DES MOINES, IOWA – During a July 14 presentation at the American Association of Meat Processors’ American Convention of Meat Processors and Suppliers’ Exhibition, attendees heard a legal update on labor issues that are or soon will be of concern to small and very small processors.

Rick Alaniz, partner with Houston-based Alaniz Law & Associates and a longtime MEAT+POULTRY contributing editor, told attendees that certain challenges stem from the Biden Administration’s stance on issues that include immigration reform, minimum wage and overtime compensation requirements and union representation. With a labor force that has proven to be fickle about expectations from employers, companies in the meat industry and all industries are struggling to recruit and retain workers.

“Sixty-six percent of your workforce, at any time, is at risk to leave your employment,” Alaniz said, “so, the challenge is holding on to those people; doing the right things for the right reasons.”

He pointed out that organized labor is historically a staunch supporter of the Democratic party, and that is especially true of President Biden and therefore has implications for operators of meat and poultry processing plants.  

“He considers himself a union man,” he said of Biden, and policies moving forward are expected to reflect that.

One example of what this could mean for employers is the elimination of states’ right-to-work laws. Currently, 27 states have right-to-work laws in place.

“A right to work state is one in which no employee has to pay a union in order to keep their job,” Alaniz said, and there is an emphasis by the current administration to implement legislation that would deter states from continuing to support right-to-work policies.

Meanwhile, efforts to raise the federally required minimum wage from the current rate of $7.25 per hour to $15 an hour are still being pursued by the current administration and Alaniz said it is likely that Republicans will likely compromise on the issue and settle for about $10 per hour in some states, like Hawaii, other states are crashing through the ceiling and are supporting minimum wages upwards of $20 per hour. 

“This is something that is definitely going to happen and [when it happens] it’s going to affect everybody in this room no matter what size you are,” Alaniz said.

Wage-and-hour issues are by far the most common labor and employment relations issues that Alaniz advises clients about in his practice.

“Misclassification of individuals as exempt when they are not qualified to be exempt from overtime,” is one of the most frequent issues that comes up, Alaniz said. What determines employees’ classifications includes a salary threshold and a duties threshold.

One common problem occurs when an employee is classified as a salaried worker but does not perform the required duties of someone who the law considers to be exempt from overtime pay. Examples of employees that are considered exempt include those at the executive level.

Administrative-level exemptions apply to workers in roles such as an office manager or business manager who makes independent judgment decisions regarding significant issues of business. Professional exemptions apply to employees in specialized roles such as IT or computer-focused duties. Penalties for violating these federal regulations include three years of backpay for any overtime worked and the total is doubled, so the liability can be substantial even though the oversights are not intentional.

“These are the kinds of mistakes that occur,” Alaniz said. “Keep in mind these are areas of potential liability that you can correct if you so desire.”

Raising the salary threshold for what constitutes exempt status is one issue employers should be prepared to address later this year. The current minimum salary for an employee to be considered exempt is $684 per week, or $35,568 per year.

Alaniz said employees should be aware that the government has announced plans to issue a new rule in October, that will likely double the current salary exemption amount after a 60-to-90-day comment period. He expects the new exemption salary threshold to be between $60,000 and $70,000 per year.

“For all employers, especially small employers, you’re talking about a major cost hit that you need to start thinking about now because it’s going to happen, there’s no question about it,” Alaniz said, adding that it will likely be implemented by January or February of 2023.   

Considerations for employers to keep in mind in preparation for the pending changes include weighing the additional cost of paying overtime for a position that will likely require more than 40 hours per week routinely versus increasing the salary to the new minimum. Other factors to consider include the impact on productivity and morale of employees who go from salary-based pay to hourly.

“It has a negative effect,” Alaniz said, as some people consider their salary status as an indicator of their success and longevity at their job, which is a point of pride.

The liability of off-the-clock work by workers at plants is another topic Alaniz said employers should be aware of, even if employees are willingly getting a head start on their shift without clocking in or clocking out and going back to work to finish some tasks.

“If they’re doing something that’s related to their job, that’s compensable time,” said Alaniz and an audit by the US Department of Labor could reveal these realities and could result in costly backpay and penalties.

This compensation also applies to non-exempt employees in sales roles who might take sales calls after work hours or administrative workers who take paperwork home with them at the end of the day.

One way employers can limit their liability is posting notices in the workplace stating a company policy that prohibits unauthorized overtime.

Post the notice and hold them accountable for it,” said Alaniz. “You can’t deny them the pay, but you can hold them accountable for it,” which can include disciplinary action.