What does the future hold for Employment Tribunal reform?

The Ministry of Justice has recently published its review of the introduction of Employment Tribunal (‘ET’) fees. The fees were first introduced 2013 and many groups have raised concerns that they are a potentially serious barrier to bringing claims in the ET, particularly for less well off workers and those who have just lost their jobs.

The review concludes that fees are not proving a barrier to access to justice. On the issue of fees it states, “While there is clear evidence that ET fees have discouraged people from bringing claims, there is no conclusive evidence that they have been prevented from doing so.”  It also asserts that the introduction of mandatory conciliation through ACAS in May 2014 has been effective in helping claimants resolve disputes, reducing the number of tribunal claims.

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Philadelphia Employers Barred from Asking about Wage History

On January 23, 2017, Philadelphia Mayor Jim Kenney signed the Philadelphia Wage Equity Ordinance into law. The bill amends the Philadelphia Fair Practices Ordinance to prohibit employers from asking about an applicant’s wage history at any point during the hiring process. Philadelphia City Council unanimously voted in favor of the legislation in December 2016.

Introduced by Councilman-at-large William Greenlee, the Wage Equity Law is intended to reduce wage inequality, particularly among minorities and women. Companies often use a new hire’s prior salary as a baseline for setting the employee’s new compensation. By prohibiting companies from asking prospective employees how much they earned at their last jobs, the bill seeks to prevent unequal wages and salaries from following employees through their entire careers.

In addition to prohibiting employers from asking job applicants about their wage history, the ordinance prohibits employers from: Continue Reading

NY Dept of Labor Finalizes Major Changes to Wage Regulations

In New York, a large number of wage and hour requirements are statutorily codified in the Labor Law. Many others requirements, however, are set forth in regulations known as wage orders, which are issued and updated from time-to-time by the New York State Department of Labor (NYSDOL).  The NYSDOL publishes wage orders covering the hospitality, building service, nonprofit, agricultural, and miscellaneous (i.e., all other) industries.  Adherence to the statutory Labor Law, but not to the wage orders, can have disastrous consequences.

To that end, on the morning of December 28, 2016, the NYSDOL finalized amendments to each of the wage orders that will have a tremendous impact on how New York employers pay their workers. The finalized wage orders, which are unchanged from the proposed orders published by the NYSDOL in mid-October, take effect in just three days, on December 31. Continue Reading

Modern Slavery Business Reporting: Beyond Compliance

A year after the introduction of the business reporting obligation in the Modern Slavery Act 2015 we take a look at the approach taken to statements to date and possible future developments in this area.

Introduction

Modern slavery and human trafficking are two of the biggest human rights challenges of our time. The Modern Slavery Act 2015 seeks to tackle these issues in a number of ways, including imposing a requirement on organisations carrying out a business (or part of a business) in the UK, and with a turnover of £36 million or more, to publish an annual modern slavery statement.

The statement must detail the steps the organisation is taking to ensure that modern slavery and human trafficking are not present in its business or global supply chains. The statement must be signed by a director and a link to the statement must be included in a prominent place on the organisation’s website homepage. Companies with a year end of 31 March should already have published their statement, whereas those with a 31 December year end are due to publish in the first half of 2017, giving the latter the advantage of being able to review and benchmark their statements against those already published.

For background on the reporting requirement in the Act, please see our blog post of October 2015.

One year on, the question is what approach are companies taking to their Modern Slavery Act statements, how much interest have the press and consumer groups shown on this topic and what does this say about the initial success of the reporting obligation?

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What Employers May Expect with Trump in Office

This installment of our ongoing series prognosticating about the new Presidential administration focuses on the regulatory environment employers may face. President-elect Trump has promised to revoke a number of the more employee-friendly measures that the Obama Administration has passed over the previous eight years.  Additionally, Ivanka Trump, who was influential throughout her father’s campaign, has reiterated her intention to fight for equal pay for women and family leave policies.  Continue Reading

Court Preliminarily Enjoins DOL Overtime Rule

A Texas federal court judge has issued a preliminary nationwide injunction blocking the U.S. Department of Labor (DOL) from implementing the controversial overtime rule set to take effect December 1. The rule would have more than doubled the weekly salary threshold for the federal Fair Labor Standards Act’s so-called “white collar” exemptions, from $455/week to $913/week.

The decision stems from a lawsuit filed earlier this year by 21 states, arguing that the DOL overstepped its authority when drafting the overtime rule by focusing on employees’ compensation rather than the work they perform. The Court noted that the increased wage levels could impermissibly supersede Congress’s intent to focus on the nature of the duties employees perform in determining whether they are exempt from overtime payment requirements.

The Court also questioned the indexing mechanism in the new overtime rule — which would have automatically increased the salary threshold every three years. This automatic increase fails to consider current economic conditions or the effect on resources. It also contravenes the statutory language and legislative history suggesting that lawmakers never contemplated such increases. Specifically, the judge wrote that the “state plaintiffs have established a prima facie case that the Department’s salary level under the final rule and the automatic updating mechanism are without statutory authority.”

Employers prepared for the December 1 effective date once again face uncertainty. While the preliminary injunction is a strong signal that the Court will permanently halt enforcement of the changes, that result is far from certain. Further clouding the situation, there are indications that the incoming Trump administration would overturn the overtime rule in the first quarter of 2017.

Employers must now decide whether to undo their recent changes in their compensation scheme, delay anticipated changes, or proceed as planned. Employers must also once again consider individual states’ laws, such as New York, that set higher “white collar” salary thresholds than $455/week. Given that the case against the DOL’s overtime rule is likely far from over, employers should consult with counsel immediately about next steps and strategy.

Employing Workers in a Trump Administration

As a presidential candidate, Donald Trump voiced many opinions about his priorities and goals for the country. Yet as President-elect Trump prepares to take office in January, employers remain uncertain as to what the American workplace will look like under a Trump administration. As a lead-up to the presidential inauguration, we will provide a series of posts looking at five areas critical to employers and prognosticating as to how the new administration will impact these areas. Continue Reading

NYC Seminar: The (Over) Time is Now

We invite our blog readers to attend a free one-hour seminar on Thursday, December 1: “The (Over) Time is Now.”  Reed Smith attorney Miriam Edelstein will join a panel to discuss the Department of Labor’s new overtime rules. The program will be held at the headquarters of Namely (the HR, Payroll, and Benefits platform provider) in New York City.

Program Description

Unprecedented rule changes from the Department of Labor are set to give millions of employees access to overtime. These changes aside, the DOL estimates that over 70 percent of employers are in violation of existing rules already.

On December 1—the same day that the rules formally take effect—Namely will host a panel of human resources leaders from leading NYC businesses and legal experts to weigh in on the new rules’ impact and implementation. Topics include:

  • Navigating the nuances and potential pitfalls of the duties test
  • Training recently reclassified employees—and their managers
  • Budgeting for future changes and making compensation decisions
  • How to have reclassification discussions with employees
  • Preserving workplace flexibility post-overtime rule
  • November’s historic election results, and their potential impact on the rule

Come hear from leading industry experts and network with other local professionals. Food and drinks will be provided.

Date

Thursday, December 1, 2016

Time

9:00 AM – 10:00 AM EST

Location

Namely HQ
195 Broadway 11th Floor
New York, New York 10007

Registration Link

https://www.eventbrite.com/e/the-over-time-is-now-tickets-29151533020

Illinois Bans Noncompetes for Low-Wage Employees

Starting January 1, 2017, the new Illinois Freedom to Work Act will prohibit private sector employers from entering into covenants not-to-compete with “low-wage employees” who work in the state, and render unenforceable any such restrictions that are entered into on or after that date.

The Act defines a “low-wage employee” as one who earns the greater of $13.00 per hour or the minimum wage required by applicable federal, state, or local law. As of January 1, 2017, that would include any private sector employee in Illinois who is paid $13.00 per hour or less.

The Act defines a “covenant not to compete” as an agreement between an employer and a low-wage employee entered into on or after January 1, 2017, that restricts the employee from performing any work for another employer for a specified period of time, any work in a specified geographical area, or work for another employer that is similar to the employee’s work for the employer that is a party to the agreement. The Act thus appears limited to non-competes rather than barring covenants not to solicit customers or employees, or confidentiality agreements. Continue Reading

NY Dept. of Labor Proposes Major Changes to Wage Regulations

In New York, a large number of wage and hour requirements are statutorily codified in the Labor Law. Many others requirements, however, are set forth in regulations known as wage orders, which are issued and updated from time-to-time by the New York State Department of Labor (NYSDOL).  The NYSDOL publishes wage orders covering the hospitality, building service, nonprofit, agricultural, and miscellaneous industries.  Adherence to the statutory Labor Law, but not the wage orders, can have disastrous consequences.

To that end, on October 19, the NYSDOL proposed amendments to each of the wage orders that, assuming they are adopted, will have a tremendous impact on how New York employers pay their workers.

Changes for Non-Exempt Employees

First, the NYSDOL updated the wage orders to reflect the minimum wage increases that were passed earlier this year. As readers may recall, the minimum wage increase announced by Governor Andrew Cuomo last spring presents perhaps the most complex wage scheme the state has ever seen.  It accounts for regional differences and staggers implementation over as many as five years in parts of the state.  Specifically:

  • For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage will rise to $11/hour at the end of 2016, then another $2/hour each year after that, eventually reaching $15/hour on December 31, 2018.
  • For workers in New York City employed by small businesses (those with 10 employees or fewer), the minimum wage will rise to $10.50/hour by the end of 2016, then another $1.50/hour each year after that, eventually reaching $15/hour on December 31, 2019.
  • For workers in Nassau, Suffolk, and Westchester Counties, the minimum wage will increase to $10/hour at the end of 2016, then $1/hour each year after that, reaching $15/hour on December 31, 2021.
  • For workers in the rest of the state, the minimum wage will increase to $9.70/hour at the end of 2016, then another $0.70/hour each year after until reaching $12.50/hour on December 31, 2020, after which it will continue to increase to $15/hour on an indexed schedule to be set by the Division of Budget in consultation with the NYSDOL.
  • The minimum cash wage for food service workers receiving tips will be two-thirds of the minimum wage rates listed above, depending on the location where the employee works.

The proposed wage order amendments also address the increases to the tip credit, uniform maintenance pay, meal, lodging, and utilities allowances, and spread of hours pay resulting from the impending minimum wage changes, as well as the new minimum wage scheme for fast food workers that was adopted in September 2015.

Changes for Exempt Employees

Perhaps just as, if not more, important, the wage orders would also set new salary thresholds for exempt executive and administrative employees. As most employers know by now, the salary threshold for exempt – i.e., salaried – executive, administrative, and professional employees under the federal Fair Labor Standards Act is set to increase to $913/week on December 1. What has been less clear, until now, is whether the salary threshold for exempt executive and administrative employees would also increase under state law in the near future (unlike federal law, New York does not impose a salary minimum for exempt professionals).  At present, the salary threshold for exempt executives and administrators is $675/week.

The proposed wage orders have finally answered this question. The NYSDOL’s proposal would substantially increase the existing, $675/week salary level and, like the minimum wage increase for non-exempt employees, would be region-specific and stagger implementation over as many as five years in certain areas.  While a full summary of the amendments can be found here, the proposed New York salary thresholds for executive and administrative employees would exceed the looming $913/week federal level:

  • On December 31, 2017, for large businesses (those with at least 11 employees) in NYC, and will eventually rise to $1,125/week by the end of 2018
  • On December 31, 2018, for small businesses (those with 10 employees or fewer) in NYC, and will eventually rise to $1,125/week by the end of 2019
  • On December 31, 2019, for employers in Nassau, Suffolk, and Westchester Counties, and will eventually rise to $1,125/week by the end of 2021
  • On December 31, 2020, for all other New York employers (depending on the increase to the federal salary threshold scheduled to occur on January 1, 2020)

Although the NYSDOL is technically accepting public comments on the proposed wage order amendments until December 3, it is a good bet that they will be adopted in full. And regardless of their ultimate content, the new wage orders will take effect on December 31.  We will therefore continue to monitor this issue and provide an update once the final wage orders are published.

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