A Guide to Employment Law Updates
From unexpected deaths of beloved celebrities to a topsy-turvy election unlike we’ve ever seen in our country’s history, 2016 has been an incredible roller coaster. In the world of Human Resources, it has been a particularly ferocious in delivering new or newly effective rules and regulations with which we must comply. Here’s a just a taste of some of the law changes we’ve seen:
Equal pay, transgender rights, immigration and accessibility have all been key topics for HR practitioners this year.
The Equal Employment Opportunity Commission (EEOC) has moved forward with expanding EEO-1 reporting requirements by obligating employers to include pay data in the reports submitted. Beginning in 2018, employers will have to submit pay data based on the previous year’s W-2 earnings with their EEO-1 reports. With some exemptions, employers with 100 or more employees and federal contractors/subcontractors with 50 or more employees and $50,000+ in federal contracts must file EEO-1 reports annually. There will be no EEO-1 report required in 2017 and the due date for submission of the newly revised EEO-1 report will be March 31 beginning in 2018 and annually thereafter.
The EEOC has also weighed in on the issue of transgender employees by issuing guidelines regarding bathroom accommodations and going so far as to say the agency believes Title VII includes transgender employees. At this time, the courts don’t agree with that interpretation of Title VII; however that may change in the future.
The Americans with Disabilities Act is also in the forefront of employment law. Most recently, Title III of the ADA, which prohibits discrimination in public accommodations on the basis of disability, has been highlighted with respect to the accessibility of websites. For particular concern to HR is the accessibility of online job boards and applications. The Department of Justice (DOJ), which enforces Title III of ADA, is taking the position that companies must comply with Web Content Accessibility Guidelines promulgated by the World Wide Web Consortium. HR professionals are encouraged to discuss this topic with their Information Technology Departments to see what changes can be made to make their websites accessible.
Immigration in general has been hotly debated during this presidential election year. As of yet, major policy changes haven’t been implemented. However, a new Form I-9 was issued November 14 and is more on-line user friendly. Employers may continue to use the current Form I-9 (dated with the revision date of 3/8/2013) until January 21, 2017.
COMPENSATION & BENEFITS
Topping most HR and payroll department’s agendas this year has been the new salary threshold for exempt employees which were to take effect on December 1. The final regulations, which were issued in May, increased the guaranteed minimum salary that exempt employees must be paid from $455 to $913 per week ($47,476 per year). A federal judge out of Texas issued a last minute injunction which postpones the implementation of this rule. While employers were granted a temporary reprieve, we’re unsure at this time what the future holds for this rule. Will the Department of Labor simply reduce the amount of the guaranteed weekly salary? Will the DOL challenge the judge’s ruling and enter 2017 bogged down in litigation? The future is uncertain, and employers should continue to follow the news on this topic closely.
One of the most significant benefits changes this year has been the Affordable Care Act’s (ACA) required reporting of health insurance coverage for employees. The ACA required employers to file Forms 1094-B & C with the Internal Revenue Service (IRS) showing their compliance with the shared responsibility/minimum essential coverage requirements. Additionally, employers were required to provide employees with individualized statements of coverage on Forms 1095-B&C. While employers had some additional time to gather the information necessary to complete these forms in 2016, in 2017, the due date to distribute Forms 1095-B&C to employees is January 31 and to distribute Forms 109 -B&C and 1094-B& C to the IRS by February 28 (or March 31 if filing electronically).
The IRS also issued final rules defining marital status as follows:
“(a) In general. For federal tax purposes, the terms spouse, husband, and wife mean an individual lawfully married to another individual. The term husband and wife means two individuals lawfully married to each other.
(b) Persons who are lawfully married for federal tax purposes—(1) In general. Except as provided in paragraph (b)(2) of this section regarding marriages entered into under the laws of a foreign jurisdiction, a marriage of two individuals is recognized for federal tax purposes if the marriage is recognized by the state, possession, or territory of the United States in which the marriage is entered into, regardless of domicile. (2) Foreign marriages. Two individuals who enter into a relationship denominated as marriage under the laws of a foreign jurisdiction are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state, possession, or territory of the United States, regardless of domicile.
(c) Persons who are not lawfully married for federal tax purposes. The terms spouse, husband, and wife do not include individuals who have entered into a registered domestic partnership, civil union, or other similar formal relationship not denominated as a marriage under the law of the state, possession, or territory of the United States where such relationship was entered into, regardless of domicile. The term husband and wife does not include couples who have entered into such a formal relationship, and the term marriage does not include such formal relationships. “
So what is the IRS really saying? They’re saying that health insurance coverage for domestic partners is considered taxable income to the employee unless the domestic partner qualifies as a dependent of the employee.
In April, the Department of Labor issued final rules expanding the definition of “fiduciary” under ERISA as well as duties of investment advisors who qualify as fiduciaries under the law. According to the final rule, any individual or entity that is paid for individualized retirement-related investment advice is considered an ERISA fiduciary if they make specific recommendations to a
- plan fiduciary;
- plan sponsor;
- plan participant;
- plan beneficiary; or
- IRA or IRA owner.
It is recommended that plan sponsors review the relationships they have with financial advisors and structure retirement plans to comply with the new rule.
The Department of Justice (DOJ) & Federal Trade Commission (FTC) have published Antitrust Guidance for HR Professionals in October that relates to no-poaching and wage-fixing agreements. Under federal antitrust laws, competitors may not agree to limit or fix the terms of hiring for potential employees. Specifically, the guidance issued states it is “unlawful for competitors to expressly or implicitly agree not to compete with one another” when they are competing for the same employees.” The DOJ further states that a violation of antitrust laws may exist when HR professionals agree to provide salaries or compensation to employees at a specific level or within a specific range or when they agree to refuse to solicit or hire another company’s employees (no-poaching agreements).
SAFETY & HEALTH
The Occupational Safety & Health Administration (OSHA) has been quite busy this year.
In May, OSHA issued a final rule on the electronic submission of injury/illnesses. This rule requires all employers with 250 or more employees and employers with 20-249 employees in certain industries to electronically submit their annual illness and injury logs to OSHA beginning in 2017. These electronic records will accessible publicly by employees, prospective employees, unions, etc. Additionally, this rule prohibits employers from implementing blanket policies that require employees to submit to post incident drug/alcohol tests. OSHA feels these types of policies deter employees from reporting injuries/illnesses and seeking treatment. NOTE: Exceptions to the post-incident testing rule are made if the policy is in place to comply with another law (such as Department of Transportation drug-testing rules).
The final rule on occupational exposure to silica has also been issued by OSHA. The rule focuses on reducing the permissible exposure limit to crystalline silica, requires employers to use engineering controls and work practices to limit exposure, and requires employers to offer medical exams to highly exposed workers.
2016 has been the year of the Zika virus and OSHA has issued a comprehensive fact sheet detailing suggested precautions to be taken to limit exposure the disease.
On January 1, 2016, the Federal Motor Carrier Safety Administration’s (FMCSA) rules regarding random drug testing became effective. These reduced the minimum random drug testing rate to 25%, down from 50%.
A number of agencies raised their penalties for non-compliance in 2016.
- OSHA penalties for serious violations increased from $7,000 to $12,471 and the maximum penalty for willful or repeated violations increased from $70,000 to $124,709.
- The EEOC’s penalty for violations of notice postings increased to $525.
- The Department of Justice increased immigration penalties for unlawful employment of aliens, I-9 paperwork violations, unfair immigration-related employment practices, IRCA document abuse and document fraud.
JOINT EMPLOYER/INDEPENDENT CONTRACTOR
The issues of joint employers and independent contractors have been under scrutiny for a number of years. However, various agencies and the courts are taking an even closer look at employers in 2016.
This year, the DOL issued an Administrator’s Interpretation (AI) which greatly expanded the definition of joint employer under the Fair Labor Standards Act and the Migrant & Seasonal Agricultural Worker Protection Act. Although this is not law, the administrator’s interpretation provides guidance for the Wage & Hour Division in its enforcement efforts. The AI describes two types of joint employment – “horizontal” and “vertical”. Horizontal joint employment basically looks at related entities that have common control, ownership, intermingled operations, etc., thus looking at the relationship of the employers to each other. Vertical joint employment looks at the relationship between the employees and employer. Generally, you’ll see vertical joint employment when there is a staffing agency, subcontractor, labor provider or other intermediary employer involved.
Also, the DOL entered into a partnership with Subway to help insure the franchisees of franchisor comply with wage-and-hour laws. This agreement is expected to have the effect of extending to other areas of employment law such as the National Labor Relations Act.
Uber has been the subject of a major class-action lawsuit this year alleging that close to 400,000 have been improperly classified as independent contractors. The judge in the case has rejected an $84 million settlement saying it was not fair, adequate or reasonable. It’s unsure when the case will be resolved.
2016 has been a busy year for the National Labor Relations Board (NLRB or The Board).
In July, the NLRB overruled existing precedent and held that a union may represent a bargaining unit that includes both regular employees and temporary employees supplied by another employer even if the employers don’t consent. This ruling will make it much easier for unions to organize temporary employees.
The Board also issued significant decisions that have legal and practical implications for employers acquiring unionized operations. Those employers will now have to take extra precautions if they wish to set the initial terms and conditions of employment for those newly acquired/hired employees.
Non-compete agreements and employment-at-will statements have also come under the scrutiny of the NLRB. In Minteq International, Inc., 364 NLRB No. 63, the Board found that two provisions commonly found in non-compete agreements interfered with employees’ rights in violation of Section 8(a)(1) of the National Labor Relations Act. The first provision regarding “interference with relationships” made it clear that the NLRB frowns upon restricting an employee’s ability to communicate with the employer’s customers. The Board stated:
“The ‘Interference with Relationships’ rule clearly places restrictions on employees’ ability to communicate with the Respondent’s customers and restricts employee efforts to “improve terms and conditions of employment or otherwise improve their lot as employees through channels outside the immediate employee-employer relationship.” … These efforts could include asking customers to boycott the Respondent’s products or services, as the General Counsel argues, but they could also encompass other forms of appeals to the Respondent’s customers. A prohibition of this type of conduct is an unlawful restriction of employees’ Section 7 rights.”
The Board further went on to rule on the Employment-At-Will provisions within the non-compete agreement stating:
“We find that employees thus would reasonably doubt whether the CBA’s ‘just cause’ provision remains in effect. Thus, the ‘At-Will’ rule has a reasonable tendency to discourage employees from engaging in conduct that would be protected by the CBA’s “just cause” provision and by Section 7 of the Act, including the exercise of rights under the collective-bargaining agreement and other protected, concerted activity (such as, for example, communicating among themselves or with the Respondent’s customers concerning their terms and conditions of employment), for fear that they could be discharged without the contractual “just cause” protection. Similarly, the conflict between the ‘At-Will’ provision and the “just cause” provision would reasonably discourage employees from engaging in the Section 7 activity of utilizing the contractual grievance and arbitration procedures to challenge disciplinary actions they believe were not for ‘just cause.’”
In April, the Board also weighed in on handbook language and work rules that aim to create “workplace harmony and privacy”. The employers, T-Mobile USA and MetroPCS Communications ran afoul of the NLRA when they issued work rules that the Board determined were so broadly drafted that they “chilled” workers’ Section 7 rights. The Board determined that the rules were so broadly drafted that employers violated the NLRA in four ways:
- Maintaining an overbroad prohibition on providing non-approved individuals access to information or information resources without written approval;
- Maintaining a “Commitment to Integrity” provision prohibiting arguing with co-workers, subordinates or supervisors;
- Requiring employees to maintain a “positive work environment by communicating in a manner that is conducive to effective working relationships”; and
- Prohibiting workers from recording people or confidential information.
This ruling follows a December 2015 board determination in which Whole Foods Market was told it could no longer forbid its employees from taking photographs or recording conversations at work. Although some states, such as Florida, require the consent of both parties to record conversations, that won’t necessarily prevent the NLRB from ruling against a company when an unfair labor practice charge is filed because they restricted an employee’s ability to record a conversation.
The NLRB has also made rulings that suggest that it’s OK for workers to use profane language when discussing working conditions. Additionally, a decision against Dish Network, the Board ruled that a blanket prohibition of all work area solicitations, including those work area solicitations that occur during non-work time, is unlawful…as is a solicitation policy requiring management’s approval before embarking on such solicitations.
A permanent injunction was issued in November against the NLRB’s final “persuader rule”. The rule would have required employers, third-party lawyers and other labor consultants to disclose to the DOL any arrangement to persuade employees directly or indirectly concerning their right to organize or bargain collectively.
In addition to issuing a new directive requiring prior approval before using Functional Affirmative Action Plans (FAAP), the Office of Federal Contract Compliance Programs (OFCCP) has been busy this year issuing final rules implementing a number of President Obama’s executive orders.
The final rule, “Discrimination on the Basis of Sex”, was issued in June. This rule clarifies “sex discrimination” to include discrimination on the basis of sex, pregnancy, childbirth (or related medical conditions, gender identity, transgender status and sex stereotyping. The rule prohibits discrimination and harassment based on sex with respect to pay, fringe benefits (including medical, life insurance, retirement benefits, etc.), job training, etc.
Paid Sick Leave
Paid sick leave rules require federal contractors to provide up to 7 days (56 hours) of paid sick leave each year. Although employers are not required to pay out accrued sick leave when an employee terminates employment, workers must be allowed to carry over accrued sick leave from year to year. Additionally, the rule requires that contractors inform employees of the amount of accrued paid sick leave at least once each pay period or each month, whichever is shorter.
Fair Pay & Safe Workplace
The “Fair Pay & Safe Workplace” rules are quite controversial. It requires contractors to report workplace law violations received within the first year preceding the start of a contract bid. These rules also preserve a prohibition on pre-dispute arbitration agreements to resolve Title VII of the Civil Rights Act and related tort claims for contracts of $1 million or more. The rule also requires contractors to inform their employees in each paycheck of the number of hours worked, overtime calculations, rates of pay, gross pay, additions or deductions from pay, and to inform employees in writing whether they have been classified as independent contractors. Just before these new rules were to take effect, the courts issued an injunction preventing the requirement to report on compliance with workplace laws. However, the pay transparency part of the rules requiring disclosure of hours worked, rates of pay, etc. remain in effect.
The final rule prohibiting federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss or disclose their own compensation or the compensation of a co-worker or applicant went into effect in January. If you haven’t already done so, it’s recommended you review your handbook to insure policies prohibiting the discussion of pay and benefits have been removed.
WILL 2016 PRESIDENT-ELECT TRUMP CHANGE THESE LAWS?
Much speculation has been made about how President-Elect Donald Trump will change the various regulations that have gone into effect in 2016. At this point, it’s too early to say whether or not he will change any of the regulations that have gone into effect. Any changes that may be made will take time by either going through the legislative process or through agency rule-making.
For example, it’s unlikely that the FLSA regulations requiring employers to pay $913 a week to their exempt employees will change in the near future. President Trump would either have to ask Congress to introduce and pass a bill that would change the Fair Labor Standards Act or he would have to ask his Secretary of Labor to issue new rules changing that weekly amount. Either way, it’s not simply an issue of writing new rules. Proposed rules have to be issued first to allow for public comment. Once the public comment period is closed, the agency has to review the comments and write and issue final rules, which can take months.
Also, it appears that Mr. Trump’s focus during the Presidential debates was on tax reform and immigration. It’s likely that legislation will be introduced requiring ALL employers (not just federal contractors) to use E-verify system to confirm work eligibility of all new hires. Similarly, it would be expected that Mr. Trump may ask for increased enforcement of current immigration laws to discover individuals who are employed illegally.
It’s also unlikely that Mr. Trump will eliminate all of the executive orders President Obama issued during his administration. For example, the rule requiring contractors to provide paid sick leave to its employees is unlikely to be overturned because Mr. Trump was vocal about his belief in paid sick leave for workers.
As 2016 comes to a close and 2017 begins to appear on the horizon, it’s imperative that employers maintain their diligence to stay abreast of the ever-changing world of employment law.
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