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END OF DEMOCRAT'S TERM ON LABOR BOARD TRIGGERS LARGE NUMBER OF PRO-MANAGEMENT RULINGS

The sole Democratic member of the National Labor Relations Board (NLRB), Lauren McFerran, reached the end of her term on December 16, 2019.  Traditionally, the departure of a Board member triggers large numbers of rulings, particularly if the case has overturned existing precedent and so a new member does not have to start all over in reviewing the pending cases.  It is likely that the Board will continue to function with the three Republicans for some time, but at some point in the future there will likely be Democrats nominated to the Board as part of some type of compromise with other appointments.  The Obama-era NLRB also functioned with three members of the Democratic Party for about eight months.

As of this writing, several encouraging rulings or developments were issued in December with pro-management implications.  These rulings were generally by three-one margin, with the sole Democrat dissenting.

SUPREME COURT MAY LET TRUMP CANCEL DACA

The U.S. Supreme Court heard arguments on November 11, 2019, as to whether President Trump could rescind the Deferred Action for Childhood Arrivals Program, commonly known as DACA.  Based on questions and comments made by the justices, many commentators suggest that we may be looking forward to another 5-4 decision, with five of the justices allowing the President to cancel the program.  One of the justices, Chief Justice Roberts, suggested that he saw DACA as illegal from the start, while another justice, Justice Brent Kavanaugh, suggested that he was satisfied with the explanation for the cancellation.  The other justices like Justice Sotomayor said the President had told DACA-eligible people "that they were safe under him and that he would find a way to keep them here." 

Following the hearing, the President suggested that a ruling in his favor would force Democrats to negotiate a way to keep the DACA recipients in this country.  President Trump tweeted:   "A deal would be made with Dems for them to stay!" 

Currently more than 660,000 people have active DACA status.  A vast majority of these DACA recipients are currently employed in the U.S.

GALLUP REPORTS ON JOB SATISFACTION

A Gallup Poll released in October shows that 40% of employed Americans believe they are in good jobs, versus 44% in mediocre jobs, and 16% in bad jobs.  The poll shows that how employees rank the quality of their job has a strong correlation with how they view their quality of life.   A majority of those making more than $140,000.00 a year, the top 10-percent, characterized their job as good, while less than a third of those making less than $24,000.00 felt their jobs were good.  About half of the workers were satisfied with their current pay, again closely correlated to their income.  Another significant finding was that only 37% found improvement in any single aspect of work besides pay over the last five years.  The study also found race, ethnicity and gender to be strongly correlated with perception of job quality

GOOGLE CONTINUES TO BE AFFECTED BY CORPORATE CULTURE ENCOURAGING OPEN DEBATE

This newsletter has noted in prior articles the significance that Google places on its workplace culture designed to encourage open debate. The culture has resulted in numerous attempts by Google employees to influence corporate policies, most notably pressing management to cancel certain contracts, including those related to the image-recognition system for the Pentagon and certain technology for use by China. Google has also run afoul of NLRB rules on employee speech, most recently in an NLRB settlement requiring it to rescind discipline against a Republican engineer who accused the company of discriminating against conservative workers.

For various reasons, the company has put in place new rules beginning this August that discourage workers from discussing politics, at least during working time. Its new guidelines are an attempt to curb disruptive internal political debates. The latest rules ask staff "to do the work we've each been hired to do, and not to spend working time on debates about non-work topics."  Google also announced it would appoint employees to moderate the company's internal message boards, in effect acknowledging that the discussions have gotten out of control.  The fear is that the level of debate has driven a wedge between those with opposing views as well as between management and an activist workforce.  The plan is for Google to flag content that doesn't align with the new guidelines. 

 

Last year, Google warned the employees that it would discipline anyone who discriminates or attacks colleagues or engages in discussions that are "disruptive to a productive work environment." In those guidelines, Google also advised employees to avoid name-calling, including making blanket statements about groups or categories of people.

 

Google's experiences also show the tension with NLRB rules which allow employees to discuss numerous issues relating to wages, hours, and terms of condition of employment, at least on non-working time.

NATIONAL SAFETY COUNCIL PUBLISHES EMPLOYER TOOLKIT FOR DRUG POLICIES AND ISSUES

The National Safety Council has published an Employer Toolkit for drug policies and issues, which is very informative and comprehensive.  The Toolkit furnishes an employer an excellent "checklist" of various items to consider, including such things as how opioids affect tolerance and ultimately lead to addiction, how to confront an employee, sample employee buy-in approaches, sample policies, and the like.  The policies recommend balancing the safety needs of the employer and workers' health, and suggest the following components:

  • Statement of the purpose and scope of the program.
  • Definition of what constitutes misuse, including alcohol and all forms of impairing drugs, prescribed, over-the-counter, legal, illegal, synthetic or otherwise.
  • Statement of who is covered by the policy and/or program.
  • Statement describing under what circumstances drug or alcohol testing will be conducted, including confidentiality of test results.
  • Procedures to ensure fair testing process (confirmation testing, use of medical review officers, worker protections against retaliatory testing).
  • Training for employees, supervisors, and others in identifying impaired behavior and substance use.
  • Employee education (e.g., a substance-free awareness program).
  • Procedures for dealing with impaired workers.
  • Assistance for those who voluntarily seek help for impairment issues.
  • For further information, go to org/opioidsatwork.

STATUS OF EEOC PAY EQUITY DATA COLLECTION

As reported in this newsletter last month, a federal judge in the District of Columbia ruled that the EEOC had to implement its requirement that employers file certain pay equity data as part of their EEO-1 Component 2 filing due on September 30 of this year.  The EEOC has already announced that the pay equity data component will not be required after this year, but there is still ongoing litigation as to the completion of the requirement for this year.  The EEOC has reported that approximately 81% of employers met the filing requirement of the pay equity data as of October 28, 2019.  Plaintiffs in the ongoing litigation have contended that the pay data requirement should remain open until over 98% of businesses with 100 or more workers have submitted their pay equity data.  The EEOC contends that sufficient filings have been made to close the first-time requirement.  On October 29, the same federal judge ruled that the EEOC must continue to collect the pay data from employers with 100 or more workers.  The rationale was that the agency had previously left the collection period open past the deadline, so now the judge wants the EEOC to at least collect the average response rate it calculates for those who submit data within the grace period rather than the normal deadline. 

The ruling directs the EEOC to keep the filing period open similar to the manner it has in the past, so that the federal judge can determine when the EEOC's responsibility to collect the pay equity data ceases.  The court order said the EEOC "must continue to take all steps necessary" to complete the data collection by January 31, 2020.  This suggests the possibility that there may be follow-up with those employers with 100 or more employees that have not yet filed the pay equity Component 2 Report.  However, there are no automatic fines or penalties for not filing. 

FEDERAL AGENCIES MUST POST ALL GUIDANCE ON THEIR WEBSITE BY NEXT FEBRUARY OR SUCH WILL BE CONSIDERED RESCINDED

Last month, this newsletter reported that President Trump, on October 9, signed two executive orders to reduce the impact of agency guidance that had become a back door means of regulation.  Agencies are supposed to review all their federal guidance documents and rescind those no longer in effect.  The Office of Management and Budget has given agencies until February 28, 2020 to list all their operative industry guidance documents and post them to a single departmental website. 

In a related development, the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC) announced that they, too, will meet these requirements, even though as independent agencies, they are outside the normal requirements. 

Guidance from federal agencies is a double-edged sword to industry.  On the one hand, many administrations have used such guidance to change the law without going through the normal notice and comment period, but on the other hand, some in industry like whatever advice they can get on compliance requirements of complicated legal issues.  The new executive order will definitely promote transparency and consistency by requiring such postings to a central website.

HAVING TROUBLE WITH AGGRESSIVE FEDERAL INVESTIGATORS - READ THIS

It is not uncommon for many employers and their attorneys to complain that they are harassed by overly aggressive federal investigators, some of whom appear to be following prior administration policies that are no longer applicable.  In October, Cheryl Stanton, Administrator of the Department of Labor's Wage and Hour Division, addressed just this issue.  She acknowledged there was a common complaint that some field investigators are ignoring the Trump Administration policies and instead advancing Obama-era strategies that are now outdated.  In such situations, Stanton advised employers or their representatives to contact their district office director or to "flag it for the national office, and we can take a look and make sure that things are being applied correctly."  Stanton also emphasized that employers are free to "run it up the chain," and stated that: "We are trying to look at the best way to become one Wage and Hour Division instead of 54 district offices."  She noted that the division is in the process of retraining some investigators and reviewing the field operation handbook.

 

In a related development, many expect the new Secretary of Labor, Eugene Scalia, to direct new policy changes under a unifying but different interpretation of what constitutes fair Labor Department enforcement.  The result may be memos to regional staffs requiring more national office oversight of major cases to guarantee the agency's litigation resources are properly engaged.

INDEPENDENT CONTRACTOR LEGISLATION IN CALIFORNIA THREATENS GIG WORKERS

The California legislature has passed a bill that has been signed by its governor designed to reclassify many or most contract workers as employees.  The bill goes into effect January 1 of next year, and applies what is known as the "ABC Test" to employment status.  It requires companies that want to treat a worker as a contractor to prove that the worker is independent and free to perform the services provided without company control, that those services are outside the company's usual course of business, and that the contractor works independently in the same type of business as the contracted work.  The bill, known as Assembly Bill 5, directly threatens the business model of gig-economy companies like Uber, as would the legislation promoted by various Democratic Presidential candidates in Congress.  Further, the so-called "red" states across the country are looking at this bill and considering similar legislation.                     

                       

The situation in California leaves many with the question as to what to do after the law goes into effect.  Federal Express reacted to similar issues by abandoning any issues of independent contractor drivers in favor of smaller independent motor carriers, and contracting with corporate entities rather than individuals seems to promote the contractor classification.  Although a company might also consider outsourcing employment to a staffing agency, issues still arise concerning potential joint employment liability.

EEOC GAINS QUORUM AND NEW GENERAL COUNSEL

On August 1, 2019, the Senate approved Sharon Gustafson as the EEOC's new General Counsel and Charlotte Burroughs (D) for a second term as a member of the EEOC Commission.  Gustafson had been awaiting Senate approval for almost 15 months, giving the Administration its first Senate-confirmed General Counsel.  The authority of the EEOC General Counsel is quite significant as the Commission has delegated the authority to the General Counsel to determine which cases to litigate, and some consideration is being given to return that authority to the Commission rather than the General Counsel.

Since the Commission now has a quorum to transact business, it will undoubtedly be addressing some of the controversial issues over which consideration has been postponed due to the lack of a quorum.  Those issues include new policies on sexual harassment and the controversial issues associated with sexual orientation and gender identity.  The Justice Department and the EEOC currently have conflicting opinions as to whether the discrimination laws protect LGBT workers, and a case dealing with that issue is now before the U.S. Supreme Court.  Another controversial issue pending at the EEOC is the Obama-era initiative to require employers to submit pay equity data with their EEO-1 Reports.  There is another nominee for the remaining open Commission position, and the Administration has nominated Keith Sonderling for this position, but as of yet there have been no Senate confirmation hearings. 

U.S. DEPARTMENT OF LABOR ISSUES FINAL OVERTIME RULE

On September 24, 2019, the U.S. Department of Labor announced its long-anticipated Final Rule on exemptions and overtime under the Fair Labor Standards Act (FLSA).  The new rule takes effect January 1, 2020.  It increases the salary thresholds necessary to exempt executive, administrative, or professional employees from the FLSA’s minimum wage and overtime pay requirements from $455 to $684 per week (equivalent to $35,568 per year for a full-year worker).  It also allows employers to count a portion of certain nondiscretionary bonuses and commissions towards meeting that salary level:  this will allow an employer to “catch up” an employee’s earnings at year end so the employee qualifies for the exemption. The total annual compensation level for highly compensated employees (HCE) is increased from the currently-enforced level of $100,000 to $107,432 per year.

The variable pay component cannot exceed more than 10% of each employee's total pay.  In addition, if an employee does not earn enough in non-discretionary bonuses and incentive payments (including commissions) in a given 52-week period to retain his or her exempt status, DOL permits a "catch-up" payment at the end of the 52-week period.  This gives an employer one pay period to make up for a shortfall of up to 10% of the standard salary level for the preceding 52-week period.  DOL did not make any revision to the separate duties test, which exempts workers from overtime if their primary duties involve supervisory functions or require advanced knowledge, provided they also earn more than the minimum salary level. 

The new rule is expected to draw a legal challenge from worker advocates, as an earlier Obama-era proposed regulation would have doubled the salary threshold to $47,500 and automatically updated it every three years. 

Employers will need to weigh the cost of raising employee salaries above the new threshold against the cost of reclassifying them as non-exempt and paying overtime.  Such changes will necessitate a communication strategy as employees tend to like salaried status, including the benefit levels that often come with salaried employees.  The changes could be explained as based on the new government rules.  If employees are reclassified as hourly, employers will need to track work time and pay appropriate overtime premiums.  Another potential solution is to keep employees on salary and pay one-half time overtime on a fixed pay for fluctuating hours arrangement.  The latter arrangement should only be used with legal advice. 


Wimberly, Lawson, Steckel, Schneider & Stine

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