Back to School:
Employment Law Update Webinar
Peter Donati
Laura Friedel
Kenneth Kneubuhler
September 15, 2016

Today’s Webinar Panel
Peter F. Donati
Partner
Tel: 312.476.7590
pdonati@lplegal.com
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Laura B. Friedel
Practice Group Leader
Tel: 312.476.7510
lfriedel@lplegal.com
Kenneth Kneubuhler
Of Counsel
Tel: 312.476.7567
kkneubuhler@lplegal.com
www.lplegal.com

Some of Today’s Webinar Topics
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• FLSA Overtime Regulations
• The Defend Trade Secrets Act
• New EEOC Guidelines on Reasonable Accommodations
• Changes in Joint Employment Standards
• Updates to Wellness Program Requirements
• Arbitration Agreements and Class Action Waivers
• Chicago’s New Family and Sick Leave Ordinance
• The EEOC’s Pay Reporting Requirements

FLSA Overtime Regulations
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• Proposed Rule & Request for Comments June 29, 2015
- First update to regulations since August 2004
- Called for increasing the salary threshold to $50,440
• Comment period officially ended September 4, 2015
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FINALIZED:
May 18, 2016
EFFECTIVE
DATE:
December 1, 2016

FLSA Overtime Regulations
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Presumption is that all employees are entitled to overtime unless employer
can establish that they qualify under an exemption.
Most commonly used exemptions are the “White Collar” exemptions:
ADMINISTRATIVE | EXECUTIVE | PROFESSIONAL
Currently, to be exempt under White Collar, the employee MUST:
1. Be paid on a salary basis;
2. Receive guaranteed salary (or other guaranteed pay) of at least
$455/week ($23,660/year); AND
3. Meet the job duties test.
The regulations only change component #2….
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FLSA Overtime Regulations:
Not All Exempt Employees Impacted
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The change in regulations doesn’t impact all exempt employees….
• Teachers
• Doctors and lawyers
• Computer workers earning at
least $455 per week or
$27.63 per hour. (Note: doesn’t
apply in all states!)
• Outside sales employees
• Employees who qualify under exemptions other than the White
Collar exemptions
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New minimum guaranteed pay requirements:
•$913 per week ($47,476 per year)
• 40th
percentile of full-time, salaried employees in lowest cost of living
region (currently, Southern US States)
•Regulations also increase the threshold for a Highly Compensated Employee
exception from $100,000 to $134,004 – but doesn’t apply in all states.
•Expect increases every three years with first change coming in 2020.
• Projections suggest it could rise to well over $50k at this time.
•Allows employers to use nondiscretionary bonuses,
incentive payments and commissions (calculated
and paid at least quarterly) to satisfy up to 10% of
the new minimum salary requirement.
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FLSA Overtime Regulations:
What Do the Regulations Change?

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New regulations create ability for employers to credit non-
discretionary/formulaic incentive compensation for up to
10% of the new minimum salary.
• Must be formula based.
• Must be determined and paid not less than quarterly.
• If employee doesn’t make the full 10% necessary to bring
them up to $913 for each week in the quarter, employer has
until next pay period to pay the difference.
REMEMBER: Still must pay guaranteed weekly
pay of at least $821.70.
(90% of $913)
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FLSA Overtime Regulations:
Incentive Compensation as Part of Guaranteed Pay

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Two Choices:
1. Increase salary to at least $913/week ($47,500/year)
• Consider using formula-based incentive compensation to cover up to
10% of that.
1. Transition to non-exempt
• Hourly non-exempt
• Salaried non-exempt
- Salary for set number of hours
- Salary for fluctuating work week
- Daily salary
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FLSA Overtime Regulations:
What do we do now?

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Steps to take in anticipation of new regulations:
1. Identify exempt employees making guaranteed pay less than
$47,500/year.
2. Weigh financial and cultural impact of pay increase vs. transition to
non-exempt.
3. Consider incentive compensation opportunities if not already
available.
4. Consider using change in regulations as opening to change status
of questionably-classified employees.
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FLSA Overtime Regulations:
Next Steps

Defend Trade Secrets Act
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• DTSA signed into law on May 11, 2016.
• For the first time, the DTSA provides a federal cause of action for
misappropriation of trade secrets. Supplements state law remedies.
• Requires employers to provide notice of the immunity and retaliation
provisions to employees, consultants, and independent contractors in
any agreement that governs the use of trade secrets or confidential
information.
• For example, employment agreements, non-compete agreements,
independent contractor agreements, etc.
• Notice can either quote provisions of DTSA or reference a
whistleblowing policy that is in compliance.
• If notice is not provided, employer cannot recover punitive damages or
attorneys’ fees.
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Defend Trade Secrets Act
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Sample language:
“Pursuant to the Defend Trade Secrets Act of 2016, Employee
will not have criminal or civil liability under any Federal or State
trade secret law for the disclosure of a trade secret that: (i) is
made (A) in confidence to a Federal, State, or local government
official, either directly or indirectly, or to an attorney, and (B)
solely for the purpose of reporting or investigating a suspected
violation of law; or (ii) is made in a complaint or other document
filed in a lawsuit or other proceeding, if such filing is made under
seal. In addition, if Employee files a lawsuit for retaliation by the
Company for reporting a suspected violation of law, Employee
may disclose the trade secret to Employee’s attorney and may
use the trade secret information in the court proceeding provided
that Employee files any document containing the trade secret
under seal and does not disclose the trade secret, except
pursuant to court order.”
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What’s New at the EEOC
Reasonable Accommodations
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• New resource document on leave as a reasonable accommodation
issued in May 2016:
- Reiterates that unpaid, job-protected leave may be a reasonable
accommodation under ADA unless it causes an undue hardship.
- ADA may require leave even when other statutes, such as FMLA, would
not be applicable, or when leave has been exhausted under other
statutes or company policies.
- Undue hardship factors:
• amount/length of leave (can consider leave already taken pursuant to law or
policy)
• frequency of leave
• predictable/unpredictable
• impact of absence on coworkers
• impact on employer’s operations
• Proposal announced in June 2016 to update guidance on national
origin discrimination.
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What’s New at the EEOC
Pay Reporting Requirements
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• Final guidance on workplace retaliation issued August 25, 2016.
• EEOC proposing that employers with EEO-1 reporting obligations be
required to include data on W-2 earnings and hours worked.
• Proposal would require new reports from employers by March 31, 2018.
• Would apply to public contractors with 50 or more employees and private
employers with 100 or more employees.
• Reporting would be by pay bands on EEO-1 Report.
• Will allow EEOC to look for pay discrimination.
• Critics point out that data will be cumbersome to gather and report and will
not meaningfully identify discrimination.
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What’s New at the EEOC:
Wellness Plans – An Update
• EEOC position: Wellness programs must be voluntary to
avoid violation of ADA (non-job related medical exams &
questions must be voluntary, confidential, and not used to
discriminate) and of GINA (Genetic Information
Nondiscrimination Act).
• Position is now reflected in final regulations under ADA
and GINA (May 2016):
• New notice requirement applies for plan years beginning on or
after January 1, 2017.
• Limits on incentive are not fully aligned with HIPAA reward limits.
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What’s New at the EEOC:
Wellness Plans – An Update
• EEOC lost Flambeau at District Court level in December
2015
• District Court in the Western District of Wisconsin held that
Flambeau did not violate the ADA by requiring employees
to complete a health risk assessment and biometric
screening test to be eligible for the company’s self-funded
group health plan.
• EEOC has appealed to the 7th
Circuit.
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Joint Employment Standards Updates
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Department of Labor Interpretation (January 2016):
“[The] possibility of joint employment should be regularly
considered in FLSA and MSPA cases, particularly where:
-the employee works for two employers who are associated or
related in some way with respect to the employee [i.e. horizontal
joint-employment]; or
-the employee’s employer is an intermediary or otherwise
provides labor to another employer [i.e. vertical joint
employment].”
Explicit acknowledgement that the DOL will view staffing
companies and clients as joint employers, and thus liable for
one another’s violations.
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Relationships to Consider:
• Sister or subsidiary companies that share management or HR
• PEOs
• Consulting companies
• Management companies
• Staffing/Temporary Labor agencies
• Other companies employing the people who work on your
business
Joint Employment Standards Updates
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Joint Employment Standards Updates
Risks to Consider:
1. Liability for violations of other
2. Coverage under statutes based on headcount
3. Aggregation of hours worked for purposes of calculating
overtime and eligibility under statutes
4. Union Organizing
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Steps to Mitigate:
1. Be aware and stay involved.
2. Make sure that whoever you’re delegating to is up to the task.
3. Consider combined headcount when determining coverage
under various laws.
4. Consider whether work for other companies needs to be
included in overtime calculations.
5. Paper relationships with agreements that require legal
compliance and assign risk accordingly.
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Joint Employment Standards Updates
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Joint Employment and Unionization
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Browning-Ferris Industries (NLRB: August 2015)
Indirect or reserved authority, even if not exercised, can be
sufficient to establish a joint employment relationship.
Miller & Anderson (NLRB: July 2016)
Staffing firm and client employees can be included in the same
unit, even if employed by different companies and viewed and
treated as separate groups.
Consent of parties is no longer required!
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Joint Employment and Unionization
Key Takeaways for Vertical Joint Employment Relationships
•Think carefully about who your partners are:
• What’s their pitch?
• Reputation / References
• Compliance attitude
•Review and Update Agreements:
• Cooperation clause
• Compliance with laws
• Rate increases (to cover unionization)
• Employee relations provisions
•Understand what your business partner is doing to keep employees
happy and avoid unionization.
•Look at what you’re doing to avoid unionization and include those
companies’ employees in your efforts.
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Other NLRB Developments
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• Regional Director issues complaint alleging that misclassification of employees
as independent contractors was unfair labor practice. (
Intermodal Bridge Transport and IBT)
• General Counsel of NLRB announces that
he is seeking change in rule permitting withdrawal of union recognition based
on objective evidence.
• NLRB rules that hiring permanent replacements for strikers is unlawful if it is
intended to discourage future strikes. (American Baptist Homes of the West)
• NLRB holds that off duty access rule was being applied unlawfully by employer
because it permitted employees to be onsite for some reasons, but did not
permit meetings with union representative in cafeteria. (
Marina Del Ray Hospital).
• Department of Labor finally issues revised “persuader rule.” Eliminates
“advice exemption” used by law firms for advising clients about union
organizing. Northern District of Texas issues nationwide injunction enjoining
rule on June 27, 2016.
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Arbitration Agreements & Class Waivers
AT&T Mobility v. Conception (S.Ct. 2011)
• Citing the Federal Arbitration Act, the Court upheld a class action
waiver in a commercial mandatory arbitration agreement.
• Very broad language in favor of enforcing arbitration agreements
as written.
Following Conception, many employers implemented
mandatory arbitration agreements
containing class action waivers in an attempt
to avoid wage and discrimination class actions.
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Arbitration Agreements & Class Waivers
The Second, Fifth and Eighth Circuits have upheld class
action waivers in employment arbitration agreements.
NLRB has taken the position that employees’ right to
engage in concerted activity includes the right to
participate in class/collective actions. This summer the
Seventh and Ninth Circuits agreed with the NLRB.
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Arbitration Agreements & Class Waivers
Lewis v. Epic-Systems Corp. (7th
Cir., May 26, 2016)
•Employee signed an arbitration agreement as a mandatory term
of employment.
•In agreement, employee waived his right to participate in or
receive any relief from any class, collective or representative
proceeding.
•Employee filed suit under the FLSA on his own behalf and other
technical writers.
•Epic moved to compel arbitration.
•7th
Circuit held that engaging in class, collective or
representative proceedings is “concerted activity” under the
NLRA and a “substantive right” that could not be waived.
•As a result, the class action waiver was not enforceable.
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Arbitration Agreements & Class Waivers
Morris v. Ernst & Young (9th
Cir. Aug. 22, 2016)
•As a condition of employment, employees are required to sign
arbitration agreement that mandated individual arbitration.
•Two plaintiffs brought a wage and hour class and collective
action and ENY filed a motion to compel arbitration.
•9th
Circuit held that employees have a substantive right to seek to
improve working conditions through resort to administrative and
judicial forums.
•As a result, the requirement that the plaintiffs arbitrate in
“separate proceedings” was not enforceable.
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Arbitration Agreements & Class Waivers
Key Takeaway
For now, enforceability of Class Action Waiver in
Employment Arbitration Agreements depends on where
you are….
Given the split between the Circuits,
it seems likely that the question
of enforceability will go to the Supreme Court.
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Other Litigation Developments
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• Hively v. Ivy Tech Comm. College (7th
Cir. July 28, 2016) –
determines that until S. Ct. rules or Title VII is amended, it
does not protect individuals from discrimination on the
basis of sexual orientation.
- cf. Illinois Human Rights Act, Cook County Human Rights
Ordinance, City of Chicago Human Rights Ordinance
• Ortiz v. Werner Enterprises (7th
Cir. Aug. 19, 2016) – was
court signaling that summary judgment will be tougher for
employers in employment cases?
• CRST, Inc. v. EEOC (S. Ct. May 19, 2016) – opens door
to employers recovering attorney's fees from EEOC even if
no favorable ruling on merits.
www.lplegal.com

ACA Health Reform Update
• Delay on Cadillac Tax on High-Cost Employer-Sponsored
Health Plans (Dec 2015)
• 40% excise tax
• Now effective 2020 - was to be effective 2018
• Excise tax now will be deductible
• Repeal of ACA Auto-Enrollment Requirement (Nov 2015)
• Would have required employers with over 200 employees to
automatically enroll new full-time employees in its group health
plan.
• Was to be effective upon issuance of regulations.
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ACA Health Reform Update
• New Summary of Benefits and Coverage
• ACA requires health plans and insurers to distribute a Summary
of Benefits and Coverage (SBC) using a standardized format.
• Applies to open enrollments beginning after March 31, 2017.
• Modest changes - some new questions and coverage examples.
• Issues with Reimbursement of Individual Health
Insurance Premiums
• IRS and Department of Labor have interpreted the term “group
health plan” to include employer reimbursement of premiums for
individual health insurance.
• This arrangement can’t satisfy ACA’s “market reform”
requirements for group health plans.
• Triggers penalties of $100/day/employee (subject to limitations),
even for employers not subject to pay or plan mandate.
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Sick/Family Leave
Chicago Paid Sick Leave Ordinance
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• Ordinance covers almost all employers in Chicago.
• Applies to employees who work at least 80 hours in 120-
day period.
• Accrual:
- 1 hour of paid sick leave for every 40 hours worked
- Cap of 40 hours accrued per 12-month period
- Employee can carry over half of accrual or max of 20 hours.
- If employer is subject to FMLA, employee can carry over an
additional 40 hours for use exclusively for FMLA purposes.
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Sick/Family Leave
Chicago Paid Sick Leave Ordinance
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• Use
• For illness or injury for medical care, treatment, diagnosis,
preventative care
• To care for family member
• If victim of domestic violence
• If place of business closed or school closed due to public health
emergency
• Can’t be required to find replacement.
• 7 days’ notice if foreseeable, otherwise “as soon as
practicable”
• Employee is entitled to use no more than 40 hours of paid
sick leave per 12-month period.
• If FMLA hours are carried over and used, employee gets
an additional 20 hours in same 12-month period.
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Sick/Family Leave
Chicago Paid Sick Leave Ordinance
• Documentation can be required if absent for more than
three consecutive work days.
• “If an Employer has a policy that grants paid time off in
an amount and manner that meets the requirements for
Paid Sick Leave under this section, the Employer is not
required to provide additional paid leave.”
• No requirement to pay out on termination.
• Notice required to be posted.
• Retaliation prohibited. Private right of action.
• Effective July 1, 2017. Point at which employees first
become eligible does not line up with many employer’s
calendar-year leave policies.
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Sick/Family Leave
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• Illinois Child Bereavement Act
• Effective July 29, 2016.
• Illinois employers with 50 or more employees must provide
employees who suffer the loss of a child with up to two weeks (10
work days) of unpaid leave.
• Leave not available if all of FMLA leave already has been used.
• Employees may elect to substitute paid leave, but can’t be
required to do so.
• Illinois Employee Sick Leave Act
• Takes effect on January 1, 2017.
• Illinois employers who provide employees with paid sick leave
must allow employees to use sick leave to care for immediate
family members, parents-in-law, grandchildren, or grandparents.
• Employers can cap amount of sick leave used for this purpose at
amount accrued over 6 months.
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Illinois Freedom to Work Act
• Act effective for agreements entered into after January
1, 2017.
• Bars non-competes for “low wage” employees (those
making less than $13/hr. or, if higher, the applicable
minimum wage).
• Does it apply to non-solicitation agreements?
• Penalty is that provisions are unlawful and will be void.
• New York Attorney General also attacking use of non-
competes for lower level employees.
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Agency Activity
Securities and Exchange Commission Crackdown on
Agreement Provisions that Deter Whistleblower Activity
•Taking issue with:
- Confidentiality provisions
- No relief from administrative claims provisions
•Different contexts
- severance agreements
- investigation confidentiality acknowledgements
•Applies to companies under SEC jurisdiction
- Public companies
- Possibly those contracting with public companies
•Penalties have been significant
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Agency Activity
OSHA Electronic Reporting Rule
• Effective January 1, 2017
• Requires certain employers to submit illness and injury
data electronically to OSHA, where it will be posted on
the public access website
• Includes anti-retaliation provisions
• Requires employers to inform employees of their right
to report illness/injury free from retaliation
• Reporting procedure must be reasonable
• Incentive programs can’t deter/discourage reporting
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Agency Activity
Phase in of reporting requirements depends on number of
employees and industry.
250+ Employees:
• Submit information from their 2016 Form 300A by July 1, 2017
• Submit information from all 2017 forms (300A, 300, and 301) by July 1,
2018
20-249 Employees in Certain Industries:
• Submit information from their 2016 Form 300A by July 1, 2017
• Submit information from their 2017 Form 300A by July 1, 2018
Beginning in 2019, must be submitted by March 2.
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Other State Law Developments
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• Illinois Human Trafficking Resource Center Notice Act
- effective January 1, 2016. Requires notices to be posted at
various employers (primary airports, urgent care centers,
emergency rooms, adult entertainment facilities, bars, etc.)
• Massachusetts and Cleveland Transgender Restroom
Laws
- permit use of restrooms, locker rooms, and changing rooms that
correspond with gender identity
• Massachusetts Pay Equity Act
- effective in 2018. Among other things prevents employers from
asking salary-related questions until after an offer is made.
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Questions?
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