Professional Service Agreement

Week In Review

February 08, 2016

Employers may require employee compliance with overtime reporting procedures, and are not liable when employees fail to follow procedures
A federal court has affirmed a lower court’s finding that an employer did not violate the Fair Labor Standards Act when the employee failed to record overtime hours in contravention of the employer’s timekeeping policy. Employer’s overtime policy prohibited hourly employees from working overtime without prior approval from a manager or supervisor. Further, its policy required that all employees accurately report their hours in its designated timekeeping system. The Court rejected the employee’s claim that she was entitled to be paid for overtime: “To hold that [the employee] is entitled to deliberately evade [the employer’s] policy would improperly deny [the employer’s] right to require an employee to adhere to its procedures for claiming overtime.” This case re-affirms the principle that if an employer has an appropriately worded, properly communicated timekeeping policy, and employees fail to comply with it, employers are not liable to those employees absent proof that they had knowledge of the work the employees failed to report. Mere access to computer records that might, upon investigation, reveal the employee worked overtime, is insufficient to establish that knowledge. An employer need not become a detective to determine whether overtime has been worked when it has an established procedure for reporting the time; reliance on that procedure is permissible, as it must be for businesses to operate.

Proposed rule would restrict confidentiality agreements between federal contractors and their employees
The Department of Defense has proposed a new rule that would require federal contractors to represent that they do not require employees or subcontractors to enter into agreements that would prohibit or otherwise restrict them from lawfully reporting waste, fraud, or abuse to a federal government or law enforcement representative. Under the proposed rule, contractors with covered contracts would be required to notify employees that any preexisting confidentiality or other agreements that do not conform to the rule are no longer in effect. The proposed rule is open for public comment until March 22, 2016. Federal contractors should review their confidentiality agreements to determine whether they will need to be revised should the proposed rule become law. As part of that analysis, contractors should review confidentiality agreements carefully and ensure that they have carve outs that explicitly permit employees and subcontractors to report in good faith instances of fraud, waste, and abuse to the federal government or law enforcement.

New Mexico joins other states where courts have upheld the termination of an employee for legal marijuana use
A federal court in New Mexico has upheld the termination of an employee for his marijuana use that was legal under state law. The court joined courts in Alaska, Colorado, and Oregon that have also upheld the termination of employees whose marijuana use was legal under respective state laws. The employee in this case suffered from HIV/AIDS. The employee’s treatment regimen, recommended by his physicians, included the use of medical marijuana. The employee had a valid patient card under New Mexico’s Compassionate Use Act (“CUA”). When the employee applied and interviewed for a management position, he disclosed the fact of his HIV/AIDS status and that he used medical marijuana to alleviate his symptoms. The employee was hired but then quickly terminated, after a drug test indicated the presence of marijuana. The employer promptly filed a motion to dismiss, arguing that neither the CUA nor the Human Rights Act obligated it to accommodate the employee’s medical marijuana use. There was no question that HIV/AIDS met the definition of “serious medical condition” within the Human Rights Act. There was also no question the CUA did not provide the employee with a cause of action against his employer. Rather, the employee’s theory was that the CUA essentially embodied New Mexico public policy that medical marijuana use is accepted, and that that policy combined with HIV/AIDS’ status under the Human Rights Act created a requirement that an employer accommodate an employee’s use. The employer contended that the CUA created no such accommodation requirement and that the employee was not terminated because of his serious medical condition; he was terminated because he tested positive for a substance illegal under federal law. The employee tried to argue that because New Mexico courts have held that New Mexico’s Workers’ Compensation Act allows for reimbursement of medical marijuana, they might also conclude that medical marijuana should be a required accommodation under the Human Rights Act. The court was not persuaded, however, instead giving credence to the employer’s argument that there is a big difference between requiring an insurer to reimburse for a doctor-recommended treatment and mandating an employer accommodate the same treatment. In particular, the court agreed with the employer that, as a national company with stores in 49 states, it shouldn’t have to create a specific workplace drug policy for each state with legalized medical marijuana, especially when federal law still prohibits its use.

SESCO recommends that clients review all applicable policy and practices to ensure compliance. For assistance, contact us at 423-764-4127 or by email at