update on hr related january 8, 2019 legislation ... upd… · related adjustments to civil...

Polsinelli PC. In California, Polsinelli LLP

UPDATE ON HR RELATED LEGISLATION, REGULATION AND

ADMINISTRATIVE ACTION

Lon R. Williams, Jr.(214) 661-5551Labor & Employment Of CounselPolsinelli PC2950 N. Harwood, Suite 2100Dallas, TX 75201

66665463

Wichita Falls HR Management AssociationJanuary 8, 2019

real challenges. real answers. sm

SHRM Texas State Council

• Expand Communication between SHRM Chapters, SHRM State Councils, and the appropriate Regional Council

• Benefits of Membership– Information

• Resource Awareness• Exposure to Legislative

Updates– Education

• Professional Development• Programs and Speakers• PHR and SPHR Certification

– Networking


Federal HR Related Legislation

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Sunlight in Workplace Harassment Act

° Filed in February 2018° Would require publicly traded companies to

disclose to the Securities and Exchange commission (SEC), number and monetary value of settlements paid out as a result of sexual harassment and other discrimination claims against corporate officers based on race, religion, sex, national origin, genetic information, status of a service member

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Ending the Monopoly of Power Over Workplace Harassment through Education and Reporting (EMPOWER)

° On July 18th, Republicans and Democrats in Congress introduced legislation that would prohibit employers from requiring employees to agree to nondisclosure agreements in cases of sexual harassment in the workplace

° Would require workplace harassment training° Would prohibit companies from receiving tax

deductions for expenses and attorney fees in connection with harassment litigation

° Would establish an EEOC confidential Hotline

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° Would create a trust fund within Social Security to collect fees and provide compensation to employees on FMLA leave

° Would collect 0.2 percent of wages from employers and from employees respectively

° Would apply regardless of size of employer

FMLA Leave Insurance Act a/k/a The Family Act


Democrat Employment Legislation

° On April 26, House Democrats introduced employment-related bills, including:

° Workforce Mobility Act – Would ban non-compete agreements and create legal

recourse if employees required to sign non-compete° End Employer Collusion Act

– Would ban employer no-poaching agreements between companies

° On June 13th, Democrats introduced new version of the Employee Free Choice Act– Would allow workers to bypass the NLRB; nullify contract

provisions prohibiting class actions and make state “right to work” laws illegal

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Democrat Employment Legislation (cont’d)

° On October 30th, Democrats filed Restoring Justice for Workers Act– Would overturn Supreme Court’s Epic

Systems v. Lewis case and would outlaw use of class action waiver provisions in employment contracts and bar agreements that require future employment disputes to be arbitrated

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Democrat Employment Legislation (cont’d)

° Healthy Families Act– Would require employers with more than 15 employees to

provide 7 paid sick days per year– Would be applicable for employees illnesses, preventative care,

sick family members, attend school meetings° Workplace Democracy Act

– Would allow immunization if majority of employees sign authorization cards

– Would require companies to start negotiations within 10 days of receiving Petition

° Raise the Wage Act– Would increase minimum wage to $15/hr over 7 year period

° Workers’ Freedom to Negotiate Act– Would facilitate contract bargaining, impose financial penalties

on labor law violators and strengthen strike provisions

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H.R. 1, the Tax Cuts and Jobs Act

° This Act included:– Dependent Care Flexible Spending Accounts

(Section 129): Allows employees to contribute up to $5,000 per calendar year tax-free into an account utilized for child care spending

– Adoption Benefits: Allows employees to exclude from income adoption assistance provided by their employer up to $13,500 (indexed for inflation)

– Work Opportunity Tax Credit: Provides employer with a 40 percent tax credit for hiring individuals in certain targeted groups

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H.R. 1, the Tax Cuts and Jobs Act (cont’d)

° Commuting Benefits: – Allows employees to exclude from income up

to:° $260 per employee per month in

transportation expenses° $260 per employee per month for parking

expenses; and° $20 per employee per month for biking-

related expenses– No deduction allowed by the employer

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° Paid FMLA Leave Credit for Employers:– Eligible employers of all sizes can claim tax credit equal to

12.5% of wages paid to qualifying employees on FMLA leave– Employers required to provide at least 2 weeks of leave for full

and part-time employees and compensate them at least 50% of their regular earnings

– Tax credit increases quarter of 1% for each 1% above 50% of earnings up to 25% tax credit.

– Tax credit only available for employees who earn less than $72,000 per year

– Applies to 2018 paid wages and continues through December 2019

– On September 24th, IRS has issued Notice 2018-71 to assist employers

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° Sexual harassment settlements– Tax reform provision states: “No deduction

shall be allowed under this chapter for – (1) any settlement or payment related to sexual harassment or sexual abuses if such settlement or payment is subject to non-disclosure agreement or (2) attorney fees related to such a settlement or payment

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° Fringe Benefits:– Moving expenses – Cancels business

deduction for employers for employee moving expenses from 2018 until 2025

– Entertainment – No employer deduction allowed for entertainment expenses, including client or prospective client meals

– Meals –Employer business deduction for employee meals allowed if business purpose

14


Workflex in the 21st Century Act

° Would allow employers to voluntarily offer full time and part time employees a qualified flexible work arrangement under ERISA

° Would preempt state and local paid leave laws if it includes paid time off benefits

° SHRM sponsored

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Texas HR Related Laws

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City of Austin – Mandatory Paid Sick Leave

Austin, Texas Municipal Ordinance No. 20180215 – 049 Mandatory Paid Sick Leave

Effective October 1, 2018

16 or more employees

6 -15 employees

Required to provide 8 days of paid sick leave

Required to provide 6 days of paid sick leave per year

Effective October 2020

5 or fewer employees Required to provide 6 days of paid sick leave per year

17


Texas Appeals Court Blocks Ordinance

° On August 17th, Third Court of Appeals granted motion by the Texas Attorney General, the Texas Association of Business, SHRM, Texas SHRM and other groups to enjoin Austin from implementing the Ordinance

° On November 18, 2018, Appeals Court ruled that ordinance was unconstitutional

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Other Similar Efforts

° City of Dallas – Ballot initiative failed for lack of signatures

° City of Houston° City of San Antonio – Adopted by City

Council on August 16th

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Texas 2019 Legislation Session

° Legislature convenes today, Jan. 8, 2019° Many bills were pre-filed which would

affect the workplace– Senate Bill 112 makes it unlawful to pay

employees differently for the same job based on discriminatory factors

– Senate Bill 113 would raise minimum wage to $10 and ban the use of nondisclosure agreements in sexual harassment lawsuit settlements

20


Texas 2019 Legislation Section

– At least 10 bills seek to liberalize the state’s marijuana laws. Many might affect employer’s ability to maintain drug-free workplaces or test applicants and current employees for marijuana use

– H 222 would prohibit a local government from requiring an employer to provide paid sick leave

21


Federal HR Regulatory Activity


Department of Labor –Proposed Regulations

° Proposed rulemaking on joint-employment status expected to be issued soon

° Comment period on Notice of Proposed Rulemaking on employment, training, and apprenticeship opportunities and 16- and 17-year-olds in health care occupations under FLSA closed on November 26, 2018

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Department of Labor Proposed Regulations (cont’d)

° DoL Proposed Rule on Unemployment Insurance Drug Testing

° NPRM proposes permitting but not requiring states to test UC applicants for whom work is only available in occupation that employers conduct drug testing as standard eligibility requirement for obtaining or maintaining employment in the identified occupation

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Department of Labor Proposed Regulations (cont’d)

° DoL issued proposed rule to let hospitality employers redistribute workers’ pooled tips to “back of house” employees if they pay at least minimum wage and do not take a tip credit

° Proposal would roll back Obama rule forbidding such tip distribution

° WHD has issued a Field Assistance Bulletin [FAB 2018-3] to explain DoL’s requirements on tip sharing between front and back of the house

° See also, recently passed Tip Income Protection Act (TIPA) which addresses employers’ ability to take tax credits against minimum wage requirements

25


Department of Labor OFCCP Regulations

° DoL published Final Rule on Minimum Wage for Federal Contractors

° Beginning January 1, 2019, minimum wage increased to $10.60 per hour for Federal Contractors

26


DoL - Final “White Collar” Overtime Rule

° Department of Labor published its final regulations amending so-called “white collar exemptions” on May 18, 2016

° Key feature of final regulations:– Increase the minimum salary to meet white collar

exemption from $455 per week ($23,660 annually) to $913 per week ($47,476 annually)

– Were to be effective December 1, 2016– Struck down by federal judge in November 2017

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DoL Overtime Rule (cont’d)

° New proposed overtime rule anticipated to be released in March 2019

° After public comments period final rule expected sometime in 2020

° SHRM-recommended salary threshold of $31,824

° DoL considering automatic indexing of threshold

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DoL FLSA Regulatory Agenda

° On May 9, 2018, Wage and Hour Division issued its regulatory agenda

° WHD will update “regular rate of pay” requirements in FLSA’s overtime regulations for purposes of calculating time-and-a-half pay for overtime purposes

29


NLRB

° Notice of Proposed Rulemaking on the standard for determining joint-employer status was issued on September 13, 2018.

° Business would only be a joint employer if it has “direct and immediate control” of another workers

° Comment period on the Proposed Rulemaking closes in mid-January

30


EEOC Wellness Regulations

° In 2016, EEOC issued regulations to align ADA and GINA with Affordable Care Act and HIPAA

° Under regulations, incentive for participating in wellness program could not exceed 30 percent of cost of individual coverage

° If percentage exceeded 30 percent then wellness program would cease to be voluntary and be in violation of law

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EEOC Wellness Regulations (cont’d)

° In December, a Federal Court ordered that EEOC workplace wellness programs rules be vacated on Jan. 1, 2019

° Two Notices of Proposed Rulemaking amending the ADA and GINA regulations and employer-sponsored Wellness programs are expected to be issued June 2019

32


HHS – HIPAA Noncompliance Final Rule

° Final rule including HHS’s annual inflation-related adjustments to civil penalties for violations of HIPAA and were effective as of October 11, 2018– Penalty for each violation of HIPAA that was due

to reasonable cause and not willful neglect: $1,141 minimum

– Penalty for each violation of HIPAA due to willful neglect and timely corrected: $11,410 minimum

– Penalty for each violation of HIPAA due to willful neglect, but not timely corrected: $57,051 minimum

33


HHS - Short-Term Insurance Rule

° On August 1st, Health and Human Services, Department of Labor and Treasury Department issued a final rule, Short-Term, Limited-Duration Insurance, extending short-term health plans from three months to one year, with renewal options to extend coverage to three years

° Short-term plans are not ACA-compliant employer-sponsored group health plans

34


HHS – Proposed Rule Regarding of HRA’s

° Proposed regulations concerning Health Reimbursement accounts in response to President Trump’s Executive Order 13813 “Promoting Healthcare Choice and Competition Across the United States.”

° Would allow HRA’s to reimburse employees for the cost of individual health insurance coverage

° Would give employers, especially small and mid-size employers, opportunities to fund he cost of individual health insurance coverage on a tax-preferred basis

° Would permit employers offering traditional employer-sponsored coverage to offer an HRA of up to $1,800 per year to reimburse an employee for certain qualified medical expenses

° Comment period on the proposed rules expired on December 29th

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HR Related Agency Activity

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Fair Credit Reporting Act

° Bureau of Consumer Financial Protection has issued a revised model Summary of Rights disclosure notice

° Employers must give document to job applicants and employees who’ve had adverse action taken

° Use of new Summary of Rights is effective immediately

37


U.S. Citizenship and Immigration Services(USCIS) - E-Verify Records

° As of March 1, 2018, employers no longer have access to E-Verify records that were created on or before Dec. 31, 2007

° E-Verify is now deleting data that is morethan 10 years old on an annual basis

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ICE(Immigration & Customs Enforcement)

° ICE has stated that the number of I-9 employment eligibility verification audits will significantly increase in 2018

° Agency plans to increase worksite investigations of employers by factor of “four or five” this year

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EEOC in 2019

° EEOC will continue to focus on claims of gender and disability discrimination and sexual harassment

° Agency will investigate bias complaints and bring suits but policymaking will likely be stopped

° EEOC filed 41 lawsuits accusing employers of sexual harassment in fiscal year 2018 – 50 percent more than 2017

° EEOC received more than 7,600 sexual harassment Charges in 2018

° EEOC anticipates issuing Final Guidance on workplace sexual harassment in 2019– Draft guidance was issued in January 2017

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EEOC –2017 Charges

° Percentage of Charges Filed– Retaliation 49 percent– Race 32 percent– Disability 31 percent– Sex 30 percent– National Origin 9.0 percent– Religion 4.0 percent– Equal Pay Act 1.0 percent

41


EEO-1 Report

° Revised 2017 EEO-1 Report would have required W-2 wage information and total hours worked by race, ethnicity and sex

° OMB stated that EEOC may continue to use the current EEO-1 form, while the revisions concerning wage data are further reviewed

° EEOC recently gave official notice that filers should not submit aggregate data about W-2 income and hours worked

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EEOC

° EEOC is currently looking at disparate impact on women job applicants regarding physical tests in recruitment and hiring

° Companies must refrain from using a test causing adverse impact unless it is job-related and consistent with business necessity as required under EEOC’sUniform Guidelines on Employee Selection Procedures (UGESP)

° UGESP regulations apply to all employers that use employment tests, strength and agility tests in making employment-related decisions

° Under UGESP employer must demonstrate validity of test as it applies to its own workplace and specific jobs

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NLRB – Employee Handbook Guidance

° On June 6th the GC Robb sent a memo to regional NLRB offices regarding Board’s new employee handbook standard under Boeing

° Created three categories for classifying employee work rules

° First - covers rules legal in all cases° Second - covers rules legal in some cases° Third covers - rules always illegal

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RegsNLRB Civility Rules

° Conflict between the NLRB and the EEOC of employer civility rules

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Department of Labor - Interns

° On January 5, 2018, DoL endorsed a new test assessing whether interns qualify as employees under the FLSA

° DoL now has a seven-factor test for determining interns’ unpaid status, rather than “old” 6 factor test

° DoL will now use “primary beneficiary test” that aligns with recent case law and will allow greater flexibility to analyze and allow unpaid internships on case-by-case basis

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Department of Labor – PAID Program

° On March 6, 2018, DoL announced its Payroll Audit Independent Determination (PAID) program to facilitate resolution of potential FLSA overtime and minimum wage violations

° Would permit employers to self-report potential wage violations uncovered during self-audit

° Would permit employers to pay all back wages due employees without liquidated damages and penalties

° Program has been extended through March 2019

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Department of Labor –Office of Compliance

° The DoL has established an Office of Compliance Initiatives (OCI)

° Purpose is to assist employers in preventing workplace violations and protecting employees’ wages, benefits and other rights under federal labor laws

° In addition Office will– Facilitate and encourage a culture that promotes compliance

assistance within the DoL– Provide employers and workers with access to high-quality, up-

to-date information about their obligations and rights under federal labor laws and regulations

° Will also help DoL agencies use online resources to facilitate their compliance and educational outreach goals such as– Worker.gov– Employer.gov

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Department of Labor - FMLA

° FMLA forms reissued with new expiration dates° Reissued FMLA forms; have expiration date of August

31, 2021– Certification of Health Care Provider for Employee’s

Serious Health Condition– Certification of Health Care Provider for Family Member’s

Serious Health Condition– Notice of Eligibility and Rights and Responsibilities– Designation Notice– Certification for Serious Injury or Illness of Covered

Servicemember – for Military Family Leave; and– Certification for Serious Injury or Illness of a Veteran for

Military Caregiver Leave

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OFCCP

° OFCCP issued new directives regarding audits of Federal Contractors in 2019

° Fewer onsite audits; more desk audits° OFCCP will go after Contractors who do not

prepare AAP’s° May rely on early resolution procedures to

accelerate audits° OFCCP will issue Opinion Letters ° OFCCP will create a help desk

50


General Data Protection Regulation (GDPR)

° On May 25, 2018, the European Union’s General Data Protection Regulation (GDPR) became effective

° It applies to the processing of any EU resident’s “personal data” which is broadly defined to include a person’s name, address, phone number, email, etc.

° Penalties are severe and relate to 4% of world-wide corporate revenues

51


OSHA Post-Incident Drug Testing

° On October 11, 2018, issued guidance memorandum regarding workplace safety incentive programs and post-incident drug testing

° 29 C.F.R. § 1904.35(b)(1)(iv) does not prohibit workplace drug testing

° Action would only violate 29 C.F.R. § 1904.35(b)(1)(iv) if employer took the action to penalize an employee for reporting a work-related injury or illness rather than for the legitimate purpose of promoting workplace safety and health

° Workplace drug testing is permissible, if– Random– Unrelated to the reporting of a work-related injury or illness;– Under a state workers’ compensation law; or– To evaluate the root cause of a workplace incident that harmed or could

have harmed employees. Employer should test all employees whose conduct could have contributed to the incident not just employees who reported injuries

52


IRS – 401(k)

° On November 1st, IRS announced 2019 401(k) Contribution Limits for Employees of $19,000; an increase of $500 from 2018

° All sources maximum contribution (employer and employee combined) increases to $56,000, up $1,000 from 2018

53


IRS Ruling – Student Loans

° On August 17, IRS issued a Private Letter Ruling in response to employer proposing to amend its 401(k) plan to offer a student-loan benefit program

° Would allow 401(k) contributions into accounts of employees who are making student loan repayments

54


IRS Taxes Parking Benefits

° On December 10, IRS issued guidance Notice 2018-99

° Clarified how employers can calculate the tax on qualified parking benefits

° Provides relief for nonprofit, tax-exempt organizations

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IRS – Executive Compensation

° On August 21, the IRS issued guidance on tax deductibility of executive compensation relating to Tax Cuts and Jobs Act

° Section 162 prohibits publicly held companies from deducting more than $1 million per year in compensation paid to senior executive officers

° Removed an exemption for commission and performance based pay° Expanded scope of covered individuals to include CFOs, CEO and

three highest paid employees beginning in 2018° Employee’s pay subject to limits regardless of whether he or she

was serving in such a position at the end of the taxable year° Officers of publicly held corporation covered even when disclosure

not required under SEC reporting rules° IRS plans to issue further guidance in the form of proposed

regulations

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IRS - ACA

° On November 29, IRS extended deadline for employers to distribute 2018 Forms 1095-C and 1095-B to employees until March 4, 2019

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Social Security Mismatch Notices

° SSA will resume issuance of Employer Correction Request notices in spring 2019

° Letters notify employers of discrepancies between submissions and SSA’s own records

° Employer’s failure to act upon discovering Social Security discrepancy will be viewed as evidence of constructive knowledge of unauthorized employment

° Trump administration is increasing previous administration’s enforcement level by 400 percent to 500 percent

58


E-Verify Expired

° E-Verify expired due to a lapse in funding and will not be available during the partial shutdown

° www.e-verify.gov will not be actively managed

° Shutdown does not affect an employer’s responsibility to verify employment eligibility

° Must still complete the Form I-9 no later than the third business day after an employee starts work

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White House Activity

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Trump Nominee

° On September 5, 2017, Cheryl Stanton was nominated as head of DoL’s Wage and Hour Division.

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EEOC

° On June 29, 2017, President Trump nominated Janet Dhillon to become Chair of the EEOC

° On August 2, 2017, President Trump nominated Lt. Col. Daniel M. Gade to be a Commissioner of EEOC

° In 2018 Chai Rachel Feldblum was nominated for reappointment as Member of the EEOC for term expiring July 1, 2023

62


Apprenticeship Programs

° Employment and Training Administration (“ETA”)

° ETA responsible for streamlining and expanding the nation’s apprenticeship system

° ETA is working on a proposed rule that would reduce state and national registration barriers and promote ability of third parties to develop their own apprenticeship guidelines

63


Apprenticeship Task Force Report

° On May 10, 2018 President Trump’s Task Force on Apprenticeship Expansion submitted its report proposing strategy to create more apprenticeships in the United States

° Members of the Task Force represented business, labor, trade and industry groups, educational institutions and public officials

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“Pledge to the American Worker”

° On July 19th President Trump signed Executive Order to enhance vocational training apprenticeships, work-based learning and on-the-job training opportunities

° SHRM joined national initiative to expand workforce training to educate HR professionals through certification programs over the next five years

° Executive Order creates The National Council for the American Worker to develop national strategy for training and retraining workers for high-demand industries

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QUESTIONS ?

Lon R. Williams, Jr.Polsinelli

2950 N. Harwood, Suite 2100Dallas, TX 75201(214) 661-5551

[email protected]

update on hr related january 8, 2019 legislation ... upd… · related adjustments to civil...

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