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Michigan historically has been at the forefront of labor law changes. This remains the case with the implementation and recent repeal of Michigan’s right-to-work legislation. Michigan workplaces are no longer governed by a “right-to-work” law, as the repeal took effect on February 13, 2024. Once again employees can be required to join a union to keep their jobs. Employers and employees alike question what effects this repeal may have on the relationship between labor unions and Michigan employers.

The U.S. Department of Labor (“DOL”) is poised to make significant changes this year to various wage-and-hour regulations interpreting the Fair Labor Standards Act (“FLSA”). The changes are expansive and include both the already released independent-contractor test and increases to the salary threshold for white collar exemptions. These changes will effect employers across the country in all industries. Nonetheless, they are not going unchallenged. The expected legal challenges to the changes have already begun and will likely continue to mount.

Large multi-state collective actions continue to be filed under the federal Fair Labor Standards Act (“FLSA”). In addition, with the increase of remote work, more and more employers are employing workers outside of the companies’ home states. This has resulted in relatively new questions about the reach of a court’s jurisdiction over out of state employers. For example, if a Michigan employee sues a New York employer for overtime in Michigan, can other employees located outside of Michigan join the lawsuit? Does the Michigan federal district court have personal jurisdiction over out of state employees when the employer is located in New York? The federal Circuit Courts of Appeals are divided on the issue. 

Introduction

In a world where a $105M settlement of an independent contractor misclassification lawsuit[i] is just another 9-figure headline, businesses cannot afford to take independent contractor misclassification risks lightly. The landscape surrounding the classification of employees versus independent contractors is continually evolving. This moving target poses a challenge for businesses throughout the United States and especially those operating in multiple states.

All employers—and not just union employers—beware: On August 2, 2023, in the long-awaited Stericycle Inc. decision, the National Labor Relations Board (the “NLRB” or the “Board”) announced a return to the detailed analysis of work rules on August 2, 2023. This decision has significant impact on all employee handbooks and other workplace rules as the Board returns to the Obama-era standard set forth in Lutheran Heritage, with a slight modification. The Stericycle standard now asks whether “a challenged rule has a reasonable tendency to chill employees from exercising  their Section 7 rights,” looking at the rule from the perspective of an employee who is not only subject to the rule, but also economically depending on the employer. If so, the rule is considered presumptively unlawful.

Many Michigan companies rely on commissioned sales representatives to develop business and maintain client relationships. However, few know that Michigan has enacted specific laws to protect sales representatives when commission disputes arise. If not handled properly, such disputes can lead to substantial damages. In 1992, the Michigan Legislature passed the Sales Representative Commission Act (the “Act”), which, among other things, provides for treble damages (i.e., three times the actual amount of unpaid commissions, up to a maximum of $100,000.00) if a court determines a company has improperly withheld commissions. Because of these significant penalties, any business using a commission salesforce in Michigan should be aware of the Act’s requirements.

While the advent of artificial intelligence tools that produce large volumes of written, audiovisual, and graphic content may be a boon for many businesses, it also could dramatically change the landscape of wage and hour practices, including how the Fair Labor Standards Act (FLSA) applies to U.S. workers. Among other things, large language models (LLMs) (a form of AI that is “trained” on volumes of data to effectively create certain kinds of output) could readily be used for a variety of office functions – fundamentally changing how office work is performed in the very near future. Previously, businesses have incrementally adopted AI for specific tasks, such as screening resumes or identifying key attributes in large volumes of documents. However, as AI progresses, it is posed to apply to a much broader swath of office and other work.

On May 19, the Sixth Circuit Court of Appeals set a new, substantially more demanding standard for employees to proceed on a collective basis in federal wage and hour lawsuits. The court’s decision in Clark v. A&L Home Care and Training Center will cause trial courts throughout Michigan, Ohio, Kentucky and Tennessee to approach wage and hour litigation very differently than previously.

Many employers remain unaware that employees making over six figures can still be entitled to overtime pay under the federal Fair Labor Standards Act (the “FLSA”).  While there is a separate exemption for highly compensated employees (the “HCE exemption”), which reduces the showing that must be made under the “duties” portion of this exemption, a question arose as to whether the “salary basis test” still applied under the HCE exemption.  In Helix Energy Solutions Group, Inc. v. Hewitt, the U.S. Supreme Court recently resolved that question, holding that the salary basis test did indeed apply to the HCE exemption.  This ruling reinforces the importance of providing sufficient weekly or monthly guaranteed compensation to even some of the most well-paid employees, and not relying solely on commissions or another compensation structure unless some other exemption would apply.

Many employers already have personal experience with the costly two-step process for collective overtime or minimum wage claims under the Fair Labor Standards Act (“FLSA”). This process permits employees to commence expensive class-type lawsuits against an employer with almost no factual support for their ability to represent other employees. However, this soon may change. The Sixth Circuit Court of Appeals is scheduled to review the proper process for certifying FLSA collective actions, and potentially could reduce the significant costs employers now routinely endure when defending themselves in wage and hour litigation. The outcome of Clark v. A&L Home Care and Training Center, LLC could change the course of numerous wage and hour cases in Michigan, Ohio, Kentucky and Tennessee.

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