10 Points for Reviewing Executive Employment Agreements
An executive’s employment agreement defines expectations regarding role, responsibilities and performance. It also establishes key contractual obligations for the executive and the employer concerning compensation and benefits, equity grants, the length or term of employment, early termination and its consequences, post-termination restrictions, and dispute resolution. Compensation, termination and other provisions may implicate tax rules and trigger penalties. Later, if there is disharmony in the relationship or disagreement about the parties’ obligations, these provisions may critically affect the rights and obligations of the executive.
Here are 10 important considerations when reviewing an executive employment agreement.
For more information on this topic, please contact Scott J. Connolly.
U.S. Department of Labor Issues Interpretation on Independent Contractor Misclassification
The Administrator of the U.S. Department of Labor (“DOL”) Wage & Hour Division issued a formal Interpretation to provide “additional guidance” concerning the misclassification of workers as independent contractors under the federal Fair Labor Standards Act (“FLSA”). Businesses continuing to utilize independent contractors need to understand that combating misclassification is a priority for DOL and this latest action may lead to increased misclassification litigation.
To learn more about this important issue read our Employment Law Advisor.
Significant Amendments To The Overtime Regulations Proposed By The DOL Will Result In Many More Workers Becoming Entitled To Overtime
If the U.S. Department of Labor’s (DOL) proposed rule is adopted, any exempt employees who earn less than $50,440 per year will need to be reclassified as non-exempt. These employees will now earn overtime if they work over 40 hours per week.
This proposal would increase the salary level required significantly in order for the employee to remain qualified for the “white collar” exemptions.
To learn more about this proposal and how it may affect you if it goes into effect, please read our full Employment Law Advisor.
Paid Sick Leave Law Creates New Employer Obligations for Intermittent, Temporary and Seasonal Workers, Including Interns
Employers who use temporary or seasonal employees including summer interns should already be aware of the importance of ensuring that those employees are paid in compliance with federal and state law. Massachusetts employers should also be aware that the new Massachusetts Earned Sick Leave Law (the “Law”) has created additional wage and hour obligations for some temporary and seasonal workers, including summer interns. (Generally, the Law requires that employers with more than 11 employees offer both full and part-time employees paid sick time; employees with fewer than 11 employees are required to offer unpaid sick time).
The Massachusetts Attorney General’s regulations addressing the Law include a provision which entitles temporary and seasonal employees like interns who work intermittently for an employer (e.g., work for the same employer for multiple summers) to sick time. The result of these regulations is that employers covered by the Law now need to track the accrual of sick time for temporary and seasonal workers, and permit those employees to take sick time once they have worked for the employer for more than 90 days.
Under the regulations, an employee with a break in service of fewer than four months will maintain the right to use any unused earned sick time accrued before the break in service. If the employee has a break in service of between four and 12 months, the employee will maintain the right to use earned sick time accrued before the break in service, but only if the employee’s unused bank of earned sick time equals or exceeds 10 hours. Employees with a break in service of greater than 12 months will not retain any accrued sick time.
Although temporary or seasonal employees are subject to the Law’s provision that employees are only entitled to use accrued sick time 90 days after the employee’s first day of work, employees with a break in service of fewer than twelve months will maintain vesting days from the employer and will not need to restart the 90-day vesting period upon their return to the employer before they can use earned sick time.
For example, an intern who works full time for an employer from June until August will likely have accrued more than 10 hours of sick time. If that intern returns to the employer the following June, he or she will (upon working 90 total days for the employer, including days worked before the break in service) be entitled to use that accrued sick time.
For more information on the use of temporary or seasonal employees including interns or the accrual of paid sick time, please contact a member of the Employment Law Group.
Massachusetts Attorney General Issues Final Earned Sick Time Regulations
The final version of the Massachusetts Attorney General’s Earned Sick Time Regulations contains some important clarifications to the Earned Sick Time Law, including changes from the draft regulations. These changes include a fifth reason that leave may be taken, guidance regarding unlimited and lump sum policies, and a variety of other provisions.
Employers should review their policies to take advantage of the options provided in the new regulations. To see what changes have been made and how they might affect you please read the full alert.
Employment Law Alert: Paid Sick Leave Transition Period
The earned sick time law was approved by the voters on November 4, 2014. This law entitles employees in Massachusetts to earn and use sick time according to certain conditions, and will go into effect July 1, 2015. Massachusetts Attorney General Maura Healey has announced a transition policy under which employers who offer sufficient sick leave or paid time off to workers now have a six-month transition period in which to bring their policies into compliance with the new Massachusetts paid sick leave law.
To learn more about the transition policy, please see our full Employment Law Alert.
Tip of the Month: Implement a Payroll Deductions Policy to Take Advantage of the FLSA “Safe Harbor”
Last month’s Tip of the Month reminded employers that communicating and maintaining an overtime policy can minimize liability for unauthorized overtime hours. This month, we focus on a second way employers can protect against wage and hour liability: the inclusion of a payroll deductions policy to take advantage of the “safe harbor” protection against liability for misclassification of employees based on the failure to pay employees on a salary basis.
As you recall, to be exempt from overtime, an employee must be performing duties recognized as exempt under the Fair Labor Standards Act (“FLSA”) and must be paid on a “salary basis.” To be paid on a “salary basis” the employee must receive a predetermined amount of compensation each pay period (at least $455/week) which cannot be reduced due to variations in the quality or quantity of the employee’s work. An exempt employee must receive the full salary for any week in which the employee performs any work, subject only to certain limited deductions.
Employers jeopardize employees’ exempt status by making improper deductions from salaries. A payroll deductions policy which meets certain requirements provides employers with the opportunity to reduce overtime liability which might otherwise accrue under the FLSA if improper deductions are made and employees are therefore found to be inappropriately treated as exempt.
A payroll deduction policy only provides a safe harbor if the employer: (1) has a “clearly communicated” policy prohibiting improper deductions, including a complaint mechanism; (2) reimburses employees for any improper deductions; and (3) makes a good faith commitment to comply in the future. The safe harbor is not effective where the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.
A good payroll deduction policy should include an explanation of how exempt employees will be paid on a salary basis, with only limited deductions for certain reasons permitted by law, including for social security, taxes, participation in company-sponsored benefit and retirement plans, absence from work for one or more full days taken in compliance with the company’s sickness or disability policy, absence from work which is covered by the Family and Medical Leave Act, absence due to certain types of suspensions, and full or partial days not worked during the initial or terminal week of employment.
For more information on implementing or reviewing a payroll deductions policy, contact a member of the Employment Group.
Immigration Alert: Frequently Asked Questions on the H-1B Cap
The 2016 H-1B Cap season is opened as of April 1st. The U.S. Citizenship & Immigration Service (“CIS”) issued a press release that it anticipates the H-1B Cap will be reached after the first five business days of April. MBBP has assembled a list of FAQs to help employers, and their employees, understand the implications if the H-1B Cap is reached quickly.
To learn about the frequently asked questions regarding the H-1B Cap, please read our full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with any questions.
Shouldn’t Employers Be Permitted to Prohibit Defamatory or Inappropriate Comments by Employees? New NLRB Report Says No.
It may come as a surprise to many private employers, who often don’t realize that the requirements of the National Labor Relations Act (“NLRA”) apply to non-unionized workplaces. However, in a recently released report the National Labor Relations Board (“NLRB”) addresses the decisions invalidating a variety of handbooks rules found in many employer handbooks.
For more information on how this applies to you read the full alert.
Employers Should Maintain and Enforce Overtime Policies
Both Federal and Massachusetts law require that employers pay their non-exempt employees overtime wages whenever employees work more than 40 hours in a workweek. The law requires that employers pay overtime when they knew or should have known that the employee worked more than 40 hours. As a result, employers can be liable for overtime hours which they did not specifically authorize. Employers can minimize this liability by establishing an overtime policy and a mechanism for requesting and reporting overtime.
Overtime policies should include: who is eligible for overtime; what, if any conditions apply to the authorization of overtime; a specific mechanism for employees to request authorization to work overtime; and a specific mechanism for employees to report overtime hours which have been worked. Any policy should be clearly and conspicuously communicated to employees, and consistently enforced. Managers should not, under any circumstances, instruct employees to falsely record time or avoid reporting overtime hours worked.
Maintaining an overtime policy will not only result in transparent workplace expectations but it could also help an employer defend against an expensive wage and hour claim. In Vitali v. Reit Management and Research, LLC, SUCV2012-00588-BLS1 (Mass Super. June 2, 2014), a Massachusetts employee claimed she had worked through her lunch regularly and as a result often worked more than 40 hours in a workweek, entitling her to overtime. However, her employer had an overtime policy in place which required advanced approval for working overtime, as well as mechanisms for reporting overtime hours, which the employee had not followed despite her familiarity with the policy. The employee presented no evidence that management knew that the employee was working through lunch. Because the employer had clearly communicated rules and policies in place, and because the employee had failed to follow them, the employee was not able to maintain her claim for unpaid wages and the employer escaped a potentially expensive claim.
For more information on overtime policies, please contact a member of our Employment Law Group.
When Will the Proposed Changes to the Overtime Regulations Be Published?
By: Robert M. Shea
In March 2014, one year ago, President Obama signed a Presidential Memorandum directing the U.S. Secretary of Labor to make changes to the federal overtime regulations concerning the “white collar” exemptions to the overtime requirements. The President directed the Secretary to “restore the common sense principles” to the overtime exemptions.
In May 2014, the U.S. Department of Labor announced a target date of November 2014 for publishing the proposed changes. The Department subsequently engaged in meetings with businesses and employees in which it solicited input and ideas, including on raising the minimum required salary level from its current level of $23,660 and adjusting the primary duties test. The Department did not meet its November 2014 target date and, instead, set a new target date of February 2015. The February date has come and gone without publication of the proposed regulations.
Last week, on March 18, the U.S. Secretary of Labor stated that the Department was “working overtime” on the proposed changes and that he “hoped” they would be published this Spring. Once published, the proposed changes will be subject to public comment and, most likely, substantial modification. Consequently, the final revised regulations will most likely not go into effect until sometime in 2016.
We will keep clients updated on the proposed changes. In the meantime, please feel free to contact the Employment Law team with any questions.
10 Points for Reviewing Physician Employment Agreements
By: Scott Connolly
A physician’s employment agreement with a group practice or hospital is an important document. It may set expectations regarding clinical duties, working conditions, the resources the physician needs to treat patients, service locations, and evaluation for ownership (for group practices). These factors will greatly affect the physician’s professional and personal life. A physician’s employment agreement also will establish key contractual obligations for both the physician and the group practice or hospital concerning compensation and benefits, the term of employment, early termination and its consequences, professional liability coverage, patient records, post-termination restrictions, indemnification, and mediation and dispute resolution.
Here are 10 important points that should be carefully reviewed in a physician’s employment agreement.
For more information on this topic, please contact Scott Connolly.
Immigration Alert: Frequently Asked Questions About H-4 EADs
On February 25, 2015, the U.S. Department of Homeland Security published a final rule allowing H-4 spouses of certain H-1B workers to apply for employment authorization documents (“EADs”). This recent development stems from President Obama’s executive order that he signed on November 21, 2014 to modernize and streamline the U.S. immigrant visa system for the 21st century. In light of this new development, we have assembled the following FAQ to help employers, and their employees, understand the implications of this new regulation.
To learn about the frequently asked questions regarding H-4 EADs, please read our full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with any questions.
Court Broadly Interprets Ban on Physician Noncompetition Restrictions
In a recent decision, a Massachusetts trial court judge decided that a medical practice could not enforce noncompetition and patient nonsolicitation provisions contained in both an employment agreement and an asset purchase agreement against a physician. This case is the first reported instance where a Massachusetts court has voided such restrictions in an asset purchase agreement.
To read the full article by Scott Connolly.
Employment Attorney Scott Connolly authors “Policies to Guide Employee Conduct and Respond to Misconduct” a chapter in MCLE’s book Drafting Employment Documents in Massachusetts
Scott Connolly, a partner in MBBP’s Employment Law Group, authored the chapter “Policies to Guide Employee Conduct and Respond to Misconduct” in MCLE’s book Drafting Employment Documents in Massachusetts (3rd Edition 2015).
The book is published by MCLE and is an essential resource for Massachusetts employers, employment attorneys, and human resources professionals. Scott’s chapter covers workplace policies that help to guide employee conduct, ensure legal compliance, promote the employer’s cultural values, and respond to misconduct.
Scott has broad experience as both in-house and outside counsel helping employers achieve their business objectives while complying with federal and state employment laws. He guides employers through the full spectrum of issues that arise from the employment relationship, including those issues most likely to lead to litigation such as wage/overtime disputes, employee discipline and performance problems, sexual harassment and other workplace investigations, terminations, and reductions in force.
Scott’s full biography and contact information are available here.
The #1 Type of Employment Claim Filed with the EEOC is Again Retaliation
By: Robert M. Shea
The federal Equal Employment Opportunity Commission (“EEOC”) has just released its statistics for fiscal year 2014 and for the fifth straight year charges alleging unlawful retaliation by employers was the leading type of discrimination alleged. Retaliation claims accounted for 42.8% of the charges filed with the EEOC, up almost two percent from 2013 to the highest percentage ever. Retaliation was followed by race discrimination (35%), gender, including sexual harassment and pregnancy discrimination (29.3%), disability discrimination (28.6%), and age discrimination (23.2%). The EEOC’s enforcement and litigation statistics for FY 1997 through 2014 are found here.
For an explanation of why retaliation claims have become so common, and guidance on steps employers should take to avoid claims, please refer to this March 2013 article.
Please contact the Employment Law team for more information.
Proposed Noncompete Legislation Filed in Massachusetts
By: Robert M. Shea
Several bills that would restrict the use of noncompete agreements were filed in the Massachusetts legislature in January. Two bills (H.730 and H.2157) filed by Rep. Angelo Puppolo and Rep. Sheila Harrington, respectively, use language similar to the California law that bans most employee noncompetes (as well as nonsolicitation agreements) but permits nondisclosure agreements.
Three other bills take a more limited approach. Two bills (H.2332 and S.809) filed by Rep. Lori Erlich and Sen. Will Brownsberger, respectively, are identical to each other and use language similar to that proposed by Governor Patrick last year. These bills are focused on noncompete agreements and do not seek to ban customer (or employee) nonsolicitation agreements or nondisclosure agreements. The bills also would not affect noncompete agreements already in place (that is, the law would not apply retroactively). Another bill (S.334) filed by Sen. Jason Lewis uses almost the same language but would apply retroactively. A sixth bill (H.709) filed by Rep. Garrett Lewis, uses similar language but could be interpreted as barring not just noncompete agreements but all employee restrictive covenant agreements. It would also apply retroactively.
We will keep clients updated on the proposed legislation. In the meantime, please feel free to contact the Employment Law team with any questions.
Immigration Alert: H-1B season has arrived; Act today
The H-1B visa is the standard working visa used by foreign nationals to work in the United States with a U.S. employer. The 2016 H-1B cap will open on April 1st. Given improving economic conditions and increased hiring, we anticipate that demand for the limited number of H-1B visas will vastly exceed supply. As a matter of fact, it’s projected that this year’s cap will reach its limit in the first week. As a result we are advising all employers who expect to sponsor an employee for a new H-1B visa to file within the first five (5) days of April (i.e. so the petition is received no later than April 7, 2015).
For information on H-1B visas and when to consider filing a petition read the full alert from MBBP’s Immigration Department. Please contact a member of the Immigration team, or your MBBP attorney, with questions.
When was the last time you updated your employee handbook?
It’s important to communicate the policies and expectations regarding employer conduct and with the recent legal developments you are required to make frequent updates to your employee handbook. We’ve outlined several policies that should be reviewed to be sure they are compliant. In addition if these are not in your handbook, they should be added!
To learn what steps employers should take, read the full advisor.
Massachusetts Maternity Leave Becomes Parental Leave on April 7, 2015
Just before leaving office, Governor Patrick signed into law a bill extending the existing Massachusetts Maternity Leave protections to all employees. Now both parents of the child can take advantage of this benefit.
Although the Parental Leave closely tracks the old Maternity Leave some new provisions have been added. One, being that if two employees work for the same employer, they will only be entitled to 8 weeks of parental leave in aggregate for the birth or adoption of a child. In addition an employee on parental leave for adoption is now entitled to the same benefits as an employee on leave for the birth of a child. There is also some interaction with other laws that you should be aware of. To see how this new law could affect you please read the full alert.
If you have any questions, please feel free to contact a member of our Employment Law Group.
Massachusetts Employment Law Blog 