Hunton Employment & Labor Perspectives

In the employment law arena, plaintiffs frequently bring in federal court both federal and state law claims arising from the same nucleus of fact.  Plaintiffs can do so thanks to 28 U.S.C. § 1367, which permits federal courts to exercise supplemental jurisdiction over state claims arising from the “same case or controversy” as the federal claims.  28 U.S.C. § 1367(a).  If the federal court dismisses the federal claims, often the court will decline to retain jurisdiction over just the state law claims and, consequently, dismisses those, too.  See 28 U.S.C. § 1367(c)(3).  If that happens, how long does the plaintiff have to re-file in state court the state law claims, which have not been adjudicated on the merits?  The answer lies in 28 U.S.C. § 1367(d), which reads in relevant part:

When a party receives an adverse order on a motion for class certification, whether the court of appeals grants permission to appeal under Rule 23(f) can be a crucial turning point in the case.  If the appellate court will not hear this interlocutory appeal, the only way to obtain review of that decision is to take the case through trial, to a final judgment.  But, due to the high stakes and large costs involved, few class actions are tried and cases often settle after the class certification order is issued by the trial court.

We have reported on several Board decisions issued by a new Republican majority in the final days of 2017, but questions remain as to what issues the Board will address next to scale back on Obama-era precedent.  In recent weeks, Republican Board Members have provided some hints in a pair of footnotes in two unpublished decisions.

On December 21, 2017, the U.S. District Court for the Eastern District of Pennsylvania in Moore v. Rite Aid Headquarters Corp., 2:13-cv-01515, dismissed a class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”).  Moore is significant in the body of criminal background check precedent because it is a post-Spokeo ruling dismissing a pre-adverse action notice claim (as opposed to a 1681b(b)(2) Disclosure claim) on standing grounds after the parties participated in discovery and developed a factual record.

On January 8, 2018, the United States Supreme Court denied a petition for certiorari seeking to overturn the Fourth Circuit’s new joint employer test under the Fair Labor Standards Act.  As a result, employers will continue to be faced with differing joint employer standards in the various federal circuits.

The new year brings new laws for California employers to grapple with. Below we highlight the most significant new employment laws affecting California employers as of January 1, 2018.  Companies based in California or with operations in California are encouraged to review their policies and procedures in light of these developments.

On Friday, January 5, 2018, the U.S. Department of Labor (“DOL”) posted a brief statement and updated its Fact Sheet on Internship Programs Under the Fair Labor Standards Act to clarify that going forward, it will use the “primary beneficiary” seven factor test for distinguishing bona fide interns from employees under the FLSA.  The DOL’s approach is consistent with the test adopted by appellate courts such as the Second and Ninth Circuits.

The 2017 Tax Act (the “Act”) imposes a 21 percent excise tax on compensation in excess of $1 million and “excess” severance paid by covered tax exempt organizations to certain employees starting in 2018.  As reflected in the Act’s legislative history, the general intent behind this excise tax is to put tax exempt organizations (which are generally exempt from income taxation) in roughly the same position tax-wise as publicly held and other for-profit companies which cannot deduct excess compensation and “golden parachute” payments paid to their covered employees.   However, unlike the changes made in the Act to the excess compensation rules for publicly traded companies, there is no transition relief for existing tax exempt organization compensation arrangements.  This means that the new excise tax will apply to all compensation paid by a covered organization to a covered employee in tax years beginning after 2017.

Set out below is an overview of the scope and application of the new excise tax provision.

If 2017 is any indication, the new year will bring a fresh cascade of changes – both announced and unannounced, anticipated and unanticipated – in the business immigration landscape.  Few, if any, of these changes are expected to be good news for U.S. businesses and the foreign workers they employ.