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Will It Be A Happy New Year For Employers? … Stay Tuned.
By Lisa Lamm Bachman
During the last eight years of President Obama’s tenure, employers encountered a number of regulatory changes. Now that we have survived another holiday season and an unprecedented election, January will introduce the potential for even more changes with the new administration. Indeed, President-elect Trump promised to reduce regulations for businesses and employers in an effort to reboot the economy. Yet, the question remains as to which, if any, of the regulations and federal laws affecting employers will be modified or repealed. Accordingly, now may be a good time to not only take inventory of changes already made, but also plan for continued developments in the field of employment law. In either case, knowledge is a powerful tool for all employers and it will likely prove beneficial to stay ahead of the curve by consulting with counsel to understand the current regulations as well as any potential changes that may be implemented in 2017.
1. Will the new administration reduce the authority of the EEOC, and if so, what impact will that have on employers and workplace discrimination claims?
The campaign promise of less regulation applicable to employers will likely include changes with the U.S. Equal Employment Opportunity Commission (EEOC) and its enforcement efforts. This could result in a potential decrease in the EEOC’s dedicated resources available for investigating charges of discrimination and providing voluntary mediation services. Moreover, less resources for the EEOC may also translate to a reduced emphasis on previously developed strategic EEOC initiatives to conduct systemic investigations and lawsuits aimed at having a wide influence on specific occupations, industries or geographic areas. Nevertheless, employers should remain vigilant in their efforts to timely document employee disciplinary and performance issues as they occur. As such, this is a good time to review any existing anti-harassment and anti-discrimination policies to make sure they are up to date and that all employees have acknowledged receipt of same. Likewise, employers should consider providing company-wide training on any revised policies and adopting a routine habit of conducting a full and complete internal investigation of any reports of harassment or discrimination and follow up with appropriate discipline if necessary. In other words, even if the EEOC redirects efforts to wipe out systemic discrimination in the workplace resulting in less EEOC investigations and lawsuits, employers need to remain focused on promoting and maintaining a discrimination-free workplace.
2. What is the Fiduciary Rule issued by DOL and will it still be implemented under the new administration?
While President-elect Trump also suggested a decrease in the U.S. Department of Labor (DOL) regulations, employers should be prepared to adopt methods to ensure compliance with the Fiduciary Rule because it becomes initially effective April 10, 2017. If your company offers a retirement plan to your employees, it will likely be affected by the Fiduciary Rule, which defines a fiduciary as any individual receiving compensation in exchange for providing advice that is used in making investment decisions for ERISA-covered retirement plans and IRAs. The DOL also issued a prohibited companion exemption, which is referred to as the “best interest contract exemption” (BIC exemption). The BIC exemption is especially important for small employer-sponsored retirement plans (holding less than $50 million in assets), which requires financial advisers and financial institutions to take additional action to ensure that recommendations are in the best interest of the plan participants. Such steps include providing clients with written acknowledgment that the adviser is a fiduciary and ongoing disclosures describing the adviser’s standard of care, compensation structure and fees, and access to a website setting forth more detailed disclosures. Although employers are not likely considered a fiduciary under the rule’s definition, there are still steps that employers need to follow to ensure compliance. First, employers should review the service agreements with the financial advisers and financial institutions that service their retirement plan to determine whether any additional disclosures are required per the BIC exemption. Likewise, the employer should endeavor to determine the financial adviser’s fee structure and confirm that the financial adviser’s fee practices are in the best interest of the plan participants. Finally, since there is a distinction between general retirement planning education and investment advice, employers should take steps to understand the differences and ensure that information provided to employees as investment education actually qualifies as such under the Fiduciary Rule.
3. Given the anticipated decrease in regulations, should our company still be concerned about implementing the DOL’s new overtime rule?
Under the Fair Labor Standards Act (FLSA), any non-exempt employee is entitled to overtime compensation for all hours worked over the 40-hour week. Exempt employees are not entitled to overtime compensation if they meet the job duties test and salary requirements. Last year, the DOL issued a new salary test-level for exempt status raising the minimum from $455 per week or $23,600 annually to $913 per week or $47,467 annually. The new DOL overtime rule was to be implemented Dec. 1, 2016. However, on Nov. 22, 2016, the U.S. District Court for the Eastern District of Texas issued an order enjoining the rule’s implementation and finding it be unlawful and beyond the DOL’s authority. While implementation of the new overtime rule is currently on hold, employers are encouraged to evaluate the “duties test” for all employees to determine whether each is properly classified. For those employers who previously implemented the salary changes for employees meeting the exempt duties test prior to the court’s order, it is best to maintain the salary changes until further notice. For those employers who had not yet done so, January is a great time to evaluate the current employee salary levels and duties to start planning for the potential of implementing an increase to the salary-level amount for exempt employees since this issue may likely result in a compromise as opposed to a repealed rule under the new administration.
Lisa Lamm Bachman is the managing partner of Foley & Mansfield’s Minneapolis office, where she focuses her practice in employment and business litigation. In her more than 25 years of practice, Lisa has tried numerous cases before both bench and jury, represented clients in both local and international arbitrations, and has handled more than a dozen appellate proceedings. For more information, she can be reached at email@example.com.