On February 1, 2018, the Office of Federal Contract Compliance Programs (OFCCP) sent 1,000 Corporate Scheduling Announcement Letters (CSALs) to federal contractors informing them that they may be audited for compliance with federal non-discrimination requirements/affirmative action plans.
Last week the EEOC released its charge statistics from fiscal year 2017, which ran from Oct 1, 2016 through Sept 30, 2017.
- Retaliation was the most common claim in FY 2017, followed by race discrimination, disability discrimination, sex discrimination (all types, including sexual harassment), age discrimination, national origin discrimination, and religious discrimination.
- Charges were down a bit in all categories, but monetary relief was up in LGBT cases and, in sexual harassment cases, was at the highest level since 2010. BUT — note that the EEOC’s fiscal year ended before the #MeToo movement began so we predict the 2018 statistics will paint a very different picture.
- Further, note that the EEOC’s new online portal, launched in November 2017, which makes it incredibly easy for individuals to sign in and file charges.
Last week, the Securities and Exchange Commission (SEC) Office of Minority and Women Inclusion (OMWI) introduced its voluntary Diversity Assessment Report for Entities Regulated by the SEC. The Report is intended to help SEC-regulated entities conduct self-assessments of their diversity policies and practices, and provides these entities with a template for submitting information about their self-assessments to OMWI. Conducting self-assessments and providing the information to OMWI are voluntary.
The SEC’s Report is in line with the recent demands from US shareholders demanding transparency and accountability when it comes to gender pay and commitments to creating more inclusive and diverse workplaces. We expect diversity and inclusion to remain at the forefront of legal issues facing employers for years to come.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law bringing significant changes to US tax law. One provision of the Act may further incentivize individuals to work as independent contractors instead of as traditional employees.
The new provision allows for independent contractors, and for service providers structured as a partnership or other flow-through entities, the potential to deduct up to 20% of their revenue from their taxable income. And while some companies might view the opportunity to re-classify individuals from employees to independent contractors as a “win–win” scenario, it could create substantial legal exposure for employers.
Michael Brewer has joined Baker McKenzie as a Partner in its North America Employment & Compensation Practice, bringing more than 17 years of experience in a range of employment litigation and counseling matters.
Based in San Francisco, Michael defends employers facing wage and hour class and collective actions, alleged harassment, discrimination, retaliation, wrongful termination and other employment-related claims. He has litigated more than 500 employment lawsuits to conclusion. Companies frequently call upon Michael to step into difficult cases even when handled by other firms. Michael has served as lead trial counsel on state and federal multi-district class actions as well as single-plaintiff cases throughout California. He has significant trial experience, and routinely counsels clients on the handling of termination and discipline decisions, workplace accommodation issues, litigation avoidance and all aspects of personnel management.
“Employment litigation and counseling is a key area of focus for many of our clients in California and throughout the US,” said George Avraam, Chair of the Firm’s North America Employment & Compensation Practice. “Michael’s extensive trial and appellate experience, covering a range of employment issues, will be a tremendous asset to our clients as they look for pragmatic, business-minded advice.”
On January 5, 2018, the Department of Labor did away with its previous six-factor test and announced a new “primary beneficiary” test to determine whether interns and students working for “for-profit” employers are entitled to minimum wages and overtime pay under the Fair Labor Standards Act. Employers are required to pay employees for their work, but in some circumstances, interns may not actually be employees under the FLSA, and therefore, can be unpaid. The DOL stated that the new test “allows increased flexibility to holistically analyze internships on a case-by-case basis.”
The new “primary beneficiary” test looks at whether the intern or the employer is the primary beneficiary of the relationship. Several circuit courts, including the Second and Ninth, have previously favored the “primary beneficiary” test, viewing it as being more up to date and aligned with the underlying purpose of an unpaid internship.
Manufacturers and retailers that have long relied on a complex web of contractors and subcontractors to supply necessary parts and materials may face a new risk. A recent decision limiting the effectiveness of a no-strike clause in a collective bargaining agreement may create an additional risk to that supply chain, if not to the employer’s own uninterrupted operations.
- Most CBAs contain some form of a no-strike clause. They are intended to protect against any interruption to production due to labor unrest during the term of the agreement.
- The Supreme Court has long deemed a strike in violation of a no-strike clause a breach of the collective agreement which a federal district court could enjoin.
- BUT — that assumption may no longer be wholly valid as demonstrated by a recent decision by a federal district court. Just Born, Inc. v. Local Union No. 6, Bakery Workers, 2017 BL 466136 (ED Pa. 2017).
As we embark on a new year, take note of the minimum wage in each state and comply with any increases that begin in 2018.
Unless otherwise indicated, the following minimum wage increases are effective January 1, 2018:
In mid-December, we hosted our Annual California Update in Millbrae, CA. We were so pleased to see many of you in attendance.
Our End-of-Year Newsletter will hit inboxes shortly, but until then – here’s our top 10 New Year’s resolutions for multinationals in 2018:
[As reported by our Baker McKenzie Compensation colleagues]
As of December 20, 2017, both the House of Representatives and the Senate have voted to approve the final version of the Tax Cuts and Jobs Act, in substantially the form released by the Conference Committee on December 15th. The bill is expected to be presented to the President for signature before Christmas, making US tax reform a reality for 2018.
What’s In? From a Compensation & Benefits perspective, among other things, the approved bill includes:
- Significant changes to Code Section 162(m);
- A new tax deferral regime for options and RSUs granted by private companies;
- Elimination of exclusion for fewer than expected employer-provided fringe benefits; and
- Increased disallowance of compensation-related deductions under Code Section 274.
What’s Out? Fortunately, the final bill does not include a Senate proposal to require the use of a first-in-first-out (FIFO) methodology when calculating capital gains on sale of shares, nor does it add back any of the changes to non-qualified deferred compensation that were proposed in the initial House version of the bill. Also, most of the changes proposed to qualified retirement plans have been eliminated.