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A consistent trend in the US business environment over the past three years has been a shift from federal to state and local governments as the main source of regulatory pressure on employers. Even as federal regulations stall or are rolled back under the Trump administration, businesses are facing higher minimum wages, paid leave mandates, and other new regulations at the state and local level. This trend has continued so far in 2019. While the new Democratic majority in the House of Representatives plans to push for an increase in the federal minimum wage from $7.25 to (eventually) $15 an hour, their intent is largely to put political pressure on Republicans with regard to labor issues, and the effort is unlikely to bear much fruit as long as Republicans control the Senate and the White House.
Meanwhile, however, the patchwork of state and local wage floors is rising and growing more complex. Minimum wages are going up this year in at least 22 US states plus Washington, DC, as well as a number of cities and counties. Most of these increases reflect automatic increases or inflation indexing built into the states’ minimum wage laws, while a few are the result of legislation or referenda passed last year.
A recent court ruling has added to the small but growing pile of jurisprudence at the intersection of marijuana legalization and labor law. In a decision handed down on September 5, a federal court in Connecticut found that Bride Brook, a federal contractor, had run afoul of that state’s Connecticut Palliative Use of Marijuana Act (PUMA) by rescinding a job offer to Katelin Noffsinger, a medical marijuana user, after she tested positive on a pre-employment drug test. The court granted summary judgment to Noffsinger but declined to award her attorney fees or punitive damages, Jackson Lewis attorney Kathryn J. Russo explains:
Bride Brook argued that its refusal to hire Noffsinger is allowed by an exception to PUMA’s anti-discrimination provision (when “required by federal law or required to obtain federal funding”). It argued that the federal Drug-Free Workplace Act (DFWA) barred it from hiring Noffsinger because that law prohibits federal contractors from allowing employees to use illegal drugs. Marijuana is illegal under federal law. The court rejected Bride Brook’s argument, noting that the DFWA does not require drug testing and does not regulate employees who use illegal drugs outside of work while off-duty. …
Bride Brook also argued that it did not violate PUMA because it did not discriminate against Noffsinger based on her status as a medical marijuana user; rather, it had relied on the positive drug test result. The court dismissed this argument, concluding that acceptance would render a medical marijuana user’s protection under the statute a nullity.
While possession and sale of the drug remain illegal under federal law, as more states relax their prohibitions on either medical or recreational marijuana, this has created legal conundrums for employers, who must rethink their zero-tolerance drug policies lest they end up in the same situation as Bride Brook.
Over the coming year, Microsoft will implement a policy requiring its suppliers in the US to provide their employees a minimum of 12 weeks paid parental leave, paid at up to $1,000 per week, Dev Stahlkopf, Corporate Vice President and General Counsel at Microsoft, announced in a blog post on Thursday:
This change applies to all parents employed by our suppliers who take time off for the birth or adoption of a child. The new policy applies to suppliers with more than 50 employees and covers supplier employees who perform substantial work for Microsoft. This minimum threshold applies to all of our suppliers across the U.S. and is not intended to supplant a state law that is more generous. Many of our suppliers already offer strong benefits packages to their employees, and suppliers are of course welcome to offer more expansive leave benefits to their employees.
Our new supplier parental leave requirement is informed by important work on paid parental leave done in states, including Washington. In 2017, Washington state passed family leave legislation, including paid parental leave. This new law will take effect in 2020. As we looked at this legislation, however, we realized that while it will benefit the employees of our suppliers in Washington state, it will leave thousands of valued contributors outside of Washington behind. So, we made a decision to apply Washington’s parental leave requirement more broadly, and not to wait until 2020 to begin implementation.
Like other major US tech companies, Microsoft relies on an undisclosed number of workers employed by third-party contractors; this so-called “shadow workforce” of contract laborers, who typically do not enjoy the same generous benefit packages as those directly employed by these companies, has been the subject of growing scrutiny and recent labor disputes, as GeekWire’s Nat Levy points out. Microsoft has faced controversy over its contingent workforce in the past, most notably in a high-profile lawsuit by “permatemps” in the 1990s. The company began putting standards on labor conditions at its US suppliers in 2015, when it began requiring that those with 50 or more employees grant a minimum of 15 days of annual paid time off to eligible employees.
Microsoft’s latest move intersection of several broad trends shaping the benefits space in the US today.
The California legislature is considering a bill that would make it the first state in the US to require women’s representation on the boards of companies headquartered there, but the business community is pushing back, saying the proposed mandate is unconstitutional and counterproductive, Antoinette Siu reports at TechCrunch:
SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine. …
Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California. … Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.
Legislative mandates or quotas for women on corporate boards are rare, with only a few European countries having adopted them. Norway was the first to do so, introducing a 40 percent quota in 2003, while France, Germany, Iceland, and Spain have since introduced their own mandates. Sweden had an opportunity to join this group but declined it early last year, when the parliament voted down a proposal to fine listed companies where women make up less than 40 percent of directors. In these countries, quotas have proven effective at driving gender equality on boards; critics acknowledge this, but argue that making women’s representation a matter of compliance isn’t changing corporate cultures to really value women in leadership.
Massachusetts State House (Keith J Finks/Shutterstock)
After several years of legislative wrangling, Massachusetts Governor Charlie Baker on Friday signed a bill into law that will limit the conditions under which employers in the state can enforce non-compete agreements on their employees. The law goes into effect on October 1 and will apply to all non-compete agreements signed after that date. Lisa Nagele-Piazza outlines the law’s provisions at SHRM:
The Massachusetts law aims to prevent overuse of such agreements by prohibiting noncompetes with employees who are:
- Nonexempt under the Fair Labor Standards Act.
- Under age 18.
- Part-time college or graduate student workers.
For a noncompete to be valid, it must be:
- Limited to 12 months in duration (with some exceptions).
- Presented to new hires either with an offer letter or 10 days prior to an employee’s start date, whichever is earlier.
- Signed by the employer and the worker.
The agreement must also inform employees of their right to consult legal counsel before signing it. If employers want existing staff to sign noncompetes, they will need to offer “fair and reasonable” consideration beyond continued employment for the agreements to be valid.
The new law is also the first in the U.S. to require that employers offer “garden leave” pay to former employees bound by non-competes. The law requires to pay these employees 50 percent of the highest base salary they earned in the prior two years for one year after their departure, or some other “mutually agreed upon consideration.”
That alternative represents a huge loophole in the law, Michael Elkon, an attorney with Fisher Phillips in Atlanta, tells Nagele-Piazza. What sort of “consideration” counts as valid for the purposes of this law will likely be hashed out in court in the coming years, but Elkon notes that employers will expose themselves to a risk of litigation (before an unsympathetic judge) if they attempt to get around this provision by offering an employee a “consideration” that undercuts the law’s guidelines.
Over the past few years, a growing number of US states and cities have enacted legislation to create state-sponsored retirement savings programs for employees of organizations that don’t offer an employer-sponsored plan like a 401(k). Currently, 40 states have considered, studied, or moved toward implementing this type of program, though only 10 states and one major city (Seattle) have yet implemented them, writes Paula Aven Gladych at Employee Benefit News. Not all state and local policies are alike, however: While automatic-enrollment, payroll-deducting IRA programs (“auto-IRAs”) are the most popular policy tool, others include multiple-employer plans and retirement savings marketplaces:
California, Connecticut, Illinois, Maryland, Oregon and the city of Seattle have adopted automatic IRAs. Massachusetts and Vermont have adopted multiple employer plans and New Jersey and Washington State have adopted marketplaces. New York, the latest state to jump into the fray, has adopted a voluntary payroll deduction IRA. …
The states that haven’t made a move yet will be watching closely to see how effective the different tools are in marketing the plans to employers and employees. … These programs are getting bipartisan support. Blue and red states are studying the issue. Every year there’s a handful of states in study mode, considering what their options are, says [Angela Antonelli, executive director for the Center for Retirement Initiatives at Georgetown University].
New York’s new program, adopted in April as part of the state’s budget for fiscal year 2019, is similar to the auto-IRAs adopted in other states, except that it is not compulsory for any employer to participate, as Paychex analyst Jessica Curtin explained at the time. The program, scheduled to begin in April 2020, uses a Roth IRA structure, so contributions are made on a post-tax basis. Employers cannot make direct contributions to the plan, but those that choose to participate must automatically enroll their employees at a contribution rate of 3 percent of their paychecks; employees may then choose to opt out.
A new law enacted in Vermont late last month extends employment protections to victims of crime, specifically targeting victims of domestic abuse and sexual assault. The law, which goes into effect on July 1, makes employees who become victims of crimes a protected class and outlaws discrimination and retaliation against these employees, Jackson Lewis attorneys Martha Van Oot and Samuel V. Maxwell explain at Lexology:
In addition, the new law carves out circumstances upon which “crime victims” are allowed to take unpaid leave from employment. These circumstances … include allowing the employee to attend:
- A deposition or other court proceeding relating to a criminal proceeding where the employee is a “victim” and the employee has a right or obligation to appear at the proceeding;
- A relief from abuse hearing pursuant to 15 V.S.A. §1103 [a state domestic relations abuse prevention law] when the employee seeks relief as the plaintiff;
- A hearing concerning an order against stalking or sexual assault when the employee seeks relief as the plaintiff; or
- A hearing seeking relief from abuse, neglect, or exploitation when the employee seeks relief as the plaintiff.
The statute allows the employee to use accrued sick, vacation, or any other accrued paid leave in lieu of taking unpaid leave.
In this regard, Vermont’s law is similar to laws recently passed in other states and jurisdictions giving employees a right to use their paid sick leave as “safe leave” for court dates, counseling, or other matters related to addressing or protecting themselves from domestic violence. New York City amended its paid sick leave mandate to that effect last year, while Maryland and New Jersey included safe leave provisions in their new sick leave laws. California, Washington, and Minnesota also give employees the right to use their paid sick leave for these purposes, as do the Canadian provinces of Manitoba and Ontario. The only country that has a statutory safe leave entitlement at the national level is the Philippines, where it is spottily enforced, but Australian lawmakers are proposing to enact one as well.