Do you own your own business with a growing workforce? Manage a group of employees? Need to hire for the first the time?
Whether you have a professional human resources team or not, your organization is probably subject to myriad laws and regulations related to its workforce. And these laws seem to always be changing.
It’s July 2017. The Trump administration is 6-months old. A shift from the Obama administration’s labor policies is underway. Here are the questions New York employers should be asking and some predictions as to the answers.
Question 1: Healthcare???
With Republican control of the White House, the Senate, the House of Representatives (and, frankly, the Supreme Court), the Affordable Care Act (Obamacare) is under siege.
Repeal?
Replace?
Repeal and Replace?
Replace and Repeal?
RE. . . . you get the idea.
Congress has already tried a couple of approaches to moving away from Obamacare. Nothing has worked so far. Too many Americans object to losing coverage, among other criticisms.
So, what’s going to happen?
The latest plan is to repeal with a two-year transition period away from the Affordable Care Act. It already looks like this may be a non-starter for some Republicans, enough to block the approach.
Best guess: Obamacare reigns for the foreseeable future, probably into 2018. Republicans will need to slow down and construct a fully workable alternative before repealing and replacing . . . before the mid-term elections next November.
Wild card: This is Congress’ lead issue, and one that affects tens of millions of Americans. Republican leadership may make significant concessions in any other area to get something through.
Question 2: FLSA Salary Threshold???
Before last year’s presidential election, the Department of Labor promulgated a new salary threshold for the so-called “white collar” exemptions to minimum wage and overtime. The new rule would have increased the exemption salary level from $455 per week to $913 per week, with future automatic increases every three years.
A federal court in Texas stepped in, however, and enjoined the rule. So it never took effect as planned on December 1, 2016.
The Department of Labor appealed the decision, and a Democratic administration almost certainly would have fought to uphold the new rule and higher salary requirement. But under Trump-appointee Secretary of Labor Acosta, the DOL recently announced that it would not seek to preserve the rule as put in place under Obama. Rather, it limited its appeal towards preserving the right to set some minimum salary level, just not the $913 plus automatic adjustments. Nonetheless, Secretary Acosta has indicated that he favors some increase from the previous $455 weekly threshold.
So, what’s going to happen?
The DOL has to take some action regarding the rules. They are still on the books, and employers have to rely on something as the basis for FLSA exemptions. (Keep in mind, New York State has its own salary levels for similar exemptions. In many cases, employees have to meet both state and federal exemption requirements to be fully exempt from overtime.)
Best guess: The DOL will come out of litigation later this year or early next year with the preserved right to set a salary level for the exemptions. Over the next year or so, they will propose a new rule with a salary requirement somewhere between $455 and $913. The new threshold will probably be close to the midpoint of those two numbers.
Wild card: Congress could amend the FLSA to fundamentally alter the related exemptions. Any such amendments would likely make more employees exempt and/or simplify the classification of employees as exempt/non-exempt. For example, a salary only test for non-manual workers would presumably reduce administrative burden on employers and reduce the risk of costly litigation.
Question 3: Federal Paid Family Leave???
Seemingly at the impetus of his daughter Ivanka’s campaign-era statements, President Trump’s initial budget included a 6-week paid family leave program for new parents. The proposal doesn’t have the force of law, but it does keep the door open on this contentious labor issue.
So far, it’s hard to find anyone who actually likes Trump’s proposed paid family leave program. Republicans and employer groups oppose it as a burden to business. Democrats and employee rights groups oppose it as not going nearly far enough.
So, what’s going to happen?
Unless President Trump is willing to completely renege on this campaign promise, he’ll have to keep it on the table for a while. But its hard to see the Republican Congress taking it anywhere. Any federal paid family leave program would have to co-exist with the existing FMLA. Plus, there are laws in several states (including New York) that also address the topic. The integration of these various laws would be a major headache for employers. So any token action in this area will continue to face significant opposition.
Best guess: Nothing meaningful happens in 2017 at least. It’s hard to fathom this Congress touching paid family leave with Obamacare still on the books. It’s also hard to imagine them tackling paid family leave in connection with healthcare, which is already complicated enough in its own right.
Wild card: If the Democrats make significant inroads in the 2018 elections, this could be an issue where the White House reaches across the aisle beginning in 2019.
Question 4: New York State Paid Family Leave???
The New York State Paid Family Leave Program takes goes into effect January 1, 2018. Once it does, some employees will have the right to both take leave from their jobs and receive partial compensation. Employee contributions pay for the leave. The program is not optional for most employees.
See here and here for more details about the New York State Paid Family Leave Program’s requirements.
As of July 1, 2017, New York employers may already be making deductions from employees’ pay checks to pay for the paid family leave program. Many have already started doing so, some without knowing it (through their third-party payroll processors).
Unfortunately, we still don’t have final regulations conclusively establishing which employees will be eligible to opt out of paying for family leave. Nor is it clear how they will do so. Thus, employers making deductions now might have to repay some employees at some point in the future.
For now, the maximum deduction is $1.65 per week (for higher earning employees). So no employee can lose more than about $50 in 2017 to pay for the leave program that begins next year. Nonetheless, employees will be confused, if not upset, about losing this money. So employers are already having to explain the program to some employees, even though most still don’t understand it themselves.
Employers who are not yet making deductions will still have to pay the necessary premiums for coverage beginning in 2018. And they presumably will still be limited to less than $2 per week for all employees next year. So, although the program is supposed to be entirely employee funded, will there be some employers who can’t deduct enough to pay for the coverage next year?
So, what’s going to happen?
Best guess: Many employers will not make deductions until they better understand the program. For some, this will be after final regulations are issued. For others, it will be very late in 2017 when they finally realize they have to pay for this additional component of their disability insurance policy. There will be frustration by both employees and employers when the deductions start, not to mention when employees become eligible for leave. Because the leave is administered as an insurance benefit, employers will not have full control, yet still may have to simultaneously adhere to FMLA requirements and maintain adequate staff to get the work done.
Wild card: If/when some form of federal paid family leave takes effect, New York employers may have a nightmare scenario of trying to simultaneously understand and live with both sets of laws.
Question 5: NLRB???
During most of the Obama administration, the 5-seat National Labor Relations Board had a Democratic majority. The Obama Board has taken the most pro-labor and pro-employee positions in the Agency’s history. Its decisions on social media policies, employee handbook provisions, class arbitration waivers, joint employment, and appropriate bargaining units have definitely pushed the envelope to the ire of employers.
At the moment, the NLRB still has a 2-1 Democratic majority. President Trump has nominated two Republicans (William Emanuel and Marvin Kaplan) to fill the vacant seats. Barring a surprise, these nominees should be confirmed and take their seats later this summer.
The NLRB primarily sets policy by deciding actual cases. Accordingly, the new Republican-majority Board can’t reverse course overnight. Rather, they must wait for the appropriate cases to come before them.
To add another wrinkle, the General Counsel of the NLRB is still Obama-appointee Richard Griffin. His term does not end until November. Until then, Griffin, a former union attorney, has substantial control over what cases are prosecuted by the NLRB.
So, what’s going to happen?
Inevitably, a new Republican majority will start issuing more employer-friendly decisions. In the meantime, employers are technically subject to principles established by the Obama-era NLRB. As a result, employers will be taking their chances if they choose to act contrary to existing guidelines with the expectation of a favorable reversal under the Trump Board.
Best guess: Employers who have changed policies and procedures to satisfy the Obama Board won’t rush to change them back. But they may be less conservative in other areas, such as dealing with unions regarding current/potential bargaining units. It will take several years for a Republican majority to decide cases in all areas touched by the Obama NLRB. But the NLRB could act relatively quickly to change the “quickie” union election rules issued by the Obama Board. That could perhaps occur by early 2018.
Wild card: The Republican Congress may try to amend the National Labor Relations Act to more swiftly, comprehensively, and dramatically undue the Obama Board’s actions. Although there have already been bills proposed to do this (which is not unusual of Republican lawmakers), it’s too soon to tell whether any such efforts will take priority and gain enough support before the 2018 elections.
