December 15, 2022
Welcome and Happy Holidays!
In this fourth and final issue of SuperVision for 2022, we asked our Spilman Team to highlight some of the big labor and employment developments from 2022 and to preview issues they expect to see in 2023. Consider this our Top Ten (plus a bonus) to close out 2022! 

We hope you have enjoyed SuperVision this year and found the topics interesting! As we start to plan for 2023, feel free to contact us with your feedback or suggestions for future topics.

We wish you and yours a wonderful holiday season and a prosperous 2023!

Eric W. Iskra, Chair, Labor & Employment Practice Group
Carrie H. Grundmann, Executive Editor, SuperVision
A Look Back at 2022 and a Look Forward to 2023

In 2022, we have seen the overturning of long-standing legal precedent by the Supreme Court and the recent passage of legislation from a democratically controlled Congress. As the recent run-off Senate election in Georgia confirms, our populace remains as polarized as ever. Do not expect this to change in 2023. With more frequent shifts in policy and legal protections, employers must grapple with an ever-changing array of laws, rules, and regulations. Employers also are having to grapple with even greater divergence among state laws, which can be a particular challenge for employers operating in multiple jurisdictions. More frequent updates and review of employment policies and benefits programs will become necessary to ensure ongoing compliance with this ever-changing legal landscape.
Pay Transparency will Continue to become a Growing Trend in 2023, so Beware of the Risks

For years, there has been a tension between employees and employers over the transparency around employee salaries. There are significant implications here that will only become more acute with gender and racial perceived pay gaps.

Momentum has been behind more transparency in recent years, and in 2023, we expect to see it gather even more steam. Many U.S. states have pay transparency requirements, and New York recently joined this list at the beginning of November.

The transition to greater pay transparency certainly won’t be easy for employers. Audits would be a wise move, and some employers should consider adjusting salaries of certain segments so that employees believe they’re being paid fairly. But the end goal of this shift – less risk of discrimination and equal pay lawsuits – will certainly be worth the effort. Employers should also remember that being transparent about pay can help boost retention and increase worker productivity.
The Status of Remote Work

COVID-19 resulted in many employers having employees work from home, either by choice or as a result of local mandates. But the result is that remote work is now a part of the workplace fabric, perhaps as a part of hybrid system where employees report to the office two to three days a week, and work from home the rest of the week.

Employers have found many advantages to remote work:
  • Reduced need to pay for office space
  • Increased productivity (at least among those who work well from home)
  • Improved recruiting since employers are not limited to candidates in their immediate locations (and no need to pay for moving expenses)

The employers who have struggled with remote work have largely done so because they did not establish expectations at the beginning. Namely, they failed to establish and/or enforce guidelines for remote work such as rules for virtual meetings (cameras on), standards for home offices (limit distractions), and procedures for recording time and attendance. But remote work is not going anyway anytime soon and employers who do not want to limit themselves in recruitment will need to adapt, beginning with strong workplace policies.
Don’t Neglect Workforce Safety in a Tight Labor Market

For the carriers surveyed, the shifting workforce in the current economic environment was one area of concern for 2023. A tight labor market may require hiring inexperienced workers with less focus on safety training, which could affect the frequency and severity of on-the-job injuries. Changes in work patterns to remote and hybrid workers following the pandemic created work environments with which the industry has little experience, causing trepidation for the surveyed insurance leaders.

Building a culture of safety reduces workplace injuries, limits lost production, and allows an employer to take advantage of cost savings in the current workers’ compensation insurance market.

The survey results and other resources can be found on NCCI’s website.
Supreme Court Hears Case on the "Highly Compensated" Exemption Under the FLSA

In October of this year, the Supreme Court of the United States heard a Fair Labor Standards Act (“FLSA”) case that may significantly impact employers who pay highly compensated employees on a daily/shift rate. In Helix Energy Solutions Group, Inc. v. Hewitt, the central question is whether a highly paid employee (in this case, a supervisor making $200,000 per year) may claim overtime pay. The real dispute is whether Hewitt was paid a “salary” (which is normally required for the “highly compensated employee” exemption) given that he was paid a daily rate of $963, instead of a fixed annual amount, as is common in the oil/gas industry. The Justices appeared divided at oral argument over the appropriate standard, but appeared acutely aware of the policy implications of this decision. If the Supreme Court sides with Hewitt, employers who rely on daily/shift rates may be forced to either pay overtime, or move to a fixed annual salary compensation scheme to qualify for the relevant FLSA exceptions. Certain industries impacted include oil and gas, nursing and healthcare, construction, and creative services.
Addressing the Rise in Workplace Violence – Workplace Violence Prevention Plan

The federal Occupational Safety and Health Administration (“OSHA”) states that nearly two million American workers report having been victims of workplace violence in the past year. Recent events have many employers assessing their organization’s risk for workplace violence and developing a prevention plan. A Workplace Violence Prevention Plan (“Plan”) provides employees with a reference on managing actual and/or potentially violent situations. It is intended to make employees, including supervisors and managers, aware of the potential for violence in the workplace, to increase their abilities to recognize early warning signs of potentially violent situations, and to understand how to respond to actual or potential incidents. In addition to serving employers’ paramount interest in protecting employee safety, a Plan may also help limit the risk of legal liability. Some hostile or violent acts are motivated by race, religion, or other protected characteristics, and they potentially implicate employment discrimination claims. Further, state law claims permitting recovery of punitive damages may be available to some victims of workplace violence, particularly if the violence was foreseeable to an employer. Such legal theories may include negligent hiring, training, and/or supervision; premises liability; and respondeat superior (where an employer is held vicariously liable for acts of certain employees), among others. Finally, such a Plan can provide employees with direction on where to go to report a concern – which may, in the end, prevent an incident of violence from actually occurring. OSHA has suggested that an employer’s failure to think about these issues, and to at least implement a plan, could support the issuance of a General Duty Clause Violation and Citation.
Unions are in Vogue

A Gallup Poll (August 2022) reports that 71 percent of Americans approve of labor unions, the highest approval rating in nearly 60 years. It is no surprise that this meteoric rise in union popularity comes at a time when unions were in the news on a near-daily basis and involving businesses like Amazon, Starbucks and Trader Joe's. Unlike the immediate post-pandemic period when it was a seller’s market, we will enter 2023 with signs of a recession, rising inflation, and a tightening job market. These factors will likely test the ability of unions to bargain on behalf of their newly unionized employees, and employers will be equally incentivized to give little ground with the pending economic risks. Regardless of whether unions continue to grow in popularity, employers must be more vigilant than ever in ensuring they compensate employees fairly, create a positive work environment for all employees, and otherwise take steps to make a union unnecessary.
From Unionization in 2022 to Collective Bargaining in 2023

Following the unionization efforts at nationwide chains (e.g., Starbucks, REI, Trader Joe’s, and Chipotle) that took place in 2022, these newly unionized chains will be busy negotiating initial contracts throughout 2023. During these negotiations, we expect two trends to emerge:

  1. Employers with unionized and non-unionized employees at different locations will attempt to withhold compensation increases offered to non-unionized locations from newly unionized locations. An employer may need to increase wages for legitimate reasons (e.g., retention), but it cannot change its unionized employees’ wages without the union’s agreement. An employer is unlikely to increase wages for unionized workers without concessions from the union, which may cause the employer to withhold raises offered to non-unionized employees. Employers must beware of the risk of discrimination claims by unionized workers if pay increases are offered to only non-unionized locations (see the Board’s complaint against Starbucks from this summer). However, there has also been a general trend in favor of more pay increases for non-unionized workers. The Bureau of Labor and Statistics reported total wage and benefit costs for private-sector nonunionized employers was 3 percent higher than unionized employers for the 12-month period ending June 2022. 
  2. Unions that represent unionized employees in different bargaining units at multiple locations will attempt coordinated bargaining. To increase their chances of winning organizing campaigns against nationwide chains, unions sought to unionize employees on a location-by-location basis. After winning these campaigns, unions' lawyers and representatives will be spread thin trying to negotiate separate contracts at individual employer locations, which will be costly and time consuming. To mitigate the costs and time to negotiate contracts, unions negotiating on behalf of employees at many locations may attempt strategies to achieve coordinated bargaining (e.g., making similar demands or using identical bargaining representatives for all locations). Under current law, however, the unions cannot insist the employers accept a “master” agreement covering employees at different unionized locations or condition any agreement on the employer’s acceptance of similar terms at a different location. We expect unions will test the limits of this current law. 
Continued Popularity of DEI Programs 

Diversity, equity, and inclusion (“DEI”) training programs and dedicated DEI employees are becoming increasingly common in workplaces in order to address disparities in workplace culture; foster inclusive behaviors; address cultural, racial, and religious sensitivities; cultivate skills to combat implicit bias; address systematic oppression; and so much more. Studies also have shown that DEI helps de-risk companies, aids in recruiting top talent, and may even result in increased profits. Expect the trend in DEI training programs and initiatives to continue into 2023 with an even greater emphasis on embedding DEI into all aspects of business and culture.
Marijuana: The Law and Reality in Employment

The rapidly changing legal landscape on marijuana usage is a challenging area of compliance for employers – particularly multi-state employers. Workplace and public safety, employee privacy, and disability laws further complicate matters. Employers must address the use of medicinal marijuana and recreational marijuana in the workplace to ensure that their policies comply with all applicable laws and that appropriate steps can be taken when faced with positive marijuana drug test results.

Some state laws prohibit employment discrimination against applicants and employees who use medical and/or recreational marijuana, and we can expect to see courts continuing the trend to protect the rights of individuals in the workplace. Employers should continue to monitor changes in federal, state, and local laws while carefully drafting policies with the guidance of legal counsel.
Pennsylvania Broadly Defines “because of . . . sex”

On December 8, 2022, a regulation proposed by the Pennsylvania Human Relations Commission (“PHRC”) in March of 2022 to provide comprehensive definitions for the terms “sex, religious creed and race” as they appear in the Pennsylvania Human Relations Act (“PHRA”) and the Pennsylvania Fair Educational Opportunities Act was approved by the Independent Regulatory Review Commission (“IRRC”).

The PHRA prohibits discrimination in employment, housing, public accommodations, education, and commercial property “because of . . . sex” and other protected classes, but the PHRA does not define “sex.” Under the new regulation, “sex” is defined to include pregnancy, sex assigned at birth, gender (including gender identity or gender expression), affectional or sexual orientation (including heterosexuality, homosexuality, bisexuality, and asexuality), and differences of sex development, variations of sex characteristics, or other intersex characteristics. The PHRC explained that the statutory term “sex” is ambiguous and that the new regulatory definition is consistent with federal and Pennsylvania caselaw developments on this subject. The new regulation, designated as 41 PA Code § 41.206, will be effective 60 days from the date of its publication as a final form regulation in the Pennsylvania Bulletin.
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Responsible Attorney: Eric W. Iskra, 800-967-8251