Welcome to my latest Monday Morning Briefing, and I hope you all are warm, safe and dry after that dramatic weekend. I am still putting my house back together after nearly two days without power, and many of my neighbors are still without power. And oh, here comes the rain again today.
But it’s been a busy busy week in the world of employment law, and once again I’m going to wind up getting this to you past my noon cut off. Maybe I should just own my proclivities and call these “Monday Sometime During the Day Briefings.”
NLRB ISSUES DECISION RESTRICTING USE OF CONFIDENTIALITY AND NON-DISPARAGEMENT CLAUSES FOR NON-MANAGEMENT
So I am going to start off this discussion by reminding everyone that the National Labor Relations Board (“NLRB”) is probably one of the more political of the federal Boards or agencies. Obviously, when there is a new administration, we usually see a changing of the guard at of the federal agencies to reflect the tenor of the new President – the EEOC, the DOL, etc. But when we look at the EEOC as an example, it has remained relatively consistent with its positions over the years, notwithstanding the changing of administrations. Not so with the NLRB. When the Trump administration took control, the NLRB came in and issued new decisions that reversed many of the significant holdings made under the Obama NLRB. And now, under the Biden administration, we are seeing the swing back.
In the McLaren Macomb decision, the NLRB is keeping down the path that the Obama NLRB had started, which was examining how the use of employers’ agreements impinge on the rights of non-supervisory employees under Article 7 of the National Labor Relations Act. Article 7 addresses the rights of employees to engage in concerted activity, including discussing the terms and conditions of employment with coworkers. The McLaren Macomb case involved a severance agreement which included both a confidentiality clause and a non-disparagement clause. The NLRB said that both clauses, as written, were overly broad and had the likelihood of chilling the employees from engaging in protected conduct.
Now there are a few things to note about the decision. First, it may still be appealed, and it can be appealed all the way up to our conservative friends at the US Supreme Court. But more importantly, while this decision does have some “precedential” value, it is somewhat limited to its facts, and the facts include that these were very broadly written confidentiality and non-disparagement clauses. Also keep in mind that this decision will not apply to management employees at all, and often, our greatest concerns with confidentiality clauses lie with high level employees anyway. Additionally, as I stated earlier, prior NLRB opinions had already foreshadowed some of this thinking, and we have already been tailoring our confidentiality clauses to take the Article 7 issues into account.
Finally, putting restrictions on both non-disparagement and confidentiality clauses has been a long time coming, not just from the NLRB. We saw laws at both the state and federal levels coming out of the #MeToo movement which significantly restricted confidentiality clauses in severance and settlement agreements. California has always looked askance at restrictive confidentiality or trade secret clauses, to the extent they effect any kind of restraint of competition. This year, California has also imposed restrictions on non-disparagement clauses as well.
In the end, we will most likely still be able to include a narrowly drawn confidentiality clause, and probably non-disparagement clauses, in negotiated settlement agreements. But for now, do not make use of any broadly worded confidentiality agreements or clauses, or non-disparagement clauses, that have not been reviewed for compliance with this decision. We will be reviewing our own agreements and verbiage to determine if they meet the new test or should be revised.
SCOTUS SAYS READ OUR LIPS: “SALARY” REALLY MEANS “SALARY”
I didn’t think this was a hard one, but I got a few emails on it, so I figured I would talk about it here. The United States Supreme Court issued a ruling confirming that the “salary test” under the Fair Labor Standards Act really does require that someone be paid “on a salary basis.” In this case, there was an oil rig worker who was paid a daily rate, and his rate worked out so that he made $200,000 a year. I guess the controversy was that he made so much money, they had to take the issue up to the Supremes to have them say “yeah, folks, you didn’t do this right; you still have to pay him overtime.”
Which is why I always say – wage and hour rules are NOT common sense. No, it does not make sense that this guy who makes $200,000 a year still needs to get overtime. There should probably be a rule that once you make a certain amount of money, it doesn’t matter what you do or if you make a “salary.” But you have to meet both tests, the “salary” test and the “duties” test. And frankly, the salary test is the EASY one to meet. So don’t screw it up. Don’t pay someone a per diem, or flat rate, or anything else except a salary if you want them to be exempt under one of the white collar exemptions. And in California, that salary rate must now be at least $64,480, for ALL sizes of employers, even those under 26 employees.
Now there is one exception to the “salary means salary” for exempt employees, and that is for computer professionals. Our friends in the tech industry helped us forge the one new exemption that has been created in the last 100 years, and that is for people actually involved in development work. If they make at least $53.80 an hour, or $112,065.20 annually (in California), they can be exempt and still be hourly. So the tech world can have hourly, exempt employees – but clearly, very highly paid hourly employees. And again, they still need to be doing dev work. They do design work, marketing, project managing, anything else in tech, they don’t meet the duties test.
Okay, I have more, but I’m already well into the afternoon, again. I need to go return some of these emails you all have sent me. Let’s hope the power stays on to let me do all of that.
Stay safe and dry, everyone.
#StandWithUkraine