By Whitney Ferrer
The beginning of a new year is an excellent time to consider recent or pending employment law changes and to determine whether updates in employment policies or practices are warranted. In this article, we examine topics that we see as emerging issues in 2017 and offer suggestions to enhance compliance.
With Congress gridlocked for much of the 2016 election year, changes at the state and municipal levels, most notably in the area of increasing minimum wages and paid sick leave laws, seemed to predominate. The biggest compliance hurdle for multi-state and national employers – or even companies with statewide operations – may be simply keeping abreast of these local law developments.
Increased Salary Levels for Exempt Employees
Fortunately, employers received a reprieve from implementation of the Final Rule increasing the required salary level for overtime-exempt employees from $455 to $913 per week in late November 2016 when a federal judge granted a preliminary injunction barring the rule from going into effect. It remains to be seen what will happen to the salary level requirement under the FLSA, but some states are not waiting for the new Trump Administration to act.
Effective December 31, 2016, the state of New York implemented new salary levels for employees classified as exempt from overtime on the basis of the executive and administrative exemptions, depending on size and geographic location. While the salary levels are tethered to number of employees and geography and are to be implemented over the next five years, the changes are significant for all employers. For example, employers in New York City and surrounding counties will ultimately see salary levels rise to $1,125 per week. While New York has been the first to act, we expect other states will follow.
While not expressly raising the salary level for exempt employees, other states have tied salary levels for exempt employees to increases in the minimum wage. Laws in the Alaska and California require white-collar-exempt employees be paid at least two times the state minimum wage for a 40-hour workweek. Colorado, Maine, and Oregon also link exempt employee pay to the state minimum wage.
Even though there is uncertainty and delay with respect to the implementation of an increased salary level under the FLSA, employers must bear in mind differing state wage and hour laws that will impact compliance with local requirements and confirm, in applicable states, that overtime-exempt white collar employees are paid at least the minimum wage where required, and paid the newly enacted salary levels in New York. In addition, employers should be mindful that the job duties of a position are also critical to an exempt classification.
Increases in the Minimum Wage
Many states rang in the New Year with an increase in the minimum wage. On July 1, 2016, Oregon enacted the first geographically-tiered minimum wage hike in the country, thereby increasing the burden on company payroll departments to implement differing pay rules within the same state. Oregon’s new minimum wage law imposes different minimum wage rates for employers in the Portland, Oregon metro area and for employers located in the more rural parts of the state. New York followed by implementing a regional pay scale rather than a uniform pay scale, raising the minimum wage for employees in New York City to $11 per hour with other areas seeing minimum hourly wages ranging from $9.70 to $10.50. Other jurisdictions, such as Massachusetts, Washington and the District of Columbia, raised minimum wages as high as $11 per hour with some escalating pay scales reaching $15 per hour in 2020. California adopted its own “tiered” approach by enacting two different minimum wages – $10.00 per hour for “small” employers, and $10.50 for “large” employers. Additionally, many localities have joined the fray, enacting local minimum wage laws. California now has differing minimum wage requirements in the areas of Cupertino, Los Altos, Malibu, Pasadena, San Diego, San Leandro, San Mateo, and Santa Monica.
Due to the abundance of differing minimum wage laws, employers may want to consider implementing an effective system of monitoring minimum wage increases at all levels, updating minimum wage posters, and training HR, payroll, and managerial employees on increases, posting, and notice requirements, and how to respond to employee inquiries concerning wage rate changes.
Paid Sick Leave Laws
The number of states enacting paid sick laws continues to grow. Washington and Arizona have now joined five other states – California, Connecticut, Massachusetts, Oregon and Vermont – requiring employers to provide employees paid sick leave. Although more states have joined the club, local paid sick leave laws far outnumber state measures and exist in states (currently) without corresponding provisions. Local paid sick laws have also now been enacted in the cities of Minneapolis and St. Paul, Minnesota, effective in July 2017. Additionally, in October 2016, Morristown, New Jersey became New Jersey’s 13th municipality to require private employers to provide paid sick time to employees.
Multi-state employers with employees in these states and localities should review and revise sick leave policies and procedures to ensure they meet newly enacted requirements. Additionally, employers should obtain or prepare compliant notices and posters, and ensure their timekeeping and payroll systems properly calculate and track accrued and used sick time. Employers may also consider training supervisory and managerial employees, as well as human resources, on varying paid sick leave requirements, including making them aware of restrictions on requesting documentation and possible restrictions on attendance policies as they pertain to an employee’s use of paid sick time.
EEOC Guidance on ADA Requests for Accommodation and National Origin Discrimination
Not to be left in the cold by state and local legislatures, in 2016, the Equal Employment Opportunity Commission (EEOC) issued guidance relating to a number of employment issues, including a resource document addressing the rights of employees with disabilities who seek leave as a reasonable accommodation under the Americans with Disabilities Act of 1990 (ADA). This document consolidates existing guidance by the EEOC on the ADA and leaves of absences as a reasonable accommodation, including the interactive process. Although the Commission’s view of the state of the law is oftentimes significantly broader than controlling case law, the enforcement guidance is helpful to employers because it provides the government’s current position and gives guidance on how the Commission will investigate claims of alleged discrimination.
The resource document explains that an employee who informs her employer that a disability may cause periodic unplanned absences from work is considered to have requested a reasonable accommodation, which would trigger the employer’s duty to engage in the interactive process. The resource document further highlights the EEOC’s view that an employer may not wash its hands of responsibility for administering leaves for employees simply by relying on a third-party administrator. Other points emphasized in the guidance include:
- An employer (which would include its third-party administrator) with an employee on leave with a fixed return date may not ask the employee to provide periodic updates, although it may reach out to an employee on an extended leave to check on the employee’s progress.
- Employers that use form letters or third-party administrators to communicate with employees who are nearing the end of a leave should advise that if the employee needs additional unpaid leave as a reasonable accommodation for a disability, the employee should seek it as soon as possible so that the employer may then consider it.
- Employers that handle leave requests separately from requests for reasonable accommodations should ensure that the lines of communication between the responsible entities or departments are open to ensure consistency and compliance with the duty to engage in the interactive process.
On November 21, 2016, the EEOC also issued enforcement guidance addressing national origin discrimination under Title VII of the Civil Rights Act of 1964 (“Title VII”). The EEOC last comprehensively addressed national origin discrimination in 2002, and the revised guidance addresses important issues and significant legal developments that have occurred since that time, such as whether it is lawful to consider language issues in the workplace. The guidance acknowledges that employers may have legitimate business reasons for making language-based employment decisions, but it is important to ensure that these decisions do not violate Title VII. For example, according to the EEOC, an employer may not base an employment decision on an accent unless the ability to communicate in spoken English is required to perform job duties effectively and the individual’s accent materially interferes with that job performance. In addition, while a language-restrictive policy may violate Title VII if it is applied at all times in the workplace, such a policy may be lawful in limited circumstances when needed to promote safe and efficient job performance or safe and efficient business operations.
In light of this guidance, employers may want to scrutinize their leave and reasonable accommodation processes and polices, as well as any language restrictive policies, with these guidance points in mind.