To help ring in a successful new year, Schiff Hardin’s Labor & Employment Group is back with our yearly update to let employers know about certain upcoming legislation slated to take effect in 2016 under federal law and Illinois, California, New York, Michigan, Texas, District of Columbia and Georgia law.  

Federal Law

Minimum Wage Increase for Federal Contractors:  Two years ago, President Obama signed Executive Order 13658, “Establishing a Minimum Wage for Contractors,” setting hourly minimum wages to be paid by federal contractors for work performed in connection with covered contracts with the federal government. On January 1, 2015, the minimum wage requirement was set to at least $10.10 per hour. Effective January 1, 2016, the minimum wage rate is set to increase to $10.15 per hour. The Order applies to (1) procurement contracts for services covered under the Service Contract Act, (2) procurement contracts for construction covered under the Davis Bacon Act, (3) concession contracts, and (4) contracts entered into in connection with federal property or lands that are related to the offering services for federal employees, their dependents, or the general public.

Non-Retaliation for Disclosure of Compensation: Effective January 11, 2016, under Executive Order 13665 (which amends Executive Order 11246), federal contractors are prohibited from discharging or discriminating against any employee or applicant because the employee or applicant has “inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.” The term “compensation” is broadly defined as payments to an employee or offered to an applicant as remuneration for employment, “including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement.” Covered contractors are also prohibited from having formal or informal policies that prohibit or tend to restrict employees from discussing or disclosing their compensation. Contractors are also required to disseminate the Office of Federal Contract Compliance’s new “Pay Transparency Policy Statement” posting found on the OFCCP’s website to employees and applicants electronically or by posting a copy in conspicuous places available to applicants and employees.

Proposed Rule Changes to the Fair Labor Standards Act:  On July 6, 2015, the U.S. Department of Labor (DOL) issued a Notice of Proposed Rule Making in which it announced a proposed rule that would increase the minimum salary required for a worker to be classified as exempt from overtime under the Fair Labor Standards Act (FLSA). Under the proposed rule, the minimum salary level required for the overtime exemption would increase from $455 per week or $23,660 per year, to $970 per week or $50,440 per year. Additional proposed rule changes include a new minimum total annual compensation requirement for qualification as a highly compensated employee under the FLSA and a newly established mechanism for annually updating the minimum salary and compensation levels for exempt employees. Comments to the proposed rule changes were accepted by the DOL through September 4, 2015. Final regulations have not yet been published but are expected to be issued sometime in 2016.

Illinois

Veteran Preference: Effective January 1, 2016, all employers regardless of size, may adopt and apply a voluntary preference policy for hiring, promoting or retaining veterans over other equally qualified applicants or employees subject to certain requirements. Employers that wish to do so must place the policy in writing, publicly post the policy, inform applicants of the policy, and apply the policy uniformly for all decisions regarding hiring, promotion, or a reduction in force. To qualify for the policy, a veteran must have served on active duty in any branch of the U.S. military for at least 180 days, been discharged as the result of a service connected disability, or be a member of Illinois National Guard. The policy is only applicable to veterans released from active military duty or the Illinois National Guard under an honorable or general discharge.

Minimum Wage Exemption for Collective Bargaining Units: Effective January 1, 2016, an amendment to the Illinois Minimum Wage Law allows a collective bargaining unit to negotiate and contractually exempt itself from the hourly wage requirements imposed by the Act. The amendment allows unions to agree to an alternate shift schedule in lieu of the standard overtime compensation requirements of the Illinois Minimum Wage Act, subject to certain conditions and requirements with respect to the number of hours worked by the subject employee over a period of time. Specifically, the employee cannot work more than 1,040 hours over the course of 26 consecutive week, or, the employee’s collective bargaining agreement must guarantee that: the employee will not work more than 2,240 hours during 52 consecutive weeks; the employee works, at a minimum, between 1,840 hours and 2,080 during the 52-week period; the employee is paid at the rate specified in the collective bargaining agreement for all hours worked or guaranteed, and paid at one-and-one-half times the regular rate for all hours worked over the guaranteed number that are also in excess of 40 in a workweek; and the employee receives overtime pay at one-and-one-half times the regular rate for all hours in excess of 2,080 hours during the 52-week period.

Expansion of the Illinois Equal Pay Act: Effective January 1, 2016, the Illinois Equal Pay Act, which forbids employers from discriminating on the basis of sex by paying an employee less than another employee of the opposite sex for the same or substantially similar work, will apply to all employers. The expansion of the Act also broadens the civil penalties available. Employers with four or more employees will now face civil penalties of up $2,500 for a first offense, up to $3,000 for the second offense, and up to $5,000 for any further offenses. Employers with fewer than four employees face lesser penalties of up to $500 for a first offense, up to $2,500 for a second offense, and up to $5,000 for any further offenses.

California

Minimum Wage Increase: Effective January 1, 2016, AB 10 increases the statewide minimum wage to $10 per hour.  This change also raises the salary threshold for exempt employees under Labor Code § 515(a), which requires employers to pay exempt employees at least twice the full-time equivalent of the minimum wage.

Gender Wage Equality: California Labor Code Section 1197.5 currently prohibits an employer from paying an employee at a wage rate that is less than the rate paid to employees of the opposite sex in the same establishment for equal work, unless the employer can demonstrate that the wage differential is based upon: (1) a seniority system, (2) a merit system, (3) a system which measures earnings by quantity or quality of production, or (4) any “bona fide factor other than sex.”  The California legislature has toughened this law through amendments that go into effect as of January 1, 2016.  Under the new law, there is no longer a requirement that the wage differential be within the same establishment.  Also, employers are prohibited from paying any of their employees at wage rates less than those paid to employees of the opposite sex for “substantially similar work,” which is to be determined based on a “composite of skill, effort, and responsibility, and performed under similar working conditions.” The amendments also heighten the burden on employers for defending against wage discrimination claims, and provide that a defense based on a bona fide factor other than sex can be defeated if the employee shows an available alternative business practice that would not have produced the wage differential. For more information about this new law, see Nov. 11 Employment Law Landscape blog, “California Adopts Most Stringent Equal Pay Law in the Nation.

Piece-Rate Compensation: Effective January 1, 2016, AB 1513 requires employers to pay piece-rate employees for periods of “nonproductive” time, including rest and recovery periods, separately from and in addition to their piece-rate compensation, at a rate no less than the minimum wage. Employers must identify certain categories of information on piece-rate employees’ itemized wage statements, including total hours of compensable rest and recovery periods, rate of compensation, and gross wages paid for those periods.

FEHA Amendment: Effective January 1, 2016, AB 987 amends California’s Fair Employment and Housing Act (FEHA), adding protections for employees who request accommodations for disabilities or religious beliefs.  Under the amended FEHA, employers may not “retaliate or otherwise discriminate against a person for requesting accommodation . . . regardless of whether the request was granted,” making a request for accommodation for a disability or religion, in itself, a protected activity.

Kin Care: Existing California law prohibits employers with 25 or more employees working at the same location from discriminating against a “family member” (a parent, guardian, or custodial grandparent) for taking up to 40 hours off each year for the purpose of certain child-related activities (such as school activities or child care or school emergency).  SB 579, effective January 1, 2016, expands the definition of “family member” to include a “parent, guardian, stepparent, foster parent, or grandparent of, or a person who stands in loco parentis to, a child.”  SB 579 also incorporates this expanded definition of “family member” into Labor Code Section 233, which authorizes family members to use accrued sick leave  for kin care purposes.

Limitations on Use of E-Verify: AB 622 takes effect January 1, 2016 and expands the definition of an “unlawful employment practice” to prohibit an employer from checking the employment authorization status of most existing employees, or applicants who have not yet been offered employment.  Employers using E-Verify must also comply with certain employee notification procedures.  Each unlawful use of the E-Verify system can result in civil penalties of up to $10,000.  For more information on the new e-verify law, see Oct. 29 Employment Law Landscape blog,  “California Employers Face New Restrictions on E-Verify Use.

Protection for Family Members of Whistleblowers:  Effective January 1, 2016, AB 1509 prohibits employers from retaliating against an employee who is a family member of a person who engaged in, or was perceived to engage in, protected conduct such as whistleblowing.  This new law also excludes certain employers, such as household goods carriers, from the imposition of joint liability on client employers for all workers supplied by a labor contractor.

Right To Cure Defective Wage Statements: Under Labor Code sections 226(a)(6) and 226(a)(8) employers must provide its employees with wage statements containing specified information, including the inclusive dates of the pay period and the name and address of the legal entity that is the employer.  Under AB 1506, which became effective October 2, 2015, the California’s Private Attorney General Act (PAGA) was amended to provide employers the right to cure certain wage-statement violations before an employee may sue under PAGA. The amended law provides employers with the right to cure defects in the wage statement resulting from the failure to provide the inclusive dates of the pay period and the name and address of the legal employer — before an employee may bring a civil action seeking PAGA penalties.  The amendment limits the employer’s right to cure these defects to once in a 12-month period.  AB 1506 applies only to the cure provisions in PAGA.  Even if a cure is implemented, an employee would retain the ability to seek statutory penalties under Labor Code section 226(e) for violations of section 226(a)(6) and (8).

Meal Period Waivers for Health Care Employees: Existing wage orders permit employees in the health care industry who work shifts in excess of 8 hours in a workday to voluntarily waive their right to one of their two meal periods.  Effective October 5, 2015, SB 327 provides that the meal waiver provisions for health care employees continue to be valid and enforceable.  In upholding the enforceability of these provisions, SB 327 clarified some confusion as to the continued validity of the wage orders caused by a recent appellate court opinion.

Protections for Grocery Workers: Effective January 1, 2016, AB 359 and 897 provide certain protections to employees of a grocery establishment upon a change in control of the business, and clarify that the definition of “grocery establishment” does not include a retail store that has ceased operations for at least six months.

New York

Minimum Wage Increases: On December 31, 2015, the statewide minimum wage in New York for non-exempt (overtime-eligible) employees increases from $8.75 to $9.00 per hour, and the minimum weekly salary for exempt executive and administrative employees increases from $656.25 per week to $675.00 per week. Wages for tipped employees in the hospitality industry are also impacted effective December 31, 2015. For food service workers, the “tip credit,” which permits employers to pay tipped employees less than the minimum wage so long as the employees earn enough gratuities to make up the difference, will increase from $3.75 to $4.00 per hour. Thus the “tipped minimum wage” for such workers will remain at $5.00 per hour, provided that tips plus wages equal or exceed the applicable minimum wage ($9.00 per hour as of December 31, 2015). The minimum overtime rate for these workers will increase to $9.375 per hour. For non-food service workers (excluding those at resort hotels), the tip credit will rise from $2.35 to $3.10 per hour, although the tipped minimum wage for such workers will remain $5.65 per hour. Certain meal and lodging credits, as well as uniform maintenance pay for employers that do not maintain required uniforms, are also scheduled to increase.

Pay Equity: S.1/A.6075, the Achieve Pay Equity bill, was signed into law by Governor Cuomo on October 21, 2015 as an amendment to N.Y. Labor Law 194, and targets differentials in pay due to sex.  It adds a number of employee protections to Labor Law 194 including, most notably, that no employee may be paid less than an employee of the opposite sex working a similar job, taking into account the skill, effort, responsibility, and working conditions involved. It also prohibits discrimination against an employee who engages in communication about his or her own wages or the wages of another employee, narrows the exceptions available to employers under N.Y. Labor Law 194, and increases the amount of damages available to an employee for a willful violation of N.Y. Labor Law 194.  The amendment takes effect January 18, 2016.

Expanded Discrimination Laws: A number of modifications to New York’s anti-discrimination law, the New York State Human Rights Law will take effect January 19, 2016, including: extending the prohibition on sexual harassment to all employers, not just those with four or more employees (S.2/A.5360); allowing employees to obtain attorneys’ fees when they prevail in sex discrimination lawsuits (S.3/A.7189); adding “familial status” to the list of protected traits (S.4/A.7317); and requiring employers to provide reasonable accommodations to all pregnant employees, not just those with a pregnancy-related disability (S.8 / A.4272).

“Ban The Box”: Effective October 27, 2015, New York City adopted the Fair Chance Act, an ordinance restricting when employer inquiries about applicants’ criminal histories may be made and imposed significant obligations on employers who intend to take action based on such information. Also called the “Fair Chance Act,” the ordinance does not supplant other local, state, or federal laws that require consideration of an applicant’s criminal history. By prohibiting such inquiries, New York City joins Washington D.C., New Jersey and Illinois, all of which enacted Ban the Box initiatives in 2014.

Wage Deductions: Originally made effective October 9, 2013, the state’s wage deduction regulations, 12 NYRR Part 195, which were originally scheduled to expire on November 6, 2015, have been extended to remain effective until November 6, 2018.

Michigan

Local Government Labor Regulatory Limitation Act:  Effective June 30, 2015, Michigan local governmental bodies (e.g., cities, villages, townships, and counties) are prohibited from regulating various aspects of employment, including, but not limited to:  minimum wage; work stoppages, strike activity, and union organizing efforts; hours and scheduling; fringe benefits; unpaid or paid leave; and information required on an application for employment.  The Local Government Labor Regulatory Limitation Act applies retroactively to any local ordinance, policy, or resolution adopted after December 31, 2014 and was designed to ward off efforts to augment employee rights and benefits beyond those afforded under state law.

Texas

Open Carry: Effective January 1, 2016, under H.B. 910 licensed individuals may openly carry handguns in Texas.  The new statute does, however, allow employers to prohibit firearms in the workplace by posting a notice that reads: “Pursuant to Section 30.07, Penal Code (trespass by license holder with an openly carried handgun), a person licensed under Subchapter H, Chapter 411, Government Code (handgun licensing law), may not enter this property with a handgun that is carried openly.”  Certain other requirements apply to the notice in order for it to be valid under the law.

Sexual Harassment of Unpaid Interns:  Texas Labor Code § 21.1065, which became effective September 1, 2015, requires an employer to take immediate and appropriate corrective action where the employer’s agents or supervisors know or should have known that an unpaid intern has been sexually harassed.

Washington D.C.

Minimum Wage Increase: In 2016, the minimum wage in Washington D.C. will again increase as a result of the District of Columbia’s Minimum Wage Amendment Act of 2013 (the Act). In July 2014, the minimum wage increased to $10.50 per hour, the highest rate for any state or territory. Effective July 1, 2016, the minimum wage will rise to $11.50 per hour. This is the final incremental increase mandated by the Act. Beginning in July 2017, the District’s minimum wage will increase annually in proportion to the annual average increase in the Consumer Price Index for All Urban Consumers in the Washington Metropolitan area for the preceding 12 months.

Transit Benefit Programs: The District of Columbia joins New York City and San Francisco on January 1, 2016, by requiring employers with 20 or more employees to offer transportation benefit programs. Starting on January 1, 2016, Washington D.C. employers covered by the law must offer one of three benefits programs. Under D.C. Code §32-151, an employer can institute a benefit program that allows employees to set aside pre-tax funds each month to pay for their “commuter highway vehicle [van pool], transit or bicycling” commuting costs, consistent with Section 132(f)(a)(A), (B), and (C) of the Internal Revenue Code. Alternatively, an employee can elect to have the employer supply a transit pass or reimbursement of vanpool or bicycling costs in an amount at least equal to the purchase price of a transit pass for an equivalent trip. The final option allows an employer to provide transportation at no cost to the covered employee in a vanpool or bus operated by or for the employer. The penalty for failing to offer at least one of these benefit programs is a civil fine ranging from $50 to $2,000 for the first offense under the Civil Infractions Act.

Living Wage Increase for District of Columbia Contractors: In 2006, the District of Columbia passed the Living Wage Act of 2006, which requires District of Columbia government contractors and recipients of government assistance, including grants, loans, or tax increment financing in the amount of $100,000 or more, to pay affiliated employees no less than the current living wage rate. Effective January 1, 2016, the living wage rate in Washington D.C. will increase to $13.84 per hour. Violators of the Living Wage Act are subject to criminal and civil penalties. The civil penalty for a first offense is $50 per day for each employee whose rights under the Living Wage Act are violated, and increases to $100 per day for a subsequent offense.

Georgia

No employment-related statutory developments are anticipated in Georgia this year.

For more information on these or other legislative developments, please contact any member of Schiff Hardin’s Labor & Employment Group.

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Photo of Julie Furer Stahr Julie Furer Stahr

Julie is sought after as an advisor and litigator by clients large and small who want effective, real-world counsel and solutions to the personnel issues employers face on a daily basis.

A one-stop shop for a broad range of human resources and employment law needs, Julie is an excellent resource who can demystify a complex web of issues. She is able to focus on a client’s big picture and understands that employment law problems are only a small part of it. That’s why Julie gears her advice toward furthering business operations and management goals in the most efficient way possible, and provides clear direction and counsel in language that makes sense to non-lawyers.