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A New Era of Regulation: Increasing Costs and Complexity

Employers are struggling to comply with increasing burdens imposed on them by government regulation.  Recently, increasing regulations by the U.S. Department of Labor and the National Labor Relations Board, as well as requirements under the Affordable Care Act (also known as "ObamaCare"), significantly increase the cost and complexity of employment.

U.S. Department of Labor (USDOL)

On July 6, 2015, the USDOL issued a Notice of Proposed Rulemaking to increase the salary requirement for the white collar exemptions under the Fair Labor Standards Act ("FLSA") from $455 per week to $921 per week.  The USDOL claims the increased salary level will simplify the identification of overtime-protected and exempt employees and make it easier to understand exemptions.  The argument made to increase the salary level is that employees in certain industries, such as fast-food, will receive much greater protections.  However, the proposed regulation fails to consider the impact upon many businesses that cannot afford to pay employees the increased salary.  This change will force employers to convert those salaried exempt employees to hourly employees or to increase their salary.

On July 15, 2015, the USDOL issued an Administrator's Interpretation addressing the misclassification of workers as independent contractors.  The USDOL's position is that most workers are employees under the FLSA.  This position is a reflection of the USDOL's intent to ensure that most workers are employees, and subject to minimum wages and overtime.  Although the Administrator's Interpretation is not a completely new approach for the USDOL, it emphasizes the USDOL's intent to scrutinize businesses who utilize independent contractors.  Employers should review each independent contractor relationship to determine whether the worker might be an employee.

National Labor Relations Board (NLRB)

Since the beginning of the Obama administration, the NLRB has been diligently working to tip the scales in favor of unions.  The NLRB's goal has been to increase unionization.  Recent changes by the NLRB have furthered this goal.  First, the NLRB has implemented "quickie elections" to increase the speed with which the NLRB conducts an election.  The alleged purpose for the quickie election rule is to ensure a fairer election process.  The real goal is to allow unions to secretly organize and for the election to be held quickly so that the employer has little ability to educate employees.  Thus, employers need to be constantly prepared to educate employees about unions.

The second area in which the NLRB has been aggressive is the regulation of employer policies.  Although the NLRB has been consistently finding employer policies to be in violation of the National Labor Relations Act, it was not until March 2015 that the NLRB General Counsel issued a Report summarizing all of the areas in which the NLRB has found employer rules to be in violation of the National Labor Relations Act ("NLRA").  Not only are these rulings shocking to employers, a review of the Report demonstrates how difficult it is for employers to maintain policies that comply with the NLRA.  Employers must have each and every policy reviewed carefully.

Affordable Care Act (ACA)

Finally, although many of the provisions of the ACA have been implemented, the most significant out-of-pocket and compliance costs of the ACA are finally being recognized.  Many employers are being forced to pay increased insurance premiums due to community rating.  Large employers are also being required to comply with the "pay or play" provisions, thereby causing employers to spend additional time, effort and money.

Conclusion

Each of the areas referenced above emphasize that employers are in a new era of regulation that increases the cost and complexity of doing business.  It is imperative that employers review all of their employment policies and practices to ensure compliance.