Top 10 HR developments to act on in 2017

January 26, 2017 9:23 AM

Top 10 HR developments to act on in 2017

Over the past year we witnessed a number of dramatic changes to existing labor and employment laws which have already affected employers, regardless of size, throughout the United States. Businesses should prepare for these employment-related developments which will likely have the most significant and immediate impact in the New Year.

1) Changes to overtime laws.

On May 18, 2016, the U.S. Department of Labor issued its final changes to the overtime exemption rules under the Fair Labor Standards Act. The final rule, which was initially scheduled to go into effect in December 2016, more than doubled the minimum salary threshold for exempt employees, requiring them to be paid at least $913 per week ($47,476 annually). In addition, the Department of Labor announced an increase to the annual minimum salary for “highly compensated” exempt employees from $100,000 to $134,004.

However, on Nov. 22, 2016, a federal judge in Texas entered a nationwide injunction halting implementation of the new overtime law. Thus, at least for the time being, the proposed amendments to the overtime regulations will not be implemented and shall have zero legal effect. Employers who acted proactively by already instituting changes to employees’ salaries and classifications to ensure compliance should, for purposes of employee morale and retention, at least consider resisting the temptation of unwinding these overtime changes in light of the Texas court decision. On the other hand, companies who failed to implement these changes prior to Dec. 1 may sit back for now, but should nonetheless monitor this issue for the foreseeable future until such time that (1) the Texas decision is reviewed by the Fifth Circuit Court of Appeals, and (2) the impending Trump Administration announces an official position on this issue.

Also see: “10 ways to improve 401(k)s in 2017.

2) Marijuana in the workplace.

On Nov. 8, 2016, Florida became the latest state to legalize the use of medical marijuana for individuals suffering from certain recognized conditions (cancer, HIV/AIDS, epilepsy, glaucoma, Parkinson’s disease, multiple sclerosis, etc.). Unfortunately, Amendment 2 failed to provide employers with adequate guidance as to its anticipated effect upon the workplace (including the viability of pre-hire drug testing and existing drug-free workplace policies, employers’ duties to offer reasonable accommodations to authorized users, and necessary changes to existing employee handbooks). The Florida Department of Health has until July 2017 to issue regulations which will hopefully clarify many of these issues. In the meantime, employers (at least for now) are not required to permit on-site marijuana use, and may continue to implement and enforce policies which expressly prohibit the use of marijuana in the workplace. It should be noted that President-elect Trump’s nominee for U.S. Attorney General, Alabama Senator Jeff Sessions, has long been a staunch opponent of marijuana (for any purpose) and may pursue steps to at least slow the nationwide march towards legalization. The next 12 months will certainly be telling.

3) Increase in Florida minimum wage.

Effective Jan. 1, 2017, Florida’s minimum wage became $8.10 — a $.05 increase from the 2016 minimum wage. With respect to “tipped employees” in the service and hospitality industries, companies will now be required to pay these employees a direct wage of at least $5.08 per hour, and may avail themselves of a maximum tip credit of $3.02 per hour.

4) New Form I-9.

On Nov. 14, 2016, the U.S. Citizenship and Immigration Services issued a revised Form I-9, Employment Eligibility Verification. Changes to the revised Form I-9 include: (1) a request for “other last names used” rather than “other names used” in Section 1; (2) new prompts to ensure information is entered correctly; (3) the ability to enter multiple preparers and translators; (4) a dedicated area for including additional information rather than adding it in the margins; (5) a new “Citizenship/Immigration Status” field at the top of section 2; (6) drop-down lists and calendars for filling in dates; and, (7) on-screen instructions for completing each required field. Beginning Jan. 22, 2017, all employers are required to complete the revised form for each new employee hired to work in the United States and for employees whose employment authorization must be re-verified under existing immigration laws.

5) Transgender discrimination.

While the media coverage of Bruce Jenner’s transition to Caitlyn Jenner shows no signs of slowing down, the government (as well as plaintiff attorneys) have become increasingly aggressive in prosecuting transgender employment discrimination cases. Just recently, an arbitrator ruled that a Louisiana financial services company discriminated against a transgender employee, in violation of federal law, when the employee was told to conform to the gender listed on his driver’s license by dressing and acting like a woman. In addition, the U.S. Supreme Court recently announced that it will hear argument and then issue a ruling on a transgender bathroom rights case involving a Virginia public school student. Employers need to be aware that an increasing number of municipalities and counties throughout Florida (including Miami-Dade, Broward and Palm Beach) have already enacted laws which expressly prohibit employment discrimination based upon an individual’s gender identity or expression. For this reason, employers must train their managers accordingly, update existing employee handbooks and related workplace policies, and ensure that affected employees are sufficiently protected from workplace discrimination and retaliation.

6) Non-compete and non-solicitation agreements.

Non-Compete and Non-Solicitation Agreements continue to be challenged throughout the country and the current trajectory does not bode well for companies seeking to restrain competition from former employees. While it is generally permissible in Florida (unlike California, Oklahoma and North Dakota) to mandate that employees sign such agreements as a precondition of employment or continued employment, companies must be aware that their ability to restrain post-employment competition is not absolute and could be heavily scrutinized by a judge or arbitrator in the event of a lawsuit. When crafting these agreements, companies need to consider the significance of the employee’s position, the legitimate business interests which truly warrant legal protection, the state in which the particular employee performs services and the inclusion of a reasonable geographical scope. The failure to do so could result in an unenforceable non-compete agreement with unintended and harmful business consequences.

7) Social media policies.

Approximately 78% of Americans currently have a social network profile on at least one social media website. As a result of this growing phenomenon, the National Labor Relation Board and courts throughout the country continue to attack employer social media policies which are drafted so broadly that they have a “chilling effect” upon protected speech under the National Labor Relations Act. For example, a policy which bars the disclosure of “confidential information,” without any explanation as to what in fact constitutes confidential information, could dissuade employees from complaining about their wages or other workplace conditions which has been deemed a protected activity under Section 7 of the NLRA. Accordingly, employers should implement social media policies which are narrowly drafted and include only legitimate and necessary prohibitions against certain social media activity.

8) Misclassifying employees as independent contractors.

In 2016, a top priority of the Internal Revenue Service, the U.S. Department of Labor, the NLRB, state governments and plaintiff attorneys has been to attack the legality of purported independent contractor relationships where the “independent contractor” is actually a misclassified W-2 employee. You can certainly expect more of the same in 2017. The consequences of this increasingly common misclassification include significant fines, penalties, back taxes, back wages and attorneys’ fees, all of which can easily reach six figures or more. For this reason, companies should perform a comprehensive self-audit of each independent contractor relationship to ensure that the affected workers have been assigned a proper 1099 classification (and are not simply W-2 employees in disguise). Such a review will allow employers to be better positioned to defend (or preemptively avoid) employee lawsuits, class actions, and government enforcement actions which can be time consuming, disruptive and monetarily painful.

9) Employment applications and the Fair Credit Reporting Act.

While employers certainly have the right to, and absolutely should, conduct background checks on prospective employees, companies are increasingly being sued when such background checks are prematurely conducted without first providing the mandatory disclosure and authorization forms to the applicant/employee. The federal Fair Credit Reporting Act prohibits companies from conducting a background check unless the employee has first been provided with “a clear and conspicuous disclosure . . . that a consumer report may be obtained for employment purposes.” Courts are requiring that such disclosure be provided in a separate, stand-alone document which consists solely of the disclosure, rather than being embedded in the middle of an employment application along with releases, warranties and other extraneous information. It is imperative that your pre-hire employment package is fully compliant with FCRA requirements.

10) Election of Donald Trump.

With President-elect Trump scheduled to take office on Jan. 20, 2017, you can expect a wave of new policies, executive orders and legislation intending to undo many of the laws implemented during the Obama Administration. For example, we will likely see (1) repeal of the Affordable Care Act, (2) narrowing of the “joint employer” doctrine which significantly expanded during the previous eight years, (3) simplification of the mandatory EEO-1 Report, (4) legislative and judicial preservation of mandatory arbitration agreements, (5) reduction of OSHA’s enforcement power, (6) decrease in funding for the U.S. Department of Labor and the Equal Employment Opportunity Commission, and (7) elimination of recently enacted requirements that federal contractors disclose labor law violations, provide paid sick leave and pay a $10.10 minimum wage.