Discussion

On September 8, 2023, the U.S. Department of Labor (DOL) published a proposed rule in the Federal Register that looks to increase the minimum salary thresholds for overtime exempt employees. The proposal seeks to increase from the current statutory threshold of $684 per week to $1,059 per week for administrative, executive, and professional exemptions. This would increase annual salary minimums from $35,568 to $55,068 for those employees to be exempt from overtime pay.

Interestingly, the DOL set the measurement for determining the minimum salary threshold based on the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region (currently the South). To arrive at the proposed number, the DOL used data from 2022, but indicated it would use the most recent data available when it issues the final rule. This could result in an even higher minimum salary threshold for exempt employees. The DOL projects that the salary threshold could be $1,140 per week ($59,285 annually) by the fourth quarter of 2023, and $1,158 per week ($60,209 annually) by the first quarter of 2024.

In addition, the proposed rule seeks to raise the “highly compensated employee” exemption from the current threshold of $107,432 to $143,988 per year. Again, the proposed increase is based on 2022 data, and the DOL expects to issue a final rule based on more current data at the time it is issued. Note that not all states recognize the highly compensated employee exemption, so this change may not impact those states like California. Exempt employees in the motion picture industry who are paid a specified base rate and meet the duties test will have their base rate increased from $1,043 per week to $1,617 per week. The proposed rule would also automatically update the salary threshold every three years. There would also be salary thresholds in U.S. territories subject to the federal minimum wage, with some exceptions. Importantly, there are no proposed changes to any of the duties tests under the FLSA overtime exempt rule.

From here, there will be a 60-day comment period through November 7, 2023 to allow the public time to comment on the rule. There will likely be extensions of this time to accommodate the influx of comments expected. Once the comment period is closed, and after all comments are reviewed, the DOL will determine whether to make any changes to the proposed rule. A final rule will eventually be published and it will go into effect within a few weeks of publishing. Considering all of these steps, a final rule is not expected to be in place until 2024. Additionally, litigation challenging the rule will also likely be filed, potentially further complicating the timeline.

Assuming an increase does occur, employers should start preparing now. Determine which employees currently, or who will in 2024, earn between $35,568 and $55,068 per year. Track their weekly hours worked to assess the potential impact of overtime pay versus the cost of a salary increase to remain exempt. To do this, potential overtime pay should be calculated based on what the employee’s regular rate of pay would be, which is based on their total compensation, including things like nondiscretionary bonuses, commissions, and shift premiums. Employers should also have a plan for communicating with employees about any changes in pay as a result of the expected final rule. Keep in mind that some states, like California, New York, and Washington, already exceed the proposed federal minimum exempt salary. Other states may have additional overtime exempt rules to take into consideration.

Although we may not yet know what the final numbers will be, employers should take steps now in order to have a plan in place when the final rule is issued. Continue to look for updates on this emerging topic.

Action Items

1. Review the proposed rule here.
2. Review the DOL’s FAQ on regular rate of pay here.
3. Analyze potential cost of converting employees to either non-exempt or exempt based on the new proposed minimum thresholds.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

Discussion

The National Labor Relations Board (NLRB) has been very active recently. There have been a number of recent rulings impacting union elections, bargaining, and the overall determination of concerted activity. Even where employers may not currently have a union presence, the changes make it easier for a union to be elected. In a time where unions are seeing a significant resurgence, employers should be aware of recent changes.

“Quickie” Union Elections. As of December 26, 2023, “quickie” union elections will return to their 2014 status. Pre-election hearings will generally be scheduled to open approximately 10 days sooner than under the current 2019 rule. The new rule eliminates the existing 20-day period between the direction of an election and the election itself in favor of elections being held on the “earliest date practicable.” Pre-election hearings will be limited to issues regarding whether the election should take place. Litigation of any eligibility and inclusion issues will be delayed post-election unless those issues must be resolved to determine whether an election should even be held. The employer’s Statement of Position responding to the representation petition will generally be due approximately three days sooner under the new rule, and unions may respond verbally at the start of the pre-election hearing rather than filing a written response.

Representation Election Proceedings. On August 25, 2023, in Cemex Construction Materials Pacific, LLC, the NLRB announced a new framework for determining when employers are required to bargain with unions without a representation election. When a union requests recognition on the basis that a majority of employees in an appropriate bargaining unit have designated the union as their representative, an employer must either recognize and bargain with the union or promptly file an RM petition seeking an election.  However, if an employer who seeks an election commits any unfair labor practice that would require setting aside the election, the petition will be dismissed, and—rather than re-running the election—the Board will order the employer to recognize and bargain with the union.

Employer’s Duty to Bargain. On August 26, 2023, in Wendt Corporation, the NLRB overruled Raytheon Network Centric Systems (2017) in part saying that allowing employers to justify discretionary unilateral changes as a “past practice” during a contractual hiatus or during negotiations for a first contract was inconsistent with Supreme Court precedent and the National Labor Relations Act (NLRA). That same day, in Tecnocap, LLC, the NLRB overruled another part of Raytheon saying an employer’s past practice of unilateral changes that was developed under a management-rights clause in a collective-bargaining agreement cannot authorize unilateral changes made after the agreement expires and while bargaining for a new agreement is under way.

Protections Advocating for Nonemployees. On August 26, 2023, in American Federation for Children, Inc., the NLRB reversed its 2019 decision in Amnesty International, returning to longstanding precedent that concerted advocacy by statutory employees on behalf of nonemployees is protected by the NLRA when it can benefit the statutory employees. “Standing in solidarity can be a protected act regardless of the employment status of those you stand with—the question is simply whether, in helping others, employees might help themselves and get help in return.”

Concerted Activity Test. On August 25, 2023, in Miller Plastic Products, Inc., the NLRB returned to the “totality of the circumstances” test for determining whether employees intending to induce group action by fellow employees are engaged in protected concerted activity under Section 7 of the NLRA. Section 7 establishes the right “to engage in . . . concerted activities for the purpose of . . . mutual aid or protection.” “To be protected under Section 7 of the Act, employee conduct must be both ‘concerted’ and engaged in for the purpose of ‘mutual aid or protection.’” The Board overruled Alstate Maintenance, LLC, (2019), which the Board said had narrowed the test for determining concerted activity.

Action Items

1. Review the Quickie Union Election final rule and fact sheet.
2. Review policies and procedures for compliance.
3. Have appropriate personnel trained on the definition of “concerted activity” as it impacts potential discipline related to employer policies.
4. Review changes with legal counsel for compliance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

Discussion

The Fifth Circuit has expanded its definition of what constitutes an adverse employment action when establishing liability under Title VII, finding that a plaintiff can now allege a disparate-treatment claim under Title VII if they plead discrimination in any hiring, firing, compensation, or decision affecting the “terms, conditions, or privileges” of employment. The Fifth Circuit previously limited actionable adverse employment actions to “ultimate employment decisions,” a term that included only hiring, firing, granting leave, promoting, or compensating an employee.

In Hamilton v. Dallas County, nine female detention officers sued Dallas County, claiming sex-based discrimination stemming from the County’s scheduling policy. Specifically, the County used a sex-based scheduling policy to determine each officer’s two days off each week. Under the policy, only male officers were given the option of having a full weekend off from work whereas women officers were only permitted to take two weekdays or one weekend day plus one weekday off. Initially, the plaintiffs’ claim was dismissed because the district court determined that the Circuit’s existing precedent required a showing of an “ultimate employment decision,” and that changes to an employee’s work schedule, such as the denial of weekends off, did not constitute an “ultimate employment decisions.” The plaintiffs then pursued this interpretation to the Fifth Circuit.

In deciding the case, the Fifth Circuit noted that the plain language of Title VII does not limit actionable disparate treatment liability to only “ultimate employment decisions,” and in fact, prohibits discrimination for both “ultimate employment decisions” and decisions “with respect to [employees’] compensation, terms, conditions and privileges of employment.” The Fifth Circuit also noted that the United States Supreme Court has recognized that “any ‘benefits that comprise the incidents of employment, or that form an aspect of the relationship between the employer and employees’ … falls within Title VII’s ban on discrimination” and that Title VII’s test “is not limited to ‘economic’ or ‘tangible’ discrimination.”

In applying this standard to the current case, the Fifth Circuit found that a full weekend off is a preferred shift for both men and women, and by switching from a seniority-based scheduling system to one based on sex, the County was denying the female officers a “privilege” of their employment that was otherwise provided to the male employees. Ultimately, the Court found that the plaintiffs had met their burden of establishing a discriminatory adverse employment action that was based on their sex, and the case was sent back to the district court for further interpretation.

This ruling brings the Fifth Circuit precedent more in-line with the application of Title VII liability in other Circuits. However, the Court specifically noted that they were not addressing the “minimum workplace harm” that a plaintiff must allege for purposes of showing discrimination. Therefore, employers in the Fifth Circuit should continue to monitor application of this new standard.

Action Items

1. Review workplace policies for prohibiting discrimination, harassment, and retaliation.
2. Conduct regular workplace training on anti-discrimination and anti-harassment.
3. Consult with legal counsel when making decisions that affect the terms, conditions, and privileges of employment to ensure compliance with anti-discrimination laws.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

Discussion

The California Civil Rights Department (CRD) recently issued its final rules modifying the Fair Employment and Housing Act (FEHA) regulations relating to criminal background checks. The following is a summary of the key changes.

Applicability. The definition of “applicant” is expanded to include existing employees who have already started working before the post-conditional offer review, applied for a different position with their current employer, or subject to review because of a change in ownership, management, policy or practice.

The definition of “employer” includes “a labor contractor and a client employer; any direct and joint employer; any entity that evaluates the applicant’s conviction history on behalf of an employer, or acts as an agent of an employer, directly or indirectly; any staffing agency; and any entity that selects, obtains, or is provided workers from a pool or availability list.”

Exemptions. An employer or its agent must be required by law to conduct the criminal background check in order to be exempt from waiting until after a conditional offer of employment is made. This exemption does not apply to any law requiring another entity (e.g., occupational licensing board) to conduct a criminal background check.

Voluntary Information. An employer cannot consider any criminal history voluntarily provided prior to making a conditional offer of employment that it would not otherwise be allowed to consider under FEHA (e.g., arrests, diversion program participation, expunged records), unless an exemption applies.

Individualized Assessment. The individualized assessment required before denying a conditional offer of employment based on criminal history was expanded. The assessment must include, among other things, the nature and gravity of the offense/conduct, time that has passed since the offense or completion of sentence, and nature of the job held or sought.

• The nature and gravity of the offense or conduct was clarified to include the following non-exhaustive factors: (1) the specific personal conduct of the applicant, (2) whether there was harm to people or property, (3) the degree of harm, (4) the permanence of harm, (5) the context in which the offense occurred, (6) whether a disability contributed to the conduct (e.g., past drug addiction or mental impairment) and if so whether the likelihood of harm arising from similar conduct either could be mitigated by a reasonable accommodation or has been mitigated by treatment, (7) whether trauma (e.g., domestic violence, sexual assault, stalking, human trafficking, duress, or other similar factors) contributed to the offense, and (8) the age of the applicant when the conduct occurred.
• The time that has passed since the offense or completion of sentence was clarified to include the time passed since the conduct underlying the conviction (which may predate the conviction itself), and/or the amount of time passed since release from incarceration.
• The nature of the job held or sought may include the following factors: (1) the specific duties of the job, (2) whether the context in which the conviction occurred is likely to arise in the workplace, and/or (3) whether the degree of harm that resulted from the conviction is likely to occur in the workplace.

If any evidence of rehabilitation or mitigating circumstances is voluntarily provided by the applicant or a third party at the applicant’s request before or during the initial individualized assessment, the employer must consider that information as part of the initial individualized assessment. This evidence may include (1) the length and consistency of employment history before and after the offense, (2) circumstances surrounding the offense, (3) the applicant’s participation in self-improvement efforts (e.g., school, job training, counseling, community service, rehabilitation), (4) whether trauma (e.g., domestic violence, sexual assault, stalking, human trafficking, duress, or other similar factors) contributed to the offense, (5) age of the applicant when the conduct occurred, (6) whether a disability contributed to the offense and if so whether the likelihood of harm or the disability can be or has been mitigated, (7) the likelihood that similar conduct will recur, (8) whether the applicant is bonded, (9) the fact that the applicant is seeking employment, and/or (10) successful completion or probation or parole. Evidence may be presented in the form of certificates of participation/enrollment/completion of a relevant program, letters from those who know the applicant, documentation from those who can attest to the applicant’s status as a survivor of domestic or sexual violence or similar offenses, documentation of the existence of a disability, or any other documentation showing rehabilitation or mitigating circumstances.

Employers cannot refuse to accept additional evidence voluntarily provided at any point prior to making a preliminary decision to rescind a job offer, require an applicant to submit any of the additional evidence at any time in the hiring process, require an applicant to provide a specific type of documentation, require an applicant to disclose their status as a survivor of domestic or sexual assault or comparable statuses, or require an applicant to produce medical records to disclose the existence of a disability or diagnosis.

Reassessment. During the reassessment process, an employer must consider any information provided by the applicant on whether or not to rescind a conditional offer of employment, including the applicant’s conduct during incarceration (if applicable), employment history since conviction or sentence completion, community service and engagement since the conviction or sentence completion, or other rehabilitative efforts, as well as the nature and gravity of the offense/conduct, time that has passed since the offense or completion of sentence, and nature of the job held or sought.

Job Denial. When reviewing an applicant’s criminal history, there must be a direct and adverse relationship that justifies denying the applicant the position. An applicant’s possession of a benefit, privilege, or right required for the performance of a job by a licensing, regulatory, or government agency or board is considered “probative” of the applicant’s conviction history not being directly and adversely related to the specific duties of that job.

Action Items

1. Review the final rule here.
2. Update criminal history screening procedures for compliance.
3. Have appropriate personnel trained on the updated requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase

Discussion

During the most recent legislative session, Illinois has passed several laws that either create new rights for employees or expand existing laws that affect employee rights. Employers should begin to review these new and amended laws now and prepare for their upcoming impacts.

Expansion of the Illinois Family Bereavement Law. Effective January 1, 2024, SB 2034 significantly expands the Illinois family bereavement leave law. Originally enacted in 2016 as the Child Bereavement Leave Act, and later expanded and renamed as the Family Bereavement Leave Act in early 2023, the law will again be renamed as the Child Extended Bereavement Leave Act (CEBLA). Under the expanded CEBLA, eligible employees who lose a child by suicide or homicide will be entitled to: (1) up to 12 weeks of unpaid leave if they work for a large employer with more than 250 full-time employees; or (2) up to six weeks of unpaid leave if they work for a mid-sized employer with 50 to 250 employees. Employees may take this leave in a single continuous period or intermittently in increments of no less than four (4) hours.

Employees must complete their leave within one year after having notified their employer of their loss. Under the amended law, employers may require the employee to provide advance notice of their intent to take leave, as well as documentation to support the basis for the leave, such as a death certificate, an obituary, or written verification from a funeral home.

Amendments to the Victim’s Economic Security and Safety Act. Effective January 1, 2024, HB 2493 amends Illinois’ Victims’ Economic Security and Safety Act (VESSA) by expanding the list of qualifying reasons for which employees may take unpaid leave. These additional reasons include attending the funeral of, making arrangements for, and grieving the death of a family or household member who is killed in a violent crime. For this new mourning leave, employees are entitled to two workweeks (10 workdays) of unpaid leave, which must be completed within 60 days after the date on which the employee receives notice of the victim’s death. If the employee is also entitled to leave under the amended CEBLA, then the mourning leave may not exceed or be in addition to leave under the CEBLA. However, the mourning leave will be in addition to the four to 12 weeks of leave to which employees may be entitled for other qualifying reasons (such as seeking medical attention, legal assistance, obtaining counseling, etc.).

If an employee is not entitled to take unpaid leave under the CEBLA, then VESSA’s mourning leave is deducted from the total amount of leave time to which an employee is entitled for other qualifying reasons. In addition to the mourning leave, the amendments also add death certificates, published obituaries and certain other written verifications to the list of documents that will satisfy VESSA’s certification requirements.

New Leave for Employee Organ Donation. Effective January 1, 2024, HB 3516 creates a new leave entitlement for an employee’s organ donation. Amending the Employee Blood Donation Leave Act, the law allows eligible employees of companies with 51 or more employees to use up to 10 days of paid leave in any 12-month period to donate an organ. The law defines an “organ” as “any biological tissue of the human body that may be donated by a living donor,” including, but not limited to, a kidney, liver, lung, pancreas, intestine, bone and skin. HB 3516 also formally renames the law to the Employee Blood and Organ Donation Leave Act.

New Freelance Worker Protection Act. Effective July 1, 2024, HB 1122 creates a new law called the Freelance Worker Protection Act (FWPA) that will require companies that hire freelancers to provide services or products valued at $500 or more to: (1) memorialize the agreement through a written contract; (2) make timely payments after the freelance worker has completed the contract for service or delivered the product (within 30 days); and (3) refrain from engaging in discriminatory, retaliatory, or harassing behavior towards freelance workers. The FWPA defines a “freelance worker” as anyone hired or retained as an independent contractor to provide products or services in Illinois or for any Illinois-based entity in exchange for compensation of at least $500 (either in a single contract or in the aggregate of all contracts during the last 120 days).

However, the FWPA specifically excludes: (1) workers performing construction services; (2) workers performing services as an employee for a contractor who engages in construction; (3) workers engaged in the traditional employer-employee relationship as defined by the Illinois Wage Payment and Collections Act; and (4) all foreign, federal, state, and local government entities including school districts. In preparation for this new law, employers should evaluate whether any independent contractors providing services to the company fall within the definition of a “freelance worker,” and if so, consult with their legal counsel to prepare the appropriate contract for services and arrange for a compliant compensation schedule.

New Pay Transparency Law. Effective January 1, 2025, HB 3129 amends the Illinois Equal Pay Act in several significant ways:

• New Job Posting Requirements. Under the amended law, covered organizations are required to disclose in their job postings the wage, salary, wage range, or salary range (i.e., the pay scale) and a general description of the benefits and other compensation that the employer reasonably expects to offer for the position. This disclosure requirement pertains to positions that will be physically performed (at least in part) within the state of Illinois, as well as positions that may be performed outside of Illinois, if the employee reports to a supervisor, office, or other work site within Illinois.
• Internal Job Posting Requirement. The Act requires covered organizations to announce, post, or otherwise make known all job opportunities to all current employees no later than the same day that the job is posted externally.

• Disclosure of Pay Scale and Benefits to Applicants. Although the amended law does not require employers to make a job posting, employers will be required to disclose to an applicant the pay scale and benefits to be offered for the position prior to any offer or discussion of compensation and at the applicant’s request if no job posting has been made available.
• Record Keeping Requirements. The amended law imposes a new record retention requirement, requiring employers to preserve records of the pay scale and benefits information for each posted position for at least five (5) years. In the event of an ongoing investigation, however, employers will need to retain them until the Illinois Department of Labor (IDOL) or court order authorizes their destruction.
• Potential Liability for Third Party Job Postings. Employers may be held liable for a third-party’s failure to include the pay scale and benefits information in a job posting that is posted on the employer’s behalf. To avoid this, employers should monitor postings managed by third party sites closely, and should make sure to provide the third-party sites with the required pay scale and benefits information (or a hyperlink to that information) ahead of the posting, so that it can be appropriately included as part of the job posting.
• Penalties for Violations. Suspected violations of the pay transparency law will be investigated by the IDOL. If the IDOL determines that a violation has in fact occurred, the employer will have seven (7) days to remedy the violation or will be subject to a civil penalty of $100 per day for each day the violation continues. Under the amended law, each job posting that fails to comply will be considered a separate violation.

Action Items

1. Review and revise leave policies and practices to account for expanded leave provisions under CEBLA, VESSA, and Employee Blood and Organ Donation Leave Act.
2. Review independent contractor arrangements to determine whether such individuals qualify as freelance workers.
3. Consult with legal counsel regarding appropriate contractual agreements required for engagement with freelance workers.
4. Review job postings to prepare for upcoming compliance with new pay transparency requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase