Tag: Layoffs

2020 Labor & Employment Law Predictions

Published by Brett Holubeck on January 20, 2020

Image of a man holding a "Happy New Year" sign to kick off the 2020 labor and employment law predictions for the Texas Labor Law Blog — Photo by Kelly Sikkema on Unsplash

2020 has arrived and so have my 2020 labor and employment law predictions. One side note, I am not going to repeat my 2019 labor and employment law predictions that are likely to happen in 2020 (new states that protect medical marijuana use outside of work, increased sexual harassment charges, the elimination of the H-4 EAD program, the NLRB issuing the joint employer standard, more states passing paid family leave, independent contractor issues arising, notices of inspection (I-9 inspections) increasing, and the Supreme Court’s decision on DACA.) So what’s new in 2020? Let’s dive right in.

1. Minimum Wage Increases Will Occur in a Number of States and Ballot Initiatives Will Be Undertaken to Get Them on the Ballot in Additional States

Florida is one state that will have a ballot initiative to raise the minimum wage to $15 per hour. The bill would raise the wage to $10 by September 30, 2021 and then increase it by one dollar every year until the wage reaches $15 in 2026. It is likely to pass as 25 out of the 27 ballot initiatives to increase the minimum wage were approved from 1988 to 2018.

Arizona (Arizona Hospital Worker Minimum Wage and Insurance Regulations Initiative), Idaho (Idaho Minimum Wage Increase Initiative), and Missouri (Missouri Prohibit State Preemption of Local Minimum Wage and Benefits Laws Initiative) also have potential ballot measures related to the minimum wage next year. Each of them are in the gathering signatures stage and more states could potentially follow suit. Arizona’s law is for hospital workers, Idaho’s law would raise the minimum wage to $12 by 2024, and Missouri’s would prohibit the state from stopping local governments from enacting their own minimum wages.

2. Retail Closures and Other Layoffs (Perhaps in the Energy Sector) Continue to Remain High or Accelerate

Ok. So, this is not exactly a labor and employment law prediction, but it affects employment law. Over 9,000 stores closed in 2019 (more retail stores closed than opened). Even if the number of retail closures is not as high next year, there is still the probability that there will be a number of closures.

In the world of oil and gas, there are a lot of companies with debt maturities coming due in 2020 or 2021 (see this article from the Wall Street Journal discussing the $120 billion debt wall these companies will face through 2023), and oil prices have been below the break-even point for many drilling sites. It is possible that there could be a number of layoffs in that industry. Of course, the situation in Iran (the death of Soleimani and Iran’s reaction to his death), any decisions from OPEC, and any possible economic slowdowns or other geopolitical issues could change this.

Unemployment is still low and there are more job openings than there are people that can fill them. If a recession takes place, then everything will change.

The workplace and workforce is changing even if the situation for retail stores and the oil and gas industry improves and we avoid a recession. Many people have read articles about the jobs that supposedly won’t exist in the future, which is something to keep an eye on. In short, layoffs are a part of life and the economy. We can expect them to continue or increase in 2020.

3. Onboarding and Employee Retention Continues to Grow in Importance

No matter what happens next year with layoffs, there will be a lot of workers that will need to be trained, retrained and onboarded. Companies are finally starting to recognize they need to find, adequately train, and keep their employees because unemployment is at a low. In short, businesses are going to want to find the right people, train them well, and try to keep them given the lack of qualified and available employees. Remember, onboarding is more than just orientation. It is a long process to help workers become established in an organization and usually occurs over an extended period of time through a set process to help the employees adjust to their new job. Onboarding also takes more importance as certain jobs are eliminated, new technology is brought into a company, and workers change positions.

The Bureau of Labor Statistics found that “Over the 12 months ending in October, hires totaled 69.8 million and separations totaled 67.4 million, yielding a net employment gain of 2.4 million. These totals include workers who may have been hired and separated more than once during the year.” Again, there were 69.8 million people hired between October 2018 and October 2019. Onboarding, training, and employee retention have gained in importance over the past few years and will continue to do so.

4. The Governmental Agencies Gear Up for the Election by Releasing a Lot of New Regulations Before the Election Happens

The Congressional Review Act allows a new Congress to disapprove of any new regulation within a 60 legislative day window by a majority vote. If the vote succeeds, then the rule does not go into effect. It was only used once before the Trump administration. The Republican Congress under Trump used it 14 times.

The Trump administration and the agencies will push out new regulations and decisions to avoid their regulations being undone either by the Congressional Review Act or by the heads of the agencies after the election (assuming that a Democrat is elected). Many agencies that previously did not engage in much rulemaking are also engaging in rulemaking to avoid their new rules being overturned easily (through decisions). You can look to the NLRB (joint employer rule) and the DOL (overtime rule and joint employer rule) as prime examples of this.

5. Candidates Push Their Election Agendas Which Will Give us a Peek into the Labor and Employment Landscape in 2021

I wrote awhile back about the Democratic candidates. At that time there were around 25 different candidates. Most of those have basically fallen away. We can expect that President Trump and the eventual Democratic candidate will propose a number of different ideas that will affect the workplace.

I expect President Trump to push limiting immigration based on the belief that this will protect American jobs and perhaps he will also propose some kind of paid family leave program as he discussed in his 2016 campaign.

The Democratic candidate can be expected to support raising the minimum wage to $15, the PRO act (that would transform union organizing, eliminate right to work states, permit card check (union elections would not need to happen if enough authorization cards were signed), expand the definition of ‘joint employer’, permit secondary boycotts (targeting neutral worksites), adopt a more restrictive definition of independent contractors, and much more), and a paid family leave program. Depending on the final Democratic candidate, more proposals could go into effect. Moreover, the success of these proposals will depend on the final composition of the House and Senate (in addition to who controls the White House).

6. Union Elections and Organizing Increases this Year Especially in the Tech Sector

Unfortunately, I did not get to publish this blog post before this prediction started to come true (I swear I wrote this before I heard about the CWU trying to organize video game developers, you can ask my kids, but who can trust anyone under 5 years old…). The tech sector is going to become an increasing target of union organizing. Unfortunately, many companies do not treat their employees right (they work long hours, their concerns are not addressed, and many of their coworkers are let go for what feels like no reason to them). Mistreated employees are always the biggest threat and cause of union organizing. The tech sector is ripe for organizing because many companies fit this model.

7. More States Pass Employment Related Laws- Especially Variations of the Independent Contractor Law that California Adopted (the ABC Test)

Employment law has become more fragmented and more influenced by multiple sectors of government (federal, state, county, and city) with a greater influence at the local level than ever before. This is going to continue. This fragmentation affects almost every area of employment law (labor law has not been affected to the same degree). For example, a number of states have their own overtime salary threshold so the new federal overtime rule does not affect them and a number of states have begun to tighten their independent contractor rules (which means that companies must follow these complex rules for each state that they operate in).

This one is not so much a prediction as it is a statement of fact. With the current administration being more business friendly (and depending on the results of the election in 2020, that may continue for 4 more years) the trend of employment law is increasingly being done at the state and local level.

8. Mental Health Issues and the Workplace Become More Important

Nearly 1 in 5 adults had a mental illness in 2016. Carley Sime at Forbes wrote “Mental health and substance abuse cost US businesses between $80 and $100 billion annually.” That is a cost that companies cannot ignore. In 2020 and throughout the decade more companies will recognize this cost and offer treatment and solutions to their staff.

The good news is that more companies are discovering that treatment works. The Center for Workplace Mental Health found that 80 percent of employees treated for mental health problems reported improvements in both their productivity and job satisfaction.

More companies are recognizing the effects of mental health and wellbeing on their workforce and taking steps to prioritize these issues and ensure their employees feel supported.

9. There will be a Ton of Issues Around Free Speech and the Workplace (i.e. It is an Election Year).

This one feels like cheating. It hardly counts as a prediction. It is an election year.

Trump is a polarizing figure. Politics seems more divided now than any time in the last twenty years or so. “A 53-point [difference] separates the percentage of Republicans (65%) and the percentage of Democrats (13%) who believe the United States is headed in the right direction, according to data from the latest Economist/YouGov poll.”

We may be more divided now than any time since Thomas Jefferson and John Adams faced off (you really need to watch this video on what they said about each other in the campaign to understand how bad it was) With this being an election year, we also get to experience attack ads (here is a history of attack ads), which means that more people will have more fodder to attack supporters of one candidate.

Additionally, from a workplace perspective, the election will likely cause more people to talk about politics at work, which can be another polarizing situation you may want to be smart about. You can read about what to do here. This is something that will probably only get more divisive before it improves (some time after the 2020 presidential election but before the 2022 midterms). With the impeachment and the bitterness of this election we have reached a bit of a tipping point in divisive politics and can perhaps expect them to be more divisive and interfere with the workplace more than ever.

10. The Cases Before the Supreme Court Put Increased Focus on Religion, Transgender Issues, and Sexual Orientation in the Workplace.

With a Supreme Court decision on whether sexual orientation is a protected characteristic and whether transgenderism is protected (see this previous article discussing Bostock v. Clayton County, Georgia and Altitude Express Inc. v. Zarda (sexual orientation discrimination cases)) and (R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission (gender identity/transgenderism discrimination case)) this is an issue that will see more traction this year. Once these decisions come out there will be talk in many workplaces about sexual orientation, transgender issues, and religion in the workplace.

The Supreme Court cases on the ministerial exception add to this issue. Here is a breakdown from SCOTUSblog on those cases:

In Our Lady of Guadalupe School v. Morrissey-Berru and St. James School v. Biel, the justices will consider the scope of the “ministerial exception,” a court-created doctrine that prohibits courts from reviewing employment decisions by religious employers involving their ministers. Under the exception, courts must determine which employees serve a “ministerial function.” In these cases, which will be argued together, two California Catholic schools are challenging rulings by the U.S. Court of Appeals for the 9th Circuit that teachers who sued the schools after the teachers’ contracts were not renewed were not, despite their religious duties, “ministers” for purposes of the exception. The schools tell the justices that the issues presented in the two cases are “vital to the daily operations of religious organizations,” and that “getting it right is crucial in protecting church-state relations.”

All of these Supreme Court decisions will cause a lot of talk about the place of religious beliefs and how they relate to the issue of sexual orientation and transgenderism/gender identity.

11. States Continue to Implement Restrictions on Noncompetition Agreements

This is something that is already happening in a number of states and now the FTC has also begun to weigh in on the issue. The Federal Trade Commission recently held a public workshop to “examine whether there is a sufficient legal basis and empirical economic support to promulgate a Commission Rule that would restrict the use of non-compete clauses in employer-employee employment contracts. This follows a labor market workshop hosted by the Department of Justice’s Antitrust Division in September 2019.”

Washington has a law that went into effect on January 1 that prohibits noncompetes for employees that earn less than $100,000 and independent contractors that earn less than or equal to $250,000.

Maryland also enacted a similar law last year that prohibits noncompetes for “employees earning equal to or less than $31,200 annually or $15 per hour.”

Maine’s law went into effect in 2019 and prohibits employers from entering into a noncompete agreement with an employee if they earn wages at or below 400% of the federal poverty level.

New Hampshire passed a law in 2019 that prohibits employers from entering into or enforcing agreements with low-wage employees (those earning less than 200% of the federal minimum wage currently $14.50 an hour).

Rhode Island’s law went into effect on January 15. It prohibits noncompetes for nonexempt employees, certain graduate and undergraduate students, people 18 and under, and low wage employees (those earning less than 250% of the federal poverty level currently $600.48 per week ($31,225 / 52))

Conclusion

2020 is going to be a big year for employment and labor law issues. Employers should prepare for these upcoming changes to ensure that they are staying a step ahead of the competition. As usual, these issues will be followed this year at the Texas Labor Law Blog, and I hope you all stay ahead of the curve this year!

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.

The Basics of Layoffs and the WARN Act

Published by Brett Holubeck on August 13, 2019

A window with the words "closed down" written on it to show what happens when layoffs occur and to serve as a reminder to follow the WARN Act. — Photo by Marco Bianchetti on Unsplash

Layoffs are terrible! A lot of employees are caught unaware that a company is not doing well while others cannot understand why they rather than someone else were let go.

Why are we talking about layoffs and reductions in force when unemployment is 3.7%?

Let me give you a couple of reasons.

Store closures may top 12,000 in 2019 as 7,062 store closures have already been announced this year compared to an all-time high of 8,139 in 2017. The retail apocalypse may be accelerating.
The ongoing trade war which many believe will result in a recession within a year or so.
Profitability of oil and gas (at least in Texas). There is some speculation that the shale oil boom may be over.

What to Consider When Layoffs Approach

There are a couple of things that all employers must remember when conducting layoffs. Employers must consider the legal elements of a layoff, and to conduct the layoffs in a way that allows the business to stay open and does not make the other employees angry. Of course, the best option, if possible, is to follow in the footsteps of Nintendo when the Wii U failed. In that case, the CEO took a 50% pay cut, and members of the board took a 20-30% pay cut.

He said:

If we reduce the number of employees for better short-term financial results, employee morale will decrease. I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world. Keeping employees can often be better than letting employees go if a company believes that the employees will be needed later.

Legal Aspects of Layoffs

Employers that layoff employees may have obligations to alert their employees.

As the Department of Labor explains:

The Worker Adjustment and Retraining Notification (WARN) generally covers employers with 100 or more employees, not counting those who have worked less than six months in the last 12 months and those who work less than 20 hours per week, or those employers with 100 or more employees, including part-time workers, who in the aggregate work at least 4,000 hours per week, exclusive of overtime.
WARN protects workers, their families, and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice gives workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain other jobs and, if necessary, to enter skill training or retraining that will allow these workers to compete successfully in the job market. WARN also provides for notice to state dislocated worker units so that they can promptly offer dislocated worker assistance.
A covered plant closing occurs when the permanent or temporary closure of a single site of employment or of one or more facilities or operating units within a single site of employment results in an employment loss as defined by WARN regulations. A covered mass layoff occurs when 50 to 499 employees are affected during any 30-day period at a single employment site (or for certain multiple related layoffs, during a 90-day period), if these employees represent at least 33 percent of the employer’s workforce where the layoff will occur, and the layoff results in an employment loss for more than six months. If the layoff affects 500 or more workers, the 33 percent rule does not apply.

Many states have their own mini-WARN Acts, so you need to review your state law as well to comply with the law. Texas does not have its own WARN Act.

There are 3 important exceptions to providing 60 days notice as required by the WARN Act:

Faltering Company Exception (applies to closing but not mass layoffs) which requires that the employer 1) sought capital or business at the time that the 60 days’ notice would have been required, 2) there was a realistic opportunity to obtain finance or business, 3) it would have been sufficient to avoid the shutdown (the employer must objectively show this), and 4) the employer must have reasonably and in good faith believed that the required notice would have precluded the employer from obtaining the business or capital.
Unforeseeable Business Circumstances Exception, which applies when business circumstances were not reasonably foreseeable at the time that 60 days’ notice would have been required. The circumstance must be a dramatic change outside of the employer’s control like losing a major contract or a dramatic economic downturn.
The Natural Disaster Exception only applies if a plant closed or mass layoffs ensued because of a natural disaster.

As noted above, another exception (or at least a situation where the law does not apply) is when a mass layoff will last less than six months. For example, suppose you send 400 out of your 500 workers home for 2 weeks while you conduct necessary maintenance at your plant. The WARN Act would not be triggered in that case because the layoff is temporary.

When conducting a layoff, it is also important to ensure that it is done in a way that does not discriminate against individuals because of their age, race or other protected characteristic. Essentially, layoffs should be conducted in a way that it does not have a disparate impact on any protected class.

Who Receives Notice of a Layoff or Plant Closing?

As detailed by the Department of Labor:

The employer must give written notice to the chief elected officer of the exclusive representative(s) or bargaining agency(s) of affected employees and to unrepresented individual workers who may reasonably be expected to experience an employment loss. This includes employees who may lose their employment due to “bumping,” or displacement by other workers, to the extent that the employer can identify those employees when notice is given. If an employer cannot identify employees who may lose their jobs through bumping procedures, the employer must provide notice to the incumbents in the jobs which are being eliminated. Employees who have worked less than 6 months in the last 12 months and employees who work an average of less than 20 hours a week are due notice, even though they are not counted when determining the trigger levels. The employer must also provide notice to the State dislocated worker unit and to the chief elected official of the unit of local government in which the employment site is located.

What the Notices Must Contain

There are different items that must be in the notice for any union that represents employees, the employees, and the State Dislocated Worker Unit and chief officials of the local government entities. You can view that information here or in the regulations.

If employees are represented by a union, then the notice must contain the following information:

The name and address of the company that will have a plant closing or mass layoff and a person and telephone number from the company that can be contacted for more information.
whether the closing is permanent or temporary and whether the whole facility will be closed.
The expected date when the first employees will be laid off and the schedule for laying off the rest of the employees.
The job titles of any positions that will have people laid off and the names of those workers that hold each affected job title.

As stated by the DOL, notices to individual employees (if they are not represented by a union) must contain the following information:

whether the closing is permanent or temporary and whether the whole facility will be closed.
the “expected date when the plant closing or mass layoff will begin and the date that the individual employee will be” laid off.
whether any bumping rights exist (employees with more seniority will be able to take the positions of people with less seniority in the layoff, which means that the most senior people that qualify for any position in the company, even if it is not their current position, will be kept or at least will be the last people to be laid off).
“The name and telephone number of a company official to contact for further information.”

Companies must also provide notice to the State Dislocated Worker Units and the chief elected official of the local governments. This notice must be provided separately and should contain:

The name and address of the company that will have a plant closing or mass layoff and the name of a company official and telephone number that can be contacted for more information about the layoff or plant closing.
whether the closing is permanent or temporary and whether the whole facility will be closed.
The expected date when the first employees will be laid off and the schedule for laying off the rest of the employees.
Job titles of the positions that will be laid off and the number of employees in each position.
Whether any bumping rights exist
The name of any union(s) that represent the employees and the “name and address of the chief elected officer of each union”

Notices must be carefully drafted especially if the layoff is intended to be temporary. Any mistakes in drafting the notice can result in penalties. Employers can be liable for backpay and benefits for each employee for every day of the violation. Penalties are capped at 60 days of backpay and benefits for each employee, civil penalties of up to $500 per day, and reasonable attorney’s fees.

Maintaining Morale in a Layoff

Don’t be like Michael Scott in the Office announcing that the branch is closing (especially when it turned out that the branch was not closing after all).

Employers need to prevent a panic when laying off employees. You need to meet with the employees that are remaining quickly (within 30 minutes or so) to let them know what is going on. You need to give employees a reason that the layoff occurred. Was it to eliminate a portion of the business that was not profitable? That is a different conversation than laying off journalists in the news industry. Journalists are one of the main components of the news business. Many of them may be wondering whether their job is next.

Companies must acknowledge the emotions of the employees that are staying. Some of them will have lost close friends and colleagues that they have worked with for years.

Employees need to understand that there is a plan to move forward. Companies need to communicate about the business’s future. How is the work going to be redistributed now that there are not as many people working for the company? Is there a way for employees to privately ask questions? What is the long-term plan?

Managers need special training to ensure that they can address the concerns of employees that are staying. They need to make everyone as productive as possible and support the employees that remain with the company. Managers essentially need to rebuild the culture of the company. A bad manager can make a layoff worse by driving people away, being unresponsive to questions, or not showing any understanding to what employees are experiencing.

Productivity will fall after the layoff occurs. However, after employees see that the company is moving forward, and their jobs are secure, these employees will settle back into their jobs and will again become more productive. Eventually, work will return to normal, but until it does, all supervisors and members of senior management need to help with this transition to ensure a productive, profitable and secure future for the business.

Conclusion

Layoffs are awful, but not following the correct protocol in the event of a layoff is detrimental to the company and its employees. Keeping in mind the specific legal elements of a layoff, along with the cultural implications within the company, will allow employers and their employees to make the best of a bad situation.

The information provided is my own and does not reflect the opinion of my firm or anyone else.