Legislative Roundup

Last year proved to be another dynamic year for employment law, not the least of which was due to proposed changes in overtime rules that will affect millions of employees. Other changes include more federal government involvement in non-union workers and delays in penalties related to the Affordable Care Act. This year will likely be quieter. With national elections scheduled for Nov. 8 and the Congress and White House at odds over most issues, it is unlikely that any significant federal legislation will pass this year. However, there are still employment law topics to watch for in the coming year.

Federal Level
United States Department of Labor (USDOL) overtime rules: The most significant development this year will likely come from the USDOL. Last June, the USDOL issued proposed regulations that would increase the required minimum salary for most exempt employees under the Fair Labor Standards Act (FLSA) from $455 to $970 per week ($23,660 to $50,440 annually). The USDOL is not likely to release the final regulations until late 2016 and probably after the presidential election. Until that time, the current minimum salary of $455 will remain in effect. However, employers are encouraged to prepare for the change now. In some cases, upon the release of the new USDOL regulations, employers may seek to reclassify employees as non-exempt if it is not financially feasible to increase base salaries.

Employers should keep in mind that non-exempt employees—who make up the vast majority of workers in this country—are entitled to minimum wage for all hours worked plus overtime for any hours worked over 40. The USDOL’s website provides extensive information on the proposed regulations, as well as classification issues in general. (See www.dol.gov/whd)

National Labor Relations Board (NLRB) continued expansion into nonunion workplaces and joint employment: In recent years, the NLRB has become more involved in non-union workplaces. Unbeknownst to many non-union private employers, the National Labor Relations Act (NLRA) applies regardless of whether a union has organized the workforce or not.

One particular area of the NLRB’s focus has been non-union employee handbooks. The NLRB continues to strike down as an unfair labor practice any policy that, in the view of the NLRB, could reasonably be construed to deter employees from exercising their right to engage in “protected concerted activity,” or, in other words, any policy that might interfere with an employee’s right to discuss their wages and other terms of employment among themselves and with third parties. Specific areas in which employers’ handbooks are under scrutiny include social media, confidentiality and employee workplace conduct policies.

In addition, this past August, the NLRB dramatically revised the definition of “joint employer” in the case Browning-Ferris Industries of California Inc. Now, two companies may be considered joint employers of a single, united workforce if, at any time, it can be shown that one of the companies had direct control, indirect control, or merely the potential to control the terms and conditions of employment of the other company’s employees.

This broadened test will likely  result in some businesses, such as franchisors, being unexpectedly required to participate in the union bargaining process, on the grounds that they are a joint employer with the unionized entity, such as a franchisee.   

Moreover, on the heels of Browning-Ferris, the USDOL issued guidance establishing new standards for finding joint employment under the FLSA. Notably, in the Jan. 20, 2016 guidance, the USDOL advised that it will consider two or more employers to be viewed as jointly employing a worker, and thus jointly liable for compliance under the applicable federal law, in a broad array of scenarios. In justifying its position, the USDOL noted that employment relationships in the current economy have evolved, and many more entities now share employees, use staffing agencies or contract out segments of their business.

Consequently, the USDOL fears that these new variations to the employer-employee relationship may result in workers losing legal protections and merit additional scrutiny. For example, overtime pay may be an issue if an individual works 30 hours one week for a company and works an additional 30 hours for another company that same week. If the two entities fall within the joint employer test, the employee may be eligible for overtime after 40 hours worked. If the two entities are separate and distinct, then neither company is responsible for overtime, and the employee will not benefit from the overtime protections of the FLSA.

USDOL independent contractor misclassification: On July 15, the USDOL published an administrative interpretation to address when a worker must be classified as an employee under the FLSA. Like all of the other agencies that have opined on this topic, such as the NH Department of Labor, the NH Department of Employment Security and the IRS, the USDOL noted that most workers should be classified as employees, and further, that companies cannot avoid the employment classification by entering a written “independent contractor agreement.”

There is a six-factor test, called the economic realities test, which determines the issue—not a title or a 1099. The test is at www.dol.gov/whd/regs/compliance/whdfs13.pdf. This misclassification issue will continue to be a hot topic in 2016, as all of the above referenced agencies have set it as a high enforcement priority.

The Occupational Safety and Health Administration’s (OSHA) enforcement areas: Employers are required to provide employees “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”

In enforcing this general duty clause, during the past year, OSHA has issued guidance to employers on a broad array of topics, including prevention of workplace violence in health care settings, restroom access for transgender workers and prevention of distracted driving. Following the passage of federal budget, it is anticipated that OSHA penalties will increase in 2016, along with enforcement actions. 

Affordable Care Act update: The ACA is still in force, though with two welcome changes for employers:

1. The IRS extension of the due dates for new health care information reporting forms in 2016:  Applicable large employers (those with 50 or more full-time employees, including full-time equivalent employees) now have additional time to provide health coverage information for 2015 to individual taxpayers. Now 2015 health coverage information for employees is due to the IRS by May 31 for paper filers and June 30 for electronic filers.

2. The “Cadillac” tax delay under the 2016 budget bill: The tax on high-cost employer-sponsored health coverage will first be effective in 2020, rather than in 2018 as originally scheduled. In addition, the budget bill makes the excise tax deductible as a business expense. Nothing has changed, though, on the potential penalties on applicable large employers for failing to offer coverage or providing subpar coverage. 

State Level
Employment contract restrictions on physicians: Pending NH legislation seeks to prohibit the use of restrictive covenants in physician employment agreements. Currently, physicians are frequently asked to sign a non-compete agreement prohibiting them from competing against a former practice. The pending legislation would eliminate the right of a hospital or practice group to request such agreements. 

Schedule of payment of wages: This pending legislation seeks to permit employers to pay employees on a weekly or bi-weekly basis. At present, NH employers must pay weekly unless the commissioner of the Department of Labor grants them permission to pay on a less frequent basis.

Peg O’Brien (top) and Pat McGrath are shareholders at Devine Millimet law firm in Manchester. O’Brien is chair of the firm’s Labor and Employment Practice Group and can be reached at 603-695-8631 or mobrien@devinemillimet.com. McGrath can be reached at 603-695-8537 or pmcgrath@devinemilliment.com.