Tag Archives: regulations

Recent NLRB Activity: Another Agency Running Amok

I have always believed elections were important mostly because the winners get to pick judges and the heads of regulatory agencies. The courts and the bureaucrats rule our day-to-day lives much more than our elected officials, but the elected officials choose who will set the rules by which we live.

And sometimes courts and agencies run amok.

In the last year, we have seen agency regulations promulgated by the Obama Administration overturned because they were overreaching—the Environmental Protection Agency over its failure to consider the cost implications of regulations under the Clean Air Act (see Michigan v. Environmental Protection Agency (U.S., June 29, 2015)), and the Department of Homeland Security over its attempt to issue regulations to limit deportation of many illegal immigrants without public comment (see Texas v. United States, (S.D. Tex., Feb. 16, 2015)) are two examples.

The Obama Administration has also used the National Labor Relations Board (NLRB) to set a progressive agenda. Issue by issue, the NLRB has pushed labor policy to the left. The NLRB has changed several past precedents through both regulations and agency adjudications. Although Congress can overrule the agency with new legislation, President Obama is likely to veto any changes this Congress passes. Therefore, these changes are likely to survive at least until 2017—and beyond, if another Democrat is elected President.

Here are some major recent revisions to NLRB policy:

1.  Quickie Elections

On April 14, 2015, the NLRB’s new regulations on union representation elections became effective. The so-called “quickie election” rules permit the electronic filing of election petitions and other documents, mandatory postings (including electronic postings in many cases) by employers, disclosure of employee names to the union (including electronic lists of employees), and fewer automatic stays on representational issues.

These rules will force employers to be much more proactive during union organizing campaigns and elections. Most employers already jumped into crisis mode at the sign of an organizing campaign. Now they will feel even more pressure to respond quickly.

2.  Confidentiality in Employee Investigations

Since its 2012 decision in Piedmont Gardens, 359 NLRB No. 46 (2012), the NLRB has pushed to require employers to disclose employee witness statements when a union requests them. Piedmont Gardens reversed a 1978 precedent, Anheuser-Busch, Inc., 237 NLRB 982 (1978), which unanimously held that such statements were exempt from disclosure. Although the Supreme Court’s decision in NLRB v. Noel Canning (2014)  invalidated Piedmont Gardens (along with hundreds of other cases), the NLRB continues to demand disclosure of employee witness statements.

In a new ruling in Piedmont Gardens, 362 NLRB No. 139 (June 26, 2015), a divided NLRB held that it would balance the union’s need for the witness statement against “any legitimate and substantial confidentiality interests established by the employer.” This test is subjective and difficult to meet. The NLRB will weigh the employer’s interest against the union’s purported need for the information. Even then, the employer will still have to seek an accommodation with the union, such as a confidentiality agreement.

Needless to say, this will not be easy. The issue of disclosure is likely to result in litigation in many cases, because the employer and union will not be able to agree on the terms of confidentiality.

3.  Temporary Employees:

The NLRB currently does not include temporary employees in a bargaining unit without consent. This long-established rule was changed briefly during the Clinton Administration, then changed back. Now, however, the NLRB seems to want to reverse this precedent again in the case of Miller & Anderson, Inc. (05-RC-079249, July 6, 2015).

4.  Social Media Rules:

Since April 2013, the NLRB has held that social media activity can constitute protected and concerted activity. In Bettie Page Clothing, 20-CA-035511, the Board found that three employees were unlawfully terminated for criticizing their manager on Facebook. The case is now on appeal to the U.S. Court of Appeals for the District of Columbia, and the Obama Administration is vigorously defending the NLRB’s position. See Bettie Page Clothing v. NLRB, briefs available on the NLRB website.

If the NLRB position in the Bettie Page Clothing case is upheld, then employers can expect the Board to let employees say about anything they want on social media sites.

* * * * *

In summary, employers can expect continued aggressiveness from the NLRB as long as the Democratic majority on the Board continues. It will take a new President to appoint members to the NLRB that are less pro-employee than the current Democratic members.

What is your view of the current NLRB position on these issues?

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Keeping Your Wellness Programs Well: EEOC Notice of Proposed Rulemaking

EEOC sealWellness programs are a popular component of many employee benefit plans. Employers use these programs to encourage healthy behaviors among their employees, thereby reducing long-term medical costs. In addition, these programs often provide financial incentives to employees to engage their interest and sometimes include contests and classes that promote camaraderie and improve the workplace culture.

Over the last fifteen years, I have worked with several employers in a variety of workplaces to design and implement wellness programs. The employers are usually concerned about how to balance the costs and benefits of the programs and how to measure whether the program has a positive impact on employee health. It is also important to focus on changing behaviors that employees can control, while not penalizing them for health issues they cannot control.

On April 20, 2015, the EEOC released a Notice of Proposed Rulemaking addressing how Title I of the Americans with Disabilities Act (ADA) applies to employer wellness programs.

Previously, federal regulations defined acceptable wellness programs under HIPAA. After passage of the Affordable Care Act in 2010, several government agencies approved wellness programs that offered financial incentives to employees, so long as the incentives did not exceed 30% of the cost of coverage to employees. Incentives of up to 50% of coverage were permitted for programs related to preventing or reducing the use of tobacco products.

However, the EEOC was not one of the agencies involved in the earlier regulatory effort. The EEOC took the position that wellness programs designed under the earlier regulations may not comply with Title VII of the Civil Rights Act of 1964 or the ADA. The EEOC challenged several wellness programs in court, most notably in a lawsuit filed against Honeywell International, Inc. Honeywell’s program imposed a penalty on workers who refused to undergo biometric testing. Such penalties are a common component in wellness program design.

The EEOC’s enforcement efforts against Honeywell and other companies has made many employers hesitant to develop new wellness programs, despite the desire of employers to promote healthy behaviors among their employees and to manage their rising health care costs.

With its recent Notice of Proposed Regulations, the EEOC is finally providing guidance on how to design wellness programs it believes are acceptable under the ADA.

First, the EEOC says, wellness programs must be voluntary.

Wellness programs must be voluntary.

  • Employees may not be required to participate in a wellness program, may not be denied health insurance or given reduced health benefits if they do not participate, and may not be disciplined for not participating.
  • Employers also may not interfere with the ADA rights of employees who do not want to participate in wellness programs, and may not coerce, intimidate, or threaten employees to get them to participate or achieve certain health outcomes.
  • Employers must provide employees with a notice that describes what medical information will be collected as part of the wellness program, who will receive it, how the information will be used, and how it will be kept confidential.

Next, the programs can only offer limited incentives for employee participation or for achieving health outcomes.

Employers may offer limited incentives for employees to participate in wellness programs or to achieve certain health outcomes.

  • The amount of the incentive that may be offered for an employee to participate or to achieve health outcomes may not exceed 30 percent of the total cost of employee-only coverage.
  • For example, if the total cost of coverage paid by both the employer and employee for self-only coverage is $5,000, the maximum incentive for an employee under that plan is $1,500.

This 30% “incentive” basically accepts the existing HIPAA regulatory definition of “reward”, although there are some differences. Most notably, the EEOC proposed regulations cap smoking cessation rewards at 30%, instead of the HIPAA 50%, although if all the employer requires is that the employee answer a question about tobacco use, then a 50% incentive is permitted.

The Notice also limits incentives to 30% for programs that ask an employee to respond to a disability-related inquiry or undergo a medical examination. This is contrary to the HIPAA safe harbor exempting bona fide benefit plans from the ADA prohibition on medical examinations.

The Notice also specifically states that compliance with the proposed rules will not mean that an employer has complied with Title VII of the Civil Rights Act, nor with the Age Discrimination in Employment Act.  Thus, the EEOC’s proposed rules are narrowly limited to compliance with the ADA.

Moreover, the rules state that employers must provide reasonable accommodations to disabled employees who seek to participate in wellness programs, such as sign language interpreters at classes for hearing-impaired participants.

Thus, the EEOC’s proposed regulations are of limited help to employers seeking to design wellness programs. It is of some benefit to know that 30% incentives are acceptable, but the regulations do not go far enough.

For more information, see

EEOC Issues Proposed Rule on Employee Wellness Programs and ADA Compliance, by Terri Gillespie, HRLegalist.com, April 21, 2015 

Wellness Programs: Agencies Issue Helpful Guidance but Look Before You Leap, by Nancy Campbell, SWLaw.com, April 21, 2015

EEOC Publishes Proposed Rule on How the ADA Applies to Employer Wellness Programs, McGuireWoods.com, April 23, 2015

EEOC Finally Releases Notice of Proposed Rulemaking for Wellness Programs, EmployeeBenefitsUpdate.com, Monday, April 27, 2015

The EEOC’s New Wellness Program Regulations: Notable or Needless, by Michael Mishlove, GSHLLP.com, April 30, 2015

New Guidance On Wellness Programs, by Mathew Parker, LaborLawyers.com, May 2, 2105

What should employers do as a result of the new EEOC Notice of Proposed Rulemaking?

  1. Read the proposed regulations and evaluate your wellness programs for compliance
  2. Consult your attorney and/or benefit plan advisors about possible changes to your wellness plans.
  3. Send your comments on the proposed regulations to the EEOC by June 19, 2015, if you so choose.

What has been your experience with employee wellness programs? What has worked best at your company?

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Proposed Changes to Overtime Regulations Don’t Update Wage Laws Sufficiently

Obama SOTUIn his State of the Union speech on January 28, 2014, President Obama promised to use his regulatory authority and executive orders to bypass Congress when they could not reach a deal. He has begun to follow through aggressively on this promise in the labor arena.

This call for new regulations to cut back on the FLSA exemptions from overtime is the subject of this post.

imagesIn general, the FLSA requires overtime pay for workers who work more than 40 hours/week, unless they fit into one of several categories of employees who are “exempt” from FLSA requirements. The largest exempt categories are for executive, administrative, and professional employees.

In his March 13 memorandum, President Obama stated:

. . . regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as “white collar” exemptions) have not kept up with our modern economy. Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage.

Therefore, I hereby direct you [DOL] to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.

Labor experts expect that the Department of Labor will increase the salary threshold for these exempt workers from $455/week to somewhere in the neighborhood of $970/week.

I’m not adverse to an increase in the salary threshold. The current threshold of $455/week has been quite low, equating to $24,000/year, and was last increased ten years ago.

However, I have two concerns about changing the FLSA regulations—the first that it won’t improve workers’ wages as the President said, and the second that it doesn’t get at the heart of the problems with the FLSA.

1.  Businesses will change their hiring practices in response

An increase in the salary threshold of the anticipated magnitude will greatly expand the number of workers eligible to receive overtime pay. But businesses will not stand still in response.

Rather than increase the overtime wages they have to pay, many businesses are likely to change the way they structure jobs. They may pay their supervisory workers overtime and hire fewer non-supervisory workers to offset the overtime paid to the supervisors. They may hire more workers, but work them fewer hours to avoid the extra cost of overtime. They may cut back everyone’s hours to keep labor costs the same. Businesses are not likely to let an increase in overtime pay increase their cost structures increase without any response.

As one commentator stated,

“Employers should begin to consider, however, how increases to the required salary level and revisions to the duties tests under the “white collar” exemptions may impact long-standing staffing and compensation models for a wide range of employees.”

These changes may or may not be good for the economy. But if President Obama thinks more workers will automatically get “the protections of overtime” with an increase in the salary threshold, he is wrong. Some workers may find their pay cut when their hours are reduced.

2.      FLSA is out of date in many respects

My second concern is that we are missing a big opportunity to improve our wage laws overall. The FLSA was adopted in 1938 in response to the Great Depression. The labor market has changed substantially in the last 76 years, and many aspects of the FLSA regulations do not fit today’s labor market.

One issue that many employers and employees alike have requested is additional flexibility on the definition of “work week” and the ability to offer “compensatory time off” in lieu of overtime wages. For example, defining a two week period of 80 hours, rather than a single week of 40 hours, and permitting employees and employers to agree to flexible schedules, or occasional fluctuations, across that longer period of time before overtime is payable.

Moreover, we no longer live in a world where most employers do all their work at the employer’s place of business. Many workers do some work from home, or at least answer work-related calls and emails. Policing overtime work is increasingly difficult, and if the new regulations do not address the problems of monitoring employees’ working hours will set employers up to pay for time they never intended employees to work.

Any regulatory change that only addresses the narrow issue of the salary threshold for white collar exemptions is missing a huge opportunity to update one of our nation’s core labor laws.

Many of the broader changes in the FLSA would require statutory change, and the President cannot address these problems unilaterally. But it would be a big step forward if President Obama worked with Congress to bring the FLSA into the 21st century, offering changes that employers want in addition to increasing overtime and minimum wage levels as Democrats want. Rather than unilateral executive actions, we need a bipartisan approach to updating work rules across the board.

What aspects of the FLSA do you think are out of date?


Filed under Human Resources, Law, Management, Politics, Workplace

The Impact of Regulation on the Labor Market

Businessman Conducting a Meeting with His StaffOne of the best articles I have read recently on the state of the labor market was an interview with Bob Funk, president of Express Employment Services, in The Wall Street Journal on September 20, 2013, titled “Where the Jobs Are—and How to Get One”. Express Employment Services is one of the largest temporary employment agencies in the U.S., which gives them a front-row seat at viewing the changes in hiring across the nation.

As I read the article, I was reminded that when I managed the recruiting function at my former employer, we used to say “follow the want ads, to follow the labor market.” We could tell which jobs were in demand by looking at which jobs were advertised most frequently. We knew which jobs were no longer viable when we noticed that no one was advertising them. Moreover, the number of pages in the want ads section of the paper was a good gauge of the general state of the economy.

Now, I suppose, it is job boards and online hiring forums that rule, rather than want ads, but the principle still applies. Jobs are more plentiful when the economy is good. And which jobs are in demand changes over time. Applicants need to be ready for these changes.

In the opening paragraphs of the interview, Mr. Funk states

“ObamaCare has been an absolute boon for my business . . . . But it’s just terrible for the country. . . .  The problem isn’t just ObamaCare, though. It’s the entire regulatory assault on employers coming out of Washington—everything from the EEOC [the Equal Employment Opportunity Commission] . . . to the Dodd-Frank monstrosity. Employers are living in a state of fear.” [emphasis added]

Employers are reluctant to make commitments to full-time hires in the current regulatory environment. Instead, they turn to temporary employees sourced by Express Employment Services and similar agencies.

I encourage anyone with an interest in the labor market to review the new white paper from Express Employment Services, Changing Dynamics, available here.

In this white paper, Mr. Funk is quoted as saying:

“The ACA [the Affordable Care Act] may already be redefining what it means to be gainfully employed in America.”

In support of this broad statement, the white paper argues three trends have emerged since passage of the ACA:

  1. A threat to the traditional 40-hour work week.
  2. “Small” businesses are trying not to become “big” businesses.
  3. Increased use of staffing companies, such as Express Employment Services.

I’m not sure I agree that the ACA is responsible for these trends. The use of staffing companies was increasing when I managed Human Resources departments ten years ago. As an attorney specializing in employment law twenty years ago, I gave advice to clients about their use of agency employees. We worried about the fifty-employee threshold for “big” businesses in 1993 when the Family & Medical Leave Act became law.

But my experience was before the Great Recession. The trends of the past ten to twenty years have only accelerated since that economic downturn. CEOs are increasingly reluctant to take on new costs.

The ACA and other employment regulations, together with increasing regulations in fields as diverse as the environment and financial disclosures, increase the costs to businesses and make corporate leaders less certain about the future.

Their uncertainties turn inevitably into a desire to make fewer commitments. And that hurts their employees.

Businesspeople Running Towards Finish LineWhat can we do about this? In The Wall Street Journal interview, Mr. Funk advocated

the first step would be to start shrinking the “vast social welfare state programs that have become a substitute for work. There’s a prevalent attitude of a lot of this generation of workers that the government will always be there to take care of them. It’s hard to get people to take entry-level jobs when they can get unemployment benefits, health care, food stamps and the rest.”

While some social welfare will always be necessary, this nation needs to have a serious debate about how much of a safety net is appropriate and whether the federal government is the right entity to provide it.

What do you think about the impact of regulation on the labor market?

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Happy Labor Day from the NLRB to Nonunion Workplaces

The percentage of private sector employees who are union members is down to about 7%. Many nonunion employers think that the National Labor Relations Act, and the National Labor Relations Board that administers the NLRA, don’t apply to them. But under the Obama administration, the NLRB is aggressively pursuing non-union employers and seeking to intrude on workplace policies.

The NLRB’s justification for its intrusion into nonunion workplaces is found in the broad language of Sections 7 and 8(a)(1) of the NLRA. Section 7 provides that employees have the right to “form, join, or assist” unions, to bargain collectively with their employers, and to “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Section 8(a)(1) of the NLRA states that it is unlawful for employers to “interfere with, restrain, or coerce employees” regarding their Section 7 rights.

It is likely that the NLRB will aggressively prosecute any employer policies that the agency believes will restrict concerted activity in nonunion workplaces. “Concerted activity” under the NRLA is extremely broad – it applies to any activity where two or more employees act together in furtherance of matters of mutual interest.  These matters of mutual interest can include compensation, benefits or a variety of workplace conditions.

“Concerted activity” comes into play any time an employee alleges he or she is working with another employee or on behalf of another employee. No union or employee representative needs to be involved; two disgruntled employees working together can be engaged in “concerted activity.”

Here are some specific policies and situations in nonunion workplaces that the NLRB is fighting:

  • Retaliatory discharge.  See Family Healthcare, Inc., 354 NLRB No. 29 (2009), where a physician-employee claimed she was discharged in retaliation of her rights under the NLRA after she questioned the changes in contracts that she and her fellow employees were asked to sign, because she acted not only for herself but for other employees.  See also In Re Trompler v. NLRB, 338 F.3d 747 (7th Cir. 2003), where production employees walked off the job at a nonunion machine shop.  They had complained about their supervisor, which was found to be “concerted activity.” 
  • Dispute resolution programs that condition employment on arbitration and prohibit employee class actions.  See D.R. Horton, 357 N.L.R.B. No. 184 (Jan. 3, 2012). Although this case is now on appeal to the Fifth Circuit Court of Appeals, the NLRB continues to pursue the theory in other cases.  See 24 Hour Fitness, Case No. 20-CA-35419, where the employer provided employees with an opt-out provision, but the NLRB still argues that the arbitration agreement is unlawful. In fact, in Advanced Services Inc., Case No. 26-CA-63184 (July 2, 2012), the NLRB even argues that the confidentiality of arbitration proceedings unlawfully chills employees’ rights to discuss the terms and conditions of their employment.
  • At will employment policies that suggest they can’t be changed through collective bargaining by a union. See American Red Cross Arizona, Case No. 28-CA-23443 (Feb. 1, 2012), where the employer’s policy provided that an employee’s “at-will employment relationship cannot be amended, modified or altered in any way,” and the NLRB found that such a policy interfered with employees’ rights to form a union.
  • Requirements that employees keep workplace investigations confidential. See Banner Health System, 358 N.L.R.B. No. 93 (July 30, 2012), where the NLRB said an employers’ “generalized concern with protecting the integrity of [workplace] investigations is insufficient to outweigh employees’ Section 7 rights.” Basically, the NLRB ruled that “blanket” confidentiality rules are illegal, and an employer must justify confidentiality on a case-by-case basis.
  • Restrictive social media policies. See Hyatt Hotels Corporation, Case No. 28-CA-61114, where the employer required employees to report “any known or suspected violations of [its code of conduct], including any violations of the laws, rules, regulations, or policies that apply to Hyatt.” The NLRB said employers must permit employees to report employer violations via social media channels, rather than only to the employer.
  • Notices in nonunion workplaces stating that employees have the right to unionize.  See Notification of Employee Rights Under the National Labor Relations Act, NLRB, Final Rule, published in the Federal Register on August 30, 2011, 76 Fed. Reg.  54,007. The effective date of this Final Rule was delayed until April 30, 2012, but in U.S. Chamber of Commerce v. NLRB, the U.S. District Court in South Carolina stayed these regulations.
  • Requiring nonunion employers to permit employees to have a representative present during investigative meetings.  These so-called “Weingarten” rights have been pushed and retracted several times, depending on whether Republicans or Democrats control the NLRB.  Currently, there is no right for nonunion employees to have a representative present during inquiries, but under the current Democratic Administration, I suspect this right would be reinstated if a case were brought before the Board.

The only way a nonunion employer can avoid investigation and prosecution by the NLRB is to make sure before terminating an employee that that employee has not engaged in any activity of mutual benefit with other employees – i.e., that there has not been any “concerted activity” that could give rise to an unfair labor practice charge.

Moreover, employers must review their policies to be sure they don’t run afoul of policies that the NLRB disapproves of.  And they should be sure to follow all NLRB requirements regarding posters, employee representation, and what supervisors can and cannot tell employees.

Additional resources on this topic include NLRB Extends Reach To Nonunion Workplaces, by Jonathan C. Fritts, Ross H. Friedman and Doreen S. Davis (Morgan Lewis), and Avoid Violations of Nonunion Employees Under NLRA, by Gigi O’Hara (Kutak Rock), and a new book entitled NLRA Rights in the Nonunion Workplace,by Kenneth Lopatka (BNA).

Readers might also check the NLRB’s webpage on protected concerted activity.


Filed under Human Resources, Law, Management, Politics, Workplace