In The Law! – Transcript – Wayne Pinkstone with Kurt Baker
Written by Kurtis Baker on May 27, 2018
Our Host, Kurtis Baker, is joined by Wayne Pinkstone of Fox Rothschild! Find out about issues in the law from 2017 to compare to last week’s episode!
In The Law!
00:00 Announcer: You’re listening to a podcast of Master Your Finances with me, Kurt Baker, a certified financial planner professional, Sunday mornings at 9:00 AM on 1077thebronc.com.
00:10 Announcer: You’re listening to an encore presentation of Master Your Finances with Kurtis Baker, originally aired April 2, 2017. Tune in next week, June 3rd, for an all new episode of Master Your Finances with Kurtis Baker, exclusively on 107.7 The Bronc and masteryourfinances.us.
00:27 Announcer: Financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.
00:43 Announcer: Planning your financial future does not have to be overwhelming. 107.7 The Bronc presents Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment. For the next 60 minutes, Kurt and his expert team of financial guests will help to decipher financial terms, navigate market trends, interpret federal and state regulations, and more so you can make smart decisions with your money to increase your personal wealth. Phone lines are open. If you have a question about personal or small business financial planning, call Kurt Baker now at 1-877-900-1077. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Master Your Finances is underwritten by Certified Wealth Management and Investment focusing on personal, financial and small business planning. For more information about all of Certified Wealth Management and Investment services online, it’s cwmi.us. Now here’s Kurt Baker with this week’s edition of Master Your Finances.
01:47 Kurt Baker: Hi, welcome back and good morning. You’re listening to another edition of Master Your Finances presented by Certified Wealth Management and Investment. I am Kurt Baker, certified financial planner professional hosting your show today and my office is located here in Princeton, New Jersey. I assist clients all over the United States and can be reached through our website, which is www.cwmi.us, or you can call me directly at 609-716-4700.
02:13 Kurt Baker: Last week, we are pleased to have with us Kimberlee Phelan, a CPA, MBA, and tax partner at WithumSmith and Brown. And we talked a lot about tax and international taxing. So if you happen to miss that, I encourage you to go to our podcast, which is www.masteryourfinances.us, subscribe there, and you’ll be able to listen to that in its entirety. It was a very good subject matter last week.
02:34 Kurt Baker: This week, we are very pleased to have with us Wayne Pinkstone, a partner with Fox Rothschild and he focuses his practice on labor and employment matters with significant experience in assisting in-house counsel, human resources executives, and company officials in identifying and solving workplace legal issues. His clients include employers in the healthcare manufacturing service, retail, technology, and financial industries. And Wayne is experienced in developing strategies and taxes to help contain costs associated with employee relations, personnel and labor issues. He advises clients on leave and disability matters at the federal and state level, and unemployment discrimination, diversity, sexual harassment, workplace safety, wage and hour compliance, and reductions in the workforce. He also conducts in-house training sessions on such topics as leave and disability, hiring practices, employee discipline, terminations, investigations, harassment prevention and supervisory skills and practices. Wayne also defends employers in federal and state administrative courts and claims involving discrimination, wrongful discharge, employee whistleblower, and wage and hour collective actions.
03:37 Kurt Baker: Wayne has litigated matters before the Occupational Safety and Health Administration with respect to matters involving OSHA fall protection, noise and construction standards. In addition, Wayne handles disputes concerning restrictive covenants and trade secrets, and assists clients in the creation of non-competition, non-solicitation, non-disclosure agreements. And Wayne recently represented matters including the defense verdict jury trial on behalf of an international corporation sued by a former employee claiming that she was discriminated against because of her gender, judgement on behalf of a national corporation sued by two former employees claiming race discrimination and retaliation, a favorable settlement of wage and hour collective action on behalf of an international manufacturing company.
04:26 Kurt Baker: So, you’ve got a lot of experience in a lot of areas. And I know you’re a member of the American Bar, the Philadelphia Bar, and a volunteer attorney with the Support Center for Child Advocates. So we appreciate very much you coming in today and to talk to us. I know there’s a lot happening in the employment field. In fact, I saw you over the chamber about a few weeks back because employers are very interested in the possible things that may or may not happen because employment law certainly affects employers in some of their decision making processes. So what are your thoughts about where we are and where we might be going because a lot of things are proposed and not really… We don’t know if they’re gonna happen or not, right? So what are your thoughts about all this?
05:06 Wayne Pinkstone: Thanks, Kurt for having me. I appreciate it. With the new administration, one of the things that employment lawyers, particularly management side of employment lawyers like myself, are grappling with is, what is gonna change for the employment law, in effect? And I think there should be some considerable changes. But right now, we’re trying to… It’s early on in the administration. We’re trying to figure out where it’s gonna go. And I do think over the next year or so, I think we’re gonna see some significant changes not only at the Judicial Branch level with particularly, it’s been in the news obviously with Judge Gorsuch and his, I think, likely confirmation to the Supreme Court of the United States. I think there’ll be some changes there because that is going to obviously impact. Right now, we have a 4/4 split at the Supreme Court, and with Judge Gorsuch, if he’s confirmed then I think it’s likely we’re gonna see that 5/4 probably tip more towards a conservative Supreme Court. And I think that’s gonna have an impact on employment law at Supreme Court cases moving forward.
06:15 Kurt Baker: Right, so his view is to literally follow exactly what’s written. So he doesn’t really do any interpretation, really it’s his philosophy. So he’s very, very conservative and, I guess, a constitutionalist. Or was that what they call it?
06:26 Wayne Pinkstone: Yeah, that’s essentially what he is.
06:27 Kurt Baker: Right, so he follows that fairly closely. So it’ll tip a little bit further to that thought process if things are vindicated, right?
06:35 Wayne Pinkstone: I think so. Yeah, I think so. Justice Scalia very much had that philosophy as well, and that is, following what the law says. A strict constitutionalist. Gorsuch, like Scalia, is a firm believer that a judge is supposed to follow the law, the black letter law, as it’s written and not influence their decisions with their own personal thoughts, political perspective. It is, “The law says this, I have a set of facts, I apply them, and I render a decision.” So, from my perspective, from a management side, the employment law perspective, I think Gorsuch is going to be… I think he’s gonna add some consistency in terms of, we know essentially where he’s going to go if he simply follows the language of the statute laws.
07:32 Kurt Baker: Right, ’cause you can read it as well, right? [chuckle]
07:34 Wayne Pinkstone: I can read it as well.
07:34 Kurt Baker: Right, okay.
07:36 Wayne Pinkstone: Yeah, I think… Now you never know…
07:39 Kurt Baker: Right. Exactly. Right.
07:41 Wayne Pinkstone: You never know but I do think that that’s likely where it’s gonna go.
07:43 Kurt Baker: So predictability will go to that, so as far as employer/employee relations, who do you think that’ll typically favor? Is there any thought about which side of that might get a better result if that were to happen?
07:55 Wayne Pinkstone: The consensus seems to be that if the Supreme Court does tip more towards the conservative philosophy, conservative side of things, that it’s likely to be more favorable for the employer. Meaning, generally a more conservative judge who follows the law as it’s written, who is not going to attempt to interpret the law, is likely to be more favorable for an employer than it is for an employee. But, you don’t know. It really a lot depends on the case, the circumstances. I think Judge Gorsuch from what I’m reading, from what I’m seeing, is someone who… Look, if the decision falls on the side of the employee, if that’s the way in his mind the law as written, the decision should be for the employee, he’s not gonna be afraid to do that if that’s where things land.
08:56 Kurt Baker: So more of the power is really shifting back to the legislative branch slightly is what it sounds like ’cause they’re not gonna really interpret what they’re writing. They’re just gonna…
09:03 Wayne Pinkstone: I think that’s right. I think that Gorsuch and the other conservative members of the Supreme Court feel that judges shouldn’t legislate. They should look at the law and make decisions, but interpreting those laws, if there’s something not in that law, that’s up to the legislation, not to the judges.
09:21 Kurt Baker: Right, so let us push it back. In some ways that might delay things because if it’s not written clearly…
09:26 Wayne Pinkstone: Yeah.
09:28 Kurt Baker: Right? So there’s pluses and minuses it sounds like.
09:29 Wayne Pinkstone: There are. And I think…
09:30 Kurt Baker: If they write good legislation it might be a plus. If it’s not good legislation it might actually be a problem because the judge is not gonna intervene in any way. [chuckle]
09:36 Wayne Pinkstone: Yeah, I think that’s right. And one thing that Judge Gorsuch has made pretty clear in his decisions is, with the employment work, employment law, the things that I do, we’re dealing with federal agencies, we’re dealing with OSHA, we’re dealing with the EEOC, we’re dealing with the NLRB, and they all have their own laws and regulations that they follow. For the most part, judges, including justices of the Supreme Court, when there is an agency interpretation of their own law, they give deference to that agency’s interpretation of the law. Gorsuch is a little different. And based on his prior rulings, it appears that he’s not gonna simply give absolute deference to a federal agency’s interpretation. He’s gonna say, “If it’s not in that law, it’s not in that law.” Or if it says XYZ, that’s what it says. He’s not gonna simply give, if it’s ambiguous, give deference to the agency’s interpretation if it’s not in the law.
10:42 Kurt Baker: So if an agency says, “Well, I think the intent was for the legislator to let us do something, in some way, shape, or form, in the workplace.” And it’s not specifically written, Gorsuch may come in and say, “Well, you may think that’s a great idea, you may think that was what they were thinking at the time, but it doesn’t actually say that.”
10:57 Wayne Pinkstone: That’s right.
10:57 Kurt Baker: So you can’t actually act on that yet unless the legislator comes back and says, “Yes, you can do that.”
11:02 Wayne Pinkstone: That’s exactly right. And I think that that’s where he’s likely to fall, and I’ll say that that is slightly different than even Scalia. Justice Scalia, he would give deference to an agency’s interpretation of its own regulations or laws. Whereas, I think Gorsuch isn’t gonna do that quite as easily.
11:24 Kurt Baker: Okay, so it sounds like you’re leaning towards likely to get in, which is something I’ve been hearing, but obviously there’s two sides to this equation. But it sounds like at some point he’ll most likely get confirmed, right?
11:36 Wayne Pinkstone: Right.
11:36 Kurt Baker: So once that happens, we’ll have a full Supreme Court then we’ll just go through the process. As an employer, what are you telling employers to do? And what about employees? There’s the employee side, too. Are there any changes either side should be thinking about during this process?
11:51 Wayne Pinkstone: Yeah. I do think if Judge Gorsuch is confirmed, and again, I think it’s likely, I think we’re gonna see over the next year or two, there are gonna be some cases before the Supreme Court on things, on employment matters that are gonna affect the employers. One of the big ones is, there’s been this issue with class action waivers, where employers will routinely have employees, when they’re onboarding that employee during the orientation process, they’ll have them sign a document that essentially says that you agree that you will not be part of a class and that usually, you will arbitrate your claims as a single plaintiff not as part of a class. So you’re waiving their ability to bring an action as a class action, a group of employees.
12:45 Wayne Pinkstone: And agencies such as the NLRB have looked at those class action waivers and found that for the most part, they violate their own statutes, they believe, by preventing employees from joining together to bring a class action. So I think where Judge Gorsuch is gonna fall is that the class action waiver, if it is clearly written and properly written, it’s likely to be upheld. So, from an employment law perspective for employers, I think these class action waivers, again, being mindful of, are they clear, are they properly written, are likely to be… You’re gonna be able to move forward with those. Whereas, I think under a more liberal Supreme Court, that wouldn’t be as clear right now.
13:33 Kurt Baker: Okay, so if I’m an employee, I’ll have a much more difficult time litigating against my employers. Obviously, it’s very hard to bring in a single line action against an employer because it’s very expensive.
13:43 Wayne Pinkstone: That’s right.
13:44 Kurt Baker: So unless you have a really valuable claim, you’re not gonna make a relatively minor claim against your employer. So it raises the bar even if you were able to do it to even be able to do it. And in this case, you may have “opted out” by the fact that you got employed and so you may, even if it’s five or 10 years later and something totally different is going on, you’re really not gonna have that chance to go after it. So you’re gonna depend on an arbitration system to go back and weigh it, which is a much smaller group, you’re not gonna end up with a jury trial and things like that. So in some way, shape, or form that may work to your advantage or disadvantage, but it certainly streamlines the process, right?
14:16 Wayne Pinkstone: It does.
14:18 Kurt Baker: So it removes some options, basically.
14:19 Wayne Pinkstone: It does. So it’s for an employer facing a class action with potentially hundreds or thousands of employees. They’re incredibly expensive to defend. And if there’s liability, it’s the significant damages that are potentially there as well. So having a class action waiver, maybe an arbitration provision for a single plaintiff or a single employee, it’s less costly. And it’s also less attractive to a plaintiff’s attorney or a plaintiff’s attorney’s firm to bring a single claim instead of a group or group reports.
14:57 Kurt Baker: Right ’cause they typically do that as a contingency. So they don’t wanna put out all those money…
15:00 Wayne Pinkstone: That’s right.
15:01 Kurt Baker: If there’s a relatively small amount they may come back.
15:04 Wayne Pinkstone: There’s contingencies and then there’s the statutes that they sue under a fee-shifting, meaning they can get their fees if they prevail, but getting your fees for a class of a thousand, instead of getting your fees for a single plaintiff, there’s a big difference.
15:19 Kurt Baker: Right, exactly. So you have to be very cautious about what you’re doing. So very fascinating. So we could have a shift as far as the contracts that you may sign when you get employed. So I guess from employee perspective, pay more attention to what you’re signing. From an employer perspective, obviously if you’re gonna write these, be very careful about how you do it and how it’s gonna be interpreted. It’s gonna be literally the way it’s written. So it’s important to understand that. So we’re gonna talk a little bit more about some changes that may or may not be happening when we come back in just a few minutes.
15:40 Announcer: You are listening to an encore presentation of Master Your Finances with Kurtis Baker, originally aired April 2, 2017. Tune in next week, June 3rd, for an all new episode of Master Your Finances with Kurtis Baker, exclusively on 107.7 The Bronc and masteryourfinances.us.
16:00 Announcer: Financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.
16:15 Announcer: We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment, exclusively on 107.7 The Bronc and 1077thebronc.com.
16:40 Kurt Baker: Hi, welcome back. You’re listening to Master Your Finances. I am Kurt Baker here with Wayne Pinkstone, a partner with Fox Rothschild and whose expertise is in labor and employment matters, and we’ve been talking a little bit about some of the changes that might be happening because we have a new administration and judges are one of the things that the Executive Branch has the ability to appoint, and then they have to be confirmed and in our last segment we were talking about how it’s likely that Judge Gorsuch is gonna be confirmed and he’s very conservative, and so that’s gonna shift the Court. Right now, it’s about a 50/50 split, 4/4. Now, it’s gonna shift it slightly. So employers and employees need to pay a little more attention to things because most likely the result would be that things are gonna be much more to the letter of how things are written as opposed to be interpreted by a judicial system. So you have to very careful about what you write these days. So you can’t depend on the Judicial Branch in this case. But there’s other things that they do as well, it’s not just Judge Gorsuch. There’s more attorneys out there as well. So what else is gonna be affected by this change in power in Washington?
17:42 Wayne Pinkstone: Sure. I think even the Supreme Court, obviously the highest court of the land, and Judge Gorsuch’s appointment is obviously significant, but there are lower, I’ll call it lower federal courts below the Supreme Court. There’s the appellate courts, federal appellate courts, or the circuit courts and then there are courts at the district court level too, which are… They’re the trial courts at the federal level. And at that level, there’s over a hundred vacancies. Meaning, there are positions that need judges that need to be filled, including 16 appellate vacancies. So there’s 16 vacancies at the circuit court level across the country, including the Third Circuit, which is the circuit that oversees New Jersey and there are two vacancies there. So the administration, the Trump administration, over the next year is gonna have an opportunity, not only to fill the Supreme Court void there, seat, but also vacancies at the trial court level and the appellate court level, at the federal level. And they will most likely be filled with more conservative judges that may have a similar mindset to Judge Gorsuch.
18:58 Kurt Baker: He’s been pretty open about who he’s gonna choose. Doesn’t he write his list up and show everybody, pretty much?
19:04 Wayne Pinkstone: He does.
19:04 Kurt Baker: It’s interesting to me. It’s not necessarily a Supreme Court issue, it could be a local issue. I know that this travel ban thing has come up a few times where you have a district… I think it was a district judge in certain areas has been saying, “Wait, no. You can’t do that.”
19:18 Wayne Pinkstone: That’s right.
19:19 Kurt Baker: So it can affect different levels of the court system, definitely affect what’s happening on not just a state level, but also a national level in some cases.
19:25 Wayne Pinkstone: That’s right.
19:25 Kurt Baker: If they have an opinion about something, right?
19:27 Wayne Pinkstone: Exactly. And for your listeners, the district court level. So for example, there’s a federal district court sitting in Trenton, New Jersey, a federal court sitting in Trenton, they sit at Newark, and then they also sit in Camden. So they oversee the state. So federal cases, questions, whether it’s a federal question, a federal statute that’s involved or if there’s a diversity issue, there’s citizens of different states that are suing each other, the federal courts, local federal courts will hear those issues and the decisions have direct impact on the citizens of the state. The Third Circuit, their decisions have direct impact on the citizens of the state. So, at a more local level who’s filling those vacancies is critical, is important. And for example, the Third Circuit, there are currently seven judges who have been appointed by a Democratic president. There are five who have been appointed by a Republican president. There are two vacancies. So those vacancies, they will obviously be appointed by President Trump, a Republican president. And if they’re confirmed, we’ll have 7-7, we’ll have a split.
20:48 Kurt Baker: Somewhat of what we’re dealing with the Supreme Court right now. [chuckle]
20:50 Wayne Pinkstone: That’s right. Democrat and Republican split, which really makes for an interesting dynamic moving forward is, “Okay, how are they gonna rule?” And you’re likely gonna look for a judge or two who may not rule, they may be slightly different and then gives the majority to that [21:08] ____…
21:08 Kurt Baker: ‘Cause they don’t always follow “the party line.” No matter who appoints them, they always have their own methodology, so they don’t necessarily step in line.
21:14 Wayne Pinkstone: They do. And I gotta tell you, from my perspective, we talk a lot about who appoints these judges, and things flip flop from one administration to the next. You had the Obama administration which was Democratic and considered more liberal, who was appointing judges who were considered more liberal, potentially were moderate. And then you have the Trump administration that may appoint judges who are more conservative. But in my experience across the line, look, these are very smart people who are appointed to these positions who make, I think, very sound decisions based upon the facts and the law. So no matter who I think appoints them, from my perspective and practicing for over 20 years, these are objective, smart people who make these decisions. So whoever fills the vacancies, frankly I think, are gonna be solid judges.
22:10 Kurt Baker: That’s good to hear from the layperson’s side. I think that in spite of all the politics, that it is a pretty rigid vetting process, and there’s a lot more than just one person that looks at this. There’s a lot of people that make recommendations. You end up with very highly qualified people who even get to this point where they’re considered. So the pool of people we’re selecting from are outstanding.
22:29 Wayne Pinkstone: That’s right and the folks that fill these roles, I think for the most part are not only very smart, are very qualified, I think are fair and objective. So, I think, again, whoever fills these vacancies, I think they’ll be qualified candidates.
22:50 Kurt Baker: Okay, so now that we got all our judges in hopefully over the next few years, most likely, we’ll start filling these back up again, because it is partially political. So now that we’ve got a new administration in place, some of these things will finally get filled that may have been vacant for a little while, which is interesting. But that’s the way it works. That’s just the process we deal with. So is there anything else the employer is likely to see as far as the change goes? And some of the things that may be coming up that we’re seeing coming up?
23:14 Wayne Pinkstone: Yeah. We spoke a little bit about the Judicial Branch in the Supreme Court, and the circuit courts, and district courts but there’s a legislative branch. There are going to be likely changes moving forward. Now, as a general theme, I think from this administration, we’re already seeing it. You’re gonna see less regulation. I think you’re gonna see less enforcement from agencies such as OSHA, EEOC, NLRB, Department of Labor, and I think more outreach and I think conciliation. And that’s partially because of funding issues. I think there’s likely to be less funding going towards these agencies, which means less people that they have to enforce the laws. So I think you’re gonna see more, I call it conciliation, reaching out to employers, pointing out potential issues and trying to resolve them in a less formal way, as opposed to filing a complaint, filing a citation and potentially litigating. That’s what I think you’ll see from a legislative perspective.
24:25 Kurt Baker: Yeah, I know, at least from a small business person’s perspective, I know when an agency comes in and you’re both on the same page. I know my wife was part of a large financial services company, and they had internal audits and it was like an audit, I go, “Oh, my gosh, having an audit.” But the audit was really about just trying to help them better the process and point out what the mistakes were. You weren’t worried about getting this huge fine thrown at you. And I think, at least in my experience, when I’ve met with different regulators and they come in and it’s like when laws change, that happens a lot. “Hey, look, this is really what we want you guys doing.” I find that to be a very… ‘Cause honestly, most employers wanna do what they’re supposed… At least I know from my perspective, I wanna comply with whatever the intent is, and sometimes it’s a little bit confusing when new laws come down. You read it yourself, and you’re like, “Well, how exactly do you really want me to implement this? I’m not really 100% sure what you intend here,” in some cases. And it’s nice when you sit with them and get it laid. I personally prefer that method, but of course you’ve got people that are outliers that are just saying, “We don’t care what the law says. We’re just gonna do what we want to do.” Hopefully they’re still gonna address those, I would think?
25:26 Wayne Pinkstone: I think so.
25:27 Kurt Baker: If they’re not gonna listen…
25:29 Wayne Pinkstone: Yeah. Oh, yeah, yeah.
25:29 Kurt Baker: So it’s not like no regulation, right?
25:31 Wayne Pinkstone: No, it’s not gonna be. Right. There are existing regulations for, for example, OSHA, Safety and Health regulations, Department of Labor regulations. EEOC have their own regulations, which are going to… We’re gonna have them around during the Trump administration and whatever administration follows, they’re gonna be here and they have to enforce those. So you’re gonna have your outliers there that may be doing something wrong, who are violating the law and deserve to be, frankly, inspected, investigated, and potentially there’s damages or fines that may be levied. But I do a lot of work where I’m dealing directly with representatives of OSHA, Safety and Health, or the EEOC, or the Department of Labor, and in my experience, yes, they want things to be done correctly in the workplace. But I think that they’re also there if there’s an employer that’s willing to accept constructive advice, and maybe there’s a small fine involved, I think the willingness to engage with those agencies comes out to be… I think it’s a positive. So I always say this to employers, to clients, I’s like, “Yes, I understand, OSHA’s at the door, the EEOC’s at the door.” I said, “But let’s take this one step at a time ’cause I think they’re there. Cooperate. Collaborate.” And I think at the end of the day, they’re fine.
26:56 Kurt Baker: Okay. Well, that’s good to hear, so I know that… Yeah, any time you hear a government agent’s coming down and saying, “We want to inspect you or audit you,” or whatever, the first thing you think of is, “Oh, my god, how much is this gonna cost me in time and in money?” But if you at least think about looking through it to the other side, there can be some benefits to the other side of it too. None of us like to take our time out of our business. It’s time out of your business. Most of us are focused on our businesses, but occasionally we have to pay attention to all sides of this thing. So it’s important to do that. There’s a lot more happening when we come back. So we got the Judicial Branch, the Legislative Branch, and there’d be more coming up when we come back in a few minutes.
27:31 Announcer: You are listening to an encore presentation of Master Your Finances with Kurtis Baker, originally aired April 2, 2017. Tune in next week, June 3rd, for an all new episode of Master Your Finances with Kurtis Baker, exclusively on 107.7 The Bronc and masteryourfinances.us.
27:48 Announcer: The financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.
28:05 Announcer: We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now, back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment, exclusively on 107.7 The Bronc and 1077thebronc.com.
28:31 Kurt Baker: Back to Master Your Finances. I’m Kurt Baker, certified financial planner professional here with Wayne Pinkstone, a partner with Fox Rothschild and we’re talking about employment changes that may happen. We talked a little bit about how the Judicial Branch may change now that the Executive Branch has changed on the federal level and how that affects the districts as well as the Supreme Court decisions. So it does affect states as well because those people have a lot of power, but he also pointed out that in many cases, most cases he says, they’re very highly qualified people. And I think that we get a little too tied into who’s actually selecting them because there is a process that happens, although it’s important, they tend to be highly qualified people. So the Legislative Branch also, which has been making the news lately about things they’ve been trying to do. So there’s some things in the employment area that have been proposed and that they’ve been doing and some of the things that we’re likely to see as he pointed out was we’re cutting some of the budgets.
29:23 Kurt Baker: I know the President said we’ll streamline departments and he has all these initiatives going on trying to cut costs in the legislative process, which essentially means less regulatory environment, less people to do the enforcement side. So we’re gonna talk a little bit more about reconciling or working with businesses to try to do what’s best for the employees and unless you’re really relatively egregious, you’re probably not likely to get the hammer drawn down on you really as quickly. Because they really wanna work with you ’cause the result is they want it to be best for the employees. But also there’s some other things that may be happening as far as the employees go and the labor laws and things like that. So you wanna touch on that a little bit and explain what that whole process is?
30:04 Wayne Pinkstone: Sure, sure. One of the big things that emerged last year was the Department of Labor under, at the time, the Obama administration, had proposed changes to the exemption or the salary threshold, if you will, for the exemption under the FLSA, which is the Fair Labor Standards Act, which is the federal law that governs the payment of wages and specifically overtime, which employees are eligible for overtime. And there’s two classifications. There’s the non-exempt folks, which means they’re eligible, usually hourly paid and eligible for overtime for any hours worked in excess of 40 in a work week. So it would be time and a half, anything over 40. And then there’s the exempt employees who are your salaried employees, usually management level employees who are paid a set salary and they’re not eligible for overtime. Well, the Department of Labor last year had proposed to increase the salary threshold to essentially, a little bit over $47,000. So what that would mean is, is that in order to be exempt from the overtime laws, there’s a salary threshold that has to be met.
31:20 Wayne Pinkstone: So the higher that salary threshold, the more people are going to be eligible potentially for overtime compensation. So they were increasing the salary threshold an excess of $20,000 to $47,476, which means there would be a whole bunch of people that fall under that salary who are now gonna be eligible for overtime potentially. They’re gonna be non-exempt. Well, those regulations have been stayed. There’s a federal court in Texas who has stayed and joined those regulations from going into effect. So employers generally are breathing a sigh of relief because many were not sure how they were going to comply with this. So they’ve been stayed. The question now is, we have a new administration, what’s gonna happen to those regulations? Period. Okay? Are they going to exist? There’s a couple lines of thinking here. Some think that they’re gonna be scrapped completely, we’re not gonna see any change. Others think that they’re likely gonna be modified. And I think that’s probably what’s gonna happen. Probably. And I think we’re gonna see that threshold most likely instead of being $47,476, it’s gonna be lowered to something like, say, $35,000. So there’s gonna be an increase, but it’s not gonna be as high. So not as many employees are now gonna be suddenly thrown into this non-exempt category and eligible for overtime. So that’s something I think on the horizon that employers and employees need to be aware of.
32:54 Kurt Baker: So when you talk about the exempted and non-exempted, can somebody make a decision more favorable to the employees in these cases? Or is it like if you hit this certain line, you have to pay them hourly? Another line, you have to pay them, essentially a salary plus whatever bonus, commissions, whatever you want, like the management typically gets paid? But I guess the argument is, if you have a line person, they’re not really on a commission thing. It gets complicated on how you compensate them for what you’re trying to pay them, I guess is what the employers say.
33:21 Wayne Pinkstone: It is, it is. It’s not as simple. I’m dealing with one and this regulation deals with one component of that, and that’s the salary threshold. There’s also something called a duties test. What that means is, yeah, we have somebody, maybe they meet the salary threshold. Let’s say it’s the $47,000, okay. Let’s say this law’s in place, they then have to meet the duty requirements, which means they can’t just simply meet the salary threshold and now they’re no longer eligible for overtime. They have to either manage. They have to be an executive level, management level person. There’s something called an administrative exemption. They have to meet certain requirements, so they have to be able to do things independently and have discretion. And then there’s other exemptions for outside sales and computer folks that do computer-type work. So not only is there this salary threshold issue, there’s this duty test which isn’t gonna change. It’s gonna stay there. So employers and employees still need to go and employers still need to go through this analysis of who is and who isn’t exempt. And it’s not easy.
34:30 Kurt Baker: Right. ‘Cause I used to be in a union in the American Merchant Marine, they used to be paid very highly on an hourly basis. So that’s the type of business where I’m just going off, I’m working shift work, I’m taking care of a plant, I’m really not a manager, I am paid well so I’m not gonna meet this, I can still get my overtime basically?
34:46 Wayne Pinkstone: That’s right. So you have people who are receiving a very high hourly wage because they’re not exempt and they’re potentially eligible for overtime. So they get time and a half for any time over 40 hours a week. So yeah, a lot depends on not only how much they’re making, but what the employee’s doing.
35:04 Kurt Baker: And I think it’s an important distinction, ’cause I know people were concerned that, “Oh, wait, I make well more than that because of my hours I work and my hourly wage. I don’t wanna lose all my overtime because of the duty test.” That necessarily doesn’t change.
35:14 Wayne Pinkstone: That’s right. You gotta look at both. And that’s not changing. And these wage an hour issues for those employers that have been hit with… We call them collective actions. So they’re essentially class actions under the Fair Labor Standards Act, and it’s a group of employees who are claiming that they were not paid overtime. Maybe they were misclassified as exempt, they should have been non-exempt and therefore, they should have been eligible for overtime. These collective actions can be difficult to defend, very costly to defend, and there could be significant damages at the end of the day. So how you classify your employee from a wage an hour perspective is difficult and obviously very important.
35:58 Kurt Baker: Right. So you have the wage an hour and you have the non-exempt, the exempt. And I know in some case… I don’t know if you wanna touch this just quickly, but there’s 1099 employees, but there’s rules about whether or not you’re being classified as a 1099 or not? Do you wanna just touch on that difference between W-2 and 1099? ‘Cause I don’t think everybody understands when you can or can’t do that.
36:13 Wayne Pinkstone: Sure, sure. So there’s W-2 employees which are your typical… They’re employees, and there’s taxes, payroll taxes, taken out of their pay. And then there’s 1099 employees, and the 1099 employees are typically classified as independent contractors. Some employers have independent contractors who come in and do the work and their status is governed by an independent contractor agreement. And they’re paid on a 1099 basis, which is, you get a check, there are no taxes taken out, and you have to pay your own taxes as an independent contractor. There is a whole set of laws and regulations, decisions, agency decisions, court decisions on whether someone is truly an independent contractor or not. And a lot of it comes down to really, I think, one major point and that is, does the independent contractor, is he or she acting independently? Or is that employer really directing and controlling what they can do? So if they are, if they come in and they don’t have other jobs that they’re working on and this employer is directing them, supervising them, telling them what they can do, even though they’re called an independent contractor, it is highly likely that an agency or court is gonna say, “I don’t care what they were called, they’re acting as employees.” And therefore, there’s tax implications, there’s wage and hour implications. It’s a big issue.
37:43 Kurt Baker: I agree. ‘Cause our industry, the mortgage industry, experienced this many years ago when there was no licensing requirement for solicitors and everyone was 1099, but whatever. A mortgage company but they had to register with one company so they came back in and said, “Oh, they’re all W-2.”
37:55 Wayne Pinkstone: Yeah.
37:55 Kurt Baker: So that’s an industry that many years ago is actually by definition of the law, you had a designated Roth as W-2 because of the way the law was written, you can only work for one entity at a time. But you had to control them, otherwise they couldn’t work for you.
38:09 Wayne Pinkstone: That’s right.
38:09 Kurt Baker: So it’s important, I think, in a lot of the cases that people understand the difference ’cause I’ve known fellow employers that have gotten into trouble because they just think they could 1099 everybody, but that’s not necessarily the case. You really pay attention to that and make sure you meet the definition ’cause it’s just not worth it to have the DOL come in and tell you’re wrong.
38:24 Wayne Pinkstone: Yeah. That’s exactly right.
38:26 Kurt Baker: It’s just not worth it. Pay attention to that, it’s really important. I know we gotta break here in a minute, but anything else you wanna touch on in the next segment? Or you just wanna say anything?
38:36 Wayne Pinkstone: Yeah, one thing I… And we could take this up in the next segment is, I’ve been talking about the federal law, at the federal level, the changes at the federal level. Employers need to be mindful of the state level. So I’m talking about federal agencies, federal courts. There are state courts, there are state agencies, and we need to be mindful of those, and we can talk about that.
38:55 Kurt Baker: Absolutely. When we come back, we’ll be talking about the state level issues that we need to be concerned about as well.
39:00 Announcer: You are listening to an encore presentation of Master Your Finances with Kurtis Baker, originally aired April 2, 2017. Tune in next week, June 3rd, for an all new episode of Master Your Finances with Kurtis Baker, exclusively on 107.7 The Bronc and masteryourfinances.us.
39:18 Announcer: Financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.
39:34 Announcer: We are talking finances, so you can make informed choices for a better financial future. Missed an episode? Go to 1077thebronc.com and Apple iTunes to download and listen to previous shows. Just look up Master Your Finances. Now back to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment, exclusively on 107.7 The Bronc and 1077thebronc.com.
40:00 Kurt Baker: Welcome back to Master Your Finances, I’m Kurt Baker, certified financial planner professional, with Wayne Pinkstone, a partner at Fox Rothschild. And we’ve been talking about some of the changes that may or may not happen here in the upcoming change in administration in the labor and employment area, which is fairly significant. He’s been talking about a lot. People have been hearing a lot about Judge Gorsuch as being run through the process about possibly becoming the Supreme Court Judges Justice. But there’s also the other justices that are being appointed on the lower court levels as well, which may affect things on the state level specifically. And then of course, you’ve got the legislative branches has had a shift as well. And the likelihood is we’re gonna have a little less regulation side, a little more working together with the governmental agencies and the employers. However, if you’re outside the bounds, of course, you’re still gonna get heavy-duty penalties if you’re not complying. But there’s also some state things as well. We wanna make sure we touch on the state level that may change as well. So, you wanna tell us some of the things on a state level that we might be seeing coming up?
40:58 Wayne Pinkstone: Sure, sure. For employers in New Jersey, New Jersey tends to be pretty active when it comes to legislation that is generally deemed more pro-employee. States like New Jersey, states like California, New York are considered a bit more progressive in their laws when it comes to the employer/employee relationship. In New Jersey, some of the things that I think we may see on the horizon. You’re seeing across the country this move to increase the minimum wage from higher, generally to the $15 an hour range. You’re seeing that happening now in California, you’re seeing that happening in New York. While there is a movement in New Jersey to increase the minimum wage to $15 an hour over a series of years. Not immediately, over a series of years. Now, that was brought forth, that was vetoed by Governor Christie, that didn’t happen in 2016. I think it’s unlikely to happen in 2017, but if in 2018 we have a new governor and that new governor may be a Democrat, I think we’re likely to see that increase in minimum wage back at the forefront and it may happen. So it’s just something to be mindful of for employers.
42:34 Wayne Pinkstone: Another big issue is this paid sick leave law issue. New Jersey, there’s several municipalities across the state who have paid sick leave laws that mandate that employers pay their employees for, usually it’s five business days, five days of sick leave. Cities like Trenton, Montclair, Newark, Jersey City already have these laws, but there’s a movement to make it statewide. So that, I think, it’s stalled before the state legislature now, but again, depending on what happens this fall, I think you’re gonna see that back in the news again in 2018. So there are two big issues. The other one, there’s a state statue, the New Jersey Law Against Discrimination, that essentially governs workplace conduct. Employers obviously cannot discriminate against employees because of a protected class, whether it’s religion, race, age. But there’s a movement to amend the NJLAD to prohibit disparities in pay among men and women. So, I think those three things, pretty significant, and I think could be impacting New Jersey-based employers most likely in 2018.
43:53 Kurt Baker: Okay, so that’s a lot to think about. So, some of the things that we’ve heard about nationally are actually being possibly coming to New Jersey. As you mentioned, the wage increases, the goal is, from a legislative perspective, is to get New Jersey up to New York and California’s level, which is $15 an hour over a period of years. However, Christie is not agreeing with that. However, if the government changes… But right now I guess, Governor Christie’s numbers aren’t looking great, so that’s a possibility, that’s a real possibility that you’ll see change in power, depending on how things go on a federal level and how New Jerseyans feel about what’s happening as far as everything else goes. So that’s really up in the air, we really don’t know what or who our next governor’s gonna be at this point.
44:31 Wayne Pinkstone: That’s right.
44:32 Kurt Baker: It could go either way for sure, but from an employer perspective you have to plan ahead. You have to think about these things ahead of time, so what are you gonna do about that? I don’t know. Some of the places I’ve seen, like you hear about these stories about, in California, McDonald’s has its first fully-automated franchise?
44:49 Wayne Pinkstone: Yeah.
44:50 Kurt Baker: Are you hearing employers talking about, at some level, when I get to 12, 13 or 14, or whatever. At some level I’m gonna start reducing my jobs? Do you hear this on your side? I’m just curious. I read about this stuff.
45:02 Wayne Pinkstone: Yeah. Where these laws really have an impact, I think, is with smaller to mid-size companies, employers, some of which may not have fully functioning HR department, they may have the owners or the managers fulfilling an HR function and just trying to keep up with these changes in law, just the language of the law is a big deal. But the impact themselves, changing the minimum wage to $15 an hour, amending the New Jersey Law Against Discrimination, or mandating paid sick leave have an impact, immediate impact on their bottom line. So what I’m hearing is, at the small and mid-size employer range, I’m hearing them say, “All right, how am I going to plan for this? I gotta run an operation, but I have to be aware of these laws. It’s impacting my bottom line. So do I start making moves to more automation that maybe replaces this worker who may be costing me more or not?” But even the automation part of it, that’s expensive.
46:10 Kurt Baker: Right. Somebody has to run that.
46:11 Wayne Pinkstone: And somebody’s gotta run that. So I think that these laws, most at the state level, are most likely gonna have an impact on small to mid-size companies more than the larger.
46:22 Kurt Baker: Now, are there certain employee levels? I know in some laws, like you have 50 employees, certain things hit, at 100 employees certain things hit. Do any of these affect everybody? And do any of them affect just certain size companies? You know these numbers by chance?
46:35 Wayne Pinkstone: Yeah. Well, the…
46:37 Kurt Baker: Roughly.
46:38 Wayne Pinkstone: The roughly. The New Jersey Law Against Discrimination you need one employee. So that’s everybody.
46:43 Kurt Baker: That’s a pretty low bar.
46:43 Wayne Pinkstone: It’s everybody.
46:45 Kurt Baker: Yeah, of course.
46:46 Wayne Pinkstone: The minimum wage is gonna be everybody, right?
46:48 Kurt Baker: Okay.
46:49 Wayne Pinkstone: The paid sick leave laws are generally kicking in somewhere in the 10-employee range.
46:54 Kurt Baker: That’s still pretty low.
46:55 Wayne Pinkstone: But it is low.
46:56 Kurt Baker: That’s pretty low, yeah.
46:56 Wayne Pinkstone: So I think it’s gonna cover many, many, the majority of employers in the state, these changes in the law. At the federal level, the big threshold is 50. And why 50 is so important is there’s a law called the Family Medical Leave Act, the FMLA, and for those employers that have 50 or more employees, that applies. And that could be a very, very difficult law to manage, and I deal with it on a daily basis with my practice dealing with employees who may be on leave and how those employers deal with those employees from a legal perspective.
47:35 Kurt Baker: Right, right. So there’s a lot to think about. So from an employer’s standpoint, are there any recommendations overall you might give to an employer? Like, what planning they should be doing now? And then, maybe if you’re an employee… Just from both sides, what things they should just focus on right now. ‘Cause there’s a lot of this up in the air at the moment.
47:51 Wayne Pinkstone: There really is, it is up in the air. At the federal level it’s up in the air and the state level it’s up in the air. But from our perspective, I think it’s important for all employers to try to stay up-to-date as much as possible on the changes that are occurring, and are occurring literally on a daily basis at both levels. If you have a lawyer that you work with, ask that lawyer, “Keep me up-to-date, send me alerts, send me articles, let me know what’s going on so I know how to prepare for these things.” But generally, I think employers should continue hopefully doing what they were doing before, and that is planning, obviously complying with the law, and understanding that there’s federal issues, there’s state issues, there’s state agencies, there’s federal agencies that we have to deal with as an employer in New Jersey. But try to keep up-to-date as best you can. I know it’s difficult, but that’s my piece of advice.
48:58 Kurt Baker: Excellent. Well, we appreciate it very much. We went through a lot of stuff weighed in and there’s a lot happening. So the key is, any time you have an administration change, things tend to shift a little bit. This one feels a little more dramatic because it seems to be in the news constantly, but these aren’t really that unusual. Employers have had to deal with this in the past with employees. So really the key is stay educated, stay up-to-date. Especially, for an employer, you need to set your parameters and how you’re gonna run your business. You really need to make sure you have the legal advice in there to make sure you’re doing this correctly, because the cost of noncompliance could be very expensive. And just to plan things out, like anything, I’m a planner, so I believe in this wholeheartedly. The plan for option A and option B, what are you gonna do if things go your way, so to speak, what are you gonna do if things don’t necessarily go the way you’d like it to go, and just have these things at least frame worked out, so you know what kind of direction you’re gonna head, so it’s not an emergency reaction if things do go into effect and you just have no idea what you’re gonna do. At least think about these things.
49:54 Kurt Baker: So, we’ve got a lot of changes happening on a judicial level. It sounds like the bench is gonna move a little more conservative, a little more literal to the law. The Legislative Branch has also shifted in that direction, so that’ll reduce regulation somewhat, reduce cost for businesses in some ways, and the government agencies should be working very closely because the manpower is gonna be a bit less, but they still want you to comply, obviously, with the laws that are on the books. From an employee standpoint, some of the minimum wage, things may be going up over time. Things may be changing a little bit as far as salary in what they call exempt or non-exempt, and what we think of as hourly employees and salaried employees, so that may be shifting as well a little bit so keep up-to-date on that. And the sick leave laws that you just mentioned, they may be adding some sick leave requirements in New Jersey, which is a New Jersey thing, as well as just discrimination, which I think is a bad idea to begin with. So in my opinion you should not be discriminating anyway, but there are laws in place that you’re not supposed to do that, so please, do not discriminate on any of the protected classes. That’s a big no-no. So, thanks again for coming on, Wayne, appreciate it very much.
50:54 Wayne Pinkstone: Thanks for having me.
50:55 Kurt Baker: Appreciate it very much. Just a quick announcement, Attitudes in Reverse, the nonprofit that I co-founded with my wife, daughter, and father is having another awareness event coming up on May 20th at Mercer County Park. It’s our 6th annual Miki & Friends: Walk & Run for AIR. You can learn more at attitudesinreverse.org or you can sign up at walkforair.org. You can reach me directly at 609-716-4700 or at www.cwmi.us. If you have any questions about your own personal or business financial plan, right now you could go to Facebook at facebook.com/masteryourfinances. Like us there. You can get more information about the show, as well as a question we’re gonna ask Wayne in a few minutes, and we’re gonna post that here shortly. And you can subscribe to this show, as well as all our shows at masteryourfinances.us. Remember, you too can master your finances and enjoy financial peace of mind.
51:49 Announcer: You are listening to an encore presentation of Master Your Finances with Kurtis Baker, originally aired April 2, 2017. Tune in next week, June 3rd, for an all new episode of Master Your Finances with Kurtis Baker, exclusively on 107.7 The Bronc and masteryourfinances.us.
52:08 Announcer: The financial views and opinions expressed by the host and guest on this program do not necessarily reflect the viewpoints of 107.7 The Bronc, Rider University, or Certified Wealth Management and Investment. The material discussed is not designed to provide listeners with individualized financial, legal or tax advice.
52:24 Announcer: You’ve been listening to Master Your Finances with Kurt Baker, a certified financial planner professional with Certified Wealth Management and Investment, exclusively on 107.7 The Bronc and 1077thebronc.com.