“I do not like war. It is costly and the outcome uncertain”

So said Queen Elizabeth I in a very early glimpse into English Civil Court proceedings.  Should we therefore be heartened by a possible sign of things to come in the modern employment world, thanks to Lord Justice Briggs earlier this week?

Addressing the Chartered Institute of Arbitrators on 26 September, Briggs LJ told of his vision of a not-far distant world of online Civil Courts where mediation for sub-£25,000 cases was the new “cultural norm” and actual litigation (through costs, stress and delay) even more of a last resort than it already is.

Where the Civil Courts go the Employment Tribunals may follow, especially if it involves saving any money.  Clearly the vast majority of Tribunal claims are for less than £25,000 and the introduction of fees is already recognised as constituting a deterrent to the bringing of claims in that forum.  The last Annual Report of the Tribunal system also spoke of moving things online, a prospect it is impossible to greet with anything but utter trepidation.

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FLSA OT Rule: Six Month Reprieve? U.S. House Votes Yes

On Wednesday, September 28, 2016, the U.S. House of Representatives passed the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act [pdf], by a vote of 246 to 177.  The Act would delay implementation of the Department of Labor’s Final Rule modernizing the Fair Labor Standards Act’s white‑collar exemptions from December 1, 2016 to June 1, 2017.  As we have previously reported, the Final Rule, which is set to go into effect on December 1, 2016, raises the salary threshold for workers to qualify as exempt from overtime from $455 per week to $913 per week, and will result in many workers either getting a raise or being entitled to overtime pay.

The Act passed by the House would allow employers six more months to prepare to comply with the new overtime rule.  Employers should already be in the process of ensuring their compliance with the new overtime rules, and should not delay preparation.  The Obama administration has already threatened to veto the House bill, which it notes already provided six months for employers to prepare, and that any further delay in implementation would result in a delay in protections to workers, who cannot afford to wait.  Employers would be wise to continue to prepare for a December 1, 2016 implementation, however, given that the Bill still has to pass the Senate and given the presidential veto threat.

Another Bill, Another Restriction on Arbitration

When it comes to employment laws, California is generally considered an employee‑friendly state. On September 25, California Governor Jerry Brown made it just a little more friendly by signing bill S.B. 1241.  For employees that primarily reside and work in California, S.B. 1241 prohibits employers from requiring an employee, as a condition of employment, to agree to a provision that would either:  (1) require the employee to litigate or arbitrate claims arising in California in a forum outside of California; or (2) deprive the employee of the protection of California law with respect to claims arising in California.

Ultimately, this law aims to restrict a significant contractual freedom between employers and employees: the right to the “choice of law” in the event a dispute arises.  Typically, contracting parties – including employers and employees – may agree to have their disputes heard in a specific location, or even have another State’s laws applied to their dispute.  For example, a shipping company located in California doing business with a Nevada corporation may include in their contract a provision requiring any dispute be heard pursuant to the laws of the State of Nevada.  With the exception of a very specific carve-out, for employees that are represented by legal counsel in negotiating the employment agreement, S.B. 1241 effectively prohibits parties from agreeing to this type of choice of law provision when the agreement would take the dispute out of California.

Another thorn in an employers’ side, care must be taken to review any employment or arbitration agreement to make sure it does not require the dispute be heard outside of California, or attempt to preclude the use of California law. Under S.B. 1241, any such provision is voidable by the employee, the effect of which is relatively nominal:  the dispute must then be heard in California subject to California’s laws.  However, there’s one more zinger employers must watch out for:  statutory attorneys’ fees.  Courts “may” award reasonable attorneys’ fees to an employee enforcing their rights under S.B. 1241.

With the constantly changing standard for arbitration agreements, most employers are already constantly analyzing and altering their employment and arbitration agreements to try and keep up. Fortunately, only contracts “entered into, modified, or extended on or after January 1, 2017” are affected by S.B. 1241.  Employers should use the time until then to take yet another look at their arbitration agreements, and address any possible violation before it’s too late.

Reminder to U.S. Employers to Update FLSA Posters

The U.S. Department of Labor (DOL) has updated its poster for “Employee Rights Under the Fair Labor Standards Act.” The new poster adds information on lactation breaks and worker (mis)classification.  Additionally, the DOL has made its new poster tech-friendly by including a scannable QR code which takes employees directly to the DOL website.  The poster is available here [pdf].  If you haven’t done so already, it’s time to post this new version!

Is your Modern Slavery Act statement ready?

A reminder for those businesses caught by the Modern Slavery Act reporting provisions that the deadline for publishing your first “slavery and human trafficking statement” may be fast approaching.

The Act imposes a new requirement on commercial organisations carrying on business in the UK with an annual turnover of £36 million or more to disclose what activities they have undertaken to eliminate slavery and human trafficking from their business and their supply chains.  Businesses with a year-end of 31 March 2016 will be the first businesses required to publish a statement for their 2015-16 financial year.  Read our guide to the new Act for further information.

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Procedural leak sinks employer’s reliance on workplace drug tests

Although drug and alcohol testing is generally recognised in Australia as forming part of an employer’s armoury for managing its health and safety obligations, a recent Fair Work Commission decision has provided a salutary reminder that employers in Australia which fail to follow best practice when conducting such tests risk being on the wrong end of an unfair dismissal finding.

Drug and alcohol testing is becoming increasingly commonplace in Australian workplaces, with testing even being a mandatory statutory requirement in some industries such as mining and public transport.  In recent times, the most contentious issue regarding drug and alcohol testing has related to the method of that testing.  It is generally accepted that an employer can require employees to undertake such tests.  However certain safeguards should be implemented to protect those employees. Employers are recommended to have in place a drug and alcohol policy which deals with issues such as how tests will be validated, counselling and rehabilitation of employees and which makes clear in advance when disciplinary action based on the results may be warranted.

However, simply having a policy in place isn’t by itself sufficient, as highlighted in the case of Moore v Specialist Diagnostic Services Pty Ltd t/A Dorevitch Pathology.

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Recent redundancy exercises – learning points for HR, part 6

Protecting your enhanced severance scheme

Some employers pay only the statutory minimum entitlement on a redundancy dismissal, but others recognise that redundancy is a no-fault reason for termination and try to do something to sweeten an otherwise bitter pill.  Maybe this is no more than paying in lieu of notice without deduction of tax (for so long as this remains possible – see our post on revisions to the severance pay tax regime and maybe it is some wholly gratuitous additional compensation.

If it is the latter, beware the risk that repeated use of the same enhancement formula may lead to employee arguments that it has become a custom and practice entitlement, i.e. theirs as of right and no longer a matter for the employer’s discretion.  This is much easier for the employee to allege than to prove (see our analysis of the current leading case on the point).  Nonetheless, there are some basic steps which your company can take to reduce this risk even further:

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Republican Lawmakers are Bracing for a Plethora of Last Minute Rules and Regulations During President Barack Obama’s Final Months in Office

Nearly 4000 regulations have made their way through the federal bureaucracy in the last year of Barack Obama’s presidency in a mad dash by the White House to push through government actions affecting everything from gun control to nutritional labeling. With the current administration entering its final months in office, there is precedent that exists for increased regulatory actions executed by outgoing administrations.  There are two efforts synonymous with a change in Administration that are worthy of congressional oversight in the Department of Labor.  The first is “Midnight Regulations”, which the GOP is mostly powerless in stopping.   “Midnight Regulations” are a feature of any lame-duck administration and represent a president’s last opportunity to lock in rules on legacy issues.   These rules may not receive the adequate review and analysis by agency officials and if rushed through the formal rulemaking process, may not have the same opportunity for public comment.  The second is an increase in employment status conversion, also known as “burrowing in”.  This occurs when an employee in a federally appointed position is converted to a career position in the executive branch.  There are several negative consequences of burrowing in including limiting merit-based, competitive hiring and promotion.  There are also clear regulations in place that must be followed when attempting to convert an employee’s status.

Senate Majority Whip John Cornyn of Texas said that his party cannot do much because “the framers of the Constitution didn’t give us a lot of tools that didn’t involve a presidential signature to overturn them”.  Cornyn said Obama seems to be in a “frenzy mode on his way out the door”.  Republicans in the House Committee on Education and the Workforce have asked the Education and Labor department secretaries for the number of positions that have been created since January 1, 2016 and a list of all the draft and final rules planned before President Obama leaves office.  A letter addressed to Secretary of Labor Thomas Perez asks for a response to these questions by October 4.

While the Committee on Education and the Workforce may have broad oversight authority, White House aides in recent weeks have made it clear that Obama will continue to use his legal authorities on whatever he deems important to wrap up before he leaves the Oval Office on Jan. 20.  Major regulatory change requires a 60‑day waiting period, meaning Obama theoretically has until November to come up with his to‑do list. 


Twenty-One States Join Forces to Oppose the FLSA’s New Overtime Rule

As most of you know, in May 2016 the Department of Labor (DOL) released its long-awaited Final Rule modernizing the Fair Labor Standard Act’s (FLSA) white-collar exemptions to the overtime requirements of the FLSA.  See our rundown of the changes in our earlier post here. The new rule is scheduled to take effect December 1, 2016.

This week, however, 21 states banded together to express their disapproval of the Final Rule and filed a lawsuit against the DOL. The states challenging the constitutionality of the rule are: Alabama, Arizona, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, Utah and Wisconsin.

The primary argument in the states’ lawsuit is that the new FLSA rule will force many businesses—particularly state and local governments—to unfairly and substantially increase their employment costs. For state governments in particular, the states allege that the new rule violates the Tenth Amendment by mandating how state employees are paid, what hours they will work and what compensation will be provided for working overtime. The lawsuit also alleges that implementation of the new rule will disrupt the state budgeting process by requiring states to pay overtime to more employees and would ultimately deplete state resources.

It’s no coincidence that more than 50 business groups—including the US Chamber of Commerce and the National Association of Manufacturers—filed a similar lawsuit on the same day and in the same court. This lawsuit alleges, among other things, that the new rule disregards the mandate of Congress to exempt white-collar employees from the overtime requirements of the FLSA.

How the courts will handle these parallel cases is an unknown. For now, employers—both public and private—are encouraged to proceed as though the new rules will take effect on December 1, 2016 as scheduled. That said, we encourage you to check back here for updates!

OSHA to Employers: No Gagging Whistleblowers!

On September 9, 2016, the United States Occupational Safety and Health Administration (“OSHA”) published new guidelines for approving settlements between employers and employees in whistleblower cases to ensure that those agreements do not contain terms that could be interpreted to restrict future whistleblowing. OSHA reviews settlements between employees and employers to ensure that they are fair, adequate, reasonable, and in the public interest, and that the employee’s consent was knowing and voluntary. The guidance provides that OSHA will not approve settlement agreements that contain provisions that discourage (or have the effect of discouraging) whistleblowing, such as:

  • “Gag” provisions that prohibit, restrict, or otherwise discourage an employee from participating in protected activity, such as filing a complaint with a government agency, participating in an investigation, testifying in proceedings, or otherwise providing information to the government. These constraints often arise from broad confidentiality or non-disparagement clauses, which complainants may interpret as restricting their ability to engage in protected activity. The prohibited constraints may also be found in provisions that:
    • restrict the employee’s right to provide information to the government, file a complaint, or testify in proceedings based on a respondent’s past or future conduct;
    • require an employee to notify his or her employer before filing a complaint or voluntarily communicating with the government regarding the employer’s past or future conduct;
    • require an employee to affirm that he or she has not previously provided information to the government or engaged in other protected activity, or to disclaim any knowledge that the employee has violated the law; and/or
    • require an employee to waive his or her right to receive a monetary award from a government-administered whistleblower award program for providing information to a government agency.
  • Provisions providing for liquidated damages in the event of a breach where those provisions are clearly disproportionate to the anticipated loss to the respondent of a breach, the potential liquidated damages would exceed the relief provided to the employee, or whether, owing to the employee’s position and/or wages, he or she would be unable to pay the proposed amount in the event of a breach.

When OSHA encounters these types of provisions, it will ask the parties to remove those provisions and/or prominently place the following statement in the settlement agreement: “Nothing in this Agreement is intended to or shall prevent, impede or interfere with the complainant’s non-waivable right, without prior notice to Respondent, to provide information to the government, participate in investigations, file a complaint, testify in any future proceedings regarding Respondent’s past or future conduct, or engage in any future activities protected under the whistleblower statutes administered by OSHA, or to receive and fully retain a monetary award from a government-administered whistleblower award program for providing information directly to a government agency.”