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

 

WORKPLACE COMPLIANCE IN THE TRUMP-ERA: IT IS NOT ABOUT TWITTER

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It has been noted politicians campaign in poetry and govern in prose.  That may sound too lofty to describe current times, but the sentiment remains: promises made on the campaign trail do not easily translate into law. We have a Republican President and a Republican Congress, which historically has meant a more business-friendly regulatory environment.  Yet as the first 100 days will show, unwinding is neither quick nor easy. The Affordable Care Act has not been repealed and little is on the horizon. The President’s Budget Blueprint for 2018 proposes to slash the Department of Labor’s (DOL) budget by 21%. What does this mean for employers right now, or even over the next year?

In short, not a lot. Meanwhile, state and local governments are legislating like mad to fill the gaps that could be created by proposed budget cuts and executive orders. President Trump is an active Twitter user but as detailed below, that communication belies the actual activity of the federal government. #Realtalk

Are employers off the hook for federal mandates? Not so fast. Most of the federal regulations that govern the workplace remain in place and, given the inability to repeal the much lamented ACA, may not change at all.

Below is a quick overview of the current federal landscape under President Trump. Without actual policy as a guide, we are using the President’s proposed budget as a crystal ball. Please note that many states, including Massachusetts and California, have stricter mandates than the federal laws:

THE FUTURE OF DOL/OSHA/EEOC ENFORCEMENT

The President has proposed $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget. Because Congress has to approve the budget this is only an outline of the actual budget.  The blue print is short on details, but does expressly call for reduced funding for grant programs, job training programs for seniors and disadvantaged youth, and support for international labor efforts.  It also proposes to eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at certain facilities.  These cuts account for $500 million dollars of the DOL budget. The blueprint does not specify where the other $2 billion in cost savings will come from, except to say more funding responsibility will go to the states.  If approved by Congress—a big if–the cuts will involve a loss of funds that could be distributed heavily through DOL’s enforcement programs. This will include the EEOC and OSHA. Yet the process by which these agencies collect fines is a valuable revenue generator and unlikely to end easily.

At this point, the likelihood of the final budget looking like the proposed one is total conjecture. Furthermore, even with the expected cuts to the DOL’s enforcement and regulatory programs, it is important to recall that under the last Republican administration—no fan of regulation– the DOL still enforced the law. Moreover, as the federal government delivers more labor enforcement responsibility to the states, employers will increasingly be forced to work to achieve compliance on two fronts, instead of one.

RIGHT NOW

Every administration has used the media as a means of furthering and communicating its chosen agenda, and the Trump administration is no exception.  The choices the administration makes in what it chooses to publicize likely signal the administration’s direction; but also shape the public’s perception of what it is actively doing.  The Trump administration and President Trump in particular use social media and news reports for the purpose of shaping the public’s understanding their activity.  From a compliance standpoint, this actually creates risk for employers.

Despite the President’s proposed budget and awaited confirmation of a new Labor secretary, the New York Times reported  that DOL enforcement actions continue.  In a departure from past practice, the department has stopped publicizing fines against companies. As the New York Times points out, the Obama administration used the announcements as an enforcement tool, and a means to influence employers.  However, the announcements also served as an important window for employers into the DOL’s current position on important compliance issues such as wage and hour or OSHA safety enforcement.  If a company in the same industry was recently fined for a practice, that action provided others in the industry with important notice to examine their practice.  Employers no longer have this benefit.  Furthermore, those who believe that the lack of information surrounding DOL enforcement means they no longer have to worry about the threat of an audit do so at their own peril.  At the present, and until the new budget is confirmed months from now, agency enforcement has not changed.  For those inclined to believe the confirmation of the new Labor secretary will change that should keep in mind that DOL audits are a money-maker for the agency.  There seems to be little reason for them to stop.

WHAT TO DO

The last few years have seen a seismic change in the number of employment laws on both the state and federal level.  If it has been a few years since your organization has updated its employee handbook, you have a compliance problem on your hands.  Updating your handbook and policies is an important step to mitigate risk.

And remember, statutes, regulatory guidance and case opinions published by the courts are what impact compliance obligations, not the news. What happens on Twitter does not reflect the actions of the agencies of the federal government. #Really

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.

 

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