What Is Labor Law Coverage?
Labor law coverage constitutes employment practices liability insurance coverage for violating federal, state and local employment-based laws, such as the Family Medical Leave Act (FMLA), Fair Labor Standards Act (FLSA), and Equal Employment Opportunity Commission (EEOC) laws. There are hundreds of employment laws of this type and their number increases each year. Understanding which laws you are required to comply can be burdensome, complicated and often very difficult. Employers – make certain that you are complying with them all or else you can easily find yourself being hit with a lawsuit . Do not overlook the fact that labor law coverage can be purchased as part of an employer’s general liability policies. Policies can be written so that they provide "broad" or "narrow" coverage. Broad policies can be more difficult to procure but can provide the coverage necessary to avoid costly lawsuits. Labor law coverage in general is best sought out and managed through management liability and EPLI professionals that understand the ins and outs and the nooks and crannies associated with labor law coverage.
Major Aspects of Labor Law
Labor law encompasses a wide range of labor-related topics, but most of it falls into three major areas: wage and hour laws, workplace safety, and anti-discrimination laws.
Wage and Hour Laws
Wage and hour laws include regulations controlling minimum wage, overtime pay, child labor, recordkeeping, and youth employment. States have some authority over their wage and hour laws, meaning employers must be aware of both federal and state requirements. Under federal law, non-exempt employees must receive the federal minimum wage of $7.25 per hour and 1.5 times their regular rate of pay for any time worked over 40 hours in a week. There are limited exceptions to minimum wage and overtime requirements. For example, employers do not have to pay overtime for casual babysitting, small occasional jobs in the employer’s home, seasonal employment, or work related to an employee’s own home.
Additionally, the Fair Labor Standards Act permits employers to pay tipped employees less than the minimum wage. Under federal law, if an employee’s tips in a month do not equal the minimum wage for every hour worked, the employer must pay the employee the difference between the two. Employers are prohibited from requiring workers to turn over their tips to their employer. Again, states and municipalities have their own wage and hour laws, and those laws may differ from federal laws and each other.
Workplace Safety
The agency that regulates workplace safety is the Occupational Safety and Health Administration (OSHA), which functions under the U.S. Department of Labor. According to OSHA, employers are obligated to provide a safe and healthy workplace. OSHA’s general duty clause requires employers to furnish employees with a work environment free from recognized hazards that are likely to cause death or serious physical harm. Additionally, OSHA sets specific standards for certain industries, such as: asbestos, chemical exposure, hearing conservation, hazard communication, and worker noise exposure.
State OSHA plans are run by the state, rather than by federal OSHA, and they often set stricter regulations than federal OSHA. The process by which OSHA investigates workplace safety concerns is functionally similar to the process for investigating wage and hour complaints. It starts with an employee or other stakeholder lodging a complaint with OSHA, who will then investigate the complaint and may issue a citation to the employer if it finds a safety violation. Most safety inspections occur after fatalities or catastrophes.
Anti-Discrimination Laws
There are multiple federal anti-discrimination laws and equivalent state laws. The main federal statutes are Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, and the Genetic Information Nondiscrimination Act of 2008. Title VII prohibits employment discrimination based on race, color, religion, sex, or national origin. It also prohibits retaliation against an employee because they filed a discrimination charge, complained to their employer, or spoke to a government agency about alleged discrimination.
The EEOC enforces Title VII and other federal anti-discrimination laws. Like all federal labor laws, states can also regulate wage and hour laws and anti-discrimination laws, and state regulations may differ from federal regulations and from each other.
Employers’ Duties Under Labor Law
Employers have a number of obligations under the labor law. These obligations are meant to ensure compliance, including making clear for employees what their rights are under the law and making clear what employers need to do in order to comply with the law.
Firstly, New York law requires employers to post a number of notices where posters are "easily accessible to employees and applicants." Those notices include: For those notices that are available from the Department of Labor, an employer may also obtain the notices from any other source that they have the right to distribute. So, for example, if your law school career services office cannot find the publications for you, check with the Alumni Association, as they often receive these materials.
Secondly, employers must file Employee Notices with the Department so that the Department can, among other things, establish a wage statement database. The employer must provide the Department of Labor Notice(s) for each employee at least five business days prior to their first day of employment (including temporary employees, non-exempt employees, interns, and volunteers). Each notice must include the following:
In addition to the obligations outlined above, employers have a number of other obligations under the Labor Law. Employers must be prepared to provide State unemployment insurance benefits to a newly unemployed worker who is eligible for such benefits. Employers must also comply with Division of Human Rights or New York City Commission on Human Rights adjudications, including reasonably accommodating persons with a disability at work.
Employees’ Rights and Protections
Employee rights and protections provided by labor law are numerous. They offer workers safety, fair compensation, and protections against discrimination and other unfair treatment. Employers, of course, must also abide by labor law, which is why it’s vital to gain a proper understanding of these laws.
Ensuring Fairness in the Workplace
Workers are entitled to protections that ensure they aren’t taken advantage of by their employers. Employers generally don’t have the option to withhold payment for work performed or fail to pay overtime for those hours worked over 39 per week. Workers are also guaranteed a safe working environment, free of danger. Employees cannot be discriminated against due to their age, illegal substance use, or sexuality, and they can’t get paid less than employees of another race or gender who perform similar work. If you feel you have been unfairly treated in any of these ways, you may be able to file a complaint.
How Employers Can Protect Themselves
To avoid problems in the first place, business owners should make sure they are abiding by any and all labor laws. In addition to paying their employees fairly and keeping accurate payroll records, owners should implement safety measures to ensure safe work environments, both externally and in the office. The family medical leave law should also be followed to the letter. By making every effort to comply with labor law, owners can keep their businesses running smoothly and avoid unnecessary legal problems.
Common Labor Law Violations
Common violations of labor law related to the wage and hour concerns are unpaid overtime, improper tracking of hours worked, and not paying for hours worked off the clock. Unfortunately many employers inadvertently violate labor law – a reasonable belief, for example that employees are exempt from overtime when the employees do not in fact meet the requirements of the exemption can lead to costly penalties and damages. Other common violations of labor law concern discrimination and retaliation . Employers who enforce handbook policies that are inconsistent with labor law or mistakenly deny time off under laws such as the Family and Medical Leave Act or under state family leave laws may face significant liability for their non-compliance. Failing to accommodate an employee with a disability, or terminating an employee after he or she complains about discrimination in violation of the employment discrimination laws may result in a significant monetary judgment against an employer. Finally, failing to protect employees from workplace harassment can also expose businesses to significant financial liability.
How to Get Help With Labor Law Issues
Employers and employees alike have several resources available to them when dealing with labor law issues. The legal aspect of a labor law issue can be confusing and, oftentimes, intimidating. For example, if an employee believes they are a victim of wrongful termination or infringement of rights, the first step they should take is to contact an attorney to determine if the situation they faced was an illegal form of discharge. For employers, if a complaint is received regarding a potentially illegal action taken against an employee, it is essential to get in contact with employment law attorneys or a human resources consultant before taking any action. A dismissal of the employee in question could lead to a retaliation claim if the discharge was based on retaliation against the employee for making the complaint in the first place.
As mentioned earlier, the NLRB and other government offices have solutions to many labor law problems. If an employee or employer becomes aware of a violation, it is important to contact the proper agency as soon as possible. The key to seeking remedies for labor law issues is to act quickly because there are statutes of limitation for each type of claim. The National Labor Relations Act created several offices to aid with issues surrounding labor laws. Those offices are listed below: Many companies and businesses have internal human resources departments to handle all complaints and issues relating to employment. If there is a problem, an employee should first check if their company has a human resources department and, if so, the employee should contact them as soon as possible. Remedial steps for a claim or complaint are made internally first to see if they can be handled without legal consequences outside of the workplace. All employers should have options available for employees to report a potential labor law infraction and they should act as those complaints are filed. There are several common methods in the workplace to handle labor law issues. Once an employee has filed a complaint internally, the complaint should be addressed as soon as possible. If the issue cannot be resolved internally, the employee should seek an attorney to help file any grievance necessary.
Recent Changes in Labor Law
Among the recent changes to consider is the requirement of E-Verify for new employees. This is a web-based system established by the U.S. Department of Homeland Security that allows an employer to electronically confirm the eligibility of a new employee to work in the United States using information provided by the employee and from the U.S. Department of Homeland Security and the Social Security Administration.
In 2018, E-Verify is required for all Michigan businesses, across all industries with 50 or more employees. Executive Order No. 2017-13 established this requirement, which is slowly being phased in over a course of two years. In 2019, E-Verify will be required for all higher education institutions and contractors that are awarded a new or renewed contract. Expansion of this requirement will eventually include all employers.
Although there are no specific penalties and resolutions contained in the Executive Order, there is an identification requirement for any businesses that fails to comply with the E-Verify requirement. The order states that noncompliant businesses will be listed on the websites of the Michigan Department of Technology, Management and Budget and the Michigan Department of Licensing and Regulatory Affairs.
Employers should ensure they are adequately prepared when the full requirement comes into effect in 2019 and should understand the implications of the order when it is fully phased in. The full phase-in will include all employers, regardless of their number of employees.
Coming Trends in Labor Law Coverage
For employers, proper determination of coverage is a moving target. The landscape for deciding whether an employee is covered by the NLRA has expanded dramatically over the past 75 years. In the early days, a finding of coverage was based on nothing more than a formal legal analysis of whether the employee worked for a covered company engaged in interstate commerce. For many decades, after an employee was found to be a covered employee of a covered employer engaged in an industry affecting commerce, the question turned on a fact-intensive inquiry involving the nature of the employee’s work and whether it had a sufficient connection to interstate commerce. Thus, employees would move in and out of coverage based on their job duties, irrespective of the general perception of the employer as a whole and the perception of the work as a whole.
Developing from the Board’s initial decisions concerning selected categories of employees, the Board has progressively expanded coverage to reach employees of employers who many would not recognize as affecting interstate commerce. Pursuant to the current standard, if an employer is wholly intrastate and every employee is equally situated with respect to the nature of their work, then nearly every employee would be covered by the Act because the work would have an effect on the flow of goods and commerce within Pennsylvania. Moreover, even if an employer conducts no business with other states nor imports goods from other states, the Act may apply based on the incidence of goods that the company sold which were manufactured or produced outside of Pennsylvania and thus "affect" interstate commerce. Recent cases arising in the context of marijuana distributors have seen the Board apply the Act to facilities that operate entirely within Pennsylvania and whose sole business is selling medical marijuana grown in Pennsylvania .
In the current economic environment marked by the gig economy and the proliferation of companies built on various on-demand platforms, the future of labor law coverage is uncertain. The future of coverage for independent contractors is particularly cloudy. Despite the common perception that independent contractors are not "employees" under the NLRA, the Board has long held that independent contractor status does not, by itself, remove a worker from NLRA protection. Rather, determining whether an independent contractor is a covered employee is a fact-intensive inquiry that must be made on a case-by-case basis. That is to say, the mere fact that a worker has been classified as an independent contractor does not settle the issue. Indeed, the Board has long struggled with this issue, and the development of the gig economy has intensified the relevancy of this issue.
The recent proliferation of employers relying on gig economy models has also raised new issues related to coverage of "workers." New app-based distribution models exploit an entirely new understanding of "employee." Numerous cases have arisen challenging the misclassification of workers as independent contractors and asserting that these workers were incorrectly denied access to the collective bargaining process. Likewise, the Board has also heard a number of cases raising coverage issues in the context of employees working remotely for employers that engage in entirely different business models. These cases have concerned issues of traditional employment status; considerations hermetically linked to coverage under the NLRA.
Going into the next decade, employers can expect that these coverage issues will continue to develop. Employers should therefore stay in close contact with counsel to be aware of emerging issues that affect NLRA coverage.