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With the midterm elections in the rearview mirror and an
incoming Democratic majority in the House of Representatives,
automotive industry employers can expect continued congressional
gridlock on labor and employment issues. However, the Trump
administration is poised to take significant regulatory action, and
employers should anticipate focused immigration enforcement to
continue. Meanwhile, there will likely be significant action at the
state and local level, where Democrats will enjoy a newfound degree
of control. These topics and more are covered below.
Federal Regulation in 2019
A controversial Obama-era National Labor Relations Board (NLRB)
decision that expanded the definition of “joint
employment” will likely be put to rest in 2019. (Under the
“joint employment” test, an employer can be held
responsible for labor law violations committed by a temporary
staffing agency or secondary employer, for example, depending on
various factors, including the control that the employer has over
workers.) The NLRB issued a proposed rule to revert the definition
of “joint employer” to its pre-2015 scope, which was much
more deferential to employers. This change is welcome news for
employers as it will reduce the risk of liability for labor law
violations committed by other “joint” employers, such as
contractors and franchisees.
Additionally, the Department of Labor (DOL) has announced plans
to tackle overtime rules for salaried employees— including
the minimum “salary threshold” required to qualify as
exempt from overtime—by March 2019. Under the Obama
administration, the DOL previously adopted regulations to increase
the pay threshold for exempt salaried employees from $23,660 per
year to $47,476 per year. That threshold would also have updated
every three years to keep pace with inflation. The regulation was
permanently blocked in federal court and was subsequently rescinded
by the Trump administration, leaving the old rules and threshold in
place. The new rule is expected to increase the salary threshold to
around $33,000 per year.
The DOL has also hinted that it intends to address employee and
independent contractor classifications in 2019. An Obama-era
administrator’s interpretation stated that most workers under
most circumstances should be classified as employees rather than
independent contractors. The Trump administration withdrew that
guidance in 2017, and the DOL appears set to issue a new
rule—likely one more lenient toward employers who use
independent contractors—in mid-2019.
The Trump administration has also revived the DOL’s dormant
practice of issuing opinion letters. Opinion letters from the DOL
respond to employer questions on a broad range of topics. Recent
letters have discussed the compensability of travel time, the
“reasonable relationship” between an employee’s
salary and actual earnings, and the payment of bonuses. The DOL is
likely to continue issuing guidance in the form of these opinion
letters, and they can be a valuable compliance resource for
automotive industry employers.
Immigration Updates and Worksite Enforcement
In 2018, the Department of Homeland Security continued its
efforts (1) to develop a “culture of compliance” with
federal immigration law and (2) to promote hiring from the
authorized workforce already within the United States pursuant to
the Buy American, Hire American presidential executive order. DHS
has done so primarily by increasing the scrutiny applied to
immigration cases seeking permission to hire foreign nationals and
by expanding worksite enforcement. This trend is likely to continue
in 2019.
Higher Standards Applied in Employment-Based Immigration
Cases – No Deference to Prior Decisions on Extension Requests
and Increased Scrutiny: DHS, through United States Citizenship
and Immigration Services (USCIS), is strictly applying the legal
standards to various employment-based temporary classifications,
such as H-1B specialty occupation and L-1 intracompany transfer.
USCIS no longer gives deference to prior favorable decisions when
the employer seeks an extension of the H-1B or L-1 employment
authorization. Each request is considered anew. Further, under a
new policy that began in September 2018, USCIS officers have more
discretion on whether to move directly to a denial or to allow the
employer another opportunity to submit evidence. It is likely that
this policy will result in a higher rate of denials.
Increased FDNS Visits to Employers: USCIS also is
increasing its site visits by Fraud Detection and National Security
(FDNS) officers. The FDNS program has existed for several years,
but it now is more robust. FDNS officers visit selected employers
to confirm that such employers were truthful in their
representations about the business, job, and foreign national. In
most circumstances, these visits occur during the months after a
favorable decision. The visits are most likely to occur in H-1B,
H-2B, and L-1A cases.
Increased I-9 Inspections and Worksite Visits by ICE:
In its year-end report, U.S. Immigration and Customs Enforcement
(ICE) announced that it had quadrupled I-9 inspections in fiscal
year 2018. ICE initiated 5,981 Form I-9 audits and opened 6,848
worksite investigations. ICE also assessed $10.2 million in civil
penalties for I-9 violations and obtained orders for over $10
million more through judicial fines, forfeitures, and other
sanctions. Employers should expect that ICE will continue to focus
aggressively on I-9 compliance and inspections in 2019.
Prepare for an I-9 Inspection Now: Employers should
take steps to prepare for government I-9 inspections and lower the
risk of liability. Here are a few recommended actions:
- I-9 Forms for Current
Employees: Confirm that the employer holds a valid Form
I-9 for each current employee who was hired on or after November 7,
1986. There are strict timeframes for completing an I-9 Form, and
doing so late is a violation. Nevertheless, a late I-9 is better
for compliance than no I-9. Therefore, identify missing I-9 Forms
for current employees hired on or after November 7, 1986, and
promptly seek to complete an I-9 Form with such employees. - I-9 Forms for Terminated
Employees: Retain I-9 Forms for former employees for the
longer of one full year after the employment ends or three full
years from the date of hire. In an audit, the government will
frequently ask for I-9 Forms for former employees covered by this
retention period. - I-9 Training: Ensure
that only trained HR professionals or other trained staff handle
the employer’s I-9 compliance. It is very important that the
employer’s representative understands the I-9 rules in order to
achieve compliance without violating the I-9 anti-discrimination
prohibitions. Training should begin with reading the 15 pages of
instructions that accompany Form I-9. - Internal I-9 Audits:
Once the employer’s staff is trained, conduct periodic internal
I-9 audits to review and correct, if necessary, the I-9 Forms. This
is an important step to lowering the risk of liability in a
government audit. - Initial Response to
Government I-9 Inspection: ICE usually will issue a Notice
of Inspection (NOI) to commence a formal I-9 audit. ICE often mails
the NOI, but sometimes will serve the NOI in person at the
employer’s premises. Employers have three business days to
respond to the NOI. ICE may ask the employer if it wishes to waive
the three-day period. It is almost never a good idea to do so.
Instead, employers should use the time to prepare and consider
contacting their attorneys promptly to discuss the response and
strategy. If ICE has a warrant, it may take the I-9 Forms
immediately, but most inspections begin with the NOI. - Fines: I-9
violations can lead to civil fines and other sanctions. ICE will
consider mitigating and aggravating factors to determine where
within the civil fine range to impose such penalties against the
employer. Employers may appeal the fines while attempting to
negotiate a settlement with ICE. For the most egregious or for
pattern and practice violations, criminal penalties may be
imposed.
Possible Changes to H-1B Cap Allocation and
Administration: In early December 2018, USCIS proposed changes
in how it will apply the annual allocation of H-1B slots against
new cases. The annual allocation is commonly called the “H-1B
cap.” More specifically, the H-1B specialty occupation is a
classification under which American employers may seek temporary
authorization to employ certain qualifying foreign nationals. For
cases in which the foreign national has not previously been in H-1B
status, the employer must prepare a well-documented case to
petition USCIS for one of the H-1B cap slots. USCIS often receives
many more cases than are allowed under the cap. Therefore, USCIS
runs a random, computerized process to select the cases that the
agency will consider. It rejects the rest.
Under USCIS’s new proposal, employers will complete a short
registration and submit it electronically. USCIS will run the
random selection process against those registrations and notify the
employers whose registrations are selected. USCIS then will grant
such employers at least 60 days to prepare and submit their full
cases on the merits. This change should put in place an orderly
system with a reasonable schedule for cases that are selected to
proceed. It will avoid the significant expenditure of the
employer’s resources on cases that are not selected. It also
will save USCIS’s time and resources by avoiding the current
chaotic process in which USCIS often receives more than 200,000
H-1B cap subject cases over a few days and then spends months
rejecting and returning most of those cases.
In addition, USCIS proposes a change to how it will administer
the H-1B cap. There are a total of 85,000 H-1B cap slots: 65,000
slots under the regular H-1B pool (with 6,800 of those slots being
allocated under the Free Trade Agreements with Chile and Singapore)
and 20,000 slots under an advanced degree H-1B cap. For the
advanced degree cap, only cases involving advanced degrees from
American schools may be considered. In the past, USCIS first
allocated the advanced degree cap and then allocated the regular
cap. Cases involving advanced degrees were allowed to participate
in both pools for possible selection. Under the new proposal, USCIS
first will allocate the 65,000 regular cap slots and then allocate
the 20,000 advanced degree cap slots. In this way, USCIS projects
that 16 percent more of the cases selected under the cap will
involve advanced degrees from American schools.
USCIS is accepting comments on this proposal until January 2,
2019. It is unclear whether USCIS will be able to review the
comments and finalize its proposal before the April 2019 H-1B cap
submission window. If not, look for this new procedure in 2020.
NAFTA’s Replacement – USMCA: The North
American Free Trade Agreement (NAFTA) has an employment provision
under which American employers may seek authorization to employ
qualified Canadian or Mexican citizens in professional occupations
specifically named in the treaty. The Trump administration has
stated numerous times that it will withdraw from NAFTA because of
concerns over the trade provisions. Some American employers have
been concerned that without NAFTA, they would lose the ability to
employ their current Canadian or Mexican professionals.
On November 30, 2018, President Trump, the president of Mexico,
and the prime minister of Canada signed a new treaty called the
“USMCA.” The USMCA retains the employment authorization
provision for certain professional occupations that is found in
NAFTA. The new treaty is not yet in effect. The Senate first must
ratify the USMCA and then there will be a transition period. As of
December 2018, NAFTA is still in place and should remain so until
at least six months after President Trump formally withdraws the
United States from that treaty.
Workplace Sexual Harassment
As the #MeToo movement enters its second year, enforcement
agencies and policymakers are responding in earnest. In 2018, the
Equal Employment Opportunity Commission (EEOC) filed 50 percent
more sexual harassment lawsuits than in the previous year and
recovered nearly $70 million for victims—an increase of $22.5
million over 2017.
States have also been active in addressing issues raised by the
#MeToo movement. Lawmakers around the country passed a number of
initiatives in 2018 to curb workplace sexual harassment. For
example, some states expanded the scope of their laws to cover
interns, apprentices, applicants, and independent contractors.
Other states limited employer-employee arbitration in harassment
cases and the use of nondisclosure agreements as a condition of
employment or as part of a settlement agreement. Maryland even
enacted a law requiring employers with 50 or more employees to
complete surveys that disclose (to the state) the number of sexual
harassment settlements entered into with employees. Many states
also increased supervisor and staff training standards. Below is a
summary of the major types of changes enacted by states in
2018:
Employment Contract Arbitration Clauses
In May 2018, the Supreme Court handed employers a major victory
in Epic Systems v. Lewis. The case involved a dispute over whether
an employee could bring a claim in federal court even though his
employment contract mandated that he resolve all work-related
claims through arbitration. Writing for the majority, Justice
Gorsuch concluded that the National Labor Relations Act (NLRA) did
not override the Federal Arbitration Act (FAA) and held that
arbitration clauses in employment contracts are enforceable. Since
the decision was issued, mandatory arbitration clauses have become
increasingly common in employment agreements.
The Supreme Court will decide another set of important cases
concerning arbitration agreements this term:
Decisions in all three cases are expected by mid-2019.
State & Local Developments
Automotive industry employers can also expect to see a broad
array of developments at the state and local level in 2019,
especially as Democrats return to power in many state and local
jurisdictions. Below are some of the measures that were trends in
2018 and which are likely to continue during 2019 and beyond.
Paid Sick Leave: Automotive industry employers can expect to see
a number of state legislatures and local governments push for more
expansive sick leave in the next year. Michigan passed a paid sick
leave law in September 2018, although the legislature scaled back
this law in early December 2018 to exempt employers with fewer than
50 employees and to allow employers to cap sick leave offered to
employees at 36 hours per year. Some counties and municipalities
around the country have also debated creating or adjusting sick
leave policies in recent years, so look for those debates to
continue in 2019.
Family and Medical Leave: Family and medical leave laws
generally provide employees with a mandatory amount of paid or
unpaid leave for qualifying events. These events include the birth
of a child, extended health problems, and commitments related to
military service. Massachusetts enacted a law mandating paid family
and medical leave in 2018 that is set to go into effect over the
next three years. Washington also has a new paid family leave
insurance law that it will begin implementing on January 1, 2019,
with benefits scheduled to be available beginning in 2020.
Marijuana Legalization: 2018 was a big year for legal marijuana
advocates. Voters in Michigan approved a ballot measure legalizing
recreational marijuana use statewide, while voters in both Missouri
and Utah approved the use of medical marijuana. In other states,
including Wisconsin and Ohio, advisory referendums on the use of
marijuana were approved by voters. Only a handful of states have
laws that prevent employers from terminating employees who use
medical marijuana, but that’s likely to change. As marijuana
use becomes legal in more jurisdictions, employers may be required
to reassess drug-free and zero-tolerance policies.
Predictive Scheduling: This lesser-known topic is poised to take
off in 2019. Predictive scheduling laws usually require an employer
to notify employees of their work schedule, including overtime, a
certain amount of time in advance. Such laws also typically allow
employees to decline to work time that is added to their schedule
late and provide protections for workers if their schedules are
changed. Oregon is the only state that has so far adopted a
predictive scheduling law, but major cities like New York, San
Francisco, Washington, D.C., and Seattle have adopted local
ordinances. Look for predictive scheduling to emerge as a hot issue
in 2019
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