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UK HR Two Minute Monthly: whistleblowing; religion or belief discrimination; employment status

October 9, 2019

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Our October update considers recent developments in employment law, including cases on the whistleblowing public interest test, whether vegetarianism is a protected belief under discrimination law, and employment status. We also outline other points of note, including guidance published by the Banking Standards Board on regulatory references, the latest employment tribunal statistics and revised immigration arrangements in the event of a no-deal Brexit.

Raising data protection concerns was sufficient to satisfy the whistleblowing public interest test

The Employment Appeal Tribunal (EAT) has confirmed that an employee was entitled to whistleblowing protection when she had a reasonable belief that alleged data protection breaches by her employer were in the public interest.

The employee worked for a small charity which among other things supports victims of domestic violence. Due to performance concerns, the employee’s probationary period was extended. The employee subsequently raised concerns that, given the nature of the sensitive and confidential personal information she dealt with, the charity was in breach of data protection legislation by failing to provide her with her own mobile phone and also with secure storage facilities to hold client records. The employer subsequently terminated her employment on performance grounds. The employee brought a claim that she had been automatically unfairly dismissed for blowing the whistle.

The employment tribunal found that the complaints raised by the employee were not in the public interest as they concerned her own contractual position, which prevented her from succeeding in her whistleblowing claim. However, on appeal, the EAT disagreed. The employment

Asset Purchasers: Beware Bans on Salary History Inquiries

When one employer purchases the assets of another and intends to employ some or all of the seller’s employees, it is very common for the asset purchase agreement to require the seller to disclose certain personnel information regarding those employees.  Often this disclosure includes such items as name, title, hire date, current salary, and other compensation and benefit information.  However, such provisions may violate state and local bans on salary history inquiries.

To date, fourteen states and Puerto Rico have prohibited or restricted private sector employers from seeking information about a prospective employee’s past compensation.  In some of those states, employers are permitted to ask about compensation history only at a certain point in the hiring process.  But in most, employers are never allowed to seek this information.  Many local governments have also enacted their own bans.

Colorado’s new statute is typical.  Effective January 1, 2021, it will be unlawful for employers to “seek the wage rate history of a prospective employee or rely on the wage rate history of a prospective employee to determine a wage rate.”  The statute defines “wage rate” broadly to mean (a) for hourly employees, the hourly rate plus the value per hour of all other compensation and benefits received, and (b) for salaried employees, the total of all compensation and benefits received.  Given the remedial purpose of the statute – to eliminate pay gaps based on gender and race – it is likely that courts will construe the statute broadly in favor of employees

New Overtime Rule More Employer-Friendly Than Last Attempt

Today, the U.S. Department of Labor finally announced its long-awaited changes to the regulations regarding overtime compensation. Effective January 1, 2020, the minimum salary required for most exemptions under the Fair Labor Standards Act will rise from $455 per week to $684 per week (or from $23,660 to $35,568 annualized). The minimum salary for the “highly compensated employee” exemption will rise from $100,000 to $107,432 per year.

Additionally, employers will be permitted to use nondiscretionary bonuses and other incentive payments (including commissions) to satisfy up to ten percent (10%) of the required minimum salary, as long as that compensation is paid at least annually. And if an employee fails to earn sufficient incentive compensation in a 52-week period to maintain “exempt” status, the employer may make up the shortfall (up to 10% of the minimum required salary) in a one-time payment in the first pay period after the end of the 52-week period.

The “final rule” announced today is more employer-friendly than the Department’s last attempt to update the overtime regulations, which was enjoined by a federal court in 2016 before the changes could take effect. The final rule issued in 2016 would have raised the minimum salaries for exemption considerably higher, making an estimated 4 million workers eligible for overtime pay, and it would have provided for automatic increases in the salary thresholds going forward. The final rule announced today is predicted to make 1.3 million workers overtime-eligible and does not provide for any automatic adjustments in the future.

Colorado Employees Lose it Over Use-It-Or-Lose-It Vacation Policies

Colorado employees are pushing back against the recent decision allowing use-it-or-lose vacation policies in Colorado.

In Nieto v. Clark’s Market, Inc., 2019 COA 98 (Colo. App. June 27, 2019), a division of the Colorado Court of Appeals held that the Colorado Wage Claim Act does not prohibit employers from imposing conditions on the right to be paid for accrued but unused vacation upon termination.   In that case, the employer’s policy provided that terminating employees would not be paid for accrued but unused vacation if they were discharged or if they resigned with less than two weeks’ notice.  The Court held that the Wage Claim Act only requires payment of vacation that has been “earned in accordance with the terms of any agreement” and that employers and employees may agree to impose conditions on payment for accrued but unused vacation.  Therefore, under Nieto, use-it-or-lose-it vacation polices are now permissible in Colorado.

Not surprisingly, employees (and their lawyers) are pushing back, focusing on two unanswered questions in the Nieto decision.

Seizing upon the word “agreement” in the statute, some employees contend that Nieto applies only to actual contracts between the employer and the employee and not to policies unilaterally imposed by the employer.   The Court in Nieto expressly declined to address this issue because neither party had raised it.  While individual vacation agreements with each employee would be unwieldy and impractical in most cases, employers should at least consider ensuring that all employees have received a copy of the vacation policy –

Client alert: the French Supreme Court validates the “Macron Grid” which caps damages awarded to employees in cases of unfair dismissal

In two opinions dated July 17, 2019, the French Supreme Court confirmed that the so-called “Macron Grid” implemented by the French employment law reforms in September 2017 is compatible with Article 10 of Convention no. 158 of the International Labor Organization (“ILO”).

Following diverging opinions and judgments from local French labor courts (e.g., Montpellier, Troyes, Lyon) on the validity of the Macron Grid, the French Supreme Court has received a request for its opinion from the Louviers and Toulouse labor courts to determine whether such Macron Grid is compatible with international laws.

The Macron Grid (codified under Article L. 1235-3 of the French Labor Code) establishes a scale that applies to the determination by French judges of the compensation granted for unfair dismissal. It sets a minimum and a maximum amount based on the employee’s seniority and average gross salary: the minimum amount is one month’s salary for one year of service (0.5 months for companies with less than 11 employees); the maximum is twenty months’ salary for employees who have at least 29 years of service. Note that this grid does not apply if employees claim that their dismissal results from discrimination or harassment and they hence request that their dismissal be declared null and void.

Certain labor courts have considered that the Macron Grid violates Article 10 of Convention no. 158 of the International Labor Organization (“ILO”) which provides that if judges rule that termination is unjustified, “they shall be empowered to order payment of adequate compensation or such

Colorado Employers Face New Employment Laws

With Colorado’s return to one-party control, Colorado employers face a spate of new employment laws. Employers in Colorado should review their practices, policies, and procedures to ensure that they are in compliance with these new laws.

Colorado Chance to Compete Act—“Ban the Box” Legislation: Under the new law, an employer may not state in an advertisement or application that a person with a criminal history may not apply to the position. The employer also may not inquire about or require the disclosure of an applicant’s criminal history in an initial application. The law takes effect on September 1, 2019, for employers with 11 or more employees, and September 1, 2021 for employers with fewer than 11 employees.

Equal Pay for Equal Work Act: The law prohibits an employer from discriminating between employees on the basis of sex by paying an employee of one sex a wage rate less than the rate paid to an employee of a different sex for substantially similar work, regardless of job title. The law also prohibits an employer from seeking or relying on a prospective employee’s wage rate history to determine a wage rate. Finally, employers may not prohibit employees from discussing their wage rates. The law takes effect January 1, 2021.

Criminal Penalties for Wage Violations:  Employers who willfully refuse to pay a wage claim or falsely deny the validity of a wage claim over $2,000 may be liable for felony theft. The penalty for theft ranges from $50 to $1,000,000 depending upon the

U.S. Department of Labor Proposes Changes to Minimum Salary for Overtime Exemptions

On March 7, 2019, the United States Department of Labor issued a notice of proposed rulemaking that would change the minimum salary levels necessary for an employee to be properly classified as exempt from the overtime compensation requirements of the Fair Labor Standards Act.  Under the proposed rule, the minimum salary for most exemptions would rise from $455 per week ($23,660 annualized) to $679 per week ($35,308 annualized).  The minimum annual compensation for the “highly compensated employee” exemption would rise from $100,000 to $147,414.

For employees in the executive, administrative and professional exemptions, the proposed rule would permit nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to ten percent (10%) of the required minimum salary.  In addition, provided that the employee has received at least ninety percent (90%) of the required minimum compensation in each payroll week for 52 weeks, the employer would be permitted to make a single “catch-up” payment within one pay period after the end of the 52-week period, in order to bring the employee’s compensation to the required level.

For “highly compensated employees,” the proposed rule would require that ten percent (10%) of the minimum annual compensation be paid in the form of a weekly salary, but the remainder could be paid in the form of nondiscretionary bonuses and incentive payments.  In addition, the rule would also permit a “catch-up” payment as described above.

The proposed rule would formally rescind the Obama-era rule proposed in 2016, which was blocked by permanent injunction before it

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