- Introduction of a statutory minimum wage in Germany
With the new Minimum Wage Act (Mindestlohngesetz, MiLoG) a statutory national minimum wage will be introduced in Germany for the first time. The Minimum Wage Act obliges every employer to pay at least the minimum statutory wage from 1 January 2015. Compliance with this obligation will be monitored by the Customs authorities in Germany.
- Entitled individuals
All employees in Germany are entitled to the statutory minimum wage. This particularly applies for employees during any probationary period as well as part-timers or marginal employment (i.e. employees with a monthly salary of up to € 450. Interns are also entitled to the minimum wage. The minimum wage does not have to be paid in a few exceptional cases, for example, in the case of internships required by training or university courses. Apprentices, volunteers and employees under the age of 18 without a vocational degree are not covered. Long-term unemployed individuals are excluded from the minimum wage for a period of six months so as to help them get back into employment.
- Amount and payment of the minimum wage
The minimum wage will initially be € 8.50 gross per hour. As of 1 January 2017, increases will be possible for the first time upon the recommendation of a Minimum Wage Commission which will be established for this purpose. The minimum wage is to be paid to the employee on the agreed date of payment, but on the last working day of the following month at the latest.
- Mandatory provision
Contracts for payments below the minimum wage or restricting or excluding the entitlement to the minimum wage are illegal. Moreover, it is only possible to waive the right to arrears of the minimum wage on the basis of a court settlement; out-of-court waiver declarations are legally invalid.
- Transitional regulations
Wages below € 8.50 gross per hour will essentially only be possible after 1 January 2015 on the basis of generally binding collective bargaining agreements, statutory ordinances as well as for the newspaper distribution industry until the end of December 2016. However, as of 1 January 2017, the statutory minimum wage will apply uniformly here as well.
- Which remuneration components go to fulfil the minimum wage requirement?
The minimum wage requirement can be fulfilled by paying a corresponding hourly wage. Alternatively, it is possible to agree a monthly base salary if an average of at least € 8.50 gross per hour will be paid. It has not yet been clarified whether other remuneration components, such as commission, bonuses, allowances or other special payments (e.g. vacation or Christmas bonus) can help fulfil the entitlement to the minimum wage. In the opinion of the legislator, allowances and supplements cannot be taken into consideration. Christmas and vacation bonuses should only then be able to be considered if these are paid proportionately each month and without reserving the right to revoke their payment. It remains to be seen what position the cases will take in this regard.
- Overtime accounts
Overtime work in excess of agreed working hours must be compensated by payment of remuneration in at least the amount of the minimum wage. Alternatively, overtime hours up to 50% of the agreed working hours can be credited on a monthly basis to a working time account, which has been agreed in writing. Time off from that account is to be granted within 12 months as compensation for any credited overtime hours.
- Liability for breaches on the part of other companies
The Minimum Wage Act provides for the liability without fault of any end-user company engaging another company as a contractor for the performance of work or services. If the contractor does not pay the minimum wage to the employees who perform the work or services, the contracting company is liable as a guarantor for the net wages resulting from the minimum wage. In such cases, the employees of the contractor can file a lawsuit for payment of the net minimum wages directly against the contracting company. Contracting companies will want to procure that contractors commit to paying at least the legal minimum so they have a right of recourse if this indemnity is called upon.
- New notification and documentation duties
Employers based abroad, which want their employees in Germany to perform work or services in certain economic sectors in the future, must complete a written registration procedure with the German Customs authorities in advance of 1 January 2015. The same applies for any companies in Germany which employ “leased” employees in Germany through companies based abroad. Furthermore, all companies must document the beginning, end and length of the daily working hours of employees in marginal employment one week after the respective work assignment at the latest and retain such documents for inspection by the authorities for at least two years. For certain industry sectors in Germany, this documentation obligation applies for all groups of employees.
- Sanctions against employers
Violations of the Minimum Wage Act, i.e. not paying the minimum wage or not paying it in time, can be subject to draconian penalties of up to € 500,000. Administrative fines of more than € 2,500.00 can additionally result in exclusion from the awarding of public sector contracts in Germany in the future.
Two recent cases from the French Courts are reviewed in this post, one a sensible relief and the other just frankly terrifying.
First, an employee with more courage than realism claimed that the obligation of confidentiality in his employment contract restricted his freedom to practise his profession, and was therefore void. He was prepared nonetheless to accept that restriction gracefully if he were paid for it separately, i.e. over and above his salary. This argument having failed consistently all the way up the French judicial system, it finally reached the Social Chamber of the Supreme Court last month. Here, both mercifully and unsurprisingly, it failed again. Reasonable obligations of confidentiality in relation to the proprietary and secret information of the employer and its clients and staff do not infringe an employee’s ability to practise his chosen trade, said the Court.
Second, the Court of Appeal in Grenoble has issued a decision in relation to the dismissal for serious misconduct of a bus driver who tested positive in workplace alcohol tests. All the law, the bus company’s internal rules and basic common sense indicate that being able to drive safely and legally should be a fundamental condition of continued employment as a driver. Consequently, failure to turn up sober should surely justify his dismissal. However, the Grenoble Court took the view that because of his age and prior clean record, the driver was entitled to a second chance despite this serious and repeated failure.
It must be right that a prior clean record could be used by an employer as mitigating circumstances if for any reason it did not want to dismiss. But where regulatory requirements and public safety are put under direct threat by the employee’s conduct, it seems more than harsh for the Court to decide that it denies the employer grounds to dismiss at all. It is to be hoped that this decision is the product of facts specific to this case, and not representative of a broader attitude of the French Courts to drink-driving by employees in the course of their duties.
If as an Employment Tribunal you are not satisfied by the evidence which the parties have put before you, are you entitled to go off and get some more of your own?
This rather unusual question was considered by the Employment Appeal Tribunal last month in East of England Ambulance Service NHS Trust –v- Sanders. Mrs Sanders was claiming to be statutorily disabled. The jointly appointed medical expert concluded that she was not and, though some level of depression was not disputed, Mrs Sanders herself gallantly but perversely resisted the Tribunal’s invitation to confirm that some years ago her doctor had diagnosed her as suffering from severe depression. A statement she prepared on the adverse impact the condition had on her activities dealt far more with what she saw as the cause than with the effect. Though her doctor had some years ago prescribed 80mg/day of anti-depressant Citalopram, she had taken so little of it that her stocks had lasted some two and a half years after the prescription ceased, and when she did finally run out, she had felt no worse in consequence. Not a promising picture on the disability question, one might have thought.
However, when it adjourned to consider its decision on that question the Employment Tribunal did some research of its own about Citalopram, consulting Wikipedia, www.drugs.com (that must have tested the firewall!) and (for reasons not clear from its ruling) the website of a South African electronic package inserts company. These led the Tribunal to the view that the 80mg which had been prescribed was in fact the maximum safe daily dose of Citalopram, which suggested that at the time of that prescription at least, Mrs Sanders’ depression had indeed been most severe. Largely on that basis (for there was clearly little else) the Tribunal then concluded that Mrs Sanders was disabled.
The grounds of appeal were numerous, but included in particular the contention that the Tribunal should not seek to bolster the evidence it has heard with the product of its own research.
Challenged on this by the EAT, the Tribunal sought to rely on Rule 41 of the ET Rules of Procedure. This expressly allows a Tribunal to seek to question the parties and their witnesses to “clarify the issues or elicit the evidence”. The EAT did not buy that – in fairly scorching terms it stressed that Rule 41 related to eliciting the evidence which the witness wished to give, not that which the Tribunal wished to hear. The Tribunal was entitled to understand the witness’s position, not to steer the proceedings one way or the other by asking potentially leading questions about “facts” it had discovered by itself which neither party had relied on. Here the Tribunal had just assumed the correctness of internet statements that 80mg was the maximum dose, and cracked on from there. The EAT sent the issue back to a new Tribunal to look at it again.
What if one of the Tribunal panel members had had medical training and so knew or believed without the vagaries of internet research that 80mg was a strong dose? Would such technical knowledge have to be ignored even if potentially relevant? The EAT took the view that if the panel were aware of something really relevant and determinative, its obligation was to seek the views of the parties on that matter, potentially granting an adjournment to allow them to obtain further evidence and prepare their representations in response.
However, the clear message was that this would be appropriate only in the rarest of cases – the EAT concluded pithily that “It remains that witness’s evidence. It is that witness’s case. It is not the Tribunal’s case. It is not the Tribunal’s evidence”.
On November 14, 2014, a New York federal judge awarded [pdf] over $10 million in back pay wages to about 2,000 current and former exotic dancers in a class action lawsuit brought against Rick’s Cabaret for unpaid wages from 2005-2012.
This recent order awarding damages to the dancers is a furtherance of the Court’s September 2013 holding which determined that the dancers were employees of Rick’s Cabaret, rather than independent contractors, as claimed by the defendant. In siding with the dancers, the Court found that Rick’s Cabaret exercised control over the dancers and that the dancers could not make independent decisions about their work. Accordingly, the Court held that the dancers, as employees, are entitled to the protections of the Fair Labor Standards Act (FLSA) and New York Labor Laws (NYLL). The violations of the FLSA and NYLL committed by Rick’s Cabaret, including minimum wage violations and for improperly keeping portions of the dancers’ tips, amounted to over $10 million in damages.
However, this $10 million order is not the end of the case; rather, it is the result of a ruling on a motion for partial summary judgment. In addition to the $10 million already awarded by the Court, the dancers may receive up to $18 million total should they prevail at trial on the remaining issues. Trial has not yet been scheduled; however, Rick’s Cabaret has already announced its intention to appeal the ruling.
At first blush, this lawsuit may be seen as an outlier case— nothing more than another salacious news story. However, it is much more than that— it serves as an important reminder that businesses in any industry can face harsh consequences for improper classification of workers, and employers should regularly review their worker designations.
The Department of Labor and state agencies offer published guidance on this issue, see, e.g., DOL Fact Sheet #13: Am I an Employee? [pdf] Your labor and employment counsel can, of course, provide additional advice.
On November 12, 2014, the Ninth Circuit addressed an issue of first impression regarding the pleading specificity required to bring an action for unpaid minimum wages and overtime wages under the Fair Labor Standards Act (“FLSA”) in Landers v. Quality Communications, Inc. [pdf] This opinion is important because many employers served with FLSA collective actions were not able to obtain basic information about the claims alleged until after responding to the complaint and commencing discovery. In Landers v. Quality Communications, Inc., the Ninth Circuit applied the standards set forth in the Twombly and Iqbal Supreme Court decisions, holding that a plaintiff must plausibly state a claim for failure to pay minimum wages or overtime wages. The Ninth Circuit explained that conclusory allegations that merely recite the statutory language of the FLSA are inadequate and upheld the dismissal of the case.
Plaintiff, a cable services installer, brought suit individually and on behalf of other similarly‑situated persons alleging that the employer failed to pay minimum wages and overtime wages in violation of the FLSA. In his complaint, Plaintiff alleged that: (1) he was subject to “a de facto ‘piecework no overtime’ system” whereby he was not paid 1.5 times his regular rate for work in excess of 40 hours a week; (2) alternatively, the employer did pay some measure of overtime wages, but in an amount less than required by the FLSA; (3) he was not paid minimum wages; and (4) the employer falsified time records to conceal their failure to pay required wages. The employer moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 8(a)(2) and 12(b)(6).
The Ninth Circuit agreed with the district court’s decision that the complaint fell “short of the line between possibility and plausibility of entitlement to relief” under Rule 8 as construed in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. While the Ninth Court did state that detailed factual allegations regarding the number of overtime hours worked was not required to state a plausible claim, it agreed with the First, Second and Third Circuits holding that “a plaintiff asserting a claim to overtime payments must allege that she worked more than forty hours in a given workweek without being compensated for the overtime hours worked during that workweek.” The Ninth Circuit pointed out that absent from Plaintiff’s complaint “was any detail regarding a specific workweek when [Plaintiff] worked in excess of forty hours” and was not paid overtime or minimum wages for that specific workweek.
The Landers v. Quality Communications, Inc. decision signals a heightening of pleading standards by the Court for FLSA actions. As such, employers should evaluate FLSA complaints to determine whether such complaints can be dismissed at the outset of litigation.
The United States and the People’s Republic of China agreed to increase the validity of short-term business and tourist visas and student and exchange visas issued to citizens of each country. Effective November 12, 2014, Chinese nationals can now obtain B-1 (business) and B-2 (tourist) nonimmigrant multiple-entry visas for up to 10 years. Previously, these visas were issued with a validity of only one year. Qualified Chinese students and exchange visitors, along with their dependents, will now be eligible for F, M, or J-category multiple-entry visas valid for up to five years (previously one year) or the length of their program. For additional details, see the US State Department’s FAQs.
To reciprocate, the People’s Republic of China will now issue, to qualified US citizens, short term business and tourist visas (L and M visas) for multiple-entry with validity up to 10 years. Qualified US students may receive student residency permits (F visa) valid up to five years, depending on the length of their educational program.
On a related note and in response to international security concerns, the US Department of Homeland Security (DHS) recently announced, effective immediately, those traveling to the US through the Visa Waiver Program (VWP) will be required to provide additional information when registering for the Electronic System for Travel Authorization (ESTA). Travelers from the 38 VWP countries, where a visa is not required for entry up to 90 days, must now provide additional passport data, contact information, city of birth, employment data, and other names or aliases. These new requirements will not impact those with current ESTA approvals which are typically granted for a two-year period or until the applicant’s passport expires, whichever is sooner. Countries participating in the Visa Waiver Program include Australia, the United Kingdom, France, Germany and other European countries as well as Japan, Taiwan, Singapore and South Korea.
Proposition J passed in San Francisco earlier this month approving a minimum wage increase to $11.05/hour effective January 1, 2015. On May 1, it will increase again to $12.25/hour. San Francisco employers should plan to update payroll systems and paystubs to reflect this change in hourly and overtime rates for any employees impacted by this change. Also be sure to add the new San Francisco Minimum Wage poster [pdf] to your bulletin board by the end of the year. As if two increases in just five months weren’t enough, additional increases have been approved for July 1, 2016 ($13.00), July 1, 2017 ($14.00) and July 1, 2018 ($15.00).
If you are a for-profit entity that contracts with or leases space from the City of San Francisco, note that the Minimum Compensation Ordinance (MCO) rate goes up to $13.02/hour on January 1, 2015. Starting in 2015, the nonprofit rate for City contractors will be the San Francisco minimum wage of $11.05. Here is a link [pdf] to the updated workplace poster reflecting the MCO increase.
Reported this week on BBC Sport Online are the results of a study funded by Football Against Racism in Europe (“FARE”) into ethnic minority representation in professional football coaching hierarchies. It makes interesting, if faintly one-sided, reading.
Taking the six most senior coaching staff at each of the 92 professional Clubs in the English Leagues produces a total of 552 coaches. Even though approximately 25% of the Leagues’ players are of ethnic minority background, only 19 of the coaches, 3.4%, are not white. Even taking into account FARE’s obvious agenda in this matter, this has led to a great deal of high emotion among involved parties, including references to “institutional racism” and the need for football to “heal itself”. In addition, of course, the study breathes fresh life into the question of whether the Rooney Rule should be introduced in the UK.
Football League Chairman Greg Clarke has come in for a barracking over not floating this at the Football League’s AGM, but with due respect to his detractors, the short point is that whatever its cosmetic or moral merits, whatever its success in the NFL in the US and however great or limited the difference it would actually make here, the Rule would almost certainly be unlawful in the UK. However worthy the goal of equality, positive discrimination is generally prohibited, and none of the commentaries seem to recognise this.
The BBC report raises two other points relevant to claims of institutional racism. First, the FARE study claims that some ethnic minority coaches have “experienced racism within the high-level coach education environment”, and blames the FA for failing to address this. By counter, the FA says that it is not aware of any complaints of discrimination and that it encourages anyone experiencing such treatment to report it immediately. It already requires coach educators to undergo equality and diversity training as part of its openness and inclusion plan.
The Rooney Rule is not the answer to allegations of racism among those training the next generation of professional football coaches. That answer lies in educating those who can be taught that this is wrong and dismissing those who cannot. Indeed, the Rule runs the risk of making the matter worse – letting ethnic minority candidates be seen to be shortlisted on grounds of their ethnicity rather than their merits, and so to be receiving more favourable treatment than equivalently-competent white candidates. Some element of resentment of a necessarily racial nature would be an almost inevitable consequence.
Second, the big question here is why only very low numbers of ethnic minority players are gaining formal coaching qualifications, the badges without which there is no possibility of obtaining one of these roles. Former Birmingham City player Michael Johnson is reported to consider that many ethnic minority professionals are put off even trying to get their badges by the belief that there will be no job opportunities for them even if they do. That may or may not be understandable bearing in mind also the tiny size of the pool in which they would be fishing for such jobs, but it would clearly explain the very low appointment statistics. The candidates have to be there to get the jobs – institutional racism by Clubs is knowing that the ethnic minority candidate is better (or at least as good), but still giving it to someone else because he is white. It is not giving the role to someone who is qualified in preference to someone who is not. The Rooney Rule would not fix that either, since it cannot sensibly require Clubs to interview candidates who do not have the right badges.
Mr Johnson does have a full set of coaching badges and yet says he has been offered “only” three interviews in as many years. With no disrespect at all to Mr Johnson, however, you cannot get from this example to allegations of institutional racism until you know both why he fell down at those 3 interviews and in particular, whether his white peers with similar playing experience and coaching qualifications have been statistically more successful.
Paid Sick Leave Laws Sweeping the Nation
At the polls last week, Massachusetts, Oakland, California, and Montclair and Trenton, New Jersey voters approved measures instituting minimum paid sick leave requirements for workers. Montclair and Trenton are the 7th and 8th cities in New Jersey to require paid sick leave for workers in their cities in the past year —Paterson, Passaic, East Orange, Irvington, Newark, Jersey City and have already passed laws mandating paid sick leave, and New Jersey’s state lawmakers are currently considering a statewide paid sick leave measure. California, Connecticut, Eugene, OR, Portland OR, New York City, San Francisco, Seattle and Washington, D.C. also have paid sick leave laws on the books which have created a patchwork of laws multi-state employers must comply with.
Under the Massachusetts law, which goes into effect July 1, 2015, employers of 11 or more employees must provide up to 40 hours of paid sick leave per year, while employers of 10 or fewer employees must provide up to 40 hours of unpaid sick leave per year. Beginning July 1, 2015, employees will earn one hour of paid sick leave for every 30 hours worked. Employees may carry over up to 40 hours of unused sick time the next year, but cannot use more than 40 hours in a year. Employees can use the sick leave for their own physical or mental illness, injury or medical condition or for that of their child, spouse, parent, or spouse’s parent, to attend routine medical appointments of their own or of their child, spouse, parent, or spouse’s parent, or to address the effects of domestic violence on the employee or the employee’s dependent child.
Under the measures passed in Trenton [pdf] and Montclair [pdf], New Jersey, employees are entitled to accrue one hour of paid sick leave for every 30 hours worked. Employers of 10 or more employees, or employers of food service, home health care, or child care employees, must provide up to 40 hours of paid sick time per year, while employers with 9 or fewer employees must provide up to 24 hours of paid sick time per year. Paid sick time may be used for the employee’s own medical care or to care for the employee’s child, parent, parent of a spouse, domestic partner, grandchild, grandparent, spouse of a grandparent, or sibling. The Trenton and Montclair laws go into effect in early March 2015.
California’s state paid sick leave law, passed earlier this year, allows workers to earn up to three paid sick leave days per year, and specifically provides that it does not preempt local sick leave laws that have additional protections for workers. Oakland’s paid sick leave measure [pdf] does just that—it provides that workers who work in the city of Oakland for at least two hours per week may accrue paid sick leave at the rate of one hour of paid leave for every 30 hours worked. Employers of 10 or more workers must provide up to 72 hours of paid sick leave per year, while employers of 9 or fewer employees must provide up to 40 hours per year. Paid sick leave may be used for the employee’s own medical care or to care for the employee’s child, parent, parent of a spouse, domestic partner, grandchild, grandparent, sibling, or another designated person if the person does not have a domestic partner. Employees will begin accruing paid sick leave on March 2, 2015, several months before the California state law’s July 1, 2015 effective date.
In addition to requiring employers to provide employees with paid sick leave, these laws generally have specific notice and recordkeeping requirements. Because the laws vary by jurisdiction and new laws are being passed at a rapid pace, companies should take care to ensure they are in compliance with current laws and any new laws that are passed.
Minimum Wage Hikes
In addition to paid sick leave protections, voters in several jurisdictions voted to increase the minimum wage:
- Alaska: $8.75 per hour beginning January 1, 2015, $9.75 per hour beginning January 1, 2016, thereafter indexed to inflation or $1 more than the federal minimum wage, whichever is higher
- Arkansas: $7.50 per hour beginning January 1, 2015, $8.00 per hour beginning January 1, 2016, $8.50 per hour beginning January 1, 2017
- Illinois: $10.00 per hour beginning January 1, 2015
- Nebraska: $8.00 per hour beginning January 1, 2015, $9.00 per hour beginning January 1, 2016
- South Dakota: $8.50 per hour beginning January 1, 2015, thereafter indexed to inflation
- Oakland, CA: $12.25 per hour beginning March 2, 2015
- San Francisco, CA: $12.25 per hour beginning May 1, 2015, $13.00 per hour beginning July 2016, $14.00 per hour beginning July 2017, $15.00 per hour beginning July 2018.
Numerous states have previously passed laws mandating annual minimum wage increases indexed to inflation. Employers should review the minimum wage in their jurisdictions in the first of the year.
In what has seemed a virtually unbroken line of cases where the U.S. National Labor Relations Board (“NLRB”) sides with employees posting about work on social media, it appears that the agency responsible for administering the National Labor Relations Act (“NLRA”) (whether the workplace is a union setting or not) has ruled against two employees who were terminated for content they published on Facebook.
In this case [pdf], employer, the Richmond District Neighborhood Center (the “Center”) operated an afterschool teen activity center in San Francisco. The Center employed two activity leaders whose employment agreements were up for renewal. The Center initially offered to renew the employment agreements, but rescinded them after finding that the employees had posted an outrageously insubordinate profanity-laced Facebook rant about their jobs. The employees alleged that their Facebook conversation was “protected, concerted activity” and that the Center’s decision to rescind their employment agreements violated the NLRA. In what can only be described as a breath of fresh and surprisingly rational air, the NLRB sided with the Center, holding that the employees’ conduct in posting the outrageous rant went so far that it lost the NLRA’s protection.
Interestingly, the NLRB did not focus on the profane nature of the language in the Facebook exchange, even though it was peppered with vulgarities the likes of which would make the most jaded sailor blush. Instead, the NLRB’s focus was on the fact that the Facebook posts advocated outright insubordination against the Center. The NLRB found it particularly significant that the employees repeatedly and expressly indicated that they intended to neglect their duties, violate school-district rules, and undermine the Center’s leadership. Given the express intent of the employees, the NLRB also concluded that the Center acted reasonably in rescinding the employment agreements even though the employees had not yet actually carried out any insubordinate acts.
While employers can take heart that the NLRB has finally found a Facebook post it doesn’t “like”, they should not view it as a significant change in how the NLRB views these cases. The case makes clear that, in determining whether employee conduct is protected by the NLRA, the NLRB will focus more on whether the conduct advocated or threatened insubordination and less on whether the conduct involved profane, vulgar or otherwise “colorful” language.