The National Labor Relations Board has taken a troubling position on facially neutral employment policies.
Section 7 of the National Labor Relations Act guarantees workers the right to “self-organization, to form, join, or assist labor organizations, to bargain collectively…, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Employers may not prohibit employees from engaging in such “collective activity” or adopt rules that have a “chilling effect” on collective activity. Work rules that expressly interfere with collective activity are clearly unlawful. But what about facially neutral work rules that may have an impact on collective activity? How is the employer’s right to manage its business balanced against the employees’ right to engage in such activity?
This is an issue on which the Board has taken vacillating positions, alternating between employer-friendly and employee-friendly approaches. The pendulum has now swung back to “employee-friendly.” An employer must show that its facially neutral work rules “advance a legitimate and substantial business interest” and are narrowly tailored to achieve the employer’s objective. Notably, when considering claims under this framework, the Board will now assess whether the challenged rule has a reasonable tendency to chill employees from exercising their Section 7 rights from the perspective of an employee who is economically dependent on the employer, who contemplates Section 7 activity, but who wishes to avoid the risk of being disciplined or discharged for violating the challenged rule.
Under this standard, the Board has deemed rules prohibiting “disrespect toward supervision” and “dishonesty or falsification of any company records” to have an unlawful chilling effect, as have rules prohibiting obscene or abusive language, prohibiting employees from restricting production, and prohibiting unauthorized use of telephones. A NLRB Administrative Law Judge recently held that Starbuck’s policies stating that “[employees] are expected to communicate with other [employees] and customers in a respectful manner at all times,” and that “[w]e treat each other with dignity and respect” were unlawful.
The employer may defend a policy by showing that the policy “advances a legitimate and substantial business interest” that cannot be advanced with a more narrowly tailored rule. This is a very difficult standard to meet. No categories of policies are considered presumptively valid. Each employment policy must be analyzed on a case-by-case, fact-specific basis.
The right to engage in “collective activity” is not limited to unionized employers. All business owners and non-profits are subject to NLRB rulings pertaining to “collective activity” even if their workers are not unionized or not seeking to unionize.
Employers must review their personnel policies to assure compliance with the new NLRB standards. Contact Trimboli & Prusinowski at 973-660-1095 to schedule a consultation.
The United States Department of Labor (DOL) recently announced an increase in the minimum salary thresholds required to categorize employees as overtime exempt under the Fair Labor Standards Act (FLSA).
Under the FLSA, business owners must pay overtime compensation at one and one-half times the employee’s regular rate of pay for any hours worked over 40 hours in a workweek unless the employee falls into an overtime-exempt category. The three most common exempt categories are the so-called “white-collar” exemptions for executive, administrative, or professional employees. In addition to performing executive, administrative, or professional functions, to be exempt from overtime pay, these employees must be paid on a salary basis and meet a minimum salary threshold.
Beginning July 1, 2024, the minimum annual salary threshold for exempt employees will increase from $35,568 to $43,888. Then, on January 1, 2025, the annual salary threshold will increase to $58,656. Beginning July 1, 2027, the minimum required salary threshold will be updated every three years.
The FLSA’s amendment also affects the salary threshold for “highly compensated employees.” Currently. highly compensated salaried employees are exempt from overtime if they are paid a minimum annual salary of $107,432 and customarily and regularly perform at least one of the exempt duties or responsibilities of an executive, administrative or professional employee. On July 1, 2024, the salary threshold for “highly compensated employees” will increase to $132,964. The threshold will increase to $151,164 on January 1, 2025, and will be update every three years beginning July 1, 2027.
New Jersey employers should be aware that the State’s Wage and Hour Law (WHL) incorporates the FLSA executive, administrative, or professional employee exemptions by reference. The increase in the mandatory salary minimums for overtime exemption under the FLSA will also apply to overtime exemption under the WHL.
Employer organizations have already filed suit to block the salary threshold increases. The outcome of these challenges is uncertain, and there is no court order enjoining the FLSA from enforcing the increases. Employers must therefore assume that the increases will take effect and plan accordingly.
Determining who and who is not overtime-exempt under federal and state law raises tricky questions of fact and law. Mischaracterizing an employee as exempt is a costly mistake. Contact Trimboli & Prusinowski at 973-660-1095 to schedule a consultation.
