2016 was a busy year for employment law developments on a national level, and 2017 promises to follow suit. To help employers navigate the changes, here is a summary of major developments that may affect your business this year.
Wage and Hour
Overtime exemption rule: After much anticipation, the Department of Labor (DOL) on May 18 released the final rule updating regulations on “white collar” overtime exemptions. The rules, which were to take effect Dec. 1, 2016, would apply to workers who fell under the executive, administrative or professional exemptions from the Fair Labor Standards Act minimum wage and overtime protections. Additionally, they set the minimum salary threshold for employee exemptions from overtime pay at $47,476 per year, from the previous minimum of $23,660.
The DOL quickly faced a great deal of backlash. In September, 21 states filed suit seeking a preliminary and permanent injunction to block the rule and declare it unlawful, as it violates the 10th Amendment. On Nov. 22, a federal judge entered a nationwide injunction blocking the DOL from implementing its rule. The case is pending before the Fifth Circuit Court of Appeals, and briefing will conclude by the end of January 2017.
Interestingly, on Jan. 3, the judge denied the DOL’s motion to stay all proceedings while the appeal is pending. Thus, the court can rule on whether a permanent injunction is appropriate at any time. Additionally, President Donald Trump's choice for labor secretary, Andrew Puzder, has spoken out against expanding the overtime rule for executives and managers, which could indicate a change in focus for the agency.
Workplace Injury Developments
OSHA Injury Reporting Rule: On May 11, the Occupational Safety and Health Administration (OSHA) published the final rule revising its regulations on the recording and reporting of occupational injuries and illnesses. It requires employers to electronically submit information about workplace injuries and illnesses, bars employers from retaliating against workers for reporting such incidents, requires employers to inform workers of their right to report work-related injuries and illnesses without fear of retaliation, and clarifies employees’ rights to access workplace injury data.
The National Association of Manufacturers and others brought a suit to enjoin the rule, arguing that it went too far. Despite the pending lawsuit, OSHA issued an interpretative guidance on the new rule and it went into effect Dec. 1. On Jan. 4, 2017, the final rule was again challenged, this time by industry groups in Oklahoma that argued it violates employers’ First and Fifth Amendment rights; is arbitrary, capricious and otherwise contrary to law; and oversteps OSHA’s authority.
While it remains to be seen how these challenges will fare, qualifying establishments must comply with the rule and submit information from OSHA Forms 300A electronically by July 1, 2017, and information from all forms (300A, 300, and 301) electronically by July 1, 2018. Employers who do not comply face serious penalties, especially since OSHA has implemented increases that allow maximum penalties of over $12,000 per violation and over $120,000 for willful or repeat violations.
Labor Law Developments
DOL Persuader Rule: The “persuader rule,” issued by the DOL in March 2016, would have required employers and their attorneys to disclose any attempts to persuade employees with respect to union activities, with the exception of pre-existing arrangements. But a federal judge’s decision on Nov. 16, 2016, in favor of plaintiffs challenging the rule has blocked the DOL from enforcing it, meaning that employers may continue to hire legal counsel on unionization issues without facing an argument from the DOL that fees paid to legal counsel must be publicly disclosed. Although the DOL has appealed this ruling in the Fifth Circuit, it is unknown whether the Trump administration will withdraw the persuader rule or refuse to defend its validity.
Enforceability of mandatory class action waivers: On Jan. 13, 2017, the Supreme Court announced it would consider whether mandatory class action waivers in employee arbitration agreements violate the National Labor Relations Act, resolving a circuit split and deciding an issue that has pitted that National Labor Relations Board against most federal courts. Such waivers prohibit employees from banding together and arbitrating employment claims as a class. The NLRB has argued that this violates employees’ rights to engage in “concerted activities,” while federal courts have interpreted the Federal Arbitration Act as allowing such provisions. Although a decision is expected by this summer, the result may be influenced by whether a Trump Supreme Court appointee can be seated before the case is heard. Also complicating the issue, the Trump administration will change the composition of the board, which could lead the board to abandon its current position.
Employee Reporting Requirements
New Form I-9: Beginning Jan. 22, 2017, employers must use the new edition of the Form I-9 for verification of identity and employment authorization for all new hires, as well as for re-verifications. The new form was designed by the Department of Homeland Security to be easier to use. A Form I-9 completed electronically should still be printed and physically signed by the employee and can then be scanned for electronic storage.
New EEO-1 reporting requirements: On Sept. 29, 2016, the EEOC released an updated EEO-1 reporting form, requiring covered employers to report employee W-2 earnings and work hours data in their 2017 reporting form. With the data, the EEOC plans to improve pay discrimination investigations. Covered employers include most private employers with 100 or more employees and federal contractors with 50 or more employees. The due date for the 2017 form has been extended from Sept. 30, 2017, to March 31, 2018 — an extension that may bode well for employers, as it will give the Trump administration time to reverse or revise the requirement before employers are saddled with the cost of collecting the data.
Two more areas to watch in 2017
NLRB Joint Employer Rule: It is likely that during the Trump administration, Republicans in Congress will pass legislation that would dismantle the NLRB’s “joint employer” standard. Under the existing standard, only “indirect control” is needed for two employers to share liability for any labor violations or unfair labor practices committed by just one employer. This comes into play frequently when an employer contracts or subcontracts work to another entity.
Restroom access laws: In the first few days of 2017, several state legislatures, including Missouri’s, introduced bills to limit access to public restrooms based on individuals’ biological gender as noted on their birth certificates. In 2017, the U.S. Supreme Court also will address whether a Virginia school district can bar a transgender student from using the boys’ restroom. While most focus has been on school and public restroom access, private employers should also keep abreast of state and local laws, which have been rapidly changing. Several states and local governments, including Illinois, have passed laws prohibiting discrimination based on an employee’s sexual orientation and/or gender identity, which may necessarily include restroom access. Additionally, the EEOC and OSHA published guidance in the last two years outlining that private employers should provide restroom access to all employees based on their gender identity rather than gender assigned at birth. While there are no federal laws that extend discrimination protections to sexual orientation and/or gender identity, employers need to tread carefully when discussing and determining restroom access for transgender employees and the public.
If you have questions about any of the topics listed in this update, please contact the attorneys in our Employment & Labor Group. For Missouri and Illinois employers, stay tuned for our next post, which will cover updates and upcoming areas to watch in those states.