Labor & Employment Insights

On August 30th, the U.S. Department of Labor (DOL) issued a long-awaited proposed rule that if adopted, will substantially expand the ranks of workers eligible for overtime payments for work in excess of 40 hours, as required by the Fair Labor Standards Act (FLSA).

Under present FLSA regulations, certain “white collar” workers who meet minimum salary requirements and perform specified duties may be classified as “exempt” employees ineligible for overtime.  The current salary threshold to qualify for the white collar exemptions is $35,560 annually, and $107,432 for the “highly compensated employee” exemption.  The proposed rule would increase that minimum salary threshold to $55,068 per annum, and $149,988 for highly compensated employees.

How Businesses Will Be Affected

The Immigration Reform and Control Act (IRCA) of 1986 requires all U.S. employers, regardless of size, to complete a Form I-9 upon hiring a new employee to work in the United States. This form serves to verify an employee’s identity and ability to work in the country.

On August 1, 2023, a new Form I-9 was released, which employers must begin to use no later than October 31, 2023. Additionally, employers that verified remote hires’ Form I-9 identity and work authorization documents virtually during the COVID-19 pandemic are required to physically inspect those documents by August 30, 2023. Failure to comply with Form I-9 requirements may result in civil and criminal fines and penalties. It is therefore critical that employers understand and implement Form I-9 requirements in accordance with these recently established deadlines as set forth herein.

Completing Form I-9

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The National Labor Relations Board (“NLRB” or “Board”) is responsible for enforcement of employee rights under Section 7 of the National Labor Relations Act (NLRA) to engage in protected concerted activity, such as organizing unions, discussing wages and discipline, and other terms and conditions of employment.

Many employers are not mindful of the fact that these rights extend to both unionized and non-union workplaces.  With the decline in union membership, the NLRB has increasingly turned its focus away from unionization issues to workplace practices that may run afoul of employee rights under the NLRA, as illustrated by two recent decisions from the Board.

The Landmark Stericyle Decision’s Impact On Employee Handbooks and Other Workplace Rules

Under New Jersey’s Unemployment Compensation Law, employers have long been obligated to provide separating employees with a Form BC-10 which includes instructions for claiming unemployment benefits, and to provide a reason for the employee’s termination when requested by the NJ Division of Unemployment and Temporary Disability Insurance (the “Division”).  Because employers historically ignored or were ignorant of these requirements, the State Legislature amended the Unemployment Compensation Law to include additional reporting requirements and enhanced penalties for those who continue to ignore these obligations.  These changes went into effect on July 31, 2023.

The Employer’s Reporting Obligations

Regardless of the reason for the employee’s separation, immediately upon a separation of employment the employer must:

Mandatory Sexual Harassment Policy Requirements

Since October 2018 New York has mandated employers to adopt written sexual harassment policies and provide yearly sexual harassment training.  The State developed a Sexual Harassment Model Policy and model harassment training materials that employers can use, or employers can develop their own policy and training materials so long as they meet the State’s minimum standards for compliance.

In April 2023 the New York Department of Labor updated its Sexual Harassment Model Policy (the “Model Policy”), model harassment complaint form, and model training materials, which can be found here.  The updated Model Policy

In a recent published decision, Kennedy v. Weichert, the New Jersey Appellate Division addressed the proper classification of fully commissioned real estate salespeople as employees versus independent contractors. The court ruled that these individuals are not subject to the “ABC” test for purposes of determining their classification under the New Jersey Wage Payment Law (“WPL”).

The “ABC” Test:

Under the “ABC” test, workers are presumed to be employees unless the business can show that: (1) it neither exercised control over the worker nor had the ability to exercise control in terms of the completion of the work; (2) the services provided were either outside the usual course of business or performed outside of all the places of business of the enterprise; and (3) the individual is customarily engaged in an independently-established trade, occupation, profession or business. A business’s failure to satisfy any one of the three criteria results in the worker being classified as an “employee” for wage payment and wage and hour purposes.

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On June 29, 2023, a unanimous U.S. Supreme Court issued its decision in Groff v. DeJoy, clarifying employers’ obligations to accommodate employees’ religious practices under Title VII of the Civil Rights Act.  The Court reinterpreted the meaning of “undue hardship” and held that Title VII requires an employer who denies an employee’s request for a religious accommodation to show that the burden of granting an accommodation would result in “substantial increased costs in relation to the conduct of its particular business.”  In doing so, the Court rejected a commonly applied, employer-friendly interpretation that an undue hardship exists if an employer can show that the accommodation would result in “more than a de minimis cost.”

The More Lenient “Undue Hardship” Standard Applied by the Lower Courts:

Under Title VII, employers are required to accommodate an employee’s religious practices unless doing so would impose an “undue hardship on the conduct of the employer’s business.”  In Groff, a postal carrier who was unwilling to work on Sundays because of his religious practices sued his employer (the United States Postal Service), alleging that it could have accommodated his Sunday Sabbath without undue hardship.  Initially, Groff’s position did not include Sunday work.  This later changed, however, causing Gross to transfer to a small postal station that did not make Sunday deliveries.  Once this station began making Sunday deliveries, however, Groff’s Sunday deliveries were redistributed to other workers.  He was disciplined for failing to work on Sundays, and he eventually resigned.  The trial court granted the employer summary judgment, which the Third Circuit Court of Appeals affirmed, finding that exempting Gross from Sunday work resulted in more than a de minimis cost, as the exemption had “imposed on his coworkers, disrupted the workplace and workflow, and diminished employee morale.”

Following through on Governor Hokhul’s promise in her 2022 State of the State address, New York lawmakers passed a blanket ban on all non-compete agreements, thus joining the growing federal and state efforts to curb their use.   However, the bill imposes greater restrictions than those implemented in other jurisdictions, including California, North Dakota, Oklahoma, Colorado, Illinois and Maryland.  The bill will take effect 30 days after it is signed by the Governor.

The Broad Scope of the Ban: 

The bill prohibits all employers, regardless of industry, from seeking, requiring, demanding or accepting a non-compete agreement from any “covered individual,” defined as any person who performs services on such terms that the individual is economically dependent on the other.  Thus, unlike other laws that include a carve out for highly compensated employees, the ban extends to all workers across the board, including workers hired as independent contractors.

On June 13, 2023, the National Labor Relations Board (“NLRB” or “Board”) reverted to its prior employee friendly independent contractor test to find that makeup artists, wig artists, and hairstylists (“the stylists”) working for the Atlanta Opera were employees rather than independent contractors.  This revived independent contractor test will significantly impact employers who will now face a higher bar when seeking to classify workers as independent contractors excluded from the protections of federal labor laws.

The Discarded SuperShuttle Standard:  Since 2014 the NLRB applied the following non-exhaustive list of factors to determine independent contractor status:

  • The extent of control the employer exercises over the work

On May 30, 2023, the Department of Labor (“DOL”) issued an opinion letter clarifying how to calculate leave taken under the Family and Medical Leave Act (“FMLA”) during a week containing a holiday. It is important for employers to properly calculate employee FMLA leave time because a miscalculation could be considered an interference with an employee’s FMLA rights.

The FMLA requires covered employers to provide eligible employees up to twelve workweeks of unpaid leave within a twelve-month period for qualifying family or medical reasons or twenty-six workweeks of unpaid leave within a twelve-month period for caretaking of qualifying service members.  Employees may take FMLA leave intermittently by taking leave in separate blocks of time or by working shortened weeks or days. The amount of FMLA leave taken by employees is calculated as a fraction of the employee’s actual workweek. For example, an employee who normally works forty hours a week but takes off eight hours for FMLA reasons, would use 1/5 of a week of his or her FMLA leave entitlement.

Full Workweek of FMLA Leave

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