Employment Law This Week: National Origin Discrimination Guidance, Cash Substitutes, Hiring Permanent Replacements, Micro-Unit Upheld

(1) EEOC Seeks Comment on New Guidance

Our top story: Here’s your chance to weigh in on new national origin discrimination guidance. The Equal Employment Opportunity Commission (EEOC) is soliciting public comments until July 1 on its proposed new guidance. Approximately 11% of private-sector EEOC charges filed in fiscal year 2015 were national origin discrimination claims. The new guidance addresses issues like human trafficking, accent discrimination, and job segregation. Richard Palmer, from Epstein Becker Green, goes into further detail:

"The new guidelines are similar in scope to the guidelines issued back in 2002. However, some areas have been expanded, and there are some new areas altogether. . . . One area where an employer may want to provide public comment relates to customer preference. As written, it is unlawful for an employer to base an adverse employment decision on the preference of a customer to deal with someone without an accent. . . . In addition, the proposed guidance contains a new section called ‘Promising Practices.’ I encourage employers to review these practices and comment if you believe that these practices are overreaching."

(2) Ninth Circuit: Cash Payments in Lieu of Health Benefits Must Be Included in Regular Rate

Cash substitutes for health benefits must be included in an employee’s regular rate calculations. That’s according to the U.S. Court of Appeals for the Ninth Circuit in a case of first impression. The city of San Gabriel, California, allowed police officers to choose cash payments in lieu of health coverage. The city treated these payments as health benefits, which are not factored into an employee’s Fair Labor Standards Act (FLSA) overtime rate calculation. A group of the officers sued, and the Ninth Circuit found that the payments were compensation for work and must be included in the regular rate calculation.

(3) NLRB Shifts Power Toward Unions During Strikes

The National Labor Relations Board (NLRB) finds the hiring of permanent replacements for strikers to be an unfair labor practice. In a 2-1 decision that could benefit unions during contract negotiations, the NLRB found that a continuing care facility in California violated federal labor law when it hired permanent replacements after a series of intermittent strikes. While the NLRB and courts have long held that an employer’s motivation for hiring permanent replacements is irrelevant, in this case, the board held that if the hiring is motivated by an intent to discourage future strikes, it interferes with employees’ rights under the National Labor Relations Act (NLRA). The employer in this case will likely seek judicial review. However, in the meantime, the decision adds new risks for employers that may wish to hire permanent striker replacements. For more on this story, click here.

(4) Fifth Circuit Upholds Macy’s Micro-Unit

In 2014, the NLRB certified a collective bargaining unit consisting of 41 cosmetics and fragrance department employees at a Macy's store in Massachusetts. Macy's appealed, arguing that the union had strategically selected a department with many pro-union employees, and that the NLRB should not have certified any unit that did not encompass all store employees or, at least, all selling employees. On June 2, 2016, the Fifth Circuit disagreed, upholding the NLRB's original decision that the employees in question had distinct interests and did not share an “overwhelming community of interest” with other workers. For more on the original case, click here.

(5) Tip of the Week

Professor David Sherwyn, Director of the Cornell Institute for Hospitality Labor and Employment Relations, shares some advice for employers in light of the Seventh Circuit’s Epic Systems decision, which was covered on last week's show: