Top Labor and Employment Issues to Watch in 2016

March 9, 2016
Increased legal scrutiny, plus new contract terms at the Detroit 3, could pose new labor challenges for U.S. automotive suppliers this year.

Employers often mention that their most valuable assets are their employees. However, those valuable assets also can be very costly without the proper preparation and policies.

In 2016, suppliers will continue to face challenging employment-related issues. Specifically, there will be increased scrutiny on employer use of independent contractors, changes to paid sick leave for employees and the significance of the UAW’s newly negotiated contracts with the Detroit 3.

Here’s an overview of the key issues and steps to make sure they don’t become headaches.

Independent Contractors

If you use independent contractors, you will want to reevaluate whether those individuals are properly classified.

Employers who make the wrong decision face potential liabilities for state or federal minimum wage and overtime pay, workers’ compensation insurance and federal and state taxes (including unemployment benefits).

On July 15, the U.S. Department of Labor issued an administrative interpretation memorandum declaring that most workers legally are employees under the Fair Labor Standards Act (FLSA). In the memorandum, the DOL emphasized it uses an expansive interpretation of the “suffer or permit to work” language that defines employment under the FLSA.

The DOL also states the vast majority of workers classified as independent contractors are invalidly classified and that companies engaging their services are violating the law. According to the memorandum (and most courts), the proper analysis is the “economic realities test,” which analyzes whether a worker is operating a business of their own (an independent contractor) or economically dependent on the employer, regardless of skill level (an employee).

Paid Sick Leave

For those suppliers that also are federal contractors or subcontractors, 2016 should be used to prepare for a change in employee sick leave based on an Executive Order signed by President Obama Sept. 7. The Order requires federal contractors to provide employees with the ability to earn up to 56 hours (seven days) of paid sick leave per year.

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Michael Groebe is an employment attorney based in the Detroit office of Foley & Lardner, where he advises employers in all aspects of labor and employment law.

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