Human-resource professionals will face significant challenges in the year ahead as they attempt to comply with various employment laws amid shifting demographics and societal trends. The year of 2013 saw the enactment of new laws and the rise of novel legal challenges that substantially altered the compliance landscape. With these changes in mind, the following represent the hot issues employers should focus on in 2014.
- Two-Year Rule Non-Compete Agreements
A ruling by the First District Appellate Court in Illinois held that — where employment is the only consideration given for entering into an employment agreement — an employee must be employed for at least two years before an employer may seek to enforce a non-compete or non-solicitation clause. Consequently, employers should consider reviewing these agreements and including more tangible consideration — such as signing bonuses, equity or other guarantees — to ensure non-compete agreements are enforceable.
- Social Media and Employment Decisions
The public nature of social media now has employers facing difficult challenges when making employment-related decisions. For example, viewing a job candidate's social-media page can potentially lead to a discrimination claim if the applicant is in a protected class and the employer fails to hire the individual. Disciplinary actions in response to employee comments also risk infringing on rights protected by the National Labor Relations Act (NLRA). The potential for conflict within this developing area of law is significant as legislators and courts seek to strike a balance between the rights of employers and employees.
- Firearms in the Workforce
Twenty-three states now have laws that allow employers to ban firearms in the workplace, as long as the prohibition does not extend into the parking area. The specifics of these laws vary by state and employers should take time to review applicable laws and incorporate them into their policies governing employment and workplace violence.
- Medical Marijuana
U.S. courts have consistently held that marijuana's status as a controlled substance under federal law permits employers to discipline or fire employees for positive drug tests or marijuana use. Nonetheless, employees may attempt to force further change by challenging employers on this issue.
- NLRB Action against Non-Union Employers
The past few years have seen increased enforcement action by the National Labor Relations Board (NLRB) against non-union employers under the National Labor Relations Act (NLRA). Certain concerted activities of employees are protected under the NLRA, and employment decisions made on the basis of these activities are illegal. In particular, the NLRA protects employee comments on social media that are intended to engage fellow co-workers in conversations related to "concerted activities." Consequently, the NLRB has been extremely critical of employer policies that attempt to discourage employees from using social media in this way.
- Misclassification of Non-Exempt Employees
Many employees are denied overtime pay when they are misclassified as "exempt" simply because they are paid a salary. Employers can prevent such misclassifications by determining status according to the nature of the duties performed, rather than how the employee is paid. Failure to properly classify an employee can result in an employer being liable for two years of back pay, plus significant damages and attorneys' fees.
- Misclassification of Employees as Independent Contractors
Similarly, changes in the economic climate are causing more employers to use independent contractors rather than employees. Unfortunately, the line between the two is often unclear and employees — and the government — are often denied certain protections, wages and monies as a result. Accordingly, the U.S. Department of Labor and the Internal Revenue Service (IRS) have both made worker misclassification a top priority. Employers should use the factors outlined by the Department of Labor to ensure workers are properly classified.
- Healthcare Reform
Employers should continue to be aware of the forthcoming requirements of the Affordable Care Act and take steps to prepare for compliance by the January 1, 2015 deadline.
- Criminal Background Checks and EEOC Scrutiny
The Equal Employment Opportunity Commission (EEOC) has been aggressive in its enforcement of the use of criminal background checks by employers. Certain state and local jurisdictions, however, have deemed such inquiries illegal. Nonetheless, employers that prefer to err on the side of caution should review their internal criminal background-check procedures to ensure full compliance with the EEOC's updated Enforcement Guidance.
- Federal Tax on Severance Pay
Employers anxiously await a forthcoming decision by the Supreme Court as to whether severance payments made in connection with workforce reduction are considered "wages." If the Court determines that such payments are not wages, any amounts paid would be exempt from federal FICA taxes, and employers and affected former employees may be entitled to refunds from the IRS.