MONDAY MORNING MINUTE: August 5, 2019

Monday Morning Minute

In This Issue

DOL Final Rule Breaks Barriers for MEPs

Illinois Amends Its Equal Pay Law; Bans Salary History Inquiry

Resistance to Mandatory Class Waiver Arbitration Agreements Continues

Firm Locations:
Chicago Office: Willis Tower 233 S. Wacker Drive 61st Floor-Suite 6154 Chicago, IL 60606 O. 312.291.8299 Milwaukee Office: Historic Third Ward 342 N. Water Street Suite 600 Milwaukee, WI 53202 O. 414.323.6337 Phoenix Area Admin Office: 36889 N. Tom Darlington Dr. PO Box 2800-145 Carefree, Arizona 85377

August 5, 2019

TRUSTED LEGAL ADVISORS

FOR

ALL YOUR BUSINESS NEEDS

www.psb-attorneys.com

DOL FINAL RULE BREAKS BARRIERS FOR MULTIPLE EMPLOYER PLANS (MEP)

A DOL final rule made public on July 29th and published in the July 31st Federal Register allows unrelated employers to join a single defined contribution plan. This could have the effect of reducing costs and administrative duties for employers such as IRS filings and audits. This new regulation takes effect September 29, 2019.

The DOL now fully authorizes this in two ways:

1. Through association retirement plans ("ARPs") which are typically offered through business associations including local chambers of commerce;

AND

2. Through Professional Employer Organizations ("PEOs").

Neither of These Two Arrangements are New:

ARPs have been known as MEPs (Multiple Employer Plans) and while these plans are not new, the access to this type of plan is now expanded to not just include employers who have a "nexus of interests." Rather, employers can join an ARP so long as they a) operate in a common city, county or state regardless of trade, industry or profession; OR b) they operate in the same trade, industry or profession regardless of where they are located.

And while many PEO's have been administering these types of plans for their clients, the final rule gives clear authorization under ERISA to do so.

This is a great time for small employers to take a look at this option. It may allow smaller employers to actually have a retirement plan for their employees (for those that do not); and for smaller employers that do have a retirement plan, it may allow them to pool resources and negotiate for improved services and reduced costs.

Additionally, the IRS has proposed a rule removing the liability risk of MEPs by one member's bad acts.

For more information on this or any other topic, please contact a Spognardi Baiocchi Attorney of your choice.

ILLINOIS AMENDS ITS EQUAL PAY LAW AND JOINS OTHER STATES WITH A SALARY BAN

On July 31st, 2019 Illinois Governor, J.B. Pritzker signed HB 834 into law which amended the Illinois Equal Pay Act of 2003 (IEPA). The major provisions changed become effective September 29th, 2019.

Major provision changes include:

1. The general application of equal pay is broadened by language change.

2. If a pay gap does exist, Illinois has followed the federal law and allowed for four explanations: a) a seniority system; b) a merit system; c) quantity or quality of production; and d) any other factor than sex or race. However after September 29th, the fourth explanation is modified to be much more narrowly tailored to require that the discrepancy be attributable to the job in question only.

3. Statute now prohibits employers from requiring an employee to sign any contract or waiver that would prohibit the employee from discussing his or her own compensation.

4. Employees will now be allowed to seek compensatory damages, punitive damages, injunctive relief and attorneys fees in some circumstances and as allowed.

5. Salary ban: As amended post September 29th, under the IEPA, there are strict provisions as to inquiries into an applicants prior salary. The salary ban prohibits Illinois employers and any agents acting on their behalf from the following:

a. may not screen job applicants based on their salary history;

b. may not request salary history be provided as a condition of being interviewed or considered for employment;

c. may not request or require applicants to disclose salary history information as a condition of employment;

d. may not seek an applicant's salary history information from the applicant's current or former employers (unless it is a matter of public record).

Of course if the applicant provides this information voluntarily the employer (or agent) will not be held liable for any violation so long as this information is not used as consideration for employment or terms and conditions of employment.

Start training your managers, supervisors and any other persons responsible for hiring on this new law. If you have any further questions or concerns, please contact a Spognardi Baiocchi Attorney of your choice.

EMPLOYERS BEWARE: RESISTANCE TO MANDATORY CLASS WAIVER ARBITRATION AGREEMENTS CONTINUES

Last year, the Supreme Court ruled in Murphy Oil and Epic Systems that class action waivers contained in mandatory arbitration programs were lawful and did not violate the Section 7 rights of the employees covered by the mandatory arbitration agreement. Employers were elated by this victory given the increase in the number of employment-related class actions.

However, resistance to mandatory class waiver arbitration systems continues before the National Labor Relations Board and in the Courts. In March, 2019, NLRB Administrative Law Judge Locke ruled that Pfizer's mandatory arbitration agreement violated Section 7 of the National Labor Relations Act ("NLRA") because it contained a confidentiality clause which prohibited employees from discussing or disclosing arbitration-related matters which employees had a right to discuss under the NLRA. Pfizer, Inc., JD-30-19 (March 21, 2019). As succinctly stated by the ALJ in the opening paragraph of his decision:

The Respondent lawfully required employees, as a condition of continued employment, to waive their procedural right to sue it in court and instead agree to submit such claims to arbitration. However, an employer cannot lawfully require workers to waive substantive rights, which include their Section 7 rights to discuss and publicly disclose their terms and conditions of employment. Therefore, the Respondent violated Section 8(a)(1) of the Act when it imposed a clause requiring employees to keep information about arbitration confidential.

Employer's can expect further scrutiny from the NLRB over the legality of specific provisions contained in otherwise lawful mandatory class waiver arbitration agreements, as well as challenges to the enforceability of the agreement as a whole when faced with a waiver of fundamental substantive rights under the Act.

Continued challenges in the courts can also be expected based upon contract formation principles, despite the Supreme Court's general endorsement of the legality of such mandatory submission agreements under the NLRA and the national policy favoring arbitration. Earlier this year, Pfizer was battered by the New Jersey state appellate court, which affirmed the trial courts finding that thousands of mandatory employee arbitration agreements were unenforceable because the evidence failed to show an affirmative, clear and unmistakable assent to be bound to arbitration. Skuse v. Pfizer, Inc., 457 N. J. Super 539 (App. Div. 2019).

In Skuse, the arbitration agreement was sent be email as part of a "training module" and required only that the employee "acknowledge" the arbitration agreement. The court found that acknowledge was distinguishable from "agree," and that the employees did not affirmatively and unmistakably agree to arbitration. In June, the New Jersey Supreme Court agreed to hear Pfizer's appeal of whether its methods of seeking employee consent to arbitrate were legally sufficient to create a legally enforceable arbitration agreement.

Spognardi Baiocchi LLP has substantial experience in designing and implementing binding and enforceable mandatory class waiver employment arbitration agreements for employers and defending those agreements from enforceability challenges in the courts. Call the Firm if you would like assistance in this area.

SPOGNARDI BAIOCCHI llp is a law firm dedicated to partnering with companies of all sizes to address the full spectrum of legal concerns for its business. Our commitment is to find common sense solutions that fit each clients' unique situation to labor, employment, human resources and general business needs.

With over 50 combined years of experience among its 2 founding partners in these areas, we can assist businesses in developing custom solutions to today's tough issues. And as litigators, who combined have over thousands of trials "under their belts" before state and federal courts as well as administrative agencies (such as the NLRB) you will find no better advocate and partner.

For more information on the firm, please go to our website at www.psb-attorneys.com or Lisa at [email protected]