Five Wage and Hour Questions: What’s “In Store” For 2017?

Seyfarth Synopsis: With the new administration and new year well underway, retail employers may be wondering what’s next for likely litigation and legislation impacting their business.  Below are thoughts about five questions retail employers may be considering.

1. The retail industry faced an onslaught of wage and hour litigation in recent years, especially class action suits about the overtime-exempt status of assistant store managers and about missed meal breaks. Will retailers get relief from these cases in the coming year?

While the tsunami may have receded a bit, these cases are still going strong and are regularly in the news, likely because reports of high fee awards have attracted plaintiffs’ attorneys. Thus, although many ASMs are not entitled to overtime due to the duties they perform, employers who haven’t reclassified these positions or defended litigation remain at risk of a large complex suit. And if the new overtime rule (the higher minimum salary requirements) ever goes into effect (which is a big “if”), retail and hospitality employers will be among the most impacted.

2. What other issues are on the horizon for retail employers?

Retailers who have or are considering arbitration agreements with class action waivers should keep their eyes on the Supreme Court’s review of whether those waivers are enforceable. Earlier this year, the Court granted review of three cases (two that supported the NLRB’s reasoning and one that went against it) and is set to decide the issue during the term starting in October.

Due to the change in administration, other NLRB-related issues that may affect retail employers are uncertain. With the composition of the NLRB about to change, the NLRB’s position on union elections, joint-employment and social media and other policies may change significantly. Retail employers who are revising their handbooks will want to stay on top of these issues.

Regardless of what happens at the federal level, national retail employers have to continue to track and comply with the ever-expanding requirements of state and local law. States and cities are passing aggressive employee protections, including paid sick and parental leave, minimum wage increases, predictable scheduling and the list goes on. While some of these issues remain localized (for example, the suitable seating requirement in California), others are spreading quickly throughout the country. National retailers will have to stay ahead of this legislation.

3. Other than meal break and bag check claims, retail employers have not faced as many off-the-clock (OTC) claims as other employers given the on-site nature of their business. Now that the law around those types of cases is fairly settled, will OTC cases against retail employers go away?

As the market changes, so do the types of cases employees will bring. It remains to be seen how retailers will adapt to the future of work and the gig economy and what new claims will come with the changes. For example, we predict that issues will arise around privacy, among other things, as more employers require employees to use wearable technology in the workplace to record location and productivity. As retailers get more creative about ways to improve and expand their business, new risks will have to be addressed.

4. There was a lot of attention on joint employment during the Obama administration. Can retailers expect a more friendly standard now?

While we anticipate pro-employer changes during the Trump administration, including possible rescission of the NLRB’s Browning-Ferris decision and the Department of Labor’s Administrator’s Interpretation, it will take time. The nomination of Alexander Acosta for Secretary of Labor is recent and still pending (the first nominee, Andrew Puzder, withdrew from consideration) and the NLRB appointments will come later. Retailers that have franchise relationships should continue to insulate themselves from joint employment while we wait to see how this issue will develop in 2017 and beyond.

5. It seems like pay equity is in the news daily, even making it into a Super Bowl ad. Are there any pay equity issues specific to retailers?

Pay equity is an area where state and local laws are rapidly expanding and providing more protections for employees than federal law. For example, Massachusetts and Philadelphia have passed laws prohibiting inquiries into an applicant’s prior salary, which the federal Equal Pay Act does not prohibit. Retailers may need to revise their job applications, policies and hiring practices to ensure compliance with these new requirements.

Nationwide retailers also should keep in mind that the factors on which they may rely to explain wage differentials vary by state. For example, when the changes to the Massachusetts law take effect next year, employers can explain wage differentials between employees of opposite genders only by relying on a seniority system, a merit system, geographic location or three other factors. While federal law provides a catchall defense for any “factor other than sex,” the Massachusetts statute has no similar provision.

Retail employers should consider whether to conduct a pay equity audit, especially in light of the potential for further legislation at the state level. Such assessments are a valuable tool for all employers to evaluate whether they are facing potential exposure and to identify options for remediation.