As 2018progresses, businesses are contending with a whirlwind of activityinvolving many facets of employment law, including exemptionstatus, pending Supreme Court cases, and responses to myriadharassment claims. (Photo: Hailshadow/iStockphoto.com)

As 2018 progresses, businesses are contending with a whirlwind of activity involving many facetsof employment law. This activity is not limited to any specificarea of law, but rather encompasses a wide range of issues,including exemption status, pending Supreme Court cases,and responses to myriad harassment claims—to name a few. Given the fastpace at which changes are occurring in so many areas, employersmust now, more than ever, stay updated on the evolving legallandscape. Here are just a few areas we are watching.

The DOL Overtime Rule

Under the Fair Labor Standards Act (FLSA) certainemployees, including those who fall within the executive,administrative and professional (EAP) exemption, are not subject tothe FLSA's minimum wage and overtime requirements, provided theymeet certain job duty requirements, are paid on a salary basis, andreceive compensation at a minimum salary threshold. 29 U.S.C.A.§213(a) (1); 29 C.F.R. §541.100.

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On May 23, 2016, the Department of Labor (DOL) issued a finalrule concerning the EAP exemption. 79-FR-18737 (Apr. 3, 2014);“Dept of Labor, Wage & Hour Div., Defining and Delimiting theExemptions for Executive, Administrative, Professional, OutsideSales and Computer Employees,” 81 Fed. Reg. 32391, 32392 (May 23,2016). The rule, which had been set to take effect on Dec. 1, 2016,would have significantly increased the minimum salary requirementof the EAP exemption from $455 per week to $913 per week (with nochange to the job duties requirement), raised the salary thresholdfor Highly Compensated Employees, and provided for automaticincreases to the minimum salary levels. 81 Fed. Reg. 32393.

Many employers, anticipating the effective date of the rule,implemented changes to employee classifications and compensation.To the surprise of many, however, on Nov. 22, 2016 (one week beforethe rule's effective date), the U.S. District Court for the EasternDistrict of Texas enjoined the rule from taking effect, afterchallenges were brought by the state of Nevada, other states, andbusiness coalitions. Nevada v. U.S. Dep't of Labor, 218F.Supp.3d 520, 524-25, 534 (E.D. Tex. 2016). On Aug. 31, 2017, theNevada court invalidated the rule, finding it made the EAPexemption primarily depend on an employee's salary level, withoutany analysis of job duties, and was contrary to Congress's intent.Nevada v. U.S. Dep't of Labor, 275 F.Supp.3d 795, 806(E.D. Tex. 2017).

In July 2017, while the Nevada litigation was pending,the DOL (under a new administration) reset the rulemaking process,inviting public comment on a range of issues, including the methodused to set a minimum salary threshold, whether different levelsshould be set, and the automatic updating provisions. Request forInformation, 82 FR 34616-01 (Jul. 26, 2017). The comment period hasended, and the DOL is reviewing the submissions. The rule-makinghas resulted in a stay of litigation, as—although on Oct. 30, 2017.the U.S. Department of Justice, on behalf of the DOL, filed anotice of appeal of the Nevada decision to the FifthCircuit—the DOL also moved to hold the appeal in abeyance whilerule-making continues, and that request was granted.

For now, employers are required to comply with the federal lowerminimum thresholds predating the rule, along with any state salarylevel requirements.

Sexual orientation and gender identityprotections

Departing from the Obama administration, the Justice Department,which previously supported an expansive interpretation of Title VIIworkplace protections, has argued for a more limited scope relativeto sexual orientation and gender identity. In July2017, the U.S. filed an amicus curiae brief in a Second CircuitCourt of Appeals case, arguing (contrary to the position of theEqual Employment Opportunity Commission [EEOC]) that Title VII doesnot prohibit sexual orientation discrimination.

On Feb. 26, 2018, the Second Circuit ruled that federal law doesprohibit such discrimination, stating: “sexual orientation isdoubly delineated by sex because it is a function of both aperson's sex and the sex of those to whom he or she is attracted.”Zarda v. Altitude Express, No. 15-3775 (2nd Cir., Feb. 26,2018). This decision creates a circuit split, with the Sixth andSeventh Circuits aligned with Zarda, and the Eighth andEleventh Circuits holding differently. Again departing from theprior administration's interpretations, in October 2017, theAttorney General's Office stated that, as a matter of law, TitleVII protection does not include gender identity per se, and thusdoes not prohibit discrimination against transgender employeesbecause “sex” is “defined to mean biologically male or female.” SeeU.S. Att'y Gen., Memorandum: Revised Treatment of TransgenderEmployment Discrimination Claims Under Title VII (October, 2017).These unsettled interpretations at the federal level do not,however, impact state or local protections, such as New Jersey'sLaw Against Discrimination, which prohibits discrimination based onsexual orientation and gender identity or expression. See N.J.S.A.10:5-12. Multistate employers should thus consider federal, stateand local laws in drafting policies and defending againstclaims.

Legalized marijuana

Although marijuana is an illegal drug under the FederalControlled Substances Act, medical marijuana and recreationalmarijuana are legal in many states. While some employersare currently not required to accommodate marijuana users,employers in other states may have to.

For example, in Massachusetts, where medical and recreationaluse are legal, the Supreme Court recently held an employee who waslegally prescribed and tested positive for marijuana might requireemployer accommodation of off-site marijuana use under disabilityaccommodation laws. Barbuto v. Advantage Sales andMarketing, 78 N.E.3d 37 (Mass. 2017). Maine also has a newrecreational marijuana law, barring employers from refusing toemploy or penalize anyone solely for consuming marijuana outsidethe employer's property, but not requiring employers to “permit oraccommodate” the use, consumption or sale of cannabis at work, andpermitting discipline of employees who report to work while “underthe influence of marijuana.” Maine Code Revised Title 17-A, Chapter45. While proving impairment is a recognized challenge, leadingemployers to reconsider testing for marijuana use, companiesenforcing drug-free workplace policies may continue to rely onmarijuana's status as an illegal substance under federal law butshould tread carefully given the expansion of state laws legalizingmarijuana and potentially protecting users even in the employmentcontext.

Sexual harassment

Countless reports of sexual harassment and assault in workplacesacross the nation have brought renewed attention to prevention and a laserfocus on responses to complaints and remedial action. Notably,legislators in New Jersey and other states have been working toensure employers are incentivized to prevent such conduct. The TaxCuts and Jobs Act, enacted in December 2017, disallows deductionsfor “any settlement or payment related to sexual harassment orsexual abuse if such settlement or payment is subject to anondisclosure agreement, or [for] attorney's fees related to such asettlement or payment.” Public Law No: 115-97 (Dec. 22, 2017). Thislaw will certainly cause employers to balance the financialimplication of a settlement payment against the benefit ofnondisclosure.

Closer to home, on Dec. 4, 2017, the New Jersey legislatureintroduced Senate Bill 3581, which: (i) would deem unenforceableprovisions in employment contracts and agreements which“conceal[]”…“details” relating to harassment, discrimination andretaliation claims; and (ii) bar waiver of any procedural orsubstantive rights relating to such claims. Other states haveproposed similar legislation. These laws would limit employers'ability to require employees to arbitrate claims under fairemployment practices laws, allowing employees to file civil claims,with the potential publicity attendant to same.

U.S. Supreme Court

Justice Neil Gorsuch's appointment to the Supreme Court,bringing the court back to a conservative majority, willundoubtedly affect labor and employment cases in 2018. Two notablepending cases are Epic Systems Corp. v. Lewis(consolidated with Ernst & Young v. Morris andNLRB v. Murphy Oil USA), and Janus v. AmericanFederation. The Epic Systems case concernsenforceability of class action waivers in arbitration agreementsinvolving employment-related disputes. The court will addresswhether such agreements, which prevent employees from participatingin class and collective proceedings asserting employment claimsagainst their employers, violate an employee's right under theNational Labor Relations Act (NLRA) to engage in “concertedactivities.” 29 U.S.C. §157. The employers have argued that theFederal Arbitration Act requires enforcement of the agreementsabsent a contrary command from Congress, and no such command isfound in the NLRA. Oral argument was held on Oct. 2, 2017.

In Janus, the court is considering whether to overrulea 1977 decision concerning the constitutionality of union dues inthe public sector. In Abood v. Detroit Board of Education,431 U.S. 209 (1977), the court held that a state may require allpublic employees (even non-union members) to pay “service charges”to unions, provided the receipts are used to cover only expensesfor purposes of collective bargaining, contract administration andgrievance adjustment, and not to support an ideological cause apublic employee may oppose. Id. at 225-26, 235-36. InJanus, the petitioner has argued that collectivebargaining with a government entity is inherently political, andthe type of mandatory service charge permitted by Aboodnecessarily subsidizes political speech in violation of the FirstAmendment. In 2016, following the death of the late Justice AntoninScalia, the court issued a gridlocked, 4-4 decision on this veryissue. Friedrichs v. California Teachers Assoc., 136 S.Ct. 1083 (2016). Accordingly, the court's decision in Janus mayrest with Justice Gorsuch, who remained silent during oral argumenton Feb. 26, 2018.

With these and so many other pending issues on the employmentfront, we are watching to see how the rest of the year unfolds.

Bird is a director in the Employment & Labor LawDepartment of Gibbons P.C. in Newark. Cowit is counsel, andGrierson is an associate, in the Gibbons Employment & Labor LawDepartment.