Supreme Court Upholds Class Action Waivers in Employment Contracts

Supreme Court Upholds Class Action Waivers in Employment Contracts

In a 5–4 ruling handed down on Monday, the US Supreme Court ruled that organizations can legally require their employees to sign arbitration agreements in their work contracts and waive their right to resolve labor disputes through class-action lawsuits. The court split on ideological lines, with the five conservative justices voting to allow class action wavers and the liberal minority dissenting, the New York Times reported:

Writing for the majority, Justice Neil M. Gorsuch said the court’s conclusion was dictated by a federal law favoring arbitration and the court’s precedents. If workers were allowed to band together to press their claims, he wrote, “the virtues Congress originally saw in arbitration, its speed and simplicity and inexpensiveness, would be shorn away and arbitration would wind up looking like the litigation it was meant to displace.”

Justice Ruth Bader Ginsburg read her dissent from the bench, a sign of profound disagreement. In her written dissent, she called the majority opinion “egregiously wrong.” In her oral statement, she said the upshot of the decision “will be huge under-enforcement of federal and state statutes designed to advance the well being of vulnerable workers.” Justice Ginsburg called on Congress to address the matter.

The ruling, which the Times adds could affect some 25 million employment contracts, comes nearly a year and a half after the high court agreed to hear a group of cases on the legality of arbitration clauses and class action waivers. It was not unexpected, given the court’s conservative majority and the inclinations Gorsuch and his right-leaning colleagues have shown in other labor-related cases.

Business groups and employer-side attorneys cheered the ruling, which they say will free companies from burdensome litigation and allow disputes to be resolved through the cheaper and speedier process of arbitration. Labor rights advocates expressed dismay, however, warning that it would result in a rollback of employees’ fundamental rights and would prove particularly disastrous in discrimination and harassment cases. In a Times op-ed, Terri Gerstein and Sharon Block, of Harvard Law School’s Labor and Worklife Program, criticize the ruling for taking away a key safety net for employees:

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NLRB Considering New Joint Employer Regulations

NLRB Considering New Joint Employer Regulations

The US Department of Labor under President Donald Trump and Secretary Alexander Acosta has been working over the past year to undo the regulations implemented by the Obama administration regarding the definition of “joint employers.” Acosta, like many employers and business associations, considers the previous administration’s standard too broad.

Now, the National Labor Relations Board is weighing a rulemaking process to update the standard, the board announced on Wednesday:

“Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today,” says NLRB Chairman John F. Ring. “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”

Acosta’s Labor Department rescinded Obama-era guidelines on the joint employer standard last June, while the National Labor Relations Board’s regional directors were instructed in December to slow enforcement of the Obama administration’s standard. Shortly thereafter, the NLRB overturned its ruling in the landmark Browning-Ferris case, in which it had considered a company to be a joint employer with a subcontractor if it exercised “indirect” control over the terms and conditions of employment or had the “reserved authority to do so.”

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GOP Senators Mull Proposal to Let US Workers Draw Paid Parental Leave from Social Security

GOP Senators Mull Proposal to Let US Workers Draw Paid Parental Leave from Social Security

Senate Republicans including Mike Lee (Utah), Marco Rubio (Florida), and Joni Ernst (Iowa) are talking up a new proposal from the Independent Women’s Forum, a conservative economic policy shop, to establish a mechanism for US parents to access paid leave without creating additional costs for their employers by deferring their Social Security benefits in retirement, the Hill reports:

According to IWF’s six-page proposal, parents could take up to 12 weeks and receive on average 45 percent of their pay in a Social Security parental benefit that’s calculated using the same formula as Social Security disability benefits. The IWF estimates the average wage worker would receive $1,175 per month.

Lee said lawmakers are trying to figure out how to structure benefits so they are delivered to families when they need them, how the federal law should interact with state paid leave laws and how to keep the law from hastening the Social Security Trust Fund’s 2034 insolvency date.

Several House Democrats released statements criticizing the proposal, calling it “woefully insufficient” and arguing that working Americans should not have to forgo Social Security benefits to spend time with their newborn children. Democratic Rep. Rosa DeLauro also insisted that “any paid leave plan that reflects the needs of working people and families must address the need to deal with a personal or family member’s serious illness.”

The US is the only industrialized nation and one of only three countries in the world not to mandate paid time off for new parents, though the Family and Medical Leave Act guarantees mothers the right to unpaid leave during pregnancy and after childbirth. Many US employers, including the 20 largest private employers, offer some amount of paid parental leave, but millions of Americans lack access to this benefit.

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Tip-Pooling Rule Under Fire Over Shelved Impact Analysis

Tip-Pooling Rule Under Fire Over Shelved Impact Analysis

In December, the US Department of Labor proposed a change to regulations under the Fair Labor Standards Act that would permit employers of tipped workers who pay the minimum wage and do not claim a tip credit to require these workers to “shar[e] tips through a tip pool with employees who do not traditionally receive direct tips–such as restaurant cooks and dish washers.” Critics of the proposed rule say it would hurt employees by allowing restaurant managers to skim tips or even conceivably not distribute the tip pool to workers at all.

New revelations have handed ammunition to these critics and thrown the future of the tip-pooling rule into doubt. Last week, Bloomberg Law‘s Ben Penn reported that the Labor Department had shelved an internal analysis of the proposal’s impact that found employees would lose billions of dollars in tips. Senior officials in the department ordered staff to revise the methodology of their analysis to produce a more favorable result, Penn adds, and later calculations showed smaller losses. Ultimately, the White House allowed the Labor Department to publish the proposal without including any estimate of its economic transfer effects.

Opponents of the rule change have leapt on this story as a reason to scuttle the proposal. Massachusetts Senator Elizabeth Warren sent a sternly-worded letter to Secretary of Labor Alexander Acosta requesting copies of all analyses the department conducted on the rule and correspondence pertaining to them, as well as urging the secretary to delay the end of a public notice-and-comment period that was to end Monday, February 5 (he did not). In addition, 17 state attorneys general wrote to the Labor Department, pushing for the proposal to be withdrawn, the Hill reported:

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ICE Step ups Workplace Raids, Targeting California’s ‘Sanctuary Cities’

ICE Step ups Workplace Raids, Targeting California’s ‘Sanctuary Cities’

Last week, federal Immigration and Customs Enforcement agents raided 98 7-Eleven stores throughout the US, arresting 21 people, including undocumented workers and franchise owners who were caught employing them. The point of the raids was not so much the arrests themselves, but rather a show of force intended to scare employers away from employing undocumented immigrant workers by demonstrating that the federal government was serious about cracking down on them, New York Times reporter Natalie Kitroeff noted earlier this week:

[A]ccording to law enforcement officials and experts with differing views of the immigration debate, a primary goal of such raids is to dissuade those working illegally from showing up for their jobs — and to warn prospective migrants that even if they make it across the border, they may end up being captured at work. Targeting 7-Eleven, a mainstay in working-class communities from North Carolina to California, seems to have conveyed the intended message.

“It’s causing a lot of panic,” said Oscar Renteria, the owner of Renteria Vineyard Management, which employs about 180 farmworkers who are now pruning grapevines in the Napa Valley. When word of the raids spread, he received a frenzy of emails from his supervisors asking him what to do if immigration officers showed up at the fields. One sent a notice to farmhands warning them to stay away from 7-Eleven stores in the area.

Employers in Northern California, in particular, are expected to be the targets of ICE’s next round of raids, the San Francisco Chronicle reported on Wednesday, in what has been described as retaliation against the wave of “sanctuary” laws passed by numerous localities and the state of California limiting the degree to which local authorities can cooperate with federal agents in immigration enforcement. Another law passed last fall bars employers in the state from voluntarily allowing ICE agents onsite to conduct immigration inspections or to access employee records without a warrant or court order.

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Business Leaders Press Congress on DACA After Judge Blocks Trump’s Order

Business Leaders Press Congress on DACA After Judge Blocks Trump’s Order

Late on Tuesday, a federal judge in California issued an injunction blocking US President Donald Trump’s order winding down the Deferred Action for Childhood Arrivals program put in place by his predecessor Barack Obama to protect undocumented immigrants who were brought into the US as children, CNN reported on Wednesday:

Judge William Alsup also said the administration must resume receiving DACA renewal applications. But the ruling is limited — the administration does not need to process applications for those who have never before received DACA protections, he said. …

The ruling came in a challenge to the Department of Homeland Security brought by the University of California and others. In his 49-page ruling, Alsup said “plaintiffs have shown that they are likely to succeed on the merits of their claim that the rescission was arbitrary and capricious” and must be set aside under the federal Administrative Procedures Act. The judge said a nationwide injunction was “appropriate” because “our country has a strong interest in the uniform application of immigration law and policy.”

The DACA program, which is based on the principle of prosecutorial discretion, was enacted in 2012 and has benefited some 800,000 individuals under 31 who arrived in the country before the age of 16, have lived in the US continuously since 2007, and are in school or have graduated. In total, up to 1.1 million so-called “dreamers” were eligible for the program, though not all who were eligible applied—potentially out of fear of “outing” themselves to the federal government as undocumented.

Trump, who campaigned on a pledge to drastically reduce legal and illegal immigration and to hasten the deportation of undocumented immigrants, ordered the DACA program canceled last September, giving Congress until March to find a legislative solution or the administration would begin phasing out its protections. Talks over a deal have stalled over disagreements between Democrats and Republicans over whether to pair it with funding for Trump’s proposed wall along the US-Mexico border. The Trump administration intends to fight Alsup’s injunction, but the court battle could drag on for years. The upshot, the Washington Post explains, is that DACA beneficiaries remain uncertain of their future status unless and until Congress acts.

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How the New US Tax Reform Bills Would Affect Employers

How the New US Tax Reform Bills Would Affect Employers

Late last week, Republicans in the US Senate and House of Representatives both passed versions of a comprehensive tax reform bill whose signature feature is a hefty cut in the corporate tax rate, from 35 to 20 percent. The bill, which received no Democratic votes in either house of Congress, now goes to conference, where lawmakers from both chambers will attempt to reconcile the two bills. Significant differences still exist between the two versions, however, and the Senate bill underwent a number of hasty revisions at the last minute before being passed in the middle of Friday night. It is therefore still uncertain whether Republican lawmakers will be able to agree on an identical bill that can pass both the Senate and the House.

Both versions of the bill have major implications for employers, beyond the tax breaks for businesses. Together, the bills touch on health insurance, retirement plans, and other employee benefits, but do so in different ways. SHRM’s Government Affairs team prepared a handy chart comparing the bills’ employer implications side-by-side, while Stephen Miller gives a comprehensive rundown of the differences:

Tuition Benefits: The House bill would eliminate the employer-provided education assistance deduction under Internal Revenue Code Section 127, which allows employers to provide up to $5,250 of tax-free tuition aid to an employee per year at the undergraduate, graduate or certificate level. The Senate version does not eliminate the education assistance deduction. …

Individual Health Coverage: The Senate’s bill would effectively repeal the Affordable Care Act’s (ACA’s) individual mandate, which requires most Americans to have health insurance, by reducing to zero the tax penalty for going without coverage. The House bill leaves the individual mandate in place.…

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