Resource Actions: 4 compliance zombies that want your HR brain
Editor's note: Welcome to Resource Actions, our occasional, back-and-forth column covering everything from the bizarre to the day-to-day that, despite everything, impacts HR departments. Please feel free to send all tips, thoughts and The Walking Dead posters to [email protected] and [email protected].
Ryan Golden: Happy Halloween, HR pros! Chances are you’ll see plenty of Harley Quinn, Captain America and donut costumes about town tonight. But a popular costume among employment lawyers and compliance officers this year would definitely be the classic zombie.
Kathryn Moody: Or maybe the ghost? Haunting policies from the past year that just won’t leave, undead regulations … we’ve seen it all. We’ve been tracking a number of wild regulations and curious court decisions that keep popping up from the ground, even as we enter the last half of Q4 2017.
Ryan Golden: They say the best weapon in the event of a zombie fight is knowledge. (A crossbow can’t hurt, though). To that end, we’re here to get you up to speed on four HR compliance monsters that just don’t quit.
Zombie #1: Overtime
Kathryn Moody: This regulation’s extremely slow death and apparent coming rebirth may be the HR zombie to rule them all.
If you feel like you will never hear the end of the overtime rule, you aren’t alone. Ever since Judge Amos Mazzant handed down a preliminary injunction on the rule at nearly the last minute in November 2016, the much-maligned Obama-era regulation — which sought to raise the overtime salary threshold to $47,476 — has managed to live on in the news cycle thanks to shifting political priorities at the U.S. Department of Labor (DOL).
The very departments that were set to defend the rule knew by then that they would likely face massive changes thanks to President Donald Trump’s win. That changing of the guard led to a year-long effort to put “the final nail in the coffin” of overtime. Both the administration and DOL ended their defenses of the rule earlier this year. (Yes, DOL is part of the federal government but that fact hasn't stopped other agencies from defending Obama-era initiatives.)
But what is dead may never die. DOL is concerned that a federal judge calling the rule “invalid” could threaten its ability to issue new regulations on the matter at all — so now they’ve appealed the injunction.
We’re expecting another overtime rule out of DOL that will likely set the salary threshold in the $32,000-$35,000 range. Until that is official, this zombie will walk on.
Zombie #2: Healthcare reform
Ryan Golden: It began with the American Health Care Act (AHCA), a bill once thought dead but quickly brought back to life by Republicans in the U.S. House of Representatives. They promptly cracked open a few cold ones to celebrate.
But since then, efforts to reform the Affordable Care Act (ACA) have been on their last legs. A GOP-controlled Senate failed to pass three separate votes to move the eight ball further, and another proposal from Senators Graham and Cassidy didn't even make it to the floor.
And yet, this zombie marches on, largely because even ACA proponents know that things can’t continue at their current rate. Employers and their advocates on the Hill are fighting for changes. Chief among them: 1) repealing the employer and individual mandates; 2) repealing taxes that make employee benefits more expensive; and 3) making it easier for employers to offer and contribute to employees’ health savings accounts.
Oh, and the White House is making its own fair share of noise in order to undermine the ACA. But that's more smoke than fire for employers — at least at this point, anyway.
Zombie #3: Tip pooling
Kathryn Moody: This zombie — which has been spared in one circuit but killed off in another — could be shuffling its way to the U.S. Supreme Court.
In 2011, DOL imposed new limits on tip pooling, banning employers from making front-of-the-house tipped employees share tips with untipped, back-of-house employees. Seven states have also banned the practice.
In July of this year, one appeals court called the regulations invalid. Stakeholders asked the Supreme Court to weigh in and DOL has been given no less than four extensions to provide its defense (or step back from the regs).
Ryan Golden: And things are actually trending in the opposite direction for the foreseeable future. DOL last week began the process of rescinding the 2011 regulations.
The situation puts employers in a tough spot. On the surface, DOL doing away with the regs would allow companies to set up tip pools that include non-tipped workers. But the real zombie here is that federal courts may continue to uphold the rules until a new rulemaking is complete. And, if the regs are eventually rescinded, experts say more state and local governments may feel prompted to adopt their own rules.
Either way, employers are going to want to tread carefully around this suspicious grave site.
Zombie #4: Joint employment
Kathryn Moody: This zombie does not run. It is slow moving — but it looms in the distance.
Under the Obama administration, then-wage and hour head David Weil focused on “fissured” workplaces that he claimed sought to escape their responsibilities to employees by using temps and contractors. By doing so, he says, employers have attempted to avoid FLSA and other responsibilities for the former, and even more — like unemployment taxes — for the latter. Weil led a charge to hold these "joint employers" responsible.
The National Labor Relations Board has applied the concept in the labor context, too. In 2015, it handed down its notorious Browning-Ferris decision. The ruling asserted that employers who contracted services from other companies, such as staffing companies, could be jointly liable for legal violations. The entire franchise-franchisee relationship could shift, depending on what the D.C. appeals court decides when it reviews this ruling.
But we’ve been waiting on the D.C. court to make a decision since the spring. In the meantime, House Republicans have been pushing the “Save Local Business Act”, an attempt to redefine joint employment in more business-friendly terms. DOL also recently withdrew its Administrator's Interpretation, a form of informal guidance, on the topic, and the NLRB is lining up to be majority Republican by the end of the year, which could mean a shift in its stances.
And even after we have an appeals court opinion, the Supreme Court could then weigh in. For now, it remains to be whether this zombie will ever pick up its pace, or if it will collapse and continue its slow (re)death.