What’s on the Horizon for U.S. Employers in 2016?
While the upcoming U.S. Presidential election and on-going Congressional gridlock make it unlikely any new federal employment laws will be enacted in the U.S. in 2016, employers can expect federal agencies to continue their efforts to implement the Obama Administration’s agenda through rule-making and increased compliance activity. Additionally, states undoubtedly will continue to enact legislation to fill in what many perceive as gaps in laws protecting employees. Here’s what is on the labor and employment law horizon for U.S. employers in 2016:
Overtime exemptions. The U.S. Department of Labor (DOL) has proposed raising the required minimum salary for employees to qualify for most exemptions to the federal Fair Labor Standards Act (the federal law governing minimum wage and overtime requirements) from $455 to $970 per week ($23,660 to $50,440 annually). If the rule is enacted as proposed, it will significantly expand the number of employees who are eligible for overtime pay under the federal law. The DOL likely will not release the final rule until late in 2016, probably after the Presidential election. For more information, please see our June 30, 2015 Legal Alert.
Continued challenges to mandatory arbitration agreements. In December 2015, the U.S. Supreme Court ruled that that the federal law governing arbitration allows federal courts to police state court decisions to ensure that they uphold the federal policy favoring arbitration. In DirectTV, Inc. v. Imburgia, (a nonemployment case), the Court found that the state court’s interpretation of the contract language in that case did not place arbitration contracts “on equal footing” with other agreements. Thus, the court failed to give due regard to the federal policy favoring arbitration. Although employees likely will continue to challenge the enforceability of mandatory arbitration agreements, especially those containing class-action waivers, the Supreme Court’s decision indicates that federal law preempts state-law rules barring the enforcement of such agreements.
Additionally, despite the recent line of decisions from the U.S. Supreme Court reiterating the federal policy in favor of arbitration, the U.S. Labor Board continues to take the position that mandatory arbitration agreements containing class action waivers violate employees’ rights under federal labor law. Employers should expect the Board to continue to challenge these agreements in 2016, even while federal courts continue to reject the Board’s position.
Minimum wage increases. Although the federal minimum wage rate (currently $7.25 per hour) likely will not increase for private employers in 2016, many state and city minimum wage rates will increase in the coming year. Employers subject to both the federal and state or local minimum wage laws must comply with the law imposing the highest rate. Some of the highest minimum wage rates include California ($10 per hour), the District of Columbia ($11.50 per hour effective July 1, 2016) and Seattle, Washington ($10.50 to $13.00 per hour depending upon the number of employees and whether the employer offers health insurance). Additionally, the required minimum wage rate for certain federal contracts increased to $10.15 per hour beginning January 1, 2016. For more information please see our September 18, 2015 Alert.
Joint employer liability. In August 2015, the U.S. Labor Board issued a decision that could significantly affect employers utilizing alternative workforce arrangements, such as staffing firms and professional employer organizations (PEOs). In Browning-Ferris Industries of California, Inc., the Board deviated from established precedent to hold that a staffing firm may be considered a joint employer of its client even where it did not actually exercise any direction and control over the workers – the right to do so is now sufficient. Whether this test will be adopted in other contexts outside the Board’s jurisdiction remains to be seen. For more information please see our August 28, 2015 Alert.
Prohibition on inquiries into applicants’ criminal history (“ban-the-box” legislation). States and local jurisdictions have been adopting ban-the-box legislation designed prevent employers from using arrest or conviction records to deny employment to job applicants at the initial stage of the application process. (“Ban-the-box” refers to the box on many application forms that applicants must check if they have ever been arrested or convicted of a crime. Employers often refuse to consider applicants if they have checked this box.) Generally, these laws require the employer to consider the applicant’s skill and experience first and delay criminal background checks until later in the hiring process. Currently, 19 states have passed ban-the-box legislation, and employers can expect more states to pass similar legislation in the upcoming year.
LGBTQ workplace issues. In June 2015, the U.S. Supreme Court held that same-sex couples have a constitutional right to marry and that states must perform and recognize same-sex marriage. For more information on the Court’s decision, please see our June 26, 2015 Alert. Under the Court’s decision, same-sex couples may now receive employer-offered benefits that were largely exclusive to heterosexual couples, such as health insurance. Married, same-sex partners are also now included in the protections provided by the federal Family and Medical Leave Act, according to DOL regulations.
The Equal Employment Opportunity Commission (EEOC) (the federal agency charged with enforcement of the primary federal anti-discrimination laws) has indicated that protection from discrimination for LGBTQ employees will be one of its priorities in the upcoming year. Additionally, employers may see more claims under the federal anti-discrimination laws arguing that the Court’s decision expands the laws’ protections to prohibit discrimination based on sexual orientation or marital status.
Wellness programs. Many employers have implemented employee wellness programs to provide incentives for workers to become more fit. The EEOC has proposed new regulations for wellness programs addressing the impact of federal disability discrimination and genetic discrimination laws on such plans.
Paid sick leave. Although there continues to be no federally-mandated paid sick leave law in the U.S. for private employers, President Obama has issued an executive order requiring certain federal contractors and subcontractors to provide employees with one hour of paid sick leave for every 30 hours worked, for at least 56 hours per year. The requirement will take effect for covered contracts entered into after January 1, 2017. For more information, please see our September 8, 2015 Alert. Additionally, Connecticut, California, Massachusetts, Oregon, and Washington D.C., as well as a number of cities, have enacted paid sick leave laws. Employers can expect to see more efforts to enact paid sick leave requirements at the state and local level in 2016.
Fair Credit Reporting Act (FCRA) litigation. In 2015, employers saw numerous lawsuits claiming technical violations of the FCRA’s notice and disclosure requirements, many of which were settled for significant sums. However, in November 2015, the U.S. Supreme Court heard oral argument in a nonemployment case that could significantly impact these types of claims. In Spokeo Inc. v. Robins, an FCRA class action, Robins sought statutory damages of between $100 and $1,000 for alleged violations of the FCRA, even though he did not claim to have suffered any actual damages from the alleged violations. The Supreme Court agreed to review the case to determine whether someone who has not suffered a concrete harm, but instead alleges only a statutory violation, has standing to bring a claim on behalf of himself or a class of individuals. If the Court holds that such individuals do not have standing, it should eliminate or greatly reduce the number of class action lawsuits filed against employers alleging technical violations of the FCRA.