As expected, on Monday, April 7, 2014, the U.S. Citizenship and Immigration Services (“USCIS”) announced that a sufficient number of H-1B petitions had been received from April 1, 2014, through April 7, 2014, to meet the statutory cap for fiscal year 2015.  The statutory cap was reached in both the general Bachelor’s category, as well as the U.S. advanced-degree category.  In short, more H-1B petitions were filed than the USCIS is authorized to approve for fiscal year 2015, which begins on October 1, 2014.  Consequently, for the second year in a row, USCIS will conduct a random selection process (i.e., lottery) to determine which filed H-1B petitions will be selected for processing/adjudication.  The USCIS has not yet announced the date when the lottery will be held. As background, the USCIS is only authorized to issue 85,000 H-1B approvals for each fiscal year, which includes 20,000 visas under the advanced-degree category and another 65,000 visas under the general category.  The 65,000 H-1B visas are available for beneficiaries who possess at least a Bachelor’s degree, with 6,800 of those available visas allocated as H-1B1 visas for qualifying nationals from Chile and Singapore.  An additional 20,000 approvals are available under the U.S. advanced-degree exemption for beneficiaries with a Master’s or higher degree obtained from a U.S. college or university. Consistent with USCIS practice, the USCIS will first utilize the lottery for petitions that qualify for the advanced-degree category under which 20,000 visas are available.  Eligible petitions that are not selected for processing in this category will be submitted for the general lottery under which 65,000 visas are available.  Any petitions not selected in the H-1B lottery will be returned to the employer, together with any applicable filing fees. Although the H-1B season for fiscal year 2015 appears to be complete, certain H-1B petitions are exempt from the numerical statutory cap.  Therefore, employers may continue to file H-1B petitions with the USCIS for new H-1B employment with a college or university, or a nonprofit research or governmental research organization – often referred to as “cap-exempt institutions.”  In addition, employers may continue to submit H-1B petitions for current workers who have previously been counted against the H-1B cap. Finally, employers seeking to employ foreign nationals in the United States should note that there may be other non-immigrant visa categories that could be a viable alternative to the H-1B category, including (but not limited to) the TN (NAFTA Professionals), the L (Intra-Company Transferee), the E (Investor), and the O (Extraordinary Ability) categories.

In August of 2011, a former employee of DISH Network filed a complaint with OSHA that DISH had “blacklisted” him.  Specifically, the complainant alleged that DISH had given him a negative job reference, and had refused to do business with the complainant’s subsequent employers.  What was the alleged reason for the “blacklisting”?  The employee, who worked in the marketing department in New York, had reported possible financial fraud to his superior in 2008, and the employee contended the actions against him by DISH -- a publicly traded company -- amounted to retaliation for his reporting the fraud, in violation of the Sarbanes-Oxley Act.  Earlier this month, OSHA completed its investigation, finding merit to the employee’s complaint, and ordering hefty fines of over $250,000 against DISH:  $157,024 in back wages, $100,000 in compensatory damages, and attorneys’ fees.  DISH has 30 days to file an appeal before an Administrative Law Judge. We highlight this recent decision because it is not widely known that OSHA is the agency tasked with investigating whistleblower provisions in twenty-two different laws, ranging from the Occupational Safety and Health Act itself, to the Surface Transportation Assistance Act and even the Affordable Care Act.  Thus, for example, an employer can be subject to a whistleblower investigation and an order from OSHA if it retaliates against an employee for participating in activities protected by these laws, such as complaining about workplace safety, reporting driving a commercial motor vehicle longer than allowed by law, or receiving a subsidy under the Affordable Care Act.  When OSHA completes a whistleblower investigation in which it finds merit or after which it files suit in federal court, it has historically issued a corresponding press release as it did regarding the DISH decision.  For an example of a press release announcing a lawsuit, see this link. A complete list of laws with whistleblower provisions subject to enforcement by OSHA is available here.  Employers are well advised to review the list and their policies, and to provide training to their managers and supervisors who make employment decisions, in order to ensure compliance with any applicable whistleblower provisions.

In a stunning and potential landmark decision, a Regional Director of the National Labor Relations Board has found that football players receiving grant-in-aid scholarships from Northwestern University (the “University”) are “employees” under the National Labor Relations Act.  In his decision released Wednesday afternoon, the Regional Director determined that “players receiving scholarships to perform football-related services for [the University] under a contract for hire in return for compensation are subject to [the University]’s control and are therefore employees within the meaning of the Act.”  Accordingly, the Regional Director ordered that an election be conducted among all football players receiving grant-in-aid scholarships who have not exhausted their playing eligibility for the University. In support of his decision, the Regional Director found that the players receive compensation for the athletic services they perform in the form of scholarships, which pay for the players’ tuition, fees, room, board, and books and can total as much as $76,000 per calendar year for up to five years.  Furthermore, the Regional Director found that the players are under the strict control of the University throughout the year.  The coaches determine the location, duration, and manner in which the players carry out their football-related activities; they monitor the players’ adherence to NCAA and team rules; and they control “nearly every aspect of the players’ private lives,” including their living arrangements, applications for outside employment, off-campus travel, social media posts, and communications with the media.  In contrast, the Regional Director held that “walk-ons do not meet the definition of ‘employee’ for the fundamental reason that they do not receive compensation for the athletic services that they perform.” The University has confirmed that it plans to appeal the decision to the full National Labor Relations Board in Washington, D.C.  If upheld, the decision has the potential to dramatically alter the world of big-time athletics in higher education as it would open the door for scholarship athletes at all private universities to unionize.  Indeed, the decision could have implications for scholarship students in a number of areas beyond athletics. The Union, College Athletes Players Association (“CAPA”), which has the financial backing of the United Steelworkers, is seeking, among other demands, financial coverage for former players with sports-related medical expenses and the creation of an educational trust fund to help former players graduate.

On March 4, 2014, the U.S. Supreme Court significantly expanded the Sarbanes-Oxley anti-retaliation law to cover employees of private contractors who perform services for publicly-traded companies.  Passed in 2002 in the wake of the Enron scandal, the Sarbanes-Oxley Act (“SOX”) establishes strict standards for financial behavior by publicly-traded companies and protects “employees” from retaliation for blowing the whistle on a number of specific types of violations.  In Lawson v. FMR LLC, the Court concluded in a 6-3 decision that not only are employees of the publicly-traded company protected from retaliation, but employees of contractors and subcontractors of the company are also similarly protected. Although it is not clear how wide the net will be expanded, millions of workers who provide almost any type of service to a publicly-traded company (e.g., cleaning, daycare, lawn service, as well as tax and audit and many others) will likely have the right to file a complaint with the Department of Labor and proceed to court if they suffer an adverse employment action after they have filed a complaint involving the publicly-traded company. What does the Lawson decision mean for most employers?  First, employers need to take inventory of whether they provide services to publicly-traded companies in order to determine if SOX’s whistleblower provision applies to their employees.  Second, employers must be sure to establish properly worded anti-retaliation policies that are broad enough in scope to cover reports of alleged fraudulent activity, including reports of alleged Securities and Exchange Act violations.  Third, even well-written policies will not be sufficient if managers and supervisors are not properly trained to deal with employee complaints covered by the policy.  Managers must be aware that adverse actions against whistleblowers (not only terminations, but also lesser actions such as job reassignments, shift changes, and below-average merit increases) can create serious liability for their employer. A well-publicized internal complaint procedure is crucial; otherwise, employees will likely turn to a private attorney or a government agency to raise their complaints.  All complaints must be taken seriously, followed by reassurance to the complaining employee that he/she will not be retaliated against in any manner.  If an internal complaint of retaliation is made, the employer must conduct a thorough and comprehensive investigation, and take corrective action if necessary.  The investigation and corrective action must be properly documented.  Solid documentation will help the company assess whether the complaint falls under SOX and will lock in the scope of the employee’s complaint.  A well-documented investigation, followed by an appropriate response to the facts uncovered, will also show a court that the company took the complaint seriously, and may help to avoid unnecessary litigation.

On December 12, 2013, the New York Court of Appeals issued a decision in Kolbe v. Tibbetts, in which the Court addressed whether the Newfane Central School District could unilaterally alter the health insurance benefits of certain retirees of the District.  The Court held that the retirees had a vested right to the same health insurance coverage until they turned 70 years of age that was in place under the collective bargaining agreements ("CBAs") that were in effect at the time of their retirement.  The Court also rejected the District's contention that it was entitled to change retiree health insurance benefits under the New York Insurance Moratorium Law, holding that the Insurance Moratorium Law does not apply to health insurance benefits that have vested under CBAs. While they were employed by the District, the plaintiffs were part of a non-instructional bargaining unit represented by the CSEA.  The CBAs in effect at the time of their retirement provided for certain health insurance benefits, including a two-tiered prescription drug coverage co-pay system and an option to participate in a flexible spending benefit program.  Each of the plaintiffs’ CBAs contained an identical section related to health insurance benefits for retirees, stating that “[t]he coverage provided shall be the coverage which is in effect for the unit at such time as the employee retires” and “full-time employees who retire . . . shall be entitled to receive credit toward group health insurance premiums” until they reach age 70.  In January 2010, after each of the plaintiffs had retired, the District executed a successor CBA which implemented changes to the co-pay system and flexible spending benefit program, and the District informed the retirees that those changes for current bargaining unit employees would also be applied to the retirees. The plaintiffs commenced an action against the District alleging breach of contract and seeking declaratory relief.  The plaintiffs moved for summary judgment on their claims and the District cross-moved for summary judgment, arguing, in part, that its modification to the retirees’ health insurance benefits was permitted under the Insurance Moratorium Law.  The Supreme Court granted the plaintiffs’ motion for summary judgment.  The Appellate Division reversed the Supreme Court's decision (with two judges dissenting), and granted the District's cross-motion for summary judgment. The Court of Appeals reversed the decision of the Appellate Division.  Although the Court recognized that contractual obligations do not ordinarily survive beyond the termination of a collective bargaining agreement, the Court held that “[r]ights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement.”  In considering the specific language set forth in the CBAs, the Court held that the plaintiffs had a vested right “to the ‘same coverage’ during retirement as they had when they retired, until they reach 70.” The District argued that it was permitted under the Insurance Moratorium Law to modify the retirees' health insurance benefits because a corresponding modification was made to the health insurance benefits for active employees.  The Insurance Moratorium Law provides, in relevant part, that a school district is prohibited from “diminishing the health insurance benefits provided to retirees . . . unless a corresponding diminution of benefits or contributions is effected . . . from the corresponding group of active employees for such retirees.”  The Court held that the Insurance Moratorium Law only applies in those instances where a school district attempts to change health insurance benefits that were voluntarily conferred, not where the benefits were “negotiated in the collective bargaining context.”  Accordingly, the Court held that the Insurance Moratorium Law did not permit the District to reduce retiree health insurance benefits simply because it negotiated a corresponding change to the health insurance benefits of active employees. In light of the Court’s decision in Kolbe v. Tibbetts, school districts and municipalities should make sure to review the retiree health insurance provisions in their CBAs before making a decision that could impact the health insurance benefits of retirees, and should consult with their legal counsel before implementing changes to retiree health insurance benefits.

On March 13, 2014, President Obama issued a memorandum directing the Secretary of Labor to update and streamline the Fair Labor Standards Act (“FLSA”) overtime regulations.  In the memorandum, President Obama noted that the regulations regarding exemptions from the FLSA’s overtime requirements, particularly for executive, administrative and professional employees (the white-collar exemptions), are outdated and should be updated to address the changing nature of the workplace.  President Obama also stated that the regulations should be simplified so that they are easier for employers and employees to understand and apply. Although the memorandum does not provide specific guidance, it is expected that the Department of Labor’s revised regulations will include an increase in the salary threshold necessary to qualify for the white-collar exemptions (currently $455.00 per week).  If such an increase is proposed, it could bring the federal regulations in line with the salary threshold necessary for employees in New York to qualify for the executive and administrative exemptions.  The salary threshold for employees in New York to qualify for the executive and administrative exemptions was recently increased to $600.00 per week on December 31, 2013 (up from $543.75 per week), and is scheduled to increase annually on December 31, 2014 ($656.25 per week) and December 31, 2015 ($675.00 per week). Any changes to the FLSA regulations that the Department of Labor proposes are subject to the normal rulemaking process, which includes a notice and comment period.  We will post updates on this blog throughout the rulemaking process.

As discussed in a previous blog post, the Fair Credit Reporting Act ("FCRA") expressly requires employers to provide applicants with a stand-alone disclosure and authorization form prior to obtaining a background check.  This form must be separate from the employment application, and cannot include any type of language attempting to release the employer from liability associated with obtaining the background check.  Unfortunately, many employers still fail to comply with this law by relying solely on a disclosure located on an employment application to inform applicants that they will be subject to a background check, or by attempting to include additional language on the disclosure.  A recent proposed class action lawsuit against Whole Foods Market California provides a reminder to employers to review their disclosure and authorization forms for FCRA compliance. The lawsuit accuses the employer of using an invalid form to obtain consent to conduct background checks during the employment application process.  Specifically, it is alleged that the employer relied on a background check consent that was included alongside several other consent paragraphs on an online employment application, and that the online consent form included a release of claims related to obtaining the background check.  If the employer is found to have used an invalid form, the consequences are significant, including invalidation of the consent, statutory damages in the amount of up to $1,000 for each applicant, costs and attorneys’ fees, and potential punitive damages. This lawsuit is a reminder that FCRA compliance makes good business sense, and that employers should periodically review their application and hiring forms and processes to ensure strict compliance.

On February 7, 2014, the Appellate Division, Fourth Department, issued a significant decision regarding restrictive covenants.  In Brown & Brown, Inc. v. Johnson, the plaintiffs terminated the defendant-employee and then sued her for violating non-competition and non-solicitation provisions in her employment agreement, which contained a provision stating that Florida law would govern.  The Fourth Department considered several issues, including:  (1) whether to enforce the Florida choice-of-law provision for the restrictive covenants; (2) whether employers can enforce restrictive covenants against employees who were involuntary terminated; and (3) whether the court must partially enforce an overbroad restrictive covenant where the agreement expressly provides for such partial enforcement. First, the Fourth Department considered the issue of whether the Florida choice-of-law provision in the agreement was enforceable.  The court noted that choice-of-law provisions are generally enforceable in New York as long as the chosen law:  (1) bears a reasonable relationship to the parties or the transaction; and (2) is not “obnoxious” to New York public policy.  The Fourth Department concluded that while Florida law met the first prong of this test, it failed the second prong.  The court explained that under New York law, restrictive covenants are enforceable if they are no greater than necessary to protect a legitimate interest of the employer, are not unduly harsh or burdensome to the employee, and do not injure or harm the public.  In contrast, Florida law does not permit courts to consider the hardship to the employee in determining whether to enforce a restrictive covenant.  Based on this difference, the Fourth Department ruled that the choice-of-law provision in the employment agreement was unenforceable, and proceeded to apply New York law to the dispute.  Significantly, the Fourth Department’s ruling did not depend on the specific facts of this case, so it is unlikely that the Fourth Department would enforce a Florida choice-of-law provision in any employer-employee restrictive covenants. Second, the Fourth Department considered defendants’ argument that plaintiffs could not enforce the restrictive covenants because they terminated the defendant-employee.  Defendants relied on a Court of Appeals decision which involved an agreement that employees would forfeit their benefits under pension and profit-sharing plans if they competed with their employer after the end of their employment.  The Court of Appeals held that the employer could not enforce the forfeiture-for-competition clause because the employees were involuntarily terminated without cause.  In Brown & Brown, the Fourth Department refused to apply the Court of Appeals decision to create a per se rule that an involuntary termination without cause always renders a restrictive covenant unenforceable. Third, the Fourth Department ruled that the non-solicitation covenant was overbroad and unenforceable because it prohibited solicitation of any clients of plaintiffs’ New York offices, regardless of whether the employee developed a relationship with those clients during her employment.  Plaintiffs argued that the court should partially enforce the covenant because plaintiffs only sought to prevent the defendant-employee from soliciting clients with whom she developed a relationship during her employment.  The Fourth Department disagreed and explained that partial enforcement is not justified where the covenant is imposed in connection with hiring or continued enforcement or where the employer knew the covenant was overbroad.  The court ruled that several factors weighed against partial enforcement in this case.  Specifically, the employee received the covenant upon hire and did not receive any benefit for signing the agreement other than continued employment.  In addition, the Fourth Department held that the employer was on notice that the covenant was overbroad based on existing case law.  Plaintiffs argued that partial enforcement was required because the employment agreement expressly provided for partial enforcement in the event that a court found the restrictive covenant unenforceable.  The Fourth Department disagreed and found that plaintiffs’ position would permit employers to use their superior bargaining position to impose unreasonable restrictive covenants without any real risk that courts would deem them unenforceable in their entirety. In light of this decision, New York employers should review any choice-of-law provisions governing their restrictive covenants.  If these provisions select Florida law or any other state laws that vary substantially from New York law, they may not be enforceable in the Fourth Department or other New York courts.  Employers should also review the scope of their restrictive covenants to determine whether they are overbroad under New York law.  Based on the reasoning set forth in the Brown & Brown decision, New York courts may sever any overbroad restrictive covenants in their entirety from agreements, even if there is a provision for partial enforcement.

On January 13, 2014, the Equal Employment Opportunity Commission (“EEOC”) announced it had reached a settlement with Founders Pavilion, Inc. (“Founders”), a former nursing and rehabilitation center located in Corning, New York.  In the lawsuit, the EEOC alleged that Founders violated the Genetic Information Nondiscrimination Act (“GINA”).  The lawsuit represented only the third time since GINA was enacted that the EEOC had brought a lawsuit against an employer in which it alleged that an employer violated GINA, and the first lawsuit in which the EEOC alleged that the discrimination was systemic. In EEOC v. Founders Pavilion, Inc., the EEOC alleged that Founders violated GINA because it conducted post-offer, pre-employment medical exams of applicants, in which it requested a family medical history from the applicants.  The EEOC also alleged Founders violated the Americans with Disabilities Act by firing an employee after it refused to accommodate her during the probationary period of her employment, and by firing two women because of perceived disabilities.  Further, the EEOC alleged that Founders violated Title VII by firing and/or refusing to hire three women because they were pregnant. After the lawsuit was filed, Founders ceased operating its business in New York and on or about January 9, 2014, entered into a five-year consent decree in which it agreed to settle the lawsuit.  Pursuant to the settlement, Founders agreed to establish a fund of $110,400 for distribution to 138 individuals who were asked to provide their genetic information.  Founders also agreed to pay $259,600 to five individuals who the EEOC alleged were fired or whom Founders refused to hire in violation of the ADA and Title VII.  In addition, Founders agreed that if it were to resume its business, it must post notices to notify its employees of the lawsuit and consent decree, as well as adopt a new anti-discrimination policy and provide anti-discrimination training to its employees. While the New York Human Rights Law has prohibited employers from discriminating against an employee on the basis of a predisposing genetic characteristic since 1996, GINA goes a step further and makes it unlawful for an employer to request or require employees to provide their own genetic information or the genetic information of family members.  Importantly, GINA and the corresponding regulations broadly define genetic information to include, among other things, genetic tests of the individual or family members and family medical history.  For a more detailed discussion of what is prohibited under GINA, see our blog posts on January 14, 2011, December 7, 2010, and November 19, 2009. In announcing the Founders settlement, the EEOC expressed its intent to continue pursing alleged violations of GINA against employers.  This settlement demonstrates the potential liability that an employer could face in the event that the employer violates a provision of GINA.  Since GINA and its regulations are relatively new, it is important for employers to consult with their legal counsel to ensure compliance.

The following article was published in Employment Law 360 on February 14, 2014. The Alex Rodriguez (“A-Rod”) saga is playing out like a classic Greek tragedy. With hubris-laced legal soliloquies and a sports media dutifully taking on its role as the Chorus, all that appears to be missing is the blind soothsayer.  But if justice is truly blind, then perhaps seeing the legal future for A-Rod merely requires referencing some ancient legal doctrines that are right before our eyes. With a mix of metaphor, the world watched as A-Rod took his swings at Major League Baseball, the Players Union, the Yankees, and just about anyone else he could blame other than himself.  As A-Rod now contemplates his next proverbial at-bat, the Yankees, in particular, possess a little-known legal weapon that we have not heard anyone talking about.  It is a legal doctrine that could dramatically shift the playing field and require A-Rod to not only forfeit all future contractual monies, but also provide restitution to the Yankees for all compensation and benefits earned during the years of his disloyal acts.  Enter Faithless Servant Doctrine. The mighty A-Rod, in a pure legal sense, is a New York employee like any other.  Every employee in New York owes a duty of loyalty to his/her employer.  The breach of that duty carries with it harsh, even Draconian consequences, including the forfeiture of all compensation, even deferred compensation that was paid to the employee during the period of disloyalty.  Consequently, A-Rod beware:  The Faithless Servant Doctrine, with its massive equitable forfeitures, may be centuries old, but it has recently seen a marked resurgence in New York with stunning results. In William Floyd Union Free School District v. Wright, a Long Island school district (which was represented by Bond, Schoeneck & King) used the Faithless Servant Doctrine to sue a former assistant superintendent and a former treasurer.  Both defendants pleaded guilty to grand larceny, admitting that they used their positions as school district officials to embezzle.  The school district sought to recover the compensation paid to the two employees during the period of their theft, plus any deferred compensation that would have been owed to the defendants in retirement. New York law regarding disloyal or faithless performance of employment duties allows the principal to recover “from its unfaithful agent any commission paid,” and “an employer is entitled to the return of any compensation that was paid to the employee during the period of his disloyalty.”  On the appeal of the William Floyd case, the Appellate Division affirmed the ordering of the full forfeiture of compensation paid to the employees during the time they were stealing from the school district.  The Appellate Division also ordered that the school district was permanently relieved of its obligation to pay contractual retirement benefits.  In language now cited in other cases, the Court held:  “Where, as here, defendants engaged in repeated acts of disloyalty, complete and permanent forfeiture of compensation, deferred or otherwise, is warranted under the Faithless Servant Doctrine.”  In addition to the benefits forfeiture and recovery of the stolen funds, the school district recovered more than $800,000 in previously paid compensation to one of the defendants. The William Floyd decision has appeared to breathe a new vitality into the Faithless Servant Doctrine.  Two such cases are of particular note.  In Astra USA Inc. v. Bildman, the Massachusetts Supreme Court interpreted and applied New York law, holding that New York’s Faithless Servant Doctrine permitted an employer to recover compensation it had paid to a high level executive who had been the subject of numerous sexual harassment complaints by other employees.  Under Astra, the doctrine can reach misconduct that does not involve theft or financial damages to the employer.  In upholding a multi-million dollar complete forfeiture the court aptly stated:  “For New York … the harshness of the remedy is precisely the point.” Just a few weeks ago, in Morgan Stanley v. Skowron, a New York federal court ordered the defendant, a former portfolio manager, to forfeit $31,067,356.76.  In Morgan Stanley, the defendant engaged in insider trading, which violated the plaintiff corporation’s Code of Conduct as well as federal securities laws.  In applying the forfeiture, the Court noted that the Faithless Servant Doctrine applies when an employee has either “breached his/her duty of loyalty or has engaged in misconduct and unfaithfulness that substantially violates the contract of service such that it permeates the employee’s service in its most material and substantial part.” Like the defendant in Morgan Stanley, A-Rod’s use of performance enhancing drugs – as found by an arbitrator with possible preclusive effect – substantially violated his contract of services in the “most material and substantial part.”  Put another way, insider trading – the ultimate unfair advantage in the securities industry – is no different in a legal sense than the use of performance enhancing drugs – the ultimate unfair advantage in professional baseball.  And the use of such drugs may not even be the sole extent of the disloyal conduct. If and when A-Rod chooses to step up to the plate again, it will be interesting to see if the Yankees and/or Major League Baseball bring out their new “closer.”

On February 12, 2014, President Obama signed an Executive Order requiring that all new federal contracts and subcontracts contain a clause specifying that the minimum wage to be paid to workers under those federal contracts and subcontracts must be at least $10.10 per hour beginning January 1, 2015.  The federal contracts and subcontracts covered by this Executive Order include procurement contracts for services or construction and contracts for concessions.  This new $10.10 minimum wage will also apply to disabled employees who are currently working under a special certificate issued by the Secretary of Labor permitting payment of less than the minimum wage. Beginning January 1, 2016, and annually thereafter, the minimum wage for federal contractors will be increased by the Secretary of Labor based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, and rounded to the nearest multiple of five cents.  The Secretary of Labor is required to publish the new minimum wage at least 90 days before the new minimum wage is scheduled to take effect. For tipped employees, the hourly cash wage that must be paid by a federal contractor must be at least $4.90 beginning on January 1, 2015.  In each subsequent year, the federal contractor minimum wage for tipped employees will be increased by 95 cents until it equals 70 percent of the federal contractor minimum wage in effect for non-tipped employees.  If an employee’s tips, when added to the hourly wage, do not add up to the federal contractor minimum wage for non-tipped employees, the federal contractor will be required to supplement the employee's hourly wage to make up the difference. The Secretary of Labor is expected to issue regulations by October 1, 2014, to implement the provisions of the Executive Order.

The National Labor Relations Board ("Board") reissued a proposed rule today that would significantly shorten the timetable for union representation elections.  This same proposed rule (which has become known as the "quickie" or "ambush" election rule) was initially issued by the Board on June 22, 2011.  After the proposed rule was met with strong opposition from employer organizations, the Board issued a final rule on December 22, 2011, that was a scaled-down version of the proposed rule.  The final rule became effective on April 30, 2012.  However, on May 14, 2012, the U.S. District Court for the District of Columbia declared the final rule to be invalid because the Board lacked a quorum when it voted on the final rule.  The Board appealed the decision, but recently announced that it was withdrawing its appeal. As some had predicted, the Board's withdrawal of its appeal set the stage for its reissuance of the broader June 22, 2011, proposed rule.  The proposed rule:

• Establishes electronic filing of election petitions and other documents (intended to speed up processing);
• Requires pre-election hearings to begin seven days after a petition is filed (currently, pre-election hearings can begin up to two weeks after a petition is filed);
• Defers litigation of all “eligibility” issues if they involve less than 20% of the proposed bargaining unit until after the election (these issues would be decided post-election if needed);
• Eliminates pre-election appeals of rulings by Board Regional Directors; and
• Reduces the time in which an employer must provide an electronic list of eligible voters from seven days to two days.

If this proposed rule is implemented, it will significantly shorten the time period from the filing of a union representation petition to the date on which a representation election is held.  This creates a distinct advantage for the union, because it gives the employer less opportunity to counteract a union campaign which likely began well before the filing of the representation petition. Comments on the proposed rule from interested parties must be received on or before April 7, 2014.  After the comment period, the Board may revise the proposed rule, or may issue it as a final rule.  The Board’s decision to reissue the original proposed rule that was issued on June 22, 2011 (rather than the final rule that was issued on December 22, 2011) seems to indicate that the Board may not be willing to make significant changes before a final rule is issued.  However, it is likely that the final rule -- in whatever form it is issued -- will once again be challenged by employer organizations in federal court on the ground that the Board exceeded its rulemaking authority.