New Hawaii Laws that Could Affect Your Business

Hawaii CapitolThe Hawaii 2015 Legislative Session resulted in the passage of several new laws that may impact your business.

For hotels, Act 137 relating to Service Charges took effect on June 19, 2015. This law requires hotels to either distribute porterage service charges to employees in full, or notify customers that service charges are being used for other purposes. As defined by Act 137, “porterage” is the “act of moving luggage, bags, or parcels between a guest room and a lobby, front desk, or any area with vehicular access at a hotel, hotel-condominium, or condominium-hotel.”

As of July 1, 2015, technology businesses are prohibited from including non-compete or non-solicit clauses in their employment contracts pursuant to Act 158 relating to Employment Agreements. A “technology business” is a “trade or business that derives the majority of its gross income from the sale or license of products or services resulting from its software development or information technology development, or both.” However, any trade or business in the broadcast industry or any telecommunications carrier is exempt from this definition of “technology business.” Act 158 does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before July 1st.

Hawaii law currently prohibits smoking in all enclosed or partially enclosed areas of places of employment, and within 20 feet from entrances, exits, windows that open, and ventilation intakes that serve an enclosed or partially enclosed area where smoking is prohibited. As of January 1, 2016, Act 19 relating to the Regulation of Tobacco Products will prohibit the use of electronic smoking devices in places where smoking is prohibited. An “electronic smoking device” is “any electronic product that can be used to aerosolize and deliver nicotine or other substances to the person inhaling from the device, including but not limited to an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, hookah pipe, or hookah pen, and any cartridge or other component of the device or related product, whether or not sold separately.” Employers with no-smoking policies may want to review their policies to ensure that electronic smoking devices are included in those policies by January 1, 2016.

(Photo: Create Commons by flickr, danramarch)

Goodsill Attorneys Speak on FMLA at the Hawaii Employers Council

Carolyn Wong

Carolyn Wong

Jennifer M. Yamanuha

Jennifer M. Yamanuha

Last month, Goodsill attorneys, Carolyn Wong and Jennifer Yamanuha, spoke at the Hawaii Employers Council on best practices for administering leave under the Family & Medical Leave Act.

Ms. Wong and Ms. Yamanuha guided the audience, consisting mostly of business executives and human resources professionals, through various interactive exercises and discussions on the definitions of “spouse” and “intermittent” leave, requests for certification and recertification, retroactive designations, and other leave laws.

The College of Labor and Employment Lawyers Has Inducted Barbara A. Petrus as Fellow

Barbara Petrus

Barbara Petrus

The College of Labor and Employment Lawyers announced the election of Barbara A. Petrus, Partner at Goodsill Anderson Quinn & Stifel, as a newly elected Fellow.  Election as a Fellow is the highest recognition by one’s colleagues of sustained outstanding performance in the profession, exemplifying integrity, dedication and excellence.

The College of Labor and Employment Lawyers was the vision of a number of the Fellows to further establish the profession in all its aspects as one uniquely important to the world of labor and employment law, individual rights, collective bargaining and dispute resolution.  The College was established in 1995 through an initiative of the Council of The Section of Labor and Employment Law of the American Bar Association.  It operates as a free standing organization recognizing those who, by long and outstanding service, have distinguished themselves as leaders in the field.

DOL Update: Proposed Changes to Overtime Exemptions and New Guidance on Independent Contractors

Labor-Department-DOLChanges to “White Collar” Exemptions on the Horizon

On July 6, 2015, the U.S. Department of Labor issued a Notice of Proposed Rulemaking, with its proposal to update the overtime exemptions for executive, administrative, and professional employees.  Key proposals include: (1) raising the exempt salary level from $23,660 to $47,892 per year; (2) providing a mechanism for automatically raising the exempt salary level from year to year (e.g., an increase to $50,440 per year in 2016) based on a percentile of weekly earnings for full-time salaried workers; and (3) adding additional “occupational examples” to the current exempt duties test.  (See the DOL’s Fact Sheet and Federal Regulations for more information.)

Guidance on “Independent Contractors”

In other news, today, the DOL issued an interpretive memorandum stating its view that an increasing number of workplaces are misclassifying employees as independent contractors.  Calling this a “problematic trend,” the DOL issued its memorandum to provide additional guidance to employers.

The standard of whether a worker is “employed” under the Fair Labor Standards Act is determined in part by the “economic realities” test, which focuses on whether a worker is economically dependent on the employer or in business for him or herself. The factors typically include: (A) the extent to which the work performed is an integral part of the employer’s business; (B) the worker’s opportunity for profit or loss depending on his or her managerial skill; (C) the extent of the relative investments of the employer and the worker; (D) whether the work performed requires special skills and initiative; (E) the permanency of the relationship; and (F) the degree of control exercised or retained by the employer. If a worker is economically dependent on the employer, he or she will most likely be deemed to be an “employee” of the company.

According to the DOL, the memorandum does not change the “economic realities” test, but it does adopt a liberal interpretation of the test. Below is a summary of the DOL’s interpretation:

More Likely an “Employee” More Likely an “Independent Contractor”
Is the Work an Integral Part of the Employer’s Business? The worker performs work that is integral to the employer’s business, even if such work is just one component of the business. The worker does not perform work that is integral to the employer’s business.
Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss? The worker’s sole concern is doing the job well and/or working more hours, and the worker will unlikely experience a loss. The worker faces the possibility to make a profit and experience a loss.
How Does the Worker’s Relative Investment Compare to the Employer’s Investment? The worker is not on similar footing with the employer in terms of investment. The worker makes investments (e.g., hiring others, purchasing materials and equipment, advertising, and renting space) that support his or her business beyond a particular job, and such investments are not relatively minor compared with that of the employer.
Does the Work Performed Require Special Skill and Initiative? The worker, albeit highly skilled, just provides skilled labor, does not make independent judgments at the job site beyond the work that he or she is doing for the job, and is told what work to perform where. The worker markets his or her services, determines materials to order, determines which orders to fill, and otherwise demonstrates managerial and business skills.
Is the Relationship between the Worker and the Employer Permanent or Indefinite? The worker is engaged on a permanent or indefinite basis (e.g., at-will employment). The worker lacks a permanent or indefinite relationship with the employer due to the worker’s own independent business initiative.
What is the Nature and Degree of the Employer’s Control? The employer assigns work, trains, and directs the time, place, and manner of work.   Though, an employer who lacks physical supervision or does not set the worker’s hours may still exercise control.

The worker controls meaningful aspects of the work performed such that it is possible to view the worker as a person conducting his or her own business.

The DOL has sought to place a larger emphasis on the first factor (i.e., whether the work is an integral part of the company’s business).  With this focus, the DOL opines, that “most workers are employees under the FLSA.”

Defining “Spouse” Under The Family Medical Leave Act

wedding rings Last Friday, the United States Supreme Court ruled in Obergefell v. Hodges that marriage is a constitutional right for same-sex couples, just as it is for opposite-sex couples. The decision invalidated bans against same-sex marriage that existed in 13 states and Puerto Rico, as well as a lawsuit filed by four states earlier this year protesting the Department of Labor’s February release of a revised definition of “spouse” under the federal Family Medical Leave Act (“FMLA”) to include same-sex spouses.

Because the bans against same-sex marriage were in effect in certain states prior to the Supreme Court’s ruling, the FMLA’s revised definition was written to provide that employers should look to whether a marriage was valid in the state where it was entered into, or, as the regulations put it, where the marriage was “celebrated,” in determining benefit eligibility under the FMLA. (The rule had previously defined a valid marriage as one legal in the state of an employee’s residence.) Thus, the regulations now assert that a same-sex or a common law marriage that may not be recognized in an individual’s state of residence is legally valid under the FMLA if it is was legally entered into in any state. A marriage entered into outside of the United States is also legally valid if it could have been entered into in at least one state. The Supreme Court’s ruling last week extending marriage rights to same-sex couples in all 50 states makes the FMLA “celebration” language configuration unnecessary with respect to same-sex spouses, and provides greater certainty to employers who otherwise would have had to track evolving state marriage laws. The language is still relevant for spouses who have entered into common law marriages valid in any state; they may claim FMLA rights even if common law marriage is not recognized in their state of residence.

What do employers need to know about FMLA leave under the new definition of “spouse?”

If your organization is covered by the FMLA (meaning you have 50 or more employees or you are a public employer), you probably already know that eligible employees may take up to 12 weeks of leave per year for their own serious health conditions or those of a spouse, parent, or child; for bonding with a new child; for preparation for a family member’s military service; and to care for a family member who was seriously injured on active military duty (additional leave time may be provided for military injury family care leave).

Since March 27, 2015, when the FMLA revised definition went into effect, leave relating to the same-sex or common law spouse of an eligible employee has qualified as spousal leave under the FMLA. Be mindful that the new definition of “spouse” also expands child care leave and parental leave options under the FMLA. The FMLA defines “child” to include biological, adopted, foster, and step-children, so employees in same-sex and common law marriages are now able to take qualifying leave to care for the minor children of a spouse. Likewise, the FMLA defines “parent” to include a biological, adopted, foster, or step-parent, so employees will now be able to take leave to care for the same-sex or common law spouse of a parent.

Under the FMLA regulations, an employer has the right to request reasonable documentation of a family relationship, which may consist of a written statement from the employee, a court document such as a marriage certificate, a child’s birth certificate (in the case of a step child), or other reasonable form of documentation. Note that the employee, not the employer, gets to choose the form of documentation to be provided. It’s prudent practice to be sure not to target only same-sex marriages in requesting documentation of family relationships. The FMLA does not apply to civil unions or domestic partnerships.

How about family care leave under Hawaii state law?

In Hawaii, same-sex marriage has been legal since 2013. Therefore, leave benefits under the Hawaii Family Leave Law (“HFLL”) have applied since 2013 to same-sex spouses and other family members who are eligible as a result of that change. As a reminder, the HFLL applies to workplaces with 100 or more employees and provides eligible employees with up to four weeks per year of leave to care for a spouse, child (of any age, including a biological, adopted, foster, or step-child), or parent (including a biological, foster, adoptive parent, step-parent, parent-in-law, grandparent, or grandparent-in-law).

Hawaii does not recognize common law marriages, so while employees who entered into a common law marriage valid in another state may assert FMLA rights even while residing in Hawaii, they may not claim leave rights under the HFLL. An HFLL leave entitlement may run concurrently with an FMLA leave entitlement.

(Photo: Creative Commons)

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