Labor Day Hot Topics
Happy Labor Day 2015! In the spirit of the day, we thought it fitting to reflect on the three, hot topics that have been dominating the labor and employment news this summer, and which are certain to impact employers and employees in 2016.
- Revision to FLSA's "White Collar" Regulations. In summary, these proposed amendments to the Fair Labor Standards Act regulations more than double the minimum salary level (from $23,660 to over $50,000 per year in 2016) for certain employees deemed to be exempt from overtime as administrative workers, executives, professionals, and computer employees. The amendments also increase the minimum pay level necessary to be deemed an exempt "Highly Compensated Employee" from the current $100,000 to $122,148 per year. These proposed regulations are a compliance and budgeting issue for many businesses. Barring some unexpected event, the regulations are likely to become effective in 2016.
- New DOL Guidance on Contractor Misclassification. The U.S. Department of Labor issued a new administrative interpretation for the legal test of whether a worker is an independent contractor or an employee. The bottom line is that under the new interpretation, it will be more difficult than ever to properly classify a worker as a contractor. This new guidance has significant implications for businesses who rely on contract labor, as there are substantial tax, wage and hour, and benefits consequences for misclassification.
- Expansion of NLRB's Test for "Joint Employment." The National Labor Relations Board (NLRB) announced in an August 27, 2015 decision that it was changing the test to determine whether two related businesses are "joint employers." In sum, the federal position announced in the NLRB decision is that many more businesses, like franchisors-franchisees, manufacturers-distributors, and staffing agencies and their clients can be held jointly liable for employment claims (wage and hour violations, discrimination and harassment, etc.) and could more easily organized by labor unions. This new legal test will be a major change for many businesses if it survives the expected court challenge.
We will be watching these changes in the law closely in the coming months as businesses begin making adjustments to comply with them and to mitigate their legal risks.