 or fewer need not do so. Employees are entitled to begin using accrued sick time 90 days after accrual begins (July 1, 2015 or the first day of employment, whichever occurs first). Though workers can carry sick time over from year to year, employers are not required to permit them to use more than 40 hours in a calendar year. Unlike vacation pay, earned but unused sick leave need not be paid out when an employee leaves the job. [Read more…]

Wage Laws Require Both Proper Payment and Good Record Keeping

When it comes to paying employees their wages, being practical sometimes is not quite good enough. So learned a group of restaurant owners who insisted their workers received all the wages due to them under federal law, but lost a $129,000 judgment on the issue nonetheless. The case offers two important lessons for employers: First, be sure to comply with both the technical and practical requirements of wage payment laws; and second, don’t  pick legal fights with federal wage and hour auditors unless absolutely necessary.

In the case, which dealt with minimum wage requirements under the U.S.’s Fair Labor Standards Act, the employer restaurant sought to apply the tip credit to its wait staff employees. The credit allows employers to pay a reduced hourly rate to employees who regularly receive tips as part of their jobs. In all cases, the credit must meet a minimum rate and the employees’ total wages, when tips are included, must satisfy the minimum wage rate in effect. Employers are required to keep records of hourly payments and tips for each employee, and those records must be available for state and federal auditors on request. Employers are also required to give notice to their employees that the tip credit system is being applied to them. The employers in this case did not do so. Though they claimed that their employees earned far more than the minimum wage when tips were considered – a claim that might well have been true – they did not keep records of those tips. Still, they challenged a federal audit result in court. The result was the large judgment, which will increase substantially when interest is added.

In Massachusetts, tip credits are governed by a state statute. Employees must be notified the credit is being applied and records of wages paid must be properly maintained. Massachusetts employers are, of course, governed by federal law as well. As a result, employees in restaurants, who are exempted from overtime requirements by state law, must receive overtime for hours above 40 each week. The effect on the tip credit is to increase both the hourly rate that must be paid for hours above 40 weekly and the gross wages that must be earned once tips are included. Massachusetts law currently requires that tipped employees receive $2.63/hour, and the rate will increase to $3.75 over the next several years. The state’s minimum wage, now at $8/hour, will also increase, to $11 by 2017. Violators can be punished with triple damages and legal fee awards.

U.S. Appeals Court Finds that Massachusetts’ Independent Contractor Statute Could be Precluded by Federal Law

In  a decision that could have broad implications for enforcement of Massachusetts’ tough employee classification law, the U.S. Court of Appeals has concluded that federal law just might make it null and void, at least as it applies to motor carriers. The problem, the court held, is that one of three tests under Mass. Gen. L. ch 149, s. 148B may infringe upon the federal government’s superior authority to regulate interstate commerce.

Relying on the FAAAA (Federal Aviation Administration Authorization Act),  a federal law that bars Massachusetts and other states from regulating the prices, routes or services offered by motor carriers, the Court of Appeals reversed a lower court’s award of judgment to the Massachusetts Attorney General. The AG is defending a suit brought by the Massachusetts Delivery Association, which argues that broad language in the Massachusetts Independent Contractor Statute  effectively bans courier companies from engaging delivery drivers as contractors. Same day delivery companies are being forced to hire drivers as employees, they argue. The result is higher prices and different routes and other services.

There can be little doubt that same day courier companies have been under fire in recent years because of the Independent Contractor Statute. Many of them have faced class action lawsuits that claim their contracted drivers are misclassified. Demands for damages have been in the millions of dollars, and some courier companies have changed their business models as a result.