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Will a Higher Minimum Wage Result in Fewer Jobs—and Small Businesses?

By | Employment News, News | No Comments

Earlier this month, the governor of Missouri announced he was lowering the state’s minimum wage from $10 back to $7.70. The reason? He had heard from numerous small-business owners who said they couldn’t afford to pay the wage and stay in business. Although California and other states have committed to raise minimum wage to $15 an hour, small and midsized business (SMB) owners with limited resources appear to be struggling to meet higher wage requirements.

McDonald's KioskEven as SMB owners are asking for relief, some larger firms are implementing innovations that could reduce their dependence on workers. McDonald’s, for example, announced late last year that it was introducing automated ordering technologies, such as kiosks and mobile ordering. You may have noticed these kiosks in your local McDonald’s—I saw one while on vacation earlier this month.

At the time, Forbes reported the decision was made to counteract the minimum wage increase, given that kiosks could potentially reduce the required number of workers. While investing in automation is more expensive than a minimum wage worker initially, over time it more than pays for itself. (McDonald’s has since stated that it will move displaced workers to different positions, rather than reducing staff count.)

At the present, there is little to no consensus in the country regarding how minimum wage should be handled, except, perhaps, among the minimum wage workers who say it isn’t enough. The irony is that the minimum wage, which was introduced to stabilize a post-depression economy, was never intended to be the primary means of support for families over the long haul.

Even now, the percentage of workers earning minimum wage is 2.7 percent of the total working population—less than 10 percent of all hourly workers (per the Bureau of Labor Statistics; 2016 figures). Of this percentage, 74 percent work part time, 85 percent are unmarried, and approximately half are below the age of 25.

These statistics appear to support employers and business organizations who argue against minimum wage increases, citing negative impacts that outweigh the benefits. They may be right. The Congressional Budget Office predicted that raising the minimum wage to $10.10 could cost the economy 500,000 jobs, many of which might be lost due to the failure of small businesses in competitive, low-margin industries.

Given that SMBs constitute 99.7 percent of employer firms (per the Small Business Association), their health is important to the health of our economy. We at Marathon will be watching to see how states—and the current, pro-employer federal administration—will address the issue.

HR Professionals Who Step Over the Line: Are You Unwittingly “Practicing Law”?

By | Employment Law | No Comments

HR Professionals Who Step Over the LineMarathon has always counseled its clients that the best way to handle legal issues relating to employment-related activities is to work with a labor attorney. When HR professionals make judgment calls about, or engage in activities relating to, the legal aspects of a personnel issue, they run the risk of taking inappropriate action that could potentially put themselves and their employers in jeopardy.

Some of these activities can seem very rational. Consider, for example, the case of Bank of Fayetteville NA v. Dep’t of Workforce Services (2016). Here, the Arkansas Court of Appeals dismissed a bank’s appeal regarding a negative unemployment benefits determination because the executive vice president of the bank, who did not have a license to practice law, signed the appeal petition. Although the act may have been done unwittingly, the employee technically engaged in the unauthorized practice of law.

The Society for Human Resource Management (SHRM) has been arguing since at least 2002 to exclude common, reasonable HR activities from consideration as “unlawful practice of law.” Former SHRM president and CEO Susan Meisinger, J.D., SHRM-SCP, criticized the American Bar Association for its suggested definition, noting, “HR professionals represent employers before countless administrative bodies,…regularly represent employers in arbitration and mediation proceedings, and negotiate legal agreements, including offer letters, termination packages and independent contractor agreements.” The ABA withdrew its proposal from consideration, leaving the states to define the laws in ways that often do not favor HR professionals.

The unlawful practice of law, defined differently from state to state, can result in misdemeanors, criminal prosecution and the invalidation of any decisions or actions taken by the person who engaged in the activity, even if they did it unwittingly. We urge organizations to heed our advice and avoid any activities or decisions that in any other industry would be left to an attorney.

Contractor or Employee? President Trump Reverses Guidance, but Employers Must Remain Vigilant

By | Employment Law | No Comments

Contractor or Employee?In June of this year, President Trump withdrew two Department of Labor (DOL) “Guidance Letters,” one of which could potentially relax scrutiny as to whether a worker is an employee or a contractor. The guidance, issued during the Obama administration, took the general position that most workers are employees rather than independent contractors. Some national organizations hailed this move as “pro-employer,” but Marathon cautions its customers not to assume they can stop being cautious in their determinations.

The withdrawn guidance letter, Administrator’s Interpretation No. 2015-1, was first issued in July 2015. It contained a multifactor test to determine whether a worker was an employee or an independent contractor—a test that did not provide a clear line for employers to follow.  Instead, the test focused on whether the worker was economically dependent on the employer or was in business for himself.

Although the withdrawal of this guidance eliminated a test that effectively turned many previous contractors into workers, it did not abolish any of the earlier, commonly accepted tests promulgated by the DOL Far more “deconstruction” of the rules would be required to substantially change the current employer guidance regarding employees versus contractors.

Marathon has long maintained that the surest way to avoid running afoul of Wage and Hour Division (WHD) rules is to make as many workers as possible hourly employees. Barring that, workers that derive a substantial portion of their income from a company, or who are required to work specific hours or perform assigned duties, likely should be treated as employees.

To learn more about the distinction between an independent contractor and an employee in light of this new guidance, give Marathon HR a call.

Can Meal Break Payments Cover Off-the-Clock Work?
The Supreme Court May Decide

By | Employment Law, Employment News | No Comments

Coffee BreakBusiness owners face many situations where laws don’t appear crystal clear or do not cover particular circumstances. In these cases, lacking the advice of an attorney or HR specialist, they make judgment calls that may get them into trouble. That happened to a major corporation, whose personnel assumed paid meal breaks could offset unpaid pre-shift and post-shift work.

Although their logic may have seemed reasonable, the approach was not covered by the Fair Labor Standards Act (FLSA). DuPont employees filed suit, and their action is a prime example of why the safest approach is to conform to the rules established in the FLSA.

In Smiley v. E.I. DuPont De Nemours & Company, the plaintiffs filed a FLSA collective action seeking compensation for 30-60 minutes of “unpaid time” spent on varied pre- and post-shift activities, including putting on and taking off uniforms and safety gear. The plaintiffs alleged the meal time could not offset unpaid work time.

Company Personnel Make an Assumption

DuPont paid the workers for 12-hour shifts, which included (per standard industry practice) three 30-minute breaks. Company accountants included the paid break time in total hours worked and in calculations of the regular rate of pay. Because, per DuPont, the paid break time always exceeded the amount of unpaid pre- and post-shift time, company representatives considered it to be a reasonable offset for the unpaid work.

The Courts Can’t Agree

Because the FLSA does not specifically prohibit the practice of offsetting unpaid work with paid breaks, a District Court sided with DuPont and granted it a summary judgment. On appeal, however, the U.S. Third Circuit Court rejected the offset argument.

The Court had invited the DOL to weigh in on the matter and, upon reading the agency’s brief, it reversed the lower court’s ruling, siding with the plaintiffs. The Circuit Court acknowledged that the FLSA was silent on the issue, but argued that the statute “implicitly” forbade the practice.

This is a very interesting case, because the appeals court’s decision conflicts with at least two earlier, similar decisions regarding non-work time. The Supreme Court has been asked to make a final determination to “restore uniformity to this important area of federal law.”

The Cato Institute, a policy thinktank, sides with DuPont, asserting that “where Congress has not addressed a certain practice, [an] agency has no authority to regulate, and the practice is presumptively legal.” Cato has now filed its own brief supporting DuPont’s petition.

If it accepts the case, the Supreme Court may be deciding not only the DuPont case but also other issues of concern for employers:

  1. How much weight the opinions of federal agencies should have in employment law cases.
  2. Whether only activities prohibited in the FLSA can be violations or if any practice not expressly allowed can constitute a violation under the right circumstances.

As Drug Use Accelerates, Failed Drug Tests Hit 12-Year High

By | Drugs in the Workplace, Employment News | No Comments

Failed Drug TestAnyone who listens to or reads the news likely knows about the drug epidemic sweeping many states, including Georgia. In the workplace, prescription pain medication has been especially problematic. Close to 8 million pain medication prescriptions are issued in Georgia every year.

Despite these events, many companies still do not drug test—or do not test effectively. Marathon believes that organizations simply cannot afford to underestimate the importance of drug testing, any longer. If you don’t think this advice applies to your firm, we have some important news to share.

Some companies don’t drug test because decision makers believe they are “good judges of character,” or the jobs for which they hire aren’t filled by “typical” drug users. Others believe they can recognize a drug user by looking at him or her. The unfortunate reality is that none of these assumptions are accurate. Consider the facts:

  • Quest Diagnostics, the world’s leading provider of diagnostic information services, recently announced that U.S. employees are failing drug tests at a rate higher than any time since 2004. Highlights of the report include:
    • The percentage of employees testing positive for drugs (4.2 percent) is within 0.3 percentage points of the all-time high (4.5 percent)—a 5 percent increase over the prior year.
    • The analysis found increased rates of positive tests across all drug test specimen types and all testing populations.
  • The United Nations (U.N.) has uncovered some startling statistics, as detailed in its World Drug Report.
    • 70 percent of drug users are employed.
    • Higher socioeconomic groups have a greater likelihood of drug use than lower socioeconomic groups.
    • The percentage of workers with opiate additions is greatest in high income brackets.
    • The evidence collected to date points to an increase in cannabis use in areas where referendums have led to the legalization of recreational marijuana use.

These statistics underscore the need for all employers to re-evaluate their drug and alcohol policies and procedures. Drug and alcohol use not only affects productivity; it also reduces workplace safety and puts both personnel and the company at risk.

Marathon recommends that drug and alcohol screening be conducted on all personnel, at all levels of the organization, with no exceptions. Selective screening is not only an unsound practice; it is potentially discriminatory. Furthermore, drug policies should clearly outline company rules and the penalties for infractions, and the entire workforce should be educated through a drug awareness program. Policies should also elucidate the workplace circumstances that merit drug testing, such as pre-hire evaluation, accident response and reasonable suspicion.

As Quest Diagnostics Senior Director of Science and Technology Barry Sample, Ph.D., noted in a press statement, “Employers committed to creating a safe, drug-free work environment should be alert to the potential for drug use among their workforce.”

Engaged to be Waiting, or Waiting to be Engaged?

By | Employment Law | No Comments

On Call SituationsOne of the most common questions for employers determining compensable time is how to handle on-call situations. If an employee is on-call, is he or she eligible to be paid for the on-call time? The answer lies in the restrictions the employer places upon the worker during the on-call period. To make this determination, there are two key questions that employers should consider.

1. Does the employer control the location where employees must wait?

Per the Department of Labor (and the Fair Labor Standards Act), if employees are required to remain on the employer’s premises (in an on-call room at a hospital, for example) or the location is otherwise restricted by the employer (e.g., the worker must be no more than 10 minutes away), employees are being “engaged to wait” and the time is compensable.

2. Are employees able to use the on-call time effectively to engage in personal activities?

Even if workers are not required to wait at a specific location or stay within a designated geographical area, their on-call time may be compensable. If, during on-call periods, employees must be available to report for duty so quickly—or are interrupted so frequently—that they cannot effectively engage in personal activities, the employer must compensate them for the on-call period.

If neither of these situations apply—for example, if workers are required only to let the employer know where they are, and they are given reasonable notice if they are called in, the entire on-call period is not compensable (the worker is “waiting to be engaged”). However, certain portions of the on-call time might still count as paid work.

Following are a few more pointers from the FLSA about on-call periods:

  1. An employer can require on-call employees to carry pagers or cell phones during on-call periods so they can be contacted if necessary.
  2. The employer may establish rules governing use of alcohol during on-call periods.
  3. The employer may establish rules relating to activities provided that employees can still use on-call time to engage in personal activities, such as cutting the grass, going to the movies, going to a ball game, or other activities of their choosing.
  4. If personnel are unable to complete basic activities without interruption—finish a meal, read a story to a child or read a newspaper, for example—they probably cannot use the time effectively for their own purposes.
  5. All time spent answering calls from, and speaking to, employers or their representatives is compensable. For example, if an on-call maintenance technician helps another technician complete a service call via the phone, the FLSA considers it work time.
  6. The FLSA recommends that on-call situations be evaluated on a case-by-case basis to ensure compliance with the law.
  7. The FLSA has not defined “reasonable notice” for on-call and other mutable work situations. Employers should consider (and publish in policies) a prudent expectation, given the location of workers, to avoid a potential violation. For example, a one hour response if an employee is called in is probably reasonable. Requiring a 15 minute response likely is not.

U.S. Circuit Court of Appeals Confirms LGBT Protections in Landmark Ruling

By | Employment Law, News | No Comments

Last month, the 7th Circuit Court of Appeals, which hears cases in several Midwest states, issued a judicial ruling that sexual orientation claims are actionable under Title VII of the 1964 Civil Rights Act. The ruling came in response to a suit in Indiana, Hively v. Ivy Tech Community College of Indiana. It adds support to a July 2016 administrative opinion, issued by the Equal Employment Opportunity Commission (EEOC) in relation to a separate suit. There, the EEOC stated that “…discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII.”

Although the Hively ruling doesn’t directly impact companies outside the 7th Circuit Court’s jurisdiction, it sets a precedent that other courts may follow. Employers across the U.S. should be on alert for similar legislation that may impact hiring and employment practices in their areas.

In addition to judicial rulings, state or local laws can require employers to extend discrimination protections to LGBT workers or applicants. For example, Wisconsin and Illinois (both of which are in the 7th District) currently have laws that prohibit discrimination on the basis of sexual orientation, as do approximately half of U.S. states. No Georgia law has been enacted that protects workers or applicants from discrimination based on sexual or gender identity, although Clarke County and the cities of Decatur and Pine Lake protect government workers, and Atlanta protects all employees against gender identity-based discrimination.

Regarding judicial rulings in Georgia, the Eleventh Circuit Court of Appeals (which presides over Georgia appeal cases) in December 2011 upheld an earlier ruling that that gender-nonconformity is protected by the federal prohibition on sex discrimination. This ruling essentially provides legal protections to transgender and gender non-conforming employees in Georgia. However, it could be construed to exclude those who self-identify as lesbian, gay or bisexual but do not dress or act in a non-conforming manner.

Driving Without Incident: Strategies that May Surprise You

By | Best Practices, News, Risk Management & Safety | No Comments

We hear a lot about the dangers of drunk driving, but did you know it is only the Number 3 cause of accidents? The Number 1 cause, by far, is distracted driving. Per a study by the National Highway Traffic Safety Administration (NHTSA) and the Virginia Tech Transportation Institute (VTTI), 80 percent of automobile accidents and 65 percent of near-accidents involve some form of driver distraction within three seconds of the incident.

Although talking or texting on a cell phone is a common example of distracted driving, anything that diverts a driver’s attention from the road is dangerous.

Causes of Accidents

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Other top causes of distracted driving include:

  • Reaching for a moving object inside the vehicle (reaching for any object can be dangerous)
  • Looking at an object or event outside the vehicle
  • Reading a book
  • Eating food
  • Applying makeup

In addition to distracted driving and drunk driving, a variety of dangerous behaviors have been implicated in accidents or near misses.

#2. Speeding
#4. Reckless Driving (This is a catch-all term for drivers who speed, change lanes too quickly, tailgate, etc.)
#5. Rain
#6. Running Red Lights
#7. Running Stop Signs
#8. Teenage Drivers
#9. Night Driving
#10. Vehicle Design Defects

Several of these (#2, #4, #6 and #7) involve personnel breaking the law. Policies for these activities should be stringently enforced. Where safely possible, personnel should also avoid apparently reckless (erratic) drivers, who may also be impatient or aggressive drivers.

For the activities that are not illegal, business owners can still establish policies that have a positive impact, such as prohibiting unnecessary driving (e.g. errands) in the rain or at night, and ensuring vehicle recall notices are promptly addressed. Driving at night is especially dangerous. It nearly doubles the risk of an accident.

June Is National Safety Month…Are You in the Driver’s Seat?

By | Best Practices, News, Risk Management & Safety | No Comments

National Safety MonthIn June, the National Safety Council will be promoting National Safety Month, a nationwide advocacy effort to increase safety at work, on the road and in homes. The campaign focuses specifically on raising awareness to reduce the incidence of the leading causes of injury and death.

In conjunction with this effort, Marathon is working to expand education about two important issues for businesses: worker driving safety, which we will feature this week, and leading causes of accidents, which we will discuss in next week’s blog.

Many business owners have workers who drive for business purposes, but not all of them know the extent of activities that qualify, nor the safeguards they should implement to protect themselves from potential liability.

  • All driving conducted in conjunction with a business activity is business-related driving, whether or not the employee is driving a company vehicle.
  • Depending on the relationship, company-related driving by independent contractors may also be considered business driving.
  • Even very peripheral activities, such picking up supplies for the business after work hours and on a volunteer basis, could be construed as business driving.

Business Driving Precautions

To protect themselves and their workers, business owners should follow and communicate a variety of safety measures:

  1. Establish and enforce clearly stated, no-exceptions policies regarding business driving. These policies should not only detail when driving for the business is acceptable but also outline the approval process for those who are not authorized to drive under their job descriptions.
  2. Primary Causes of Accidents
  3. Develop guidelines for personnel to follow in the event of an accident or traffic infraction. These should be incorporated into both the company manual and a “safety kit” that also includes:
    • Company contacts to notify in the event of a problem on the road;
    • What information to provide police and any other drivers involved;
    • Company preferences for towing companies, doctors and other third parties who might assist a worker after a driving incident.
  4. Speak to company insurance agents, both automotive/fleet and corporate, and determine what driving is covered under the policy. If agents recommend expanding or adding coverage, give their suggestions earnest consideration.

Workplace Injuries Are Costing Firms a Fortune

By | News, Risk Management & Safety, Workplace Injuries | No Comments

Despite decreasing over the past decade, disabling, non-fatal injuries in the U.S. workplace still cost employers approximately $60 billion in direct compensation costs, which equates to $1 billion each week, per the 2017 Liberty Mutual Workplace Safety Index. Direct costs are those that directly impact the bottom line, including workers’ compensation payments, medical expenses and costs for legal services.

The index, which ranks the top 10 causes of disabling work-related injuries and their direct costs based on data from the Department of Labor, found that the top five injury types accounted for 63.8 percent of the total cost burden. Fortunately, organizations do not have to become a statistic.

  • 2017 Liberty Mutual Workplace Safety Index

    Click Image for Larger Version

    Overexertion involving outside sources is the number one cause of disabling injury, costing $13.79 billion yearly in direct costs and accounting for 23 percent of the overall national burden. This category includes injuries related to lifting, pushing, pulling, holding, carrying or throwing objects. Ironically, it is one of the activity classes easiest to make safer through proper policies and training.

  • Falls on the same level ranked number two, costing businesses $10.62 billion (17.7 percent of the total) Again, these incidents, which are also referred to as “slip, trip and fall events” are highly preventable with proper training and policy enforcement, especially as it relates to slippery surfaces.
  • The next three causes, falls to a lower level (5.50 billion; 9.2 percent of the total), struck by an object or equipment ($4.43 billion; 7.4 percent of the total) and “other” exertions or bodily reactions ($3.89 billion; 6.5 percent of the total) are a mixed bag of activities where a number of factors, from carelessness on the part of another worker to machine failure can cause the event. This category points out the need for expanded policies and training, such as safety measures for working around other personnel and following routine maintenance procedures.

Interestingly, the sixth leading cause of disabling non-fatal injuries is roadway incidents involving motorized land vehicles—one of our focuses for next month.

The direct costs we cited here are not comprehensive. They do not include indirect costs, which can be considerable and include:

  • OSHA Safety Pays ProgramWages paid to injured workers for absences not covered by workers’ compensation;
  • Wage costs related to time lost through work stoppage;
  • Administrative time spent by supervisors following injuries;
  • Employee training and replacement costs;
  • Lost productivity related to new employee learning curves and accommodation of injured employees; and
  • Replacement costs of damaged material, machinery and property.

The hard reality is that workplace injuries not only hurt workers; they can also cripple and even shutter companies. To help businesses put these costs in perspective, OSHA hosts an excellent resource, the interactive Safety Pays module, which allows business stakeholders to calculate the cost and potential impact of various workplace injuries.