Five Self-Checks that Could Save Your Company Money
Employers are subject to various state and federal law requirements and it can be difficult to keep up with changes in the employment laws or issues related to compliance. We have highlighted five areas related to employment and compliance matters that will likely impact employers this year. Taking the necessary preventative steps now can save your company a substantial amount of money down the road.
1. Fair Labor Standards Act
The number of FLSA lawsuits continues to surge. Just this past summer, the Department of Labor proposed new regulations to increase the salary level requirements for exempt employees under the FLSA. The proposed regulations seek to increase the minimum salary level for the white-collar exemptions to $970 per week, or $50,440 annually. Additionally, the regulations propose changing the annual compensation requirement for highly compensated exemption from $100,000 to $122,148. Although it is unclear when the final regulations will go into effect, many expect these changes will occur in 2016. Thus, the growing concern for wage and hour compliance for all employers will likely not pass anytime soon. FLSA litigation can be financially crippling for a company. The best defense to these suits is investing in compliance audits. A substantial amount of FLSA litigation results from misclassification of non-exempt employees as exempt employees. As such, employers should review employee classifications to ensure “exempt employees” are in fact “exempt” under the FLSA. Employers can review the Department of Labor’s Fact Sheet #17A to review the criteria for the most common exemptions. Additionally, employers ought to examine whether the salary component of these exemptions can continue to be met under the proposed regulations. Preparing for these changes now is in an employer’s best interest.
2. Ban the Box
The “ban the box” movement is focused on restricting an employer’s ability to automatically exclude applicants who “check the box” disclosing they have a criminal conviction. This movement is gaining momentum. Nineteen states have “ban-the-box” laws. The EEOC’s position is that criminal record exclusions have a disparate impact on racial minorities. The EEOC is investigating employers that apply such exclusions on Title VII disparate impact charges. Thus, employers may want to examine their workforce to ensure there is no disparate impact on a group because of their race or national origin and/or that there is a business justification for the inquiry. While Texas has not yet passed a state-wide law, over 100 cities, including Austin, Texas, have “ban-the-box” laws in place. President Obama directed federal agencies to cease inquiries into an applicant’s criminal history until later in the hiring process. Under most “ban-the-box” laws, employers are only able to ask about criminal convictions if there is a business justification or if there is an additional regulation that requires inquiry into an employee’s criminal history.
3. OSHA Safety Data Sheets
Occupational Safety & Health Administration (OSHA) compliance can often be overlooked, but employers should be aware that hazards may be present even in an office environment. Something as simple as canned air or janitorial cleaning supplies may require an employer to maintain a Hazard Communication Program and require employers to properly identify and label chemicals. OSHA recently revised Hazard Communication Standard and employers must update their Material Data Safety Sheets (MSDS) to Safety Data Sheets (SDSs). The regulation requires that the SDSs be formatted in a more user-friendly manner with a 16-section format. Employers have until June 1, 2016 to update all workplace labeling and hazard communication in addition to providing additional employee training on any new hazards.
4. Form I-9 guidance
Employers were again reminded that self-correcting problems with I-9s is permissible and given direction on the best way to correct errors. On December 17, 2015, the Department of Homeland Security Immigration Customs and Enforcement (ICE) and the Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) published guidance for internal I-9 audits. For example, employers may correct Forms with multiple errors in Section 2 or Section 3 by completing a new Form I-9 with revisions to the sections with errors and attaching it to the original Form. Done right an internal audit can be a useful tool to ensuring compliance and protecting against ICE fines.
5. Sexual Orientation and Retaliation
The EEOC officially declared last summer that it considers discrimination on the basis of sexual orientation a violation of Title VII. As such, the EEOC has begun filing lawsuits on behalf of LGBT individuals. The EEOC is filing lawsuits to test its interpretation of the law in court. Although Texas does not have a law specifically prohibiting discrimination based on sexual orientation many Texas cities’ including Dallas, Fort Worth, Plano, and Austin have such ordinances. This is an area of the law that is evolving. Employers need fluid policies and management training to address issues related to sexual orientation and need to constantly remind managers of the company’s anti-retaliation policy against employees that make complaints. The EEOC is hot on the topic of retaliation as well. In January 27, 2016, EEOC proposed new regulations that would make it very difficult to defend retaliation cases. Reviewing policies and conducting training can help an employer stay clear of the EEOC’s interest when investigating charges.