Legal Updates – September 2020

Department of Labor Compliance Update:  Employers Have an Obligation to Track and Pay for Remote Work

The COVID-19 pandemic has greatly increased the number of employees teleworking or working remotely.  Now that these employees are not physically present in a workplace, uncertainty surrounding the obligations employers have under the Fair Labor Standards Act (“FLSA”) to monitor and track hours worked by non-exempt, hourly paid, remote employees has arisen.  The Department of Labor’s Wage and Hour Division issued a Field Assistance Bulletin on August 24, 2020, which provides guidance to employers on how to track work performed by employees working remotely.

An employer is required to pay its employees for all hours worked, including work not requested but “suffered or permitted,” including work performed at home or otherwise remotely.  See 29 C.F.R. §785.11-12.  If the employer knows or has reason to believe that compensable work is being performed, the time must be counted as hours work.  Employers must require non-exempt employees to accurately record hours worked and report the hours they work each day, regardless of the location the work was performed, when work was performed or whether the time worked is part of their regular schedule or in excess of their regular schedule.  Employers are required to pay employees for all such hours, even if the work was not pre-authorized or requested by the employer.

It should be noted that simply issuing a directive to non-exempt staff to record all time worked does not meet the compliance obligation.  Employers are required to ensure that work is not performed that they do not wish to be performed.  “The employer bears the burden of preventing work when it is not desired, and the mere promulgation of the rule against such work is not enough.”

Reasonable diligence regarding unscheduled hours of work can be met by establishing a reasonable process for an employee to report work time.  Once a time reporting procedure is implemented, the onus is on the employee to follow the procedure and report all of the time worked.  If an employee fails to report unscheduled work hours through such a procedure, the employer is generally not required to investigate further to uncover unreported hours.  For example, an employer is not required to routinely examine computer and phone records to determine if employees worked beyond hours they reported.  The FLSA does not require the employer to pay for work it did not know about and had no reason to know about.

What This Means for Employers

Now that remote work is the “new normal” for many employees, employers should implement and enforce policies to ensure payment of non-exempt employees for all hours worked.  Key elements of any such policies should include:

  • Requiring employees to record time worked on a daily basis;
  • Providing a procedure for employees to report working unscheduled hours;
  • Prohibiting overtime work without prior approval from a manager;
  • Requiring employees to certify that they have accurately recorded all time worked and not performed any off the clock work;
  • A complaint procedure for employees to raise concerns about being compensated for off the clock work; and
  • Prohibiting managers from encouraging, suggesting or requiring non-exempt employees to work off the clock.

Lastly, it is important to note that local jurisdictions have carrying wage-and-hour requirements that may differ from the FLSA.  Employers should confirm that their policies and practices in these respects also comply with the applicable laws in the jurisdictions the employer and employees are located.


Opioid Use and Addiction May Give Rise to ADA Rights According to EEOC’s New Guidance

The Equal Employment Opportunity Commission (“EEOC”) issued new guidance on August 5, 2020, which addresses employee opioid use, addiction and employee rights under the Americans with Disabilities Act (“ADA”).  The guidance does not establish new policy, instead, it applies established principles under the ADA to applicants or employees who legally use opioid medications or who have a history of addiction to opioids.

Opioids, under the guidance, include prescription drugs such as codeine, morphine, oxycodone, hydrocodone and meperidine, as well as illegal drugs like heroin.  Opioids also include buprenorphine and methadone, which can be prescribed to treat addiction in a Medication Assisted Treatment (“MAT”) program.

The guidance clarifies that employers can continue to refuse to hire, discipline and terminate employees because of illegal use of opioid.  Opioid use is considered legal if the opioids were taken as directed in a MAT program or if the employee has a valid prescription.  Employers are also permitted to apply other applicable federal laws that restrict opioid use in some cases (i.e., under Department of Transportation regulations).  However, if the opioid use is legal and federal law does not disqualify the applicant or employee, then employers may not automatically disqualify the applicant or employee for opioid use “without considering if there is a way for [them] to do the job safely and effectively.”  In determining job safety, the EEOC offered the following guidelines:

  1. The employer must have objective evidence that an applicant or employee cannot do the job or poses a significant safety risk, even with a reasonable accommodation.
  2. To disqualify an applicant or employee from the job for safety reasons, the evidence must show they pose a “significant risk of substantial harm.” The applicant or employee cannot be disqualified because of “remote or speculative risk.”
  3. To make sure there is enough objective evidence regarding the ability to safely and effectively perform the job, the employer is permitted to ask the applicant or employee to undergo a medical evaluation.

Reasonable Accommodation

The ADA may require employers to reasonably accommodate employees who are currently using opioids, are addicted to opioids, or were addicted to opioids in the past, but are not currently using drugs illegally.  If an employer thinks that an employee’s lawful opioid use, history of opioid use, or treatment for opioid addiction will interfere with an employee’s work, the employer should first consider providing a reasonable accommodation before taking an adverse action against the employee or rejecting a prospective employee’s application.  It should be noted, however, that the employee or applicant is required to request a reasonable accommodation in order to trigger the employer’s obligation to consider reasonable accommodations.

The guidance provided the following scenarios in which the employer might be required to provide a reasonable accommodation for legal opioid use:

  • Underlying Medical Condition – if the medical condition that is causing pain qualifies as a “disability” under the ADA, the employee or applicant may qualify for a reasonable accommodation. “Many conditions that cause pain significant enough for a doctor to prescribe opioids will qualify.”
  • Side Effects of Prescription Opioids – the employee or applicant may also qualify for a reasonable accommodation if the opioid medication interferes with the employee or applicant’s everyday functioning.
  • Opioid Addiction – opioid use disorder (“OUD”) is a “diagnosable medical condition that can be an ADA disability.” However, an employer may deny an accommodation request if the employee or applicant is using opioids illegally.
  • Recovery from Opioid Addiction – An applicant or employee who had a past disability may be entitled to a reasonable accommodation, including, for example, an altered work schedule to enable the applicant or employee to attend a support group meeting or therapy session that would help prevent relapse.
  • Medical Conditions Related to Opioid Addiction – if the employee has a medical condition associated with opioid addiction, such as major depression or post-traumatic stress disorder, the employer may be required to provide a reasonable accommodation.

When evaluating possible accommodations for conditions related to opioid use, employers should use the same analysis under the ADA for other disabilities.  A reasonable accommodation is a change in the way things are normally done at work, but employers never have to lower production or performance standards, eliminate essential functions of a job, or pay for work that is not performed.  Some accommodations an employer might consider are:

  • Reduced or altered work hours/flexible scheduling
  • Frequent breaks
  • Altering work location or assignments
  • Referral to a treatment program
  • Leave (paid or unpaid) to either get treatment or to attend recovery meetings
  • Transfer to another position
  • Restricting narcotic handling if such handling is customary for the employee’s job

Employers should revisit current employee handbooks and policies to ensure they comply with both the EEOC guidance and the ADA.  Additionally, employers should be prepared to address requests for reasonable accommodation based on an employee’s legal opioid us, current addiction to legally prescribed opioids, or past opioid addiction.


McDonald’s is Facing Two Racial Discrimination Lawsuits

Fifty-two Black former franchisees filed a racial discrimination lawsuit against McDonald’s September 1, 2020, in a federal court in Illinois.  Plaintiffs are seeking more than one billion in damages and claim that they faced “systematic and covert racial discrimination,” and that they were “denied equal opportunity to economic success” compared to their white counterparts.  The lawsuit alleges that the average sales of Black owned franchises were around two million a year between 2011 and 2016, which was $700,000 below the national average.  In addition to financial losses, the Plaintiffs claim that Black franchise owners were pushed out of the company.  By their account, the number of Black franchise owners has halved to 186 over the past two decades.

The lawsuit argues that because McDonald’s has to approve all new franchisees, the corporation was able to control the location of Black owned franchises and that it “systematically steered” Black franchisees to buy locations in Black neighborhoods.  These “substandard locations” tend to have higher insurance and security costs and generally bring in less revenue, thus hindering profitability.  The lawsuit claims that the “cash flow gap between Black and White McDonald’s franchisees more than tripled between 2010 and 2019” and that acquiring McDonald’s locations as a Black owner/operator was a “financial suicide mission.”

McDonald’s is facing another racial discrimination lawsuit that was filed earlier this year by two Black senior executives.  This lawsuit alleges that McDonald’s fired Black leadership, pushed Black franchisees out and lost Black customers.  The lawsuit claims that almost a third of Black franchisees left under former CEO Steve Easterbrook’s tenure between 2015 and 2019.  The plaintiffs allege that under both Mr. Easterbrook and the current CEO, Chris Kempezinski, the company “became overtly hostile to African Americans in both words and deeds.”  The two senior executives, Vicki Guster-Hines and Domineca Neal, allege that they were subjected to racial discrimination, a hostile work environment and retaliation when they spoke out.

Mr. Kempezinski claims that the chain has created more millionaires in the Black community than any other company.  In June, however, he acknowledged that McDonald’s has more work to do to improve racial equality and diversity within the company.  The September racial discrimination lawsuit comes just weeks after McDonald’s joined dozens of corporations in a statement of support of Black Lives Matter and nationwide anti-racism protests.

McDonald’s is involved in another lawsuit, but as the plaintiff.  The company is suing the former CEO Mr. Easterbrook over claims that he lied about the extent of his sexual relationship with three employees.  McDonald’s is asking Mr. Easterbrook to return his forty-two million in severance, a package that was agreed upon after he was fired for breaching company policy by entering into a relationship with a subordinate employee.  McDonald’s agreed to terminate Mr. Easterbrook’s employment “without cause” based on assurances that the relationship was the only one of an intimate nature that he had with an employee.  A subsequent internal investigation revealed that Mr. Easterbrook had lied about three additional relationships with subordinates so that he could secure a more lucrative severance package that included stock options and benefit in addition to the forty-two million payout.

For more on the long and complex history of McDonald’s role in in Black communities, see Marcia Chatelain’s book “Franchise: The Golden Arches in Black America” and this interview with the author on Marketplace.  For more on the lawsuit filed in September, see Business Insider and NPR.  For more on the lawsuit filed in January, see CNBC.  For more on McDonald’s lawsuit against Mr. Easterbrook, see The New York Times.