There are several changes and new trends appearing this year in various areas of labor and employment law. This month’s Workplace Word highlights several of these changes and discusses what employers should expect this year.
Minimum Salary Levels to Increase for Exempt Employees
Under the FLSA
by Jennifer R. Phillips
For the first time in over a decade, the U.S. Department of Labor is updating the Fair Labor Standards Act (FLSA) regulations for executive, administrative and professional (“white collar” exempt) employees. The Department estimates that, in the first year, nearly five million workers will be affected in particular because of the increase in the salary level threshold. The regulations propose to increase the minimum amount of pay and set the standard salary level to the 40th percentile of weekly earnings for full-time salaried workers — which means the amount would more than double from the current minimum salary level ($455 per week or $23,660 annually) and increase to approximately $970 per week ($50,040 annually) in 2016. This amount will automatically increase annually.
Another change is that the salary level for highly compensated employees will increase. The highly compensated employee exemption currently applies only to employees who have a guaranteed total annual compensation of at least $100,000 and who “customarily and regularly” perform one or more of the exempt duties of an administrative, executive or professional employee and who are not engaged in manual work. It is anticipated that amount will increase to approximately $122,148 total annual compensation. Under the proposed regulations, the total annual compensation may continue to take into account commission payments, nondiscretionary bonuses and other nondiscretionary compensation.
The final regulations are due to be published in the Federal Register in 2016 — by all accounts, sometime in the next few months. Once these new regulations take effect, companies will need to audit their workforce to ensure that their white collar exempt employees meet the new salary test.
2016 Employee Handbooks Update: A Cautionary Tale
by Jordan Lee
The year 2016 promises to be no different from prior years and brings new considerations for employee handbooks. A recent case issued by the Utah Court of Appeals is illustrative. In Reynolds v. Gentry Finance Corp. and Royal Management, 2016 UT App 24, an at-will employee sued her employer for terminating her, purportedly based on her opposition to a request to perform tasks in violation of company policy, and possibly applicable law. The employee based her claims on a contract supposedly implied by her employee handbook and on public policy grounds. The court rejected the employee’s public policy contentions, but held that the employment manual created a triable issue as to whether the employer was contractually bound by its statements that no employee would be terminated for submitting a complaint or grievance, despite the fact that the employee had signed an employment agreement, with an integration clause, that clearly stated she was an employee at will. The court focused on the conspicuousness of the provision stating that the company would not terminate employees for submitting complaints. Although the employment manual also contained an at-will employment provision that had language almost identical to language previously approved by the Utah Supreme Court, the court nevertheless held that the employer may have created an implied-in-fact contract based on the other, more conspicuous provisions.
This case highlights the need for employers to review their current handbooks not only for the inclusion of appropriate language, but also for format, font and placement, to guard against having a trial over the existence of an implied contract.
NLRB Law: Outlook for 2016
by Gerard Morales
For 2016 we can expect the NLRB to continue aggressive prosecution of any employer rules, policies or practices that, under any interpretation, would tend to inhibit or “chill” employees from engaging in protected activities. Lutheran Heritage 343 NLRB 646 (2004). More specifically, the Board will find unlawful any restriction on the employees’ rights to communicate among themselves and with third parties regarding terms and conditions of employment, whether such restrictions apply in the workplace or out through social media, during working time or during non-working time.
2016 is also expected to bring new developments with respect to franchisers as being deemed joint employers with their franchisees. The McDonald’s case, which raises the issue of the application of the NLRB decision in Browning-Ferris 362 NLRB No. 186 (2015) in the franchising industry is currently being litigated before an NLRB Administrative Law Judge. 2-CA-93893. In Browning, the NLRB held that two or more entities may be joint employers of the same workforce and therefore jointly liable for unfair labor practices and bargaining obligations, if the putative employer(s) possesses sufficient “control” over the employees’ essential terms and conditions of employment, irrespective of whether such control is exercised directly or indirectly – such as through an intermediary – and irrespective of whether the “control” is even exercised in any way. There will doubtless be more complaints issued by the NLRB General Counsel against national restaurant and retail chains presenting this issue to the Board. The litigation is expected to take many months.
Finally, this year employers will need additional guidance regarding whether newly selected unions are entitled to notice and the opportunity to bargain over disciplinary decisions before a Collective Bargaining Agreement is even reached. This issue is pending before the NLRB in Ready Mix USA, 10-CA-140059. Employers should seek counsel whether they will be tasked with notifying and bargaining with a newly recognized union before taking disciplinary action, even when the employer is acting consistent with its well established policies and practices on discipline.
