Employers are Preparing Now to Tackle 2019’s Newest Labor and Employment Laws
Employers are Preparing Now to Tackle 2019’s Newest Labor and Employment Laws By James A. Paretti, Jr. and Michael J. Lotito on November 13, 2018 Print
As 2018 draws to a close, employers are looking to the next wave of labor and employment laws and regulations that will take effect in 2019 and beyond. On January 1, and throughout the coming year, employers across the nation must address a host of new or amended federal, state, and/or local obligations. This article summarizes the laws and regulations taking effect in 2019 that will impact most employers, and highlights some anticipated activity in the coming months.
The majority of labor and employment bills stalled in the 115th Congress. The most significant federal legislative development in 2018 that impacted employment law was Congress’s omnibus budget bill, the Consolidated Appropriations Act (“the Act”). The Act amended the Fair Labor Standards Act by addressing rules affecting tipped employees and tip ownership. Specifically, the Act expressly prohibits an employer from keeping tips received by its employees for any purposes (this includes allowing managers or supervisors to keep any portion of employees’ tips), regardless of whether the employer takes a tip credit. 1
The Tax Cuts and Jobs Act, which was signed into law on December 22, 2017, impacts certain deductions and reporting provisions for 2018 in 2019. For example, the law eliminated, at least through 2025, the exclusion for employer-paid relocation expenses, the deduction for employer-paid transportation fringe benefits, and the business deduction for entertainment expenses. 2
This tax law also included a provision that eliminates a business expense deduction related to nondisclosure agreements (NDAs) in connection with the settlement of sexual harassment claims. The law amends section 162 of the tax code, which generally allows businesses to deduct certain business expenses, to provide that no business expense deduction will be allowed for: (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment. This exclusion applies to amounts paid or incurred after December 22, 2017, the date the tax bill was enacted. As a practical matter, this new restriction means employers must decide on a case-by-case basis whether any amount paid to settle a sexual harassment claim is significant enough to be worth the tax deduction at the expense of an NDA.
Immigration policy and enforcement remains a Trump administration priority. Although no immigration-related bill advanced in 2018, employers will likely continue to see increased U.S. Immigration and Customs Enforcement activity and U.S. Citizenship and Immigration Services (USCIS) policy initiatives in response to White House directives on immigration. 3 Further changes are anticipated from USCIS in 2019. 4
For the most part, federal employment law activity has been confined to the regulatory arena. For example, the National Labor Relations Board (NLRB) issued a proposed rule in September that would reverse the NLRB’s 2015 Browning-Ferris Industries decision and clarify the standard for joint employment. 5 The comment period for the proposed rule will close on December 13, 2018; and a final rule is expected sometime in 2019. The DOL’s Wage and Hour Division also may propose its own joint employer rule, a re-vamped “white collar” overtime proposed rule, and a rule clarifying the “regular rate” of pay calculation for purposes of overtime compensation. 6 Some final rules will take effect immediately, while others might afford employers a compliance grace period.
State and Local Activity
While federal legislative developments may have been slow in 2018, state and local lawmakers picked up the slack. As the chart below demonstrates, states and municipalities have adopted new laws and ordinances that will take effect in 2019 on a variety of topics, including protected time off, sexual harassment training, and salary history inquiries.
Many new state and local laws enacted in 2018 have already taken effect. The chart below focuses only on those laws with effective dates in 2019 or later. Readers interested in keeping abreast of legislative activity at the state and local levels should follow State of the States , our monthly report featuring notable bills and trends percolating in the statehouses and city halls nationwide. 7
Laws Taking Effect in 2019
The chart below briefly recaps laws and regulations that will become effective in the few remaining weeks of 2018 and in 2019. Although local and industry-specific laws may be listed, these samples are included primarily to highlight compliance challenges employers face. Further, this chart does not include all state and local minimum wage updates. A complete discussion of minimum wage rate changes for 2019 can be found in a separate Littler Insight to be published later this month. Because the below chart is only a summary and does not include all possibly applicable federal, state, and local laws, employers are encouraged to discuss with knowledgeable counsel the local, state, and/or federal laws that will apply to the employer’s workplace in 2019.
Executive Order 13658 Contractor Minimum Wage Increases to $10.60 per hour the wage rate that generally must be paid to workers performing work on or in connection with covered contracts; increases to 7.40 per hour the required minimum cash wage that generally must be paid to tipped employees performing work on or in connection with covered contracts. 1/1/2019 EBSA Rule on Moral Exceptions Benefits: Contraceptive Coverage These rules finalize expanded exemptions to protect moral beliefs for certain entities and individuals whose health plans are subject to a mandate of contraceptive coverage through guidance issued pursuant to the Patient Protection and Affordable Care Act. 1/14/2019 EBSA Rule on Religious Exceptions Benefits: Contraceptive Coverage These rules expand exemptions to protect religious beliefs for certain entities and individuals whose health plans are subject to a mandate of contraceptive coverage through guidance issued pursuant to the Patient Protection and Affordable Care Act. 1/14/2019 OSHA Rule on Crane Operators Construction: Training and Evaluation of Crane Operators Amends standards for construction employers concerning the training, certification or licensing, and evaluation of crane and derrick operators. Evaluation and documentation requirements take effect on February 7, 2019. 12/09/2018 HB 79 Workers’ Compensation Amends Alaska Workers’ Compensation Act to define and exclude independent contractors from the benefits of the act, and prevents discrimination against employees who in good faith filed a workers’ compensation claim, but does not prohibit requiring applicants fill out a prior health or disability history form. 11/22/2018 AB 1654 PAGA Liability: Construction Employers Excludes construction employees from coverage under the state Private Attorneys General Act, if covered by a collective bargaining agreement that includes certain provisions, such as an express waiver. Remains in effect until January 1, 2028. 1/01/2019 AB 1976 Lactation Accommodation Amends lactation accommodation provisions to require employers to provide a location other than a bathroom to express milk. 1/01/2019 AB 2034 Human Trafficking Notice & Training Mandates updated notice to be posted by January 1, 2019 by numerous types of employers (public transportation, emergency rooms, hotels, rest areas, etc.). Requires training for certain mass transit employees by January 1, 2021. 1/01/2019 AB 2282 9 Salary History Amends the statewide salary history ban, adding guidance about the questions an employer may ask during an interview and when employers must disclose pay scales for positions. 1/01/2019 AB 2334 10 Workplace Safety Allows Cal/OSHA to issue recordkeeping citations for errors to logs, for up to five years. Empowers Cal/OSHA to consider enforcing electronic recordkeeping requirements if the federal agency ceases doing so. 1/01/2019 Sexual Harassment Training: Talent Agencies Requires agencies to distribute anti-harassment materials, along with information about nutrition and eating disorders. 1/01/2019 AB 2455 Home Care Aide Registry Authorizes disclosure of home care aide contact information to labor unions, upon request, after July 1, 2019. 1/01/2019 AB 2587 Family Temporary Disability Insurance Repeals the seven-day waiting period for the initial receipt of insurance benefits under the California family temporary disability insurance and the provision allowing employers to apply vacation leave to the waiting period. 1/01/2019 AB 2610 Commercial Driver Exception to Meal Period Laws For certain commercial drivers, requires a meal period after six hours of work, instead of five hours, if the driver is paid at 1.5 times the minimum wage and receives overtime compensation. 1/01/2019 AB 2770 11 Discrimination and Harassment: References Allows a former employer to state it would not rehire a former employee based on the employer’s determination that the former employee engaged in sexual harassment. 1/01/2019 AB 2844 Insurance Broker Commissions Creates rebuttable presumption that commission is lawful if compliant with other provisions and paid per written agreement. 1/01/2019 AB 3109 Waivers of Right of Petition or Free Speech Provides that a contract or settlement agreement provision is void and unenforceable if it waives a party’s right to testify about criminal conduct or sexual harassment committed by the other party. 1/01/2019 AB 3247 Arbitration Agreements Mandates that if a party to an arbitration agreement refuses to arbitrate, the court must order arbitration when petitioned by another party, unless grounds exist for rescission of the arbitration agreement. 1/01/2019 SB 224 Harassment Liability Amends Civil Code to impose liability on a defendant who “holds himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party,” including elected officials, lobbyists, directors, and producers. 1/01/2019 SB 820 Non-Disclosure Agreements Prohibits confidentiality provisions in settlement agreements that would thwart disclosure of information related to claims of sexual assault, harassment, and discrimination. 1/01/2019 SB 826 Board of Directors Membership Mandates that publicly held corporations must have a set number of women on their board of directors, based on the number of individuals on the board. 1/01/2019 SB 1123 Paid Family Military Leave Amends the Family Temporary Disability Insurance Program to include time off for a servicemember to participate in a qualifying exigency related to a covered active duty. 1/01/2019 SB 1252 Wage Record Receipt Allows current and former employees to request a copy of their wage record that they can keep. 1/01/2019 SB 1300 12 Discrimination and Harassment Among other things, curtails an employer’s ability to utilize non-disparagement clauses and certain waivers for claims asserted under the state Fair Employment and Housing Act. 1/01/2019 SB 1343 Sexual Harassment Training: General Requires employers with five or more employees to provide at least two hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every two years thereafter. 1/01/2019 SB 1402 Customer Liability in Labor Contracting: Port Drayage Establishes joint and several liability for customers who use or engage port drayage motor carriers if those carriers have unpaid wages, taxes, or workers’ compensation claims. 1/01/2019 SB 1412 Criminal History Creates additional exemptions to the restriction on inquiring about an applicant’s prior arrest and detention record. 1/01/2019 SB 1428 Employment of Minors Work permits may not be denied based on grades, GPA, or school attendance for minors seeking to participate in government-administered programs during school breaks. 1/01/2019 SB 1500 Discrimination Against Service Members Prohibits employers from discharging or halting benefits of an employee for being a member of the military reserve or because of ordered military duty or training. 1/01/2019 Oakland, Measure Z Hotel Worker Protections Amends Oakland municipal code to raise minimum wage for covered hotel employees, require employers to provide panic buttons, and limit mandatory overtime, among other items. Minimum wage increase takes effect in 2019, with potential regulations and enforcement mechanisms likely by 2020. 7/01/2019 AB 375 13 Consumer Privacy Allows a consumer to request a business disclose the personal information it collects, the categories of sources that collect the information, the business purposes for collecting or selling the information, and the categories of third parties with which the information is shared. 1/01/2020 SB 970 14 Human Trafficking Training: Hotels and Motels Requires hotels and motels subject to the Fair Employment and Housing Act (FEHA) to provide at least 20 minutes of training regarding human trafficking awareness to each employee likely to interact or come into contact with victims of human trafficking. 1/01/2020 SB 1121 Consumer Privacy Amends the new California Consumer Privacy Act (AB 375, above) to allow consumers to recover damages from a business if the business does not use reasonable security procedures to protect confidential information, and a breach occurs. 1/01/2020