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Arizona Industrial Commission Issues Additional Guidance on Prop. 206 Paid Sick Time Law By Erin Norris Bass, Associate, Steptoe & Johnson LLP

Posted By Cindy Hesch, Wednesday, July 5, 2017

Arizona Industrial Commission Issues Additional Guidance on Prop. 206 Paid Sick Time Law

By Erin Norris Bass, Associate, Steptoe & Johnson LLP

Last week the Industrial Commission of Arizona (ICA) supplemented its proposed rules interpreting Arizona’s new paid sick time (PST) law under the Fair Wages and Healthy Families Act (the Act), better known as Prop 206. Among other noteworthy changes, the supplement provides some much-needed clarity on how the Act affects employers’ existing PTO policies. It also simplifies compliance for employers electing to front load at least 40 hours of PST or equivalent paid time off (24 hours for small employers).

Clarification on “Equivalent Paid Time Off”

With the addition of the defined phrase “equivalent paid time off,” the ICA’s proposed rules indicate that employers do not need to separately track or record PST if they give employees equivalent paid time off.  For example, the Act requires employers to record the amount of PST available to and used by each employee during that year to date. It was previously unclear if employers who provide equivalent paid time off were nevertheless required to separately track and record PST. The ICA’s supplemental rules clarify that employers can simply track and record equivalent paid time off.

Likewise, it was previously unclear if employers who provide equivalent paid time off were nevertheless required to carve out and reserve a minimum number of hours for employees to use for the Act’s specified PST purposes. The ICA’s supplement clarifies that employers with equivalent PTO policies do not need to reserve a block of time for PST purposes.

Clarification on Front Loading PST

The supplemental proposed rules incentivize employers to front load 40 hours of immediately-available PST or equivalent paid time off to each employee (24 hours for small employers). According to the ICA, employers who do that will be exempt from the Act’s carryover and additional accrual requirements. That is, if an employer front-loads 40 hours of immediately-available PST to each employee on January 1, 2018, the employer will not need to cash out or carry over its employees’ unused PST hours at year’s end. Instead, on January 1, 2019, the employer will simply need to front load 40 new and immediately-available hours to each employee.

Importantly, the exemption only applies to employers who front load at least 40 (or 24) hours to every single employee. The Act gives employers an alternative option to front load PST on an individualized basis in the amount an employee is expected to accrue that year, which may be less than 40 (or 24) hours for some employees. But, according to the ICA, those front-loading employers are not exempt from the Act’s carryover and additional accrual requirements.

Calculating the “Same Hourly Rate”

The ICA’s supplemental proposed rules clarify the calculation of the “same hourly rate” for salaried employees and provide an additional option for employees paid on a commission, piece-rate, or fee-for-service basis.

For salaried employees, the ICA clarified that an employer does not need to provide additional PST pay if a salaried employee’s use of PST does not reduce the employee’s regular salary that pay period. When using PST will reduce the employee’s regular salary, the proposed rules provide two methods to calculate the “same hourly rate,” in order of priority: (1) all wages earned during each pay period covered by the salary divided by the agreed-upon work hours during each pay period, if previously established; or (2) all wages earned during each workweek covered by the salary in the current year divided by 40 hours.

For employees paid on a commission, piece-rate, or fee-for-service basis, the first four proposed calculations remain the same, but the ICA added a fifth option: the hourly average of all compensation earned in the previous year based on hours actually worked or a 40-hour workweek.

How Should Employers Proceed at This Late Date?

Because the PST law went into effect on July 1, Arizona employers have already created and implemented PST policies and practices without the benefit of this additional clarification from the ICA. Employers should keep in mind that the ICA’s proposed rules are not final, and may change again before they go into effect. As long as an employer’s existing PST plan complies with the Act, the employer can and probably should proceed as planned for the time being. But, employers should closely monitor the ICA’s ongoing rulemaking process and consider updating their PST policies and practices when the rules go into effect.

Employers have until August 8 to submit written comments on the proposed supplemental rules.

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Does Crying Put an Employer on Notice of the Need for FMLA Leave?

Posted By Cindy Hesch, Thursday, June 29, 2017

Does Crying Put an Employer on Notice of the Need for FMLA Leave?

By Lorie Birk, Esq, SPHR, SHRM-SCP

HR Law Works, LLC

While we may be crying over the continued heat, there has been an interesting case in Illinois about crying and FMLA, Valdivia v. Township High School District 214, 2017 U.S. Dist. Lexis 73647.

The story begins with Ms. Valdivia being a secretary at Elk Grove High School from May 2010 through June 2016.  Ms. Valdivia indicates that her co-workers regularly made derogatory remarks about Hispanic people and students.  As it happens, Ms. Valdivia is Hispanic and she found the comments degrading, hostile and offensive.  These comments increased in frequency in September 2014 and continued.  Ms. Valdivia complained to the principal about this and nothing was done.  In March 2016, Ms. Valdivia transferred to another school in an effort to remove herself from the hostile work environment.  These types of comments continued at her new job.  Ms. Valdivia became very distraught and began crying uncontrollably at work.  In one instance, she told her supervisor that she was overwhelmed and afraid and unsure if she could continue working.  Due to her continued concerns and distress, several individuals in leadership including her supervisor, indicated to Ms. Valdivia that she had to decide between continuing or resigning her employment.  After that, Ms. Valdivia again approached her supervisor and explained she was confused and overwhelmed, had not slept in weeks, had not been eating, and was losing weight.  Again, she was told she needed to decide between continued employment and resigning.  Ms. Valdivia does end up providing a written letter of resignation.  Five days later she tries to rescind it but the school district indicates the position has already been filled.  Less than two weeks after her resignation is effective, Ms. Valdivia was hospitalized for four days and diagnosed, for the first time, with depression, anxiety disorder, panic disorder and insomnia.  She was cleared for secretarial work by her physician after treatment.

At first you are probably thinking there is a race discrimination claim in this story.  That is covered in the case but let’s focus on the FMLA issue.  Ms. Valdivia sued for interference with her FMLA rights, in addition to violations of Title VII of the Civil Rights Act.  Ms. Valdivia argued that her supervisor and others who had known her for several years should have known she had a medical condition that made her unable to perform her job based on her behavior and what she said.  Let’s refresh our memory on what the notice requirements are for requesting FMLA.  Per the regulations an employee shall provide at least verbal notice sufficient to make the employer aware that the employee needs FMLA-qualifying leave.  In addition, the regulations state that when an employee seeks leave for the first time, the employee need not expressly assert rights under the FMLA or even mention FMLA.  Court decisions have indicated that the notice requirement is not demanding.  The court found that there was sufficient information for Ms. Valdivia to pursue her FMLA claim as any reasonable person would conclude that Ms. Valdivia may need FMLA leave.  The court based that on not only the uncontrollable crying, but the statements that Ms. Valdivia made about being overwhelmed, confused, not having slept in weeks, not eating and losing weight.  The court stated that the fact that Ms. Valdivia was not diagnosed with a medical condition until a couple weeks after her employment ended is not relevant.

So, I do not believe crying alone puts an employer on notice.  It was that in combination with the other facts that proved to be the issue for the employer.

This case does highlight the need to train managers on not only what is FMLA but when FMLA may be triggered and what to do next.

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The Hidden Danger in Prop 206

Posted By Cindy Hesch, Thursday, June 15, 2017

The Hidden Danger in Prop 206

By Erin Norris Bass, Associate, Steptoe & Johnson LLP

As employers hustle to comply with the Prop 206 paid sick time provisions before they take effect July 1, one other aspect of the law presents a little-discussed hidden danger.  If an employer takes an adverse employment action against an employee within 90 days of the employee using paid sick time, the law presumes that the action was unlawful retaliation.  The employer can successfully defend itself only by meeting a stringent evidentiary standard. In effect, the law imposes a “just cause” standard on employers to justify their employment decisions.

Take an example. Employees can earn and use up to 24 or 40 hours of paid sick time per year, depending on the size of their employer.  If an employee takes an hour of paid sick time every 90 days, the statute presumes unlawful retaliation if his employer takes an adverse employment action against him at any point in the year.  Adverse employment actions include a range of negative actions in the workplace, such as discharge, suspension, discipline, reduction of hours, schedule changes, or a denial of a transfer request.  As a result, the law’s “presumption of retaliation” gives every disgruntled employee in Arizona an opportunity to bring a charge against his employer for any perceived negative action before the Arizona Industrial Commission at taxpayer expense.

If the employee brings a retaliation claim against his employer, the statute requires the employer to present “clear and convincing evidence that such action was taken for other permissible reasons.”  That’s a higher evidentiary burden than the “preponderance of evidence” standard employers typically carry in employment law cases.  If the employer cannot meet that high burden, the employer must reinstate the employee (if discharged), pay back wages, and pay penalties of at least $150 per day since the “retaliation,” among other potential remedies. The employer must also pay the employee’s attorneys’ fees and costs.

So what should employers do?  Employers should develop internal protocols to determine whether an employee took paid sick time or engaged in other protected activity under the law within 90 days before the employer takes an adverse employment action. If the answer is yes, the employer should review the decision under a just-cause standard, asking whether:

1.       The employer based its decision on a reasonable policy;

2.       The employee knew of the employer’s policy;

3.       The employer conducted an investigation;

4.       The investigation was fair and objective;

5.       The investigation found strong evidence of the employee’s policy violation;

6.       The employer consistently applied the policy; and

7.       The discipline is reasonable compared to the violation.

Employers should partner with experienced legal counsel to ensure a defensible decision.  Better to be pennywise than pound foolish:  the time and money spent upfront making the decision could save significant money down the road in legal fees, back wages, and fines.

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Cafeteria Plan Responsibilities for Employers under Section 125 of the Internal Revenue Code

Posted By Administration, Thursday, June 1, 2017
Updated: Tuesday, May 30, 2017

Cafeteria Plan Responsibilities for Employers under Section 125 of the Internal Revenue Code

By: Cory Jorbin, HUB International


A cafeteria plan is much what it sounds like; a cafeteria of sorts that employers can use to help employees pay for certain expenses. Instead of food and drinks, this cafeteria is stocked with benefits like health, dental and vision insurance and flexible spending accounts (medical and dependent care). These plans are attractive to both employers and employees as they offer tax benefits. Employees can use pre-tax dollars to pay for benefits, giving them more take-home pay. Lower taxable income for employees means lower payroll taxes for employers. Here are a few of the potential issues employers should consider when creating and maintaining a cafeteria plan.


Writing Requirement

Under Section 125(d) the cafeteria plan must be in writing. These are often referred to as Premium Only Plan or POP documents. In the case of a Flex Spending Arrangement, a separate FSA document would be used. This mirrors the ERISA requirement that plans have a written plan document and serves a dual purpose. First, it provides a record for both the employer and employee of what benefits and provisions are actually contained within the plan. Second it allows for pre-tax payment of benefits. Failure to properly maintain a POP document can result in the plan losing its tax advantaged status.


Plan Adoption

Once the POP document is created and finalized, it should be formally adopted by the entity.  Adoption of a plan should generally follow the same process that an entity uses for other major business actions. For a corporation this may mean approval by the board of directors, but this can vary between entities. The Articles of Incorporation, Bylaws or other governing documents as applicable should be referenced to determine the appropriate means of adoption. Failure to properly adopt the POP document can lead to potential issues later on.


Plan Selection

Employers have some flexibility as to which benefits employees may pay for with pre-tax dollars. Typically employers include medical, dental and vision plans as these tend to have the highest cost and thus provide the greatest tax benefits. Voluntary benefits such as STD, LTD, accident and critical illness coverage may potentially be paid for pre-tax as well. Voluntary benefits pose a unique dilemma for employers since amounts paid out under these policies are generally taxable to the employee when an employee pays for them with pre-tax dollars. As a result of this, many employers do not include these in their pre-tax benefits. The idea being that an employee who receives payments under a disability policy receives a greater benefit when these payments aren’t taxed than they would from pre-tax premium deduction. Employers should review individual plan inclusion with their attorney or CPA.


Plan Changes

Cafeteria plan elections are generally only allowed to be changed once per year, during the plan’s annual open enrollment period. There are two exceptions to this rule, changes when HIPAA Special Enrollment Rights are triggered, and changes under the IRS Permitted Election Changes under Treasury Regulation 1.125-4. While HIPAA Special Enrollment rights are required where applicable, plans have flexibility to adopt all, some or none of the permitted election changes. Plans that adopt these changes must allow participants to change their cafeteria plan elections mid-year when one of these changes is triggered. Whether a permitted change is triggered often depends on small details, which requires employers to pay special attention to these items.


On a final note, plans must obtain an annual authorization (signed or electronic) from employees consenting to their payroll deductions. Cafeteria plans can provide great benefits for employers and employees. Plans should take these and other important items into consideration when establishing a plan and its continued maintenance.



Cory Jorbin is a Compliance Officer with HUB International focusing on ERISA, ACA, Cafeteria Plans, HIPAA, FMLA and related matters.

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Proposed Rules Provide Some Clarity To Prop 206 Paid Sick Time Law, Leave Other Questions Unanswered

Posted By Cindy Hesch, Thursday, May 11, 2017

By Erin Norris Bass, Associate, Steptoe & Johnson LLP

The Industrial Commission of Arizona (ICA) issued proposed rules under Arizona’s new paid sick time (PST) law on May 5, 2017. The proposed rules provide some clarity on calculating the “same hourly rate” for paying sick time and how the PST carry over rules intersect with the PST accrual rules. However, the proposed rules leave open other questions on how to implement the new laws. Employers have until June 5 to submit written comments on the proposed rules.

Calculating the “Same Hourly Rate”

The proposed rules provide detailed guidance on how to calculate the “same hourly rate” for purposes of paying sick time, answering employer questions on how to calculate the rate for employees who earn wages based on something other than a straight hourly rate.

In particular, for employees who earn multiple hourly rates, employers must first pay the wages that would have been paid for the period of time in which sick time is used. If that’s not known, employers must pay the weighted average of all hourly rates from the previous pay period.

For employees paid on a commission, piece-rate, or fee-for-service basis, the proposed rules list four methods of calculation, in order of priority:

1.       a previously established agreed-upon rate (such as in an employment contract);

2.       the wages that would have been paid, if known;

3.       a “reasonable estimation” of wages that would have been paid; or

4.       a weighted average of all hourly rates over 90 days.

Salaried employees must be paid an hourly rate that divides their salary by the number of hours the salary is intended to cover. For fluctuating hours, the employee is presumed to work 40 hours in a week.

The proposed rules also clarify that shift differentials, hazard pay, and other premiums meant to compensate for differing conditions must be included in the hourly rate. The employer can exclude overtime premiums, holiday pay, bonuses, incentive pay, and tips, but the hourly rate can never dip below the minimum wage.

Given the different options for calculating pay for employees who earn wages based on something other than a straight hourly rate, employers should consider whether they would benefit from advance agreements with employees over rates or hours. Employers should also note the proposed rules’ emphasis on calculating the hourly rate based on the time of use, particularly if loaning employees PST or paying out the balance of sick time at the end of the year.

Clarification on How Carry Over Affects Accrual

The proposed rules clarify the cap on the number of PST hours an employee can carry over to the following year – 40 hours for an employee whose employer has 15 or more employees, and 24 hours for an employee whose employer has less than 15 employees.

Importantly, the proposed rules make clear that “[c]arry over shall not affect accrual or use rights.” That is, employees of larger employers can potentially carry a balance of up to 80 hours of PST – 40 carried over from a previous year and 40 accrued in the current year. Nevertheless, the employee can use no more than 40 PST hours in a year.

Other Clarifications

The proposed rules clarify precisely what records the employer must keep on PST for both non-exempt and exempt employees: (1) accrued PST, (2) used PST, and (3) the current balance of PST.

The proposed rules also exempt “small employers” from the posting requirement (although they are still subject to other minimum wage and PST rules). A “small employer” is defined as a company with less than $500,000 in gross annual revenue.

Finally, the proposed rules define “public health emergency” narrowly, as only applying when the governor has declared certain state emergencies.

Questions Left Open

The proposed rules offer no clarity on who is an individual related by “affinity” for purposes of determining whether they qualify as a “family member” whom the employee may take PST to care for.

Also, the proposed rules do not clarify if or how an employer can recover PST that it loans to an employee if the employee departs the company before actually accruing the PST.

Comment Period and Hearing

The IAC will hold a hearing on the proposed rules on June 5, 2017, at 9 a.m. at the IAC auditorium. Employers may submit written comments on the proposed rules until June 5. Employers should consider submitting comments that would garner clarification on how the PST laws would impact their particular business model.

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You're Fired! Arizona Law and Employee Termination Overview

Posted By Cindy Hesch, Thursday, May 4, 2017
Updated: Wednesday, May 3, 2017

You're Fired! Arizona Law and Employee Termination Overview

Written by Matthew M. Kinney, TSC, CSP

Arizona is considered to be an employer friendly state by most employers; however, this does not mean there aren’t pitfalls for the unwary or uninformed.  Terminations are almost always difficult and should be reviewed internally for several factors including unintended bias, costs (rehiring, training, and lost productivity), as well as possibly reviewed by qualified counsel.  Termination best practices always apply no matter how employer friendly Arizona may be.

Quick Overview of Arizona Employee Termination Law

Fortunately for employers, Arizona does not have any laws on procedures that must be followed in regard to discipline and employee grievances nor does it have anything like a Worker Adjustment and Retraining Notification Act that applies to layoffs or plant closures.  It is one of the least unionized states in the country; however, it also falls into Region 28 of the National Labor Relations Board which is considered one of the most aggressive regions in the country for employers.  Arizona is a “right to work” state and employers cannot penalize employees because of refusal to join a labor union (A.R.S. § 23-1302) and conversely, a labor union cannot intimidate or compel an individual to join their ranks as a condition of the individual’s employment (A.R.S. § 23-1304).

Employees in Arizona are considered at-will employees as defined by the Arizona Employment Protection Act (A.R.S. § 23-1501(A)(2)).  Employees can challenge their termination under the Arizona Employment Protection Act in one of several ways:

·         termination in breach of written contract which sets out that the employment relationship will remain in effect for a set period of time or expressly restricting either party’s right to terminate the employment relationship;

·         termination in violation of the Arizona Civil Rights Act or other Arizona statutes;

·         termination for refusing to violate the Arizona Constitution or Arizona statute; or

·         for employees in the public sector, where the employee has the right to continued employment under either the United States or Arizona Constitutions.

Arizona law (A.R.S. § 23-353(A)) provides that when an employee is discharged that they must be paid wages due to them within seven working days or at the end of the next pay period, whichever is sooner.  If the employee voluntarily quits, they must be paid in the usual manner all wages are paid and the next regular pay period.  An employee can request payment via mail instead of having to pick up a check from the employer. An employer can be liable for treble (triple) damages if it violates Arizona wage statutes as outlined in A.R.S. § 23-355.  If the employer can establish that there is a good faith dispute regarding the amount of unpaid wages it can establish an affirmative defense to these treble damages.

Arizona Termination Pitfalls

While Arizona is considered an employer friendly state, there are several areas an HR professional should be aware of as it relates to termination and discrimination:

·         Several municipalities including Phoenix, Tempe, Tucson, Sedona, and Flagstaff prohibit workplace discrimination based on sexual orientation and/or gender identity.

·         The Arizona Medical Marijuana Act has areas of concern for employers that drug test.  While the Act is not an affirmative defense to using marijuana on the job, even for medical conditions, it can preclude you from refusing to hire or terminating an employee for a failed drug test if the employer is made aware of the candidate/employee’s medical marijuana card holder status. There are exceptions to this for employers that could lose funding/licensing under federal law as well as other so-called “safety sensitive” positions.

·         Arizona courts have increased scrutiny and issued employee-friendly rulings regarding the scope and enforceability of confidentiality agreements and other restrictive covenants such as non-compete agreements.  Following what are considered industry best practices related to timeframes, geographic areas, and definition of confidential information is key.

·         Arizona is one of the most gun-friendly states in the country and its laws in an employment context reflect this fact.  Unless prohibited by state or federal law or if the vehicle is owned or leased by the employer, you cannot terminate or discipline an employee from lawfully carrying or storing a firearm in their vehicle so long as the vehicle is locked and the firearm is not visible (A.R.S. § 12-781).

When in doubt regarding your rights as an employer to termination in the state of Arizona, it is always a good idea to consult qualified counsel.  Arizona courts have protected and upheld employer’s rights regarding termination, at-will employment, and are generally employer friendly but this area of employment law is always changing.  Qualified counsel can help you avoid not only an expensive mistake but one that can cause even more damage from a public relations standpoint.

*A.R.S. stands for Arizona Revised Statutes

Matthew M. Kinney is the Executive Vice-President of Research and Development for BWSI.  He writes, speaks at conferences, and is lucky enough to consult with clients all over the country on issues from human resources, employment law, and payroll issues as well as his normal ‘day’ job as a Microsoft certified developer.

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“Trumping” Political Discourse in the Office

Posted By Cindy Hesch, Thursday, April 6, 2017

“Trumping” Political Discourse in the Office

Written by Matthew M. Kinney, TSC, CSP

It seems like the past few years, political discourse has really ratcheted up several notches as supporters on one side versus the other or one side of a proposition or another try to convince those around them of their viewpoint.  Particularly due to the past contentious election season some businesses are considering banning political discussion altogether—can they and should they?  To get right to the point, as a private employer there is no federal statute that protects an employee’s right to express their political viewpoints at the office; i.e. freedom of speech does not exist in the office per se.  However, if you try to enforce this you could run afoul of several federal laws such as the National Labor Relations Act (NLRA) for discussions of a minimum wage increase or sick pay proposition or Title VII of the Civil Rights Act of 1964 for terrorism discussions as it relates to the Muslim religion for example.  The bigger question is not whether you can ban political discourse but should you?

Ban or Embrace?

Political discussions are going to happen whether you ban them or embrace them.  I feel that embracing them is a better use of resources and can lead to some positive results.  As an example, consider all the campaign rhetoric regarding national origin, gender, and religion and how you can use that to reinforce, emphasize, and possibly retrain on your company’s policies regarding anti-discrimination and anti-harassment.  As previously mentioned, the NLRA guarantees employees the right to “protected concerted activity” which the National Labor Relations Board (NLRB) is enforcing rather zealously—it would be so easy to run into problems with employees discussing the various sick pay leave ordinances or minimum wage increase propositions if you attempt to ban political discussions.  If you choose to attempt to ban these discussions, make absolutely sure that it is across the board and for business related reasons as well as not running afoul of other federal statutes.

Playing Nice

If you are going to embrace political discussions in your office there are a few tips that can help manage this:

·         Managers and supervisors should stay neutral.  This is a big deal as what a manager or supervisor says could be interpreted to be speaking for the company, particularly on hot button issues such as immigration, healthcare reform, or minimum wage/paid sick leave.  Managers should not share their political opinions with subordinates as doing so could lead to trying to impose their viewpoints on subordinates.

·         Don’t judge coworkers based on whom they support.  Particularly in the currently charged political environment, try to see your coworkers and employees for who they are and not who they support.

·         Squash Us vs. Them—i.e. Red vs Blue ASAP.  For those that don’t hide their political affiliations you will probably start to see divisions in the office, more pronounced than usual given the current partisan political climate.  Don’t buy into this and try to have discussions with your employees as to why it is unacceptable.

·         The unknown art of concession, or at least seemingly unknown in Washington, D.C., should be readily practiced and taught.  The art of concession is something that can help any workplace and you can use the election season as an opportunity to touch on it a bit more.  A willingness to agree on even a small point shows you are open-minded and level-headed and can readily defuse a volatile political discussion.

Make the Bad People Stop

The next election season seems like it is already round the bend and will probably fire up in earnest before President Trump has been in office 6 months.  Putting policies and procedures in place regarding political discussions and activity in your office will pay ongoing dividends and not just every four years during the presidential elections.  Given the intense partisanship in the country and the most recent bruising election season many of you aren’t Red or Blue but simply Purple from getting pounded with rhetoric.  How you set your office policies and how you handle the rhetoric yourself can go a long way to a smoothly running office.  This isn’t just something that can make for a more harmonious office, but can directly affect your bottom line according to the American Psychological Association’s Center for Organizational Excellence survey—more than 1 in 4 younger employees reported feeling stressed out because of political discussions at work and more than twice as many men as women said political talk is making them less productive!

Matthew M. Kinney is the Executive Vice-President of Research and Development for BWSI.  He writes, speaks at conferences, and is lucky enough to consult with clients all over the country on issues from human resources, employment law, and payroll issues as well as his normal ‘day’ job as a Microsoft certified developer.



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Executive Orders Explained

Posted By Cindy Hesch, Friday, March 24, 2017

Executive Orders Explained

It has become inescapable to consume any sort of media and not hear, read, or watch coverage of President Trump’s Executive Order signings and/or protests of them.  Without delving into the political side of the discussion, just what are Executive Orders (political wonks often refer to them as EOs) and how can they affect you and your human resources policies?  In short, Executive Orders are legally binding orders signed by the President to Federal Administrative Agencies (IRS, EPA, Department of Labor, etc.)  These orders are usually issued to direct these agencies in their execution of established laws or policies.  Executive Orders do not require Congressional approval and have the same legal weight as laws passed by Congress.

Unlike Men, Executive Orders Are Not Created Equal

The term Executive Order is kind of a catchall for several ways the Executive branch (i.e. the President) can issue direction or even modify laws passed by Congress.

·         Executive Order—this is a numbered, legally binding document signed by the President.  In every respect it is essentially legislation and published in the Federal Register.  If you have been following recent developments, then you know that an EO can “trump” Congressional legislation somewhat or previously issued EOs from past Presidents.

·         Executive Memorandum—technically this isn’t a legally binding document; however, unless challenged in court they are binding upon the agencies that report to the President.  This is why the Department of Homeland Security would have to follow an Executive Memorandum on something like immigration as if it were law.  There is also the threat that the President can fire agency heads basically at will.

·         Signing Statement—these are accompanied by legislation the President is signing into law.  Oftentimes they are used to communicate Presidential intent to modify or handle something differently than what is outlined in the legislation being signed.  This is a legal gray area that has never been challenged, so until such time, they should be considered legal and enforceable by the President.

·         Proclamation—a statement or proclamation of intent that is not legal and generally used for things like pseudo holidays such as “National Bloggers Day” or maybe “Taco Tuesday”.

·         National Security Directives—these are concerned with national security or defense related issues; also known as Presidential Decision Directives.  Oftentimes, due to their sensitive nature, these are not made public.

Checks and Balances?

While it seems like a President can govern by fiat, nothing could be further from the truth.  The President’s authority to issue EOs can be found in Article II, Section 1 of the Constitution which grants the President “executive power”.  Furthermore, Section 3 of Article II directs the President to “take care that the laws be faithfully executed.”  Congress has several options to countermand or “check” EOs:

·         Rewrite or amendment to previous law, including spelling out in greater detail how the President must act.  The President then has recourse to veto the bill if he disagrees with it which Congress can override with a 2/3 majority.

·         Court challenges can also be pursued on the grounds that an EO deviates from Congressional intent or exceeds the President’s constitutional powers.  In general, courts, particularly the Supreme Court have granted deference in regards to EOs.

It is important to note that an Executive Order could not, for example, override the new overtime regulations that were scheduled to go into effect as they went through the complete rule-making process and were published to the Federal Register.  However, an EO could direct agencies to not enforce the new rules which could then be countermanded by Congress, a future President, or even a new rules making process.

So Executive Orders Impact Me?

Absolutely, yes, and most certainly.  While some of the more recent ones are still subject to court challenges and interpretation, the guidance issued in them—wide discretion on enforcing some aspects of the Affordable Care Act (ACA) for example can directly affect you and your HR policies.  Lately it seems like the past several Presidents have been using EOs more and more to bypass Congress or direct federal agencies on certain aspects of enforcement.  It remains to be seen if this trend will change; however, given the increasing polarization at the federal level, I feel pretty certain that the use of EOs will continue to increase quite possibly in a way that the Founders did not consider.

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