The Employment Law Horizon – What does 2017 hold for employers?

There has been no shortage of prognostication and opinion as to how the new Trump Administration will alter the legal landscape in numerous areas. Here, we look at five ways employers may be impacted as the new Administration begins to put its stamp on federal regulations and agencies that most impact employment law.

The Future of the ACA:  The Magic Eight Ball says “Hazy”

The Affordable Care Act (the “ACA” or “Obamacare”) took center stage during the 2016 Presidential campaign with now President Trump promising to “repeal and replace” the law. The Republican-led Congress took the first steps towards repeal by approving a budget that would allow for repeal through the reconciliation process, thereby preventing the possibility of a Democrat-led filibuster.

What is less certain is the exact form that any replacement law will take. Several Republican lawmakers have proposed replacement bills, including President Trump’s nominee for Secretary of Health and Human Services Representative Tom Price, M.D. (R-GA) and more recently Senators Bill Cassidy (R-LA) and Susan Collins (R-ME). President Trump has also signaled that he favors retaining (or including in a new law) certain portions of the ACA. This includes provisions allowing children to remain on their parents’ health insurance through age 26, as well as prohibitions against insurance companies denying coverage based on pre-existing conditions.

Although reading tea leaves is always dangerous, it appears that nearly all of the potential replacement plans include some common features, such as allowing insurance companies to sell insurance across state lines, allowing employers to reimburse insurance premiums through health savings accounts, tort reform, and the repeal of the large employer mandate requiring employers with over fifty employees to offer health insurance.  Any of these replacement plans will likely encounter stiff opposition from Democrats making it difficult to predict both the timetable and scope of repeal and replace efforts.

With all the talk of repeal and replace, we caution employers to presume nothing and continue to comply with existing legal obligations. This includes not only mandates regarding the provision of health insurance, but also the upcoming deadlines for issuing and returning IRS Form 1095-B or 1095-C and related filing requirements.    

Minimum Wage and Overtime Regulations:
An about-face, or just a turn sideways?

As most employers know, a Federal Court in Texas enjoined the enforcement of the DOL’s overtime pay regulations, which sought to increase significantly the required salary threshold for overtime exempt or “salaried” status. This stopped enforcement of the regulation nationwide and left the salary requirement for exempt status at $23,660 for a full-time employee.

The Trump Administration has yet to make any formal statement as to how it intends to address this regulation, which is currently on appeal. It is widely believed, however, that the Administration will abandon the appeal, effectively nullifying this regulation.

What may become a more interesting question is what changes a Trump Department of Labor (“DOL”) (which will likely be led by former Carl’s Junior and Hardee’s CEO Andy Puzder) will make to existing minimum wage and overtime law. Mr. Puzder has been a vocal critic of both the DOL’s overtime regulation and efforts to increase the minimum wage to $15 per hour.  On multiple occasions, however, he has stated that he does not necessarily oppose a more modest increase in the minimum wage, which has not changed since 2009.

Employers should anticipate the possibility of an increase to the minimum wage and the overtime exemption salary threshold, albeit far more modest than what exists in the (now blocked) DOL regulation or what is sought by labor activists. Regardless of whether this prediction proves true, all employers should continue to ensure compliance with existing wage and hour laws that were unaffected by the judicial stay of the Obama DOL regulation. This includes compliance with the “duties test” for determining whether an employee’s job function meets the requirements for exempt status.

The NLRB:  Will a Trump Administration Rein in the Labor Board?

There is no question that the National Labor Relations Board (“NLRB”) took on a far more prominent role in the enforcement of employment law during the Obama Administration, even as private sector labor union membership fell to near record low levels (6.7% of U.S. workers).  NLRB initiatives included enacting “quickie election” rules, which shortened the time between a petition for union representation and an election; expanding joint employer status; and broadening the definition of “employer” under federal labor law.  The NLRB also aggressively pursued as unfair labor practices common employer policies, such as the inclusion of class action waivers in arbitration agreements.  While successful in some areas, a number of NLRB actions have been blocked by Federal Courts, such as the controversial “Persuader Rule,” which would have required employers to report on efforts, including through their attorneys, to persuade employees concerning union representation.

President Trump will immediately have the option of filling two existing vacancies at the NLRB, which would result in a 3-2 Republican majority. Once confirmed, the NLRB will almost certainly revisit many of the rules put in place during the Obama Administration. This may include abandoning Union/employee-friendly changes to the rules governing the timing of elections, the definition of joint employment, and the NLRB’s opposition towards class action arbitration waivers.

In many instances, employers may see fewer “new” policies out of the NLRB, but rather a return to the labor landscape which existed during and prior to the Bush Administration. None of these changes, to the extent they happen at all, will be instantaneous. Employers can expect that the NLRB and its rules and regulations will be a focal point of many political battles in 2017 and beyond.    

Federal Employee Leave Laws:
An Area of Bipartisan Compromise?

Bipartisan compromise in Washington has been a rare unicorn in recent years decades. One potential area of such compromise may be in the area of paid leave. Currently, leaves of absence under the Federal Family Medical Leave Act are unpaid unless an employee has accrued sick or vacation time to use. Several states, however, have some form of paid sick leave requirement, with four states (California, New Jersey, Rhode Island, and New York beginning in 2018) offering paid family leave. Although not generally favored by many Republican lawmakers, First Daughter Ivanka Trump, made paid maternity leave a focus during the campaign with President Trump supporting a guarantee of six weeks of pay through unemployment insurance. Although not as expansive as some paid leave advocates would prefer, paid leave does appear to be a concept that could take hold at the Federal level.

What is less clear is how the new Administration will address EEOC enforcement policies and guidance that impact employee leave issues. In May 2016, the EEOC issued a resource document addressing employee leave rights as an accommodation under the Americans with Disabilities Act (ADA). This guidance takes an expansive view of an employer’s obligation to offer leave as a reasonable accommodation. It also sets forth the position that common employer rules such as maximum leave and “no fault” attendance policies may violate the ADA. Given that this guidance does not have the force of law, the EEOC could abandon or modify it at any point. Many employers hope for more certainty and guidance on issues of employee leave and accommodation from the EEOC under the Trump Administration. Employers are cautioned, however, to continue to treat EEOC guidance in this and other areas as the Agency’s position unless formally altered.   

The Impact on State Employment Law:
The new, new age of federalism?

Federalism (the roles of the fifty states in developing law and policy) has been associated in the last several years with conservative causes and voices.  Under a Trump Administration, many “Blue States” have already begun to push for a greater focus on state law as the source for legal and social policy. Over 20 states (and in some cases municipal localities), for example, have minimum wage requirements higher than the federal minimum wage of $7.25 per hour. Many of these same states also have more expansive paid leave and non-discrimination laws.

Employers that operate or do business across multiple states must ensure that their focus on legal compliance does not begin and end only with federal law. In some cases, competing legal requirements may create new challenges for employers. This includes, for example, employers with legal obligations to conduct background and credit checks if they operate or recruit from the states and municipalities that place restrictions on the use of background and credit checks (such as “Ban the Box” legislation), or the use of criminal history in employment decisions. Such scenarios will necessitate a broader focus on compliance in many instances.

Advances in technology have made it possible for even smaller employers to take advantage of multi-state, or even national, business opportunities. Businesses of all sizes, however, must ensure that they are mindful of the risks and obligations associated with taking advantage of such opportunities.

The Road Ahead

It is impossible to predict with any certainty if, how, or when these and other changes to the labor and employment landscape will occur. What does appear clear, however, is that employers will need to remain focused on changes to legal compliance and requirements for 2017 and beyond.

The employment law attorneys at Sands Anderson are available to assist employers of all sizes on these and other legal compliance issues.