Labor & Employment Archives - Page 78 of 154

San Marcos, Texas Joins Growing Ranks of Cities Raising Minimum Wage to $15 Dollars

Taking its cue from other, larger cities, San Marcos, Texas, recently voted to raise the minimum wage to $15 dollars per hour for businesses applying for tax breaks and others incentives to build or expand in the city. In addition to the higher wage, businesses must also offer all employees and their dependents benefits equal to those offered to full-time employees. The San Marcos City Council saw requiring the higher pay rate as a way businesses could return the favor of receiving tax incentives to the local economy. This new law applies only to future businesses seeking economic development incentives, and not companies already doing business in San Marcos. The city joins the ranks of cities such as Los Angeles, Seattle, San Francisco, and Washington, D.C. that require a “living wage.”

Key Takeaways for Businesses in San Marcos

Businesses seeking tax incentives to build or expand in San Marcos need to be prepared to pay a higher minimum wage and offer benefits to all of employees. This trend is likely to continue in other cities across the nation.

ARTICLE BY Raven Applebaum of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Winter Is Coming —Wage and Hour Considerations During Weather-Related Emergencies

With winter storms around the corner, it’s the right time to revisit employer rights and responsibilities during a weather-related emergency or other major disruption. We discuss below some typical scenarios that you are likely to face during weather-related or other emergencies, and the consequences under the wage and hour laws.

“Our office was closed for a few days because of the storm. Do we have to pay our employees for those days?”

Non-exempt (i.e., overtime-eligible) employees generally have to be paid only for hours they actually work. So if a non-exempt employee cannot work because your office is closed—or because the employee cannot make it into the office because of weather-related conditions—the wage and hour laws do not require you to pay the employee for non-working time. On the other hand, a non-exempt employee who performs work remotely (say, from home, from a temporary site, or from a coffee shop) is entitled to pay for the time worked.

An exception exists for salaried non-exempt employees, who may—depending on the terms of their agreement with the employer—expect to receive their full weekly salary regardless of how many hours they actually work that week.

Exempt employees (i.e., employees not entitled to overtime pay) generally receive their full salary for any week in which the office is closed for less than a full workweek. Employers who prorate an exempt employee’s weekly salary because of office closure risk losing the exemption for the week in question—a consequence that may or may not be material depending on how many hours the employee works that week. If your office is closed for an entire workweek, you can inform all employees of the closure and you need not pay them for that week (unless they are working remotely).

Be sure to check any agreements with exempt employees—as well as offer letters, policies, or other statements regarding the nature of their pay—which may also limit your ability to prorate salary during office closures and/or give rise to pay claims.

“Our office was open, but some of our staff could not make it in because of the weather. Do we need to pay them?

As described above, non-exempt employees generally must be paid only for hours they actually work, but salaried non-exempt employees may have a contractual right to receive their full salary for any week in which they perform any work.

Exempt employees who are absent from work for one or more full days because of inclement weather, including because of transportation difficulties, are considered to be absent for personal reasons (if the office is otherwise open). Absent a contractual right to be paid, they do not have to be paid for the days they fail to report to work, and your failure to pay them for such days will not jeopardize their exempt status. Deductions for partial-day absences under these circumstances, however, will violate the salary basis rules and jeopardize the exemption for that week.

“Because of flooding or another dangerous condition, we had to close our office after a number of employees had already reported for work. Do we have to pay them for the day?”

Exempt employees who report to work but are turned away or sent home by their employer generally must receive their salary for that day. Non-exempt employees who report to work but are turned away or sent home must be paid for all hours actually worked that day. In addition, some states have “reporting pay” or “call in” pay laws that require employers to pay non-exempt employees a minimum number of hours’ pay for any day in which they report to work.

“Our payroll records were destroyed in the storm, or are inaccessible. How do we pay our employees?”

Exempt employees paid on a salary basis should receive their normal salary payment (less any permissible full-day deductions). For hourly non-exempt employees, use a reasonable method to determine the number of hours worked, such as:

Asking the employees themselves to submit a certified time sheet indicating the number of hours they worked;
Recreating hours worked through electronic records (g., card/ID swipes or log-ins/log-outs);
Making assumptions based on an employee’s fixed or regular schedule of hours;
Asking managers to verify hours worked; or
Some combination of the above.

“Can we require our employees to use available vacation days or other paid time off during a weather-related office closure or absence?”

Yes. Under federal law and the laws of most states, employers are not required to provide vacation benefits or other paid time off to employees. Such benefits are generally a matter of agreement between employer and employee, or set forth in the employer’s handbook or policy. Under these circumstances, there is no prohibition on an employer giving PTO and requiring that it be taken on specific days. So long as it’s permitted under the applicable PTO policy or agreement, employers can reduce an employee’s accrued PTO bank for either partial or full day absences, without violating the wage and hour laws.

“Can we give our staff additional paid or unpaid time off to assist in recovery or relief efforts?”

Employers can grant their employees additional paid and unpaid time off for any reason, including assisting with storm-related recovery and relief efforts.

Employees who are assisting in relief efforts as part of the National Guard or Armed Forces Reserves may have additional rights under federal and state law.

Because of the snow, it took our employees twice as long to commute to work as opposed to most other days. Do we need to pay them for the additional commute time?”

Time spent in an employee’s normal commute from home to work at the beginning of the workday, and from work to home at the end of the workday, is not considered time worked and need not be paid.

“Some of my employees are members of a union. Do these rules apply to them as well?”

Collective bargaining agreements generally cannot waive or reduce the protections available to employees under federal, state, or local wage and hour laws. Collective bargaining agreements can, however—and often do—impose different and additional pay, time off, and other obligations on employers. Employers with unionized employees should consider all applicable agreements when analyzing their rights and responsibilities in the context of a weather-related emergency or other “force majeure” event.

“We want to do more for our employees, to go above and beyond what the law requires. What are some things we can do?”

There are many options available to an employer who wants to do more for its employees, including:

Granting additional paid or unpaid time off
Allowing employees to donate accrued paid time off to other employees (i.e., leave-sharing plans)
Allowing affected employees to work remotely for some period of time
Making emergency advances of salary or loans
Setting up disaster-relief programs or payments
Making certain payments to assist disaster victims that can be excluded from their taxable income
Setting up food and clothing drives

Final Thoughts

Employers making decisions about scheduling, pay, and time off during weather-related emergencies and disruptions should bear in mind the potential implications on employee morale. Flexibility and support in times of need—or the absence of them—are likely to be remembered long after the storm passes.

As always, check state and local laws—as well as your contracts and policies—before making any final decisions regarding wages, hours, or time off.

ARTICLE BY Allan S Bloom & Arielle E. Kobetz of Proskauer Rose LLP

Employment Based Immigration: New Form I-9, Employment Eligibility Verification

On November 14, 2016, U.S. Citizenship and Immigration Services (USCIS) published a revised version of Form I-9, Employment Eligibility Verification (“Form I-9”). Employers can continue to use the most recent version dated March 8, 2013 until January 22, 2017. By January 22, 2017, employers must use only the new version or face serious fines.

Form I-9 requirements were established in November 1986 when Congress passed the Immigration Reform and Control Act (IRCA). IRCA prohibits employers from hiring people, including U.S. citizens, for employment in the United States without verifying their identity and employment authorization using Form I-9.

Among the changes in the new version, Section 1 asks for “other last names used” rather than “other names used,” and streamlines certification for certain foreign nationals. The revised Form I-9 is easier to complete using a computer. Enhancements include drop-down lists and calendars for filling in dates, on-screen instructions for each blank item, easy access to the full instructions, and an option to clear the form and start over.

Additionally, prompts have been added to ensure the information is entered correctly, and now employers can enter multiple preparers and translators. There is a dedicated area for including all additional information rather than having to add it in the margins. There is also a supplemental page for the preparer/translator. When the employer prints the completed form, a quick response (QR) code is automatically generated, which can be read by most QR readers and may be used to streamline audit processes.

The instructions have been separated from the form, consistent with other USCIS forms, and include specific instructions for completing each field.

ARTICLE BY Elise S. Levasseur of Dickinson Wright PLLC

Alaska Minimum Wage, Tip Credit, and Overtime Rights Ruling: Gallo’s and Taco Kings

On Dec. 12, 2016 the Alaska Wage and Hour Division announced a settlement with a small chain of restaurants local to Alaska in the amount of $835,000.00.^[1] Considering this is a small locally owned business this a staggering amount. To put this in perspective there are a total of only 9 eating establishments involved, three Gallo’s and six Taco Kings. Gallo’s are traditional sit down restaurants with full service. Taco Kings are small walk up and order off a menu board establishments with self-serve soda fountains and condiments and no wait staff.

In conversations with persons at both Gallo’s and the Alaska Wage and Hour Division it became clear that the overtime issues had been ongoing for several years. The current settlement was related to an audit conducted by the Alaska Wage and Hour Division and covered the period of Nov. 2013 to Dec. 2015.^[2] Prior to the recent settlement, dating back to 2011, Gallo’s/Taco King had settled six previous complaints for a total of $50,000.^[3] It was this systemic abuse of the Alaska overtime law that led to the audit which revealed overtime being owed to 159 employees.^[4]

Alaska law requires workers be paid minimum wage (currently $9.75/hr. and increasing to $9.80/hr. on Jan.1, 2017) with time and a half paid for overtime over 40 hours in a week.^[5] Alaska does not allow for a tip credit^[6] and as such this was a straight overtime case.^[7]

Despite this being an overtime violation case, a settlement of this significance will tend to catch the attention of restaurant workers around the country. Add to that the recent nationwide injunction issued by Judge Mazzant with respect to the Final Rule,^[8] there is likely to be heightened awareness of minimum wage and overtime rights among workers in general. As such it is probably worthwhile for practitioners to remind their clients and perhaps update policies with respect to tipped employees.

Federal wage law as it relates to wait staff allows for a tip credit, but still requires that wait staff earn at least minimum wage when the hourly wage and tips are added up for the hours worked.^[9]

One of the requirements of the tip credit often overlooked is the requirement that the employer inform the employee of the tip credit. According to DOL Wage and Hour Division Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act, employers must inform tipped employees of the following before the tip credit can be applied:

1) The amount of cash wage the employer is paying a tipped employee, which must be at least $2.13 per hour;

2) The additional amount claimed by the employer as a tip credit, which cannot exceed $5.12 (the difference between the minimum required cash wage of $2.13 and the current minimum wage of $7.25);

3) That the tip credit claimed by the employer cannot exceed the amount of tips actually received by the tipped employee;

4) That all tips received by the tipped employee are to be retained by the employee except for a valid tip pooling arrangement limited to employees who customarily and regularly receive tips; and

5) That the tip credit will not apply to any tipped employee unless the employee has been informed of these tip credit provisions.

Failure to properly inform the tipped employee of the credit entitles the worker to receive both the Federal Minimum Wage of $7.75 and all of the tips received.^[10] Although the notification can be either verbal or written, it is advisable that employers have their employees sign a formal notification that the tip credit allowed under Federal law is being utilized by the employer to ensure minimum wage requirements are being met.

Cases like Gallos/Taco King are becoming more frequent as workers become more educated about their rights. While many employers are taking advantage of employees’ ignorance of employment laws, in particular minimum wage/overtime, many more are making innocent mistakes which could result in significant violations. Now is the perfect time to be proactive to make sure employers who have tipped employees are not hit with significant wage violations for not having informed their employees of the tip credit.

ARTICLE BY Jim Arkell of University of Alaska Fairbanks

_{^[1] Press Release No. 16-45 – State of Alaska Dept. of Labor and Workforce Dev., Heidi Drygas, Commissioner http://labor.alaska.gov/news/2016/news16-45.pdf}

_{^[2] Conversation with Commissioners office of the Alaska Wage and Hour Division on Dec. 14, 2016.}

_{^[3] Id}

_{^[4] Above Note i}

_{^[5] Alaska Statute Sec. 23.10.065.}

_{^[6] Id. According to the DOL 6 other states (California, Minnesota, Montana, Nevada, Oregon and Washington) and Guam also do not allow for a tip credit. https://www.dol.gov/whd/state/tipped.htm#Alaska}

_{^[7] Above Note ii}

_{^[8] Nevada et al. v. U.S. Department of Labor et al., —F.3d—, 2016 WL 6879615 (Civil Action No.4:16-CV-00731) U.S.D.C (E.D. Tex. Nov.22, 2016).}

_{^[9] 29 U.S. Code Sec. 3(m)}

_{^[10] DOL Wage and Hour Division Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (Revised July 2013)}

NY State Prepared to Increase Salary Level for Certain Overtime Exceptions

Proposed amendments to the New York State Wage Orders significantly increase the salary levels needed for employers to qualify for the executive and administrative exceptions under the New York Labor Law.

Last month, a US district court in Texas enjoined the US Department of Labor’s proposed revisions to regulations regarding exemption status under the Fair Labor Standards Act, which were scheduled to go into effect on December 1, 2016. In light of this injunction, there is no federal legal requirement at this time to increase the weekly salary for individuals to be exempt from overtime to the $913 per week that the new Regulations would have required under federal law. This injunction is being appealed, and employers should be prepared to act quickly in case the district court’s decision is overturned and the injunction lifted.

However, for New York employers, that is only half of the issue.

Employers in New York must also simultaneously comply with the state’s salary basis floor for the executive and administrative exceptions under the New York Labor Law (NYLL). That minimum is presently $675 per week or $35,100 per year. If that amount is not paid, employers cannot claim executive and administrative exception status under the NYLL regardless of the duties the individual performs, and such individuals will be eligible for additional compensation for hours worked over 40 per workweek even if they are exempt under federal law. The New York salary minimum is a mandatory pre-condition to be completely excepted from the state overtime requirements.

Moreover, proposed amendments will very likely increase these salary basis minimums for the executive and administrative exceptions effective December 31, 2016, with scheduled increases in subsequent years. Specifically, the New York State Department of Labor (NYSDOL) has amended the state’s Wage Orders to increase the salary threshold for the executive and administrative exceptions to $825 per week for large employers in New York City. If adopted, these regulations would amend the salary basis threshold in the NYSDOL’s Wage Orders covering the building services industry (12 N.Y.C.R.R. 141), miscellaneous industries and occupations (12 N.Y.C.R.R. 142), nonprofitmaking institutions (12 N.Y.C.R.R. 143), and hospitality industry (12 N.Y.C.R.R. 146). The inclusion of the miscellaneous industries Wage Order will extend these amendments to nearly all employers.

The public comment period on these proposed changes closed on December 3, 2016. If the proposed amendments are finalized by the NYSDOL, they would become effective on December 31, 2016.

Proposed Amendments to Salary Threshold for Executive and Administrative Exceptions

The proposed salary basis amendments contain different salary requirements based on an employer’s size and geographic location within New York State. Specifically, there are different salary requirements for “large employers” in New York City (employers with 11 or more employees), for “small employers” in New York City (employers with 10 or fewer employees), “downstate” employers (employers in Nassau, Suffolk, and Westchester counties), and employers in the “remainder of state” (employers outside of New York City, Nassau, Suffolk, and Westchester counties).

The below chart provides an overview of the proposed changes:

	NYC Large Employers (11 or more employees)	NYC Small Employers (10 or fewer employees)	Employers in Nassau, Suffolk, and Westchester Counties	Remainder of NY State Employers
Current (as of December 31, 2015)	$675.00 per week	$675.00 per week	$675.00 per week	$675.00 per week
On and after December 31, 2016	$825.00 per week	$787.50 per week	$750.00 per week	$727.50 per week
On and after December 31, 2017	$975.00 per week	$900.00 per week	$825.00 per week	$780.00 per week
On and after December 31, 2018	$1,125.00 per week	$1,012.50 per week	$900.00 per week	$832.00 per week
On and after December 31, 2019	–	$1,125.00 per week	$975.00 per week	$885.00 per week
On and after December 31, 2020	–	–	$1,050.00 per week	$937.50 per week
On and after December 31, 2021	–	–	$1,125.00 per week	–

Effective Date

The effective date of the proposed amendments is December 31, 2016. While it is possible that the NYSDOL will withdraw or change the amendments before this date, it is more likely that they will be adopted without alterations and become effective on December 31, 2016.

Recommended Next Steps

In light of the increase in the salary threshold for the executive and administrative exceptions, employers should quickly identify and evaluate positions compensated below the new threshold and decide whether to reclassify employees as eligible for overtime under state and/or federal law, or raise their salaries. Employers should consider the hours worked for these employees to estimate the potential cost of paying overtime.

For those employees who will be reclassified as overtime eligible, employers should prepare talking points for managers and employees about the change, the reason for the change, and how the change will impact their compensation, benefits, and opportunities for advancement, if at all. Employers should also develop training and robust time reporting policies for reclassified workers who will not be accustomed to recording hours worked.

To the extent that reclassified employees previously were receiving bonuses, commissions, or other incentive compensation, employers will need to reevaluate those forms of compensation or carefully consider how to factor them into the regular rate of now-hourly workers. Employers should also be prepared to follow up and audit timekeeping practices for newly reclassified employees to ensure that they are following proper processes and procedures.

ARTICLE BY Samuel S. Shaulson & Christopher A. Parlo of Morgan, Lewis & Bockius LLP

Los Angeles Enacts ‘Ban the Box’ Legislation

Los Angeles is the latest in a growing list of jurisdictions to adopt an ordinance restricting employers from asking a job applicant about his or her criminal history during the application process also known as “Ban the Box”. Under the Ordinance, private employers with at least 10 employees will be barred from inquiring about a job applicant’s criminal history until a conditional offer of employment has been made.

The “Los Angeles Fair Chance Initiative for Hiring (Ban the Box),” signed by Mayor Eric Garcetti on December 9, 2016, goes into effect on January 22, 2017.

Los Angeles has taken a different approach than San Francisco, the other California city to have adopted a “ban the box” ordinance affecting private employers. For example, the San Francisco ordinance, enacted in 2014, restricts questions about applicants’ criminal records on applications for employment and generally prohibits any type of criminal history inquiry until after the initial job interview. (For details, see our article, San Francisco Enacts ‘Ban the Box’ Law.) The Los Angeles ordinance prohibits employers from inquiring about criminal histories until a conditional job offer has been made.

Applicant

An applicant for employment is broadly construed to include any individual who submits an application or other documentation for employment for work performed in the City, whether for full- or part-time work, contracted work, contingent work, work on commission, temporary or seasonal work, or work through an employment agency. It also includes any form of vocational or educational training, with or without pay.

Employer

An employer is defined as any individual, firm, corporation, partnership, labor organization, group of persons, association, or other organization that is located or doing business in the City and employs at least 10 employees.

The Ordinance does not apply to the City of Los Angeles or another local, state, or federal government unit.

Prohibitions

Under the Ordinance, employers are prohibited specifically from inquiring into or seeking a job applicant’s criminal history before a conditional offer has been made. This broadly precludes employers from:

asking any question on a job application about an applicant’s criminal history;
asking about or requiring disclosure of the applicant’s criminal history during a job interview; or
independently searching the internet for criminal conviction information or running a criminal background check before a conditional offer of employment has been made.

Criminal history is defined as information regarding any felony or misdemeanor conviction from any jurisdiction for which the person was placed on probation, fined, imprisoned, or paroled.

Exceptions

The four common-sense exceptions to the prohibitions are where:

an employer is required by law to run a criminal background check on an applicant to obtain information on an applicant’s conviction;
the job sought requires the possession or use of a gun;
a person who has been convicted of a crime is prohibited by law from holding the position sought; and
an employer is prohibited by law from hiring an applicant who has been convicted of a crime.

Fair Chance Process

If, after a conditional offer of employment has been made, an employer enquires into an applicant’s criminal history and determines the information warrants an adverse action, it must follow a “Fair Chance Process.”

Prior to taking any adverse action against an applicant, the employer must:

perform a “written assessment” that links the specific aspects of the applicant’s criminal history with the risks inherent in the duties of the position sought. In performing the assessment, an employer must “at a minimum,” consider the factors identified by the Equal Employment Opportunity Commission (e.g., conduct an individualized assessment) and follow any rules and regulations that may be issued by the Designated Administrative Agency (“DAA”) responsible for enforcement;
provide the applicant with written notification of the proposed action, a copy of the written assessment, and any other information or documentation supporting the employer’s proposed adverse action;
wait at least five business days after the applicant is informed of the proposed adverse action before taking any adverse action or filling the employment position; and
if the applicant provides the employer with any information or documentation pursuant to the Fair Chance Process, the employer must consider that information and perform a “written reassessment” of the proposed adverse action. If the employer still elects to take the adverse action after such reassessment, it must notify the applicant of the decision and provide the applicant with a copy of the written reassessment.

Employers using a consumer reporting agency to conduct their criminal background checks, should proceed with the Fair Chance Process concurrently with the pre-adverse and adverse action requirements of both federal and state Fair Credit Reporting Act laws.

Recordkeeping, Notice

Employers must retain documents related to applicants’ employment applications and any written assessment and reassessment performed for three years.

The Ordinance’s notice and posting requirements provide that employers must state in all job advertisements and solicitations for employment that they will consider for employment qualified applicants with criminal histories “in a manner consistent with the requirements of this [Ordinance].”

To notify applicants of the Ordinance, an employer must post a notice about the law in a conspicuous place at every workplace, job site, or other City location under the employer’s control and visited by applicants. In addition, a copy of the notice must be sent to the appropriate labor unions.

Retaliation

The Ordinance makes it unlawful for an employer to take any adverse employment action against any employee for complaining to the City about the employer’s compliance or anticipated compliance with the Ordinance, for opposing any practice made unlawful by the Ordinance, for participating in proceedings related to this Ordinance, or for seeking to enforce or assert his or her rights under the Ordinance.

Civil and Administrative Enforcement

The law allows an individual to bring a civil action for violation of the Ordinance. However, as a prerequisite to pursuing a civil action against an employer, the individual first must report an administrative complaint to the DAA (Department of Public Works, Bureau of Contract Administration) within one year of the alleged violation.

Beginning July 1, 2017, the DAA may fine employers up to $500 for the first violation, up to $1,000 for the second, and up to $2,000 for the third and subsequent violations of the law. However, fines for violations of the record-retention and notice and posting requirements are capped at $500 for each violation. Prior to July 1, 2017, the DAA will not issue any monetary penalties. Instead, it will issue written warnings to employers that violate the Ordinance.

A civil lawsuit may be brought against the employer, but only after the alleged violation has been reported to the designated administrative agency and the administrative enforcement process has been completed or a hearing officer’s decision has been rendered, whichever is later. The DAA still needs to establish rules governing the administrative process for investigation and enforcement of alleged violations.

All covered Los Angeles employers should communicate and train their managers who are involved in the hiring process about the Los Angeles Fair Chance Initiative for Hiring (Ban the Box) ordinance and take steps to ensure compliance with its restrictions

ARTICLE BY Jamerson C. Allen, Susan M. Corcoran, Richard Greenberg &Alexandra Gilinsky of Jackson Lewis P.C.

Limited Relief for Small Employers from ACA Restrictions in 21st Century Cures Act

The 21st Century Cures Act, just signed into effect by President Obama, provides limited relief to employers who wish to pay premiums for individual health insurance policies obtained by their employees or for other qualifying medical expenses their employees may incur. The Internal Revenue Service (IRS) has taken the position that the Affordable Care Act (ACA) bars these types of arrangements.

The relief applies only to employers who have fewer than 50 employees and do not offer a group health plan to any employees.

Further, the arrangement must meet certain conditions:

It must generally be offered on the same terms to all “eligible employees” (generally as defined under the non-discrimination rules applicable to self-funded group health plans).
It must be funded only by the employer (without involving any salary reduction contributions).
The employee must provide “proof of coverage.”
It provides payment or reimbursement only for eligible medical expenses (including health insurance premiums).
Payments cannot exceed $4,950 per year or $10,000 for a family (both adjusted for inflation).
The employer must provide employees with a specified notice on a timely basis.
In addition, the relief previously granted to small employers under IRS Notice 2015-17 has been retroactively extended to plan years beginning on or before Dec. 31, 2016.

If your company is a small employer under the ACA (50 full-time employees or less), it may pay, subject to the dollar limitations and other requirements summarized above, part or all of employees’ individual health insurance policy premiums and/or other qualified out-of-pocket medical costs related to their health insurance without being subject to excise taxes.

ARTICLE BY Stephen J Evans, Jonathan W. Igoe & Sarah Roe Sise of Armstrong Teasdale

How Does the 21st Century Cures Act Affect Employee Benefits?

There are two key benefits takeaways for employers in the bipartisan 21^st Century Cures Act, which President Obama signed into law on December 13, 2016.

The act, which passed both houses of Congress by large majorities, is designed to increase funding for medical research, ease the development and approval of experimental treatments, and reform federal mental healthcare policy.

Mental Health Parity Rules

Employers can expect increased enforcement, along with stricter interpretations, of the existing federal mental health parity rules in coming months and years.

Though the act does not expand requirements under the Mental Health Parity and Addiction Equity Act, Title XIII of the act directs the secretaries of the Department of Health and Human Services, the Department of Labor, and the Treasury to issue guidance within 12 months related to compliance with the mental health parity rules. The act also calls for increased coordination between federal and state authorities in enforcing the mental health parity rules.

In addition, when a group health plan or insurer is found to have violated the mental health parity rules five times, the secretaries are directed to audit the plan’s or insurer’s documents the following year to “help improve compliance” with the rules. By including such specific compliance measures directly within the act, Congress appears to be encouraging increased enforcement of the mental health parity rules in the coming months and years.

The act does make one substantive “clarification” to the existing mental health parity rules. If coverage is offered for eating disorder treatment, then the treatment (including residential treatment) must be provided consistent with the mental health parity rules.

Standalone HRAs for Small Employers

The Affordable Care Act effectively prohibited employers from offering employees health reimbursement arrangements that were not integrated with other group health plans (standalone HRAs).

The act rolls back that rule slightly—though only for employers that are not “large employers” for ACA purposes (generally, those that have 50 or more full-time equivalent employees) and that do not offer any health plan to employees.

Title XVIII of the act creates qualified small employer health reimbursement arrangements (QSEHRAs) which are available for plan years starting after 2016. A QSEHRA is an arrangement funded solely with employer money that provides for payment or reimbursement of medical care expenses, up to $4,950 per year for individuals ($10,000 per year for families). In addition, a QSEHRA must generally be provided to all eligible employees of the employer on the same terms, and the employer must provide notice to the eligible employees. These QSEHRAs could permit reimbursements for individual health insurance premiums, which is also generally not permitted under the ACA. In addition, QSEHRAs are not subject to the Consolidated Omnibus Budget Reconciliation Act’s (COBRA) continuation coverage requirement.

These rules will take effect on January 1, 2017, which means that eligible employers could begin offering a QSEHRA next month. For small employers that offered a standalone HRA before January 1, 2017, the act will extend certain transition relief. HRAs that qualify under Notice 2015-17 will continue to qualify for transition relief through the end of 2016.

ARTICLE BY Timothy J. Stanton & Jessica E. Kuester of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

FLSA Overtime Rules Enjoined, NY Overtime Laws, National Origin Discrimination: Employment Law This Week [VIDEO]

District Court Enjoins FLSA Overtime Rules

Our top story: A federal court in Texas has temporarily enjoined new exemption rules issued by the U.S. Department of Labor (DOL). The rules, which would have dramatically increased salary thresholds for overtime exemptions, were set to go into effect on December 1. The district court judge found that the 21 states that brought the suit established a prima facie case that the DOL overstepped its authority in establishing the new rules. Because the Fair Labor Standards Act makes no reference to salary thresholds, the court found that any new thresholds might have to be created by Congress and not the DOL. If the injunction is made permanent, it could be the beginning of a lengthy appeals process, which would leave employers in limbo.

New York State Overtime Laws Likely to Proceed

While overtime expansion is stalled at the federal level, New York State’s plan to increase salary thresholds remains on track. The comment period for the proposed increase closed on December 3. Under the rule, thresholds for exempt employees would rise to $825.00 per week for large employers in New York City and $787.50 per week for employers in Nassau, Suffolk, and Westchester Counties. If the New York State Department of Labor proceeds with the new rule, it will go into effect on December 31 of this year.

EEOC Issues Updated Guidelines on National Origin Discrimination

The Equal Employment Opportunity Commission (EEOC) released updated guidance on national origin discrimination. The new guidelines address legal developments on issues like human trafficking and harassment in the workplace. The guidance includes over 30 examples of national origin discrimination, as well as best practices to reduce the risk of violation. The guidance also states that, if an employee’s accent “materially interferes” with his or her ability to communicate in spoken English and effective spoken communication in English is a job requirement, an employer can legally move that worker.

USCIS Increases Stability for Foreign Workers

The U.S. Citizenship and Immigration Services (USCIS) has issued a final rule that makes it easier for employers to sponsor and retain skilled foreign workers. The rule gives added job flexibility and protection to foreign workers in H-1B status or who are stuck in a long green card application process. USCIS’s rule also expands the eligibility of certain employers for H-1B cap exemptions and adds grace periods, so certain skilled workers can remain in the country for limited periods while in between jobs.

Tip of the Week

Last week, as part of the 21st Century Cures Act, the U.S. House of Representatives passed new mental health reform legislation intended to step up enforcement of rules requiring that insurers cover mental health care at the same level as they cover physical health care. The legislation could impact employers’ health insurance plans. For this week’s Tip of the Week, James Gelfand, Senior Vice President of Health Policy for The ERISA Industry Committee (ERIC), has some advice on how employers should update their plans in 2017 in order to remain compliant:

BY George Carroll Whipple, III of Epstein Becker & Green, P.C.

Fast-Food Restaurant CEO Tapped to Head Labor Department: What to Expect

President-elect Donald Trump has announced his intention to nominate Andrew Puzder, Chief Executive Officer of CKE Holdings, the parent company of Carl’s Jr. and Hardee’s, to head the U.S. Department of Labor.

Puzder was a lawyer in St. Louis and represented the founder of Carl’s Jr. He later became the general counsel for CKE and then its CEO. He has criticized state and local minimum wage increases, the Affordable Care Act (ACA), and government overregulation, among other things.

If Puzder is confirmed as Secretary of Labor, employers should look for the following changes.

Wage and Hour

Puzder is no fan of the DOL’s regulation expanding overtime protection.
Employers are holding their breath as the U.S. Court of Appeals for the Fifth Circuit considers an appeal by the DOL of a nationwide preliminary injunction issued by a Texas district court judge enjoining the DOL from implementing its highly publicized regulation expanding overtime coverage. Puzder’s nomination as Secretary of Labor could affect the regulation’s fate. In May 2016, the DOL issued a Final Rule more than doubling the required salary level required to satisfy the exemptions from overtime for “white collar” employees from $23,660 to $47,476. The Rule was set to become effective December 1, 2016. On November 22, 2016, however, days before the effective date, a Texas district court judge issued a nationwide preliminary injunction, blocking the regulation. The DOL filed an appeal, asking for expedited briefing, and the Fifth Circuit granted that request, requiring all briefing to be completed by January 31, 2017, just days after inauguration, with oral argument to be scheduled quickly after briefing is completed.
Whether the DOL under a Trump Administration would support the overtime Rule is unclear. However, Puzder has been an open critic of the overtime regulation. Writing in Forbes Magazine in May 2016, after the DOL published the final regulation, Puzder stated the regulation would not help workers, and “will simply add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.” In practice, he said, “this means reduced opportunities, bonuses, benefits, perks and promotions.”
Fearing the DOL under Trump might abandon the appeal, and citing Puzder’s writings on the overtime rule specifically, the Texas AFL-CIO has filed a motion with the district court to intervene as a defendant and defend the Rule even if the DOL back out. Puzder’s criticisms of the regulation, and a Republican-controlled Congress, could mean one of Secretary of Labor Thomas Perez’s signature regulations, for which the DOL worked for over two years developing, may be at an end. The new Congress could simply pass legislation that would invalidate the rule and present it to Trump, regardless of the outcome of the Fifth Circuit appeal.
Puzder also has been a critic of large increases to the minimum wage.

Employee Benefits

Puzder has criticized the ACA repeatedly as another government mandate that has caused labor cost increases and led to job cuts. The DOL, along with the Department of Health and Human Services (HHS) and Internal Revenue Service (IRS), is responsible for the majority of the regulations issued under the ACA. With Puzder heading the DOL, Trump will have an ally and partner in dismantling the ACA.
Puzder’s anti-regulation perspective likely will mean strong opposition to the DOL’s fiduciary rule, which expands the scope of who acts as a fiduciary and has significantly affected the financial services industry. Currently slated to go into effect in April 2017, the fiduciary rule will be at the top of the Secretary’s list of priorities.
Generally, Puzder’s favoring of market forces, as opposed to government regulation or mandated benefits, signals a penchant toward steering the DOL in ways that favor competition between employers for talent based on compensation and benefit packages. Appointments of the assistant Secretary of Labor of the Employee Benefits Security Administration (EBSA) and members of the ERISA Advisory Council also are eagerly anticipated as they are key in the direction of rulemaking and enforcement of ERISA and other employee benefit initiatives.

Federal Contracts (Office of Federal Contract Compliance Programs)

A new, more business-friendly Director of Office of Federal Contract Compliance Programs (OFCCP) likely will be focused on the regulatory burdens on mid-size and small businesses. This should shape an agenda of deregulation that may roll back regulations, including those governing paid sick leave, minimum wage, pay transparency, sex discrimination, and lesbian, gay, bisexual, and transgender (LGBT) discrimination.
A shift in how OFCCP approaches its auditing function also may come from a new leader. For example, a move away from the OFCCP’s current Active Case Enforcement system to one closer to that used by the George W. Bush administration (Active Case Management) would bring more efficient, high-level compliance reviews in most instances, with deeper dives reserved for the few audits with major indicators of potential discrimination.
There also may be a change in OFCCP enforcement priorities. OFCCP likely will not look to push boundaries, create new law through litigation, or publicly shame employers. We can expect a shift in the OFCCP’s push to address the gender pay gap and it may step back from comparable worth theories of pay discrimination. Finally, such programs as the Class Member Locator, the online registry of employers that OFCCP had cited for a discrimination violation, likely will disappear.

Immigration

As the CEO of CKE, Puzder brings a unique perspective on the role of foreign-born workers in U.S. businesses. Puzder has stated frequently that immigrants play a vital role in growing U.S. businesses, spurring innovation and creating jobs. Puzder will be an important and potentially moderating voice related to immigrant and nonimmigrant work visas.

Labor

The nomination of Puzder and the recent deal to keep an Indiana facility from closing to retain more U.S. jobs signal both Trump’s and nominee Puzder’s focus on ensuring that labor relations fits within a broader economic picture.
Puzder believes, as does Trump, that free enterprise will result in job growth. It is likely that the new Secretary of Labor will seek to remove burdensome regulations and be more business-friendly. For example, we anticipate changes to the DOL’s efforts to expand the definition of joint employer status, which the National Labor Relations Board (NLRB) also has expanded under the Obama Administration. Consistent with this approach, Trump (immediately after his inauguration) may repeal many of President Barack Obama’s executive orders, including (among others) Executive Order 13658 (Establishing a Minimum Wage for Contractors), Executive Order 13673 (Fair Pay and Safe Workplaces), and Executive Order 13502 (Use of Project Labor Agreements for Federal Construction Projects).

Workplace Safety and Health

Puzder currently heads a company that is not heavily regulated by the Occupational Safety and Health Administration (OSHA). He has stated, however, that new regulation may not be the best way to effect policy change and that view could trickle down to OSHA and the Mine Safety and Health Administration.

Non-Competes and Protection Against Unfair Competition

Puzder would be unlikely to latch onto the assault against non-compete agreements advanced by the Treasury Department in its March report and by the White House in its May report and October “state call to action.” Given his business background, Puzder would understand the utility of non-compete agreements, even with respect to low-wage earners, because they serve to protect the employer’s investment in training such workers.

Disability, Leave and Health Management

Puzder may be more willing to reduce or eliminate the burdens associated with the paid sick leave executive order that is scheduled to go into effect for new contracts after January 1, 2017. The Executive Order currently makes it very difficult for businesses to identify when paid sick leave accrues (pushing many employers to provide more than required), makes it difficult to coordinate with state and local paid sick leave laws, and makes it easier for employees to abuse the system and use the benefit to thwart any attendance policy. Businesses that operate in multiple states likely would welcome some form of federal measure that simplifies paid sick leave benefit administration, aligns federal, state, and local benefits, and provides an ERISA-type preemption.
Under Puzder, the DOL likely will be more business-minded with respect to issues under the Family and Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA). This would result in the administration taking less aggressive stances (including in terms of litigation) on these laws and fewer attempts to expand the coverage of these statutes.

ARTICLE BY General Employment Litigation Practice Group Jackson Lewis

Category: Labor & Employment

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