Wyatt Employment Law Report


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President Obama’s Equal Pay Executive Orders to Impact Federal Contractors

By R. Joseph Stennis

In support of National Equal Pay Day, President Obama signed an executive order on April 8, 2014, that prohibits federal contractors from retaliating against workers who discuss their compensation with each other and/or in the workplace. According to White House officials, this executive order will not compel workers to discuss pay and/or require employers to publish employee compensation. Instead, it will serve as a “critical tool” to encourage pay transparency, so that workers have an additional mechanism in place for discovering violations of equal pay laws and are able to seek appropriate remedies. Whether retaliation against employees who discuss their pay on social media outlets such as Twitter or Facebook would also fall under the President’s order is uncertain, but more than likely would be protected under the contemplated executive order.

Additionally, President Obama will direct the Labor Department this week to create and issue regulations that will require federal contractors to submit to the Deparment data regarding their employees’ compensation. This data must include details regarding employee gender and race. The Labor Department will utilize the data to conduct more targeted enforcement against federal contractors with the expectation that companies will comply voluntarily with equal-pay laws – the Equal Pay Act of 1963 and the Lilly Ledbetter Fair Pay Act. It remains unclear at this point what such “targeted enforcement” will entail. However, it may result in more enforcement activity by the Department if it concludes a company is not being compliant.


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Supreme Court Holds Certain Severance Payments Are Taxable Wages for FICA Purposes

By Edwin S. Hopson

On March 25, 2014, the U.S. Supreme Court ruled in United States v. Quality Stores, Inc., 572 U.S. ___ (2014), No. 12-1408, that severance payments made to employees involuntarily terminated in connection with Quality Stores’ Chapter 11 bankruptcy were taxable wages for purposes of the Federal Insurance Contributions Act (FICA). A bankruptcy court, a district court and a court of appeals had held to the contrary. Thus, in an opinion by Justice Kennedy, joined in by all other Justices but Kagan who recused herself, the Court reversed the court of appeals, finding that FICA’s definition of “wages” was stated broadly as “all remuneration for employment.” The Court noted that the severance payments at issue “were varied based on job seniority and time served, and were not linked to” state unemployment benefits. They were a part of the employer-employee relationship for which compensation was paid. The Court also stated that the lengthy list of exemptions from the definition of wages included severance payments “because of … retirement for disability.” There was no explicit exemption for the severance payments at issue here.

FICA’s statutory history also supported the Court’s holding in this case.

Finally, the Court stated that the major principle of Rowan Cos. v. United States, 452 U. S. 247 (1981), that simplicity of administration and consistency of statutory interpretation instruct that the meaning of “wages” should be in general the same for income-tax withholding and for FICA calculations, also supported its decision.

For more information in the Louisville, KY; Lexington, KY or New Albany, IN areas, contact Ed Hopson.

For more information in the Memphis, TN; Nashville, TN or Jackson, MS areas, contact Odell Horton.


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U.S. Supreme Court Extends SOX Whistleblower Protection to Employees of Private Contractors Who do Business with Public Companies

By R. Joseph Stennis

In Lawson, et. al. v. FMR LLC, No. 12-3 (decided March 4, 2014), a divided U.S. Supreme Court confirmed that the whistleblower protections contained in the Sarbanes-Oxley Act of 2002 (“SOX”) extend to employees who work for private contractors that do business with public companies. At issue in the case was a bit of text in SOX which provides that, “[n]o public company. . . or any . . . contractor . . . of such company may [retaliate] against an employee . . . because of [SOX- protected activity].”

The U.S. Court of Appeals for the First Circuit had held this language applied exclusively  to employees of  public companies and not to employees of private contractors that do business with public companies. The First Circuit’s ruling was  in sharp contrast to  decisions issued by the Administrative Review Board of the U.S. Department of Labor (“ARB”).  For example, in Spinner v. David Landau & Assoc. LLC, Nos. 10-111 and 10-115 (decided May 31, 2012), the ARB held that a private contractor’s employee who was a whistleblower as to fraudulent activity by his company was covered by SOX and therefore protected by its anti-retaliation provisions.

In Lawson, the whistleblower plaintiffs were employed by private companies that performed as advisers to public mutual fund institutions.  Petitioners, Jackie Lawson and Jonathan Zang, urged the High Court to overrule the First Circuit and extend whistleblower protections to employees of private contractors of publicly held companies. The respondents argued that the petitioners’ interpretation would lead to an unlimited application of the statute.  Ultimately, the Supreme Court in a 6-3 ruling—penned by Justice Ginsburg—concluded that the plain meaning of SOX’s text, SOX’s legislative history, and its overall statutory purpose favored a wider interpretation and reading of the provisions than favored and advocated by the respondent companies.

Thus, Lawson establishes that an employee of a private contractor that does business for a public company and is retaliated against for engaging in SOX protected conduct would be entitled to pursue an anti-retaliation claim under SOX against that private employer.


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White House Seeking Expansion of Overtime Pay Under the FLSA

By Mitzi D. Wyrick

President Obama has directed the U.S. Department of Labor (“DOL”) to revise regulations under the Fair Labor Standards Act to make more workers eligible for overtime pay.  Specifically, the DOL will be reviewing the executive, professional, and administrative exemptions, sometimes referred to as the “white-collar” exemptions from the requirement to pay overtime for hours worked over 40 in a workweek.  The salary basis threshold, which is currently set at $455 per week, will be one area of focus.  In addition, the White House has directed the DOL to review other exemptions changes to which would result in more overtime pay based on the type of work performed.  For example, under the revised regulations thought to being considered, store managers who also perform non-management duties may be entitled to overtime pay unless they can demonstrate that the majority of their time is spent performing management work.  Read more about it at:  http://t.co/KgEmpdqfZT


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President to Announce Minimum Wage Hike for Certain Federal Contractor Employees

By Edwin S. Hopson

Several news outlets, including the New York Times, are reporting that President Obama plans to announce tonight
during his State of the Union address that he plans to sign an executive order requiring that certain workers, including janitors and construction workers, who are employed by federal contractors be paid at least $10.10 an hour as a minimum wage.  This effort, which avoids the need for Congressional approval, may be the only way the President can effect such a change.


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Labor Department Releases Data on Union Membership Rates in 2013

By Edwin S. Hopson

On January 24, 2014, the U.S. Department of Labor’s Bureau of Labor Statistics (BLS) released 2013 data on union membership in both the private and public sectors.

The statistics are virtually unchanged from 2012.  In 2013, BLS reported that the union membership rate overall was 11.3%, just as it was in 2012.  The number of workers belonging to unions was 14.5 million.  BLS noted that in 1983, the first year that comparable data is available, there were 17.7 million workers belonging to unions and the membership rate was 20.1%. Continue reading


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Employers Beware: The Lateral Transfer Of An Employee Can Be An Adverse Employment Action

by Michael D. Hornback

On January 14, 2014, the U.S. Court of Appeals for the Sixth Circuit reversed a grant of summary judgment in favor of the employer, finding that a jury should determine whether the lateral transfer of an employee constituted an adverse employment action. Continue reading

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