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USA: District Court Holds Overtime Rule Invalid; Is End of Obama-Era Rule Here?

DOL Possesses Authority to Implement Minimum Salary Level
The court clarified some confusion created by its prior ruling, explaining it had not held the DOL lacks authority to implement any minimum-salary requirement (an issue pending in the appeal of its preliminary injunction ruling). On the contrary, the court noted, Fifth Circuit precedent provides that such authority exists under the Congressional authority given to the DOL to “define and delimit” the exemptions “from time to time.” But, the court held, even though the DOL has the authority to impose a salary level, the salary level imposed by the Final Rule was invalid because it was too high and excluded too many individuals who otherwise would have satisfied the duties test. The statutory provision establishing the exemptions makes clear that the primary test of whether a position meets the exemption is its duties, not its salary, as the latter was designed merely “as a floor to screen out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary,” the court explained.

Rule Not Entitled to Chevron Deference
In setting a new minimum salary level that would have more than doubled the previous minimum requirement (from $23,660 to $47,476, a new minimum that the DOL itself estimated would render 4.2 million employees automatically eligible for overtime pay), the court held the Final Rule “fails to carry out Congress’s unambiguous intent” that the focus of the white collar exemptions is the duties performed in the position, not the pay. Thus, the Final Rule was not entitled to deference under the first step of the two-part standard established by the U.S. Supreme Court in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), to evaluate the validity of regulations. In addition, the court held that, by raising the minimum salary so high, the DOL “effectively eliminates a consideration of whether an employee performs ‘bona fide [EAP] duties,’” and so it likewise fails under the second step of the Chevron analysis.

Other Issues
On two related issues, the court explained that its preliminary injunction “applied to both states and businesses on a nationwide basis.” This statement may have been an indirect response to a lawsuit filed in the District Court of New Jersey in June 2017. Those plaintiffs contend that the Texas injunction applied only to the DOL and not to private employers. The court put that argument to rest.
Finally, the court clarified that by invalidating the minimum salary aspect of the Final Rule, it likewise was holding unlawful the Rule’s provision requiring an automatic update of the minimum salary level every three years.

What to Expect
The court’s summary judgment ruling likely sounds the death knell for the Obama-era overtime rule. Although the previous administration had appealed the preliminary injunction to the Fifth Circuit, it had done so to argue only that the DOL in fact has the authority to establish a minimum salary level, as it was unclear from the district court’s ruling whether that had been the basis of the ruling. As the district court now has clarified DOL has that authority, that appeal likely will be dismissed as moot. In addition, earlier on the same day the summary judgment order was issued, the parties had jointly moved the Fifth Circuit to place the appeal on hold while they “engaged in ongoing discussions on how to narrow the scope of their dispute and potentially eliminate the need for this interlocutory appeal.” That motion likewise probably becomes moot as well (although it signals that the DOL and the plaintiffs perhaps had struck a deal, most likely very similar to the ruling they received).
One avenue for those seeking to uphold the Final Rule is through a motion to intervene that was filed by the AFL-CIO in December 2016, shortly after entry of the preliminary injunction order. However, concurrently with its summary judgment order, the district court denied the motion to intervene, finding that it was untimely and that the DOL adequately represented whatever interests the union might have. The AFL-CIO could appeal that ruling.
Where does that leave the white collar exemptions? Back where they were prior to May 2016 — and since 2004 — at least until the Trump Administration promulgates a new rule with a revised minimum salary level, something Secretary of Labor Alexander Acosta has intimated will happen. It would appear unlikely that either party (the State and Business Plaintiffs or the DOL) will appeal this ruling.

We will continue to follow these developments. Please contact the Jackson Lewis attorney with whom you work with questions about the decision and compliance with the FLSA’s overtime exemptions.

For more information on these articles or any other issues involving labour and employment matters in United States, please contact John Sander, Partner at Jackson Lewis P.C. (www.jacksonlewis.com) at John.sander@jacksonLewis.com

UK: Discrimination Awards: Injury to feelings compensation increased

The revised bands will be as follows: lower band for less serious cases: £800-£8,400; middle band: £8,400-£25,200 and upper band for the most serious cases: £25,200-£42,000. The new bands will apply to claims made on or after 11 September 2017. For claims before that date, it will be open to Tribunals to adjust the bands in accordance with inflation, and the Guidance sets out the methodology for doing so.

For more information on these articles or any other issues involving labour and employment matters in United Kingdom, please contact Robert Hill, Partner at Clyde & Co (www.clydeco.com) at robert.hill@clydeco.com

UK: Whistleblowing: New rules take effect for certain UK branches of foreign banks and insurers

Similar rules came into force on 7 September 2016 for UK banks and deposit takers, as well as insurers and PRA investment firms. The new rules apply to: (1) UK branches of non-European Economic Area (EEA) deposit takers (2) UK branches of non EEA Solvency II insurers and (3) UK firms that are UK subsidiaries of non-EEA deposit takers with a UK branch. This means that the new rules do not apply to UK branches of EEA deposit takers or insurers.

For more information on these articles or any other issues involving labour and employment matters in United Kingdom, please contact Robert Hill, Partner at Clyde & Co (www.clydeco.com) at robert.hill@clydeco.com

China releases details regarding its social security treaty with the Netherlands

The Treaty on Social Security and the Memorandum of Understanding on Implementation of the Treaty both between China and the Netherlands came into effect on September 1, 2017. In order to ensure the enforceability of the said two documents, China’s General Office of the Ministry of Human Resources and Social Security released the Circular of Implementing the Treaty between China and the Netherlands on Social Security (hereinafter referred to as the “Circular”). The Circular clarifies the types of social security that will be exempted under the Treaty, the personnel who will be entitled to such exemption, the competent authority that will handle the filing for exemption of relevant social insurance and the regulations that will govern the procedures for such social insurance exemption filing. In view of the above, we suggest Netherland companies that assign employees to work in China pay attention to the applicable scope for social insurance exemption under the Circular and avoid from paying double social insurance contribution in China.

For more information on these articles or any other issues involving labour and employment matters in China, please contact Carol Zhu, Partner at Zhong Lun Law Firm (www.zhonglun.com) at carol.zhu@zhonglun.com

Canada: Canadian government plans drafting of federal accessibility legislation

Between July 2016 and February 2017 the Government of Canada conducted public consultations with respect to the planning of federal accessibility legislation. In May 2017 the federal government released its consultation report, Accessible Canada. Creating new federal accessibility legislation. What we learned from Canadians.

According to the results of the consultations, participants expect the Canadian federal government to assume a leadership role in improving accessibility throughout the country, set out standards that could be adopted by provincial governments if necessary, and introduce broad accessibility legislation spanning a variety of areas with particular emphasis on accessibility in employment. As a result of the consultation, in August 2017 the federal Minister of Sport and Persons with Disabilities indicated that the planned federal accessibility legislation will be “proactive” and will provide leadership beyond the federal jurisdiction.

The planned accessibility legislation is expected to apply only to federally regulated employers. At this time, seven Canadian provinces are yet to enact accessibility legislation.

For more information on these articles or any other issues involving labour and employment matters in Canada, please contact Robert Bayne, Partner at Filion Wakely Thorup Angeletti (www.filion.on.ca) at rbayne@filion.on.ca

European Court Rules on Employee Monitoring Programs and Privacy

The Grand Chamber of the European Court of Human Rights (ECHR) issued its decision in the case of Bărbulescu v. Romania (application no. 61496/08) on September 5, an appeal from a determination by the Romanian courts upholding an employee’s termination for personal use of the employer’s computer system.

The Court held that the Romanian courts violated Article 8 of the Convention for the Protection of Human Rights and Fundamental Freedoms in failing to establish the relevant facts and perform an adequate balancing exercise between the applicant’s right to respect for his private life and correspondence and the employer’s interests. While the Convention does not apply directly to employers, the effect of the decision is that disciplinary actions in European Union countries based on personal use of company electronic media will be vulnerable if the facts do not satisfy the balancing considerations outlined by the Court.

Background
Bogdan Bărbulescu, a citizen of Romania, worked for a private company in Bucharest. In 2007, the company requested that Bărbulescu establish a Yahoo Messenger account for the specific purpose of responding to client inquiries. In July 2007, the company informed Bărbulescu that it had been monitoring his Yahoo Messenger account and that its records indicated he had been using the account for personal use. Bărbulescu denied the personal use, but when confronted with proof, including chat transcripts with his brother and fiancée on personal matters, he claimed invasion of privacy. Shortly after, his employment was terminated.

Bărbulescu challenged his termination in the Romanian courts, where his case was dismissed.

Eventually, Bărbulescu’s case reached the Chamber of the ECHR, a seven-judge panel, on the issue of whether the company’s monitoring of its employees violated Article 8 of the Convention, which requires respect for an individual’s private and family life, home, and correspondence. The Chamber, in a 6-1 decision, held that, although Article 8 was applicable, it had not been violated because Bărbulescu had not explained why his Yahoo Messenger account was being used for personal purposes and nothing indicated that the Romanian courts failed to strike a proper balance. “It is not unreasonable for an employer to want to verify that the employees are completing their professional tasks during their working hours,” the Chamber observed.

Grand Chamber Decision
The Grand Chamber, the appellate division of the ECHR, overturned the Chamber’s decision. In an 11-6 ruling, the 17-judge panel concluded that member states have a positive obligation under Article 8. This obligation requires national authorities to confirm that employers with an employee monitoring system also are implementing “adequate and sufficient” safeguards.

The Grand Chamber advised national authorities to consider the following criteria (PDF) when assessing an employer’s monitoring system:

  • Whether the employee has been notified of the possibility that the employer might take measures to monitor correspondence and other communications.
  • The extent of the monitoring by the employer and the degree of intrusion into the employee’s privacy.
  • Whether the employer has provided legitimate reasons to justify monitoring the communications and accessing their actual content.
  • Whether it would have been possible to establish a monitoring system based on less intrusive methods and measures than directly accessing the content of the employee’s communications.
  • The consequences of the monitoring for the employee concerned and the use made by the employer of the results of the monitoring operation.
  • Whether the employee has been provided with adequate safeguards, especially when the employer’s monitoring operations are of an intrusive nature.

The Grand Chamber’s decision in Bărbulescu highlights that it can be lawful to monitor an employee’s communications, but that must be done with deference to the factors set forth above.

The employer must ensure that it provides clear advance notification of its policies on personal use of company electronic facilities and its reservation of the right to monitor the employee’s use and to access communications. Monitoring also should be proportionate to the needs of the investigation and sensitive to unnecessary intrusion on privacy.

It is important to remember that national law can provide additional protections to employee’s use of company facilities beyond the standards outlined in the Court’s decision.

We can expect further refinements as this area of the law continues to change with advancements in monitoring technology.

By John L. Sander ©2017 Jackson Lewis P.C.
This Update is provided for informational purposes only, for details, visit Jackson Lewis publication.

For more information on these articles or any other issues involving labour and employment matters in United States, please contact John Sander, Partner at Jackson Lewis P.C. (www.jacksonlewis.com) at John.sander@jacksonLewis.com

United Kingdom: Parental Bereavement Leave announced

Currently, there is no requirement for employers to provide paid leave for grieving parents. However, employed parents who have lost a child may soon be entitled to take paid bereavement leave. The Parental Bereavement (Pay and Leave) Bill has been introduced into the House of Commons. The Bill has not yet been published, but its primary purpose is to give employed parents a statutory right to paid time off to grieve the loss of their child.

It is a Private Members’ Bill which often means that it is unlikely to make the statute books due to lack of Parliamentary time. However, this Bill may be different as it meets a Conservative party manifesto commitment and is therefore fully supported by the government. Over the summer there will be consultation with employers, employee representative and campaigners to gain a better understanding of the needs of bereaved parents and employers.

A second reading of the Bill is due in the autumn when we can expect to have details of the statutory pay and period of parental bereavement leave that are envisaged. As yet, there is no indication as to when this will become law.

For more information on these articles or any other issues involving labour and employment matters in United Kingdom, please contact Robert Hill, Partner at Clyde & Co (www.clydeco.com) at robert.hill@clydeco.com

United Kingdom: Government has published statement of intent on New Data Protection Bill

The government has published a statement of intent on the new Data Protection Bill which will replace the current Data Protection Act and bring the EU’s General Data Protection Regulation (GDPR) into UK law. The statement explains that the new law will replace the existing UK data protection laws, but offers reassurance that the new regime will be implemented in a way that as far as possible preserves the existing data protection concepts we are used to in the UK.

The statement of intent sets out the government’s objectives which include maintaining public trust and confidence in the processing of personal data and the ability to transfer data across international borders. The new law aims to provide continuity of data protection standards following Brexit.

The new Bill will create two new criminal offences, of intentionally or recklessly re-identifying individuals from anonymised data and of altering records with the intention of preventing disclosure of that information following a subject access request. These offences will incur unlimited fines and may be ‘reportable’ offences, ie they may be included on a criminal record check.

The new law will provide for some UK national laws which are permitted under the GDPR. Existing UK exemptions and derogations (which are essentially what businesses use to enable them to process personal data) will be retained, the statement explains, with necessary adjustments to match up with the GDPR. The statement of intent outlines certain ‘notable’ derogations that will be retained from the current law, including:

  • preserving the current approach to the treatment of criminal offence data, so that organisations can process criminal convictions and offences data
  • allowing the use of automated decision making provided that individuals can request that processing is reviewed by a person rather than a machine.

However, there is more detail that businesses are waiting for – the statement does not provide significantly new or different information to that in the GDPR. The government has not yet announced when the new Bill will be published, but it may be as early as September 2017.

For more information on these articles or any other issues involving labour and employment matters in United Kingdom, please contact Robert Hill, Partner at Clyde & Co (www.clydeco.com) at robert.hill@clydeco.com

Saudi Arabia: ‘Parallel Nationalization’ program is a new initiative by the government

The ‘Parallel Nationalization’ is a new program aimed at helping employers who are unable to meet the requirements of the Nitaqat program (namely the achievement of quotas set according to employer size and sector). Essentially, the program will allow employers to pay fees in order to upgrade their classification within Nitaqat.

These fees will be determined according to how many KSA nationals would need to be employed in order for the employer to move to the higher or next classification category under Nitaqat. The fees will be subject to change each month. However, the employers will have the option of paying such fees six months in advance for the Nitaqat classification to be upgraded accordingly. The fees will go to support the Human Resources Development Fund (“HRDF”) for the purposes of training Saudi nationals who are seeking employment.

For more information, please contact L&E Global.