Employment Law This Week®: DOL’s Final Overtime Rule, CA Codifies “ABC Test,” Pay Data Collection Beyond 2018, NLRB’s Busy Summer
This Employment Law This Week® Monthly Rundown discusses the most important developments for employers heading into October 2019. The episode includes:
1. DOL Issues Final Overtime Rule
On September 24, the U.S. Department of Labor (“DOL”) issued a final rule increasing the annual salary threshold for white-collar exemptions to $684 per week. This is an increase of about 50 percent over the present levels. Up to 10 percent of that amount can be in the form of commissions, non-discretionary bonuses, or other incentive compensation. For highly compensated employees, the final rule increases the annual earnings threshold to $107,432. The new thresholds will take effect January 1, 2020.
“One of the big issues going into this rulemaking was whether there would be automatic increases of these salary and compensation levels. In the Obama administration’s proposed rule and final rule that ended up not going into effect, there was a provision calling for automatic updates without new rulemaking every three years. The Department considered that type of commitment in its Notice of Proposed Rulemaking that it issued in March of this year, but chose not to have automatic updating in the final rule.” – Paul DeCamp, Member of the Firm, Epstein Becker Green
2. California Codifies “ABC Test” for Classifying Workers
The “ABC test” becomes law in California. Last month, California passed legislation codifying the worker classification test established in the state supreme court’s Dynamex case. The new law goes into effect on January 1, 2020, and will likely impact a number of industries. Under the new law, individuals hired to provide services will be considered employees unless the hiring entity proves that the individuals (A) are free from direction and control, (B) perform work that’s outside the usual course of the hiring entity’s business, and (C) are engaged in an independently established trade, occupation, or business. While versions of the “ABC test” are already used in several states in some circumstances, California has set a new high-water mark, with some other states already signaling that they might follow suit.
3. EEOC Reconsiders Pay Data Collection Beyond 2018
The pay data collection story took another turn in September. After much legal wrangling, the Equal Employment Opportunity Commission (“EEOC”) is still collecting the Component 2 pay data from 2018 and 2017, which was required to be submitted by employers by September 30. But for now, the agency has announced that it does not anticipate renewing the pay data collection requirement moving forward, including for 2019 data. The agency underestimated the compliance cost of yearly submissions for employers. The EEOC plans to assess the value of the data employers filed last month before deciding whether to renew the requirement in the future.
“The EEOC took a hard look at the data collection burden estimate that was done in 2016. In 2016, the EEOC decided that they were going to treat every employer the same. So, whether you have a single establishment, which requires one form to be filed, or 150 establishments, where you have 150 forms or more to file, they treated everyone the same way. That is not an accurate representation of what the filing is. Likewise, it’s a much more complex form that’s being required. So for the EEO-1, the standard EEO-1 is 140 data fields. The new component 2 data fields are 3,360 fields. So, it’s a much more complex report to file, and it’s a much more expensive report to file.” – Robert O’Hara, Member of the Firm, Epstein Becker Green
4. NLRB Wraps Up a Busy Summer 2019
It was a summer to remember for the National Labor Relations Board (“NLRB” or “Board”). With a Republican majority firmly in place, the Board took on a number of contested issues over the past few months. Its decisions continued the NLRB’s move away from the pro-union perspective of the Obama-era Board and, in some cases, reversed long-standing precedent.
“The general impact of the Republican-majority Board decisions is really to slant the case law in favor of employers, and the employer’s position. They had three main decisions just this summer that really gave the power to employers to control. One was a UPMC hospital decision. One other major precedent that the Republican majority impacted was the standard applied when looking at unilateral change to bargaining terms. So, historically, there’s always been the standard of ‘clear and unmistakable’ waiver. Now, the Board said, ‘Well, no, hold up; we’ll wait. You know, if there’s a management rights provision that really gave them the ability to do that, then we won’t really look at ‘clear and unmistakable’ waiver. We’ll really focus on whether there is language within the contract that really permitted the employer to do that.’ This fall, we will most likely continue to see limits placed on ability to organize and case law that favors unions.” – RyAnn McKay Hooper, Associate, Epstein Becker Green
Stay tuned for further developments that may affect your business.