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Aug. 4 — New overtime regulations, Affordable Care Act provisions, and LGBT (lesbian, gay, bisexual and transgender) employee rights are among the issues currently on the minds of employers, according to a survey from law firm Littler Mendelson.
“These concerns have been amplified as employers worry less about macroeconomic impacts on their businesses, as the economy continues to improve and as we grow further away from 2009’s economic low points,” Littler Mendelson said in a report accompanying the “2015 Executive Employer Survey,” which was conducted in April and May and released July 14.
On June 30, the White House released a notice of proposed rulemaking, seeking public comments on proposed changes to the “white collar” overtime exemption regulations.
The proposed rule would more than double the salary workers must be paid before they can be considered exempt from the Fair Labor Standards Act requirement to be paid one and one-half times their normal pay rate for work hours exceeding 40 in a workweek. The current salary threshold for overtime eligibility is $455 a week, or $23,660 per year.
The survey found that 25 percent of respondents were concerned about how this increase will affect their bottom line. “This is going to be huge and affect every industry,” Tammy McCutchen, principal with Littler's Washington, D.C., office, told Bloomberg BNA Aug. 4. “This will also have a disproportionate impact in smaller cities and rural areas and in the Midwest and the South,” said McCutchen, who was chief administrator of the DOL's wage and hour division under former President George W. Bush.
The survey found that in response to the proposed rulemaking, more than one third (37 percent) of participants said they were concerned with the potential elimination of the executive, administrative and professional exemptions for workers who spend more than 50 percent of their work time engaged in non-exempt duties, and 29 percent noted concern with the elimination of the executive exemption for supervisors who perform some non-exempt duties, such as stocking shelves and working the cash register.
Generally speaking, McCutchen said, the options employers have to be compliant with the proposed rules are to either raise salaries or re-classify employees. For some employees who are close to making $50,000, that increase in salary might make sense, but for other employees “you can’t give them a $15,000 raise,” she said.
When it comes to the Affordable Care Act, Littler found that more employers are in a “wait and see” mode than in 2014—18 percent compared to 14 percent.
“The rise in a ‘wait and see’ approach was an indication that employers continued to be uncertain about the fate of the ACA prior to the Supreme Court decision in King v. Burwell,” Ilyse Schuman, co-chair of Littler's Workplace Policy Institute in Washington, D.C., told Bloomberg BNA Aug. 4. However, that decision on subsidies for federally run insurance exchanges maintained the status quo, she noted.
King v. Burwell challenged the legality of subsidies on federal insurance exchanges. Had the Supreme Court ruled differently, the case could have unraveled health insurance for millions of people who obtained coverage through federal exchanges, Schuman said. Before the opinion’s release, 21 percent of respondents said their major issue in implementing ACA provisions was the uncertainty surrounding the law, according to the survey.
Today, the ACA is becoming more ingrained in employers’ minds and operations, going from the conceptual to the operational, Schuman said.
The main “unknown” part of the ACA now is its “Cadillac tax,” or excise tax provisions, which will go into effect in 2018, she said. “I think it is very much an unknown and outstanding issue for employers,” and it could be a “game-changer in the way that we haven’t really seen with the pay-or-play mandate.”
Specifically, Schuman said, employers should be wary of “staying the course” until 2018 when they may be too late to become compliant.
Unions and the business community are advocating for changes, if not repeal, to this tax, she said, and there is bipartisan support for trying to do something to minimize its impact. That presents a unique opportunity to try to make some changes to the excise tax mandate, either through legislation or regulations, she said.
Schuman said employers also are on the watch for clarification on how to structure wellness programs. There is still uncertainty about how to structure wellness programs, in light of guidelines from the Equal Employment Opportunity Commission on wellness programs, as non-voluntary participation could run afoul of the Americans With Disabilities Act and the Genetic Information Non-Discrimination Act.
“There is still a disconnect on how the EEOC and the ACA treat wellness programs that leaves employers in a difficult position in trying to not run afoul of the ADA or GINA,” Schuman cautioned.
When it comes to issues related to LGBT employees in the workplace, nearly half (47 percent) of respondents said their companies had instituted no new changes to policies because they already had policies that expressly addressed related issues, Littler found.
However, with the Supreme Court decision in Obergefell v. Hodges that states can no longer ban same-sex marriage, employers with self-insured plans will need to address the issue of same-sex spouses, Mark Phillis, a Littler shareholder in the Pittsburgh office, told Bloomberg BNA Aug. 4. “Employers who don’t look at making that type of change could expose themselves to liability,” he cautioned.
Phillis also recommended employers prepare to make sure other benefits policies are amended accordingly.
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The survey findings are available at http://www.littler.com/files/littler-executive-employer-survey-report-july-2015.pdf. A video of the attorneys discussing the findings is at /overtime-aca-top-list.
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