SMCR Conduct Rules go live!

Reed Smith will be hosting a breakfast seminar on the SMCR 28 March 2017. Visit reedsmith.com for more information.

On 7 March 2017, the Conduct Rules in FCA Handbook and PRA Rulebook were extended to cover thousands more employees at UK Banks And Building Societies (including UK branches of overseas banks).

As part of the SMCR, the Conduct Rules now apply to all employees other than those with purely administrative functions, exposing many employees to individual ‎regulatory accountability for the first time.

The SMCR give firms a responsibility to report all breaches of conduct rules to the regulator, including the personal details of those individuals responsible, the basis for the breach, and details of any individual sanctions (including malus or clawback). These changes have potential to place enormous strain on the employment relationship, and implementing the right processes, employment contract changes, workplace policies and breach reporting systems has been essential to successfully implementing the SMCR.

If you’d like to hear more about the employment impact of the Conduct Rules and the SMCR, we’d be delighted for you to attend our SMCR breakfast seminar 28 March 2017.

Visit reedsmith.com for full details of the event. R.S.V.P. to events@reedsmith.com if you would like to attend.

Gender Pay Gap Reporting – Do we need more?

Today is International Women’s Day. What originally started life in 1909 as a single protest organised by the Socialist Party of America in New York, is now a global event with the backing of the United Nations and some of the world’s largest corporations.

The theme of this year’s campaign is #BeBoldForChange. The UK Government’s own flagship equality measure, while a welcome step forward, is, it might be said, neither particularly bold, nor likely to inspire much change.

In just under a month, from 6 April, new regulations on the publication of gender pay gap information will come into force.

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New York Wage Payment Regulations Are Revoked at the Eleventh Hour

Recently, New York’s Industrial Board of Appeals (IBA) revoked regulations issued by the State’s Department of Labor (NYSDOL) governing employee wage payments via direct deposit and payroll debit cards, which were scheduled to go into effect March 7, 2017. The IBA, an independent agency with certain oversight authority over the NYSDOL, held that the proposed regulations exceeded the NYSDOL’s regulatory powers.

New York employers were already prohibited from paying their employees through direct deposit without first obtaining the employees’ advance written consent. The invalidated regulations, published by the NYSDOL September 7, 2016, attempted to impose additional requirements on employers before they could pay employees via direct deposit or payroll debit cards.  A full discussion of those now defunct obligations is available here. Continue Reading

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

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