No matter how many employees you have or what industry you are in, the current economic climate provides a good breeding ground for several specific problems. Here is a short list of potential issues and steps you can take now:
1. WATCH HOW YOU PAY PEOPLE
Two different initiatives have converged to make employers who pay improperly prime targets in 2012.
a. The US DOL Is on a Mission—And Has Funding
The Obama Campaign promised to beef up enforcement of employee protections. The President made good on that promise in part by funding increases for the Department of Labor (DOL). That’s the agency that enforces the Fair Labor Standards Act (FLSA). Even with a budget compromise in the works don’t expect that the DOL enforcement budget will suffer much.
Here in Las Vegas the DOL office was a “resident office” that was merely a satellite of the Phoenix District Office and was down to two or three investigators. Now Las Vegas is its own District. That means that we have a District Director, an Assistant District Director and are on track to have eight or more investigators. While the new District Director and Assistant seem like reasonable folks, make no mistake that they are here to enforce the FLSA. Keep in mind that, except for the daily overtime provision, the Nevada Overtime Law has fewer teeth than the FLSA. Therefore on many overtime issues if the couple of DOL investigators had never made it to your company your company had received a pass for many years.
Now you should get ready to have your overtime practices scrutinized. Expect to be questioned about why you consider certain positions to be exempt from overtime. Expect your timekeeping procedures and records to be questioned. Even if you are trying to everything right it is easy to make wage-hour mistakes and many good employers do.
What can you do right now? Perform a wage-hour self audit. The idea is to do what the DOL would do if it showed up for an audit—but do it yourself now while you have time to correct mistakes or reconsider the risky things you have been doing on purpose. Self audits can be done by your employment attorneys. They can also be done in house –we’ve taught lots of clients how. Just don’t ignore the issue.
b. States Lose Employment Tax Money When There Are Fewer Employees
Sure there are fewer employees because companies have done layoffs and are doing more with fewer people. Employers have also turned to outsourcing which can sometimes save money as well. But many employers also use independent contractors instead of employees. The risk is that you might “misclassify” an individual as a contractor when under the law he or she would actually be considered an employee. Whether you have been doing that for years or have just started during the economic crisis, remember that you are potentially at risk. Various Nevada agencies are aggressively auditing employers, including the Employment Security Department (ESD) and the Nevada Labor Commission. Expect the DOL to look at that issue too. When you misclassify an individual as a contractor you are subject to potential tax liability, overtime or minimum wage liability and the entire panoply of roll-ups. Benefits and ERISA claims are not out of the question.
What is your action step now? As discussed above, the wage-hour self audit is your best bet. And for this one be sure to obtain legal help—the test for independent contractor status is tricky and different government agencies use different legal tests.
2. WATCH HOW YOU HANDLE DISCRIMINATON AND HARASSMENT COMPLAINTS AS WELL AS ADA COMPLAINTS
In the last legislature, the Nevada Equal Rights Commission (NERC) faced the end of the road. Its funding was slashed and nearly eliminated. Even well before that happened the US Equal Employment Opportunity Commission (EEOC) opened a resident office here in Las Vegas. It had been well known that the EEOC felt that NERC was not aggressive enough with Nevada employers—especially with the evil casinos. Casinos never got a free pass from NERC, but that story gave the Federal Government a great excuse to spend money on a new EEOC office.
Now every Nevada employer, casino or not, will be hearing from the EEOC. Discrimination charges with merit, and therefore legal exposure, will still need to be dealt with by employers as before. But not long ago there were new regulations released by the EEOC regarding the Americans with Disabilities Act (ADA). Because of those regulations few ADA cases will now be won by employers simply because the plaintiff did not fit the technical legal defination of “disabled”. Therefore expect that the EEOC will take even marginal cases or those with little or no damages and try to make examples of employers who have not done the basics. By the basics I mean:
● Having a comprehensive and up to date discrimination and harassment policy.
● Performing regular and comprehensive training for supervisors on harassment and discrimination prevention.
● Using (and documenting the use of) a formal interactive process to deal with employees requesting an accommodation.
The EEOC must justify its new Las Vegas office—expect to hear from them.
3. ANTICIPATE AND BE READY FOR UNION ORGANIZING
Once again, here there are two converging factors, both of which require you to be vigilant.
a. Unions Are Losing Ground and Need Members Who Will Pay Dues
It’s no secret that unions are at their lowest membership levels ever. Membership has continued to decline, from 12.3% of the workforce to 11.9%. Only 6.9% of private sector employees are now organized.
This means that unions will continue to aggressively attack industries where the jobs cannot be exported: hospitality, health care and government. But note that in the past unions have concentrated on the largest employers. Unions get the largest payoff in dues and generally do better in elections where the bargaining unit is large. But with the crisis now faced by unions even small employers in any industry can be a target and need to be ready.
What can you do right now? There are many things an employer can do to union proof the workforce and I will discuss many of them in future blog posts. At least for now learn the basics about the law of union organizing by reading this booklet on the union organizing aspects of the National Labor Relations Act. Also read this booklet on unfair labor practice liabilty under the National Labor Relations Act.
Also consider performing a union vulnerability audit on your own or with the help of your labor attorney. Start by using this tool. Many of our clients have made changes based on the audit results and those changes have helped insulate companies from organizing.
b. The Obama Administration Could Not Deliver EFCA To the Unions so Instead Has Delivered the NLRB
You should know by now that the National Labor Relations Board is dominated by labor friendly appointees. And not just garden-variety labor friendly appointees but folks who are dedicated to making it easier for unions organize your company. The NLRB, even without Congress changing a word of the National Labor Relations Act can drastically change the rules that apply to union elections and how unfair labor charges are prosecuted.
Here’s one very recent example. After a union lost an election it filed an objection with the NLRB and asked that the election results be thrown out and a new election held. The objection alleged that the employer committed misconduct during the election. The misconduct? Simply having a couple of rules in the employee handbook that could affect employee rights protected under the National Labor Relations Act. There was no evidence that any of the alleged improper rules were enforced during the union campaign. There was also no evidence that any of the alleged improper rules inhibited any employee activity during the union campaign. Nor was there any evidence that any of the employees even knew about the rules! You can read this crazy NLRB case here.
What can you do now? Have your employee handbook carefully reviewed by a competent labor attorney, not just someone who practices in the general employment field. We have found rules in many of our client’s handbooks that would be considered unlawful by the NLRB but with some minor revisions can be brought into full compliance with current law.
I’ll have more about all of the above topics in future blog posts.