Executive Summary: 2016 is nearly upon us. While federal employment legislation most likely will not be enacted in the upcoming year, employers can expect federal agencies to continue their efforts to implement the Obama Administration's agenda through rule-making and increased compliance activity. Additionally, states undoubtedly will continue to enact legislation to fill in what many perceive as gaps in laws protecting employees. Here's what is on the labor and employment law horizon for 2016:
Overtime exemptions. The DOL issued a proposed rule that would raise the required minimum salary for most FLSA exemptions from $455 to $970 per week ($23,660 to $50,440 annually). The DOL is not likely to release the final rule until late in 2016, probably after the presidential election. For more information, please see our June 30, 2015 Legal Alert, The DOL's Proposed Amendments Increase the Salary Threshold for the FLSA's White Collar Exemptions - Dramatically Expanding the Number of Employees Eligible for Overtime.
Continued challenges to mandatory arbitration agreements. Earlier this month, inDirecTV, Inc. v. Imburgia, the US Supreme Court ruled that the Federal Arbitration Act (FAA) allows federal courts to police state rulings to ensure that they uphold the federal policy favoring arbitration. While not an employment case, the Court looked at whether an arbitration clause was scrutinized "on equal footing" with other agreements. Accordingly, it is likely that claimants will challenge agreements to arbitrate employment disputes with their employer. However, the decision makes it clear that the FAA preempts state-law rules barring enforcement of an arbitration agreement if the agreement does not permit the parties to utilize class procedures in arbitration or in court. Additionally, the National Labor Relations Board (NLRB) continues to take the position that mandatory arbitration agreements containing class action waivers violate employees' rights under the National Labor Relations Act, despite multiple federal court decisions rejecting this position.
Home health care pay. In August 2015, the federal Court of Appeals for the D.C. Circuit upheld a U.S. Department of Labor (DOL) rule that requires the payment of a minimum wage and overtime for live-in home health care workers employed by home health care agencies. The rule was supposed to take effect on January 1, 2015, with a twelve-month grace period for employers to comply. It remains unclear when the revived rule will be fully implemented, but the DOL maintains that it will continue to provide technical assistance to employers for compliance in 2016 and will use complaint-based and agency-initiated investigations to achieve compliance. For more information, please see our October 13, 2015, Legal Alert, United States Supreme Court Denies Stay of Appeals Court Ruling Validating USDOL's Final Rule.
Minimum wage increases. Many state and city minimum wage laws are set to change in 2016, including Birmingham, AL ($8.50/hour as of 7/1/16), Alaska ($9.75 on 1/1/16), Arkansas ($8.00 on 1/1/16), California ($10 on 1/1/16), various cities in California, Colorado ($8.31 on 1/1/16), Connecticut ($9.60 on 1/1/16), DC ($11.50 on 7/1/16), Hawaii ($8.50 on 1/1/16), Chicago, IL ($10.50 on 7/1/16), Lexington, KY ($8.20 on 7/1/16), Louisville, KY ($8.25 on 7/1/16), Portland, ME ($10.10 on 1/1/16), Maryland ($8.75 on 7/1/16), Massachusetts ($10.00 on 1/1/16), Michigan ($8.50 on 1/1/16), St. Louis, MO ($9.00 on 1/1/16), Minnesota ($7.75 or $9.50 depending whether a company's annual sales are greater than $500,000, on 8/1/16), Nebraska ($9.00 on 1/1/16), New York ($9.00 on 12/31/15), Rhode Island ($9.60 on 1/1/16), South Dakota ($8.55 on 1/1/16), Vermont ($9.60 on 1/1/16), Seattle, WA ($10.50 to $13.00 depending upon number of employees and whether the employee offers health insurance, on 1/1/16), Tacoma, WA ($10.35 on 2/1/16) and West Virginia ($8.75 on 12/31/15). In addition, on all contracts entered into on or after January 1, 2016, federal contractors must pay workers a minimum wage of $10.15 per hour. Certainly, employers should ensure that these new minimum wage rates are correctly paid. In some instances, employers may need to update employee handbooks in sections that address minimum wage rates.
Joint employer liability. The NLRB issued a decision that could significantly affect employers utilizing alternative workforce arrangements, such as staffing firms and professional employer organizations (PEOs). In Browning-Ferris Industries of California, Inc., v. Sanitary Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, the NLRB deviated from established precedent to hold that a staffing firm may be considered a joint employer of its client even where it did not actually exercise any direction and control over the workers – the right to do so is now sufficient. Accordingly, two or more entities would be deemed joint employers of the same employee if they "share or codetermine those matters governing the essential terms and conditions of employment." It remains to be seen whether the NLRB's test will be adopted in other contexts, such as under Title VII of the Civil Rights Act of 1964 (Title VII), the Family and Medical Leave Act (FMLA) or other employment laws outside of the NLRB's jurisdiction.
Ban-the-box legislation. States and local jurisdictions have been adopting ban-the-box legislation designed prevent employers from initially using arrest or conviction records to deny job applicants employment. Instead these laws require the employer to consider the applicant's skill and experience first and delay criminal background checks until later in the hiring process. Over the past few years, more states have been banning employers from asking questions about prior criminal convictions on job applications. At last count 19 had passed ban-the-box legislation: California (2013, 2010), Colorado (2012), Connecticut (2010), Delaware (2014), Georgia (2015), Hawaii (1998), Illinois (2014, 2013), Maryland (2013), Massachusetts (2010), Minnesota (2013, 2009), Nebraska (2014), New Jersey (2014), New Mexico (2010), New York (2015), Ohio (2015), Oregon (2015), Rhode Island (2013), Vermont (2015), and Virginia (2015). In addition, several of these states (Hawaii, Illinois, Massachusetts, Minnesota, New Jersey, Oregon and Rhode Island) have also removed the conviction history question on job applications for private employers only. Expect more states to pass similar legislation.
LGBTQ workplace issues. This year's Supreme Court case of Obergefell v. Hodgesheld that same-sex couples have a constitutional right to marry. Accordingly, same-sex couples may now receive employer-offered benefits that were largely exclusive to heterosexual couples, such as health insurance. The law likely will bring claims under Title VII (arguing that the law's protections include sexual orientation or marital status) or the FMLA (on the basis that an eligible employee is allowed to take protected leave to care for a "spouse" who has a serious medical condition, especially now that the DOL has revised its regulations to define spouse under the FMLA to include married, same-sex partners). Additionally, the Equal Employment Opportunity Commission's (EEOC's) Strategic Enforcement Plan includes protections for LGBTQ employees. Accordingly, employers should look at language contained in benefit plans and other provisions of their handbooks which could implicate rights afforded to same-sex couples to ensure compliance with this decision.
Wellness programs. Many employers have implemented employee wellness programs to incentivize workers to become more fit. The EEOC has proposed new regulations for wellness programs addressing the Americans with Disabilities Act (ADA) and Genetic Information Nondiscrimination Act of 2008 (GINA). For instance, the EEOC is looking at whether, and to what extent, the ADA permits an employer to offer financial incentives for employees to participate in wellness programs that include disability-related inquiries (such as questions about current health status asked as part of a health risk assessment) or medical examinations (such as blood pressure and cholesterol screening to determine whether an employee has achieved certain health outcomes). The EEOC stated that a wellness program violates the ADA if it utilizes an involuntary medical examination, such as a biomedical test, that is not job related. So, employers should closely follow the EEOC's enforcement with respect to wellness programs and evaluate whether their plans are legally compliant. For more information, please see our April 22, 2015 Legal Alert, EEOC Issues Proposed Wellness Program Amendments to ADA Regulations. Title II of GINA prohibits employers and other covered entities from requesting, requiring, or purchasing genetic information, subject to six limited exceptions. One exception allows a covered entity to acquire genetic information about an employee or his or her family members when it offers health or genetic services, including wellness programs, on a voluntary basis. The EEOC's proposed rule to amend the regulations implementing Title II of GINA would allow employers who offer wellness programs to provide limited financial and other inducements (also called incentives) in exchange for an employee's spouse providing information about his or her current or past health status. The EEOC is accepting comments on the proposed rule through December 29, 2015, so a final rule will likely be released sometime in 2016.
Paid sick leave. While there continues to be no federally-mandated paid sick leave law in the U.S., President Obama has issued an executive order requiring certain federal contractors and subcontractors to provide employees with one hour of paid sick leave for every 30 hours worked, for at least 56 hours per year. The requirement will take effect for covered contracts entered into after January 1, 2017. The President has directed the Secretary of Labor to issue implementing regulations by September 30, 2016. For more information, please see our September 8, 2015 Legal Alert, Executive Order Will Require Paid Sick Leave for Employees of Government Contractors. Additionally, Connecticut, California, Massachusetts, Oregon (effective in 2016), and Washington D.C., as well as a number of cities, have enacted paid sick leave laws. Employers can expect to see more efforts to enact paid sick leave requirements at the state and local level in 2016.
Fair Credit Reporting Act (FCRA) litigation. In 2015, employers saw numerous lawsuits claiming technical violations of the FCRA's notice and disclosure requirements, many of which were settled for significant sums. However, in November 2015, the Supreme Court heard oral argument in a nonemployment case that could significantly impact these types of claims. In Spokeo Inc. v. Robins, an FCRA class action, Robins claimed Spokeo (a company that operates a "people search engine" that aggregates various types of public information about people) provided inaccurate information about him. Although Robins did not claim actual damages, he claimed the company's violation was willful and sought statutory damages of between $100 and $1,000. The federal trial court dismissed the case, finding he lacked standing to bring it, but the Ninth Circuit reversed this decision. The U.S. Supreme Court agreed to review the case to determine whether someone who has not suffered a concrete harm, but instead alleges only a statutory violation, has standing to bring a claim on behalf of himself or a class of individuals. If the Court holds that such individuals do not have standing, it should eliminate or greatly reduce the number of class action lawsuits filed against employers alleging technical violations of the FCRA.
The new year undoubtedly will bring its share of challenges for employers.