5 Key Takeaways from My Long List of Regulatory Changes Shared at ECVC2016

by NAVEX Global
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NAVEX Global

[author: Scott Nelson, Partner, Baker & McKenzie LLP]

As 2016 draws to a close with a major political transition underway in Washington, D.C., organizations already dealing with a rapidly evolving regulatory environment now face uncertainty regarding whether some of the new regulations will remain in place.  

I had a chance to address at least some of the regulatory points of uncertainty at NAVEX Global’s 2016 Ethics & Compliance Virtual Conference.  My session, which could have easily been titled something like “Regulators Gone Wild,” ran the gamut, from the U.S. Department of Labor’s (DOL) new heightened salary requirements for exempt status, to the Equal Employment Opportunity Commission’s (EEOC) new EEO-1 reporting requirements, to the growing state and city “ban-the-box” laws.

Out of the several changes I shared at the conference, these are the five I think you should really be paying attention to.

1. The DOL’s New Overtime Exemption Requirements

These are huge changes, and they’re going to affect companies’ bottom lines, unless they are blocked.

On May 18, 2016, the DOL published a final rule that will increase the salary threshold for employees to qualify for the executive, administrative, and professional exemptions under the Fair Labor Standards Act (FLSA).  The salary threshold will increase from $455 a week (or $23,660 a year) to $913 per week (or $47,476 a year).  The DOL estimates five million workers will be affected by the change, which is set to take effect on December 1, 2016.  The DOL also raised the threshold for workers to qualify for the highly compensated employee exemption, from $100,000 to $134,004.

These are huge changes, and they’re going to affect companies’ bottom lines, unless they are blocked.  After my presentation, news came out that a federal judge in Texas is expected to rule by November 22, on whether to enter an injunction stopping them from taking effect.  Given the short time until December 1, however, employers still need be prepared for the change in the event the court does not stop the new regulations from taking effect.  For steps employers should be taking to prepare, review my recent webinar with Ingrid Fredeen highlighting three focus areas for compliance with the FLSA requirements.


View Webinar: Three Focus Areas for Compliance with the FLSA Requirements


2. The EEOC and Pay Equity

Equal pay has been a hot topic for decades.  But looming pay-reporting changes are causing employers consternation that they will face additional administrative burdens to produce information on broad categories of employees.  With the first new EEO-1 report due in early 2018, the EEOC is set to require that organizations list pay for employees by race, ethnicity, and gender across 12 pay bands and 10 job categories.

Pay equity issues are getting a lot of attention, and they are going to continue to be a big deal, regardless of the administration change.

There are concerns that the new report’s categories are overly broad, so broad that the information may not even be very useful in correctly determining pay equity issues; however, this additional information is where the EEOC currently wants to start.  Given the concerns expressed about the new reporting requirement and the length of time before the new report is required, the new administration may work to change the requirement before it takes effect.

States are also passing laws in an effort to address pay equity issues.  A new Massachusetts law forbids employers from asking prospective hires about their salary histories until after making a job offer that includes the compensation information for the position.  Pay equity is also getting more traction around the world, with other countries either adopting or considering laws designed to advance gender pay equity.

Pay equity issues are getting a lot of attention, and they are going to continue to be a big deal, regardless of the administration change.  Accordingly, businesses will want to conduct privileged (as in you have a lawyer coordinate this) audits of their pay practices so they may get ahead of this issue before facing potential liability.

3. Labor Laws and Social Media

At first blush, few people would think to connect old traditional labor laws, which most people think are only about unions, to modern employee postings on social media.  The National Labor Relations Board (NLRB) takes a different view.  It has been ruling against employers that discharge or discipline employees for certain types of social media posts that the NLRB views reflect protected concerted activity under the National Labor Relations Act (NLRA).

Accordingly, employers should review current social media policies to make sure their prohibitions do not violate the NLRA.  They also should use caution in making hiring decisions based on social media posts and consult with labor lawyers before taking disciplinary action against employees because of social media posts.


Micro Learning Course: Employment Law: Equal Employment Opportunity (EEO) for Managers


4. Defend Trade Secrets Act

In other words, now is the time to consult with your trusted employment counsel to make sure your agreements contain the necessary disclosure language.

The new Defend Trade Secrets Act (DTSA), effective since May 11, 2016, creates a federal private cause of action for misappropriation of trade secrets.  It will be an important new tool for companies to protect their trade secrets.  The DTSA also provides immunity for people who disclose trade secrets to a government entity for the purpose of reporting or investigating a suspected legal violation.

For companies to take full advantage of the DTSA’s new protections, however, they must notify employees and contractors of the above-mentioned immunity in any confidentiality agreements they sign, regardless of whether the confidentiality agreements are in employment agreements, severance agreements, independent contractor agreements, stand-alone confidentiality agreements, invention assignment agreements, or any other types of agreements containing a confidentiality clause.  It is very important that companies make this notification, otherwise they lose the ability to recover punitive damages, exemplary damages, or attorneys’ fees.  In other words, now is the time to consult with your trusted employment counsel to make sure your agreements contain the necessary disclosure language.

5. Ban-the-box Laws

A growing number of state and local governments are passing ban-the-box laws that restrict employers’ ability to inquire about applicants’ criminal backgrounds.  But the lack of uniformity in these laws presents challenges for multi-state employers.  The main thing is you don’t want to get in trouble for something that’s on an employment application that you may not even need or think is a big deal, so now is a good time for employers, especially multi-state employers, to review their applications for compliance.

What's on your list of regulatory changes?

View original article at Ethics & Compliance MattersTM.

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