Year End Federal Employment Law Changes: 2017 Summary

2017, 2018

Stressed? We can help. Below is a Federal Year End Update that will walk you through important changes in Federal law and enforcement practices.

Join us on December 14, 2017 at 12:00 pm EST for a virtual lunch time (or breakfast depending on your time zone) roundup of changes in Federal and State laws that took place in 2017. It will be quick but informative. From 12:00-12:30 pm, we will cover changes at the Federal level, from 12:30-1:00 pm we will cover notable changes on the East Coast, and from 1:00 pm-1:30 pm we will cover the West Coast. To RSVP, please send an email to nicole@foleylawpractice.com.

2017 YEAR END ROUNDUP: FEDERAL EDITION

What a long, strange trip it’s been. The Affordable Care Act (ACA) did not go away but the overtime rule did-for now (see below). The constant tweets and the initial flurry of Executive Orders gave way to little action by Congress. Yet, there are many changes that will impact employers in 2018. Federal agencies and the courts hammered away on workplace issues. Additionally, sex-based and sexual harassment is being litigated and receiving unprecedented attention, putting unprepared employers at tremendous risk. And states are legislating where Congress has not (more on that soon). Let’s take a quick tour of what is in store for 2018:

Sexual Harassment, Time to Take Action

You can call it the Harvey Weinstein effect, but sexual harassment is not just a Hollywood problem. It exists in all industries and has for years. However, it is now getting some serious press, which means sexual harassment is on employees’ minds, and all employers are at an increased risk of a sexual harassment claim.

Before now, the standard sexual harassment compliance advice has been to implement a sexual harassment policy, and invest in sexual harassment training. Yet, many of the workplaces publicly rocked by recent claims-including the Weinstein Company-are headquartered in California, where the law mandates that employers have strict policies and training in place. What can be done?

First, it is time for all employers to revisit and revise their existing policies and practices. The U.S. Equal Employment Opportunity Commission (EEOC) has released a new document identifying five core principles for addressing and preventing sexual harassment in the workplace. According to the EEOC, the principles are “promising practices,” rather than official guidance or legal requirements; but they are a great place for all employers to start. They include:

  1. Committed and engaged leadership;
  2. Consistent accountability;
  3. Strong harassment policies;
  4. Trusted, accessible complaint procedures; and
  5. Regular, interactive and tailored training.

Next Steps:

  • Update Harassment Policies. Our firm is available to help draft a policy that includes an open door element, multiple avenues for complaints, and a process that will allow employees to file complaints with your organization-rather than going to an attorney or the MCAD or EEOC.
  • Utilize Targeted Training. Our firm offers a unique form of sexual harassment training targeted to your organization’s culture and needs.
  • Create a Communication Strategy. Messages from leadership will set the tone for the entire organization.
  • Join Us for a Sexual Harassment Webinar. Many employers are feeling overwhelmed and concerned about their exposure regarding sexual harassment. Join our attorneys from the comfort of your desk for a webinar on January 17, 2017, at 12:00p.m. We will provide an overview of the state of the laws as well as strategies for addressing harassment in the workplace. To RSVP, please send an email to nicole@foleylawpractice.com.

I-9 Audits and ICE Investigations

Although USCIS does not require employers to submit Form I-9 audits, the U.S. Immigration and Customs Enforcement (ICE) does audit I-9’s, and the agency just recorded its largest I-9 settlement ever, to the tune of $95 million. When viewed alongside recent Executive Orders changing ICE’s immigration priorities and promoting Buy American, Hire American policies, there seems to be a clear pattern of change in enforcement strategies emerging.

Recently, the acting Director of ICE announced that he has instructed the investigative unit of ICE, to increase worksite enforcement audits and inspections by four to five times. ICE has already increased the number of inspections in worksite operations, and these inspections will significantly increase this next fiscal year. In addition, ICE is changing its approach to more aggressively go after employers that hire illegal workers.

1095-B or 1095-C Flags
At the same time, we have noted a marked increase in the number of employer questions related to employees who either present a new social security number or whose 1095’s are rejected by the IRS. The 1095 requirements arose out of the reporting required by the Affordable Care Act. The system verifies whether the name and social security number on the 1095C actually match Social Security Administration records. If they do not match, the system is returning an error message. There are a number of reasons the name and social security numbers on a 1095C might not match, including typos, marriage, divorce, or a “borrowed” social.

Unfortunately, even when the employer is able to fix the 1095C errors, I-9’s and W-2’s will need to be updated as well. The I-9 rules do not require employers to terminate employees for submitting false identity documents, and later requesting to change them. However, they do require employers to complete a new I-9 and attach it to the old I-9 form making note of the reason for the change.

But, Please Don’t Forget About Discrimination Laws

The current administration’s push for “Hire American” cannot be interpreted as “hire only Americans” or even “hire Americans first” without exposing your company to legal liability. First, workplace laws limit what employers can ask in the application and interview process, particularly when it comes to immigration status. Furthermore, once a new hire comes on board, an employer cannot require proof of U.S. citizenship when filling out the Form I-9. The law is clear that employers must accept valid documents and cannot insist on additional documentation because of a suspicion that an applicant is not a U.S. citizen. Federal law also prohibits employers from conducting E-Verify or requesting a form I-9 before the employee has accepted an employment offer, and employment applications must state that.

Next Steps:
The tension between discrimination laws and the actions of the current administration are creating risk for employers. However, there are steps employers can take to mitigate these risks:

  • Review and update applications. Ensure they do not ask unlawful questions related to citizenship. Our firm is available to review and update or draft applications for a flat fee.
  • Training. Any employee who will be conducting interviews or collecting I-9 forms and all HR employees must understand the potential pitfalls outlined above.
  • Forward facing employees should be prepared for ICE inspections.They should know who to contact, and how to reach them immediately. They should know what to say and what not to say. There are specific regulations regarding I-9 production, and California has its own I-9 steps vis a vis ICE.
  • Perform an I-9 audit. If you self-audit, the first step is to ensure that you are using the newest Form I-9. The form was updated twice this year, and a third update may be on the way. We can also assist.
  • We Can Help. Our firm offers training on discrimination as well as I-9 compliance. We draft action plans for I-9 audits and/or ICE inspections, and we have also developed a flat fee I-9 audit intended to help our clients address this thorny issue.

It Is Not Dead Yet: New Overtime Rule Rears its Head

Although the current administration has remained publicly silent on the so called white collar overtime rule, the Department of Labor (DOL) has taken a series of steps that indicate new overtime rules may be coming. First, the DOL issued a news release in July announcing that the DOL would publish a Request for Information (RFI) for the overtime rule. Then this fall the DOL appealed the initial injunction stopping the overtime rule in order to affirm its authority to set a salary threshold for the white collar exemptions. At that time Secretary of Labor Acosta stated: “The particular question on the table is how should the overtime rule be updated…it hasn’t been updated since 2004, and it really is in need of updating.” While the timing of the proposed overtime rule remains up in the air, it is clear that employers should be ready to take another look at their overtime classifications.

Next Steps
For clients we worked with already, you updated your job descriptions, reviewed your exempt and non-exempt classifications, focusing on the employees’ duties in addition to the minimum salary level, and you are now in good shape. Up to date and accurate job descriptions are vital in the defense against various claims and to proper classification of employees.

Employers who hedged and thought they would wait-now it is your turn.Our office performed a number of Position Classification Audits in 2017, and our clients found them to be an extremely effective risk management tool, even without the new overtime rules. Most employee misclassification occurs because the employee is incorrectly classified as exempt in the first place, not because of the salary. We continue to offer this audit under a flat fee arrangement.

Affordable Care Act (ACA)

While the ACA was not been repealed there have been many changes over time. Here are some areas for employers to review in preparation of 2018:

  • For plan years beginning in 2018, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage for the least-expensive plan option the employer offers does not exceed 9.56 percent of the employee’s household income for the year (down from 9.69 percent in 2017). The ACA has created a safe harbor for employers to use in lieu of actually knowing an employee’s household income:
    • The employee’s wages, as reported in Box 1 of the W-2, generally as of the first day of the plan year.
    • The employee’s rate of pay, which is determined by the employee’s hourly wage rate multiplied by 130 hours (the monthly equivalent of at least 30 hours per week) as of the first day of the plan year.
    • The individual Federal Poverty Level (FPL). The FPL isn’t officially published until January, until then, employers can use the FPL in effect six months prior to the start of the plan year. For 2018, the maximum monthly premium contribution that meets the FPL safe harbor will be 9.56 percent of the prior year’s federal poverty level ($12,060 in most states for 2017) divided by 12, or $96.08.
  • Out-of-Pocket Maximums: An annual limit on cost-sharing, known as an out-of-pocket (OOP) maximum is set by the department of Health and Human Services (HHS) and applies to all non-grandfathered plans. The ACA’s self-only annual limit on OOP costs applies to each covered individual, regardless of whether the individual is enrolled in self-only coverage or family coverage.
    • In 2017, the OOP maximum is $7,150 for an individual and $14,300 for a family plan. For 2018, the OOP maximum will be $7,350 for self-only coverage and $14,700 for family coverage.
    • The IRS annually sets a separate, lower OOP maximum for high-deductible health plans (HDHPs) that can be linked with health savings accounts (HSAs), known as HSA-qualified HDHPs. For these plans, the OOP maximum for 2017 is $6,550 for an individual and $13,100 for family coverage. For 2018, the OOP maximum will be $6,650 for self-only coverage and $13,300 for family coverage.

Next Steps
The 2018 affordability rate is lower than the 2017 affordability rate, meaning applicable large employers may need to reduce their employees’ share of premium contributions in order to maintain affordable coverage as required by the ACA. We recommend developing a compliance strategy now to avoid ACA assessments under 4980H. Because applicable large employers (50 or more full-time equivalent employees during the previous calendar year) are assessed a penalty of $3,000 per year for each full-time employee who receives a premium tax credit through the ACA exchange, it is important to ensure that plans meet the affordability requirement. The IRS has published a Q&A located here: https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision

As a reminder, large employers-those with 50 or more full-time employees in the previous year-must use IRS Forms to report healthcare coverage offered to full-time employees in the previous calendar year. This year’s deadlines for filing are as follows:

  • Forms 1095-B and 1095-C: January 31, 2018
  • Forms 1094-B and 1094-C with copies of1095-B and 1095-C (paper submission): February 28, 2018
  • Forms 1094-B and 1094-C with copies of1095-B and 1095-C (electronic submission): March 31, 2018

Tip: Employers can receive an automatic 30-day extension by filing Form 8809 with the IRS.

WE CAN HELP, REACH OUT TO US AT QUESTIONS@FOLEYLAWPRACTICE.COM OR (508) 548-4888.


© 2017 FOLEY & FOLEY, PC, ALL RIGHTS RESERVED

 

Foley & Foley, PC, 495 Palmer Avenue, Falmouth, MA 02540

 

Happy Memorial Day

When-is-Memorial-Day-2017

Happy Memorial Day! For many, this is a day to honor fallen soldiers and also a time to get ready for summer.

Have you done the following?

  • Sunscreen?
  • Summer reading list?
  • Pay Equity Audit?
  • Midyear handbook and diagnostic workplace audit?

If you answered “No” to any one of these questions, we can help!  Read on.

SUNSCREEN

It is outside our wheelhouse but we do like to be helpful.  See the latest list from Consumer Reports. http://www.consumerreports.org/sun-protection/get-the-best-sun-protection/

PAY EQUITY

In 2016 alone, California, New York, Nebraska, Maryland and Massachusetts passed aggressive equal pay legislation. If you are not in this group, the EEOC’s proposed expansion to the EEO-1 reports means more pay data will be required from federal contractors and employers with more than 100 employees.

Do I Need to Buy More Software?

Absolutely not.  By now you may have seen software solicitations touting the importance of statistical analysis to comply with pay equity. Beware.  Sizes matters: unless an employer has a significant number of employees performing the same role and a statistically significant amount are women, a statistical analysis will not produce reliable results. Most of our clients should perform a cohort analysis, which better compares the factors affecting pay.

Why Should I Use Your Pay Equity Audit?  

By partnering with an attorney, the process is protected by the attorney-client privilege. Any pay equity found will be kept strictly confidential.  Moreover, in Massachusetts you create a rolling affirmative defense by conducting an evaluation of pay practices if it is completed within three years prior to the commencement of a wage discrimination claim. We have developed an effective and painless Pay Equity Audit to achieve compliance and create an affirmative defense.

Why Now? 

The effective date of the MA Pay Equity Law is July 1, 2018.  Many of you are planning for 2018 in your budgets and hiring. Include Pay Equity in that list to be compliant and create the rolling affirmative defense against any future claims.

SUMMER READING

Software slamming aside, Bill Gates is a pretty smart guy.  His summer reading list looks terrific.  Check it out!  https://www.gatesnotes.com/About-Bill-Gates/Summer-Books-2017?WT.mc_id=05_22_2017_10_SummerBooks2017_BG-media_&WT.tsrc=BGmedia

 

MIDYEAR HANDBOOK AND DIAGNOSTIC AUDIT

Probably not high on your reading list but terribly important is your employee handbook.  When is the last time you read it? We recommend that you review and update your handbook on an annual basis. Now is a particularly good time given the many local and state law updates.  Marijuana, equal pay, paid family leave, sick leave—many changes have taken place that are probably not properly addressed in your handbook.

Why Worry about the Handbook?

A well-crafted handbook serves many valuable purposes:

  • Define the culture of your business
  • Set expectations
  • Inform employees of compensation, benefits and rules
  • Provide a clear avenue for dispute resolution, a critical road map for staff

Your Handbook are a valuable tool for you and an important resource for employees.

 

What is the Diagnostic Audit?

The Risk Management Diagnostic Audit is a tool we have developed to allow you to identify and respond to the compliance risks at your workplace. This audit targets your organization’s unique vulnerability and provides action items to put you on the path to compliance.  Please check out our website or call 508-548-4888 for the steps and timelines for this popular service. http://www.foleylawpractice.com/diagnostic-compliance-audit.html

Enjoy the long weekend!

Contact us at 508-548-4888 or info@foleylawpractice.com

 

 

 

Why Many Executive Orders are Hot Air

hot-air-balloons-439331_960_720.jpgOn May 4, 2017, President Trump signed an Executive Order Promoting Free Speech and Religious Liberty.  Could this order allow discrimination against LGBTQ individuals and women, as feared?   Will this impact the workplace? No. Here is the line to remember: Existing laws cannot be overturned by Executive Orders.

Let’s take a look at this Order as a good example. The portion of the Order that pertains to Federal law is:

_Sec_. _4_. _Religious Liberty Guidance_. In order to guide all agencies in complying with relevant Federal law, the Attorney General shall, as appropriate, issue guidance interpreting religious liberty protections in Federal law.

Attorney General Jeff Sessions can issue guidance until the cows come home: The US Equal Employment Opportunity Commission (EEOC) does not answer to him.  The EEOC is an independent federal agency charged with enforcing federal laws against illegal discrimination in the workplace. Laws like the ADA, ADEA, FLSA, FMLA and Title VII are under the purview of the EEOC for enforcement and guidance. Congress may make changes to the laws and the courts can overrule, clarify or uphold the laws.

Executive Orders might be good optics but cannot impact the rule of federal. state or local law in the workplace.

Landmark decision: A federal appeals court rules Title VII bars sexual orientation bias in the workplace

“..[I]t is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex…” wrote Chief Circuit Judge Diane P. Wood of the 7th Circuit Appeals Court,  wiping away prior ambiguity surrounding Title VII protections based on sexual orientation. The 8-3 decision, held in a rare en banc hearing, arose out of Indiana professor Kimberly Hively’s lawsuit against her former employer Ivy Tech Community College. Hively claimed her denial of promotions, tenure and her eventual termination were because she is a lesbian.

The 7th Circuit completely bypassed the issue of Congressional intent of the word “sex” in Title VII. Judge Posner opined that the court was not the “obedient servants of the 88th Congress (1963-1965)” and the court was “[T]aking advantage of what the last half century has taught.”

This case matters beyond Illinois, Indiana and Wisconsin. This decision reflects what many state and local government have already done to protect LGBT workers, and similar cases will be heard in other circuits.  Most importantly, it is a best practice to implement policies, procedures and training that prohibits discrimination based on sexual orientation in the workplace.

We can help. Contact us at info@foleylawpractice.com or call 508.548.4888 to update your handbook and policies. Visit http://www.foleylawpractice.com for more resources.

 

rainbow

Now what?

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by Attorney Angela Snyder

What Happens Now?

Change comes with every Presidential election and this one could be seismic.  Naturally, when we heard the outcome, we began questioning, what does this mean for employment laws?  What will happen to the Affordable Care Act?  What will happen with the new overtime rules?  Should businesses ignore the December 1 deadline and just wait to see what happens next? For Massachusetts, California, Maine and Nevada employers, and 25% of the country, employees will now have access to legal recreational marijuana.  How will the workplace be affected?

While we cannot read the future, we spend much of our day watching laws change and examining legal trends.  Here are our predictions  and advice for weathering the coming changes.

The Overtime Rules

As a threshold matter, Donald Trump will become the President on January 20, 2017, after the new overtime rule takes effect. Although Trump’s Secretary of Labor will likely roll back many of President Obama’s employment-related initiatives, the breadth of these changes remains to be seen. Trump has not released a specific policy or position, although he has said he favors “a delay or a carve-out of sorts,” but only for small businesses. This is far from a guarantee.

Additionally, as we have advised over the last year, the FLSA White Collar exemptions require a 3 part test.  Employees must receive a salary of at least $455 per week (rising to $913) per week; they must receive the same salary no matter how many hours they work; and they must pass a strict duties test.  The new FLSA rule set to take effect December 1, 2016, addresses only the minimum salary level portion of the test.  Many employers audited all of their exempt positions in preparation of these new rules.  To the extent employees were reclassified because their duties did not meet the requirements of one of the White Collar exemptions, a rollback of the new salary levels will be irrelevant.

In late September, two lawsuits were filed in federal court in Texas, and legislation that would delay the effective date of the rule until June 2017 passed the U.S. House of Representatives.  None of the legislation will pass into law before the new rules go into effect.  As for the lawsuits, there is a hearing this week in an action to challenge the rule; and it is possible the presiding judge will issue an injunction at that time.  However, the judge hearing the case is an Obama appointee, which means it is more than likely that on December 1, 2016, by law, all exempt positions must receive a salary of at least $913 per week.

Why comply, when there is a chance the new rules will be rolled back? As a quick reminder, under the FLSA, non-exempt employees who are improperly classified will be owed back wages and liquidated damages (equal to the back wages owed), and the auditing agency or court will look back two years to determine the overtime and wages owed.  If they believe the employer intentionally misclassified employees, that period extends to three years.  Under Massachusetts law, employees are entitled to treble damages.  These are not small penalties and often result in fines in the tens or hundreds of thousands of dollars.

For this reason, we advise all of our clients to comply with the new overtime rules on December 1.  If the new administration changes the rules, these employees can always be reclassified as exempt at a later date.  

Affordable Care Act

Trump and Republicans in Congress have stated that they will seek to repeal ObamaCare within Trump’s first hundred days in office. There are roughly 1,000 pages of the ACA and its related provisions.  A full repeal will be incredibly difficult, but it is possible.  It does look like Trump’s intention is to replace the ACA with some other program, which means 2017 should be interesting for employers. Trump has also stated he would keep the pre-existing condition mandate and the availability of insurance for children until the age of 26, which sounds a lot like…ObamaCare.

Marijuana Use

With the advent of the edible marijuana industry, a gummy bear is no longer a gummy bear.  Recreational pot shops are coming to Massachusetts in 2018.  Wondering how to prepare your workplace? Here are some things to know when it comes to creating policies on marijuana use:

  1. There is not an accurate test for marijuana intoxication.  An employee who uses marijuana outside of work (even the day before) will likely fail a blood test, even if the use was totally outside of work, and he or she was not intoxicated at the time of testing.  Given the legalization of medical marijuana in particular, this has resulted in a number of lawsuits.
  2. Although marijuana has now been legalized in a number of states, it is still considered a ‘controlled substance’ under federal law.  As such, at least for the time being, marijuana use remains illegal under federal law. Thus, any federal employer or private employer that receives federal monies may have to conduct testing under federal guidelines.
  3. Finally, only New Hampshire and Arizona have laws protecting medicinal marijuana use and preventing employers from discriminating against marijuana users.  This will likely change now that Massachusetts and California have legalized marijuana.

So, what does all of this mean?  In the states that legalized marijuana in 2012, there have been lawsuits filed by employees who have been terminated after a positive drug test.  The outcome of these cases has been surprisingly consistent, and offered employers a fair amount of latitude when it comes to drug testing and terminating employees for marijuana use.  This has been true even in states where recreational marijuana use is legal.  However, the courts up to this point have relied on the fact that marijuana remains illegal under federal law as a major justification for their decisions.

Now that legal access to recreational marijuana exists in several states, it is likely the federal government will have to look seriously at declassifying marijuana as a Schedule I drug.  This, in turn, will likely influence legal decisions.

Although the Massachusetts recreational marijuana law does not directly alter the state laws governing employer drug testing, it definitely makes sense to review your drug testing policies in light of the new law. At a minimum, policies that call for termination or other discipline for an employee’s use of “illegal” drugs may need to be revised, given that it is no longer illegal for adults to use marijuana in Massachusetts.

As to what amount of marijuana use should result in a termination, Colorado and Washington, where recreational use of marijuana is legal, set the level of impairment at 5 nanograms of active tetrahydrocannabinol (THC) based on a set amount of blood. Pennsylvania set a 1 nanogram threshold; Nevada and Ohio opted for 2 nanograms.  States are all over the map because setting a specific impairment threshold with THC is not as clear-cut as it is with alcohol. THC can remain in a person’s system for days and weeks. That means blood tests alone are unreliable.

In 2014, after marijuana was legalized in Washington, fatal crashes where the driver was found to have THC in his/her blood doubled from around 8% to 17%.  Now that so many states have legalized marijuana, the U.S. is going to be forced to find a national standard for sobriety that is based on real science.  However, until that happens, testing for marijuana use will continue to be problematic.

Recommendations

Private employers have latitude in terms of behavior they can prevent in the workplace.  Just as you can prohibit employees from having alcohol in the workplace, you can prohibit them from possessing or being under the influence of marijuana in the workplace.

Where your testing is limited to reasonable suspicion testing, your risk of an employee claim of wrongful termination based on a positive drug test is much lower than if you conduct random tests.  Although an employee may dispute the validity of your test, if you also have documented reasonable suspicion that an employee was under the influence while at work, you will be able to show that your action as an employer was based on a reasonable and good faith belief that the employee was a danger to him/herself or others.

As for smoking, you can continue to prohibit smoking marijuana and/or ingesting marijuana just as you can prohibit smoking cigarettes or drinking alcohol.

What About the Rest?

Without question our clients should expect some change in the employment law landscape with the new administration, and it will likely be more employer friendly. However, as we observed during the election, Mr. Trump has shifted positions on many issues, many times.  Trump’s appointments to the DOL, the EEOC, NLRB, and OSHA, not to mention the Supreme Court, will be far more telling of the direction of employment related laws in the coming years.

We can help: info@foleylawpractice.com or 508-548-4888

 

 

The EEOC Jumps on the Employee Classification Bandwagon

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The Equal Employment Opportunity Commission (EEOC) has issued updates to its Strategic Enforcement Plan for 2017-2021 .   At first glance it looks a lot like the current plan.  Then, like many government statements, there is a hidden line that gives a clue to where the EEOC is going:

The Commission adds a new priority to address issues related to complex employment relationships and structures in the 21st century workplace, focusing specifically on temporary workers, staffing agencies, independent contractor relationships, and the on-demand economy.

The US government is playing catch up to the gig economy—Uber, Lyft, etc.  Yet this priority has noteworthy implications for all employers.  Misclassification of employees is a complicated and expensive issue. The EEOC is joining the chorus of the  Department of Labor (DOL) Misclassification Initiative.

 

If you have not reviewed your employee classification to comply with the December 1, 2016 DOL deadline on the “White Collar” Overtime mandate  you might reconsider an audit or position classification service. The message from the Feds is clear: misclassify employees at your peril (and you thought I was going to write: we just keep coming up with new regs to make it harder to do business!).

 

We can help. Call 508.548.4888 or email  Mike@foleylawpractice.com