The National Labor Relations Board is signaling yet another change to the joint employer test in its recent issuance of a new proposed rule.  The Board has waffled back and forth on this important issue recently, creating a lot of uncertainty for employers.  Here’s an explanation of what has been going on and what is likely to come.

Remind Me: What’s Been Going On?

Many of you will remember the Board’s 2015 decision in Browning-Ferris Industries.  That decision rocked the labor world because it held that two or more companies are joint employers of the same employees if they “share or co-determine those matters governing the essential terms and conditions of employment.”  Our earlier coverage of that decision is here.

That new standard was a significant departure from the Board’s earlier, well-established precedent which held that a company must exert direct and immediate control over hiring, firing, discipline, supervision, and direction to be a joint employer.  Under Browning-Ferris, indirect control or a reserved—even if unexercised—right to control was sufficient.  The Board also expanded the “essential terms” to include scheduling, seniority, overtime, assigning work, and determining the manner and method of work performance.

Employers and management-side labor lawyers were obviously not happy with the Browning-Ferris decision, while employee and union-side folks were pleased.  Luckily, however, the decision had a relatively short (initial) lifespan.

The Board overturned Browning-Ferris in December 2017 in its Hy-Brand Contractors Ltd. decision.  That case adopted a test more closely resembling the pre-Browning-Ferris joint employer test, requiring proof that:  (1) a putative joint employer actually exercised control rather than merely had a (an unexercised) right to do so; (2) the control is direct and immediate (as opposed to indirect); and (3) the joint employer will not result from “limited and routine” control.

It looked like we’d gone back to the old standard and would have some stability on this issue.  But then some drama emerged at the Board.

Just a couple of months after the Hy-brand opinion’s publication, the Board’s Inspector General reported that new Board member William Emanuel should not have participated in the Hy-Brand decision because his former law firm represented one of the two alleged joint employers in the Browning-Ferris case.  Based on the report, the other four members of the Board then unanimously vacated Hy-Brand, effectively reinstating the Browning-Ferris standard.

And now there’s a new development.

What’s Happening Now?

On September 13, 2018, the Board released a draft rule to re-define the joint employer test.  Under the proposed rule, a company would only be considered a joint employer if it:  “possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine.”  Further, “[i]ndirect influence and contractual reservations of authority” will not establish a joint employer relationship under the proposed new rule.

The proposed new rule requires a 60-day public comment period. The Board will then consider the public comments prior to publishing a final version of the rule, which we probably won’t see until early- to mid-2019.

So, to recap (and to make sure we’re all on the same page): Browning-Ferris’s broad test is still in place for joint employer liability under current Board law.  It will remain that way – until it is either reversed (again) by another decision or a final rule is published by the Board setting a new standard.  Employers, therefore, need to continue to use caution when evaluating the extent to which their contractual relationships or actions might be interpreted as giving them indirect control over another company’s employees.  And, of course, keep paying attention here for the latest updates!

On September 7, 2018, the U.S. Department of Labor’s Bureau of Labor Statistics announced the most recent employment numbers for the United States.  As of August, total payroll employment had increased by 201,000, and the unemployment rate remained at 3.9%.  The positive trend has also impacted an often-overlooked category of potential employees:  disabled adults of prime working age.

Employment for this group has been steadily rising in recent years.  For example, the Bureau of Labor Statistics reported on June 21 of this year that 18.7 % of disabled adults of prime working age (25-54) were employed in 2017 (compared with 65.7% of those without a disability).  The news overall was good; the employment-population ratios for both persons with and without disabilities had increased from 2016 to 2017.

Highlights from the 2017 data included:

  • Nearly half of all persons with a disability were age 65 and over, three times larger than the share of those with no disability.
  • Across all age groups, the ratio of persons employed continued to be much lower for persons with a disability than for those with no disability.
  • In 2017, 32 percent of workers with a disability were employed part-time, compared with 17 percent for those with no disability.

Other reports have noted that people with disabilities tend to be employed at higher rates in regions with tighter labor markets where a larger share of the overall working-age population is employed and tend to have higher employment rates as their educational levels increase.

Although there is still plenty of room to improve, this increase in employment of disabled adults is part of a growing trend.  As one economist wrote recently, after many years (including during the 2001 and 2008 recessions) of relatively rapid increase in the number of Americans citing disability as a reason not to work, this number has begun to steadily fall for the past four years.  And, the news is good for the market as a whole; some economists have opined that the labor market’s ability to show this type of change and growth indicates that there is still room for employment numbers to continue to improve even further for everyone.  If that’s true, and the market continues to grow, it appears likely that more working-age adults with disabilities will seek employment, increasing the pool of applicants available to employers across the country.  Prudent employers should pay attention and take advantage of the increased opportunity to widen and diversify their workforce.  While there can be challenges in hiring workers with disabilities, many employers report that disabled workers are among their most loyal and hardworking, and have a much lower rate of turnover than non-disabled employees.  In a tight labor market, those factors have real value.

For the past several years, folks in the HR space have had to pay special attention to the language in their handbooks and employment policies out of fear of violating rules established by a series of decisions from the National Labor Relations Board (NLRB). Those decisions established a tough standard for evaluating facially neutral employment policies that complied with their interpretations of labor law. Combined with an aggressive NLRB enforcement strategy, employers have understandably been on edge with respect to their workplace rules and policies.

Under that standard, the NLRB found that employers violated the National Labor Relations Act (NLRA) by maintaining workplace rules that did not explicitly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities, if the rules would be “reasonably construed” by an employee to prohibit the exercise of his or her NLRA right to engage in “protected, concerted activity.”

On December 14, 2017, however, the NLRB replaced that standard with a new one. In The Boeing Company, 365 NLRB No. 154 (2017), the NLRB established a new test for workplace rules and policies:  when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the NLRB will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.

This standard is much more favorable to employers. Many policies which would have violated the previous standard will now be considered appropriate and lawful.

Additionally, the NLRB also announced three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions:

  • Category 1: This will include rules that the NLRB designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. (An example of a Category 1 rules is the no-camera requirement maintained by Boeing in the case.)
  • Category 2: This will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
  • Category 3: This will include rules that the NLRB will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.

In the Boeing case, the NLRB concluded that Boeing lawfully maintained a no-camera rule that prohibited employees from using camera-enabled devices to capture images or video without a valid business need and an approved camera permit.  The NLRB explained that the rule potentially affected the exercise of NLRA rights, but that the impact was comparatively slight and outweighed by important justifications, including national security concerns.

Overall, while employer policies and rules must still be evaluated to ensure compliance with the NLRA, such policies and rules will now be judged under much less stringent standards than they have been for the past several years, which is very good news indeed for employers.

With the holidays now over and everyone settling back into our regular work routines, some predictions on labor and employment law developments for 2018 might be helpful. Overall, federal agencies are expected to continue last year’s trend of taking more employer-friendly positions under the current Administration. In addition to that general theme, however, here are five specific “predictions” for what employers will likely see in 2018.  

Prediction 1: We’ll Get (A Lot of) New Opinion Letters from the Department of Labor.

For years the U.S. Department of Labor’s (DOL) Opinion Letters were a helpful source of information for employers as they answered questions received from members of the community (primarily on wage and hour issues). For example, if an employer or other entity had a question about how a particular wage and hour regulation applied to its employees and an answer wasn’t clear from the case law or administrative decisions, the employer could send in its question and DOL officials would issue an Opinion Letter offering guidance.

While the Opinion Letters functioned as the DOL’s official, written opinion on how a specific law applied to a given situation, they weren’t binding authority on the DOL or any courts. But they were certainly helpful for employers when there was no other guidance (or differing opinions) available on a sticky issue. Courts also found the letters helpful and they were (and still are) cited to support reasoning offered in judicial decisions.

In 2010, however, the DOL stopped issuing Opinion Letters. Instead it started issuing more general “Administrator Interpretations” which were intended to provide general interpretations of certain laws applied to a specific type of employee or industry. Notably, the DOL only issued 11 Administrator Interpretations between 2010 and 2016. Opinion Letters were issued with much greater frequency, sometimes with dozens being issued in a single year.

Now, however, the DOL has reinstated the issuance of Opinion Letters. “Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” said Labor Secretary Alexander Acosta. The DOL “is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.”

So, it seems probable that the DOL will issue many Opinion Letters in 2018 on a variety of topics.  To date, the DOL has already issued 17 Opinion Letters in 2018 on the FLSA. The Department’s Opinion Letters can be found at https://www.dol.gov/whd/opinion/flsa.htm. Keep an eye on the site for plenty more this year.

Prediction 2: We’ll See A(nother) New Overtime Rule.  

According to the DOL’s regulatory agenda (which you can see here), a new overtime rule will likely be issued this coming October. Based on comments from Labor Secretary Acosta, it seems like a good bet that the new rule will raise the exempt salary threshold for white-collar workers above the current $23,660 minimum annual salary threshold, though almost certainly not as high as was proposed under the Obama Administration’s ill-fated 2016 rule (which more than doubled the annual minimum to $47,476).

In addition to raising the minimum exempt annual salary level, the new rule may again contain a provision allowing for automatic adjustments so that the numbers keep pace with inflation (as the 2016 rule did as well). Inclusion of such a provision is far from certain, however, because there is some debate as to whether the DOL has the authority to implement such a feature under the language of the FLSA. Assuming such a provision is included, this could cause some problems for employers as it may require them to implement pay raises at times that do not coincide with employers’ fiscal years or follow performance evaluations.

Employers should begin planning now for a possible increase to the minimum exempt salary level. Speculation is that the new threshold will be in the $30,000 to $35,000 range. Planning and considering options and impacts now could be smart business strategy.

The beginning of the new year often brings fresh resolve, brightened attitudes, and a renewed sense of hope for the coming year.  Savvy employers harness those emotions in their workforce and engage their employees to reach new goals and achievements.  But behind the scenes, employers also need to be aware of new laws and regulations that must be implemented to keep things on track.

One of the best ways to capture critical updates is to conduct an annual review of your company handbook and employment practices.  Many states and localities have adopted regulations that require certain procedures and information be included in a company handbook.  Employers should review those updates for each location where employees work, paying special attention to the following:

  • Minimum Wage: Alaska, Arizona, California, Colorado, Florida, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington have all implemented an increase of the minimum wage for 2018.
  • Ban the Box: California and other states have also prohibited questions regarding an applicant’s criminal history from being included on an application for employment.  While employers may still check an applicant’s or employee’s criminal background, these laws specify when it may be done and what may be considered.
  • Equal Pay and Salary History: Joining Massachusetts, Delaware, California and other states and some cities (Philadelphia, for one) have recently enacted various statutes to prohibit questions regarding an applicant’s salary history on an employment application.  While confirmation of prior salary may be done in certain circumstances, basing an employee’s salary on prior compensation is generally prohibited by these laws.  Recruiting managers and their teams need to be trained to avoid such inquiries unless and until the point in the process where they may lawfully ask about prior salary.
  • Anti-Harassment Policies and Training: Ensure that your non-harassment policy is compliant with applicable federal, state and local laws by including at least two methods to report complaints and checking to be sure that your policy covers all forms of potential harassment and discrimination against protected classes.  Employers should also check their training records to be sure that trainings are being conducted with appropriate frequency and that all required persons have timely completed them.
  • Update Labor Law Postings: Many of the new laws enacted for 2018 require updated labor law postings.  California and New York both have new poster requirements, as do cities including New York City and San Francisco.  Employers should consult with counsel regarding these new requirements and be sure that their postings are up to date.  A government agency conducting an on-site inspection of a workplace will look for updated posters, and out-of-date posters can lead to fines under some laws, or at least signal that an employer does not focus on compliant employment practices.
  • New Mileage Rate: As of January 1, 2018, the IRS mileage reimbursement rate for the use of a car for business travel has been raised to 54.5 cents per mile.

With up-to-date policies and practices in place, employers can focus on building great teams and achieving business success in the new year.

For those who missed it while getting an early start to their Labor Day weekend, late last week a federal judge closed the door on regulations that would have significantly changed overtime exemptions after previously leaving that door ajar.

Most employers became very familiar — and concerned — with the proposed regulations over the past two years. The regulations would have increased the minimum salaries required for executive, administrative and professional employees to remain exempt from overtime pay under the Fair Labor Standards Act (FLSA). We wrote about the regulations and their effects in detail here. They were set to become effective December 1, 2016, and would have more than doubled those salary minimums from $455 per week, or $23,660 annually, to $913 a week, or $47,476 annually. The regulations would also have increased the salary threshold for the “highly compensated employee” exemption from $100,000 to $134,000. However, a lawsuit was filed in the Eastern District of Texas and the judge who was assigned the case granted an emergency, nation-wide injunction in November of last year which preliminarily (and temporarily) prohibited the Department of Labor from implementing the new rules.

On Thursday of last week, that same court entered a final judgment against implementing the higher salary thresholds. In doing so, the court found Congress intended that both the salary levels and the duties of executive, administrative and professional employees be considered in determining whether they are exempt from overtime requirements of the FLSA. The court concluded that the high minimum salaries proposed by the regulations placed too much emphasis on only one factor and effectively eliminated consideration of what duties are performed by those employees. The ruling can be found here.

For all practical purposes, the court’s ruling means that the door is now shut on those higher salary thresholds. The Department of Labor has even stated in filings that it no longer seeks to increase the salary minimums to the levels called for by the regulations it fought to implement last year. Rather, the DOL seeks now only to clarify with the courts whether it has any legal authority to increase those minimums at all. When that clarification comes, the DOL may well again implement increases, though not like the ones just struck down.

Employers should keep their eyes open for requests for information and comments from the DOL in anticipation of possible increases to minimum salary thresholds in the near future. Fortunately, those increases will likely be substantially smaller than those which would have been implemented late last year. In addition, many employers, having already prepared their workforces and compensation schemes to allow for the possibility of higher minimum salaries, will likely have less cause for concern with the smaller increases to come.

Earlier this month, a widely-recognized Fortune 50 company reached a $1.7 million agreement with the Equal Employment Opportunity Commission to resolve nearly a decade of litigation over the company’s nation-wide policy of discharging workers who do not return from medical leave after 12 months.

While this settlement still requires approval by a federal judge, the litigation itself (and the size and scope of the settlement, which also includes changes to the company’s policy, notice-posting, record-keeping, reporting, and other requirements) should be instructive for employers dealing with a common issue: what to do with employees who are granted a medical leave but cannot return to duty at the end of a set time period.

Continue Reading Could The EEOC Sue Over Your “Maximum Leave” Policy?

One of President Trump’s chief agenda items has been immigration enforcement.  While the President’s intent may be to keep out terrorists, remove undocumented foreign nationals, and eliminate fraudulent visa practices, these efforts can also have a tremendous impact on U.S. employers.  One of the ways this administration has ramped up its immigration enforcement efforts has been through an increase in I-9 Employment Eligibility Verification Form audits to ensure companies and organizations are engaging in fair, non-discriminatory hiring practices and only hiring individuals who have proper work authorization.

While the Form I-9 requirement originates from Section 274A of the Immigration and Nationality Act, all employers are required by law to complete and retain a Form I-9 for each employee, regardless of the employee’s immigration status in the U.S.  So, even a company or organization with only U.S. citizen employees is not necessarily safe from a government-conducted site visit.  For instance, the Immigrant and Employee Rights (IER) Section of the Department of Justice exists to investigate 1) citizenship status discrimination in hiring, firing, or recruitment or referral for a fee, 2) national origin discrimination in hiring, firing, or recruitment or referral for a fee, 3) unfair documentary practices during the employment eligibility verification, Form I-9 and E-Verify, and 4) allegations of unlawful  retaliation or intimidation.  Note that discrimination can be consider action both for or against U.S. workers or workers of a particular national origin, so if the IER receives a complaint about your company’s hiring or employment practices regardless of who it supposedly helps or harms, it can open a case against your company and investigate the allegation(s) made.  Even if your company has not engaged in prohibited discriminatory practices, your company could still face severe penalties and fines for documentation/paperwork violations that may be found in such an investigation.

In the event that your company is selected for an audit and you have never inspected your Forms I-9 with an experienced counsel, it is possible that there will be numerous I-9 violations per form. These violations can be either civil or criminal.  For example, in a recent I-9 case settlement, a national Chinese fast-food chain was fined $400,000 in civil penalties and was ordered to pay $200,000 in back wages for its unlawful practices.  One of its primary violations was carrying on the practice of re-verifying lawful permanent residents when their green cards expired.  In another case, a Florida staffing company was ordered to pay a fine of $120,000 for requiring non-U.S. citizens to present specific documents, among other violations.  Without proper training in completing the Form I-9, it is not difficult to make sixty-plus violations per form—the average number of I-9 violations a government officer finds on a single I-9 form!

When the government is assessing monetary fines, one of the mitigating factors considered is good faith on the part of the employer.  By proactively taking the first step to have an experienced counsel review your company’s Forms I-9 and making adjustments and corrections before the government pays your company a visit, you may be able to significantly reduce the amount of total fines or even avoid any penalties altogether.

Back in April 2015, we told you about a new player in the world of employee whistleblower enforcement:  the Securities and Exchange Commission (SEC).  The SEC grabbed everyone’s attention in 2015 by issuing its first administrative order finding that a public company violated SEC rules based solely on language in an employment agreement. Continue Reading Employment Agreements Under the Bright Light of the SEC’s Enforcement Efforts