Overtime Reform, ACA, LGBT Policies Among Concerns for Today’s Employers

SAN FRANCISCO, CA (July 14, 2015) – Littler, the largest employment and labor law practice in the world representing management, has released its 2015 Executive Employer Survey. The report highlights the insight from more than 500 respondents on a variety of issues impacting employers. Littler’s survey of in-house counsel, human resource professionals and high-level executives from many of the largest companies in the United States also covered the economy and regulatory matters. The survey was conducted in April and May 2015.

Department of Labor Overtime Rules Concerns Employers

Companies said they were watching the Department of Labor carefully, aware that the required amount of overtime pay would likely sharply increase. When surveyed, 25 percent of respondents were concerned that the DOL would raise the minimum salary for professionally exempt employees above the $23,600 threshold – a concern that was realized after the White House last month announced a new estimated level of $50,440 for 2016.

Meanwhile, 37 percent of employers were concerned that the DOL might eliminate the executive, administrative and professional exemptions for workers who spend more than 50 percent of their work time engaged in duties that are non-exempt. Twenty-nine percent of surveyed employers also worried about the executive exemptions that may disappear for supervisors who engage in some non-exempt duties.

“Changing the threshold for overtime pay will severely alter management’s outlook on how it fills positions as the drastic salary increase could squeeze out jobs due to payroll increases,” said Tammy McCutchen, a Littler principal whose practice is focused on labor and wage-hour issues. “The overtime adjustment and other potential changes from the DOL could cost employers billions of dollars. The employer community should take action now to shape the final rule.”

The ACA Remains a Focus for Employers

Before the Supreme Court’s landmark decision late last month in King v. Burwell, 55 percent of respondents said they had engaged or planned to engage with employee benefits attorneys or consultants to help navigate healthcare regulations relating to the Affordable Care Act. That was down slightly from 2014, when 58 percent gave that response. Meanwhile, 18 percent of respondents said they were taking a “wait and see” approach in 2015 regarding the ACA, slightly higher than 14 percent last year.

“The rise in a ‘wait and see’ approach was an indication that employers continued to be uncertain about the fate of the ACA prior to the Supreme Court decision in King v. Burwell,” said Ilyse Schuman, Co-Chair, Workplace Policy Institute at Littler. “Overall, the results show that employers are becoming accustomed to the ACA stipulations. However, employers need to stay abreast of any changes that could impact the ACA as to remain compliant with the law.”

Increased Attention on Rights of LGBT Employees

Last month, the Supreme Court announced its decision in Obergefell v. Hodges, finding that same-sex marriage bans were unconstitutional nationwide. Prior to the ruling, many companies had adjusted workplace policies. Forty-seven percent of respondents, in fact, said their companies had put in place policies that directly address issues faced by LGBT employees.

Only 11 percent said that changes in laws prompted new policies, and 13 percent said that their companies intended to make changes to policies within the next year.

“Even before the ruling in Obergefell v. Hodges, it was clear that many U.S. employers had been moving toward creating more inclusive workplaces for LGBT employees,” said Mark Phillis, a Littler shareholder. “Now that same sex marriage is legal nationwide, employers should revisit their benefits plans, leave policies, domestic partnership policies and non-discrimination policies to ensure they are treating all their employees equally.”

Greater Liabilities a Leading Concern with Possible Change in Joint Employer Definition

Employers remain concerned with the potential change to the current joint employer standard as the National Labor Relations Board reviews multiple cases that could ultimately modify the definition. The prospect of this change prompted:

  • 69 percent of respondents to register concern about exposure to greater legal liability.
  • 59 percent of employers expressed concern with the potential difficulty in monitoring the employment practices of separate entities.

“For employers, the burden of having to monitor not only their own employees, but also the employees of subcontractors is especially daunting and has the potential to have a huge impact on industries throughout the country. It is certainly worth keeping a close eye on,” said Michael Lotito, co-chair of Littler’s Workplace Policy Institute. “As the NLRB and other agencies continue their enforcement efforts, cost is a continued concern among employers. Thirty-four percent of respondents were justifiably concerned that a change from the NLRB on this matter could result increased costs for their company.”

Aggressive Government Policies Put New Spin on Whistleblowing

The SEC continues to encourage the increase of tips through hefty rewards to those who blow the whistle on their companies. This puts employers in a precarious position as their compliance officers that are tasked to ensure their companies stay within the law and uphold company policies can now profit from unlawful violations, even those that may wittingly contribute to violations.

This dichotomy of duties, while vexing, still only had 16 percent of respondents concerned that compliance officers will leverage their insider knowledge to secure bounties. And nearly double the number of respondents, 30 percent, picked none of the available options in the survey as concerns. Furthermore:

  • 22 percent of our survey’s respondents expressed concern that compliance programs will generally be less effective because compliance officers will take lapses straight to the government rather than to executives.
  • 22 percent noted compliance programs would be less effective because individuals will report to government agencies rather than fulfilling job duties. 

“These results are surprising as employers should be concerned about each of the issues in the survey. There are a myriad of risks for employers should they ignore the fact that compliance officers can wield a big stick,” said Edward Ellis, Co-Chair, Whistleblowing and Corporate Ethics Practice Group at Littler. “The SEC has made a clear effort to elicit more whistleblowers with proprietary knowledge of their companies’ compliance programs. It is up to employers to be proactive.”

An Active EEOC and Discrimination Claims in the Workplace

The number of completed systemic investigations in 2014 fell to 260 from 300 the previous year. Despite this, a healthy portion of respondents remain concerned about EEOC investigations and charges. In the survey:

  • 57 percent of respondents expect an increase in charges relating to hiring barriers, including the consideration of criminal or credit histories within the hiring process.
  • 37 percent of employers expected to see an increase in claims arising relating to accommodations for disabled workers.
  • 34 percent expected more charges of regarding equal pay issues to be investigated.

Also, respondents were concerned about claims of retaliation (33 percent) and charges of age discrimination (32 percent).

“The survey results mirror concerns that the newly appointed EEOC Chair, Jenny Yang, and current General Counsel, David Lopez, recently approved for a new term, will focus on larger, systemic cases in the near term,” said Barry A Hartstein, Co-Chair, EEO & Diversity Practice Group at Littler. “Employers will continue to grapple with discrimination claims as the EEOC ramps up its enforcement efforts. The concerns expressed in the survey align with what is happening in the courts, such as the Supreme Court’s decisions in UPS v. Young and EEOC v. Abercrombie, or newly minted ban the box legislation. In short, employers have many issues impacting their workforce related to discriminations and hiring practices.”

View the 2015 Executive Employer Survey Report

About Littler

Littler is the largest global employment and labor law practice, with more than 1,000 attorneys in over 60 offices worldwide. Littler represents management in all aspects of employment and labor law and serves as a single-source solution provider to the global employer community. Consistently recognized in the industry as a leading and innovative law practice, Littler has been litigating, mediating and negotiating some of the most influential employment law cases and labor contracts on record for over 70 years. Littler Global is the collective trade name for an international legal practice, the practicing entities of which are separate and distinct professional firms.