by Lisa A. Krupicka
Hard to believe that 2017 is almost over but here we are. I don’t have a particularly good knack for making predictions, but I don’t have to be a legal wizard to tell you what to expect in employment law in 2018: Change, change, change! Here are some areas that HR professionals should be watching in the coming year:
The Salary Threshold for Overtime Exemptions
We had a lot of excitement in 2016 with the anticipated raising of the salary threshold required for the white collar exemptions from $455 a week ($23,660 annually) to $913 a week ($47,476) on December 1, 2016. Then came the last minute injunction from a Texas federal district court and the election of Donald Trump as President. The Trump administration Department of Labor backed off its appeal of the injunction and the district court eventually granted summary judgment for the plaintiffs in August 2017, making the injunction permanent.
So we’re back at $455 but for how long? Probably not long. In July 2017, the Department of Labor issued a request for information that asked commentators their thoughts on how to set the new threshold. At his confirmation hearing, new Labor Secretary Alexander Acosta said the threshold should be set somewhere between $30,000 and $35,000.
The comment period closed in September 2017. Commentators from the management side argued that the DOL should use the 2004 test, which calculated the threshold based on the 20th percentile of the lowest wage region. This test, when based on current numbers, would raise the threshold to $32,000. Labor commentators want to stick with the Obama DOL formulation based on the 40th percentile of the lowest wage region, which sets the threshold at $47,476 with a built-in escalator. Look for the final proposed rule in 2018.
The Minimum Wage
Expect it to continue to increase through state and municipal legislation, except in the South, with some states on the two coasts going as high as $15 an hour over the next few years. There is little or no chance the U.S. Congress will change the federal minimum wage, so it will be left to cities and states to continue to experiment.
Collective Action Waivers
In 2012, the National Labor Relations Board decided D.R. Horton, Inc., 357 NLRB 2277 (Jan. 3, 2012) holding that Sections 7 and 8 of the National Labor Relations Act prohibit employers from requiring their employees to sign an agreement that precludes joint, class or collective claims concerning wages, hours or their working conditions. The Board reasoned that such waivers interfere with employees’ statutory rights to engage in concerted activities in pursuit of mutual aid and protection.
The NLRB has continued to enforce the D.R. Horton rule despite its rejection by the Second and Eighth Circuits, pointing to support from the Seventh and Ninth Circuits. The circuits rejecting D.R. Horton have generally held that a class or collective action is a procedural device used to bring substantive claims rather than a substantive claim in itself, so that the NLRA does not apply. The circuits upholding D.R. Horton reach the opposite conclusion, i.e., that the use of class action procedures is a substantive right protected by the NLRA.
In order the resolve this circuit split, the U.S. Supreme Court granted certiorari in the Fifth, Seventh and Ninth Circuit cases and heard oral arguments in October 2017. The Supreme Court has affirmed time and again its great affection for the Federal Arbitration Act, including in the class action waiver context. In AT&T Mobility LLC v. Concepcion, the Court held in the consumer context that state law doctrines that “disfavor arbitration” are preempted by the FAA if requiring the option of class-wide arbitration interferes with fundamental attributes of arbitration. We can expect a decision in early 2018.
LGBT Issues in the Workplace
We have seen swift advancement of LGBT rights in the wake of the U.S. Supreme Court decision that same-sex couples have the constitutional right to marry in Obergefell v. Hodges, but changes in the employment context have not yet been clearly established. Although the Seventh Circuit, in Hively v. Ivy Tech Community College of Indiana, decided that Title VII’s prohibition on sex discrimination includes sexual orientation, and the Second Circuit appears poised to do the same in Zarda v. Altitude Express, the vast majority of the other circuits have held that sexual orientation discrimination is not covered by Title VII, including the recently decided Eleventh Circuit decision of Evans v. Georgia Regional Hospital.
If you had asked me a couple of weeks ago if I thought the Supreme Court would take up this circuit split at the first opportunity, I would have said “yes of course!” but I would have been wrong. On December 11, 2017, the Court denied cert in the Georgia Regional Hospital case, leaving the law uncertain. I do think it is probable that another circuit will be presented with an opportunity to revisit the issue in 2018, so stay tuned.
Labor Relations Round-Up
In this area, we can expect swift and wide-reaching changes in the interpretation of labor/management rights by the new Republican-dominated NLRB. With the confirmation of two management-side labor lawyers to the NLRB to create a 3-2 Republican majority and the appointment of a management-side labor lawyer as General Counsel, some of the most controversial board precedents of the last few years are already in the process of being overturned.
On December 1, 2017, the General Counsel issued a directive to his Regional Directors to submit for advice cases raising issues such as the following: protection of the use of vulgar or obscene language when exercising rights under the NLRA, the invalidation of employee handbook rules prohibiting disrespectful conduct, the imposition of the joint employer doctrine in independent contractor and franchisor/franchisee relationships, the invalidation of rules requiring employees to maintain the confidentiality of workplace investigations, and the requirement that employers allow employees to use company email systems to advocate for a union.
Only two weeks after the issuance of this directive, on December 14, 2017, the Board, by a 3-2 vote, has already invalidated the 2015 Browning-Ferris Industries case, which expanded the test for determining joint employment to permit a company and its franchisees or contractors to be deemed a single employer for union organizing purposes even in the absence of overt control over workers’ terms and conditions of employment. On that same day, the Board, by the same majority, overturned the 2004 Lutheran Heritage Village-Livonia standard, which held that handbook policies that could be “reasonably construed” to have a chilling effect on the exercise of collective rights under the NLRA were illegal, imposing instead a standard under which the Board would balance a given rule’s impact on workers’ rights with the employer’s reasons for promulgating it. The Board has also overturned Specialty Healthcare, the 2011 decision approving the creation of “micro-units” for bargaining purposes, and the 2016 DuPont decision limiting changes an employer can make in union workplaces. Expect more such reversals in 2018.
Sexual Harassment Allegations
With new allegations of sexual harassment and assault being announced virtually every day against some of the most powerful figures in the fields of entertainment, journalism, politics, business and technology, there is no reason to believe this tsunami will abate in 2018. Many of these claims were addressed by the payment of a large settlement requiring confidentiality, so that in some cases, serial harassers were protected for years. The new tax bill passed by Congress in the last weeks of 2017 refuses a tax deduction for expenses associated with settlement of a sexual harassment or assault claim if the settlement is tied to a confidentiality agreement. A once skeptical public has now embraced complainants and expects action to address these complaints. HR professionals, who are frequently outranked by the person who is the subject of a complaint, will be under even more pressure to strike the right balance among their duties to complainants, to the accused and to the companies they work for. Cue shameless plug: your friendly neighborhood employment lawyer is always available to help you navigate these treacherous waters!
Good Luck and Happy New Year!