Rescission of Trump-Era Joint Employer Rule Strengthens Workers’ Rights

The federal government is scrapping a rule created under the Trump administration to narrow the protections of the Fair Labor Standards Act (“FLSA”) for workers with more than one employer. Because this Trump administration rule shrank the category of entities liable for wage violations, it made recovering earned wages more difficult for employees. Its implementation would have cost employees one billion dollars per year, according to the Economic Policy Institute. A federal court struck down a large portion of the rule last year in New York v. Scalia; now, the Department of Labor (“DOL”) has decided to rescind the rule entirely. The rescission will take effect on September 28, 2021. 

When multiple entities are considered joint employers, they can be held accountable for the same employee’s wages and other rights and benefits. For example, some workers hired through staffing agencies are jointly employed by the agency and the business at which they perform their duties. In such a case, both the agency and the other business is legally responsible for ensuring that the worker is appropriately compensated. The Trump-era “Joint Employer Status Under the Fair Labor Standards Act”' redefined the criteria for the joint employer classification, to make fewer employers liable. 

The rule broke from past DOL interpretations of the FLSA, as B
ryan Schwartz Law previously wrote. It did away with the traditional “economic dependence” analysis in favor of an employer-favorable four-factor analysis of the entity’s control over the employee. These Trump administration-preferred factors were whether an entity

(i)                Hires or fires the employee;

(ii)              Supervises and controls the employee's work schedule or conditions of employment to a substantial degree;

(iii)           Determines the employee's rate and method of payment; or

(iv)            Maintains the employee's employment records.

The court in New York v. Scalia threw out most of this rule, siding with the seventeen states and the District of Columbia that challenged it. However, the court’s decision applied only to “vertical” joint employment—when an employee obtains work with an entity through a contractor, such as a staffing agency, and in similar situations. Meanwhile, the Trump administration’s rule continued to govern “horizontal” joint employer liability, which can apply when a worker splits time between two employers. 

The Biden administration’s DOL will eliminate the Trump DOL’s rule in its entirety, providing a clear set of uniform regulations. This rescission fuels advocates’ hopes that the Biden Administration will continue to reverse regressive Trump-era policies undermining workers’ rights. Bryan Schwartz Law has written about previous reversals. For instance, in May, the Biden Department of Labor prevented the Trump administration’s Independent Contractor Rule from going into effect. That rule would have made it easier for employers to misclassify workers as independent contractors, denying them the rights of employees under the FLSA. Biden also revoked a memo issued by Trump’s Justice Department attempting to limit the protections that the landmark decision Bostock v. Clayton County affords LGBTQ+ workers. 

If you have been denied wages, breaks, overtime pay, or any other workers’ rights, please contact Bryan Schwartz Law.

Trump Policy to Stop Covid-19 Relief Found Unlawful

A federal court in California recently struck down the Trump Administration policy that prevented currently and formerly incarcerated individuals from receiving their $1,200 stimulus payments under the COVID-19 lockdown relief bill. The preliminary injunction requires the U.S. Treasury, the IRS, and the United States of America to stop withholding CARES Act stimulus funds from individuals based solely on their incarcerated status. The case is Scholl v. Mnuchin, 20-cv-05309-PJH. 

Because of the decision, thousands of currently and formerly incarcerated folks will now be entitled to the $1,200 check that non-incarcerated Americans have already received. For more information about who is eligible and how to file, please visit  the IRS’s “Economic Impact Payment Information Center.”  

Congress passed the CARES Act to help stimulate the economy during the ongoing COVID-19 pandemic. The Act allocates, among other things, $1,200 to “eligible individuals,” as well as $500 for each qualifying child. An “eligible individual” is defined as “any individual” other than: (1) someone who isn’t an American citizen, (2) any individual who is claimed as a dependent on someone else’s tax return, and (3) an estate or trust. 26 U.S.C. § 6428(d). 

Though the Act did not explicitly or impliedly exclude incarcerated people, the Trump Administration refused to issue checks to anyone currently in prison or jail. In fact, after the IRS sent 84,861 payments to incarcerated individuals, the government required them to return the payments. Plaintiffs Colin Scholl and Lisa Strawn filed a class action on behalf of themselves and other currently and formerly incarcerated persons, asserting that excluding them from the COVID-19 relief was unlawful. 

The court’s injunction rejected the Trump administration’s practice of withholding CARES Act payments from individuals on the basis of their history of incarceration, at least until trial. The court also certified the class, so that all those Americans denied relief in this manner could proceed together. 

The court recognized the current economic reality faced by many incarcerated individuals across the U.S., and subsequently, how refusal of the CARES Act payment has caused and would continue to cause “irreparable harm.” Most individuals who enter prison were economically disadvantaged beforehand. Inmates often must purchase basic necessities to survive while incarcerated, as the court explained:

[P]risons do not provide all basic necessities required by incarcerated persons, including food and hygiene. With respect to food, incarcerated people supplement their food with items from the commissary, especially since … some institutions have reduced the number of calories or meals provided to inmates…. [S]ome penal institutions require inmates to pay for their own soap and personal hygiene items. 

Scholl v. Mnuchin, at 31.

The economic strain on family and loved ones of inmates has only intensified since the pandemic struck. Id at 31. As of October 15th, there are 1,560 cases per 10,000 prisoners in California, which is 623% higher than California overall. In the first three months of the pandemic, more than 10,000 federal prisoners applied for compassionate release, though only 156 were approved. Many states have suspended visitation--including legal visits--all together. The pandemic, as well as the opinion itself, raises concerns about whether America’s prisons are humane, if inmates do not have necessities for survival.

The Court found that the Trump administration’s interpretation of the CARES Act would likely be considered “arbitrary and capricious.” Scholl v. Mnuchin, at 28. “Defendants have not directed the court to any other evidence indicating that the Treasury Department or IRS gave any reason for its decision, much less an adequate one.”  Id. at 34.

Among other things, Trump’s administration claimed that the plaintiffs had shown no injury, but the court found that the denial of CARES ACT payments now, when they are most needed, was a sufficient injury. Id. at 11-12.

For more information about the case, please visit Lieff Cabraser Heimann & Bernstein’s blog post, “Federal Judge Certifies Class, Orders Trump Administration to Stop Denying Pandemic Relief Funds to Incarcerated Persons.” For information about the impact of COVID-19 on incarcerated people, please visit Equal Justice Initiative’s article, “COVID-19’s Impact on People in Prison.” 

Ninth Circuit Rejects Latest Version of Trump’s Muslim Ban on Statutory Grounds, Stating: “Immigration, Even for the President, is Not a One-Person Show”

On Monday, the U.S. Court of Appeals for the Ninth Circuit upheld the Hawaii district court’s nationwide preliminary injunction against President Trump’s revised “travel ban.” This travel ban was Trump’s second attempt at delivering on his bigoted and callous campaign promise to prevent Muslims from entering the United States: it sought to deny entry to all nationals of six majority-Muslim countries and to impose draconian restrictions on refugees, including temporarily banning the entry of all refugees and reducing the cap on refugees for fiscal year 2017 by more than fifty percent.

The revised travel ban largely followed the original Muslim ban’s template, except that it does not include Iraq in its list of majority-Muslim countries, it does not apply to current visa-holders, it does not contain explicit preferences for non-Muslim refugees, and it provides for case-by-case waivers at the discretion of consular or border control officers. Nonetheless, the intent of the revised travel ban is clear, as Trump has repeatedly referred to it as a continuation of his efforts to deny entry to Muslims.

Notably, the Ninth Circuit rejected the travel ban because it overstepped the President’s authority as delegated by Congress under the Immigration and Nationality Act (“INA”), which includes a prohibition on national origin discrimination. This approach stands in contrast to the Ninth Circuit’s prior ruling on the original Muslim ban and the Fourth Circuit’s ruling on the revised ban, which both affirmed lower-court injunctions on constitutional grounds. By avoiding the constitutional questions and deciding the case on statutory grounds, the Ninth Circuit highlighted an alternate legal theory to defeat the travel ban, based on canons of statutory interpretation rather than the more overtly political process of constitutional analysis. No doubt the unanimous three-judge panel of the Ninth Circuit had the conservative-majority Supreme Court in mind when it took this more unassuming approach.

In addition to constitutional claims based on the Establishment Clause of the First Amendment and the Due Process Clauses of the Fifth and Fourteenth Amendment, Plaintiffs the State of Hawaii and Dr. Ismail Elshikh also alleged that the revised travel ban ran afoul of the INA by: (1) discriminating on the basis of nationality; (2) ignoring and modifying the statutory criteria for denying entry based on terrorism-related concerns; and (3) exceeding the scope of statutory authority delegated to the President by Congress. 

Article I, section 8 of the Constitution grants Congress the power to “establish a uniform rule of naturalization,” but Congress has delegated some of that authority to the President under the INA. That delegation, however, requires that the President make a finding that the entry of a “class of aliens . . . would be detrimental to the interests of the United States” before denying entry to that group. The Court correctly observed that the Trump Administration had made no such finding that the 180 million nationals of the six countries were inherently dangerous based on their nationality alone. It cited to one of Trump’s tweets to support the position that Trump intended to target countries, not individuals from those countries who had, for example, engaged in terrorist activities or other dangerous behavior. It also cited to leaked Homeland Security reports which had concluded that excluding individuals based on nationality would be ineffective in preventing terrorist attacks. As to the refugee ban, the Court noted that refugees already undergo the most lengthy and involved vetting process of anyone seeking admission to the United States, and determined that the Trump Administration had provided no justification for how suspending or dramatically reducing the number of refugees admitted would promote public safety. By failing to make any such a finding of detriment – beyond xenophobic conjecture – Trump exceeded the authority Congress granted to him under the INA.

Similarly, the revised travel ban was found to violate the INA’s prohibition on national-origin discrimination, enacted in 1965 to eliminate the prior immigration system based on racial quotas – i.e., favoring immigrants from northern Europe and heavily restricting immigration from Asia and Africa. As discussed above, the ban’s emphasis on nationality as the sole criterion for exclusion, as opposed to culpable conduct, could not satisfy the INA’s nondiscrimination mandate, “because it would enable the President to restore discrimination on the basis of nationality that Congress sought to eliminate.” The Ninth Circuit also addressed the fact that the INA contains detailed provisions governing terrorism-related admissibility, which require reasonable grounds to believe that an individual alien is likely to engage in terrorist activity, which would be rendered superfluous by the revised travel ban.

Finally, the Court took a broad view and addressed the scope of the President’s authority under the tripartite framework established by Justice Jackson’s concurrence in the Steel Seizure Case. The Ninth Circuit concluded that “the President took measures that were incompatible with the expressed will of Congress, placing his power ‘at its lowest ebb.’”

In short, once more, Trump and his inexperienced team of white nationalists and corporate cronies have failed to achieve one of their goals because they could not be bothered to do their homework. And the Ninth Circuit – like the Fourth Circuit and various district courts – once again affirmed the role of the judicial branch to ensure that we remain a nation of laws which do not wither in the face of an impulsive, unprincipled, and uninformed Executive.

Given the nationwide injunction and the importance of these issues, the Supreme Court is likely to confront the revised travel ban – possibly in the next three weeks before the end of the current term. When it does, the High Court may find that the Ninth Circuit’s example of constitutional avoidance and rigorous interpretation of the INA is the most prudent way to dispose of the Muslim Ban once and for all.

Seventh Circuit Holds Federal Law Prohibits Employers From Firing People Because they are Gay

Before the full panel, the U.S. Court of Appeals for the Seventh Circuit issued a groundbreaking decision, holding 8-3 that workplace discrimination based on sexual orientation violates federal civil rights law.

The case involved a lesbian, Kimberley Hively, who sued Ivy Tech Community College when it denied her full-time employment and promotions because she was a lesbian and married to a woman. Hively began teaching at Ivy Tech in 2000 as a part-time adjunct professor. Between 2009 and 2014, Hively applied for at least six full-time positions, but each of these efforts were unsuccessful; even worse, in July 2014 her part-time contract with Ivy Tech was not renewed, resulting in her termination.

After she was terminated, Hively filed an administrative complaint with the Equal Employment Opportunity Commission, alleging that Ivy Tech discriminated against her because of her sexual orientation and violated her rights under Title VII of the Civil Rights Act of 1964. After the trial court dismissed the case, the Seventh Circuit initially affirmed the the trial court's decision based on decades of case law that held sexual orientation was not a protected category under Title VII. Hively v. Ivy Tech Cmty. Coll., 830 F.3d 698 (7th Cir. 2016). 

Before the Seventh Circuit's full panel, Chief Judge Diane Wood, writing for the majority, brought new life into analyzing claims of sexual orientation discrimination under Title VII. The court framed the main question of the case as a question of statutory interpretation: what does it mean to discriminate on the basis of sex, and in particular, are actions taken on the basis of sexual orientation  a subset of actions taken on the basis of sex?

Guided by the U.S. Supreme Court's approach in a related case addressing whether Title VII covered sexual harassment inflicted by a man on a male victim (Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75 (1998)), the Seventh Circuit acknowledged that discrimination on the basis of sexual orientation may not have been the principal evil Congress was concerned with when it passed Title VII. The Seventh Circuit nonetheless found that "statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which [courts] are governed." Id. at 79-80. The court also acknowledged that Title VII has been understood to cover far more than the simple decision of an employer not to hire a woman simply because of her gender.

Hively framed her argument for why she should be covered by Title VII under two approaches: (1) a simple comparison isolating Hively's sex and the significance it played in her employer's decision; and (2) relying on Loving v. Virginia, 388 U.S. 1 (1967), which found that the Fourteenth Amendment of the constitution protects interracial marriages, holding that Title VII protects Hively's right to associate intimately with a person of the same sex. 

Under the first approach, the court found that if Hively had been a man married to a woman, and everything else would have stayed the same, Ivy Tech would not have refused to promote her and would not have fired her. The court stated that "any discomfort, disapproval, or job decision based on the fact that the complainant - man or woman - dresses differently, speaks differently, or dates and marries a same-sex partner, is a reaction purely and simply based on sex," falling within Title VII's prohibition against sex discrimination. 

Addressing the second theory of discrimination presented by Hively, the court, relying on decades of cases holding that Title VII prohibits discrimination based on the race with whom a person associates, found that Ivy Tech's discrimination against Hively based on the sex of the person she associated with is also prohibited under the act. 

The court concluded with a clear holding: a person alleging that he or she experienced employment discrimination on the basis of his or her sexual orientation has put forth a case of sex discrimination for Title VII purposes. 

This is a landmark decision for the LGBTQ community, extending federal employment protections in Wisconsin, Illinois, and Indiana, which previously had state laws that only prohibited employment discrimination on the basis of sexual orientation with regards to state employment. This decision will now cover all private and public employers subject to Title VII. And, this will hopefully lead to other U.S. Circuit Courts revisiting this issue and expanding employment protections across the country for the LGBTQ community.

In California, the state's Fair Employment and Housing Act and Unruh Civil Rights Act have explicitly protected sexual orientation and gender identity from discrimination in employment, housing, and public accommodations for many years. Last year, California's Department of Fair Employment and Housing became the first state civil rights agency to issue guidance to employers regarding transgender employees.

If you have experienced discrimination based upon your sexual orientation, and need help, contact Bryan Schwartz Law.

A Victory for Workers in Trump’s Puzder Defeat

America’s workers won when Donald Trump's first choice for Secretary of Labor Andrew Puzder recently withdrew his nomination, after it appeared unlikely that Puzder could get even 50 votes in the Republican-controlled Senate. Puzder, the CEO of Carl's, Jr. and Hardee's fast food restaurants, had the kind of baggage that would have sunk any nominee in a previous administration: his ex-wife had stated on Oprah that Puzder abused her,[1] Puzder employed an undocumented housekeeper and failed to pay taxes until after his nomination, and Puzder had long defended his restaurant chains’ hyper-sexualized ads featuring swimsuit models drooling over burgers.

More to the point, though, Carl's, Jr. and Hardee's restaurants have a long record of wage violations and workplace sexual harassment, and Puzder is a committed opponent of a federal minimum wage increase from the current, unlivable rate of $7.25 per hour. Puzder's support for moderate immigration reform -- at odds with the Trump Administration -- seemed informed more by a desire to increase the supply of cheaper, exploitable labor rather than any humanitarian aims. In short, putting Puzder in charge of the Department of Labor would have been an affront to America’s working families, more like a charter for a new Department against Labor.

Puzder’s withdrawal is also an encouraging development because it shows that at least some of the old rules still apply to Trump, and, further, shows some cracks forming in Senate Republicans’ support for the Administration and its nominees, regardless of their qualifications (or lack thereof). Reportedly, Senators Collins (Maine) and Murkowski (Alaska) expressed serious reservations after viewing the tape of Puzder’s ex-wife on Oprah. Several other Republican Senators were apparently more concerned about the undocumented housekeeper than Puzder’s alleged spousal abuse. Regardless, the signals from certain Senate Republicans (and a united Democratic party) as to Puzder’s disqualifying biography evoke a return to previous norms concerning suitability for high public office.

Trump announced his replacement nominee Alexander Acosta the very next day at the start of a 77-minute press conference that subsequently devolved into the President reacting defensively and returning to his standard line, when confronted with his failings, of berating the reporters who dared to question him.

Acosta is the current dean of Florida International University Law School, served in the Civil Rights Division at the Department of Justice during the George W. Bush Administration, and served on the National Labor Relations Board. If confirmed, he would be the only Hispanic-American in Trump’s cabinet.

Acosta has considerable government experience, having been confirmed by the U.S. Senate three times, and is clearly more qualified to run his assigned agency as compared to many of Trump’s “tremendous” nominees (see Betsy DeVos, Ben Carson, Rick Perry). Acosta has testified in the Senate against the anti-Muslim discrimination, which seems to be a unifying theme among many of Trump’s supporters. 

Acosta’s tenure in the DOJ’s Civil Rights Division during the Bush Administration is cause for concern, given the rampant politicization of personnel decisions during his tenure. Acosta also has no record protecting workers’ rights, though Trump had pretended during the campaign that as President he would be a working-class champion. Still, Acosta is the kind of nominee one could expect to see in any Republican administration, rather than being just another of Trump's rich, white friends who is patently unqualified for high government service.

The collapse of Puzder’s nomination, shortly following the resignation of National Security Advisor Michael Flynn, is another major setback for the chaotic Trump Administration, and another victory for our resistance. The replacement nomination of Acosta, a fairly conventional Republican pick who will likely be easily confirmed, shows how much political capital Trump has already lost due to the proliferation of scandal, incompetence, and mismanagement during Trump’s first month in office.

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[1] Puzder denies the abuse allegations, and his ex-wife has since recanted them.