The past decade was relatively quiet for major employment regulations, including federal and state statutes, administrative regulations and judicial decisions. However, 2009 saw sweeping changes, and this year is expected to bring more. The Daily Transcript invited four San Diego employment law leaders to share their insights on what the upcoming employment law landscape will look like -- and the potential impact of anticipated changes.
The new Health Care Reform Bill will, of course, change employee benefit plans and practices. What broader implications will this complex legislation have for employers and on the workplace overall?
Butterfield Schechter LLP
The Health Reform Bill passed in a whirlwind and practitioners like myself are still studying its implications. My initial reactions are as follows (some of which are more obvious than others):
1. Employers will be more reluctant to hire part-time employees who work at least 30 but less than 40 hours per week with a fear the cost-benefit ratio of benefits will be “out of whack.” Employers will seek to hire more part-time employees who work under the 30 hours per week threshold (and will ban overtime or extra hours). For businesses with over 50 full-time employees, the rules get tricky. Employers who have more than 50 full-time employees (or equivalents -- the bill has some complex rules) are required by 2014 to offer coverage to employees or pay a $2,000 penalty per employee after their first 30 employees if at least one of their employees receives a “tax credit.” The tax credit is a government subsidy for employee coverage.
2. Employers will push (and some will exceed) the limits of independent contractors vs. W-2 employees. Already a contentious area fraught with danger for employers, but you don’t care about benefits a contractor gets. This assumes the contractor relationship is legitimate (often it is not).
3. Employers who can do so will seek to outsource services either domestically or internationally, so as to reduce their costs and potentially get below 50.
4. Employers who did not previously provide health coverage will lose much of the competitive advantage of not paying for coverage in comparison to competitors who do. That is a “plus” for the employers who previously offered coverage.
5. Flexible Benefit/Cafeteria/Section 125 Plans will need to be more restrictive. The bill curiously places less emphasis on high deductible health insurance. It will be interesting to see if the focus away from high deductible insurance causes more overutilization of health care. One purpose of the bill was to attempt to slow the rapid increase of health costs. Further law changes will be necessary to advance that goal (if Congress was serious about that goal).
The Department of Labor recently announced initiatives such as the “We Can Help Campaign” protecting “vulnerable” workers under the Fair Labor Standards Act and its plans to focus efforts on rebuilding Worker Protection Programs. What can we expect from the White House in terms of noteworthy legislation and regulations on labor and employment?
Joshua D. Gruenberg
The Law Office of Joshua D. Gruenberg
President Obama will continue to promote workplace flexibility for families of varied income levels, including paid leave for elder care. The White House’s economic recovery efforts are centered on small and medium-sized businesses, and President Obama will ensure that protections for workers extend to these employers. The first bill President Obama signed after taking office was the Lily Ledbetter Fair Pay Restoration Act. He will look for other opportunities to implement pay equity.
As the green energy sector develops, the White House will encourage project labor agreements and other regulations to set a precedent of fair workplaces in this emerging industry. On many Americans' wish list: the White House will follow the lead of the Franken Amendment and of the Equal Employment Opportunity Commission, and forbid employers from forcing employees to sign arbitration clauses, which severely restrict employees' rights.
California has specific employee protection laws, and class action litigation is seeing an increase. What recent or pending class action legislation will have a significant impact on employers in California?
Partner, Labor & Employment
Luce, Forward, Hamilton & Scripps LLP
Class action in California has really been an enormous part of what’s coming onto the dockets, and there is a wave of litigation that has got employers reeling. Class action is a handful or one plaintiff representing a big group of employees, such as the Brinker Case (Brinker Restaurant Corp. v. Superior Court of San Diego County) that’s before the California Supreme Court. That will let us know whether the 30-minute meal break given to employees who work six hours or more means that an employer just needs to make it available or needs to also police the work force to ensure that the break is actually taken. It is a huge case because there are tons of class actions pending right now where that is the main issue.
Most employers certainly have policies that provide for taking a 30-minute period, but these class actions want to ensure that employees take them. If the outcome is that employers must ensure the break is taken, employers would owe not only time but also one hour for every day an employee didn’t take the 30-minute lunch -- that’s big damages plus attorney fees. The argument is that if an employee takes an e-mail or telephone call while sitting at his desk during lunch, then he wasn’t relieved of his duties for 30 minutes. And Blackberrys and cell phones make it even more difficult.
Thus, if employers are required to police the work force, then they will have to have rules that the employee can’t sit at his desk to take lunch, will have to pay the penalty of an extra hour of wages and then will have to discipline or take corrective action against any employee who does take a call or e-mail during break.
The reintroduced Employee Free Choice Act (EFCA) would now allow workers at a particular company to unionize through an open ballot and could make contracts mandatory. What are some of the biggest challenges the EFCA may pose to employers if it passes?
Leonid “Lonny” Zilberman
Partner, Employment Practice Group
Wilson Petty Kosmo & Turner
If enacted, EFCA would result in the most sweeping changes to national labor policy since the National Labor Relations Act was passed 75 years ago. When he introduced EFCA, Iowa Sen. Tom Harkin said, "Just as the National Labor Relations Act, the 40-hour week and the minimum wage helped to pull us out of the Great Depression and into a period of unprecedented prosperity, so too will the Employee Free Choice Act help reinvigorate our economy."
At the heart of the NLRA is the secret ballot election process. Currently, during the period between the filing of the petition and the election, the employer and the union have an opportunity to present their views to the voters, much like a political campaign. If signed into law, the EFCA will change the NLRA by requiring the National Labor Relations Board to certify a union upon a finding that a majority of employees have signed authorization cards designating the union as their bargaining representative; eliminating secret ballot elections. This so-called "card-check" certification would deprive an employer of an opportunity to present its view to its employees on whether unionization is appropriate or advantageous for that particular workplace (and would eliminate one of the NLRB's primary duties -- conducting elections).
Another centerpiece of the NLRA has been that it is neutral concerning the content of collective bargaining agreements. The NLRA simply requires that the parties engage in good faith bargaining in an effort to reach agreement on a contract. The EFCA would change this process because if the parties could not reach agreement within 30 days, a government-appointed arbitration board would determine the terms under which the business will operate, effectively "imposing" a collective bargaining agreement on the employer. Such a change seems to undermine, not promote, collective bargaining by taking out of the parties' hands -- and giving to government arbitrators -- the power to dictate the terms and conditions of employment.
If EFCA passes, an employer could end up with a union before it even became aware that a campaign had begun. The best strategy for employers is to be proactive and provide employee relations training to all supervisory employees. Employees often choose a union if morale is low and workers perceive that managers don’t care about the people they supervise. Thus, management training is an effective method to identify these risks. Also, employers should conduct human resources audits to make sure they are following their own policies and are also following the law.
Unions often claim that employees will obtain better benefits and working conditions if they are installed. Employers should evaluate compensation and benefit programs, employee communication systems and supervisory competence, which will all be geared to assessing what needs employees feel are unmet and will potentially lessen the exposure to unionization.
-- Compiled by Jill Blackford