Category Archives: legislative

Is One Watchdog Better Than Two?

The Trump administration wants to combine the Equal Employment Opportunity Commission with another federal watchdog agency—and both worker and business groups are worried.

The issue got attention on Wednesday as new Secretary of Labor Alexander Acosta testified before a House subcommittee about how President Trump’s proposed budget will affect his department.

Among other proposals that would cut Labor department spending by 20 percent overall, Trump’s budget also proposes merging the department’s Office of Federal Contract Compliance Programs into the EEOC, an independent agency.

Acosta told skeptical Democrats on the panel that the merger made “common sense” and would not hurt workers, the Associated Press and other news organizations reported.

Off Capitol Hill, the merger idea has drawn fire from communities that often disagree—business leaders and worker-rights advocates. The Leadership Conference on Civil and Human Rights, a coalition that includes labor unions, the ACLU and others, wrote the administration and Congress on May 26 that the merger would effectively shutter the OFCCP by folding it into the EEOC.

“Both OFCCP and EEOC help advance and protect equal employment opportunity, but they are distinct in their enforcement approaches and expertise, and they should remain separate,” said Leadership Conference CEO Wade Henderson in a prepared statement. “We strongly urge Congress to reject this proposal, which would lead to an erosion of key civil-rights protections for working people.”

Though the merger idea got an early boost from the business-friendly Heritage Foundation, some corporate leaders agree with critics that the agencies should remain separate. Some, including the U.S. Chamber of Commerce, fear the merger would create a mega-regulator with too much power.

”There is a fear in the business community that this newly formed grouping might result in the worst of all worlds from both agencies,” said Randy Johnson, a chamber senior vice president, in a prepared statement. He noted that the EEOC has legal powers the OFCCP does not.

House Passes Comp Time Bill

Hourly workers who’ve had to juggle shift schedules with picking up their kids from school or daycare or attending college classes while holding down a full-time job may have cause to cheer a bill that was passed earlier this week by the U.S. House of Representatives. The Working Families Flexibility Act, sponsored by U.S. Rep. Martha Roby (R.-Ala.), would allow employers to give their workers paid time off in lieu of time-and-a-half pay (i.e., “overtime pay”) when they work more than 40 hours during a single week. The bill  now heads to the Senate, where Sen. Mike Lee (R.-Utah) has introduced a similar measure.

The House bill, which had strong Republican support, was touted as a way to “codify” flexibility for employees.

“I don’t think there’s anything more powerful than giving them more control over their time so that they can make the best decisions for themselves and their families,” said Rep. Cathy McMorris Rodgers (R.-Wash.) at a press conference held by Republican House leaders, reports CNN.

House Democrats were universally opposed to the bill, giving it zero votes. Six House Republicans also voted against it. The bill’s chances of passing the Senate appear uncertain at best: It will need to garner votes from at least 8 Democrats  as well as all 52 Republican senators in order to avoid a filibuster and make it to the desk of President Trump, who’s indicated he will sign it.

“This is nothing but a recycled bad bill that would allow big corporations to make an end-run around giving workers the pay they’ve earned,” said Sen. Patty Murray (D.-Wash.) in a statement. Several similar bills have been passed by the House in recent years but died in the Senate.

The National Partnership for Women & Families has also strongly criticized the bill, saying that it would put too many restrictions on employees’ ability to decide when they’d want to use their paid time off.

If it became law, the Working Families Flexibility Act would give workers “a false and dangerous choice between overtime pay now and time off later when they work more than 40 hours in a week,” writes NPWF Vice President Vicki Shabo in The Hill. “It does this by giving employers the right to hold onto employees’ overtime wages for months, while giving employees no guarantee that they will be able to take their ‘comp time’ when they need it.”

 

Sacrificing Safety or Creating Jobs?

The fate of an Obama-era piece of legislation designed to improve worker safety appears to be anything but safe.

On Monday, the U.S. Senate voted by the slimmest of margins—49 to 48—to eliminate the Fair Pay and Safe Workplaces rule, which was created to “limit the ability of companies with recent safety problems to compete for government contracts unless they agreed to remedies,” as the Washington Post reported this week.

Signed by then-President Barack Obama on July 31, 2014, the executive order required prospective federal contractors bidding on federal deals worth more than $500,000 to disclose their violations of certain workplace protection laws before receiving a contract. The rule also obligated federal agencies to work with noncompliant contractors in an effort to address existing safety-related issues.

The regulation was put on hold, however, by an October 2016 court order determining that it exceeded congressional limits. A measure to abolish it has since made it through the House, and this week’s Senate vote all but assures that will now happen. President Donald Trump is expected to sign off on rolling back the rule—just one of a handful of worker safety regulations the administration is eyeing for elimination.

“This is the opening salvo of the Republicans’ war on workers,” Deborah Berkowitz, senior policy adviser at OSHA, told the Post. “It sends a signal that Congress and the administration is listening to big business and their lobbyists and they are not standing up for the interests of the American workers.”

Meanwhile, groups such as the U.S. Chamber of Commerce and the Business Roundtable contend that the Fair Pay and Safe Workplaces rule hampers businesses’ ability to compete for government contracts, which subsequently reduces jobs.

“Any changes in employment laws proposed by the employer community [are] disingenuously described [by Democrats] as an attack on workers,” Randy Johnson, the U.S. Chamber’s senior vice president for labor, immigration and employee benefits, told the Post. “The left has never seen a regulation they don’t like, no matter how many jobs it kills.”

Sen. Elizabeth Warren (D-Mass.) doubts that the motives behind wiping out this particular rule have much to do with saving or generating jobs.

“Instead of creating jobs or raising wages, they’re trying to make it easier for companies that get big-time, taxpayer-funded government contracts to steal wages from their employees and injure their workers without admitting responsibility,” she said in a Senate floor speech ahead of Monday’s vote.

As the Post points out, the eradication of the Safe Workplaces rule is likely just the first phase of a Congressional movement to “kill Labor Department regulations.”

The “Volks rule,” for instance, could be next.

Adopted in January, the rule was meant to “give OSHA authority to issue citations and levy fines against companies for failure to record illnesses, injuries and deaths that date back as far as five years,” according to the paper.

U.S. Representative Bradley Byrne (R-Ala.) has introduced a measure that would do away with the rule, which he has described as an overreach.

“If you are determined to be a bad actor, you’ll be a bad actor,” Byrne told the Post. “I don’t think this is going to encourage noncompliance. I think OSHA is being lazy on getting its investigations done.”

For their part, Congressional Democrats maintain that rejecting the rule would undermine OSHA’s efforts to enforce safety reporting requirements.

For example, Rep. Robert C. Scott, of Virginia, says doing so would “create a safe harbor for those employers who deliberately underreport.”

The arguments coming from both sides of the aisle with respect to such workplace-related regulations are nothing new, and are sure to continue. But it seems every bit as certain that we’re going to find out what sort of impact taking these rules away will have on workplace safety.

Commander-in-Chief or CEO?

From Truman to Trump, a handful of U.S. presidents have made their way to the Oval Office via the business sector.

If a recent Korn Ferry Institute survey offers any clues, it might be a while before we see another commander-in-chief who’s taken that route.

In a poll of 1,432 corporate executives, an overwhelming majority of respondents showed no signs of aspiring to the highest political office in the land. Given the choice, 85 percent of executives said they would rather be CEO of their own organization than lead the country, according to Korn Ferry.

While recognizing the similar requirements for both roles—the ability to drive growth, manage crises, think strategically and manage finances, for example—most business leaders allow that the president has even more hats to wear.

Indeed, 81 percent of the executives polled said they think the U.S. president has a more complex job than they do.

“In a way, you could consider the U.S. president [to be] the national CEO,” says Rick Lash, senior partner at Korn Ferry Hay Group, in a press release summarizing the findings. “While serving as a corporate CEO is generally considered a very challenging role, executives acknowledge the U.S. president faces hurdles that are much higher than those faced by a leader in corporate America.”

In addition to complexity, you can put compensation on the list of reasons why your CEO isn’t likely interested in leading the free world.

Seventy-one percent of executives, for example, reported feeling that the U.S. president—at $400,000 annually, as determined by Congress—is underpaid. Nearly half (48 percent) said the president should receive at least $10.4 million per year; the current average compensation for a CEO at an S&P 500 company. And exactly 0 percent cited salary/compensation as the top reason someone would want the job of U.S. president. But money, or a lack thereof, isn’t the only thing deterring executives from someday pursuing a presidential run.

The position of U.S. president “comes with extra scrutiny as well,” according to Korn Ferry.

Donald Trump, for example, “has been president for less than a week and he’s been questioned about his every action, from the serious (the words he used during his inaugural speech and his choice of cabinet members) to the silly (whether the dance with his wife, Melania, at an inaugural ball was ‘awkward’),” notes the aforementioned release.

“A corporate CEO may be questioned on his or her firm’s stock price and business strategy, but usually isn’t scrutinized for dancing ability.”

High Anxiety for Plan Sponsors

It’s still unclear whether the incoming Trump administration will take aim at the Department of Labor’s new fiduciary rules, which are slated to go into effect on April 10.  As Joseph Urwitz, a partner in McDermott Will & Emery’s Boston office, told us late last month: “While it’s not possible to predict the future, the new Congress and president may overhaul, eliminate or at the very least delay implementation of the fiduciary rule. Time will tell whether or not any of these moves will come to pass.”

thinkstockphotos-468426388But what we do know is that litigation continues to be very much on the minds of plan sponsors.

This fact received further support earlier this week, when Cerulli Associates, a global research and consulting firm, released the findings of a study—titled “The Cerulli Report: U.S. Retirement Markets 2016”—that found more than half (57 percent) of more than 800 401(k) plan sponsors questioned are concerned about potential litigation.

While much of the litigation has targeted large plans with deeper pockets, the research found that smaller plan sponsors are also paying attention to today’s litigious environment.  Nearly one-quarter of small plan sponsors—those less than $100 million in 401(k) assets—describe themselves as “very concerned” about potential litigation.

As most of you know (and the Cerulli report points out), fee-related lawsuits, in particular, have been something of a theme in 2016, putting added pressure on plan sponsors to find ways to reduce fees. “Plan-sponsor-survey results show that the top two reasons for which 401(k) plan sponsors choose to offer passive (indexed) options on the plan menu are because of ‘an advisor or consultant recommendation’ or because they ‘believe cost is the most important factor,’ ” according to the Cerulli press release. But there is also no denying that lowering the risk of litigation factors into the decision making as well.

The Cerulli report suggests that the rash of litigation that has occurred in recent times is stifling innovation. Jessica Sclafani, associate director at Cerulli, notes that “plan sponsors feel they have little to gain by appearing ‘different’ from their peers due to the risk of being sued. This mindset can make plan sponsors reluctant to adopt new products … .”

The Zenefits Saga Continues

It appears Zenefits woes are continuing—and if the predictions of one consultant are correct, they aren’t likely to end anytime soon.

Yesterday, Washington State Insurance Commissioner Mike Kreidler ordered Zenefits to “cease free distribution of its employee benefits software, noting the tactic violates Washington state insurance law against inducements,” his office’s statement reads.zenefitslogo

Washington is said to be the first state to take action against the company for violating inducement laws. Under an agreement with Kreidler, Zenefits can challenge the order within 90 days.

The state took issue with the fact that Zenefits required clients to designate it as its broker of record and then collected insurance commissions from the products it sold in order for them to access its free software.

“The inducement law in Washington is clear,” Kreidler said. “Everyone has to play by the same rules.”

Following the announcement, Zenefits’ General Counsel Josh Stein posted the following on the company’s website

“Today, Zenefits has reached a compromise agreement with the Washington Office of the Insurance Commissioner (OIC) on how Zenefits will price its services in Washington State.  Beginning January 1, at the order of OIC, Zenefits may no longer provide free software services in Washington. As a result, Zenefits will charge all Washington state customers $5 per employee per month for our core HR product.”

Stein went on to say …

“The Washington viewpoint is a decidedly minority view. Since its founding, Zenefits has had conversations with regulators about our business model, which includes some free HR apps. Many states have looked into the issue and concluded that free software from Zenefits is not a problem; in fact, it’s in the interest of consumers. Only one state other than Washington has disagreed.  Utah’s department of insurance tried to force Zenefits to raise prices for consumers, and Utah’s state legislature and governor quickly took action, passing a bill to clarify that its rebating statute should not be interpreted to prohibit innovative new business models that deliver value to consumers.”

Earlier today, I spoke with Rhonda Marcucci, partner and consultant in Gruppo Marcucci, a Chicago-based HR and benefits technology consulting firm.

Zenefits has created its own regulatory scrutiny reputation for the rest of its life, Marcucci told me. In this case, she said, “I don’t think it is driven so much by the brokers but by the insurance departments who are extremely angry about the licensing piece—so that now invites more scrutiny in other places. Brokers may have brought it to [the attention of insurance regulators], but the way I look at this, Zenefits is a regulatory penalty box—and they will be, I think, forever.”

Marcucci noted that every state, except for California, has some kind of no rebating or inducement laws for transactions. But that doesn’t necessarily mean that every employer is following the law.

At the end of day, she said, states typically base their decision on enforcing these laws by “who screams the loudest.”

As far as Zenefits is concerned, Marcucci said, it’s realistic to expect that other states might follow Washington’s lead, especially those states with difficult regulatory insurance environments such as New York.

The Gig Economy: Pros and Cons

More than one in 10 working Americans have joined the so-called gig economy, working as freelancers or independent contractors, according to a survey of 1,008 people from ReportLinker. A third of respondents said they would consider exiting the traditional workplace to work in the gig economy, while nearly half said they would be willing to consider doing so within the next three years.

Why would so many consider giving up the security and benefits of a full-time job for the uncertainties of gig work? Twenty eight percent of survey respondents cited “being your own boss,” while the ability to work flexible hours came in second. Nearly 40 percent of job seekers say they’d consider becoming an independent contractor, as would 59 percent of part-time workers and 33 percent of students, according to the survey.

The lack of benefits is a drawback for those working in the gig economy, however, with one in four of the respondents who work as freelancers citing the lack of retirement benefits as a downside. Indeed, the lack of traditional job benefits such as sick-leave pay and unemployment benefits has led the United Kingdom to appoint a team of four experts to review the impact of “disruptive” businesses such as Uber and Deliveroo on that nation’s workforce, reports the BBC. The panelists include Matthew Taylor, chief executive of the Royal Society for the Arts.

“One of the key issues for the review is ensuring that our system of employment rules are fit for the fast-changing world of work,” Taylor writes in a piece for the Guardian newspaper.

“As well as making specific recommendations, I hope the review will promote a national conversation and explore how we can all contribute to work that provides opportunity, fairness and dignity,” he told the BBC.

The lack of benefits typical in most gig economy jobs has resonated Stateside as well, of course, with a number of gig workers filing suit alleging that they’re actually employees, not independent contractors, and are thus eligible for benefits such as unemployment compensation. In response, companies that employ freelancers are pushing for bills that promote “portable” benefits that workers would be able to take from job to job. Online home-cleaning company Handy, for example, is circulating a draft bill in the New York State legislature that would establish guidelines for portable benefits for workers in that state’s gig-economy companies, reports Reuters. The bill would classify workers at companies choosing to participate in the program as independent contractors rather than employees under state law, as long as the companies’ dealings with their workers “meet certain criteria.”

Not all are pleased with the bill. Larry Engelstein, executive vice president of 32BJ Service Employees International Union, criticized it as offering workers too little.

“The amount of money that’s supposed to be put into these portable benefit funds seems so meager,” Engelstein told Reuters. “The actual benefit a worker is getting hardly warrants what the worker is giving up.”

The ‘Ban the Box’ Paradox

HRE columnist Peter Cappelli recently penned a piece suggesting that “ban the box” legislation, while certainly well-intentioned, may not be the best approach to helping ex-felons transition back into the workforce.

Such laws, which prohibit employers from making questions about criminal convictions part of the hiring process, have been adopted in 24 states and more than 100 cities and counties in the U.S.

The good news is that “more ex-felons seem to have gotten jobs,” says Cappelli, a professor of management and director of the Center for Human Resources at The Wharton School of the University of Pennsylvania in Philadelphia.

Meanwhile, the overall hiring of young black and Hispanic men has declined, he adds.

“In other words, we swapped one form of discrimination for another,” says Cappelli. “It wasn’t supposed to work that way. The problem is people don’t behave the way the legislation anticipated. We don’t wait until the law allows us to find out about criminal records. We start guessing.”

Researchers Jennifer Doleac, an assistant professor of public policy at the University of Virginia, and Benjamin Hansen, an associate professor of economics at the University of Oregon, seem to share that view.

In their recent study (which Cappelli does reference in his column), the pair of professors tested the net effects of ban-the-box policies on employment outcomes for various demographic groups, using data from the Current Population survey.

The authors found that, among men between the ages of 25 and 34 who don’t hold a college degree, BTB policies decrease the probability of being employed by 4.5 percent for black men, and by 3.5 percent for Hispanic men.

In the same age group, black men with a college degree and white women of all educational levels benefit from this policy, according to the study. This finding suggests that, when criminal history information is unavailable, “employers pursue candidates who are less likely to have been recently incarcerated based on their remaining observable characteristics,” the authors write.

The goal of BTB laws “is to improve employment outcomes for ex-offenders and thereby reduce racial disparities in employment.”

The legislation, however, “could do more harm than good,” they continue, noting that firms that don’t want to hire ex-offenders might statistically discriminate based on race and gender in order to avoid interviewing applicants who are more likely to have been recently incarcerated.

“Of particular concern, employers might avoid interviewing young, low-skilled, black and Hispanic men when [ban-the-box legislation] is in effect,” note Doleac and Hansen. “This could worsen employment outcomes for those already-disadvantaged groups, without meaningfully improving outcomes for ex-offenders.”

In a recent UVA Today article, Doleac offers a “two-fold policy plan” to help combat discrimination against those for whom “ban the box” laws were designed, “without unintentionally hurting minority men without criminal records.”

For example, “individuals with criminal records may have histories of violent or dishonest behavior, and on average might struggle with greater emotional trauma and have worse interpersonal skills,” she says.

Providing opportunities for such applicants to demonstrate that they don’t have these problems—perhaps by having a local job-training program vouch for them—could potentially “help them overcome automatic assumptions about their temperament and suitability.”

Another “broad category of policies” that might improve upon current legislation includes education and rehabilitation programs that “would actually improve the underlying job readiness of this population,” says Doleac, who is currently working on a new technology-based project aimed at improving re-entry outcomes for individuals leaving prison.

“The reason that employers discriminate against people with [criminal] records is that, on average, that group is less job-ready than people without records.”

 

Supporters of E-Cigs Fight Back

There’s some real pushback under way to what I was thinking had become a generally agreed-upon vice worth eradicating from our streets, public arenas and workplaces: e-cigarette vaping.

470456691--vapingMy eyebrows were raised on Friday when I came across this release from the National Center for Public Policy Research announcing an amicus brief that had just been filed by the NCPPR and TechFreedom in support of an earlier challenge to the Food and Drug Administration’s war on vaping.

Specifically, the initial challenge that got a major boost on Friday was filed by Nicopure Labs, a manufacturer of e-cigarette liquid, against the FDA’s Deeming Rule, which was finalized in May. That rule would force e-cigarette manufacturers to undergo an expensive and time-consuming premarket tobacco-application process unless their products were on the market prior to the predicate date of Feb. 15, 2007. As the NCPPR release puts it:

“The high cost of the application process means most e-cig businesses will be forced to shut down, eliminating choices of dramatically safer alternatives to combustible cigarettes, which will leave smokers with fewer options to compete against the most harmful form of nicotine consumption, [again,] combustible tobacco.”

It also states that:

“The FDA’s Deeming Rule fails to consider the scientific evidence readily available to the agency regarding the safety and the public health benefits of e-cigarettes.”

Is it just me or is this the first time you’ve read anything about the “public health benefits of e-cigarettes”?

I love how this guy, Tom Remington, on his blog post, compares  choosing between e-cigs and tobacco to choosing between Donald Trump and Hillary Clinton. Mind you, I’m not 100-percent sure what position he’s taking here (something tells me he’s anti e-cigs … and don’t ask me to even hazard a guess as to who he plans to vote for), but his quote is pretty fun:

“Having a discussion about whether or not e-cigarettes are more healthy than real tobacco-product cigarettes is akin to deciding which crook, Hillary or Donald, should get your vote. Would you rather die from e-cigarettes or from tobacco? Would you rather get screwed and further forced into slavery by Hillary or Donald?”

For a much more complete and sobering look at why clamping down on the e-cigarette business isn’t necessarily a good thing for health but IS a big victory for Big Tobacco, read this opinion piece on the Washington Post site by Jonathan Adler. Here’s just one compelling thought to come away with, as Adler writes it:

“With the new FDA rule, Big Tobacco is getting just what it wanted. … [A]s a consequence of the FDA rule, the e-cig market will shrink, and Big Tobacco will be in a better position to dominate what’s left. A vibrant competitive market will be replaced with a cartel, much like the one we see in the cigarette market.”

So what does all this have to do with HR? Probably not as much as other topics we’ve raised here, but I do know many of you are grappling with your smoking policies, and many of you have opted to lump vaping in with the rest of your organization’s prohibited activities.

I guess this might just give you something more to think about as you go about drafting or enforcing such a policy … like who’s hands you might be playing into(?) Or where the real truth lies(?) If, indeed, these things are so much healthier than cigarettes, for all concerned, and can help move the quitting process along, are you sure you want to deny your employees any and all access(?)

Maybe just put all this in your pipe and smoke it(?) (Sorry.)

A Groundbreaking New Pay Equity Law

Beginning July 1, 2018, employers in Massachusetts will be prohibited from asking job candidates about their salary history before offering them a job or asking candidates’ former employers about their pay. The new law, the Pay Equity Act, is designed to reduce the pay disparities between men and women in the workplace.

Although other states (including California and Maryland) have also enacted recent legislation designed to reduce pay inequity, Massachusetts is the first state to ban employers from asking about candidates’ salary history. The law, signed earlier this week by Republican Gov. Charlie Baker, not only had bipartisan support in the state legislature but also from business groups such as the Greater Boston Chamber of Commerce.

Nationally, women still earn only 79 cents for every dollar earned by men, according to the U.S. Census Bureau. Because companies tend to use candidates’ pay history as a guideline in making offers, these inequities can follow candidates throughout their lifetimes, pay-equity advocates say.

The Massachusetts law, which amends and expands upon the state’s pre-existing pay equity law, also makes it illegal for employers to ban employees from discussing their pay with others and will require equal pay employees whose work is “of comparable character or work in comparable operations.” The law also bars employers from reducing the pay of any employee in order to come into compliance with the Pay Equity Act.

The law also increases the penalties for violations, according to an analysis by law firm Holland & Knight:

The law expands the remedies available to plaintiffs by extending the statute of limitations from one year to three years, and creating a continuing violation provision under which a new violation of the law occurs each time an employee is paid an unequal amount. This provision may permit employees to recover years of back pay discrepancies as well as liquidated damages. Fines are increased from $100 to $1,000 per violation. There is no requirement that an employee file first with the Massachusetts Commission Against Discrimination (MCAD). Lawsuits may be filed directly in court.

Notably, however, the law features a safe harbor provision for employers that have been accused of pay discrimination, writes attorney Victoria Fuller of White and Williams:

Employers may avoid liability for pay discrimination under the Act if they can show within the last three years and before the commencement of the action, they have completed a good-faith self-evaluation of their pay practices and can demonstrate that reasonable progress has been made towards eliminating compensation differentials based on gender for comparable work in accordance with the evaluation.