A few things employers should consider as the New Year approaches
As a new year approaches, one thing many have in common is wondering about what lies ahead. Here are just a few things employers should be considering. The overarching theme? Compliance.
Every year, laws change. For employers, these changes flag new compliance issues. This year, perhaps more than any in recent history, this exercise is more critical. Congress is primed to enact new laws in the pending infrastructure package which has, in part, set this in motion. The Biden Administration and the President’s appointments to various agencies have also dramatically made this concern even more important. These changes will require employers to review how they have been operating over the years, and how these statutory and other legal developments will require them to alter their practices going forward. This article highlights a few of these items.
Basic Policies and Procedures
The Department of Labor (the “Department”) and the National Labor Relations Board (the “Board”) have announced a number of initiatives that may require planning and changes to current practices on issues beyond those triggered by the pandemic. For instance, and perhaps in an unprecedented manner, the government is ramping up its enforcement of the laws under its umbrella, including the Occupational Safety and Health Act (“OSHA”) and new overtime initiatives under the Fair Labor Standards Act (“FLSA”), as well as its commitment to promote unionization. Many elements of the pending “soft infrastructure” bill reflect these initiatives.
What to expect.
One thing for sure is that the Department will aggressively investigate FLSA overtime pay compliance issues with the added threat of hugely increased fines for noncompliance. Further, if it concludes that overtime pay is due to employees, the Department will likely assess liquidated damages equal to double the amount of unpaid overtime assessed. The Department will also likely alter its view as to who are “joint employers,” enabling it to hold employers of contractors, franchisors, parent companies, etc., liable for the wrongs of contractors, franchisees, and subsidiaries.
In addition, the Board is primed to challenge many basic policies and practices of non-unionized private sector employers by holding that they unduly “chill” their employees’ right to engage in concerted activities regardless of union status of either the employers or employees.
- Most significant in this regard is the Board majority’s clear intent to reverse current precedent by making many typical employment policies illegal due to their perceived potential chilling effects. This change appears inevitable, and when it occurs, most employers will need to review and likely revamp their policies on such matters as what constitutes insubordination, how their email systems may be used for nonbusiness reasons, what employees may say on social media, and how to deal with employees who walk off the job or do not report to work to partake in political matters.
- In addition, the Board is considering making it easier for unions to organize workers by giving union organizers more access to employees, changing the election process to make it more difficult for employers to share their views on unionization, and allowing unions to organize small units or singular departments (a/k/a “micro-units”) versus having to organize larger groups of employees.
- The Board’s lead prosecutor, its General Counsel, has also announced that the penalties for non-compliance—whether or not the employer is unionized—will be restructured in an unprecedented manner. For instance, in addition to the fines included in the soft infrastructure bill, remedies will include no compromise on the amount of back-pay claimed to be at issue, no non-admission of liability provisions is settlements, a wider distribution of postings announcing the “settled” violation, and the levying of consequential damages (e.g., compensation for borrowing money or making 401(k) withdrawals, losing a home, relocating, etc.).
- Further, the NLRB is positioning the law to hold employers who contract with unionized firms to be more readily deemed joint employers with those firms and thereby acquire some bargaining obligations with respect to the contractors’ employees.
Both the Department and the Board also are aggressively on the path towards challenging workers classified as independent contractors and finding that they are instead misclassified employees. As employees, they would be eligible for overtime pay and allowed to unionize.
What to do.
Taking preventative measures now will be critical for better positioning employers to both lessen their exposure to claims and lessen their liability should legal claims surface. Waiting until claims arise or when the government knocks on the door will be too late.
Consequently, employers should review their contracts with contractors. staffing companies, and PEOs. They should also review their handbooks and policies and decide if they should be revised to mitigate against claims that they could, under the anticipated new rules, chill employee’s rights under the NLRA.
Policies and practices also should be audited to make sure that they align with these developments, particularly with respect to how work time is recorded and paid, who is exempt and non-exempt from overtime, how discrimination claims are handled, how paid leave is provided, and the like. In addition, arbitration agreements and policies should be scrutinized to make sure that they are enforceable and provide the maximum protections desired
With the new year, in the many states and municipalities with minimum wages higher than the regular federal minimum wage of $7.25 per hour, minimum wages will increase on January 1. Employers with low-wage employees may need to make adjustments to comply with these changes. For instance, the regular minimum wages in the following states are changing:
|California||$14||$15 (for employers with 26+ employees)|
|Illinois||$11||$12 (Chicago, $15 if 20+ employees)|
New Ban-The-Box and Portal Posting Requirements for Government Contractors
A number of states and local governments have “ban-the-box” rules, i.e., rules prohibiting employers from inquiring about a job applicant’s criminal background until after a conditional offer of employment is extended. In 2019, Congress passed the Fair Chance to Compete for Jobs Act which extends this requirement to most federal contractors with respect to applicants for positions related to work under the contract. This mandate becomes effective on December 20, 2021, and includes significant penalties for noncompliance. Due to this requirement, federal contractors should review their job application forms and otherwise take measures to assure that such inquiries are not otherwise made during the pre-offer hiring process, whether orally or in writing.
Federal government contractors will also have new reporting obligations in the new year. Starting on February 1, 2022, contractors may initiate the affirmative action program registration process in the recently approved Contractor Portal. Then, on March 31, 2022, and no later than June 30, 2022, each contractor will have to certify that it has developed and maintained an affirmative action program for covered contracts,
This Alert only highlights some of the issues “on-deck.” These, at the very least, should be addressed now. If not, employers may trip on compliance landmines—trips that are avoidable if prompt action is taken.
For more information about how to conduct these audits and otherwise conform to these developments, contact any of the authors of this post or any member of Dykema’s labor and employment group.