As we covered last year, the United States Supreme Court held in Epic Systems Corp. v. Lewis that employment contracts can legally bar employees from collective arbitration (and require instead individualized proceedings). The Supreme Court found that a provision forbidding collective arbitration violated neither the Federal Arbitration Act nor the National Labor Relations Act. This decision was a win for employers, as it continued the Supreme Court’s recent trend of enforcing agreements to arbitrate and enabled employers to specify that employees must each arbitrate their claims individually, rather than all together as a group.

Since then, as you might expect, employee arbitration agreements have become a hot topic for many employers. They’ve been a hot topic in the Supreme Court as well; in two different rulings issued in January 2019 (New Prime Inc. v. Oliviera and Henry Schein Inc. v. Archer and White Sales Inc.) the Court continued to shed light on the Federal Arbitration Act’s transportation worker exemption and to what extent parties may delegate decisions of whether a claim must be arbitrated or litigated in court to an arbitrator.

All of this activity related to arbitration provides a good opportunity to consider whether requiring your employees to arbitrate employment disputes is the right decision for your business. And, if so, what should you do to make sure your agreements with your employees are enforceable?

We’ll discuss the first topic – whether you should or should not require employees to arbitrate employment claims – in this Part 1, and we’ll cover the second issue in Part 2 (a “coming soon” blog post).

To start, what are some of the reasons you might want to require employees to arbitrate – rather than litigate in court – their employment-related disputes? Arbitration can be cheaper and faster, because discovery is much more limited than what is provided for disputes litigated in court. Pre-hearing motions are also more limited in arbitration as compared to in court; generally, a matter in arbitration will proceed much faster to a hearing on the merits.  Because of this, and due to the fact that private arbitrators generally do not have as much on their dockets, arbitrators can usually set a hearing date and reach a decision resolving the merits of a dispute faster than a court can.  Further, some employers find that having an arbitrator resolve disputes, rather than a jury, can provide more predictable results.  Unlike in court, where the parties have no input on which judge is assigned to hear their case and are subject to the opinions of a jury of their “peers,” there is no jury in arbitration and the parties have a say in which arbitrator will resolve the dispute. And although arbitration is not automatically confidential, it can be much more private than resolving a dispute in court because, for example, there are no public filings.

But arbitration isn’t for everyone or every situation. It can cause morale problems with employees, who are sometimes very concerned to find out that their employer is asking them to give up their right to a jury trial over a dispute that they may consider hugely important to them and their future career. Additionally, arbitration offers limited opportunities for appeal. While that can be a good thing if the arbitrator decides in your business’s favor, it is a double-edged sword if he or she does not. Arbitrators also tend to have a bit more room to fashion remedies that “split the baby,” giving the employee at least some measure of victory, which is less common in court.  Further, because of the limited discovery and ability to file pre-hearing motions, employers may not be able to learn about facts that help them evaluate the strengths and weaknesses of their case, so matters will generally either proceed directly to a hearing on the merits or settle without any opportunity to narrow an employee’s claims through motions practice (or have them dismissed altogether, which happens in a considerable percentage of employment lawsuits). Finally, some states place limitations or requirements on arbitration agreements, ranging from the relatively minor (such as requiring that employees specifically initial an arbitration provision in an agreement) to much more substantive (barring arbitration of certain claims, such as for sexual harassment, outright). Meeting these requirements can become complicated, particularly for employers who operate in multiple states. Although the Federal Arbitration Act generally preempts state law requirements that act as a bar to arbitration, this isn’t always a clear-cut determination and can force parties to engage in motions practice in court to determine whether the agreement is valid or if the dispute can be heard by an arbitrator at all – before ever even reaching the merits of a claim.

There are many practical and legal considerations involved in deciding whether to require that employees arbitrate employment-related disputes as opposed to resolving them in court. This is not a decision to be made lightly or without advice of legal counsel.  If you do decide to proceed in that direction, then you have to make sure your agreements to arbitrate are enforceable.  And that’s no easy trick either. Stay tuned for some thoughts on that topic and some additional issues to consider in Part 2.  In the meantime, consider reaching out to your favorite Troutman Sanders labor and employment attorney for guidance about whether arbitration is right for you and your workplace.

Part I of this post offered predictions related to DOL Opinion Letters and a likely rule increasing the minimum exempt salary level under the FLSA.  This Part II offers three more predictions involving legal issues quite different from wage and hour concerns.

Prediction 3: Continuing and Increasing Focus on Harassment in the Workplace.

2017’s #MeToo movement empowered and emboldened individuals to bring forward stories of sexual harassment and assault in and out of the workplace. Allegations of sexual harassment continue to dominate headlines and this trend shows no signs of slowing down. 2018 will likely see these claims leveled against managers and executives at companies of all sizes and types, not just celebrities or very high-profile figures. It seems that the #MeToo movement has greatly reduced the negative stigma associated with raising these allegations, so the overall volume will likely increase as the year continues.

If you have not already done so, your Company should implement appropriate written policies and training at all levels of the organization to actively try to change or better the culture at work. The two-part process of training employees and holding them strictly accountable is the only proven way to create the major paradigm shifts that some employers need to end and prevent this type of behavior from happening in the workplace.

Prediction 4: Retaliation Claims Will Continue to Dominate.

The EEOC’s data shows that the number of retaliation claims continue to outpace other claims in charges of discrimination filed with that agency. One reason for this is because retaliation claims are often included with other claims as “tag-along” claims. While there are certainly instances where a retaliation claim is filed alone, most frequently retaliation claims (often flimsy ones) are tacked on to more substantive discrimination allegations.

There are two primary reasons behind this. First and foremost, the more claims there are in a charge or lawsuit, typically the more it will cost the employer to defend the case. Charging parties (and their attorneys) try to use the greater defense costs of additional claims as leverage for a more favorable settlement. Second, retaliation claims are often easier to pursue than other claims, since all an employee must do in many instances to survive summary judgment and get their case in front of a jury is complain verbally about discrimination or harassment to someone in management relatively close in time prior to the employee’s termination or other adverse employment action. Sometimes that’s all they need to show to get in front of a jury.

So, it’s no huge surprise at all that retaliation claims continue to surge, and there’s no reason to think this trend will slow in 2018. Employers should consider any complaints from employees (either in writing or verbally) prior to taking any action against employees to help prevent retaliation claims arising (and to reduce the risk they might have any merit).

Prediction 5: Marijuana in the Workplace Will Get Renewed Focus.

Medical and recreational marijuana is now legal in 8 states. More than half of all states allow for limited use of medical marijuana under certain circumstances. For instance, Louisiana, West Virginia, and a few other states allow only cannabis-infused products, such as oils or pills, for medical uses. Other states have passed narrow laws allowing residents to possess cannabis only if they suffer from select medical illnesses. There are 21 states with broader medical marijuana laws.

Marijuana is, however—whether for medicinal or recreational purposes—still illegal as a Schedule I controlled substance under federal law. So, the question remains: If an employee in a state where medical marijuana is legal has been prescribed the medication by a physician, can the employee be fired for testing positive for marijuana on a drug test?

The answer remains unclear. One case from Colorado held that while marijuana is illegal under federal law as a Schedule I drug (which means it officially has no medicinal uses under federal law), an employee is not protected for discipline or discharge for a positive test. Another case from Rhode Island held that an employer could not refuse to hire a medical marijuana cardholder when the prospective employee said that she would fail a pre-employment drug screening. A third case from Massachusetts held that an employee’s off-duty use of medical marijuana was not a “facially unreasonable accommodation” under state law.

Amid this backdrop of uncertainty, employers with operations in states with legalized medical marijuana should evaluate their current drug testing policies (if they haven’t done so recently), consider their legitimate reasons for testing their employees (such as safety or business-related reasons), and be sure to engage in the interactive process when dealing with employees who establish their marijuana use is prescribed for medical purposes.

Conclusion

2018 is sure to be full of exciting and even surprising developments in the world of labor and employment law. We will continue to update you on these topics, re-visit our “predictions” and address any unexpected changes throughout the year.

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.