Thursday, February 4, 2016

Maryland General Assembly Workplace Law Update

and more…..

As expected, Maryland delegates and senators are beginning to present bills that effect how employers in the state of Maryland operate. As of today, here are several of those bills that have the potential to adversely affect business.

HB 401 - Equal Pay for Equal Work – Revisions

This bill will create a commission to study, analyze and then recommend legislation/regulations to address pay disparities between men and women, and minorities and non-minorities. A very laudable endeavor! However, a couple little provisions were slipped into this bill that don’t make a great deal of sense to me as to how they will do anything to address any current or future unfair pay disparities.

It would require an employer to include in a job advertisement/posting the minimum rate of pay; whether pay is hourly, daily, weekly, piece, salary, etc.; if the position is eligible for overtime; and whether any allowances (tip credit, meals, etc.) are included. It would also prohibit the employer from seeking salary history information without the written consent of the applicant; and prohibits employers from giving the salary history of current or former employees without written consent. It’s not clear if it would prevent an employer from asking an applicant during an initial phone screen about salary history without first getting written consent, but it doesn’t really clarify that, either. A rather serious inclusion to this bill is individual liability for violations (a supervisor, HR representative, etc., could be held individually liable in addition to the company).

SB 481 - Labor and Employment - Equal Pay for Equal Work

SB 481 would add gender identity to state wage discrimination laws. It would also prohibit businesses from attempts to prevent the discussion of wages by and among employees or adverse action for discussing same.

Both state and federal laws (Equal Pay Act of 1963 and Title VII of the Civil Rights Act, the ADEA, and the ADA) prevent such wage discrimination and other than adding gender identity, this bill does not increase protections under existing laws. In addition, preventing discussion of wages is already prohibited under the NLRA.

This is a continuation of the "layering" of laws and regulations upon businesses, and adding additional causes of action available to employees who feel they’ve been wronged. I’m not sure how piling up the heap of similar laws actually results in more protection, or even adds to the deterrence of the actions they were meant to prohibit. The increased cost and administrative burdens to comply with multiple laws covering the same topics all contribute to a very negative business environment.

HB 580 – Maryland Healthy Working Families Act (SB0472)

This is Maryland’s version of "Sick and Safe Leave" acts that have passed in other states and localities in the last year or so. In fact, this appears to be pretty much a duplicate of Washington D.C.’s law. And it’s not pretty…..

The accrued paid leave requirement will apply to businesses with 9 or more employees; unpaid accrued leave will be required for those with less than 9 employees.

If passed, this law will have a major impact on businesses. A one-size-fits-all approach never really fits anyone.

  • Leave accrues at the rate of 1 hour of leave for every 30 hours worked; employer can cap at 56 hours in a year; and can grant all leave up front, or accrue throughout the year.
  • The bill requires reinstatement of accrued, unused time if the employee is rehired within 12 months. This is not standard practice with sick leave and would add an additional liability a business must carry on its books, further increasing business costs.
  • Allowance for employees to use time not yet earned. Most employers do not allow "borrowing" of leave time; and when they do, it is often in cases of severe need only.
  • Requires the allowance for use of time for non-medical, non-illness needs. Many employers require that sick leave be used for illness of the employee only, or for the illness of an immediate family member.
  • Extends the definition of "family member" beyond what is standard and practical. Allowing use of such leave for grandparents, grandchildren and siblings, for example, in addition to what is traditionally defined as an immediate family member, is far outside the norm for leave policies; increasing direct labor costs in terms of wages, and the increased need to replace employees on leave for these additional circumstances.
  • The bill does not allow for the employer to require employees to find their own replacement for the hours the employee will not work. This is common practice in health care settings, retail and food service.
    These requirements will add significant costs to businesses and likely will have a negative effect on wages and job creation. While it’s great when an employer can afford to offer paid leave – and I believe it should if possible – not all businesses can do this. 

    Whenever a law adds to the cost of doing business, the money has to come from somewhere; it doesn’t just appear because we wish it to be so. The vast majority of employers in both Maryland and across the country are not huge, money-saturated operations. They are small and mid-size companies that struggle to produce and sell their products or services, realize some profits and treat their employees as well as they can.

    If you operate a business in Maryland and have any number of employees, I urge you to take a look at these bills and then contact your delegates and senators and let them know how they will affect your business in particular. That is the only way our elected officials will find out how their actions affect our lives.

    In other news…..back in July of last year, I wrote here about the Department of Labor’s proposal for the Fair Labor Standards Act’s exemption rules. We’ve all been waiting to find out when the final rule might be released. The DOL’s Solicitor M. Patricia Smith told attorneys at a New York State Bar Association meeting that the final rules would likely be published in July 2016. Given an effective date 60 days after the release of the final rules, employers will have to comply with the new rules by September 2016.

    As I mentioned in that prior post, you need to get ready for this:

  • Look at your current exempt-level jobs that pay below $51,000. Decide if you will raise their salary to keep them exempt, or reclassify them as non-exempt and pay the additional overtime. Analyze how many hours employees in these jobs actually work to help you decide which option makes more financial sense to your organization. Keep salary compression effects in mind…
  • Limit overtime opportunities? Will this eventually cause you to have to add to staff in order to get the work done? Which is more cost-effective for your business?
  • Reclassify the appropriate positions, but reduce pay to offset for the amount of expected overtime payments? Not a great option, but one that might be necessary for some businesses.
  • The proposed new rule will require that this minimum amount will be adjusted annually based on the 40th percentile of non-hourly paid employees. Here’s one analysis of the effect of that provision. Keep this future cost in mind.
      Finally, remember that the DOL in its proposed rules, asked questions seeking feedback about changing the duties test for exemptions to the overtime requirements. We won’t know if the duties test will be amended in the final rules (with no further public comment!), but if the test is changed, you’ll also need to analyze your exempt-level positions to see if they will still qualify under the new test. Are we having fun, yet?

      Stay tuned……….


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