Employment Law New Year’s Resolutions – It’s Not Too Soon!!
By Rebecca Bruch, Esq.
In my mental calendar it is still around August or September, and way too soon to think about holidays, and turkey, and shopping, and things to do at work to get ready for next year. But alas, as I’m looking at my real calendar and it is reminding me to pick up the turkey from the butcher tomorrow, I snapped out of my unicorn dream world and realized I only have about 40 days to the start of a new year. Yikes!!
In case you find yourself in the same state of denial, and at the risk of an imposing miserable dose of reality, I would like share with you some of the things on the HR horizon in 2024, and whisper that it is not too soon to consider making a few resolutions that you may have been avoiding.
While most of the HR fallout from the 2023 Nevada legislative has already taken effect, there are several federal regulations about to be launched. Here is just an overview of a few of them.
Overtime Exemption Will Be Increasing: The salary increase to qualify for an overtime exemption is intended to increase the number of employees eligible for overtime by increasing the minimum threshold salary that will qualify for the exemption. It appears to be at the top of the priority list for the DOL. The current salary threshold is $35,568 per year. That number is expected to increase substantially, to $55,068 per year. The comment period expired on November 7, 2023. Unlike past increases where the duties test was not changed, we are told we can anticipate a change in the duties test that will also expand the number of employees who are eligible for overtime. And in yet another aggressive move, DOL has proposed automatic increases every three years, rather than having to go through the legislative process to get increases.
As another part of a major revamp of overtime exemptions, the DOL is looking at increasing the salary basis for the highly-compensated exemption. This stems from a case decided in February 2023, Helix, where the U.S. Supreme Court ruled that an oil rig worker who was guaranteed at least $963 a day was entitled to overtime because the daily rate was not relevant to the weekly pay rate needed to qualify for overtime. The Court held that in order to claim the exemption, an employer must guarantee a worker a weekly minimum of $684 per week. That guarantee must be in writing.
- Resolution Suggestion #1: Start looking at the salary range of those employees who will fall into the category of people who will no longer be exempt from overtime and think about whether it would better serve your organization to increase their salary, or to leave their salary as is and now be paying them overtime.
- Resolution Suggestion #2: If you are relying on an overtime exemption under the highly-compensated category in the FLSA, be sure to put a weekly guarantee consistent with the current amount ($684 per week) in writing. Watch for that amount to increase in 2024. The easiest way to safeguard the exemption is to make the guarantee part of an employment offer, but if that “ship has sailed,” update the current employment offers of any of the applicable employees.
Independent Contractor Rule: Trying to keep up with the changes in the independent contractor rule over the years is like watching a tennis match or a game of ping pong. Like many of these wage-and-hour issues, they are subject to the dance of the politicians. In this case, not only is the DOL very interested, but so is the IRS. Currently, the test emphasizes two core factors: control over the work and worker’s opportunity for profit or loss. Pundits and employment law commentators are expecting the new rule to return to a totality-of-the-circumstances test, which will be less likely to result in a finding of independent contractor status. The overriding analysis is whether, in looking at the whole situation, is the individual economically dependent on the employer or truly in business for themselves.
- Resolution Suggestion: Review your current and anticipated independent contractor relationships. Do the terms of the contract reflect the reality of the relationship? Can you anticipate the independent contractor might be the one arguing to the Labor Commissioner that they are not really independent, and they are being pressured into signing a contract in order to keep their job?
Joint Employer Standard and the NLRB: The “final rule” for determining joint employment by the NLRB has been postponed from December 29, 2023, to February 26, 2023, because of a lawsuit filed November 9, 2023, by a coalition of various business groups. It may be on hold for now, but it is not going away. The new rule creates a more liberal legal test for joint employment and allows for a joint employer finding based on indirect or unexercised control alone. The NLRB’s focus is on whether work rules by employers are coercive and violate Section 7 of the NLRA regarding terms and conditions of employment. It arises primarily in settings where individuals may be placed at a business or entity through a staffing agency. Among other things, the new rule would widen the number of companies that must participate in labor negotiations, or be liable for unfair labor practices, alongside their franchisees or independent contractors.
- Resolution Suggestion: If you think your organization might fit into a category that might be considered a joint employer, you should make it a priority to address or extend services to franchisees about how to lead employees. You also should monitor franchisees and managers more closely to make sure they are complying and get more involved in employee management. If you are a staffing agency, you should make sure that the client with whom you are contracted to provide employees has a solid handbook and reporting mechanism, including a clear requirement that the company is reporting all disciplinary matters to you.
Pay Reporting Data May Be Resumed: The EEOC is pushing to resume pay data reporting for private employers. That requirement was intended to require employers to report pay data in order to increase the agency’s efforts to sue for race and gender discrimination in pay. The practice was stopped in 2019 because of employer complaints.
- Resolution Suggestion: Keep a watch-out for this initiative that seems to be one of the EEOC’s top two or three initiatives, all with an eye toward equal pay.
The NLRB Wants To See Your Handbook: If you are a private company, whether unionized or not, the NLRB has authority to scrutinize your business. Under an August 2023 ruling, Stericycle, you must now have documentary evidence of the justification for the work rules before an unfair labor practice charge is filed. Your intent is immaterial. The rules will be interpreted from the perspective of an employee who is subject to the policy, economically dependent on the employer and contemplates engaging in concerted activity. That includes talking with one or more coworkers about wages and benefits or other working conditions, circulating a petition asking for better hours, participating in a concerted refusal to work in unsafe conditions, openly talking about pay and benefits, and joining with coworkers to talk directly to the employer, an agency, or the media about problems in the workplace. The overall analysis is whether a rule tends to chill employees from exercising their NLRA rights to protected concerted activity. If the NLRB provides such proof, your work rule is presumed to be unlawful.
- Resolution Suggestion: Review your handbooks sooner rather than later. You can counter the presumption of unlawfulness by proving that the rule advances a legitimate and substantial business interest and that you cannot advance that interest with a more narrowly-tailored rule. If you can prove this, your work rule will be found lawful. Look at every single provision in your handbook and visualize yourself on the witness stand explaining why your rule is needed to advance the business interest of the company.
These anticipated changes are likely just the tip of the 2024 iceberg, especially since it is an election year. If you have any questions about these or other matters related to employment law, contact any of our employment lawyers and we will help you figure out what is bound to be an eventful year for employers.