On July 26, the Dept. of Labor (DOL) published a Request for Information (RFI)(which can be found here), looking for input from the public on next steps after the Obama Administration’s effort to increase the minimum salary threshold for exempt employees was struck down in the courts. Although that case is still on appeal, the Trump Administration has not backed the Obama regulations and has only asked the courts to affirm that the DOL has the authority to increase the minimum salary threshold.
This new RFI opens up a number of new possible approaches to the appropriate salary level for an exempt employee, and signals that DOL is still committed to making changes. The current amount of $455 per week has not been updated since 2004. The Obama administration sought to increase this minimum amount to $913 per week, but the new Secretary of Labor, Alex Acosta, has said publicly that he thinks that amount was too high. This new RFI offers some insight into how DOL is now looking at this issue by asking for comments on the following approaches:
1. Different minimum salary thresholds depending on the size of the employer or the region of the country.
2. Different minimum salary thresholds based on the type of exemption – i.e. executive v. administrative.
3. Different thresholds for highly compensated employee exemption, based on geography, company size, etc.
4. Different methods for updating the above numbers based on either inflation or some other measure, and the appropriate time period to make these adjustments.
Responses to this RFI are due on September 25, 2017. It is widely expected that the agency will take some action to update the minimum salary threshold in late 2017 or early 2018.
With the first tropical storm of the season bearing down on the Gulf Coast, it is a good time to dust off your HR Department’s Hurricane Plan and make sure it is up to date. If you don’t have one, it is an even better time to put one together. Attached is Cozen O’Connor’s HR Guide for Hurricane and Disaster Preparation. This is a handy checklist for the most common Human Resources issues that should be addressed in such a plan. These issues include:
1. Compliance with Chapter 22 of the Texas Labor Code: This law protects from discrimination employees who are absent because if an evacuation order. This law has certain exceptions, including emergency services personnel or those required to provide services for the general public during emergency situations. That said, companies who require such employees to work during a storm must provide emergency shelter.
2. Payment for Employees Who Are Absent Due to Weather: The FLSA treats exempt employees differently from non-exempt. Non-exempt employees must only be paid for actual hours worked. Exempt employees, however, must be paid if the work site is closed or unable to open because of weather for less than a full workweek.
3. On-Call/Waiting Time: Weather events often create unique circumstances that don’t fall neatly into existing policies. Employees may be stuck at work waiting for the weather to clear before they go home – is this compensable time? What if employees are on-call to return to the office after the storm has passed. Is this compensable “on-call time?”
4. Protected Leave Under FMLA: Disasters often create family issues, especially where there are elderly or sick family members who must be moved or cared for during such an event. These situations could trigger protection for absences under the FMLA.
5. Payday: No one wants to miss a paycheck. Make sure your company has a contingency plan in place to communicate with employees and maintain personnel functions like payroll and benefits processing even during a disaster.
Comp time has long been available to public sector employees, but never for private companies. That might be changing soon.
On May 2, the House passed the Working Families Flexibility Act. This bill would amend the Fair Labor Standards Act to allow comp time as an option in lieu of overtime. The full text can be found here. Some key points of the bill include:
– Comp time could only be used if the employee agrees, in writing, before the hours worked.
– Employees could not accrue more than 160 hours of compensatory time.
– Companies would be required to pay out unused comp time at the end of the year (i.e. no carrying over), and upon separation.
– Employees would be able to use comp time unless it would “unduly disrupt” the employer’s operations.
– Employees could ask for payment of all accrued comp time and would be able to opt out of comp time if requested in writing.
Democrats in the Senate have said they would filibuster the bill, so the fate of this bill is uncertain. Obviously, there are a number of important legislative measures right now, including tax and health care reform, so this bill will not be at the top of the list. Stay tuned.
This week, the US Court of Appeals for the Seventh Circuit became the first Federal Court of Appeals to hold that discrimination based on sexual orientation is actionable under Title VII of the Civil Rights Act. A news article about the decision can be found here. A copy of the legal opinion can be found here. This decision is remarkable in that it is joined by both Republican and Democrat judges, including Posner, one of the most respected jurists in the Country.
Although many disagree with the court’s analysis of Title VII to include “sexual orientation” as part of the statute’s prohibition against “sex discrimination,” the reality is that this decision increasingly reflects the main stream view that such discrimination is either already covered under Title VII or should be prohibited as a matter of public policy. When you couple this important decision with the EEOC’s enforcement policy, the myriad of state and local laws already prohibiting discrimination on the basis of sexual orientation, it is hard not to see the “writing on the legal wall.” In fact, for large employers operating in multiple jurisdictions, it is more likely than not that a majority of the workforce is already protected from discrimination based on sexual orientation.
One takeaway from this decision is that it is a good time to review your employee handbook. Does your company policy prohibit discrimination based on sexual orientation and trans-gender status? If not, you may want to update that policy. Although technically not required in every state and jurisdiction, a contrary position is becoming increasingly risky, and could be a barrier to recruiting. If your supervisor training does not already include a discussion about how to address potential discrimination based on employee sexual orientation, it would again be a good time to add such training.
President Trump has only been in office a little over a month, but one thing is clear. He intends to do what he said he would do on the campaign trail, especially in regard to immigration. What does that mean for employers? First, President Trump has said multiple times that he intends to cut down on the “job magnet” and aggressively enforce immigration laws. This priority was right up there with building a wall, deporting illegal immigrants with criminal records, and banning refugees from terrorist countries. The other priorities have garnered all of the news headlines but make no mistake, ICE and other federal agencies are now under the control of a new administration and employers should expect stepped up enforcement of workplace immigration laws.
Starting January 2, 2017 a new updated I-9 form was required, and ICE recently increased fines for document violations related to the I-9 verification process. Clearly, there has been an increased enforcement focus on I-9 compliance and prudent employers should take steps now to get their house in order. Federal law only requires 72 hours’ notice for an I-9 inspection, which leaves little time to conduct an audit and fix mistakes. It is much easier to be proactive and potentially stop small mistakes from being repeated. After all, the same person(s) typically prepare I-9 forms, and if a mistake is being made, it is likely to be repeated until identified in an audit or training session.
Lastly, another issue worth watching is the future of employees working under DACA permits (a/k/a “Dreamers”). These permits were issued under a program unilaterally implemented under President Obama. Although he vowed to end the program when running for office, President Trump has recently been silent as to the fate of this program, and the government is still issuing work permits. There is much uncertainty as to whether the program will be stopped or existing permits will be renewed when they expire (which typically is within two years), which creates practical issues for employers who employ such persons. The main takeaway is that employers should already have a tickler system to re-verify employees with expiring work eligibility and should consider providing extra notice to DACA holders so that all parties are aware of the deadlines and potential political changes that could affect employment eligibility.
Well, 2017 is here; and Cozen O’Connor has just issued its annual Labor and Employment Observer, which contains thoughtful analysis on the year and review of what to expect in the future. A link to the materials can be found here.
With a new President and a Republican majority in Congress, changes are likely to be coming fast and furious once the inauguration is done. Some employment issues likely to get immediate attention are changes to Obamacare and deciding the fate of the Department of Labor’s effort to raise the minimum salary threshold (which was stayed by a federal judge in Texas and is currently on appeal).
My contribution to the 2017 Observer was an article on the rise of state and local employment legislation. This is a trend to watch as it will likely pick up steam as democrat-controlled cities and states seek to fill in the perceived gaps in areas like minimum wage and sick pay laws. As an example of where this trend may be headed, see the attached article discussing an effort in Philadelphia to limit an employer’s right to question applicants about their salary histories.
The enforceability of employee restrictions on competition has traditionally been up the states, with some, like California, largely banning such agreements, while others, like Texas, allowing them with reasonable limitations. On Tuesday, October 25, the White House took the unprecedented step of calling on state legislatures to ban non-compete agreements. A news report on the White House announcement can be found here.
Although the Obama administration’s effort will be largely symbolic, and have no legal effect, it is important as it may be the first in a series of steps to apply pressure to states or employers that allow restrictions on employee competition. For example, it would not be a surprise to see this President, or a future one, restrict government contracts for employers that require employees to sign non-compete agreements. Other legal avenues of attack may include regulations or enforcement actions under anti-trust laws.
For those businesses that rely on such agreements, this is a major wake-up call as it is the first time a President has taken a position on state laws in this area. If we have another Democratic President, or a change in control of Congress, it is possible this issue could gain more traction.
You can add anti-trust laws to the long list of legal risks that must now be managed by corporate HR departments. According to a recent guidance document prepared by the Federal Trade Commission and the Department of Justice, the following acts could result in not only civil liability, but criminal prosecution:
- Agreements between companies to not recruit or hire the other’s employees (a/k/a no-poaching agreements)
- Talking to other industry members about establishing uniform pay scales or caps on pay
- Agreements between competitors to limit or reduce fringe benefits
These laws can be especially tricky in the context of trade associations or other industry groups that exist to promote sharing of information among industry members. Generally, sharing information without any agreement to take uniform action is not a violation of the law, but the lines between legal and illegal conduct can be blurry. The threat of criminal prosecution and the encouragement of competitors to report violations to the DOJ’s hotline make it even more important for HR departments to understand the law in this area. Our firm’s client alert on the subject can be found here, and the recent “Antitrust Guidance for Human Resource Professionals” can be found here.
This year, the Department of Labor (DOL) announced new regulations that would double the minimum threshold for a salaried employee exempt from overtime from $455 per week to $913 per week (or $47,476). The regulations also tied the salary threshold to inflation with an automatic adjustment every three years. These changes are scheduled to take effect December 1, 2016, and more details can be found on the DOL’s website, here, or our firm’s client alert on the subject, here.
Recently, there have been two separate legal efforts to stop the increase on December 1. First, the House of Representatives passed a bill on September 28, 2016 that would delay the increase by six months. The bill has not been taken up by the Senate, where its chances of passing are tougher. Regardless of the result in Congress, it is doubtful the President would sign a bill delaying one of his administration’s most important accomplishments (his press secretary has already said it would be vetoed). Put simply, employers should not expect a new law which would delay the December 1 deadline.
The second effort to stop the DOL regulations is a legal challenge filed in a federal court in East Texas by 21 states and more than 50 business groups. Challenging the DOL’s authority to raise the minimum salary threshold, however, is not likely to be successful. The agency has raised the threshold multiple times since the law’s creation, under both Democratic and Republican Presidents. That said, there is a serious legal question regarding whether the DOL has the authority to tie the minimum salary to inflation and create, by regulation, an automatic increase every three years. This is unprecedented, and the court may find that this section of the regulation overstepped the agency’s authority under the law. If that happens, it will be of little value to employers as the December 1 deadline will be unaffected, as the first automatic increase is not scheduled until January 2020.
Texas and many other states in the South have passed state laws in recent years restricting employers from terminating employees who keep their lawfully-licensed concealed handgun locked in their vehicle. For the most part, these laws do not create a private cause of action that would allow a suit for damages against the employer. For example, in Texas, an employee’s recourse would be to file a complaint with the Texas Attorney General.
This week, in a case of first impression, the United States Court of Appeals for the Fifth Circuit (Texas, Louisiana and Mississippi) reversed the dismissal of a wrongful termination claim against an employer and concluded that an employee can sue for damages under Mississippi law. The case is Swindol v. Aurora Flight Sciences Corp., No. 14-60779, and can be found here. Generally, the facts of the case are that Swindol parked his truck on his employer’s lot with his firearm locked inside. Management learned of the gun and fired Swindol for violating its strict company policy prohibiting firearms on company property. This policy, however, was in conflict with state law that allowed Swindol to store his handgun in a locked vehicle on his employer’s property.
The federal court sent a certified question to the Mississippi Supreme Court asking whether it would consider a violation of the state concealed handgun law to be a violation of an important “public policy,” warranting an exception to the employment at will doctrine. The Mississippi Supreme Court answered “yes,” which meant the wrongful termination case could proceed.
Not all states recognize a public policy exception to the employment at will doctrine. For example, Texas does not recognize this exception. But, many do. For that reason, employers should be careful to understand that simply because the relevant statute governing employee gun rights does not provide for a cause of action, that does not mean such a claim is foreclosed.