Littler Survey Reveals Government Impact on Employers

Littler, the world’s largest employment and labor law practice representing management, has released the results of its 2014 Executive Employer Survey. The third annual survey, completed by more than 500 in-house counsel, human resources professionals and C-suite executives, many from the nation’s largest companies, analyzed how employers are being impacted by current economic conditions and regulatory changes during the final years of Barack Obama’s presidency.

Divided Government Brings Uncertainty for Employers

While employers continue to feel the impact of changing legislation and regulations, the past three survey reports show a steady decline in the level at which respondents anticipate key regulatory issues, particularly healthcare reform, will influence their workplace in the coming year. Employers appear to be shifting some of their concerns to the uncertainty that stems from a divided government.

Respondents identified rulemaking and enhanced enforcement from federal agencies as the most troubling outcome of a divided government with 56 percent indicating concern in regard to the impact on workplace policy.

“With Congress deadlocked and the ongoing divisions in government, employers are feeling the impact of President Obama’s focus on the federal agencies to bring about changes to workplace policy,” said Michael Lotito, co-chair of Littler’s Workplace Policy Institute. “As employers grapple with more aggressive enforcement and workplace reforms from several federal agencies, the Department of Labor’s pursuit of President Obama’s ‘income inequality’ agenda was a particular area of concern for employers. 29 percent indicated concern with measures to raise the minimum wage and expand overtime pay, both of which will have a significant impact on employers’ bottom-line.”

Healthcare Reform Remains Top of Mind, but Concern Declines

The Affordable Care Act (ACA) remained the regulatory issue that respondents expect to have the most impact on their workplace during the next 12 months; however, those that felt it would have a significant impact dropped 16 percentage points from 57 percent in the 2013 survey to 41 percent in 2014.

“It’s not to say that employers are no longer concerned about the ACA – they are and healthcare reform continues to be one of the most pressing issues on the minds of all employers,” said Steven Friedman, co-chair of Littler’s Employee Benefits Practice. “However, uncertainty surrounding the ACA, as well as delays in its implementation, has created confusion among employers. In response,58 percent said they have engaged employee benefits attorneys or consultants to help track changing deadlines and upcoming compliance obligations.”

Similar to the 2013 survey, respondents identified a range of actions that they have taken or anticipate taking in response to the ACA’s implementation, albeit to a slightly lesser degree. The implementation of employee wellness programs remained the top action taken by roughly half of employers (52 percent). About a quarter of respondents said they would consider offering employees healthcare benefits through private health insurance exchanges (26 percent) or limit more employees to 30 hours per week (25 percent).

Government Bounties Drive Corporate Whistleblowing

Financial awards from government programs, such as the Securities and Exchange Commission whistleblower program, that encourage employees to report misconduct have had a clear impact on the behavior of companies and of whistleblowers themselves.

♦ 53 percent of employers said that whistleblowers are more inclined to report misconduct to regulators rather than within the organization.

♦ 56 percent reported that they are taking steps to address these issues through stronger internal compliance programs.

“In the whistleblowing context, the best offense is a strong defense, so it is encouraging that the survey shows a majority of respondents are working toward a culture of ethics and compliance,” said Greg Keating, co-chair of Littler’s Whistleblowing and Retaliation Practice. “Most companies are making a genuine effort, but are still in need of guidance from the federal agencies on how to create an environment in which employees feel comfortable reporting misconduct without fear of retaliation, as well as stronger incentives to create a culture of compliance.”

Challenges in Managing Employees in the New World of Work

Employers appear to be increasingly comfortable with the size of their current workforce. The percentage of respondents indicating no plans to make changes to their workforce has increased steadily over the past three years from 13 percent in 2012 to 22 percent in 2013 to 26 percent in 2014. However, employers still remain relatively bullish in their hiring plans, with the majority (53 percent) planning to hire workers in the coming year.

As a variety of forces continue to reinvent the workplace, employers identified several challenges in managing their workforces.

♦ 48 percent of respondents reported that current economic conditions are leading disenchanted employees to bring more lawsuits or claims against their employers—up 25 percentage points since last year.

♦ Discrimination and harassment is the area in which respondents noted that their organization has seen the most employee lawsuits or class actions during the past year (40 percent), followed closely by wrongful termination claims or wage and hour lawsuits (36 percent).

♦ Workforce retention was the issue respondents felt presented the most difficulty in managing their workforce with 88 percent having some level of concern. Employers also expressed concern with social media and employee privacy (86 percent), preventing abuse of leaves under the Family and Medical Leave Act and similar laws (69 percent), and managing generational differences between younger and older employees (68 percent).

“The rise in the degree to which respondents are seeing lawsuits from disgruntled employees is a troubling finding for employers. Even if the claims are frivolous, they can be costly, distracting and time-consuming to defend,” said Barry Hartstein, co-chair of Littler’s EEO and Diversity Practice. “The prevalence of lawsuits from disenchanted employees, which often center on discrimination or harassment claims, combined with an increasingly aggressive Equal Employment Opportunity Commission create significant risks for employers, particularly when claims fall into the priority areas of the EEOC’s Strategic Enforcement Plan.”

Barriers Impacting the Workforce

Employers reported seeing a decline in some of the barriers identified in previous survey reports as impacting their workforces.

♦ Unhappy workers appear to be less wary about remaining in their current positions due to an inability to find employment elsewhere (this figure fell from 85 percent in 2012 to 79 percent in 2013 to 66 percent in 2014).

♦ Far fewer respondents cited underemployment as a barrier impacting the workforce (from 67 percent in 2012 to 44 percent in 2013 and 2014).

However, in the past three survey reports, employers have continued to indicate that current economic conditions mean employees are being asked to do more with less (84 percent in the 2014 survey).

Increased Focus on Employee Privacy

Workplace privacy is a growing area of concern among employers as more and more companies incorporate new technology policies and widespread data breaches continue to make headlines.

♦ Avoiding workplace and data security breaches was identified as the top concern among employers regarding workplace privacy, with 74 percent ranking this option as their top or second greatest concern.

♦ 34 percent ranked as either their top or second greatest concern safeguarding customer and corporate data without unlawfully accessing employees’ personal information as “bring your own device” (BYOD) programs become increasingly common.

♦ 31 percent of respondents ranked among their top two concerns laws and legislation prohibiting employers from requesting criminal history information or restricting the use of credit information for employment purposes.

“It’s not surprising that data breaches and issues surrounding BYOD programs are among the top concerns for employers, as the protection of sensitive information is critical in today’s technology-driven workplace,” says Philip Gordon, chair of Littler’s Privacy and Background Check Practice. “Interestingly, respondents expressed the lowest level of concern with being able to monitor employees’ personal social media activity, with a mere 6 percent ranking this as their top concern, despite the proliferation of state laws that restrict employers from accessing employees’ social media passwords.”

A detailed survey report is available here.

About Littler

Littler is the largest global employment and labor law practice, with more than 1,000 attorneys in over 60 offices worldwide.  Littler represents management in all aspects of employment and labor law and serves as a single-source solution provider to the global employer community. Consistently recognized in the industry as a leading and innovative law practice, Littler has been litigating, mediating and negotiating some of the most influential employment law cases and labor contracts on record for over 70 years. Littler Global is the collective trade name for an international legal practice, the practicing entities of which are separate and distinct professional firms. For more information visit:  www.littler.com.