RWHRMA Quarterly Employment Law and Legislative Update –
August 2017
By: Ashley L. Felton, attorney at Felton Banks, PLLC and member of RWHRMA Governmental Affairs team
The RWHRMA Governmental Affairs team is pleased to bring you the second quarterly newsletter for 2017. This edition recaps some of the key employment law and legislative developments since April 2017.
Washington, D.C. │ National Legislative Update
ACA Remains as Healthcare Repeals Fail
As the GOP struggles to pass a repeal or replacement of the Affordable Care Act (“ACA”), employers should know that the ACA remains in full force for the time being. This means Employers should continue abiding by ACA regulations, including employee health coverage requirements and annual notification and reporting requirements. Stay tuned as this issue progresses.
DOL Withdraws Guidance on Joint Employment/ 1099 Status
As you may recall, in 2015 the U.S. Department of Labor issued an interpretation of the test for independent contractor status under the Fair Labor Standards Act (“FLSA”). This six-factor test was based on “economic realities” of the individual situation. This same test was also expanded upon as useful when determining Joint Employment liability between two companies with shared ownership or employees. By withdrawing this guidance, it is uncertain whether or not courts will consider this six-factor test in cases in which joint employment status or contractor status play a key role.
Proposed Revisions to Overtime Rule…...?
Overtime reform still remains on hold for the time being, which means the current FLSA language is the law. On July 25, 2017, the DOL submitted a formal Request for Information (“RFI”) to the public regarding the “white-collar exemptions.” Comments can be submitted electronically by going to www.regulations.gov. All public comments are due 60 days after the final RFI is published in the Federal Register.
North Carolina │ State Legislative Update
Franchisors are not Employers under certain North Carolina Employment Laws
Gov. Cooper signed Session Law 2017-10 which adds G.S. §95-25.24A to North Carolina’s body of employment laws. This new law states that franchisors are not deemed “employers” for purposes of unemployment insurance, worker’s compensation, and employer taxation requirements under Chapter 105 of the North Carolina General Statutes.
Fair Employee Classification Act Ratified by General Assembly
During the 2015 legislative session, North Carolina devoted a great deal of attention to the classification of independent contractors. This continued in subsequent sessions and in 2017, Senate Bill 407 was ratified creating the Employee Fair Classification Act. This Act focuses on the classification of independent contractors and requires cooperation and information sharing between North Carolina state agencies including the North Carolina Department of Revenue, Department of Labor, the Division of Employment Security and the North Carolina Industrial Commission relative to reports and investigations of employee misclassification and creates an Employee Classification Section to be housed in the Industrial Commission. The Act also contains a “public notice” provision which requires all establishments subjects to the Act to display a poster summarizing major provisions which shall also include notice of the following “in plain language:”
· Any worker defined as an employee shall be treated as an employee unless an independent contractor.
· Any employee who believes that the employee has been misclassified as an independent contractor may report the suspected misclassification to the Employee Classification Section.
· The physical location, mailing address, telephone number, mailing address and e-mail address where alleged incidents of misclassification occurred may be reported to the Employee Classification Section.
As of the date of publication this Senate Bill 4017 has not been signed into law by Governor Cooper. However, with this legislation pending, now may be a good time for North Carolina employees to consider conducting an audit of independent contractors to ensure proper classification of the workforce. This is particularly important since the Employee Fair Classification Act requires the Employee Classification Section to publish annually a report relative to the Act, including, at a minimum, the number of reports of employee misclassification received, the number and amount of back taxes, wages, benefits and penalties or other monies collected, and the number of cases referred to each Section. Senate Bill 407 makes clear that employee classification is going to be an issue that state agencies in North Carolina increasingly focus on in the years ahead.
Paid Time Off Excluded from Severance Pay for Purposes of Unemployment Insurance under House Bill 5
House Bill 5 was ratified and became effective on July 1, 2017, and applies to claims for unemployment insurance benefits from and after this date. Under House Bill 5, G.S. 96-15.01(c) was rewritten to exclude amounts paid to an individual for accrued and unpaid time off following termination of employment. As revised, these payments no longer qualify as a “separation payment.” An individual is not considered to be unemployed if, with respect to the entire calendar week, the individual receives or will receive because of the individual’s separation from work remuneration in any form. As revised, “remuneration in any form” will no longer include payments for accrued and unused PTO and the individual will be considered unemployed for the purposes of unemployment benefits despite payment of these amounts by the employer after employment terminates. Additionally, G.S.14.1(b) was rewritten so that an individual no longer needs to serve a one-week waiting period if a claim for unemployment benefits was directly due to a federal disaster declaration. Employers in North Carolina should be aware that payment of accrued and unused PTO following termination of employment will no longer extend the one-week waiting period and should also be aware that when unemployment is the result of a federal disaster declaration, the one-week waiting period will no longer apply.
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If you have a question, are interested in joining RWHRMA’s Governmental Affairs team or have a topic you would like to see covered in the December 2017 legislative update, please contact Holly Hammer, Governmental Affairs director or another member of the RWHRMA Governmental Affairs team, all of whom practice employment law in the RTP community:
· Holly Hammer, attorney at Hutchison PLLC,
· Ashley Pittman, attorney at Hutchison PLLC,
· Ashley Felton, partner, Felton Banks PLLC,