Emerging Labor & Employment Law Trends (Part 2)

With summer 2016 almost behind us, employers should begin to plan for the major labor and employment law trends expected to emerge in the last quarter of the year and into 2017. In the first part of this two-part series, we looked at some of the principal trends likely to be shaped by federal regulators.  In this second and final piece in the series, we will look at some other trends, with a particular emphasis on emerging state and local movements.

  • Equal Pay on Everyone’s Radar. Last fall, California and New York enacted legislation strengthening existing equal pay laws by making it more difficult to discriminate against workers based on sex. Other states, like Massachusetts, have followed suit in the ensuing months. And beyond the state level, the U.S. Equal Employment Opportunity Commission (EEOC) is finalizing an equal pay data rule that will likely require employers with more than 100 workers to provide pay data across up to 12 pay bands, broken down by sex, race, and ethnicity.

It is therefore important for all employers, even those in jurisdictions without newly-updated equal pay laws, to review compensation data to ensure that employees within a given region, even if there are multiple offices, are being fairly and consistently paid without regard to sex, race, or some other protected characteristic.

  • Expansion of LGBT Rights in the Workplace. In recent years, the EEOC has taken the position that federal law bars discrimination based on sexual orientation and gender identity. This position is just beginning to be litigated in the federal court system and may ultimately work its way to the Supreme Court. In the meantime, numerous states and cities have passed laws barring discrimination based on sexual orientation, transgender status, and gender dysphoria. Expect to therefore see an increase in EEOC charges and litigation involving claims of discrimination against LGBT workers.
  • Increased Limitations on the Hiring Process. Perhaps the area of greatest legislative activity at the state and local level over the past few years has been the restriction of the pre-employment process, specifically laws barring employers from inquiring into an applicant’s credit and/or criminal history during the hiring process, as well as laws barring employers from inquiring about a candidate’s salary history. For employers with operations in multiple jurisdictions, these new laws likely require a complete overhaul of the hiring process. The laws also come at the same time that class actions under the Fair Credit Reporting Act, a federal law governing employer’s use of background checks, have reached an all-time high.
  • Medical Marijuana Legislation. The enactment in several states of legislation permitting the use of medical marijuana has required the business community to re-consider longstanding policies and procedures regarding substance abuse. Employment-specific issues include whether accommodations are required for medical marijuana users and the right to terminate employees who test positive for marijuana. Although lawsuits by medical marijuana users questioning their employers’ practices have been limited thus far, that is sure to change over the next few years.
  • Efforts to Preserve Family and Caregiving Obligations. Another trend gradually gaining traction is legislation designed to protect employees’ family and caregiving obligations. New York, for instance, recently passed laws barring familial status discrimination and, effective in 2018, providing employees with up to 12 weeks of paid family leave. And New York City, for its own part, recently adopted legislation barring “caregiver” discrimination. As other jurisdictions mull similar protections, expect to see an increase in litigation by employees who claim to have been discriminated against based upon their family and caregiving obligations.
  • Validity of Class Action Waivers. There is currently a split among the federal Circuit Courts of Appeals as to whether class action waivers in arbitration agreements violate Section 7 of the National Labor Relations Act. Expect the Supreme Court to weigh in on this question in the near future. In the meantime, the National Labor Relations Board will likely continue to conclude that such waivers violate federal law.

As we head into last quarter of 2016, the U.S. employment law landscape is as dynamic as ever. Employers therefore can, and indeed should, expect significant changes to their employment relationships in the coming months and year.  It is more crucial than ever that employers stay in regular contact with their experienced employment law counsel to prepare.

 

Emerging Labor & Employment Law Trends (Part 1)

With summer 2016 almost behind us, employers should begin to plan for the major labor and employment law trends expected to emerge in the final quarter of the year and into 2017. In the first part of this two-part series, we will take a look at some of the principal trends likely to be shaped by federal regulators.

  • Wage & Hour Class Actions Will Remain Hot. On December 1, 2016, the U.S. Department of Labor’s (DOL) changes to the salary threshold for exempt employees will increase the number of workers eligible for minimum wage and overtime payments. Specifically, the salary threshold for exempt executive, administrative, and professional employees will increase to $47,476 per year (or $913/week), meaning that salaried employees earning less than this amount, regardless of job duties, must be compensated for overtime work. This will undoubtedly result in an increase in wage and hour class actions in the coming years.

In addition, the DOL and other administrative agencies, as well as the plaintiffs’ bar, remain intently focused on independent contractor misclassification, especially following the DOL’s July 2015 guidance proclaiming that most U.S. workers should be classified as employees. Bring-your-own-device policies will also continue to lead to claims of unpaid overtime work.

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Five Tips for Handling Pokémon Go in the Workplace

In the past several weeks, Pokémon Go has taken the world, and many workplaces, by storm. If you’re concerned about reducing the negative impact that this game may be having on your employees’ productivity – and, more importantly, their safety – here are five steps you can take:

1. Make sure that your corporate policies for use of email, internet, and electronic devices are up to date. The policies should state the parameters and limitations regarding the use of these tools for personal matters. If your company allows for reasonable use of internet and personal email, the policy should state that an employee’s personal activity should not interfere with his or her job responsibilities. Ideally, a policy will also include a non-exhaustive list of sites, apps, games, and other programs that employees should not access at work. Examples, such as Pokémon Go, can also be listed. A specific social media policy that limits personal use of sites such as Facebook and Instagram should be included, as well. The policy should also limit personal use of mobile phones during work hours. In drafting or revising any policies, be sure that you take into account the recent decisions of the National Labor Relations Board (NLRB). These decisions strike down common personnel policies on the grounds that they could lead reasonable employees to believe they may face discipline for engaging in protected activity with or on behalf of one or more co-workers relating to employees’ wages, hours, or other terms or conditions of employment.

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Changes to tax treatment of termination payments

The UK Government has announced changes to the tax treatment of termination payments following the conclusion of its recent consultation. Draft legislation has now been published which will come into force in April 2018.

The main changes are as follows:

  • All payments in lieu of notice (“PILONs”) will be fully taxable regardless of whether there is a PILON provision in the employment contract or not.
  • Employer National Insurance contributions will be payable on the balance of any termination payment above £30,000. Termination payments will remain free of employee National Insurance contributions.
  • Payments in respect of injury to feelings will be taxable. This resolves a current divergence of judicial opinion on the matter. Tax free payments in respect of injury or disability may only be made in respect of any injury of a physical or psychological nature which means that the employee is not able to perform their job properly.  The UK Government has also confirmed that the £30,000 tax free exemption for termination payments will remain in place. Proposals had been made during the consultation to reduce the tax free amount or link it to length of service but these proposals have now been dropped.

The UK Government has also confirmed that the £30,000 tax free exemption for termination payments will remain in place. Proposals had been made during the consultation to reduce the tax free amount or link it to length of service but these proposals have now been dropped.

Massachusetts Equal Pay Law

Effective January 1, 2018, Massachusetts’ equal pay law will impose new and broad sweeping requirements on employers. At its core, the law prohibits gender-based pay disparities. It also takes steps to encourage transparency regarding compensation among employees, and to reduce the emphasis on compensation inquiries during the hiring process. The recently enacted amendments are designed to further ensure that salaries for men and women are equal for equal work.

The law previously prohibited the payment of differential wage payment “as between the sexes” for “work of like or comparable character.” The new law amends this language and includes additional provisions to reinforce the prohibition of discrimination “on the basis of gender in the payment of wages” for “comparable work.”  “Comparable work” is defined as “work that is substantially similar in content and requiring substantially similar skill, effort and responsibility and performed under similar working conditions.”  The law also contains new exceptions for pay variations based on:

  • Seniority
  • A bona fide merit system
  • A bona fide system that measures earnings by quantity or quality of production or sales
  • Geographic location, or
  • Education, training, or experience, to the extent such factors are reasonably related to the particular job in question and consistent with business necessity

A violation occurs when a discriminatory compensation decision or practice is adopted, when an employee becomes subject to a discriminatory compensation decision or practice, or when an employee is affected by application of a discriminatory compensation decision or practice. Each discriminatory paycheck shall be deemed a violation. Additionally, the law prohibits employers from reducing the pay of any employee to resolve a gender-based pay disparity.

The amended law further prohibits employers from:

  • Banning employees from talking about their own salaries or the salaries of others
  • Screening job applicants based on their wages or salary histories, which includes requiring or requesting that applicants disclose wage or salary history to be considered for a position
  • Seeking the salary history of a prospective employee from a current or former employer, except after a formal offer of employment and with written consent of the prospective employee, or
  • Retaliating against an employee for disclosing, discussing, or inquiring about compensation, or opposing or complaining about unlawful wage differentials[1]

The law encourages employers to take steps to remedy gender-based pay disparities. Specifically, it creates an affirmative defense for any employer who, within the preceding three years, has completed a good-faith self-evaluation of its pay practices, and can demonstrate reasonable progress has been made to eliminate gender-based pay differentials, if any, for comparable work. An employer may design its own review, provided that it is reasonable, or may conform to templates, forms, and guidance that the Massachusetts attorney general will provide.

The law requires employers to post a notice in their workplaces that notifies employees of their rights to equal pay for comparable work. As part of the legislations, a special committee will assemble to investigate, analyze, and study the factors, causes, and impact of pay disparity based on gender.

The statute of limitations for violations is three years. Damages for violating the law shall be the amount of unpaid wages plus an equal amount in liquidated damages, as well as attorney’s fees.


 

[1] An employer may prohibit human resources employees, or others whose job responsibilities require access to other employees’ compensation information, from disclosing compensation information without prior written consent from the employee whose information is sought.

New OSHA Rule May Require Employers to Update Drug-Testing Policies

The Occupational Safety and Health Administration’s (OSHA) new reporting rule goes into effect August 10, 2016. Although it does not expressly address post-accident drug testing, OSHA’s commentary related to the new rule makes clear that such testing will now be squarely in the agency’s crosshairs. Accordingly, many employers may want to consider updating their drug-testing policies to ensure OSHA compliance. Continue Reading

Protecting Whistleblowers in the UK – Is the Law Sufficient?

With instances of whistleblowing hitting the press on an ever-increasing basis, does UK law do enough to protect employees who blow the whistle on their employer’s wrongdoing? According to a new report published by the international NGO, Blueprint for Free Speech, and the Thomson Reuters Foundation (the “Report”), the answer to this question is a resounding no. The Report identifies a number of deficiencies in the current statutory regime and argues that the UK falls short of international standards. It goes on to propose 10 urgent reforms and 10 further recommendations.

Background

Whistleblowing occurs when a worker reports or exposes (in most instances to his/her employer, but potentially also to the appropriate regulator or even the press) certain wrongdoing or malpractice in the workplace. English law provides certain protection against victimisation and dismissal related to whistleblowing. Since June 2013, workers – to be protected – must have a reasonable belief that the disclosure is “in the public interest”. Continue Reading

NY Dept of Labor Proposes Drastic Changes to Employers’ Use of Direct Deposit and Payroll Cards

The New York State Department of Labor (NYSDOL) recently published a proposed rule governing how employers pay their employees through direct deposit and payroll debit cards. While the majority of the proposed rule focuses on new requirements regarding the use of payroll cards, the proposal, if adopted, would also effectively require every Empire State employer to obtain re-authorizations for direct deposit from all affected employees.

Requirements for Direct Deposit

New York law already prohibits employers from paying their employees through direct deposit without first obtaining the employees’ advance written consent. With the proposed rule, the NYSDOL seeks to add additional requirements regarding the use of direct deposit consent forms. First and foremost, the form would need to be provided in English and in the primary language of the employee, and must contain:

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Reminder to New Jersey Employers: Shortening the Law Against Discrimination’s Statute of Limitations is Prohibited

Dana E. Feinstein, Reed Smith Summer Associate, contributed to this blog post.  

Employers in New Jersey should be aware that a recent New Jersey Supreme Court decision invalidated a contractual provision that shortened the statute of limitations for bringing a claim for discrimination under the Law Against Discrimination (“LAD”). On June 15, 2016, the New Jersey Supreme Court overturned the lower court’s decision and held that employers cannot impose a contractual limit on the two-year time period allotted to an employee to file a claim of employment discrimination under LAD. See Rodriguez v. Raymours Furniture Co., 2016 N.J. LEXIS 566 (June 15, 2016).

Sergio Rodriguez, a non-native English speaker from Argentina, signed an employment application when applying for a job at Raymour & Flanigan Furniture Stores. The application stated in bold and capitalized letters that the undersigned agreed “that any claim or lawsuit relating to [his] service with Raymour & Flanigan must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit” and that he would waive any conflicting statute of limitations. This contractual six-month limit was far shorter than LAD’s two-year statute of limitations.

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EAT Decision Sheds New Light on Scope of ACAS Code on Ill Health Dismissals

In the recent case of Holmes v Qinetiq Ltd, the Employment Appeal Tribunal (“EAT”) considered for the first time whether the power to increase or decrease an award of compensation for a failure to comply with the ACAS Code of Practice extends to dismissals on the grounds of ill health. The EAT concluded that the ACAS Code does not extend to such dismissals, and is instead limited to disciplinary and poor performance situations.

The background to the decision

Employers are required to follow the ACAS Code of Practice on Disciplinary and Grievance Procedures where a disciplinary procedure has been invoked. If they do not follow the ACAS Code, then employees may be entitled to an increase in compensation of up to 25% (section 207A(2) of Trade Union and Labour Relations (Consolidation) Act 1992 (“TULR(C)A”)).

In this case, the Employment Tribunal had awarded the claimant, a security guard, compensation for unfair dismissal and unlawful discrimination. He had been dismissed on the grounds of ill health on the basis that he was no longer capable of doing his job. At the tribunal the employer conceded that the dismissal was unfair because it had failed to obtain an up to date Occupational Health report about the claimant’s ability to attend work after an operation to resolve his pain.

The Tribunal dealt with the question of whether the power to increase compensation for failure to comply with the requirements of the relevant ACAS Code of Practice extends to dismissal on ground of ill health. It concluded that the ACAS Code of Practice does not extend to ill health dismissals. The reasons given by the Tribunal relate to the issue of culpability – in that the ACAS Code of Practice “does not apply to internal procedures operated by an employer concerning an employee’s alleged incapability to do the job arising from ill health or sickness absence and nothing more”. The ACAS Code’s application is therefore limited to internal procedures relating to disciplinary situations, including misconduct or poor performance and “the correction or punishment of culpable behaviour of some form or another”.

In this case, no disciplinary procedure was invoked because nothing in his conduct or performance gave rise to a disciplinary situation.

Employment Appeal Tribunal decision 

Amongst other issues, the Employment Appeal Tribunal examined the issue of whether the Tribunal was correct to refuse an increase to the award.

Its view was that the Tribunal was correct to refuse such an increase, and concluded that the power under section 207A(2) of TULR(C)A to increase or decrease an award for compensation for failure to comply with the relevant ACAS Code of Practice does not extend to dismissals on the grounds of ill health.

What does this mean for employers?

This decision has important implications for employers, because it sheds light on the scope and limits of the ACAS Code.

In practice this means that in scenarios where employers dismiss employees for ill health , they are not obliged to follow the ACAS Code of Practice. As a result the increase in compensation under 207A(2) of TULR(C)A is not available to employees in this type of situation.

However, Employers should keep in mind that the position would be different were an employee’s ill health leads to a disciplinary issue and a procedure is followed to address the employee’s alleged misconduct, for example a failure to follow sickness reporting procedures.

The full judgment is available here.

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