Tag: employment

Fourth Circuit Holds Firm Against Expansion of Religion-Based Defenses to Discrimination (US)

What happened in the interim that ended this beloved educator’s decorated teaching career? In 2014, shortly after North Carolina recognized same-sex marriage, Mr. Billard posted on his personal Facebook page that he and his partner of fourteen years were engaged to be married.

Lonnie Billard was a well-loved and decorated drama and English teacher at Charlotte Catholic High School (CCHS) in Mecklenburg County, North Carolina. He was named Teacher of the Year in 2012 after serving the Catholic high school’s students for eleven years.

Two years later, CCHS told Mr. Billard he was not welcome back as a teacher.

CCHS has never denied why it fired Mr. Billard: his plans to marry violated the Mecklenburg Diocese’s policy against teachers engaging in conduct contrary to the moral teachings of the Catholic faith. Mr. Billard filed a charge with the Equal Employment Opportunity Commission (EEOC) alleging sex discrimination in employment. The EEOC issued a notice of right to sue. Mr. Billard sued in federal court. He won and was awarded stipulated damages.

If that were the end of the story, although a frustrating one for Mr. Billard and his husband, the case would hardly be newsworthy. Why the case warrants attention is the defense that CCHS did not assert, and why.

The ‘Ministerial Exception’

Throughout the second half of the twentieth century, a judicially crafted concept known as the “ministerial exception” emerged among federal appellate courts: Religious institutions may discriminate in their treatment of certain employees, notwithstanding Title VII, provided that the employee plays a vital ministerial employment role or is involved in ecclesiastical matters. Indeed, ministerial exception is a misnomer because the exception is not limited to those employees holding titles of independent religious significance (e.g., priest, pastor, rabbi, imam), but also applies to employees holding important positions within churches and other religious institutions. The Supreme Court recognized the ministerial exception in Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171 (2012). Although the Court refused to answer directly the question of who is and is not a minister, it found on the facts of the case before it that a “called teacher” with the title of “Minister of Religion, Commissioned” fit the bill.

Hosanna-Tabor was binding law when Mr. Billard filed suit in 2017. CCHS’s obvious defense to Mr. Billard’s allegations of sex discrimination was that he, as a Catholic school teacher engaged to teach his students in accordance with diocesan mission, fell within the ministerial exception, but in an unusual turn of events, CCHS waived this argument. In fact, CCHS stipulated with Mr. Billard that it would not argue that his job duties qualified him for the ministerial exception. Why? CCHS claims that it waived the ministerial exception defense because it wanted to avoid the burden of discovery around the issue of whether Mr. Billard’s role was sufficiently ministerial. (More on that below.) Since CCHS waived the best defense available to it and unequivocally admitted why it fired Mr. Billard, it’s no wonder he prevailed.

The Appeal

On appeal, CCHS propounded four affirmative defenses it had advanced without success at the trial court level – none of which included the ministerial exception. First, CCHS asserted two First Amendment-based defenses: the “church autonomy” doctrine and freedom of association. The trial and appellate courts quickly disposed of both theories, concluding that CCHS’s “church autonomy” argument was another way of trying to dress up the ministerial exception and, as to freedom of association, the courts found “no precedent for privileging a right of expressive association over anti-discrimination laws.” CCHS also asserted a statutory defense under the Religious Freedom Restoration Act (RFRA), but the courts made quick work of this too, finding that the RFRA does not apply to suits between private parties.

But CCHS’s fourth and final argument, and by far its most controversial, was that the trial court should have exonerated it under Title VII’s religious exemption. This notion, which is different than the First Amendment-inspired ministerial exception and derives from the plain text of Title VII, exempts certain religious organizations from Title VII’s non-discrimination strictures “with respect to the employment of individuals of a particular religion.” 42 U.S.C. § 2000e-1(a). For instance, a Baptist church may favor hiring a Baptist minister or liturgical worship leader over a Methodist or Lutheran candidate, regardless of their respective qualifications. But the religious exemption has only ever been applied as a defense to claims of religious discrimination. Seeking to overturn decades of precedent, CCHS argued in Billard for an unprecedented expansion of the exemption, one that would permit religious organizations to discriminate even on the basis of sex, race or national origin as long as religious belief motivated the employment decision. At oral argument before the Fourth Circuit Court of Appeals, CCHS conceded that its proffered interpretation of the religious exemption would permit discrimination against not only the relatively small number of employees of religious institutions with a claim to ministerial status, but also the hundreds of thousands of groundskeepers, custodians, bus drivers, musicians and administrative personnel that work for such institutions but whose duties are non-ecclesiastical.

An interpretation like that for which CCHS called would seriously erode protections against discrimination. For instance, under CCHS’s interpretation of the religious exemption, if a religious employer asserted as a principle of its faith that women should not work outside the home, it should be permitted to discriminate on the basis of sex. Likewise, under CCHS’s reading of the exemption, a religious employer asserting a faith-based reason for preferring one race over another would be exempt from Title VII consequences. And, to close the loop, if a religious employer held as a religious tenet that being gay or marrying one’s gay partner was a moral lapse, then it should be permitted to discriminate on the basis of sexual orientation.

The Fourth Circuit balked at CCHS’s statutorily ungrounded argument for an expansion of the religious employer exemption. The text of Title VII is ambiguous and exempts religious organizations “with respect to the employment of individuals of a particular religion”; it does not protect discrimination against individuals because of religion. The appellate court was also unimpressed by CCHS’s attempt to force a determination on these grounds by earlier waiving the ministerial exception. Therefore, the Fourth Circuit set aside the parties’ waiver and found sua sponte (meaning on the Court’s own initiative), that CCHS was not liable for discrimination for terminating Mr. Billard because he was, notwithstanding his secular teaching subjects, “a messenger of CCHS’s faith.”

The Fourth Circuit explained that it was constrained to reach this outcome based on developing jurisprudence interpreting the ministerial exception. In the years since Mr. Billard filed suit, the Supreme Court expanded on Hosanna Tabor in Our Lady of Guadalupe Sch. v. Morrissey-Berru, finding in 2020 that two secular subject teachers at religious schools were nonetheless ministers within the ministerial exception as they were entrusted with educating and forming students in the school’s faith. (Notably, CCHS was represented by The Becket Fund for Religious Liberty. The Becket Fund was also lead counsel in Our Lady of Guadalupe, a fact which raises a few questions about the plausibility of CCHS’s explanation for waiving the ministerial exception. The Becket Fund claims to be a “leader[ ] in the fight for religious liberty … at home and abroad,” and has fought against COVID-19 mandates, contraception care and LGBT and unmarried parent foster and adoption rights.)

The appellate court’s decision undoubtedly provides little comfort to Mr. Billard, who is now spending his retirement with his husband whom he married in May 2015. But even though the Fourth Circuit reversed judgment in his favor and instructed the trial court to enter judgment in CCHS’s favor on the grounds that the ministerial exception protected the school, it at least rejected CCHS’s request for unfettered license to discriminate on any basis so long as it articulated a faith-based motive for doing so. As CCHS proved victorious and therefore lacks grounds to appeal to the Supreme Court, for now, religious employers remain insulated from civil interference with decisions about the appointment and removal of persons in positions of theological significance—even high school drama teachers—but may not use purported religious beliefs to justify discrimination on other grounds.

© Copyright 2024 Squire Patton Boggs (US) LLP
For more news on Religious-based Discrimination Defenses, visit the NLR Civil Rights section.

Understanding the New FLSA Overtime Rule: What Employers Need to Know

Changes to overtime rules under the Fair Labor Standards Act (FLSA) announced on April 23, 2023 affect most U.S. employers. The Final Rule substantially increases the number of employees eligible for overtime pay. It is critical that employers understand the rule and its implications for their business.

Current FLSA Overtime Regulations: The Basics

The FLSA requires employers to pay overtime pay of at least 1.5 times an employee’s standard pay rate for hours worked in excess of 40 hours per week. However, “white collar” and “highly compensated” employees are exempt from this overtime pay requirement if they meet a three-part test:

  • Salary Basis Test – an employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary Level Test – the amount of salary paid must meet a minimum specified amount. (Spoiler Alert: The new rules change the salary level.)
  • Duties Test – the employee’s job duties must primarily involve executive, administrative, or professional duties.

THE WHITE COLLAR EXEMPTION

The white-collar exemption applies to employees who perform primarily executive, administrative, and professional tasks. Workers who perform these tasks are considered to have more autonomous, managerial, or specialized roles justifying exemption from overtime. Therefore, if an employee’s duties are executive, administrative, and professional, and they satisfy the salary basis and salary level tests in the FLSA, they are not entitled to overtime pay under the FLSA.

HIGHLY COMPENSATED EMPLOYEES

A highly compensated employee (HCE) is someone who earns a high annual compensation (according to salary thresholds in the FLSA) and whose role includes one or more executive, administrative, or professional duties. The FLSA exempts “highly compensated employees” from the overtime pay requirement.

Key Changes to the FLSA Overtime Rules

The new rule increases the salary thresholds in the salary level test for highly compensated and white collar employees. As a result of the changes, less employees will be considered exempt and employers will be liable for significantly more overtime pay. Notably, the types of duties eligible for exemption are not impacted.

The new salary thresholds are introduced in two phases with the first increase becoming effective on July 1, 2024, and the second occurring on January 1, 2025. Importantly, the new rule also includes a mechanism for automatically updating these salary thresholds every three years based on current wage data. This means employers will need to stay vigilant for future increases.

THE NEW SALARY THRESHOLDS

In general, the minimum annual salary to qualify for the white collar exemption is increasing from $35,568 to $58,656 and the total annual compensation requirement for the highly compensated employee exemption is increased from $107,432 to $151,164. Here’s a detailed breakdown of the higher salary thresholds and their effective dates:

New FLSA Overtime Rule - The New Salary Thresholds

Why This Rule Matters: Essential Steps for Employers

This rule will have a significant impact on Pennsylvania employers, potentially reclassifying millions of currently exempt employees as non-exempt and eligible for overtime pay. Employers who fail to comply risk costly back pay, penalties, and lawsuits.

There are practical steps that employers can consider to ensure compliance with the new FLSA rule:

  • Review Current Employee Salaries, Hours, and Duties: Audit current salaries, hours, and job duties. This review will help identify which employees’ status may be affected by the new salary thresholds for exempt status under the FLSA.
  • Reclassify Employees as Non-Exempt as Necessary: Based on the review, determine which employees will need to be reclassified from exempt to non-exempt, or awarded a salary increase, to comply with the new rules. This reclassification will make them eligible for overtime pay, altering how their work hours are managed and compensated. It is advisable to consider an employee’s perception of this reclassification when taking this step.
  • Time Recording Policies and Processes: For employees who are reclassified as non-exempt, implement or update timekeeping procedures to accurately track hours worked. This may also require training employees on time-keeping systems. Effective and accurate time recording is essential for managing overtime and ensuring compliance.
  • Update Overtime Policies: Revise company overtime policies to reflect changes in employee classifications. Include clear procedures for overtime approval to manage overtime work more effectively and ensure it aligns with budget constraints and business needs.
  • Bonuses, Incentive Pay, Commissions: Evaluate how non-salary forms of compensation will factor into the new salary thresholds for exempt status. The FLSA determines how this compensation should be treated in determining total annual compensation, which could influence exemption status.
  • Remember Contractual Obligations: The FLSA is a federal law which applies to all U.S. employers. However, any additional salary commitments in an employment contract still legally bind the employer. These should not be ignored.

Despite the quickly approaching compliance date, we also anticipate legal challenges to this rule, which could delay or change the rules. For now, though, employers should proceed on that basis that the updated regulations will take effect on July 1, 2024. Preparing for this deadline ensures that employers will not be caught off guard and can avoid any potential legal and financial repercussions.

©2024 Strassburger McKenna Gutnick & Gefsky
For more news on FLSA Regulations, visit the NLR Labor & Employment section.

Big Labor Got Bigger in 2023

While union numbers on the whole generally declined in 2023, some of the biggest American unions were able to augment their numbers in spite of the downward trend.

According to a recent report from Bloomberg, “Many of the nation’s largest unions including the Teamsters and West Coast dock workers saw membership gains last year, signaling potential for new organizing even as the labor movement struggles to tighten its grip on the workforce, according to new federal data.

“The numbers paint a more optimistic portrait of unions’ ability to recruit new members, particularly in the service and manufacturing sectors, even in the face of declining density nationwide. Two dozen groups added members in 2023, a year marked by high-profile strikes and labor stoppage threats across industries. The additions overcome losses from seven other peer unions, according to a Bloomberg Law analysis of disclosures filed with the US Department of Labor last week.”

For context, union membership rates across private and public sector workers overall dropped to 10 percent in 2023, down from 10.1 percent in 2022. For comparison, when this data first became available in 1983, that number was at 20.1 percent – or double where unions are now. In the private sector, only 6 percent of those workers now belong to unions as of 2023.

Nevertheless, this report showing gains by some of the nation’s largest labor organizations, combined with historic union organizing numbers and the seemingly growing number of union election successes, may move those union membership percentages upward by the close of 2024. In addition, recent changes by the National Labor Relations Board to the union election process may further help unions bolster their ranks. We’ll see how this all shakes out by year’s end. Stay tuned.

© 2024 BARNES & THORNBURG LLP
For more on Unions, visit the NLR Labor & Employment section.

United States | H-1B Denial Rates Up Slightly From 2022

H-1B denial rates in fiscal year 2023 increased slightly from FY 2022, according to a National Foundation for American Policy analysis of U.S. Citizenship and Immigration Services data.

Despite the increase, H-1B denial rates for FY 2023 still remain substantially lower than during the Trump administration when they peaked in FY 2018.

Fiscal Year New Employment H-1B Denial Rate
2023 3.5%
2022 2.2%
2021 4%
2020 13%
2019 21%
2018 24%
2017 13%

The low denial rate in recent years is at least in part due to legal challenges that forced USCIS to issue new guidance on the adjudication of H-1B visas in June 2020.

The NFAP analysis stated that “H-1B temporary status remains often the only practical way for an international student or other high-skilled foreign national to work long term in the United States” and said the 85,000 H-1B cap “remains the leading immigration problem for most tech companies.” The report can be read here.

©2024 Berry Appleman & Leiden. All Rights Reserved.
by: BAL U.S. Practice Group of Berry Appleman & Leiden
For more on H-1B, visit the NLR Immigration section.

Minimizing National Labor Relations Act Liability for Employers with Non-Unionized Workforces

This post continues our consideration of comments submitted in response to proposed regulations under the Mental Health Parity and Addiction Equity Act (MHPAEA).

Under current law, if a plan provides any mental health or substance use disorder (MH/SUD) benefits in any classification of benefits, benefits for that condition or use disorder must be provided in every classification in which medical/surgical (M/S) benefits are provided. Classifications for this purpose include inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs. The proposed regulations modify this standard by providing that a plan does not provide benefits for MH/SUD benefits in every classification in which M/S benefits are provided unless the plan provides meaningful benefits for treatment for the condition or disorder in each such classification “as determined in comparison to the benefits provided for medical/surgical conditions in the classification.”

The term “meaningful benefits” is nowhere defined. The regulators nevertheless “recognize that the proposal to require meaningful benefits [ ] is related to scope of services.” “Scope of services” for this purpose generally refers to the types of treatments and treatment settings that are covered by a group health plan or health insurance issuer. The preamble to the proposed regulation invites comments on how the meaningful benefits requirement “would interact with the approach related to scope of services adopted under the 2013 final regulations.” The preamble of the 2013 final regulations addressed an issue characterized as ‘‘scope of services’’ or ‘‘continuum of care’’ but otherwise failed to provide any substance. Two examples from the proposed regulations do, however, give us a sense of what the regulators have in mind.

  • A plan that generally covers treatment for autism spectrum disorder (ASD), a mental health condition, and covers outpatient, out-of-network developmental evaluations for ASD but excludes all other benefits for outpatient treatment for ASD, including applied behavior analysis (ABA) therapy, when provided on an out-of-network basis. (ABA therapy is one of the primary treatments for ASD in children.) The plan generally covers the full range of outpatient treatments and treatment settings for M/S conditions and procedures when provided on an out-of-network basis. The plan in this example violates the applicable parity standards.
  • In another example, a plan generally covers diagnosis and treatment for eating disorders, a mental health condition, but specifically excludes coverage for nutrition counseling to treat eating disorders, including in the outpatient, in-network classification. Nutrition counseling is one of the primary treatments for eating disorders. The plan generally provides benefits for the primary treatments for medical conditions and surgical procedures in the outpatient, in-network classification. The exclusion of coverage for nutrition counseling for eating disorders results in the plan failing to provide meaningful benefits for the treatment of eating disorders in the outpatient, in-network classification, as determined in comparison to the benefits provided for M/S conditions in the classification. Therefore, the plan violates the proposed rules.

Notably, the newly proposed meaningful benefits requirement is separate from, and in addition to, the newly prescribed nonquantitative treatment limitation (NQTL) testing standards. These latter standards include a “no more restrictive” requirement, a “design and application” requirement and an “outcomes data and network composition” requirement. A handful of comments nevertheless urge the regulators to add scope of services to its non-exhaustive list of NQTLs. As a result, a plan’s scope of services would be subject to comprehensive NQTL testing. Or, put another way, they would be fed back into the NQTL testing loop. Using the first of the examples above, this would require that ABA therapy to be first compared to the treatment limitations imposed on some M/S benefits in each classification. But what benefits, exactly? The problem is that a plan’s scope of services – what types of treatments a plan will pay for and in what settings – is a high-level plan design feature and not an NQTL.

While reasonable minds can and do differ on much of the substance of the proposed regulations, we doubt that anyone would claim that they streamline or simplify compliance. Compliance with these rules is already complicated and expensive; if the final rule looks anything like the proposed regulations, compliance will only get more complicated and more expensive. The proposed meaningful benefits requirement is intended to prevent plans, as a matter of plan design, from satisfying the parity rules by offering nominal or insubstantial MH/SUD benefits when compared to similar M/S benefits in each classification. Treating a plan’s scope of services as itself a separate NQTL does not advance this goal.

© 2024 McDermott Will & Emery
by: Alden J. Bianchi of McDermott Will & Emery 

For more news on Health Care Law, visit the NLR Health Law and Managed Care section.

U.S. Immigration Strategies to Attract, Retain, and Develop Talent

Amid the evolving global economy throughout the past year, employers may be reassessing their approach to talent acquisition and retention. Companies are navigating uncertainty by recalibrating mobility programs, aiming to not only attract but also retain talent to fulfill a skills gap in the U.S. workforce. Central to leveraging foreign talent is the power of immigration branding and messaging. A strategic emphasis on employee longevity proactively curtails workforce attrition and preempts potential labor shortages in the future.

Attracting talent

Understanding and leveraging avenues offered by U.S. immigration laws can be pivotal in securing the right skills and meeting business demands to drive success. Employers commonly leverage F-1 student OPT/STEM OPT training and the H-1B and L-1 work visa programs to source foreign workers in the talent ecosystem.

Foreign students with work authorization pursuant to OPT/STEM OPT are prime candidates for expanding a company’s talent pool with long-term development potential. Employers may attract foreign students through internships while the student completes their academic program, post-graduation employment pursuant to OPT/STEM OPT, and subsequent work visa and green card sponsorship. For most foreign students, switching from a student visa to a work permit is often challenging due to the restrictions and limited availability of H-1B visas. However, companies with an overseas presence may be able to set up strategically located hubs abroad to recruit and employ foreign nationals who were not able to obtain an H-1B visa, and then transfer them back to the United States with L-1 intracompany transfer visas following their employment abroad over at least one year. A company’s corporate immigration policy outlining support of various immigration pathways, and benchmarked against the policy of industry peers, is a competitive tool to meet foreign workers’ needs and attract high-potential talent.

Retaining talent

In response to the need for talent retention, employers are strategically tapping into their existing talent pool to bolster operational efficiency. With post-COVID-19 employees seeking greater fulfillment, employers may want to consider proactively refining their retention efforts to include top-tier foreign talent.

Companies are increasingly turning to their internal talent reservoirs to bridge skill gaps and curtail additional hiring costs. Retaining current talent is becoming pivotal for success, mobility, and business continuity. To address the evolving landscape of talent retention and the demand from foreign talent for immigration support, employers may consider several key strategies.

Various immigration pathways offer avenues for continued employment, providing stability to existing talent. For example, some companies leverage sponsorship for work visa programs and employment-based green cards to retain skilled foreign workers. Payment of legal fees and the provision of immigration counsel are initial steps in this effort, and other offerings including immigration seminars for employees and family members, an internal immigration portal with FAQs and self-service features that provide status reports, and access to documents and opportunities for interaction with the immigration team are also important. Employers leverage streamlined extension processes for work authorization to ensure continuity for employees and the business without disruptions. Embracing technological advancements in immigration processes may streamline procedures, reduce processing times, and minimize errors. Further, a robust green card sponsorship program signals a long-term commitment to retain valuable talent and grants employees a sense of security and stability in their professional journey within the company. Clearly defined benchmarks when the company initiates green card sponsorship are not only a recruitment and retention tool but also ensure that foreign workers do not lose immigration status or work authorization.

Adaptability and foresight also benefit companies navigating corporate immigration policy frameworks. Companies can implement consistent yet flexible approaches to immigration sponsorship that cater to both business needs and the foreign worker’s circumstances. For example, timing adjustments in initiating green card sponsorship may prevent work authorization gaps. Evaluating risks versus benefits might lead to early green card sponsorship for students to safeguard their status and work authorization if they are not selected in the H-1B lottery. Exploring alternative sponsorship options, such as supporting family-based or self-sponsored petitions, could be viable alternatives for a company to retain critical talent and may streamline the process and save time. Finally, recognizing and addressing the needs of dependents, such as spouses and children, within the immigration sponsorship process may be determinative to retain valuable talent.

Developing talent

Companies recognize the importance of not just attracting and retaining foreign talent but also developing their skills and potential. With strategic planning, immigration strategies can help advance the capabilities of international talent within a corporate setting.

Demand for H-1B visas has increased while the number of available visas has remained static. In response, employers are assisting international talent to develop their credentials to become eligible for an O-1 visa as an alternative. The O-1 visa for individuals with extraordinary abilities allows companies to support foreign workers in advancing their careers by recognizing their exceptional talent and contributions. Although the standard to qualify is high, for many foreign workers there are specific steps they can take to proactively bolster their resume toward becoming “O-1 visa ready.”

Sponsorship of certain visa categories, such as EB-1A for individuals with extraordinary ability or a National Interest Waiver to bypass the requirement to test the labor market, may encourage innovation and leadership among an employer’s foreign workers. Elevating a green card process to a higher preference category generally accelerates the process and the prospect of a higher preference category may lead foreign nationals to excel in their fields, drive innovation, and propel critical progress for the company.

Multinational employers are increasingly implementing international rotational programs and cross-border exchanges to foster skill development and broaden experiences. This approach not only addresses internal labor shortages but also mitigates the need for expensive talent searches and replacements. These programs offer benefits akin to longer-term assignments, facilitating knowledge transfer and nurturing company culture at a reduced cost. Such exposure can empower foreign workers with diverse market insights, enriching their skill sets and fostering a global perspective. Moreover, it allows businesses to harness internal expertise to bolster critical initiatives. However, the rise in popularity of these short-term rotation and remote work programs may invite heightened compliance measures, including increased audits and inspections. Hence, employers should anticipate a trend towards more rigorous immigration requirements aligning with labor, tax, and social security laws.

©2024 Greenberg Traurig, LLP. All rights reserved.
For more on Immigration Strategies, visit the NLR Immigration section.

Another Government Shutdown Looms: What It Means For Employers With Foreign National Employees

Only two days before the deadline in November 2023, the U.S. Senate passed a temporary budget to fund federal agencies through Jan. 19, 2024, marking the first time since 2012 that Congress entered a holiday season without the threat of a December shutdown. Now, following the start of a new year, lawmakers have less than two weeks to advance a recent spending agreement and reach a more permanent solution.

The November 2023 vote marked the second time Congress extended the budget for fiscal year 2023, which expired in September, to avert a government shutdown.

IMPACT ON IMMIGRATION

For employers, immigration funding and legislation are top of mind whenever a shutdown looms. Each time the government is on the verge of a shutdown, employers must identify cases that are affected and attempt to locate an avenue to mitigate the impact of the potential shutdown. This increases costs and reduces efficiency, among other complex consequences.

During the 2019 government shutdown, the U.S. Department of Justice suspended 60,000 hearings for non-detained migrants, causing significant delays in the immigration system. Rescheduling an appearance on the immigration docket can often take years, leaving migrants and their families to wait in uncertainty in the interim.

On the employment-based side of immigration, a mad dash ensues each time a government shutdown becomes imminent because applications made to the Department of Labor that are critical steps in both nonimmigrant and immigrant visa categories come to a halt. With already lengthy processing times, foreign national beneficiaries and their employers cannot afford to wait 90 days, as we saw in 2019, for government processing to resume.

Employers and their legal teams would be wise to shift their focus during these times to pushing forward the submission of as many Labor Condition Applications (LCAs), permanent labor certification applications (PERM), and prevailing wage determination requests as possible. A missed window of opportunity can result in years-long delays, or worse, the loss of work authorization, for critical foreign national talent in the U.S.

HOW TO PREPARE

With deadline déjà vu, now is the time for employers to prepare. Employers should consider the following three actions:

1) Submit Labor Condition Applications for all foreign nationals with a nonimmigrant visa (NIV) status expiring within the next six months, should the relevant nonimmigrant visa category require an application, such as for H-1B, H-1B1, and E-3 visa classifications

2) Submit Prevailing Wage Requests for all initiated PERM processes

3) File any PERM applications of individuals for whom the requisite recruitment steps and waiting periods have been completed

© 2023 BARNES & THORNBURG LLP
For more on Foreign National Employees, visit the NLR Labor & Employment section.

New Year, (Potentially) New Rules?

SOMETIMES, THE ONLY CONSTANT IS CHANGE. THIS NEW YEAR IS NO DIFFERENT.

In 2023, we saw several developments in labor and employment law, including federal and state court decisions, regulations, and administrative agency guidance decided, enacted, or issued. This article will summarize five proposed rules and guidance issued by the Department of Labor (“DOL”), the National Labor Relations Board (“NLRB”), the United States Equal Employment Opportunity Commission (“EEOC”), and the Occupational Safety and Health Administration (“OSHA”), which will or may be enacted in 2024.

DOL’s Proposed Rule to Update the Minimum Salary Threshold for Overtime Exemptions

In 2023, the DOL announced a Notice of Proposed Rulemaking (“NPRM”) recommending significant changes to overtime and minimum wage exemptions. Key changes include:

  • Raising the minimum salary threshold: increasing the minimum weekly salary for exempt executive, administrative, and professional employees from $684 to $1,059, impacting millions of workers;
  • Higher Highly Compensated Employee (HCE) compensation threshold: increasing the total annual compensation requirement for the highly compensated employee exemption from $107,432 to $143,988; and
  • Automatic updates: automatically updating earning thresholds every three years.

These proposed changes aim to expand overtime protections for more employees and update salaries to reflect current earnings data. The public comment period closed in November 2023, so brace yourselves for a final rule in the near future. For more information: https://www.federalregister.gov/documents/2023/09/08/2023-19032/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and

DOL’s Proposed Rule on Independent Contractor Classification under the Fair Labor Standards Act

The long-awaited new independent contractor rule under the Fair Labor Standards Act (“FLSA”) may soon be on the horizon. The DOL proposed a new rule in 2022 on how to determine who is an employee or independent contractor under the FLSA. The new rule will replace the 2021 rule, which gives greater weight to two factors (nature and degree of control over work and opportunity for profit or loss), with a multifactor approach that does not elevate any one factor. The DOL intends this new rule to reduce the misclassification of employees as independent contractors and provide greater clarity to employers who engage (or wish to engage) with individuals who are in business for themselves.

The DOL is currently finalizing its independent contractor rule. It submitted a draft final rule to the Office of Management and Budget (OMB) for review in late 2023. While an exact date remains unknown, the final rule is likely to be announced in 2024. More information about the rule can be found here: https://www.federalregister.gov/documents/2022/10/13/2022-21454/employee-or-independent-contractor-classification-under-the-fair-labor-standards-act

NLRB’s Joint-Employer Standard

The NLRB has revamped its joint-employer standard under the National Labor Relations Act (“NLRA”). The NLRB replaced the 2020 standard for determining joint-employer status under the NLRA with a new rule that will likely lead to more joint-employer findings. Under the new standard, two or more entities may be considered joint employers of a group of employees if each entity: (1) has an employment relationship with the employees and (2) has the authority to control one or more of the employees’ essential terms and conditions of employment. The NLRB has defined “essential terms and conditions of employment” as:

  • Wages, benefits, and other compensation;
  • Hours of work and scheduling;
  • The assignment of duties to be performed;
  • The supervision of the performance of duties;
  • Work rules and directions governing the manner, means, and methods of the performance of duties and the grounds for discipline;
  • The tenure of employment, including hiring and discharge; and
  • Working conditions related to the safety and health of employees.

The new rule further clarifies that joint-employer status can be based on indirect control or reserved control that has never been exercised. This is a major departure from the 2020 rule, which required that joint employers have “substantial direct and immediate control” over essential terms and conditions of employment.

The new standard will take effect on February 26, 2024, and will not apply to cases filed before the effective date. For more information on the final rule: https://www.federalregister.gov/documents/2023/10/27/2023-23573/standard-for-determining-joint-employer-status

EEOC’s Proposed Enforcement Guidance on Harassment

A fresh year brings fresh guidance! On October 2023, the EEOC published a notice of Proposed Enforcement Guidance on Harassment in the Workplace. The EEOC has not updated its enforcement guidance on workplace harassment since 1999. The updated proposed guidance explains the legal standards for harassment and employer liability applicable to claims of harassment. If finalized, the guidance will supersede several older documents:

  • Compliance ManualSection 615: Harassment (1987);
  • Policy Guidance on Current Issues of Sexual Harassment(1990);
  • Policy Guidance on Employer Liability under Title VII for Sexual Favoritism (1990);
  • Enforcement Guidance on Harris v. Forklift Sys., Inc. (1994); and
  • Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisors(1999).

The EEOC accepted public comments through November 2023. After reviewing the public comments, the EEOC will decide whether to finalize the enforcement guidance. While not law itself, the enforcement guidance, if finalized, can be cited in court. For more information about the proposed guidance: https://www.eeoc.gov/proposed-enforcement-guidance-harassment-workplace

OSHA’s Proposed Rule to Amend Its Representatives of Employers and Employees Regulation

Be prepared to see changes in OSHA on-site inspections. Specifically, OSHA may reshape its Representatives of Employers and Employees regulation. In August 2023, OSHA published an NPRM titled “Worker Walkaround Representative Designation Process.” The NPRM proposes to allow employees to authorize an employee or a non-employee third party as their representative to accompany an OSHA Compliance Safety and Health Officer (“CSHO”) during a workplace inspection, provided the CSHO determines the third party is reasonably necessary to conduct the inspection. This change aims to increase employee participation during walkaround inspections. OSHA accepted public comments through November 2023. A final rule will likely be published in 2024.

For more information about the proposed rule to amend the Representatives of Employers and Employees regulation: https://www.federalregister.gov/documents/2023/08/30/2023-18695/worker-walkaround-representative-designation-process

Preparing for 2024

While 2023 proved to be a dynamic year for Labor and Employment law, 2024 could be either transformative or stagnant. Some of the proposed regulations mentioned above could turn into final rules, causing significant changes in employment law. On the other hand, given that 2024 is an election year, some of these proposed regulations could lose priority and wither on the vine. Either way, employers should stay informed of these ever-changing issues.

© 2023 Ward and Smith, P.A.. All Rights Reserved.
       
For more news on 2024 Labor and Employment Laws, visit the NLR Labor & Employment section.

Non-Negotiable Arbitration Agreements May Be Required as a Condition of Employment

On February 15, 2023, the Ninth Circuit struck down AB 51, a California statute that imposed criminal and civil penalties against employers who required employees to enter into an arbitration agreement as a condition of employment, finding the statute to be an “unacceptable obstacle to the accomplishment and execution of the full purposes and objectives” of the Federal Arbitration Act (“FAA”).  Chamber of Commerce of the United States of America, et al. v. Bonta, et al., No. 20-15291 (9th Cir. 2023).

As discussed in our prior post and articles (link here), in August 2022 the Ninth Circuit withdrew its prior decision, which had upheld portions of AB 51, following the United States Supreme Court’s June 2022 decision in Viking River Cruises v. Moriana.

AB 51, embodied in California Labor Code §432.6 effective January 1, 2020, prohibited an employer from entering into a non-negotiable agreement that required the employee to waive “any right, forum, or procedure” for a violation of the Fair Employment and Housing Act or the California Labor Code, including “the right to file and pursue a civil action.”  Further, AB 51 imposed harsh penalties for employers who violated the statute, including a fine of up to $1,000 and up to six months’ imprisonment, as well as the potential for civil litigation by the State of California or by private individuals.  In an effort to avoid Supreme Court decisions striking down state laws that improperly targeted arbitration agreements, the California legislature also created the confusing outcome that potentially criminalized the formation of non-negotiable arbitration agreements, but permitted their enforcement once executed.

Noting that arbitration agreements by their very nature require parties to waive their rights to bring disputes in court, and crediting the plaintiffs’ evidence that the possible imposition of civil and criminal penalties deterred employers from attempting to enter into non-negotiable agreements with employees, the court affirmed the district court’s preliminary injunction in favor of several trade associations and business groups who sought to block the implementation of the statute.  Relying on principles of preemption and judicial precedent striking down similar state laws or judge-made rules that singled out executed arbitration agreements, the Court found AB 51 improperly “burden[s]” the formation of arbitration agreements in violation of the FAA.

Having written the previous 2-1 decision upholding AB 51, Judge Lucero now found himself dissenting.  Arguing that the majority “misconstrue[d] the jurisprudence” of the Supreme Court, the dissent claimed that arbitration was permissible only if consensual and that AB 51 only applied to conduct occurring prior to the formation of the contract and thus was not an obstacle to the objectives of the FAA.

Employers may require their California employees to sign non-negotiable arbitration agreements to obtain or maintain their employment.  Arbitration agreements may still be unenforceable however if they are procedurally and substantively unconscionable, if the agreement lacks mutual consent because a party was forced to sign by threats or physical coercion or “upon such grounds as exist at law or in equity for the revocation of any contract.”  Thus, employers should review their agreements to ensure they are in compliance with other California requirements, that the terms are not unfair or one-sided, and, the agreement presented is not unfair, surprising or oppressive.

Article By Sheryl L. Skibbe of Vedder Price

For more arbitration legal news, click here to visit the National Law Review.

© 2023 Vedder Price

Biden Administration Sets New Course on ESG Investing in Retirement Plans

In late 2022, the Department of Labor finalized a new rule titled “Prudence in Selecting Plan Investments and Exercising Shareholder Rights,” largely reversing Trump-era guidance that had strictly limited the ability of plan fiduciaries to consider “environmental, social, and governance” (ESG) factors in selecting retirement plan investments and generally discouraged the exercise of proxy voting. In short, the new rule allows a fiduciary to consider ESG factors in selecting investment options, provided that the selection serves the financial interests of the plan and its participants over an appropriate time horizon, and encourages fiduciaries to engage in proxy voting.

The final rule moves away from 2020 Trump-era rulemaking by allowing more leeway for fiduciaries to consider ESG factors in selecting investment options. Specifically, the rule states that a “fiduciary’s duty of prudence must be based on factors that the fiduciary reasonably determines are relevant to a risk and return analysis and that such factors may include the economic effects of climate change and other ESG considerations on the particular investment or investment course of action.” The rule makes clear, however, that there is no requirement to affirmatively consider ESG factors, effectively limiting its scope and effect and putting the onus on fiduciaries to determine whether they want to incorporate ESG factors into their assessments of competing investments.

Overview

  • Similar to the Trump-era guidance, there is no definition of “ESG” or an “ESG”-style fund. Debate continues over what kinds of funds can be considered ESG investments, especially in light of the fact that some companies in industries traditionally thought to be inconsistent with ESG conscious investing are now trying to attract ESG investors (e.g. industrials, energy).
  • Fiduciaries are not required to consider ESG factors in selecting investment options. However, the consideration of such factors is not a presumed violation of a fiduciary’s duty of loyalty or prudence. Unlike the prior rule, which suggested that consideration of ESG factors could only be considered if all other pecuniary factors between competing investments were equal (the “tiebreaker” approach), the new rule allows a fiduciary to consider potential financial benefits of ESG investing in all circumstances.
  • Plan fiduciaries may take into account participant preferences in constructing a fund lineup. Therefore, if participants express a desire for ESG investment options, then it may be reasonable for plan fiduciaries to add ESG funds or to consider ESG factors in crafting the fund lineup.
  • ESG-centric funds may be used as qualified default investments (QDIAs) within retirement plans, reversing the prior outright prohibition on use of such funds as QDIAs.
  • In some situations, fiduciaries may be required to exercise shareholder rights when required to protect participant interests. It is unclear whether the exercise of such rights is only limited to situations that have an economic impact on the plan, or applies to additional situations. The clarification suggests that the exercise of proxy voting is not disfavored as an inefficient use of fiduciaries’ time and resources, as the prior iteration of the rule suggested.

Effective Date and Challenges to the Regulation

The new rule became effective in January 2023, except for delayed applicability of proxy voting provisions. However, twenty five state attorneys general have joined a lawsuit in federal court in Texas that seeks to overturn the regulation. The court is in the Fifth Circuit, which historically has been hostile to past Department of Labor regulations (including Obama-era fiduciary rules overturned in 2018, though the ESG rule is less far-reaching than the fiduciary rule and may survive a challenge even in the Fifth Circuit). Congressional Republicans have also introduced a Congressional Review Act (CRA) review proposal to repeal the regulation that has gained the support of Joe Manchin (D-WV). Although CRA actions are not subject to Senate filibuster rules, they are subject to presidential veto, which President Biden is sure to do if the repeal reaches his desk.

Action Steps

Employers should assume that the ESG rules will remain in effect and engage with plan fiduciaries, advisors, and employees and determine the extent to which ESG considerations should (or should not) enter into fiduciary deliberations when considering plan investment alternatives. Some investment advisors have already begun to include separate ESG scorecards for mutual funds and other investments in their regular plan investment reviews. Fiduciaries should also consider whether and how the approach that is ultimately taken should be reflected in the plan’s investment policy statement. Plans that delegate full control over investments to an independent fiduciary (an ERISA 3(38) advisor) should engage with their advisor to determine whether and the extent to which ESG considerations will be part of that fiduciary’s process, and whether that is consistent with the desires of the plan fiduciaries and participants.

Article By Alex H. Glaser and Timothy Brechtel of Jones Walker LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2023 Jones Walker LLP