Where Is Employment Law Headed?

I attended the November breakfast meeting of Atlanta’s Southeast Franchise Forum, a group I have been associated with for 15 years now. Matt Clark from Smith Gambrell & Russell provided an employment law update. The significance of the timing of course is that new overtime regulations are going live in two weeks. I had a few of “take-aways” I wanted to pass along.

The NLRB, pushed by a liberal administration and NLRB make-up, has increased the pay floor dividing “exempt” and “non-exempt” employees (reads: not subject to overtime versus subject to overtime) to roughly $47,500 per year. There are other criteria of course, but the pay level is one element of the rule that is hard to ignore or overcome.

The current administration hopes that raising the floor will mean that many workers will get an automatic pay raise. Others believe just the opposite – that people who work more than 40 hours per week now will have pay rates adjusted, or a cut back to 40 hours per week by spreading current job duties around, or perhaps reconsidered jobs duties all together, or perhaps hiring more people who work less and maybe earn less. I suspect that the new rules will encourage the existing trend of replacing people with technology. The new presidential administration will undoubtedly place restraint on the NLRB, but Mr. Clark advises that NLRB personnel changes will be slow since members will only start to turn over in mid-2018.

Matt Clark also discussed the trouble employers can find themselves if they terminate workers for posting derogatory comments about the employer on social media. Put simply, employers cannot fire workers who do that. Why? The current NLRB believes non-union employees have a right to such “concerted activity”, even if the comments are grossly incorrect or provided in the most unsavory terms. Ironically, an employee who uses social media to profess bad social deeds (i.e., that same employee speaks poorly of a person or group on Facebook, or posts that he/she wants to beat up people of one group or another), then employers could fire them for being social misfits.

Mr. Clark finally updated everyone on the “joint employer” rush that is running through franchising. The NLRB and some courts have found that franchisors who exercised too much control over employees of franchisees are joint employers and jointly and severally liable for bad employment deeds of the franchisees. How far this trend goes is hard to determine. Clearly this is a tight rope for franchisors. The new presidential administration might restrain the joint employer movement. But Mr. Clark and others remind franchisors to restrain activities that may make it appear that they control employment practices at franchisees. There are also steps the franchisees can be required to take to limit the franchisor’s exposure. Interestingly, hold harmless and indemnification clauses in franchise agreements may need to be reconsidered since a deemed joint employer-franchisor that incurs damages may not be able to recover costs from a franchisee since, it might be argued, the franchisor caused the employment problem.

All this shows we are in scary and shifting place right now when it comes to employment law. Mr. Clark and his colleagues will be busy for some time.

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