WORKPLACE COMPLIANCE IN THE TRUMP-ERA: IT IS NOT ABOUT TWITTER

 

It has been noted politicians campaign in poetry and govern in prose.  That may sound too lofty to describe current times, but the sentiment remains: promises made on the campaign trail do not easily translate into law. We have a Republican President and a Republican Congress, which historically has meant a more business-friendly regulatory environment.  Yet as the first 100 days will show, unwinding is neither quick nor easy. The Affordable Care Act has not been repealed and little is on the horizon. The President’s Budget Blueprint for 2018 proposes to slash the Department of Labor’s (DOL) budget by 21%. What does this mean for employers right now, or even over the next year?

In short, not a lot. Meanwhile, state and local governments are legislating like mad to fill the gaps that could be created by proposed budget cuts and executive orders. President Trump is an active Twitter user but as detailed below, that communication belies the actual activity of the federal government. #Realtalk

Are employers off the hook for federal mandates? Not so fast. Most of the federal regulations that govern the workplace remain in place and, given the inability to repeal the much lamented ACA, may not change at all.

Below is a quick overview of the current federal landscape under President Trump. Without actual policy as a guide, we are using the President’s proposed budget as a crystal ball. Please note that many states, including Massachusetts and California, have stricter mandates than the federal laws:

THE FUTURE OF DOL/OSHA/EEOC ENFORCEMENT

The President has proposed $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget. Because Congress has to approve the budget this is only an outline of the actual budget.  The blue print is short on details, but does expressly call for reduced funding for grant programs, job training programs for seniors and disadvantaged youth, and support for international labor efforts.  It also proposes to eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at certain facilities.  These cuts account for $500 million dollars of the DOL budget. The blueprint does not specify where the other $2 billion in cost savings will come from, except to say more funding responsibility will go to the states.  If approved by Congress—a big if–the cuts will involve a loss of funds that could be distributed heavily through DOL’s enforcement programs. This will include the EEOC and OSHA. Yet the process by which these agencies collect fines is a valuable revenue generator and unlikely to end easily.

At this point, the likelihood of the final budget looking like the proposed one is total conjecture. Furthermore, even with the expected cuts to the DOL’s enforcement and regulatory programs, it is important to recall that under the last Republican administration—no fan of regulation– the DOL still enforced the law. Moreover, as the federal government delivers more labor enforcement responsibility to the states, employers will increasingly be forced to work to achieve compliance on two fronts, instead of one.

RIGHT NOW

Every administration has used the media as a means of furthering and communicating its chosen agenda, and the Trump administration is no exception.  The choices the administration makes in what it chooses to publicize likely signal the administration’s direction; but also shape the public’s perception of what it is actively doing.  The Trump administration and President Trump in particular use social media and news reports for the purpose of shaping the public’s understanding their activity.  From a compliance standpoint, this actually creates risk for employers.

Despite the President’s proposed budget and awaited confirmation of a new Labor secretary, the New York Times reported  that DOL enforcement actions continue.  In a departure from past practice, the department has stopped publicizing fines against companies. As the New York Times points out, the Obama administration used the announcements as an enforcement tool, and a means to influence employers.  However, the announcements also served as an important window for employers into the DOL’s current position on important compliance issues such as wage and hour or OSHA safety enforcement.  If a company in the same industry was recently fined for a practice, that action provided others in the industry with important notice to examine their practice.  Employers no longer have this benefit.  Furthermore, those who believe that the lack of information surrounding DOL enforcement means they no longer have to worry about the threat of an audit do so at their own peril.  At the present, and until the new budget is confirmed months from now, agency enforcement has not changed.  For those inclined to believe the confirmation of the new Labor secretary will change that should keep in mind that DOL audits are a money-maker for the agency.  There seems to be little reason for them to stop.

WHAT TO DO

The last few years have seen a seismic change in the number of employment laws on both the state and federal level.  If it has been a few years since your organization has updated its employee handbook, you have a compliance problem on your hands.  Updating your handbook and policies is an important step to mitigate risk.

And remember, statutes, regulatory guidance and case opinions published by the courts are what impact compliance obligations, not the news. What happens on Twitter does not reflect the actions of the agencies of the federal government. #Really

Charlie Baker as the Taxman: The so-called fair share comes roaring back

If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet…

George Harrison, The Beatles

 

Massachusetts Governor Baker has included a new tax assessment on businesses in his 2018 proposed budget and it is a whopper.  The proposed tax assessment would impact businesses with 10 or more employees if the employer does not contribute at least $4,950.00 toward each full time employee’s healthcare and have an 80% participation in its group health plan.  This health related tax assessment would require a payment of $2,000.00 per full time equivalent employee.  Full time employees are defined as those who work 35 hours or more per week.  The proposal revives the “fair share” that was eliminated under the Affordable Care Act (ACA)—with a hefty increase.  The goal is to raise $300 million to offset the costs of the projected 1.93 million enrolled in MassHealth for 2017. Baker is also proposing various caps paid to providers in an attempt to limit costs and close the gap on discordant charges for the same services.

The short version of how this happened: Way back in 2006, before the ACA, Massachusetts employers with 11 or more employees were required to offer health care coverage to full-time workers or pay a fee of $295 per worker. If an employer offered health insurance, employees were ineligible for MassHealth.  To comply with the ACA, the employer fee and the restriction in choosing MassHealth were eliminated.  Moreover, the ACA federal mandates to fine employers were pushed back and some eliminated. In Massachusetts that meant more people enrolling in MassHealth and less money to fund it. Can you say quagmire?

The attempt to shift this enormous burden onto the backs of business has understandable resistance.  The sky rocketing cost of insurance is the central issue and throwing more money at insurance costs makes no sense.  The interplay between the ACA and MassHealth has problems as well– Baker has requested a waiver from ACA provisions that conflict with or add unnecessary costs to the state. And finer points of Baker’s 2018 assessment must be addressed. For instance, what if employees reject employer offered coverage (perhaps in favor of coverage from a spouse) and participation drops below 80%? Under the current provision, the employer will still be required to pay the assessment.

The legislature needs to carefully examine this proposal and its massive potential impact on business.  Did I just write “carefully examine” in the same sentence as the legislature? Desperate times… .We urge you to contact your representatives in the Senate and House. Call if you can, email or write if you cannot. We will monitor the progress of this proposed tax assessment and continue to update our clients on any new developments.

 

Now what?

by Attorney Angela Snyder

What Happens Now?

Change comes with every Presidential election and this one could be seismic.  Naturally, when we heard the outcome, we began questioning, what does this mean for employment laws?  What will happen to the Affordable Care Act?  What will happen with the new overtime rules?  Should businesses ignore the December 1 deadline and just wait to see what happens next? For Massachusetts, California, Maine and Nevada employers, and 25% of the country, employees will now have access to legal recreational marijuana.  How will the workplace be affected?

While we cannot read the future, we spend much of our day watching laws change and examining legal trends.  Here are our predictions  and advice for weathering the coming changes.

The Overtime Rules

As a threshold matter, Donald Trump will become the President on January 20, 2017, after the new overtime rule takes effect. Although Trump’s Secretary of Labor will likely roll back many of President Obama’s employment-related initiatives, the breadth of these changes remains to be seen. Trump has not released a specific policy or position, although he has said he favors “a delay or a carve-out of sorts,” but only for small businesses. This is far from a guarantee.

Additionally, as we have advised over the last year, the FLSA White Collar exemptions require a 3 part test.  Employees must receive a salary of at least $455 per week (rising to $913) per week; they must receive the same salary no matter how many hours they work; and they must pass a strict duties test.  The new FLSA rule set to take effect December 1, 2016, addresses only the minimum salary level portion of the test.  Many employers audited all of their exempt positions in preparation of these new rules.  To the extent employees were reclassified because their duties did not meet the requirements of one of the White Collar exemptions, a rollback of the new salary levels will be irrelevant.

In late September, two lawsuits were filed in federal court in Texas, and legislation that would delay the effective date of the rule until June 2017 passed the U.S. House of Representatives.  None of the legislation will pass into law before the new rules go into effect.  As for the lawsuits, there is a hearing this week in an action to challenge the rule; and it is possible the presiding judge will issue an injunction at that time.  However, the judge hearing the case is an Obama appointee, which means it is more than likely that on December 1, 2016, by law, all exempt positions must receive a salary of at least $913 per week.

Why comply, when there is a chance the new rules will be rolled back? As a quick reminder, under the FLSA, non-exempt employees who are improperly classified will be owed back wages and liquidated damages (equal to the back wages owed), and the auditing agency or court will look back two years to determine the overtime and wages owed.  If they believe the employer intentionally misclassified employees, that period extends to three years.  Under Massachusetts law, employees are entitled to treble damages.  These are not small penalties and often result in fines in the tens or hundreds of thousands of dollars.

For this reason, we advise all of our clients to comply with the new overtime rules on December 1.  If the new administration changes the rules, these employees can always be reclassified as exempt at a later date.  

Affordable Care Act

Trump and Republicans in Congress have stated that they will seek to repeal ObamaCare within Trump’s first hundred days in office. There are roughly 1,000 pages of the ACA and its related provisions.  A full repeal will be incredibly difficult, but it is possible.  It does look like Trump’s intention is to replace the ACA with some other program, which means 2017 should be interesting for employers. Trump has also stated he would keep the pre-existing condition mandate and the availability of insurance for children until the age of 26, which sounds a lot like…ObamaCare.

Marijuana Use

With the advent of the edible marijuana industry, a gummy bear is no longer a gummy bear.  Recreational pot shops are coming to Massachusetts in 2018.  Wondering how to prepare your workplace? Here are some things to know when it comes to creating policies on marijuana use:

1. There is not an accurate test for marijuana intoxication.  An employee who uses marijuana outside of work (even the day before) will likely fail a blood test, even if the use was totally outside of work, and he or she was not intoxicated at the time of testing.  Given the legalization of medical marijuana in particular, this has resulted in a number of lawsuits.
2. Although marijuana has now been legalized in a number of states, it is still considered a ‘controlled substance’ under federal law.  As such, at least for the time being, marijuana use remains illegal under federal law. Thus, any federal employer or private employer that receives federal monies may have to conduct testing under federal guidelines.
3. Finally, only New Hampshire and Arizona have laws protecting medicinal marijuana use and preventing employers from discriminating against marijuana users.  This will likely change now that Massachusetts and California have legalized marijuana.

So, what does all of this mean?  In the states that legalized marijuana in 2012, there have been lawsuits filed by employees who have been terminated after a positive drug test.  The outcome of these cases has been surprisingly consistent, and offered employers a fair amount of latitude when it comes to drug testing and terminating employees for marijuana use.  This has been true even in states where recreational marijuana use is legal.  However, the courts up to this point have relied on the fact that marijuana remains illegal under federal law as a major justification for their decisions.

Now that legal access to recreational marijuana exists in several states, it is likely the federal government will have to look seriously at declassifying marijuana as a Schedule I drug.  This, in turn, will likely influence legal decisions.

Although the Massachusetts recreational marijuana law does not directly alter the state laws governing employer drug testing, it definitely makes sense to review your drug testing policies in light of the new law. At a minimum, policies that call for termination or other discipline for an employee’s use of “illegal” drugs may need to be revised, given that it is no longer illegal for adults to use marijuana in Massachusetts.

As to what amount of marijuana use should result in a termination, Colorado and Washington, where recreational use of marijuana is legal, set the level of impairment at 5 nanograms of active tetrahydrocannabinol (THC) based on a set amount of blood. Pennsylvania set a 1 nanogram threshold; Nevada and Ohio opted for 2 nanograms.  States are all over the map because setting a specific impairment threshold with THC is not as clear-cut as it is with alcohol. THC can remain in a person’s system for days and weeks. That means blood tests alone are unreliable.

In 2014, after marijuana was legalized in Washington, fatal crashes where the driver was found to have THC in his/her blood doubled from around 8% to 17%.  Now that so many states have legalized marijuana, the U.S. is going to be forced to find a national standard for sobriety that is based on real science.  However, until that happens, testing for marijuana use will continue to be problematic.

Recommendations

Private employers have latitude in terms of behavior they can prevent in the workplace.  Just as you can prohibit employees from having alcohol in the workplace, you can prohibit them from possessing or being under the influence of marijuana in the workplace.

Where your testing is limited to reasonable suspicion testing, your risk of an employee claim of wrongful termination based on a positive drug test is much lower than if you conduct random tests.  Although an employee may dispute the validity of your test, if you also have documented reasonable suspicion that an employee was under the influence while at work, you will be able to show that your action as an employer was based on a reasonable and good faith belief that the employee was a danger to him/herself or others.

As for smoking, you can continue to prohibit smoking marijuana and/or ingesting marijuana just as you can prohibit smoking cigarettes or drinking alcohol.

What About the Rest?

Without question our clients should expect some change in the employment law landscape with the new administration, and it will likely be more employer friendly. However, as we observed during the election, Mr. Trump has shifted positions on many issues, many times.  Trump’s appointments to the DOL, the EEOC, NLRB, and OSHA, not to mention the Supreme Court, will be far more telling of the direction of employment related laws in the coming years.

We can help: info@foleylawpractice.com or 508-548-4888