Now that the busy 2014 holiday shopping season is over and the new year has begun, it’s a good time for retail employers to take a breath and think about 2015—what’s coming, what issues they should be watching, and what should be on their “to do” lists for the new year. To find out what the most pressing labor and employment issues of concern are for retailers in 2015, I polled a group of in-house counsel and human resources professionals at some of the nation’s top retailers. Here are the common themes that emerged and 10 New Year’s resolutions (in no particular order) that retail employers should consider making at the start of the new year, as well as links to helpful information:
1. Evaluate your background check policies and practices. Over the past several years, many states, and even municipalities, have passed so-called “ban-the-box” legislation limiting the types of information employers can ask of new applicants and placing requirements on the timing of background checks. The City of Chicago, Columbia, Missouri and New Jersey have all recently enacted such legislation. Further complicating this checkerboard of varied state and municipal requirements across the country is the fact that the U.S. Equal Employment Opportunity Commission (EEOC) has long taken the position that employers’ reliance on arrest and conviction records may have a disparate impact on individuals because of their race or national origin. Not only has the EEOC made enforcement of its position on background checks a priority as part of its Strategic Enforcement Plan FY 2013-2016, but it also filed lawsuits in 2014 against multiple national employers alleging that their criminal records check processes discriminated against minorities. The EEOC’s expectations with regard to background checks are contained in its Enforcement Guidance on Employer’s Consideration of Arrest and Conviction Records, which, among other things, encourages employers to implement a targeted screening process that takes into account the following factors: (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense, conduct, and/or completion of the sentence; and (3) the nature of the job held or sought. In 2015, retailers will want to review their background check policies and procedures to make sure that they are in compliance with the myriad state and municipal laws, as well as with the EEOC’s expectations in this regard.
2. Review your leave policies to ensure they comply with state and municipal sick leave laws and domestic violence leave laws. In the November 2014 elections, Massachusetts and several cities in New Jersey joined the ranks of San Francisco, California, the District of Columbia, and Seattle in enacting new laws mandating that employers provide sick leave (sometimes paid leave) to employees (including seasonal and part-time employees). Many states, including Massachusetts, also recently have enacted laws mandating that employers provide domestic violence leave. Retail employers should make sure to review their leave policies and practices in 2015 to ensure that they are in compliance with all the various state and municipal sick leave and domestic violence leave laws that have cropped up recently.
3. Evaluate your dress codes and religious accommodation practices. Dress codes were a focus of both the EEOC and the National Labor Relations Board (NLRB) in 2014, and more attention to dress codes and religious accommodation issues is expected in 2015. The Supreme Court of the United States is poised to issue a decision in a case involving the EEOC’s challenge to its dress code brought by a Muslim job applicant who wore a hijab during an interview at an Abercrombie & Fitch store.
This case raises issues relating to dress codes and religious accommodations, and the Supreme Court’s decision should provide needed guidance to retail employers on these issues. Meanwhile, the NLRB has been scrutinizing dress codes as well for policies that may have a chilling effect on union activities. In February 2014, the NRLB deemed a car dealership’s prohibition on “pins, insignias, or other message clothing which are not provided to them by the company” overly restrictive and a violation of the National Labor Relations Act (NLRA). Both the EEOC and NLRB’s attention to dress codes make 2015 a good time for retail employers to reevaluate their dress code policies and religious accommodation practices.
4. Review your arbitration agreements and class action waivers, or consider implementing them if you don’t have them. In the wake of several Supreme Court decisions in 2013 upholding the enforceability of arbitration agreements and class action waivers, many retailers have implemented arbitration agreements in an attempt to stem the tide of class and collective actions, particularly wage and hour cases that have been filed against retailers for the past several years. While there has been a plethora of litigation about the scope and enforceability of such agreements, particularly as to class action waivers in the wage and hour context, the courts have been upholding the enforceability of such agreements and class action waivers, despite unsuccessful challenges from the NLRB in the D.R. Horton case.
There are many pros and cons to arbitration and class action waivers that employers should consider before implementing such policies, but they can be attractive options for retail employers in 2015. Retailers that already have arbitration agreements and class action waivers should review them in 2015 in light of the case law that has developed to make sure that no changes to their programs are necessary to ensure their enforceability.
5. Conduct a wage and hour audit to ensure compliance with new minimum wage laws, restrictions on the use of unpaid internships and other issues. Retail has been one of the most targeted industries in recent years for wage and hour claims, particularly class and collective actions. Claims that are currently in vogue include misclassification of managers; meal and rest period violations; failure to reimburse cell phone expenses; and the use of unpaid interns. Also, in the November 2014 elections, many states passed laws increasing state minimum wage rates effective in 2015. Finally, retail employers in New England who are unaware of their obligation to pay “holiday pay” on certain holidays can face treble damages for failing to pay the required premiums. With the landscape of wage and hour claims continually changing, now is a good time for retailers to conduct a wage and hour audit to shore up any problem areas with their pay practices and minimize their chances of becoming targets of wage and hour class or collective actions.
6. Review your policies and practices for “hot button” issues of concern for the NLRB. In 2014, the NLRB continued its focus on issues affecting non-unionized employers—specifically, employer policies that the NLRB has deemed to have a chilling effect on employees’ ability to engage in protected concerted activity under the NLRA; 2015 promises more of the same. Among the policies that are consistently under scrutiny by the NLRB are employee handbook policies and and social media policies. Most recently, the NLRB has taken issue with employers’ email policies prohibiting the personal use of company email on the ground that such policies can serve to chill employees’ union organizing efforts. Both unionized and non-unionized retailers alike should review their policies and agreements for the NLRB’s “hot button” issues of concern to make sure that they do not become the focus of an NLRB proceeding in 2015. Unionized retailers will also want to review their collective bargaining agreements in light of the recent NLRB decision in Babcock & Wilcox Construction Company changing the deferral standards to be used for deferral to arbitration and settlement. Retailers should consider whether their collective bargaining agreements should be modified to include reference to the rights protected by the NLRA. If a grievance is filed under the collective bargaining agreement, all settlements need to be reviewed for potential unfair labor practice issues and, if they exist, the agreement must specifically incorporate the parties’ intent to resolve those issues.
7. Create a data breach prevention and response plan. According to the National Retail Federation, 11 percent of all data breaches in the United States involve retailers. Breaches can involve customer data as well as employee data, such as payroll and medical information protected by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Many states have their own data breach laws, some requiring that companies create a data security plan and notify individuals whose data have been compromised. Retailers involved in large-scale data breaches face not only hard costs and legal liability, but also negative publicity, consumer and employee distrust, and damage to their brands. Taking steps to ensure that your company has a plan to prevent a data breach and respond to one if it occurs can go a long way to ameliorate these steep costs. The 10 most important issues that employers need to address in the wake of the recent proliferation of data breaches are discussed in a recent post, “What Do Employers Need to Know in the Wake of the Latest Data Breach?”
8. Review the ADA accessibility of your facilities and your accommodation practices. Lawsuits, including class action lawsuits, brought under the Americans with Disabilities Act (ADA) against places of public accommodation are on the rise, particularly in California, New York, and Florida. This is due in part to the growth in the number of serial ADA plaintiffs who are bringing multiple claims and the increase in the size of the plaintiffs’ bar supporting and advancing such claims. Retailers that want to avoid being targeted for such suits in 2015 should review the accessibility of their facilities and remediate any accessibility issues that they find. They should also review their policies and procedures regarding the presence of animals—both service animals and emotional support animals—in their stores or consider implementing such policies in 2015, given the rise in the number and variety of animals appearing in places of public accommodation.
9. Get ready for possible union organizing under the NLRB’s new ambush election rules. In December 2014, the NLRB implemented new “ambush election” rules which will make it possible for union elections to occur in less than 21 days. This development, plus the NLRB’s willingness to recognize micro-unions and the growing strength of grassroots movements targeting retailers (discussed below) spells possible trouble on the horizon for non-unionized retailers. Therefore, retailers should start planning now for possible union organizing activity in 2015.
10. Start thinking about and planning for brewing issues such as overtime regulations, wellness programs regulations, and grassroots movements. It’s never a dull moment for new issues in the labor and employment arena, and 2015 will be no different. Already-brewing issues include (1) new federal overtime regulations, which will include a higher weekly salary minimum than the current $455 per week and will expand the pool of employees entitled to earn overtime; (2) the issuance of guidance by the EEOC, which has already filed several suits against employers challenging their wellness programs under the ADA; and (3) the proliferation of grassroots movements, including the stable hours movement that led to the passage of the San Francisco Retail Workers Bill of Rights and the gun control advocacy movement demanding that retailers sign anti-open gun carry petitions. Savvy retailers will want to consider these issues in advance and sketch out contingency plans so they are ready when events occur.
Diane M. Saunders is a shareholder in the Boston office of Ogletree Deakins and co-chair of the firm’s Retail Practice Group.