Working quietly on a number of fronts, federal agencies have been strengthening legal protections for whistleblowers and increasing employer penalties for perceived retaliation against employees who report regulatory violations.
The kind that garner the most headlines stem from two financial reform laws: the Sarbanes-Oxley (SOX) and Dodd-Frank Acts.
Most recently the Securities and Exchange Commission announced its award of about $6 million to a whistleblower under Dodd-Frank (the third largest such award so far), and a federal appeals court upheld an award for more than $330,000 to a fired employee under SOX.
However, most employers in the third-party logistics industry are more likely to face the whistleblower and anti-retaliation provisions piled up in recent years by other federal agencies, such as Occupational Safety and Health Administration and the Equal Employment Opportunity Commission.
OSHA Changes the Rulebook
OSHA offers whistleblower protection under 22 federal statutes. At the end of January, OSHA significantly broadened its reach by changing the wording of its guidance manual for its inspectors.
Under the new standard they are tasked to find if there is “reasonable cause” to believe a violation occurred to then proceed – which does not require as much evidence as would be required at a trial.
Attorney Nickole Winnett of the law firm of Jackson Lewis says the changes are not all bad news for employers. Even if the less stringent standard is met, the complaint may be dismissed if the employer can offer clear and convincing evidence that it would have taken the same adverse personnel action regardless of the employee engaging in any protected activity.
Winnett says, “The change underscores the need for employers to maintain documentation of all disciplinary actions and employee performance issues, and to recommit to ensuring that disciplinary policies and performance expectations have been clearly conveyed to employees and applied consistently.”
In April OSHA issued a rule for handling retaliation complaints arising from employee reports of food safety concerns under the Food and Drug Administration Food Safety Modernization Act.
Food safety professionals’ regular job duties (reporting food safety issues to the employer) are “protected activities.” Any adverse action against these employees could result in a retaliation claim, and subject the employer to an OSHA investigation.
Also protected are employees who testify or assist in a proceeding about the violation, or refuse to participate in activities or assigned tasks they reasonably believe are in violation of the law.
Keep in mind that the law’s protections against whistleblower retaliation extend to any “entity engaged in the manufacture, processing, packing, transporting, distribution, reception, holding, or importation of food.”
All Things Not Being Equal
Earlier this year the EEOC also embarked on a series of changes in its retaliation protective scheme in an effort to keep up with the head-spinning expansion of its jurisdiction to such things as transgender bathrooms and Gay discrimination.
Although not binding on courts, this new guidance will be used by EEOC investigators in assessing alleged violations of anti-discrimination laws.
The agency’s more expansive reading of the law includes holding that employees can succeed with retaliation claims as long as they have a reasonable belief that they were engaging in protected activity – even when wrong about the existence of underlying discrimination.
Protection also extends to managers and human resources personnel, ignoring the fact that some courts already have rejected that idea. EEOC holds that retaliation protection efforts cannot be effective if “those employees best situated to call attention to and oppose an employer’s discriminatory practices are outside its protective ambit.”
In addition, a supervisor who does not carry out management’s unlawful instructions can be found to have passively engaged in protected activity.
Perhaps trespassing on National Labor Relations Board jurisdiction, EEOC also says inquiries or discussions concerning compensation may can be protected activity if it can be reasonably interpreted as a complaint in opposition to discrimination.
EEOC also warns employers not to retaliate against third parties, such as a complaining employee’s co-worker relative or altering a vendor contract with the employee’s family member in retaliation.
EEOC says employers should maintain a written, easy-to-read anti-retaliation policy including examples of retaliation that may not be obvious; proactive steps for avoiding retaliation; a reporting mechanism for employees; and a clear explanation that retaliators can be subject to discipline, including termination.
Employers Slam Overtime Change
Employer groups lost little time in condemning the expansion of the overtime standard issued by the U.S. Department of Labor.
On Dec. 1, the salary threshold for overtime to apply will increase to $913 per week, or $47,476 annually, doubling the current limit of $455 per week, or $23,660 a year (AA, 5-31-16, P. 1).
The International Warehouse Logistics Association says the rule not only will hurt job growth, but will discourage the upward mobility that distinguishes the warehouse industry.
The warehousing industry will adjust by delaying promotions or bringing managers back down to hourly compensation structures, IWLA stresses.
Randy Johnson, senior vice president of the U.S. Chamber of Commerce, says “The overtime regulation is just another example of how little this administration understands how the economy works or regards employers’ concerns.”
It will mean millions of employees who are salaried professionals will have to be reclassified to hourly wage workers, Johnson points out.
“Small businesses, nonprofits, and public sector employers will be especially impacted as they will have the hardest time finding more income to cover the increased labor costs, even if they will have a longer time to implement the new requirement.”
Hank Jackson, president of the Society for Human Resource Management, says his organization is disappointed in the new rule.
“The salary threshold will mean many employees will lose the professional ‘exempt’ status that they have worked hard for and the flexibility from rigid schedules that they care deeply about,” he adds.
“While changes in regulations were meant to benefit employees, a change of this magnitude will do the opposite,” Jackson notes. “There likely will be fewer opportunities for overtime pay as employers are forced to restructure their compensation and staffing.”
Chemical Industry Data Predicts Growth
A leading economic indicator produced by the chemical industry predicts that the economy will continue to grow for the rest of the year.
“Trends suggest increased business activity into the fourth quarter,” says the American Chemistry Council, on May 24 when it issued the most recent Chemical Activity Barometer, which is considered to be a leading economic indicator.
The CAB expanded 1.0% in May following a revised 0.8% increase in April and 0.1% increase in March. All data is measured on a three-month moving average (3MMA).
Accounting for adjustments, the CAB remains up 2.3% over this time last year, a marked deceleration of activity from one year ago when the barometer logged a 2.7% year-over-year gain from 2014.
On an unadjusted basis the CAB jumped 0.3% in May, following a solid 1.7% gain in April.
The CAB consists of four primary components incorporating a variety of indicators: production, equity prices, product prices and inventories.
In May all four of these categories for the CAB improved for the second consecutive month, the council reports.
Production-related indicators were positive, with improvement in plastic resins used in packaging and trends in construction-related resins, pigments and related performance chemistry still hinting at an ongoing strengthening of the housing sector.
ACC also says inventories and other downstream indicators were positive. Equity prices further rebounded in May, and product prices firmed.
In a separate report ACC says production of major plastic resins totaled 6.3 billion pounds in April, an increase of 0.8% compared to April 2015. Year-to-date production was 26.7 billion pounds, a 5.2% increase as compared to the same period in 2015.
Although plastic resin sales were stagnant in April year-to-date sales was 26.7 billion pounds, a 4.2% increase as compared to the same period in 2015.