Friday, February 10, 2017

Update Maryland Employment Legislation

While today (2/10/17) is the last days bills can be presented in the House (2/3/17 was last day for bills to be presented in the Maryland Senate), more could slip through after being reviewed by the House Rules and Executive Nominations Committee or the Senate Rules Committee, so stay tuned….

There have been several bills presented this session that appeared in prior sessions and a few new ones. I’ve highlighted those that I believe would have impact on the business community in terms of employment law/workplace regulation.

Again this year, paid sick leave is at issue in Maryland (as in other states). This time around, we have two competing bills – one is simply a repeat from last year, and the other is our Republican Governor’s compromise bill.

HB0001/SB0230 – Maryland Health Working Families Act
This is very similar to the amended bill that was in place at the end of last year’s session. It includes the following main provisions:

  • Applies to businesses with 15 or more employees. (Businesses with fewer than 15 employees must provide unpaid sick and safe leave.)
  • Applies to employees working at least 8 hours per week.
  • Provides 1 hour of sick and safe leave for every 30 hours worked.
  • Allows an earnings cap of 56 hours per year and a usage cap of 80 hours per year.
  • Allows a waiting period for use of leave for the first 90 calendar days of employment, or 480 hours of work, whichever is shorter.
  • Requires carryover of accrued leave up to 56 hours year to year. Carryover is not required if all leave is granted in a lump sum at the beginning of the year.
  • Allows "borrowing" of time before earned/accrued.
  • No requirement for pay out of unused, accrued time upon separation of employment.
  • Requires reinstatement of unused leave if a separated employee returns within 9 months of leaving (unless unused leave was paid out upon termination).
  • Requires allowing use of leave for non-illness –related reasons.
  • Includes grandparents, siblings, etc., in definition of "immediate family".
  • Only allows verification/justification of leave if used for more than 2 consecutive shifts.
  • Includes local jurisdiction pre-emption for any bills taking effective on or after 1/1/17.
  • Excludes employees working in the construction industry.
  • Violations result in treble damages, punitive damages, attorney’s fees, injunctive relief
  • Would be effective as of 1/1/18.
  • HB0382/SB0305 - Commonsense Paid Leave Act
    Governor’s bill: This is a paid leave bill – not just a paid sick/safe leave bill. 

    • Covers employers with 50 or more employees. Businesses with fewer than 50 employees that choose to provide such leave may be eligible for subtraction modification.
    • No requirement for payout of unused, accrued leave at time of termination
    • Includes pre-emption of local laws. This includes pre-emption of laws already passed by local jurisdictions. In other words, no local jurisdictions (city or county) can pass a wage or benefit law different from state law).
    • Applies to employees working at least 30 hours per week. Will be counted as an employee if worked at least 120 days total, and at least 30 hours per week in the previous calendar year.
    • Provides 1 hour of paid leave for every 30 hours worked, up to a total of 40 hours annually.
    • Does not apply to employees working less than 120 days per year (seasonal).
    • Does not apply to construction industry or to employees covered by CBA’s.
    • Allows for carryover of up to 40 hours per year.
    • Penalty for non-compliance is $300 per employee, or $600 per employee for subsequent violations for the same employee within 3 years. Allows for injunctive relief for subsequent violations.
    • Would be effective 10/1/17. At a minimum this should be changed to 1/1. An October effective date results in employer’s managing two different leave accrual systems for the last quarter of the year and reconciling the new requirement to existing policies.
    As you can see in comparing the two paid leave bills, even if your company already provides paid leave to your employees at least as generous as the first bill, you will still be affected since you most likely don’t extend leave to employees working as little as 8 hours per week and you don’t reinstate unused leave if an employee returns to your company, as just two examples.

    An interesting development recently, and one that has garnered a bill in Maryland this year, is the building trend of states pass pre-emption laws. This is clearly in response to the ever-growing list of cities and counties passing their own wage and benefit laws, leaving those states with a patch-work quilt of regulations that cover the same issue, but provide competing and conflicting requirements.

    Philadelphia has had its own paid sick leave bill since May of 2015. However, a group of PA state senators have announced they were re-introducing legislation that would stop municipalities from passing paid leave ordinances. The reasoning being that such ordinances hurt small businesses and force larger businesses that have multiple locations to comply with differing and conflicting rules.  That bill was introduced in January and is now pending in the State Senate.  In addition, other states such as Wisconsin, Arizona and Florida, have already passed statewide laws preventing cities and other local governments from passing their own sick leave ordinances.

    As mentioned above, this bill prohibits a county or municipality from enacting a law that regulates wages or benefits that differs from state law (except laws/ordinances dealing with the local jurisdictions own employees).

    Having different minimum wages in different jurisdictions will (and already does) result in unnecessary burdens on businesses with more than one location in a state (disruptions to an employer’s ability to staff locations, having to manage compensation plan for reasons unrelated to skills, knowledge, etc. and based only on the actual location; additional compliance and recordkeeping requirements, etc.).

    The delegate who sponsored this bill is a Democrat, and he is taking a huge raft of sh*t from his party for doing so. I applaud his courage to at least attempt to address the issue.
    HB0398/SB0404 - Equal Pay - Job Announcement and Salary History Information Disclosures
    This is a re-introduction of a bill presented last year requiring employers with 15 or more employees to include specific information in a job posting and to prohibit seeking salary history information from applicants.
    1. Employers cannot prohibit employees from discussing or disclosing the wages of the employee or other employees, and cannot take adverse action against an employee who does.
    2. Job posting must include the following information:
    3. Minimum rate of pay
      • How pay is calculated (hour, shift, day week, etc.)
      • If position is eligible for overtime, and what that rate is (includes other allowances such as tip credits, meals, etc.)
    4. Prohibits the employer from paying less than what is stated in the job posting.
    5. Prohibits employer from seeking by any means the prior salary history of the applicant.
    6. Prohibits screening applicants based on their prior salary history, or qualifying that applicant to proceed in the hiring process.
    7. Only allows seeking prior salary history information after a specific offer of employment is made and the applicant authorizes the employer to seek the information.
    8. Prohibits employers from disclosing salary history information to prospective employers, unless specifically authorized to do so by the employee/applicant.
    While federal law has guaranteed employees the right to discuss wages, hours and other conditions of employment for decades, this bill unnecessarily includes it. Further, these provisions remove the rights and flexibility of an employer to change the wage range of a job based on factors relevant to the job and to the available applicants, without first having to re-advertise the job with the new rate. It also places restrictions on what an employer can say to other, prospective employers seeking reference/background information. Employers do not, contrary to popular belief, rely solely on previous salary information to negotiate wages with new employees.

    There is no objective data suggesting that eliminating salary history information from the hiring process or adding this information to job advertisements, furthers the goal of ending illegal pay discrepancies.

    While I believe that employers should not place an inordinate amount of importance on the prior salary history of an applicant, laws prohibiting this practice will do very little to "fix" the issue they are intended to address. 

    HB0531 - Right to Work
    Sad, but his won’t have any better chance of passing this year than the many years prior. It will prohibit an employer from requiring, as a condition of employment or continued employment, an employee or a prospective employee to join or remain a member of a labor organization, pay charges to a labor organization, or pay a amount to a third party (basically, "maintenance fees" or "agency fees".
    In 1935 the National Labor Relations Act was signed into law granting American employees the right to organize and be represented by a union if they choose to do so. It is far past the time when we should also grant American employees the right to choose NOT to be represented by a union they don’t feel benefits them, and not force them to financially support that union. There are now 28 states with Right to Work laws.

    In an attempt to address what they feel the Trump administration has done, or more accurately, what they fear it will do, several states are attempting to pass laws to pre-empt federal action. An example is the minimum salary required for exemption under the state Fair Labor Standards laws.

    HB0665/SB0607 - Exemptions From Overtime Pay - Administrative, Executive, or Professional Capacity - Oppose
    This bill raises the minimum salary to be exempt from overtime regulations to $913 per week, adjusted every 3 years.
    • Includes the standard exclusions for agriculture, entertainment, camps, etc.
    • Also excludes cafe, drive–in, drugstore, restaurant, tavern, or other similar establishment that sells food and drink for consumption on the premises; and has an annual gross income of $400,000 or less.
      This past November, U.S. District Judge Amos Mazzant ruled the federal DOL’s new overtime rule "unlawful" and granted a temporary injunction preventing it from going into effect on December 1, 2016. Among other arguments, Judge Mazzant held that Congress had intended the Executive, Administrative, Professional (EAP) exemption to depend on an employee’s duties rather than an employee’s salary. Further, he held that the DOL exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level such that it "supplants the duties test".

      The Maryland bill, as in the DOL’s final rule, does much the same. While it may be argued that the minimum salary amount should be increased, a more than 100% increase is unreasonable and completely negates a very important factor in determining whether an employee should be exempt from overtime – the actual duties the employee performs.

      Members of Congress (both Democrats and Republicans) reacted negatively (see HR Policy Association) to the rules when first proposed. It’s pretty telling when even our elected representatives themselves say they would have difficulty with the new threshold.

      The costs of compliance with such a change will force many smaller employers and non-profits to have to cut critical programming, staffing, other benefits and/or services to the public. It will most likely result in restrictions on employee work hours that will deny them flexibility and opportunities for advancement. 

      SB0379 - Hospitals - Changes in Status - Hospital Employee Retraining and Economic Impact Statements
      While at the time, this bill only affects hospitals, it’s a "slippery slope" warning for the rest of us. If passed, I don’t think there’s much doubt it will be amended in the future to include all types of business. It requires a hospital that voluntarily converts to a freestanding medical facility or is acquired by another hospital or health system to pay a fee directly to the Department of Labor, Licensing, and Regulation if workers are displaced.

      • The fee may not exceed 0.01 percent of the gross operating revenue for the immediately preceding fiscal year.
      • Fees will be paid into the Hospital Employees Training Fund.
      • Requires the entity to provide an economic impact statement within 90 days of the decision to the Maryland Health Care Commission detailing the potential economic impact of the dislocation of the hospital’s employees.
      It would seem that penalizing (in essence, taxing) a business for making decisions based on a determination of what is in the best interest of that business’s health (and continued ability to employ some number of citizens) does not add to an environment that is conducive to attracting or retaining business to Maryland. Furthermore, employers already pay into the Unemployment Insurance Fund for the benefit of Maryland citizens who qualify for benefits. As with many such bills targeting a specific industry or type of business, the likelihood of future amendments to the bill to extend the provisions beyond the original scope is also very concerning. And if you think that this "training fund" won’t become another slush fund from which the state will "borrow", you’re kidding yourself.

      I’ll be keeping an eye on these and other bills – and any that drop between now and the end of Session. Updates later!

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