May 18, 2023
A top 10 rundown of today’s human resources issues in manufacturing
Employment issues are getting national, state, and local attention. The following is not the top 10 list but a selection of 10 current issues impacting manufacturers’ employment policies, practices, and programs.
1. Employment Agreements and Noncompete
On January 5, the Federal Trade Commission (FTC) announced its proposed rule that would effectively ban new and existing noncompete agreements. Specifically, the FTC’s new rule would make it illegal for an employer to 1) enter into or attempt to enter into a noncompete with a worker; 2) maintain a noncompete with a worker; or 3) represent to a worker, under certain circumstances, that the worker is subject to a noncompete. The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers they are no longer in effect.
2. Employment Agreements, Nondisparagement, and Nondisclosure
On February 21, the National Labor Relations Board (NLRB) ruled that an employer violated the National Labor Relations Act (NLRA) when it offered a severance agreement that broadly prohibited covered employees “from making statements that could disparage or harm the image of the [employer] and further prohibited them from disclosing the terms of the agreement.” The NLRA covers most employers, including those with no unionized employees. Section 7 of the NLRA gives all nonsupervisory employees the right to act in concert regarding wages, hours, and conditions of employment. Section 8 prohibits employers from “interfering, restraining, or coercing” employees in the exercise of their Section 7 rights. The NLRB is not alone in having this concern. The U.S. Equal Employment Opportunity Commission (EEOC) expressed similar concerns as far back as 1997. In that year, the EEOC issued related guidance, writing that “such agreements have a chilling effect on the willingness and ability of individuals to come forward with information that may be of critical import to the commission as it seeks to advance the public interest in the elimination of unlawful employment discrimination.”
3. Discrimination, Harassment, and Bullying
You may have heard about Creating Respectful and Open Workplaces for Natural Hair (CROWN) acts. The CROWN Coalition reports that as of this writing, 20 states and 44 local jurisdictions have enacted this type of law. Other states are broadening their definition of unlawful discrimination and harassment to include conduct that is less severe than that required under federal law. The Workplace Bullying Institute reports that 31 states have introduced anti-workplace bullying or healthy workplace bills. Only California has enacted a related law. It does not hold employers legally liable for workplace bullying but does have mandatory training requirements.
4. Minimum Wage
The U.S. Department of Labor reports that as of January 1, at least 30 states have a minimum wage higher than the federal rate. At least 23 have announced they will increase their minimum wage rate this year. The Economic Policy Institute reports that 47 localities have adopted minimum wages above their state minimum wage. And at the federal level, the Living Wage Now Act, H.R. 505, is pending in Congress and proposes to increase the federal minimum wage from $7.25 to $15.00 per hour and take effect on the first day of the third month that begins after the date of enactment of the act. These trends, while well-intentioned, may flatten the market and make those of you who currently pay rates higher than the market less competitive when the market is flattened.
5. Paid Sick, Family, and Medical Leave
It is getting harder to find a state or local jurisdiction that has not enacted a paid leave law. Common examples are sick leave, family leave, and medical leave. Most of the rest have enacted leave laws that require unpaid time off. This list is even longer for cities and counties, which often conflict with the state law. At least two states have enacted paid vacation leave! The trend is likely to continue. President Joe Biden expressed support for paid family and medical leave in his most recent State of the Union address. Congress has at least three bills pending that would expand the federal Family and Medical Leave Act. Six members of Congress also recently announced the formation of a new House Bipartisan Paid Family and Medical Leave Group. These trends add to the myriad other leave laws covering military service, jury duty, parental leave, bereavement, school activities, and more, including vacation. Whether you employ staff working at just one location or are a multistate employer, stay abreast of the frenetic pace of these changing laws.
6. Recruitment and Pay Transparency
The salary history ban trend started several years ago. State and local laws prohibited certain employers from asking an applicant to disclose their salary or wage history. The laws varied, and many permitted the inquiry but only after a certain point, such as the first interview or an offer of employment. More recently, that trend expanded into pay transparency laws, requiring employers to disclose their pay range for advertised jobs, either upon an applicant’s request or in the job ad itself. These laws also vary, and state administrative agencies are often left to answer myriad questions not covered in the law, such as which employers are covered, only those in the state or those that might hire an employee to work from home in that state? Similar questions arise regarding covered applicants. And what if you post a job on social media that anyone in the nation might see—with which law must you comply?
7. Religious Accommodation
On January 13, the U.S. Supreme Court agreed to hear a case asking two key questions about what is or is not a reasonable accommodation under Title VII of the Civil Rights Act of 1964 for religious observance. (1) Should the de minimis rule be changed to a stricter standard? (2) Should the assessment of undue hardship on the conduct of the employer’s business include merely showing that the requested accommodation burdens the employee’s co-workers rather than the business itself? A tad more practically put, Title VII’s undue hardship rule asks if the requested accommodation imposes anything more than a de minimis burden on the employer. If it does, then it imposes an undue hardship, and the employer need not provide it. As to the second question—a burden on whom?—what if the hardship is imposed on one or more co-workers rather than directly on the employer? For example, an employee requests that one or more co-workers work the employee’s shift or a portion of the shift so the employee can take time off from work for a religious observance. Must the employer direct those co-workers to work the additional time over their objection, or would that be unreasonable? The court should answer these questions by June 30. As of this writing, oral arguments were scheduled for April 18. In the interim, review your current policy and practice on religious accommodation, and stay tuned.
8. Substance Testing
The Center for Advancing Health reports that at least 22 states have legalized adult recreational use of cannabis. It remains illegal in just six states. The others have a mix, such as recognizing its legal use as medically authorized only. Some state laws have express language that addresses employers’ rights to prohibit use on the job and conduct testing. On the flip side, some impose restrictions as to whether the employer may take adverse employment action, such as firing or corrective action, based on a positive test result. And at least two local jurisdictions have enacted a law prohibiting related inquiries or testing at the preemployment stage.
9. Wage and Hour Woes—Preliminary and Postliminary Activities
On Valentine’s Day, a class action lawsuit was filed against the Hershey Co. It alleged that Hershey had failed to pay a group of hourly employees for all hours worked, as well as overtime. The issue was whether the time employees spent before and after their shift, donning and doffing “sanitary clothing and other protective equipment” was time worked. Time spent on unpaid activities reportedly averaged 10 to 15 minutes a day.
The U.S. Supreme Court has ruled on this issue multiple times in the past 20 or so years. In general, an employer must pay a nonexempt employee for all time worked—that is, time when an employee is engaged in “principal activities.” Principal activities are those that are “integral and indispensable” to performance of the job. Many jobs in manufacturing require the incumbent to do something before the actual work can begin, from donning protective gear to prepping equipment or machinery, conducting testing, taking inventory, and more.
Consider your jobs. What tasks must a nonexempt employee perform, if any, before work can begin or end? If those tasks are performed and not paid, talk to your company’s employment counsel to determine if they are principal activities under the Fair Labor Standards Act.
10. Wage and Hour Woes—One Manufacturer’s Bonus Program Bites Back
A manufacturer’s nonexempt employees frequently worked over 40 hours per week, averaging between 40 and 60 hours per week. The employer provided those employees with bonuses as “an incentive for hard work.” The allegation is that the employer failed to include the bonuses in the employees’ regular rate of pay for purposes of calculating their overtime compensation, and that they “denied significant amounts of overtime compensation.” Reminder No. 1: Overtime is based on the employee’s regular rate of pay. The regular rate is the employee’s hourly rate plus certain other wage payments such as shift, night, or weekend differentials, as well as nondiscretionary bonuses. Reminder No. 2: A nondiscretionary bonus may be a misnomer. It does not refer to your ability to discontinue the bonus program at your discretion. It generally refers to a bonus announced in advance, for the purpose of changing behavior, and upon which an employee relies when performing the requested work. If you offer such incentive compensation and do not include the bonus in your hourly or nonexempt employee’s “regular rate” of pay for overtime calculations, talk to your company’s legal counsel about remedial measures.
Christine V. Walters, J.D., MAS, SHRM-SCP, SPHR, is the founder and an independent consultant at FiveL Co. She can be reached at christine@fivel.net.
