Five Essential New Year Resolutions Every Employer Should Have for 2016

With the new year underway there are a number of resolutions employers of all sizes and industries should act on if they wish to avoid winding up in the crosshairs of governmental workplace watchdogs bent on expanding their influence in 2016.  Here are 5 highly recommended areas deserving of employers’ immediate attention:

1.    Avoiding “joint employer” status and liability under newly adopted standards –

Last year, the National Labor Relations Board (NLRB) overhauled the test to determine whether two (or more) employers are “joint employers” for purposes of labor law, with its Browning-Ferris Industries decision.  The new test makes it much easier to establish joint employer status and is now being used to pursue claims against McDonald’s Corp. for the actions of its franchisees.  The NLRB’s test is being used to hold multiple employers liable for unfair labor practices committed by one, as in the case of McDonald’s Corp. as a joint employer with its franchisees.  Joint employer status may also be used to impose collective bargaining and union contract obligations, as well as determining whom can be subjected to picketing and other strike activity or economic pressure, from unions. 

The Department of Labor (DOL) recently issued its own definition of “joint employers,” amid allegations from some United States Congressmen of collusion between the two agencies.  Although some of the factors in the two tests are similar (the DOL definition is actually broader than that of the NLRB), the consequences of finding a joint employer relationship by the different agencies differ significantly.  The DOL’s guidance is relevant for the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).  Under these laws, the hours worked for joint employers will be aggregated for purposes of determining if an employee has worked overtime during a workweek.  In either case, both joint employers will be jointly liable for any violations under these laws.  

Because of the severe ramifications at stake and the current heightened focus on the issue, we highly recommend that employers make the New Year’s resolution of auditing any potential joint employment relationships with the help of someone knowledgeable in these areas.   

2.    Ensuring those regarded as “independent contractors” are not employees, again, under newly adopted standards –

Last summer the Department of Labor (DOL) issued a new interpretation of when a worker is an independent contractor rather than an employee for purposes of wage and hour requirements under the Fair Labor Standards Act (FLSA).  According to the new interpretation, the key question is whether the worker is economically dependent on the employer or in business for him or herself, and can be determined by considering several factors.  The DOL boldly stated that under its new analysis, “most workers will be considered employees rather than independent contractors.” 

Workers that might be reclassified under this interpretation as employees rather than independent contractors could include subcontractors, salespeople, drivers, cleaners, nurses and caretakers, etc.   Companies that use these types of workers risk being held liable for tracking hours and paying minimum wage and overtime under the law.  Additionally, the DOL has signed an agreement with the Minnesota Department of Labor and Industry to share information and to coordinate investigations and enforcement with regard to the misclassification of workers as independent contractors.  Unwary companies could find themselves taken by surprise with liability under a number of laws for their assumed “independent contractors” when the DOL defines these workers as employees under its new stringent standard.

Given the DOL’s war on independent contractors, once again an audit of these relationships is in order. 

3.    Thoroughly preparing for anticipated changes to exempt vs nonexempt status and the explosion of rest break and meal wage/hour claims –

American businesses are bracing in 2016 for the DOL to issue its final regulations on minimum salary levels for white-collar exemptions, which potentially could convert over 6 million workers from exempt to non-exempt hourly employees, regardless of their exempt duties.  Proactive business and Human Resources professionals are auditing their current exempt employees and preparing contingency plans to deal with these regulations.  In the meantime, however, the onslaught of class action wage and hour lawsuits continues, unabated.  In addition to overtime suits based on employee misclassifications under the state and federal FLSA, claims of employers mishandling meal and rest breaks are proving to be fertile ground for plaintiff lawyers. 

Given the explosion of wage and hour lawsuits, coupled with what could well be monumental changes in employee classifications necessitated by the DOL’s regulations expected to issue sometime this year, resolving to conduct an internal audit of employee pay practices is one New Year’s resolution every employer ought to have high on its “to do” list.

4.    Becoming politically active to oppose an onslaught of proposed anti-business legislation (2016 is, after all, an election year) –

In the current Minnesota legislative session, among the more controversial proposals to impact employers, include:

·         Outlawing an “abusive work environment” (i.e., bullying), and providing a private cause of action for employees to bring a lawsuit.  While most employers oppose bullying in their workplaces, most lawsuits do not have merit, and this right to a private cause of action would allow employees to bring lawsuits for frivolous claims of bullying;

·         Imposing fines on employers for discriminating against unemployed individuals;

·         Preventing employers from providing different pay or benefits to employees based on the number of hours worked;

·         Impinging on employers’ ability to set and change work schedules, as needed; and

·         Providing for paid family leave, as well as earned “sick and safe time,” which would allow the employee to use the earned leave for absences caused by the illness or injury of the employee or the employee’s family member, or for domestic abuse, sexual assault, or stalking of the employee or the employee’s family member.

Employers who oppose these intrusions into their operations should resolve to become active in their local business groups in 2016 and otherwise contest these and other similar pieces of legislation.

5.    Updating employee handbooks or policies, especially any that are 2 years or older; chances are they are seriously outdated –  

The passage of the Women’s Economic Security Act brought several changes to Minnesota law within the past two years—including a new law requiring language relating to employees’ rights to discuss and disclose their compensation to be included in employee handbooks, and changes to Minnesota’s parental leave law and the Minnesota Human Rights Act, as well as a new law regarding pregnancy accommodations—leave many employee handbooks with out-of-date or illegal policies.  Additionally, several federal agencies—most notably the National Labor Relations Board—have been increasing their scrutiny of many common handbook policies, such as provisions regarding confidentiality, e-mail use, social media, use of cameras and recording devices, communications with the media and other parties, conduct toward the company and supervisors, and more. 

Any employee handbooks that have not been updated within the past 2 years, with these important new legal developments in mind, can be presumed to be outdated and should be reviewed and revised ASAP.

Contact the experienced attorneys of Wessels Sherman for help with auditing and compliance measures as part of your company’s 2016 resolution to keep up with the developing law of the workplace.  In many cases an hour or two of legal “prevention,” can be worth much more than what it may take to “cure” problems down the road.  To arrange a free discussion of your issues with an experienced attorney and get a proposal or quote of the cost to address them, please email or call Ms. Christine Beggan at (952) 746-1700, or email her at chbeggan@wesselssherman.com.