The Labor and Employment Horizon—2019

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Jackson Walker

If there has been one constant in employment law over the last generation, it is change. The forecast for 2019 is no different. In Congress, the Supreme Court, and the Texas Legislature, employers can expect developments that will impact their policies and employee relations practices. This article highlights some of the more salient prospects for change in the year to follow.

From Congress

With a divided Congress, the prospect for any ambitious legislation impacting employers and employees reaching the president’s desk is limited. Ten years have passed since the minimum wage was adjusted under federal law, however, and in recent years several states and localities have raised the minimum wage for employers in their jurisdictions. Increasing the federal minimum wage is a priority for Speaker Pelosi. With considerable popular sentiment for increasing the minimum wage above $7.25/hour, this is one potential 2019 legislative development at the federal level.

The patchwork of paid leave laws in states and municipalities around the country is a compliance thicket for all companies with employees in multiple states. One proposal to minimize the complexity of leave law compliance is to federally preempt state and local leave laws for employers that voluntarily provide paid leave at or above a specified minimum level. This proposal is contained in the Workflex in the 21st Century Act (H.R. 4219), which has support of many in the business community.

The patchwork of paid leave laws in states and municipalities around the country is a compliance thicket for all companies with employees in multiple states.

A prosecutorial phenomenon in recent years has been enthusiasm among states attorneys general to curtail nationwide business practices they disapprove of. In the employment context, a visible example is state challenges to “no poach” agreements among employers. Such agreements, perhaps most common among franchisees, provide that the participating businesses will not hire employees away from one another.

Early last year, Senator Cory Booker (D-N.J.) introduced the “End Employer Collusion Act” to amend actual antitrust laws to ban no-poach agreements. There are significant problems for business with this legislation in its present form. As 2019 unfolds, however, the possibility that comparable legislation will be introduced in the House and gain some momentum is a development for employers in high turnover and highly competitive industries to watch for.

From the Supreme Court

Four important employment law issues might be decided by the Supreme Court in 2019. First, does Title VII of the Civil Rights Act of 1964 protect against employment discrimination on account of gender identity or sexual orientation? The case raising that issue is Altitude Express v. Zanda, a case out of Georgia. Two companion cases in the Supreme Court present the same issue. A decision by the Supreme Court to accept or reject these cases for argument is expected soon.

The second issue involves compensation practices. May an employer lawfully consider an individual’s compensation history in setting rate of pay for a new hire? Opponents of compensation history as a factor in setting rates of pay for new hires argue that the practice perpetuates historical gender discrimination. Others contend that pay history is a market factor that is non-discriminatory and vital to recruiting new employees. The case presenting this issue for possible ruling by the Supreme Court is Yovino v. Rozo out of California.

Third, and not surprisingly, arbitration agreements between employers and employees is again teed-up for Supreme Court review. Last year, in Epic Systems, the Supreme Court held that arbitration agreements between employer and employee that contain waivers of one’s right to file a class action are enforceable. This year, the issue involves arbitration agreements that are silent about class actions. Can the employee arbitrate on a class action basis if the agreement is silent on that subject or must the agreement expressly authorize class arbitration? The case, Lamps Plus, Inc., et al v. Frank Varela, was argued to the Supreme Court on October 29, 2018, and a decision is expected this spring.

Finally, and most recently, the Supreme Court granted a petition to review a case arising out of Texas—Fort Bend County v. Davis. This is a religious discrimination case, but the issue to be decided by the Supreme Court is procedural and impacts all types of cases under Title VII. The question presented is this: Must employees bringing Title VII claims in court first timely exhaust administrative processes at the EEOC as a jurisdictional requirement before going to court, or is the charge filing process a procedural step that can be waived or forgiven? Although the Fort Bend County case will not impact employee relations practices, the outcome will have an impact on many discrimination claims where the employee failed to satisfy charge filing procedures specified in the statute.

Although the Fort Bend County case will not impact employee relations practices, the outcome will have an impact on many discrimination claims where the employee failed to satisfy charge filing procedures specified in the statute.

From the DOL and NLRB

Since President Obama’s second term, there have been two particularly hot potato labor and employment issues at the administrative level. The standard for determining when one company is a joint employer of another company’s employees is one of them. The current standard at the National Labor Relations Board (NLRB), since August 2015, is ability to control rather than actual control over wages, benefits, and working conditions. Either by rulemaking or remand of the Browning Ferris case from the federal court of appeals in Washington, D.C., we expect the NLRB to clarify the joint employer standard in 2019.

The minimum salary for purposes of exempt status under the Fair Labor Standards Act is another anticipated development from the federal government in 2019. The Obama Administration was unsuccessful in its attempt to substantially increase the minimum salary necessary for application of the administrative employee, executive employee, and professional employee exceptions. The Department of Labor is presently working on a new proposal for application of the white collar exemptions, presumably with a lower salary threshold than contained in the Obama Administration’s attempted change, and that is expected to be completed mid-year.

From the Texas Legislature

Employment law is normally a subject of secondary importance in the Texas Legislature—at least relative to lawmakers in many other states. That is likely to be true again in the 2019 session, but there are a few bills of interest worth following. Most notable among them is another measure by the state to rein in municipalities in matters impacting the business climate in our state.

In 2018, Austin and San Antonio attracted a lot of attention by passage of ordinances mandating paid sick leave. House Bill 222, filed by Rep. Matt Krause (R-Fort Worth), would prohibit Texas municipalities from adopting and enforcing laws requiring employers to provide paid leave benefits. Especially with the narrower majority control in the Texas House and Senate, H.B. 222 is likely to be a contentious subject this legislative session. In the meantime, the prospect for legislative intervention may cause some cities to delay consideration of employee welfare ordinances.

Especially with the narrower majority control in the Texas House and Senate, H.B. 222 is likely to be a contentious subject this legislative session.

Equal pay has been the subject of litigation, legislative, and bureaucratic battles since the 1960s. There has been some progress in narrowing the compensation disparity between men and women in America, but that largely has been through evolving social and business attitudes and goals rather than cases, laws, or regulations. By introduction of Senate Bill 112, Sen. Jose Menendez (D-San Antonio), however, is proposing a ban on discriminatory-based compensation disparities among individuals performing the same job. This equal pay initiative appears redundant of protections that already exist under Title VII at the federal level and Chapter 21.001 of the Texas Labor Code. Nonetheless, S.B. 112’s debate and fate in the Texas Legislature will be interesting to see unfold over the next five months.

Conclusion

Although no monumental changes in employment law are anticipated in 2019, there will be developments in the courts, the legislatures, and possibly the federal government that employers will have to adapt to. One rare opportunity for simplifying employment law compliance rests in the Workflex in the 21st Century Act, which is the early stages of lawmaking in the U.S. House of Representatives. As 2019 unfolds, Jackson Walker’s labor and employment group will keep you informed about the potential developments summarized in this article and the inevitable unforeseeable developments that will occur along the way.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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