The federal employment law landscape saw some interesting developments in 2017, as well as some anticipated changes that were ultimately halted or delayed. Below is a summary of major federal employment law headlines and a look at what employers can expect in 2018.
For Missouri and Illinois employers specifically, a review of 2017 updates and a look forward at 2018 can be found here.
Rules and regulations: Delayed, but not forgotten
Although 2017 was filled with promises and proposals of forthcoming federal rules and regulations, we saw many of these rules delayed, reworked and pushed off until 2018. Included in these delays were the following regulations:
FLSA Final Rule: On May 18, 2016, the U.S. Department of Labor (DOL) released the Final Rule updating the regulations defining and limiting “white collar” overtime exemptions under the Fair Labor Standards Act (FLSA). These rules would apply to workers who fall under the executive, administrative or professional exemptions from the FLSA’s minimum wage and overtime protections. The Final Rule also set the minimum salary threshold for employee exemptions from overtime pay at $47,476 per year ($913 per week) — a 101 percent increase above the previous minimum. The rule was set to go into effect Dec. 1, 2016, until a Texas federal judge issued an order on Nov. 22, 2016, to block the regulation.
The Obama DOL initially defended the Final Rule and appealed the injunction to the Fifth Circuit Court of Appeals seeking to overturn the injunction. After the Trump inauguration, however, the DOL went silent regarding its position on the appeal. On June 30, 2017, the DOL informed the Fifth Circuit it had decided not to advocate for the specific salary level set in the final rule, but it requested that the Fifth Circuit approve the DOL's use of both a "salary" and "duties" test to determine eligibility for overtime exemptions. The DOL also informed the court that it would commence further rulemaking to determine the appropriate salary levels for such exemptions. On July 26, 2017, the DOL published a Request for Information (RFI) seeking public comments, data, ideas and information on an appropriate salary level for exempt employees. The DOL allowed for a comment period of 60 days, or until Sept. 25, 2017.
Now that the DOL has had over four months to consider the public comments and responses, we expect it will reissue its Final Rule in 2018. That said, we recognize that it will likely look different than the 2016 version. In particular, we suspect the salary threshold will be lower, and there could even possibly be multiple salary levels based on factors like employer size, census region or metropolitan statistical area.
OSHA Final Rule: The Final Rule from the DOL’s Occupational Safety and Health Administration (OSHA), which took effect Jan. 1, 2017, requires certain employers to electronically submit injury and illness data that they are already required to record on their onsite OSHA Injury and Illness forms. On Aug. 1, 2017, OSHA extended the compliance date for electronically submitting the injury and illness data through the Injury Tracking Application (ITA) to Dec. 15, 2017. This allowed affected employers additional time to become familiar with the new electronic reporting system. On Dec. 18, 2017, OSHA again extended the deadline for accepting 2016 OSHA Form 300A data through the ITA until midnight on Dec. 31, 2017. OSHA stated that it would not take enforcement action against those employers who submit their reports after the Dec. 15, 2017, deadline but before Dec. 31, 2017. Starting Jan. 1, 2018, the ITA would no longer accept the 2016 data.
OSHA has stated that it is currently reviewing the other provisions of its final “Improve Tracking of Workplace Injuries and Illnesses” rule and intends to publish a notice of proposed rulemaking to reconsider, revise or remove portions of that rule in 2018.
ERISA Rule: At the beginning of 2017, the DOL finalized amendments to the Employee Retirement Income Security Act (ERISA) claims and appeals procedures for disability benefit plans. The DOL originally indicated that plans covered by ERISA must comply with the Final Rule by Jan. 1, 2018. The amended regulations require plans to provide more detail in denial notices, impose additional criteria to ensure independence and impartiality in decision-making. The new rules also allow claimants to go directly to court if a plan’s procedures do not strictly comply with the final rules, and make disability claims subject to the same “culturally and linguistically appropriate” rules as group health plan claims.
On Oct. 12, 2017, the DOL announced a 90-delay of the implementation of the amended ERISA claims procedure rule until April 1, 2018, giving the DOL time to decide whether to amend, modify or rescind the Final Rule. The DOL’s proposed delay was prompted by concerns raised by various stakeholders and Congress that the Final Rule would increase the cost of offering disability benefits plans to employees, increase litigation, and ultimately result in employees having less access to disability benefits. The DOL allowed additional time for comments and data submissions, but later issued a press statement that while it received numerous complaints about the new rule, only a few of them provided substantive criticism.
On Jan. 5, 2018, the DOL announced that the Final Rule will become effective on April 1, 2018. For more information and an in-depth discussion of the new claims procedures, see our detailed post here.
Title VII: Circuit Split on Sexual Orientation
Last year brought a closer look at whether sexual orientation is protected under Title VII of the Civil Rights Act of 1964. The verdict is still out in several jurisdictions, but the Second, Seventh, and Eleventh Circuits have spoken. The Second and Eleventh Circuits found that Title VII does not prohibit sexual orientation discrimination, while the Seventh Circuit Court of Appeals ruled that Title VII protection extends to sexual orientation as a form of sex discrimination. Despite ripeness for a resolution, in December 2017 the Supreme Court denied a petition for writ of certiorari in the Eleventh Circuit case, Evans v. Georgia Regional Hospital, (No. 17-370, certiorari denied 12/11/2017). So, the opportunity for clarity from the Supreme Court remains. Presently, however, employers are advised to check local and state laws for guidance, keeping in mind that several state and local jurisdictions have already provided protection against sexual orientation discrimination. Find a more detailed discussion on this circuit split here.
2018 promises to be an interesting year for employment law at the U.S. Supreme Court, as the court gears up to address multiple questions that might affect your business. In the coming year, we can expect decisions on the issues described below.
Can public employees be required to pay “fair share” union fees?
For the third time in four years, the Supreme Court will consider whether public sector workers can be required to pay “fair share” union fees despite not being union members in Janus v. AFSCME. In 1977 in Abood v. Detroit v. Board of Education, the Supreme Court approved of fair share fees, but recent cases have asked the court to overrule this decision in light of First Amendment concerns. In 2014, the court reviewed fair share fees for public employees in a case involving home health aides but skirted the issue by deciding that the workers in question were not public employees. The justices heard a similar case in 2016, but Justice Scalia’s death left the court deadlocked. Now with Judge Gorsuch on the bench and an administration that supports overturning the Abood decision, the court will hear oral argument on this issue on Feb. 26.
Can arbitration agreements contain class action waivers?
Earlier this term, the Supreme Court heard oral argument in a trio of cases asking whether arbitration agreements between employers and individual employees that contain class action waivers violate the National Labor Relations Act by preventing employees from engaging in “concerted activity” with their coworkers. At issue is a clash between the NLRA, which permits employees to band together to for “mutual aid or protection” and the Federal Arbitration Act, which provides that arbitration agreements should be enforced unless there is a clear contrary command from Congress. A decision barring class action waivers in arbitration agreements would have sweeping effects, invalidating an estimated 25 million employment agreements. Stay tuned for the court’s final ruling and opinion.
Does a business have to make a cake for a same-sex wedding?
In December, the Supreme Court heard oral arguments in the now well-known Masterpiece Cakeshop v. Colorado Civil Rights Commission case. This case stems from a baker’s refusal to make a wedding cake for a same-sex couple — a refusal that led the Colorado Civil Rights commission to find a violation of a Colorado state public accommodations law prohibiting discrimination on the basis of sexual orientation. The baker then sued, alleging that the application of the anti-discrimination law violated his sincerely held religious beliefs and his freedom of expression. The Supreme Court’s ultimate decision has not yet been penned, but either way the justices decide, it will certainly be a landmark decision for the LGBTQ population. If the court finds in favor of the bakery, the free speech or freedom of religion card could trump any state law prohibiting places of public accommodation from discriminating on the basis of sexual orientation. Around 20 states currently have such laws on their books.