The Greek philosopher Heraclitus once said, “The only constant is change.” HR professionals are only too aware of the truth of that statement, as evidenced by the tidal wave of changes in workplace regulations over the past few years. The summer of 2015 will continue that trend. Multiple federal and state laws and regulations are in the final stages of passage, and other rules and recent court decisions have already set new changes in motion.
The following are some highlights of these upcoming and recent changes:
Federal Wellness Regulations.
On April 20, 2015, the Equal Employment Opportunity Commission issued long-awaited draft regulations describing the application of Americans with Disabilities rules to wellness programs. Currently, wellness programs are subject to multiple regulations under the Health Insurance Portability and Accountability Act and Affordable Care Act provisions issued by the Departments of Labor, Treasury and Health and Human Services. Conspicuously missing from those existing regulations was any guidance from the EEOC on whether and when wellness programs violate the ADA. For example, when does a wellness program become “involuntary” and thereby an unlawful medical examination?
The absence of an ADA wellness guidance did not deter the EEOC from commencing lawsuits against employers on grounds that their wellness programs violated the ADA. Several Wisconsin employers were recently sued by the EEOC in highly publicized actions, despite EEOC’s unwillingness to issue any regulatory guidance to employers. Some have criticized the EEOC for implementing the so-called “sue first, explain later” strategy in relation to wellness plans.
Comments on the proposed EEOC wellness regulations are due by June 19, 2015. All HR professionals are encouraged to submit comments to ensure that employer voices are heard prior to finalization of the regulations. Once the public comment period is closed, the wellness regulations will be finalized and issued with a designated effective date. It is anticipated that this will occur before the end of 2015 to allow employers to modify their programs prior to the start of the 2016 health plans and wellness programs.
Changes to Overtime Exemptions.
The Department of Labor has created draft revisions to the overtime exemptions under the federal Fair Labor Standards Act. The draft revisions were recently referred to the Office of Management and Budget for review and are expected to be issued for public comment in the immediate future. Once the public commentary period ends, the regulations will be finalized and issued with a designated effective date.
The details of the new regulations have not yet been disclosed, but it is anticipated that they will have a dramatic impact on many employers. Changes are expected on both the minimum weekly salary required for exempt employees and on the scope of duties that an exempt employee must perform before being exempt from overtime rules. The current minimum salary is $455 per week, and some expect the new minimum to be targeted at around $1,000 per week. Likewise, the existing definition of “primary duties” may be modified to require that exempt duties be performed during a majority of working time. Currently, an employee may qualify for overtime exemption so long as exempt duties are the “most important” duties performed by the employee, even if they are not performed during a majority of working time.
The implementation of new overtime exemption rules will require employers to undertake an internal audit of their exempt positions to avoid exposure to wage and hour lawsuits. HR professionals are encouraged to review the draft regulations as soon as they are published and submit comments by the deadline in order to ensure that employer voices are heard before the final regulations are issued.
Accommodating Pregnant Workers.
The scope of employers’ obligations to accommodate pregnant workers has been a significant issue over the past year. In July of 2014, the EEOC issued new Guidelines under the Pregnancy Discrimination Act and the Americans with Disabilities Act which greatly expanded employers’ duties to accommodate pregnant workers, including the obligation to offer “light duty” programs which had previously been reserved for employees with work-related injuries. Restricting light duty programs to those with only work injuries was permitted under a previous EEOC Guidance. In addition, pregnancy had previously not been considered to be a “disability” under the ADA.
Then, on March 25, 2015, the U.S. Supreme Court decided Young vs. UPS. The Young case arose prior to the 2014 EEOC Guidance and challenged the employer’s refusal to consider light duty programs for pregnant employees when such programs were designed only for employees with work injuries. In Young, the employee argued that the Supreme Court should adopt the 2014 EEOC Guidance and require the employer to offer light duty tasks to her. The Court refused to do so, holding that the 2014 Guidance was overbroad in several respects and directing the EEOC to revisit the Guidance. The Court also held that there was evidence that the employer may not have reserved the light duty tasks solely for work injuries, so it remanded the case to determine whether the employer discriminated against the employee based on her pregnancy.
In light of the decision in Young, the EEOC is now reviewing the 2014 Guidance and has publicly indicated that it will be issuing “appropriate updates.” HR professionals are encouraged to watch for the new Guidance and continue to monitor practices relating to pregnant workers for compliance under both the ADA and PDA.
Federal Contractor Requirements.
On May 28, 2015, the Department of Labor published a proposed Guidance for implementing the new Executive Order on Fair Pay and Safe Workplaces. The Executive Order covers all businesses with federal contracts worth more than $500,000 and will become effective in 2016.
Under the proposed Guidance, federal contractors will need to disclose a three year history of any violations of 14 federal laws to the federal agency they are seeking to contract with. A later Guidance is expected to identify a list of additional state law violations which must be disclosed.
In addition, federal contractors will not be permitted to enforce employee arbitration agreements on employee claims of sexual assault or civil rights violations. Federal contractors will also be required to provide more detailed payroll information to employees to allow employees to verify the accuracy of their paychecks.
The DOL is inviting public comments on the draft Guidance through July 27, 2015. HR professionals who are or seeking to be federal contractors are encouraged to review the draft Guidance and send their comments to the Department of Labor prior to the deadline.
NLRB Response to Right to Work Laws.
In 2015, Wisconsin joined 24 other states in implementing so-called “Right to Work” legislation, which forbids employers and unions from compelling employees to join a union or pay union dues or representation fees. In response, on April 16, 2015, the National Labor Relations Board published an invitation to interested parties to comment on whether the Board should adopt a federal rule allowing unions to charge non-dues paying employees in Right to Work states a fee for processing grievances.
The invitation suggests a planned decision by the Democrat-controlled Board to implement such a requirement later this year. Unions have complained that, in Right to Work states, they are now forced to represent employees in grievance proceedings without receiving any dues from the employee if the employee has opted out of such payments. Employees and businesses have argued that employees who opt out of paying dues or union membership do not wish to be represented by a union or covered by a union contract, and may have voted against a union or against the union contract, but are forced to live under the contract against their will. Those employees should not also have to pay for the right to pursue grievances under such circumstances. The unions have a choice of whether to act as representative of employees, and they should not be heard to complain about having to process grievances if they are elected as representatives.
Efforts to Repeal ACA Cadillac Tax.
Under the Affordable Care Act, employers who maintain certain high cost health care plans will, beginning in 2018, be required to pay an excise tax of 40 percent of the cost of the plans that exceed federal-established cost limits. Studies have shown that many current employer plans would be subject to this so-called “Cadillac tax.”
Representatives of both parties in Congress have recently introduced legislation to repeal the ACA excise tax, and the national SHRM organization is mobilizing its members to support the efforts to repeal the tax. Green Bay HR professionals can access sample support letters by visiting the national SHRM website and accessing the link to the SHRM HR Policy Action Center. All state and federal HR professionals are being encouraged to contact their representatives and encourage them to support the repeal of the tax.
On the Wisconsin side, members of the Republican majorities in both the Assembly and Senate have introduce bills in both houses to modify the Wisconsin law governing employee non-compete agreements, non-solicitation agreements, confidentiality agreements and other restrictive covenants. The proposed legislation (Senate Bill 69 and Assembly Bill 91) would dramatically change the contours of Wisconsin law that have been the source of continual legal battles for decades and is one of the most restrictive laws in the country for employers seeking to implement and enforce such agreements.
If passed, the current law, which disfavors restrictive covenants in general, would be changed to one which permits such covenants if certain provisions are included in the agreements. The law would provide much clearer guidance on maximum time periods for the restrictions, would include explanation of what forms of consideration provided to employees would be sufficient for enforcement, would codify rights to legal fees, and would address many of the other key issues surrounding restrictive covenants.
More work will need to be done on these bills before they become law. HR professionals are encouraged to review the bills and contact their representatives to express opinions or suggestions on the pending legislation.
These are but a few examples of upcoming developments in the pipeline for the remainder of 2015. Although “change may be the only constant,” HR professionals can stay ahead of the curve by monitoring these pending developments, responding to invitations for public feedback and developing internal action plans in anticipation of these significant changes.
Additional information on any of the above legislation, guidances, regulations or developments may be obtained by contacting our employment law team.