With record unemployment and a healthy economy in the first quarter of 2018, companies can expect a hot labor market and a continuation of the war for talent this year. The changes in the legal landscape that began last year will continue throughout the remaining quarters of 2018: on the federal level, deregulation efforts across a broad swath of government agencies and leadership changes at U.S. Department of Labor, Equal Employment Opportunity Commission and National Labor Relations Board will create a generally more employer-friendly environment. This year, federal agencies face restructured and reduced budgets and have signaled shifting enforcement priorities and a more conservative reading of existing legal protections for employees.
At the same time, as in 2017, many state and local governments are attempting to maintain or increase protections and benefits for employees. As a result, multi-state or national employers will continue to face a maze of compliance challenges as states and municipalities enact legislation that attempts to restore - or expand - legal protections diminished or unaddressed at the federal level. The plaintiff’s Bar may also try to pick up enforcement priorities that are perceived to be dropped or deprioritized at the DOL or EEOC. While these regional changes run the gamut from minimum wage increases above the federal level to “predictive scheduling” laws restricting changes to employees’ schedules, a few notable trends in 2018 will likely impact most employers.
Confusing and Conflicting Entitlements and Rights
• Paid Leave. The number of jurisdictions that require employers to provide paid sick or family leave will continue to grow, making “one size fits all” policies for national employers increasingly difficult. As of the start of 2018, 9 states and 35 municipalities had enacted paid sick leave laws, with Maryland becoming the ninth state to enact such legislation on January 12, 2018. Four states have paid family leave requirements with approximately a dozen active campaigns in state legislatures to pass similar paid leave legislation. At the federal level, Congress continues to debate the Federal Family and Medical Insurance Act, which would require 12 weeks of paid leave funded by employers and employees, tracking the currently unfunded FMLA leave entitlement. Until there is clarity on the federal level, look for states and municipalities to craft their own paid leave laws.
• Gender Identity. Transgender rights face conflicting developments in the law as well. In October 2017, the U.S. Department of Justice reversed the position of the prior administration, issuing a memorandum stating that Title VII does not protect gender identity. This position is contrary to the EEOC’s current position and that of some federal courts (1st, 6th, 9th, and 11th circuits). At the state legislative level, less than half of state anti-discrimination laws include gender identity. There is a similar split in positions between the DOJ and the EEOC on whether sexual orientation is covered under Title VII as well, and 2018 will not likely provide clarity on these issues.
Women in the Workplace
Harassment. While harassment issues in the workplace are not new and most employers have policies and training in place to try to prevent it, companies are re-examining how they address harassment in the workplace in light of the #MeToo movement. The movement has heightened sensitivity to these issues and spurred renewed conversations about workplace culture and behavior. Companies are attacking three primary areas to mitigate these challenges:
• Policies: Employers are revamping their policies and training to more clearly delineate responsibilities. For example, some employers are expanding accounting for reporting behavior that an employee witnesses as a “bystander” in order to detect bad behavior earlier in the process.
• Investigations: Investigation protocols are being revised to ensure all necessary steps are taken and assigned investigators are trained and equipped to investigate complaints. The strength and thoroughness of an investigation may come under heightened scrutiny due to the increasing pressure for transparency with respect to these issues.
• Training: Some employers are revisiting the mode (live versus web) of their training. Additionally, some employers are expanding the frequency in which managers and front line employees receive refresher training.
Once a claim occurs, companies must weigh whether to include boilerplate confidentiality provisions in settlement agreements. Some jurisdictions have legislation pending that would prohibit such provisions. In any event, the current public perception of “covering up” misconduct with such provisions must be weighed carefully.
Pay Equity. The proposed EEO-1 form which would have required more transparency in pay rates for men and women has been rescinded. However, state pay equity laws passed last year and effective in 2018 (notably California and Massachusetts), restrict the factors that employers can consider to explain pay differentials. Additionally, many of these local laws also restrict employers from asking prospective employees about their compensation history. Employers would do well to assess how they document compensation decisions and to consider conducting a pay equity audit to identify and fix any anomalies that arise in the audit. Private lawsuits and state enforcement actions under these state laws may see a significant uptick in 2018.
As noted above, this year will continue to see increased complexity in the legal landscape on many more fronts as well, making compliance efforts a larger focus for many companies.