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.
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:
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.
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.
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In a new development, 21 states and many business groups are requesting that the Texas court enjoin implementation of the new DOL overtime exemption rules. As far as their chance of success, at least in the near term, it is not good.
Reports are that both cases have been assigned to Judge Amos Mazzant, who was nominated by President Barack Obama in 2014. It has been suggested that this assignment may not bode well for the plaintiffs. Theoretically, prospects may improve if the lower court decision is taken up on appeal to the Fifth Circuit.
The states are claiming that the DOL overstepped by raising the salary level for what should be exempt duties–regardless of salary. Moreover, the plaintiffs allege that the automatic indexing that raises the threshold salary over three years is an overreach of authority and should include provisions for economic conditions or the effect on resources.
Our view is that we all stay the course, and continue compliance efforts. With the compliance date of December 1 so close, it would be risky to leave the fate your workplace with the courts. In the meantime we will closely monitor this case and if the courts stop implementation, that will be a wonderful surprise.
Here’s What We Know:
What Will Change When The New Law Goes Into Effect On 7/1/18:
How Can Employers Avoid Liability:
Take Full Advantage Of The Next 23 Months To Achieve Compliance:
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As you know, the final version of the Department of Labor’s (DOL) updated overtime rules have been issued. In a nutshell, these overtime rules will raise the salary threshold for “white collar” workers from $455 per week to $913 per week starting December 1, 2016.
Our clients and the groups we have presented to have expressed a great deal of anxiety about these new overtime rules. Many are totally overwhelmed. Who will be impacted? How do we handle this? What does compliance even look like?
In response to these concerns, we created a Position Classification Service to help our clients and the groups in which we are involved. We recognize the incredible vulnerability employers are feeling, and we want to help. We believe this service provides two vital benefits:
Please let us know how we can help.
At last, the final version of the Department of Labor’s (DOL) overtime rule has been issued. The final rule will:
-Raise the salary threshold for overtime eligibility for “white collar” workers from $455/week to $913 per week or $47,476 per year, effecting a projected 4.2 million workers.
-Automatically update the salary threshold every three years, based on wage growth over time.
-Amend the highly compensated employees subject to a minimal dutes test salary from $100,000 to $134,004 per year.
-Go into effect December 1, 2016.
We won’t quote Joe Biden here, but this is a big….deal. With six months to prepare, do not wait until the last minute. Be sure your employees are properly classified with an employment audit. Running afoul of the Fair Labor Standards Act (FLSA) is expensive with big penalties, plus the possibility of class action lawsuits.
In other less shattering but important news:
The EEOC just released their final rules regarding employer wellness plans. The ten second version: the EEOC’s final rules describe how Title I of the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act (GINA) apply to wellness programs offered by employers that request health information from employees and their spouses. The guidance applies to both employers and employees about how workplace wellness programs can comply with the ADA and GINA consistent with provisions governing wellness programs in the Health Insurance Portability and Accountability Act, as amended by the Affordable Care Act (Affordable Care Act).
Time to take a closer look at your Wellness Plan. No good deed goes unpunished.
We can help. 508-548-4888
Government moves at its own pace. Sometimes the effective date of change is unknown, or as was once famously coined, a “known unknown.” In the case of the changes to the salary threshold for overtime pay, it is unknown when the rule will become effective (and perhaps even what the final salary threshold will be). There are, however, some knowns. The rule making comment period closed 9/4/15, with a whopping 293,394 comments. The rule making website has the Final Rule scheduled for “7/00/16” which we all know is not a real date, even in Washington. This is an election year, however, so the rule will most likely take effect sometime between Labor Day and November 1, 2016. How’s that for accuracy?
What’s an employer to do? Prepare. The change is coming and an employment audit will put you in compliance. We can help. 508.548.4888
Uber has just settled two class action lawsuits in California and Massachusetts brought by drivers. Drivers sought classification as employees, overtime pay and transparency regarding tips.
What does the settlement mean for the drivers and–more importantly–the law of independent contractors?
Very little. First, federal court judges in both jurisdictions must approve the $100 million settlement. Hearings will be held: This is not a rubber stamp situation by any means. The 385,000 drivers will receive little compensation to drop their claim to be employees. Judges may reject the settlement outright or pressure Uber into a much higher amount. Earlier this month, a federal judge in California rejected rival ride service Lyft’s $12.25 million dollar settlement with drivers as unfair, stating the drivers were “short-changed” by the deal.
This private action will not resolve or carry any weight on the issue of whether Uber drivers are employees. The IRS could audit Uber and make a determination on whether drivers are employees or independent contractors. The National Labor Relations Board (NLRB) is investigating Uber’s labor practices. The Teamsters are trying to organize the drivers and that would also bring the question of employee classification to the NLRB. Finally, both MA and CA have laws favoring the employee relationship over the narrowly defined independent contractor, which creates an unfriendly environment for Uber.
Many people are watching Uber as one of the largest companies to use the gig economy–can it last? Stay tuned.
The US Department of Labor (DOL) announced this week that a human resources service provider will pay $1 million in back overtime wages and damages to hundreds of employees. A DOL investigation found widespread violations of the Fair Labor Standards Act (FLSA). You can find the press release at https://www.dol.gov/newsroom/releases/whd/whd20160418-0 .
How did this happen? The employer made a common but erroneous assumption: salaried employees are not eligible for overtime pay. In this case, the employer raised salaries to avoid OT pay after 40 hours a week. The employees however were NOT EXEMPT because the criteria under the FLSA exemption were not met. (http://www.dol.gov/whd/overtime/fs17a_overview.pdf) Worth noting is the mistake was made by an outsource HR provider, which illustrates how legally complicated these matters are.
Whether an employee is actually exempt under the law—and not determined by past practice or a job description—has enormous ramifications for a business. In this case an HR provider made a very costly error, which occurs easily with back pay, liquidated damages and attorneys’ fees allowed under the Act.
Between the upcoming changes in the overtime rules (https://wordpress.com/post/workplacelawhelp.com/419 ) and cases like this, committing resources to a comprehensive audit by Foley & Foley PC is a good investment. We can get your employment classification and wage and hour matters in compliance and you can go about your business. We can help.