Wednesday, January 18, 2017

Cases and Issues to Watch in 2017 – Part I

2016 proved to be invigorating for the labor and employment field. 2017, however, is likely to be more contentious and not simply because of the transition to the Trump administration. While many anticipate a shift towards management-friendly decisions and regulations, the following is Part I of a two-part series that identifies cases and issues that we anticipate will have a considerable impact on the labor and employment field in the coming year.

1.  The DOL Final Overtime Rule - State of Nevada et. al. v. U.S. Department of Labor

With only a few days until the U.S. Department of Labor’s (“DOL”) final overtime rule was to become effective, a U.S. District Court Judge in Texas issued a nationwide injunction against the new regulation expanding by millions the number of workers who would be eligible for overtime pay. Prior to the injunction, employers had been moving quickly to prepare for implementation of the DOL final overtime rule that was scheduled to take effect on Dec. 1, 2016.

The future of DOL final overtime rule is certainly in doubt given the President-elect’s public remarks criticizing the new overtime threshold and pledge to repeal numerous executive orders and agency regulations issued by President Obama and his administration. Mindful of the forthcoming changes, on December 1, 2016, President Obama appealed the decision to the U.S. Court of Appeals for the Fifth Circuit. The Fifth Circuit recently granted the DOL’s motion for expedited briefing and oral argument in its appeal of the nationwide injunction which required all briefing to be completed by January 17, 2017 and oral arguments will be scheduled by the Fourth Circuit after January 31, 2017. Despite the President-elect’s public remarks, it is unclear whether the new administration will change the course of the appeal by withdrawing the appeal.

2.  Unsettled Labor Relations - AFSCME v. State of Illinois

Almost two years ago in early 2015, the State and AFSCME began negotiating for a successor collective bargaining agreement. In those negotiations, the parties negotiated and agreed to a series of Tolling Agreements whereby they agreed to continue meeting and negotiating in good faith for a successor bargaining agreement and to not to engage in strikes, work stoppages, work slowdowns, or lockouts unless they mutually agreed that an impasse had been reached in the collective bargaining or until the Illinois Labor Relations Board (“ILRB”) resolved the issue concerning the existence of an impasse. To that end, on January 8, 2016, the State determined that an impasse existed and presented AFSCME with a Last, Best, and Final Offer and pursuant to the Tolling Agreement. After AFSCME disagreed that the parties were at impasse, the State submitted the issue to the ILRB as an unfair labor practice charge. On November 15, 2016, the ILRB orally declared there was an impasse in the collective bargaining negotiations. Thereafter, the State began implementing the terms of its Last, Best, and Final Offer, which included the following contract terms: $1,000 merit pay for employees who missed less than 5% of assigned work days during the fiscal year; overtime after 40 hours; bereavement leave; the use of volunteers; the beginning of a merit raise system; drug testing of employees suspected of working impaired; and the formation of a task force to look into workplace safety.

Since the ILRB oral decision, AFSCME has launched a full litigation assault on that decision by first filing in St. Claire County a motion for a TRO on December 1, 2016 that sought an order that the parties Tolling Agreement remained in effect, and it prohibited the State from implementing the terms of its Last, Best, and Final Offer from the negotiations and then on December 6, 2016 filing in Cook County a challenge to the ILRB’s impasse order as a violation of the Open Meetings Act. With respect to the TRO, on December 15, 2016, the Illinois Appellate Court issued a non-publishable Rule 23 remanding the case. Although the Illinois Appellate Court did not rule the circuit court did not have jurisdiction to hear the case, the appellate judges ruled that the circuit court must determine whether to dissolve the order in light of facts as they currently exist, specifically the ILRB’s written order. The case alleging violations of the Open Meetings Act has not been decided.

Following AFSCME’s filing of its two legal actions, on December 22, 2016 the State filed an unfair labor charge with the ILRB alleging AFSCME’s litigation tactics were concealed efforts to stall implementation of the Last, Best, and Final Offer and constituted in bad faith bargaining that was costing taxpayers approximately $2 million every day the State was prevented from implementing a contract. While the litigation continues in St. Claire County, Cook County, and before the ILRB, the implementation of the Last, Best, and Final Offer remains on hold. We will provide updates on the litigation as it becomes available.

3.  Minimum Wage Increases 

Local minimum wage laws have significantly increased in recent years. Beginning in 2017, both the City of Chicago and Cook County enacted ordinances to gradually increase the minimum wage to $13 per hour by July of 2020. The ordinances apply to any business or individual that employs at least one “employee” who performs at least two hours of work in any two-week period while physically present within the geographical boundaries of Cook County, with very few exceptions. The new law applies to the all of Cook County, including unincorporated areas. However, home-rule towns can vote to opt out of the increase.

Unless a home-rule town votes to opt out of the Cook County increase, the merits of any challenge to either the City of Chicago’s or Cook County’s minimum wage ordinances are unclear. Indeed, legal challenges to minimum wage ordinances in other jurisdictions have gained little traction. For instance, in the challenge with the most fanfare, last spring, the U.S. Supreme Court declined to hear a lawsuit against a law Monday that will gradually raise the Seattle minimum wage to $15 an hour. In that case brought by the International Franchise Association, it alleged the minimum wage law violated the Commerce Clause and was discriminatory because it gave small businesses more time to adjust but excluded individually owned franchisees. More recently, a Maricopa County Superior Court judge refused to halt Arizona's new minimum wage increase that went into effect on January 1, 2017. In that case, various business organizations, including the Arizona Chamber of Commerce and Industry, challenged the law on the basis that the banded together to challenge the lawsuit on the basis that it violated the Arizona Constitution by creating a new cost to the general fund without providing a revenue source. Legal challenges to minimum wage ordinances are also pending in Birmingham and St. Louis.

Notwithstanding, the Cook County State’s Attorney’s Office issued a legal opinion to the Board of Commissioners anticipating legal challenges because it opined that the County did not have home-rule authority to enact such an ordinance. Given the tension over increases to minimum wage and possible litigation to upend application, we will update you on any challenges to either the City of Chicago or Cook County minimum wage ordinances.

Tomorrow we will discuss more cases and issues to watch in 2017.