December 7, 2016
2016 was quite the eventful year for the legal landscape, particularly where labor and employment laws are concerned. While many of the laws passed during 2016 also took effect this year, many changes to laws and regulations will not take effect until 2017.
Although not exhaustive by any measure, below are four of the more significant of such laws of which corporate counsel should be aware heading into 2017.
FLSA Exemption Rules (Originally Set to be Effective December 1, 2016)
On November 22, U.S. District Judge Amos Mazzant issued a nationwide injunction against implementation of this rule, potentially jeopardizing it completely – since the incoming Trump administration could easily drop the appeal and leave the rule dead in the water.
The change, in short, would have increased the salary threshold for those workers who automatically qualify for overtime pay from $455 a week (or about $23,660 a year) to around $913 per week ($47,476 a year). In practice, employers would have to have paid overtime to a whole new class of workers – or simply reduce the number of hours that employees previously classified as “exempt” to ensure that they remained under 40 per week.
Considering that the previous threshold covered only 7% of full-time salaried workers, and that the revised threshold will cover 35% of that same class of workers, employers were facing a major change to their wage practices.
Although it’s likely that the Trump administration could let the rule die, it’s also possible that, if the rule proves popular enough among the public, that the administration could simply pare it down to make exceptions or to delay implementation.
Until its fate is determined, employers should carefully watch the rule’s status in the courts and prepare accordingly.
California Minimum Wage Increase (Effective January 1, 2017)
On April 4, California Governor Jerry Brown signed a bill into law that will raise the minimum wage from the current $10 an hour to $15 an hour by 2022. In 2017, the minimum wage will increase to $10.50 an hour, and then to $11 an hour in 2018. After that, the minimum hourly wage will increase $1 per year until it reaches $15 an hour in 2022.
While it’s true that this minimum wage increase applies only to California, the state is the country’s most populous, and most large employers operating on the national level have a significant presence in the state. The impact of this change will be especially felt by retailers, who rely considerably on hourly workers.
What’s more, the change in California will have the largest impact of the recent initiatives to increase the minimum wage, likely an indication of the movement gaining steam. Positive results with this California experiment could inspire other jurisdictions to follow suit – or, potentially, the federal government.
In short, this change probably isn’t simply an isolated incident, but rather suggests a larger trend for which employers must prepare in 2017 and beyond.
California’s New Arbitration Protections for Employees (Effective January 1, 2017)
Similarly, two new laws signed by Governor Brown at the end of September likely point to a larger, nationwide trend: increasing protections for non-corporate parties to contracts.
In this case, the non-corporate party are workers. SB 1007 and SB 1241 respectively amend California’s Code of Civil Procedure and Labor Code to create additional safeguards for California employees for arbitrating disputes with their employer.
SB 1007 allows a party to an arbitration “the right to have a certified shorthand reporter transcribe any deposition, proceeding, or hearing as the official record.” SB 1241 prohibits employment arbitration provisions from mandating the arbitration of claims in outside states or arbitrators from applying another state’s law to resolve the dispute.
Neither of these laws will be particularly earth-shattering, but both nevertheless underscore the need for companies to prepare for potential legal challenges to arbitration contracts in 2017 and beyond.
Vermont and Connecticut “Ban the Box” (Effective July 1, 2017, and January 1, 2017, respectively)
On the other side of the country, Connecticut and Vermont have enacted “Ban the Box” laws that prohibit employers from inquiring about a prospective employee’s prior arrests and criminal history, with limited exception. These two join seven other states and the District of Columbia in enacting such laws.
The majority of these laws have been passed within the past five years or so, and more jurisdictions are considering Ban the Box laws each year. Employers naturally must prepare themselves for the changes coming in Connecticut and Vermont next year by removing objectionable questions from application forms in those jurisdictions. Thinking further ahead, however, employers must be vigilant for any future laws in other jurisdictions likely to emerge in 2017 and later.
In essence, monitoring legal shifts in individual states, even if those isolated changes will have a minimal impact on a company’s operations, is vital, because such changes may herald the coming of larger shifts in the legal landscape for which companies must be prepared.