With the November 8, 2016, election in our rear-view mirror, we’re reporting on three significant developments that will affect the workplace: California’s ballot measure on recreational marijuana, Washington’s ballot measure on paid sick leave and minimum wage, and the presidential election’s impact on recent federal employment law developments.
CALIFORNIA: Voters approve recreational marijuana
Californians voted to approve Proposition 64, the “Adult Use of Marijuana Act,” which legalizes the use of recreational marijuana in the state by individuals who are at least 21 years old. The new law protects individuals from criminal prosecution, but specifically preserves an employer’s right to enforce a drug-free workplace policy. California employers with drug and alcohol policies would be wise to notify their employees that they must continue to comply with company policy on drug and alcohol use, regardless of the state law legalizing recreational marijuana. Based on our experience with legalization of recreational marijuana in Oregon and Washington, many employees don’t understand this distinction without employer guidance.
WASHINGTON: Voters approve statewide paid sick leave and minimum wage increase
Washington voters have officially approved a new statewide paid leave requirement that takes effect on January 1, 2018, and an increase in the minimum wage over the next four years beginning January 1, 2017. Over the next few months, we will diligently monitor these developments and provide guidance through webinars, a detailed legal guide with the requirements, a model policy, and other resources.
In the paid leave portion of Initiative 1433, there are many ambiguities; the initiative tasks Washington’s Department of Labor and Industries (L&I) with adopting and implementing rules to carry out the new law. In the meantime, here are the key details on paid leave:
- Effect on other paid leave laws in Washington: The new law does not preempt any of the local ordinances in Seattle, Tacoma, or Spokane. This means that employers with workers in those cities will have to comply with both the state law and the local ordinance, applying each provision that is more generous to workers.
- Covered employers: Any employer with at least one Washington employee.
- Eligible employees: Any employee covered by Washington’s Minimum Wage Act. Importantly, this excludes various agricultural workers, volunteers, employees exempt from overtime, and others.
- Accrual: Employees must earn and be able to use 1 hour of paid leave for every 40 hours worked, including overtime hours. As of now, there is no language in the law that would cap maximum accrual or use, so presumably employees who work a significant number of hours would earn and be able to use large amounts of paid leave.
- Use of paid leave: Employers may require employees to wait 90 days before the paid leave is used, to give reasonable notice that does not interfere with an employee’s lawful use of the paid leave, and to provide verification for absences of more than 3 consecutive scheduled workdays.
- Reasons for using paid leave: The paid leave can be used for both treatment and diagnosis of medical conditions for the employee and the employee’s family, closures of school or business due to public health emergencies, and to deal with domestic violence.
- Carryover: Employees must be able to carry over up to 40 hours of accrued but unused paid leave from one year to the next.
- Rate of pay: The employee’s regular rate of pay.
- Cash out of unused paid leave: There is no requirement that employers ever cash out unused paid leave, including at the point of separation from employment.
- Rehired employees: Accrued but unused paid leave must be reinstated if an employee returns to work within 12 months of separation from employment.
In the minimum wage portion of the new law:
- Increases: Minimum wage rises from the current rate of $9.47 per hour to $11.00 in 2017, $11.50 in 2018, $12.00 in 2019, and $13.50 in 2020. Tips are not allowed to be counted toward an employee’s minimum wage.
- Future increases: After 2020, minimum wage will be adjusted for inflation and set by L&I.
Tips: At this time, implementation of the minimum wage requirement is clear. Beginning on January 1, 2017, employers in Washington will have to pay at least $11.00 per hour to all nonexempt employees. However, the paid leave requirements are more complex, especially if your company is already subject to the paid leave ordinances in Seattle, Tacoma, or Spokane. Over the next few months, as L&I begins to draft rules implementing these new requirements, Vigilant will provide resources to ensure that every member is ready to comply. This will include webinars, updating our current sick leave comparison charts, providing a model policy for handbooks, and other assistance. If you need help with your paid sick leave policy, contact your Vigilant employment attorney.
As President, Trump could unwind recent federal employment law developments
Federal government agencies have pursued some significant new initiatives in recent years. We anticipate that some of those may be on the chopping block under the Trump administration. Here are some major ones we believe will be scrutinized by the incoming administration:
Salary increases for workers who are exempt from overtime. [Important update: On November 23, 2016, a federal court temporarily blocked these salary increases, which were scheduled to take effect on December 1, 2016. See our Alert on the judge’s ruling, which put the U.S. Department of Labor (DOL)’s changes on hold for now. This paragraph has been modified to reflect the judge’s ruling. For information about the DOL’s rules, see our May 19, 2016, blog post.] These federal wage and hour regulations from the U.S. Department of Labor (DOL) take effect December 1, 2016. Since they will already be in effect by the time Mr. Trump takes office on January 20, 2017, the regulatory process to change them again would be slow. Therefore any short-term efforts to reduce or delay the new minimum salary threshold for exempt employees would likely need to come from Congress or the courts. For now, be aware that nothing has changed for the new regulations and the December 1 implementation date. For more information, see our 5/18/16 alert on the rules and our 10/6/16 newsletter article describing legal challenges to the rules.
Submission of electronic data on work-related illness and injuries. These rules from the Occupational Safety and Health Administration (OSHA) take effect on a graduated schedule beginning on July 1, 2017. That may give enough time for the new administration to put the brakes on the new rules, if the President is persuaded that the reporting requirements are unduly burdensome to businesses. For more information, see our 5/19/16 newsletter article.
“Blacklisting” rules for federal contractors. There are actually three components of these rules, which derive from Executive Order 13673, “Fair Pay and Safe Workplaces.” A federal court has put two of those components on hold: (1) the requirement for federal contractors to self-report adverse labor law decisions; and (2) the prohibition on requiring workers to arbitrate claims arising under Title VII or any tort related to or arising out of sexual assault or harassment. The third component, which mostly requires federal contractors to disclose certain information on workers’ paychecks, will apply to federal contracts/subcontracts over $500,000 that are issued on or after January 1, 2017. Because these requirements stem from an executive order, it would be easy for the new president to rescind them. We think this is likely, at least for the highly controversial portion of the executive order that requires reporting of adverse labor law decisions. For more information, see our 9/1/16 newsletter article on the rules and our 10/26/16 newsletter article on the lawsuit that temporarily suspended some of those rules.
Federal contractor paid sick leave. Employers with covered federal contracts (mostly for services or construction) will soon have to comply with Executive Order 13706, “Establishing Paid Sick Leave for Federal Contractors,” for contract solicitations occurring on or after January 1, 2017. Although it would be simple for the new president to rescind this executive order, it is uncertain whether doing so would be a priority under his administration. We believe it is more likely that federal contractor paid sick leave will remain intact. For more information, see our 10/6/16 newsletter article.
EEO-1 reporting of hours and wages. The EEO-1 Report has been significantly expanded to include data on pay ranges and number of hours worked, in addition to race/ethnicity, gender, and job category. The first submission of the new report is due by March 31, 2018. This allows plenty of time, under any regulatory process, to scale back the report to its previous format. For more information, see our 10/6/16 newsletter article.
DOL persuader rules. These rules were scheduled to take effect on July 1, 2016, but are currently on hold by a federal court. The DOL had attempted to require employers and consultants to report activities in which employers used consultants to indirectly persuade workers regarding their rights to organize and bargain collectively. It’s unclear whether the Trump administration would be in favor of shrinking these rules back to their original approach of only reporting the use of third-party persuaders who directly communicate with workers. This may depend on what happens in the federal lawsuit. For more information, see our 3/24/16 alert on the rules and our 7/7/16 newsletter article on the lawsuit that put those rules on hold.
“Quickie” union elections. It’s been nearly two years since the National Labor Relations Board (NLRB) approved regulations that speed up the process for workers to elect unions. We believe the faster process for union elections may be here to stay because it is now relatively entrenched and because updating regulations takes time. However, a reconstituted Board under the new administration will consist of three Republicans and two Democrats. We expect that a majority-Republican Board will put the brakes on recent expansive interpretations of worker protections under the National Labor Relations Act (NLRA), although the process will be slow. It can take a while for Board members to be appointed and confirmed. For more information, see our 12/18/14 newsletter article.
Health care reform. Mr. Trump has made the repeal of the Affordable Care Act (ACA or “Obamacare”) a central platform of his campaign. His pledge seems likely to succeed, since Republicans will control both the House of Representatives and the Senate during at least his first two years in office. It is unclear, however, whether another form of health care coverage will take its place.
Tips: One thing is certain—it’s going to be an interesting four years ahead. Vigilant will continue to keep members apprised of any employment law developments. In the meantime, if you have specific questions about how these changes affect your workplace, please contact your Vigilant employment attorney.