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Year in Review 2015

EMPLOYMENT, LABOR & BENEFITS

With a year of aggressive regulation ahead, it pays to be proactive
A LETTER FROM THE DEPARTMENT CHAIR

Charles M. Roesch | Cincinnati, OH

In 2015, the courts and agencies were extremely active with regard to rulings affecting employers. The National Labor Relations Board (NLRB) instituted the so called “Ambush Election” rules governing union elections and the Board sought to dramatically expand its influence over non-unionized workplaces. Likewise, the Board is actively attempting to expand the concept of joint employer status and has placed tight restrictions on employers’ rights to discipline employees for social media postings. In 2016, we fully expect this “expansionism” mentality of the Board to continue in full force.

The Department of Labor (DOL) followed the lead of the NLRB in 2015 and also pushed to expand the definition of joint employer. The DOL initiative on fissured workplaces seeks to change the fundamental behavior and potential liability of industries using temporary employees and franchise relationships. This initiative again will be a major point of emphasis for the DOL in 2016.

Similarly, Wage/Hour Class Action claims and Fair Credit Reporting Act Class Actions continued to dominate the employment litigation filings in 2015. Employers have learned that they must have strong and strictly enforced policies in place relating to working off the clock. Putting preventative measures in place in 2016 is critical for employers to stave off this type of costly litigation.

Lastly, the DOL has become much more aggressive in auditing employers’ Affirmative Action Plans. Whereas, in the past those audits involved a 1-2 day on-site by one investigator, the audits in 2015 more often involved 2-4 investigators who remained on-site for 1-2 weeks.

In the coming year we expect a continued aggressive agenda by regulators and the White House. Strong agency enforcement efforts will continue in the areas of ADA, FMLA and pregnancy discrimination. Additionally, social media will continue to be an area of dispute between employers, employees and government agencies.

With activity on so many fronts, employers must take the time and effort to carefully evaluate their policies and procedures. Ensuring Affirmative Action Plans are in compliance in advance of a possible audit is critical. Likewise, training front line supervisors on the current status of developing labor and employment law is a best practice for preventing claims.

As the trend of dynamic agency enforcement initiatives continues, our goal is to ensure our clients are ahead of those efforts and properly prepared to defend any claims asserted by agencies or employees. We will continue to assist by providing advice on emerging trends, training for management personnel and a top quality defense when claims are asserted.

Highlights


MARK CARTER TESTIFIES ON CAPITOL HILL
ON NLRB REGULATION

Dinsmore’s Mark A. Carter, a leading attorney on labor law, testified before a United States Senate Committee on February 11, 2015.

Carter, who was invited to speak as the designee of the U.S. Chamber of Commerce, appeared before the U.S. Senate Committee on Health, Education, Labor and Pension to discuss a National Labor Relations Board’s (NLRB) regulation known as the “Ambush Election” regulation, which went into effect April 14, 2015. Carter has a long relationship with the Chamber of Commerce.

Carter was also appointed by President George W. Bush to serve three terms as a member of the Federal Service Impasses Panel. Mark served in that role from 2002 to 2009. The panel includes seven Presidential appointees who serve on a part time basis to resolve collective bargaining impasses between federal agencies and unions representing federal employees.

“The opportunity to serve the president of the United States was just a mind-blowing experience to me,” Carter said. He even wore the gold cuff links with the blue-bordered seal of the president to his testimony on The Hill.

This is not the first time Carter has testified before Congress. In 2012, he testified before the House Oversight Committee to discuss President Obama’s recess appointments and how they would affect the NLRB and labor law in general. The Supreme Court later concluded those appointments were unconstitutional.

“As honored as Mark was to testify, we’re as honored to have Mark’s experience and passion for labor law representing our clients,” said Charles M. Roesch, Labor and Employment Department Chair at Dinsmore.

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NLRB DRAMATICALLY EXPANDS
DEFINITION OF EMPLOYER

Mark A. Carter | Charleston, WV

The National Labor Relations Board (NLRB) has overruled 30 years of precedent by dramatically increasing the circumstances in which a “joint employer” relationship can be found by the agency. This decision should be of particular interest to employers who are franchisors or who routinely contract with temporary labor providers to supplement their workforce, as it will increase the rights of applicable unions in organizing or expanding. At its core, the NLRB decision changes the existing legal standards by testing whether one employer could control the terms and conditions of another employer’s employees. The NLRB reversed 30 years of precedent which focused those decisions upon whether one employer has, in fact, exercised a right to assume the role of the employer of another employer’s laborers.

For decades, the NLRB has declined to recognize a “joint employer” relationship between two employers unless the agency can prove that the contracting employer has engaged in the actual control or supervision of temporary employees and that the control is “direct, immediate and not limited and routine.” Therefore, where a contractor’s employees were hired, supervised and disciplined by the contractor, there was no direct control by the contracting employer. Moreover, where the contractor provided immediate discipline to an employee engaged in misconduct – and not the contracting employer – there was no evidence of a joint employer relationship. Finally, if a contracting employer did complain about a contractor’s employee episodically, but not in a limited and routine fashion, there was no evidence of control by the contracting employer that would support a joint employer finding.

In Browning-Ferris Industries of California, Inc. and Sanitary Truck Drivers and Helpers Local 250, IBT, 362 NLRB No. 186 (August 27, 2015), the NLRB rejected the Board’s prior standard requiring the actual exercise of authority by a contracting employee, but has held that the mere potential of the exercise of such authority may establish a joint employer relationship. In making this finding the Board found it has a responsibility of “encouraging the practice and procedure of collective bargaining.”

The new standard adopted by the Board for finding a joint employer relationship is:
The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or co-determine those matters governing the essential terms and conditions of employment.

The NLRB found that a contracting employer may be a statutory “employer” of another employer’s employees under agency principles where the (s)ervant (employee) is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other’s control or right to control.

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WAGE AND HOUR ISSUES TO WATCH IN 2016

Drew B. Millar | Lexington, KY
Jason W. Hilliard | Cincinnati, OH

The Department of Labor’s (DOL) Wage & Hour Division (WHD) continued to be very active in 2015. This is a trend that has been occurring during President Obama’s administration, as the WHD added hundreds of new investigators and substantially increased the number of audits and investigations it conducts each year.

In 2015, there was not only an increase in prosecutions of federal and state minimum wage and overtime law violations, but also an intensified scrutiny of the classification of workers as independent contractors.

The intensified scrutiny regarding the classification of workers as independent contractors was identified as a priority during a panel discussion by Secretary of Labor Thomas E. Perez in December 2014. The administrator of the DOL’s WHD also issued a 15-page memorandum of guidance regarding the misclassification of employees as independent contractors on July 15, 2015. To address this issue, the DOL has significantly increased its investigation of worker misclassification. The DOL has also worked with several states to share information and coordinate enforcement efforts regarding the misclassification of independent contractors.

We also continue to see a significant increase in litigation in this area. Nationwide, we have seen at least a 10% increase in wage and hour litigation each year for the last several years. Employers should expect these trends of increased filings from individual workers and heightened scrutiny and enforcement from the DOL to continue in 2016.

Most notably in 2015, the DOL proposed an overhaul of regulations enforcing the Fair Labor Standards Act’s (FLSA) overtime exemption for white collar employees. This was in response to President Obama’s March 2014 directive to the DOL to “update regulations regarding who qualifies for overtime.” On July 6, 2015 the DOL’s WHD announced its proposed amendment to the FLSA regulations and, in particular the regulations governing “white collar” exemptions for executive, administrative, and professional employees. The proposed rules were subject to a comment period and comments will be considered before the final rule is announced. The final rule is expected in 2016. This will be the biggest wage and hour challenge most employers will face in 2016. Many employers will have to make significant changes to how employees are compensated and potentially classified.

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THE EMPLOYER’S TOOLKIT:
INSIGHT & RESOURCES FOR YOUR WORKPLACE

We believe employers should spend their time growing their companies, not mired in employee-related conflicts about benefits, compensation, claims or litigation.

The Employer's Toolkit continues our commitment to help human resources professionals, in-house attorneys and managers navigate and understand today’s legal issues. Our live and on-demand resources provide our insights in employment law, their impact on your human resource and employment practices, and helpful solutions for dealing with the changing workplace.

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NEW TALENT:
EMPLOYMENT, LABOR & BENEFITS

Dinsmore continues to add talented Labor & Employment attorneys who are committed to helping employers Accomplish more.

Charleston, WV
Samuel T. Long (Associate)


Chicago, IL
Sara A. Weinberg (Partner)


Detroit, MI
Theresa Smith Lloyd (Partner)


Huntington, WV
Scott K. Sheets (Partner)


Louisville, KY
Matthew P. Gunn (Partner)

Barbara W. Menefee (Partner)


San Diego, CA
Adriana Cara (Partner)