Big changes are happening in the realm of workplace compliance issues and labor laws in the United States. Noncompliance with government regulations can have serious consequences—and can cost your business big time. Keep up with what's happening between the government and the workplace with the HR Compliance Tracker: your go-to place to stay updated on some major workforce compliance issues.
Supreme Court Issues Pro-Employer Ruling Class Action Waiver
On May 21, the U.S. Supreme Court delivered a pro-employer ruling class-action in Epic Systems Corp. v. Lewis. With a 5-4 vote, SCOTUS upheld an employer’s right to require workers to arbitrate disputes individually, surrendering their right to class or collective action. This is a case of employers who prefer to handle disputes through arbitration against employees who favor united action towards a resolution.
In its culmination, three different cases set the stage for the Supreme Court ruling. The first case rules that arbitration agreements violated employees’ National Labor Relations Act right to engage in concerted action for mutual aid. In the second case, employers argued that the Federal Arbitration Act provides valid, irrevocable, and enforceable agreements. With this circuit split, it forced the court to interpret two federal statutes—the Federal Arbitration Act and the National Labor Relations Act— in this case.
The Supreme Court also ruled that workplace employment agreements that ban class actions do not violate federal labor laws. The Court stated, “the law is clear: Congress has instructed that arbitration agreements must be enforced as written.” For employers, this can save companies money and time from resolving collective battles. However, this makes it harder for employees to address workplace complaints in class action lawsuits in the future.
The fight against the lawsuit aimed at ending ACA
Since its introduction in 2010, the ACA has survived nearly 70 unsuccessful repeal attempts in Congress. Previous cases like King v. Burwell and NFIB v. Sebelius have upheld the ACA’s constitutionality. In another lawsuit aimed to dismantle the ACA, the ongoing legal battle adds a new layer of players who support or oppose the recent Texas lawsuit.
Last year, President Trump signed legislation that declared the heart of the ACA — the individual mandate — unconstitutional. The original lawsuit filed in Texas argues that if the mandate is killed, the remainder of the ACA must also fail. Nineteen other states joined the anti-ACA coalition. If the attorneys general accept the motion to intervene, they would take part in the court proceedings and be able to provide evidence that the law is constitutional.
- Among 16 attorneys general, California Attorney General Xavier Becerra seeks to enter the lawsuit to defend the ACA. He argues that if the lawsuit succeeds, millions of people who receive quality, affordable healthcare under the ACA could lose half a trillion dollars in healthcare funding. Working families, seniors and people with disabilities could lose preventive care and prescription drug benefits. The state of California would stand to lose $160.2 billion in healthcare for its residents.
- Attorney General Beshear states that Kentucky stands to lose a projected $49.7 billion in federal funding if the lawsuit moves forward. The private insurance plans and Medicaid have been instrumental in the state’s fight against the opioid epidemic.
- Washington State Attorney General Bob Ferguson argues that insurers would discriminate against patients based on medical history, and they would be subject to annual and lifetime limits to their health benefits if the state loses coverage.
Other state attorneys generals joining the motion to intervene include California, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, North Carolina, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, Washington and the District of Columbia.
DOL publishes new fact sheet for higher education employees
How do you determine “normal” work hours for educators with irregular schedules? If someone has a serious health condition, how are rest breaks compensated? Are lump-sum payments considering “earnings”? Finally, what is the applicability of “white collar” exemptions in higher education institutions?
All these questions are answered in the Department of Labor’s (DOL) new fact sheet for higher education employees concerning overtime pay under the FLSA. The fact sheet addresses the “white collar” exemptions for employees who perform executive, administrative, professional, and outside sales duties. This includes teacher exemption, professional employee exemption, administrative employee exemption, academic administration employee exemption, and executive employee exemption. In particular, it highlights positions unique to higher education that may fall into various exemptions, including coaches, online educators, postdoctoral fellows, academic counselors, and department heads.
Additionally, the fact sheet provides opinion letters, frequently-asked-question responses, and general DOL details. Rolling out the fact sheet will provide employers with assistance and guidance for complying with the FLSA.
SCOTUS puts its foot down on FLSA construction language
In a 5-4 decision, SCOTUS ruled in Encino Motorcars, LLC v. Navarro that the Fair Labor Standards Act (FLSA) exempts service advisors at car dealerships from the act’s overtime requirements. Typically, the FLSA requires employers to pay overtime to employees who work more than 40 hours a week. Some employees are exempt from the rule including “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks or farm implement.” But what about employees who consult with customers about servicing needs?
The District Court ruled that service advisors are exempt. However, the Ninth district ruled otherwise, sticking to its assertion that FLSA exemptions should be narrowly construed. While service advisors are considered “salespeople”, they aren’t engaged in “servicing automobiles, as they do not actually repair and maintain vehicles.” The Court rejected the Ninth Circuit dependence on statutory interpretation. This decision solidified that exemptions should be construed as plainly as its written, shedding light for all employers asserting the application of any FLSA exemption.
Getting PAID: a new way for employers to address wage and hour violations
HR professionals face tremendous pressure to process payroll on time and manage regulations. Under the Fair Labor Standards Act (FLSA), many employers and HR managers struggle to understand its nuances and complexities in the realm of compliance. It can be difficult to fully understand where employees fall under the rules, especially if they’re not properly classified. However, there may be another way to address wage and hour violations. A new program is roaming the halls of HR, and it’s called PAID, otherwise known as the Payroll Audit Independent Determination.
The WHD recently announced the national pilot program for employer self-audit of wage and hour violations under the FLSA. The PAID program aims to ease resolution of potential overtime and minimum wage offenses. Catered to employers, the program hopes to help correct wage and hour violations while limiting risk to pay additional damages and costs of litigation.
While PAID has its benefits…
Employers working under PAID are able to:
- Correct minimum wage and overtime violations without litigation
- Avoid costs of liquidated damages or civil monetary penalties when employer make payments for all back wages due
- Execute limited release of violations identified under the FLSA after accepting payment under the PAID program
...critics see potential downsides too:
Employers are not able to:
- Join the PAID program after violations are disclosed
- Release any private right of action if employees choose not to accept payment
- Exceed the scope of employee identified violations for the time period in which the employer is paying back wages
- Avoid any future investigations that WHD chooses to conduct
- Rely on data protection, which means information submitted to WHD could be available to employees who wish to pursue litigation
Starting in April 2018, the WHD will roll out the program nationwide for six months. In its finish, WHD will evaluate the results and determine next steps.