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Insight & Impact: Labor & Employment Regulatory Update

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General L&E | NLRA | OSHA | Employee Benefits | Immigration


General L&E

ISSUE: Developments with the Department of Labor's Proposed Overtime Regulations: What's Going On?

We all remember that on May 18, 2016, the Department of Labor announced a final rule change to the so-called "white collar" overtime exemptions under the Fair Labor Standards Act. Before the change, employees making less than $23,600 per year did not qualify for those exemptions. Under the new rule, employees making less than $47,476 per year would not qualify. The rule was set to take effect on December 1, 2016. In November 2016, a federal judge in Texas granted a nationwide preliminary injunction blocking the rule from going into effect. That case is now on appeal at the Fifth Circuit. If the injunction is reversed, employers could be liable for the period between the original December 1 effective date, and the date of appellate reversal. However, the new Secretary of Labor, Alex Acosta, indicated during his confirmation hearings that the Department may not pursue the appeal. If that happens, the Texas injunction would remain in effect. The Department could also choose to rescind or change the proposed final rule, but would require an entirely new rulemaking process, including new notice-and-comment periods, drafts, and revisions.

IMPACT: As the legal process plays out, employers should consider the following:

  • Be thoughtful and proactive about messaging to employees. Many employers already adjusted salary levels and classifications in anticipation of the December 1 effective date. Those changes may be difficult to undo as a practical matter. Many employers are leaving those adjustments in place, but are considering their impacts on future salary increases and staffing needs.
  • Be cautious about converting employees to independent contractors to try and escape the current legal limbo. In order to qualify as independent contractors, workers must meet separate, strict tests which are also under increased scrutiny.
  • Assess your company's legal risk for any lag period if the Rule is untimely upheld on appeal.

For more information: contact Otto Immel at otto.immel@quarles.com or (239) 659-5041.


ISSUE: Pay Equity and the EEO-1 Report

It is still too early to tell if the Trump Administration is going to repeal a report that will bolster efforts to bring pay equity claims. Much of the legislative activity on pay equity is at the state and local level. Shareholder proposals on pay transparency and pay equity at public companies are becoming more common.

The Obama administration modified the EEO-1 Report so that beginning in 2018, an employer of at least 100 employees must report employees' pay and hours worked as part of its report filing. The report is due on March 31, 2018. If none of the EEOC Commissioners resigns early, President Trump will control a majority of EEOC Commissioners in July 2017. However, that timing would cut it close for employers that need to update software and systems to allow them to generate the EEO-1 reports by March 2018.

IMPACT: Employers should plan to analyze the compensation of women versus men because pay equity will only continue to grow as a litigation and public relations risk. Other key topics to evaluate include considering questions to applicants about pay history as some state and local laws limit such questions; and assessing risk profiles for shareholder or other demands related to pay equity. Employers also should communicate with their software vendors on patches to prepare the updated EEO-1 and protect any compensation report as confidential and subject to attorney-client privilege so an employer does not have to turn it over to government agencies or in litigation. Privilege also allows an employer to more freely assess potential independent variables impacting pay.

For more information: contact Pamela Ploor at pamela.ploor@quarles.com or (414) 277-5661.


NLRA

ISSUE: NLRB Affirms Decision Requiring Employers to Allow Employees to Use Work Email for Union Purposes . . . For Now

On March 27, 2017, the National Labor Relations Board ("NLRB" or "the Board"), in a 2-1 vote, upheld its decision in Purple Communications I, and thereby affirmed that employees have the right under the NLRA to use their employer's email systems for union organizing purposes and other communications related to employee wages, hours and working conditions. Issued in December of 2014, Purple Communications I overturned the Board's 2007 decision in Register Guard, which held that an employer could prohibit employees from using the employer’s email system for otherwise NLRA-protected communications, without providing a business justification, so long as the employer’s ban was not applied discriminatorily. Under Purple Communications I, employees who are provided access to their employer’s email systems for their work may presumptively use their employer’s email systems on their non-work time for Section 7 purposes (i.e., to communicate with respect to unions or their wages, hours and working conditions). An employer can overcome the presumption only if it can establish "special circumstances" that justify a total ban on non-work use of email "to maintain production and discipline."

Both in Purple Communications I, and the Board's recent decision upholding it, Acting Chairman Phillip Miscimarra (who was recently appointed to the role of Chairman by President Trump) issued scathing dissents regarding the Purple Communications I standard, taking particular issue with its impact on employers' property rights over their communication systems and the challenges of determining whether certain communications occurred during working or non-working time. Chairman Miscimarra has also advocated for the Board's return to the Register Guard standard in both decisions.

IMPACT: The Board currently has two vacancies that President Trump is expected to soon fill with Republican appointees, which will shift the Board's partisan majority from Democrat to Republican. When this occurs, employers should expect that the Board may again revisit Purple Communications I and potentially return to Register Guard standard in light of Chairman Miscimarra's position on the issue. Employers should therefore keep an eye on the upcoming Board appointments and be prepared to review/revise their employment policies based on the changes likely to come from the Board's shift in partisan makeup.

In the meantime, employers should be mindful of current Board law and tread carefully when enforcing email policies or disciplining employees who use Company email resources to communicate regarding terms and conditions of employment.

For more information: contact Mike Aldana at michael.aldana@quarles.com or (414) 277-5151.

NLRB Board Decisions (365 NLRB No. 50 -- March 24, 2017 Purple Communications Decision); (361 NLRB No. 126 -- December 11, 2014 Decision); Register Guard (351 NLRB 1110); and NLRB Won't Reverse Worker Email Usage Standard, by Vin Gurrieri of Law360.


OSHA

ISSUE: OSHA’s New Walking-Working Surfaces Standard Imposes Significant New Requirements on Employers

In short, the updated Walking-Working Surfaces standard requires General Industry employers to “ensure that each employee on a walking-working surface with an unprotected side of edge that is 4 feet … or more above a lower level is protected from falling by:” a (a) guardrail system; (b) safety net system; or (c) personal fall protection system. See 29 CFR 1910.28(b)(1)(i)(A)-(C). Whereas the prior Walking-Working Surfaces standard required employers to implement guardrail systems to protect employees from falls, the updated regulation’s most significant revision, per OSHA, is “allowing employers to select the fall protection system that works best for them, … including personal fall protection systems.” The updated regulation contains the following compliance deadlines:

May 17, 2017

Employers must ensure workers exposed to fall hazards are trained on those hazards, and workers who use fall protection equipment are trained on that equipment

November 20, 2017

Employers must inspect and certify permanent anchorages for rope descent systems

November 19, 2018

Employers must install personal fall arrest or ladder safety systems on new fixed ladders over 24 feet and on replacement ladders/ladder sections, including fixed ladders on outdoor advertising structures

November 19, 2018

Employers must ensure existing fixed ladders over 24 feet, including those on outdoor advertising structures, are equipped with a cage, well, personal fall arrest system, or ladder safety system

November 18, 2036

Employers replace cages and wells (used as fall protection) with ladder safety or personal fall arrest systems on all fixed ladders over 24 feet

IMPACT: OSHA's revised Walking-Working Surface standard is a significant change from its prior version. Employers subject to the General Industry Standards must be attentive to the revised standard. Because of the upcoming training and compliance requirements, employers should assess their workplaces and determine what changes, if any, to the workplace need to be performed. To assist employers, OSHA has published a Fact Sheet and FAQs.

For more information: contact Fred Gants at fred.gants@quarles.com or (608) 283-2618.


Employee Benefits

ISSUE: Must Employers Continue To Comply With The Affordable Care Act? Has Anything Changed?

As has been widely reported, the Republicans control all levels of legislative power in the federal government. After striking out in their first attempt to modify the Affordable Care Act ("ACA"), Republicans scored a victory on May 4, 2017 when the House of Representatives narrowly approved an amended version of the American Health Care Act ("AHCA"). The AHCA would repeal certain key provisions of the ACA, but faces an uncertain future. The AHCA is currently under review by the Senate and may be revised significantly (or replaced altogether with the Senate's own healthcare bill). (See our webinar content here: http://www.quarles.com/john-l-barlament/events/impact-of-the-trump-administrations-policy-shifts-on-employee-benefit-plans/ for details on Republican healthcare proposals over the past few years.) The AHCA has a long road ahead of it, and it is not clear when (or if) it will become law. The AHCA has no immediate impact on employers.

President Trump has also issued several broad executive orders. The executive orders are meant to lessen the impact of the ACA and decrease the number of regulations the federal government issues. Because the orders were so broad, their exact impact remains to be seen. The federal agencies have not taken much action yet because of the orders.

IMPACT: Employers should take the following steps:

  • Monitor the progress of the AHCA (and watch for other legislative changes) as Congress continues to work on modifying the ACA.

  • Monitor other regulatory changes. The IRS and DOL are likely to modify the existing ACA regulations, to some extent. Presumably those changes will be favorable to employers and plan sponsors. But right now there is no clear indication of what will change.

For more information: contact John Barlament at john.barlament@quarles.com or (414) 277-5727.


Immigration

ISSUE: Immigration Document Retention and Storage Requirements

With the increased political focus on immigration, it is important for employers to comply with immigration document retention and storage requirements to avoid fines and other civil penalties. There are three key types of immigration documents with regulatory retention requirements: I-9 forms, H-1B Public Access Folders, and PERM green card application materials.

1. Form I-9

Employers must verify the identity and employment authorization of individuals hired for employment in the United States with the proper completion of Form I-9. Form I-9s should be retained in paper or electronic format, on or off-site, for three years after the date of hire, or 1 year after the employment termination date, whichever is later. Employers have three days to present I-9s in response to a government inspection request.

2. H-1B Public Access Folder

Employers seeking to employ foreign workers on an H-1B must first obtain a certified Labor Condition Application (LCA/ETA Forms 9035) from the Department of Labor. LCAs, and the corresponding public access folder, generally must be retained at the employer's principal place of business or the employee's work location for 1 year after the employment end date specified on the LCA or 1 year from the date the LCA is withdrawn.

3. Form ETA 9089

Employer sponsored green card processes can require the employer to obtain Department of Labor labor certification, Form ETA 9089. Form ETA 9089, and the corresponding audit file, must be retained for 5 years from the date the ETA 9089 was filed and can be stored by the employer, or the outside immigration attorney.

IMPACT: Immigration documents should be stored separately from employee personnel records to limit the scope of the government's access to unrelated files. To minimize exposure to fines and penalties, we recommend developing a comprehensive compliance program, regular internal audits, and an action plan should a government site visit for the inspection of your immigration-related documents occur.


For more information: contact Eric Ledbetter at eric.ledbetter@quarles.com or (312) 715-5018 or Nneka Umeh at nneka.umeh@quarles.com or (312) 715-5124.