- On the Campaign Trail, Partisan Bills Abound: Both Parties Promise Raises to Workers’ Wages
- June 6, 2012 | Author: James "Jim" M. McCabe
- Law Firm: Troutman Sanders LLP - Atlanta Office
Since our last update, most labor and employment legislation has seen little or no progression. We expect that this trend will continue until the 2012 presidential and congressional elections have been decided.
While Congress turns to the elections, two bills have been introduced since the last update - one by Democrats, and the other by Republicans - that are of interest to employers. While decidedly partisan in focus, these bills promise workers in America the same thing: a raise. These bills provide sharper focus on broader issues regarding employer and employee relations that may loom large in this year’s elections, including the role of government in business and the difference in compensation between the average employee and the executive, between Main Street and Wall Street, and between Obama and Romney.
In other interesting news, recently introduced federal legislation attempts to regulate employers’ use of technology to inform human resources decision-making. While these bills may not find their way to the President’s desk, they highlight the shape of things to come.
THE REBUILD AMERICA ACT (S. 2252)
CURRENT STATUS OF LAW: The Fair labor Standards Act ("FLSA") generally requires that employers pay employees minimum wage. Minimum wage is currently set at $7.36 for non-tipped workers and $2.13 for tipped workers.
The FLSA also generally requires that employers pay employees overtime at a rate of 1.5 times their base rate, unless the employer can demonstrate that the particular employee is exempt from overtime requirements. A common misconception among employers regarding overtime is that, as long as an employee is paid a "salary," the employee is not owed overtime. This is not the case. Rather, in general, to be exempt from the overtime requirements, the employee must qualify for one of the "exemptions" listed in the FLSA. The most common exemptions are the so-called white-collar exemptions, which include the administrative, executive, and professional exemptions. To qualify for these exemptions, employers must demonstrate that the particular employee actually performs exempt administrative, executive, or professional work (as defined by federal regulations and case law), that this work is their "primary duty" (as defined by federal regulations and case law), and that the particular employee is compensated at a minimum of $455 per week on a salary or fee basis (as defined by federal regulations and case law).
Currently, neither the FLSA nor other federal law requires employers to provide employees with paid sick leave.
WHAT WOULD CHANGE: On March 29, 2012, Senate Democrats introduced The Rebuild America Act. As outlined below, this bill would increase minimum wage for non-exempt and exempt employees and would require employers to provide paid sick leave.
Increase in Minimum Wage. The minimum wage would increase from $7.36 to $9.80 over two years and thereafter would be subject to an annual increase according to the percentage increase in the applicable Consumer Price Index. The base minimum for tipped employees would increase from $2.13 to $6.85 over five years and thereafter would require that the base minimum wage remain 70 percent of the actual minimum wage rate.
Increase in Minimum Wage for Exempt Employees. The salary or fee basis requirement for the white-collar exemptions would increase from $455 per week to $1,045 per week over three years and thereafter would be adjusted annually by the increase in the applicable Consumer Price Index. The highly compensated employee exemption would also increase from $100,000 to $120,000 per year. The white collar exemption test would redefine the word "primary duty" with respect to the administrative, executive, and professional exemptions to mean a duty that "an employee spends more than 50% of the employee’s work hours per week performing."
Required Paid Sick Leave. Employees would receive one hour of paid sick leave for every 30 hours worked with the ability to earn up to seven days worth of paid leave (56 hours) per year. Employers could not require employees to find a replacement when they are on sick leave. Employers would be required to post the requirements for sick leave in the workplace. Employees could bring a cause of action against employers who discriminate, retaliate against, or otherwise interfere with an employee’s exercise of their right to take paid sick leave.
WHY YOU CARE: Most obviously, paid sick leave and increases in minimum wage for exempt and non-exempt employees will increase the costs of doing business. Even more troubling, every time an employee requests paid sick leave, employers could be subject to litigation.
LIKELIHOOD OF BECOMING LAW: This bill has little chance of passing in the Republican-controlled House and has been criticized by some pro-business groups as unwisely raising the costs of doing business in the midst of a struggling economy. While this bill is going nowhere fast in the legislature, aspects of this bill may be thrust into the court of public opinion on election day, as variations in compensation between the average employee and the executive, between Main Street and Wall Street, and between Obama and Romney, have already become an issue at the center stage of the 2012 elections.
THE REWARDING ACHIEVEMENT AND INCENTIVIZING SUCCESSFUL EMPLOYEES ACT (THE "RAISE" ACT) (H.R. 3178; S. 2371)
CURRENT STATUS OF LAW: The National Labor Relations Act ("NLRA"), as interpreted by the National Labor Relations Board ("NLRB"), prohibits employers from dealing directly with individual employees who are part of a labor union to increase an employee’s compensation above the amounts defined by the applicable agreement between the union and the employer (the "collective bargaining agreement"). Such direct dealing would be considered a violation of the NLRA and could subject the employer to an unfair labor practice charge before the NLRB.
WHAT WOULD CHANGE: On April 18, 2012, House Republicans introduced the RAISE Act, which would modify the NLRA to allow employers to pay employees covered by a collective bargaining agreement "greater wages, pay, or other compensation" than provided for in the agreement. On April 26, 2012, Senator Marco Rubio (R. - Fla.), potential vice presidential candidate for the GOP front runner - Mitt Romney - introduced similar legislation in the Senate. According to Senator Rubio, the NLRA’s prohibition on direct dealing affects roughly 8 million union members who have capped salaries.
WHY YOU CARE: RAISE would allow employers to deal directly with their employees regarding what matters most to employees, their compensation, without going through the often time-consuming and expensive process of collective bargaining.
LIKELIHOOD OF BECOMING LAW: RAISE will almost certainly not pass the Democrat-controlled Senate and has been criticized by pro-union groups as an attempt to undercut employee rights to collective bargaining. The controversy surrounding this bill typifies one of the debates that looms large in this year’s election, namely, what role the government should have in business and in rebuilding the economy. The controversial nature of the NLRB’s role in governing labor relations in this year’s election is heightened by the President’s January recess appointments to the NLRB, which will likely continue to be a point of contention in the coming debates. (See our January 2011 article discussing these controversial appointments: http://www.troutmansanders.com/president-obamas-controversial-recess-appointments-to-the-nlrb-foreshadow-a-lively-year-for-labor-law-01-18-2012/).
SOCIAL NETWORKING ONLINE PROTECTION ACT ("SNOPA") (H.R. 5050)
CURRENT STATUS OF LAW: No federal law exists that specifically prohibits an employer from requiring an employee to provide login information related to an employee’s private e-mail account or social networking websites (though we generally advise against this practice as explained in our article "Requesting Facebook Login Information a Risky Choice for Employers," also included in this edition of the Newsletter). While no federal law exists, Maryland recently passed the first state law prohibiting this practice and similar laws are pending in other state legislatures.
WHAT WOULD CHANGE: On April 27, 2012, Democrats introduced SNOPA in the House. SNOPA is a play on SOPA ("Stop Online Piracy Act," H.R. 3261), an Act proposed by Republicans in the House last December that was denounced by Democrats in the House as an improper invasion of individual privacy rights. SNOPA, unlike SOPA, purportedly seeks to protect the privacy of individuals by making it unlawful for any employer to require or request that an employee or applicant provide the employer with a user name, password, or any other means for accessing the employee or applicants’ private e-mail account or social networking website. SNOPA would also make it unlawful to retaliate against an employee for refusing to provide this information. In addition to employers, SNOPA would apply to K-12 schools, colleges, and universities.
WHY YOU CARE: Do your managers request this information from applicants or employees? You may want to return to more old-fashioned methods of selecting and retaining employees or face civil penalties of up to $10,000 for each violation.
LIKELIHOOD OF BECOMING LAW: While some pundits believe that SNOPA will receive a warmer bi-partisan reception than SOPA did, we think it will be difficult to pass this legislation until the elections have been decided. With that said, you should check for similar laws that may already be pending in your state’s legislature.
PAYCHECK FAIRNESS ACT (S. 3220) UPDATE
Yes, you’ve heard this one before. We last reported on the introduction of this bill in this Congress in our Summer 2011 installment (http://www.troutmansanders.com/congress-heats-up-for-the-summer-a-summary-of-potential-changes-to-federal-employment-laws-07-11-2011/). Reintroduced in the Senate on May 22, and reported out of committee on May 23, this bill is on the Senate Democrats’ fast track. Will it work this time around? Our guess - there’s some pressure on Republicans due to the allegations they are engaged in a "war on women." Still, we can’t see this bill garnering much bipartisan support in the Senate, not to mention the Republican-controlled House.
At press time, the Paycheck Fairness Act stalled in the Senate when a cloture vote failed to garner any Republican support.