Workplace Governance
Our membership is well-versed and uniquely positioned to discuss what it takes to recruit and retain top talent and promote flexible, inclusive and equitable workplaces. SHRM members have firsthand knowledge of the consequences of regulations or legislation that affect workplace operations or governance issues.
SHRM members are generally charged with establishing and communicating intra-office policies and procedures; defining job duties and responsibilities; setting salary ranges, bonuses and other total compensation packages; and considering all of the other day-to-day decisions vital to ensuring organization continuity. As a result, SHRM remains committed to advocating for data-driven, nonpartisan workplace policy solutions that advance workplaces.
SHRM's Position on Workplace Governance:
SHRM supports clear, balanced rules and guidance on governance issues that are critical to building workplaces better equipped to thrive in the modern market.
To ensure workplaces function to the benefit of employers and employees and avoid unintended consequences that hurt employers, employees and the overall economy, a range of perspectives, especially from HR professionals, should be considered in developing workplace governance policies. SHRM also believes that regulations should seek to provide as much clarity and consistency as possible to avoid disruption to organizational operations.
SHRM Public Comments on Workplace Governance
Over the years, SHRM has submitted several public comments, amicus briefs and letters to Congressional leaders to influence workplace policies. Below are a few noteworthy examples:
Overtime Exemptions for EAP Employees
On September 8, 2023, the Department of Labor (DOL) Wage and Hour Division (WHD) officially published its Notice of Proposed Rulemaking (NPRM) for “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees” (the “Overtime Proposed Rule”) that would notably increase the salary threshold from $684 per week ($35,568 annually) to $1,059 per week ($55,068 annually). Within SHRM’s submitted comment about the rule as proposed, SHRM, along with 27 state chapter affiliates who signed on to the letter, expressed support for reasonable increases to the overtime salary threshold for executive, administrative and professional “white-collar” workers. However, the groups also expressed concern at the sharp increase from the current level of $684 per week ($35,568 annually)—which just became effective in 2020—to the proposed level of $1,059 per week ($55,068 annually). SHRM also sought to express concerns over the proposal to add a mechanism that would automatically increase the salary threshold every three years without a comprehensive analysis of the economic landscape or a notice-and-comment period.
Worker Classification under FLSA
On Dec. 13, 2022, SHRM submitted a comment to the Department of Labor’s (DOL’s) Wage and Hour Division on a proposed rule for how employers can determine a worker’s independent contractor status under the Fair Labor Standards Act. With co-signers from 26 state councils, SHRM urged the department to keep the current worker classification test in place because it provides two clear standards to determine worker classification—the nature and degree of control over the work and the worker's opportunity for profit or loss based on initiative and/or investment.
SHRM said the modern economy demands more flexibility from employers, and employees expect it. Unfortunately, the proposed rule does not consider organizational size. Small businesses will have to anticipate and plan to allocate more time and resources to navigate the DOL’s new “totality-of-the-circumstances” standard. Additionally, SHRM said the proposed rule will limit independent work opportunities because it tilts the scales toward employee classification. If employers are forced to consider full employment to fulfill talent needs, contracting opportunities will become scarce as work functions become internalized.
NLRB Changes Standard for Joint Employer
On October 27, the National Labor Relations Board (NLRB) published its final rule “Standard for Determining Joint Employer Status.” The rule rescinds the NLRB’s 2020 rule, which required that, in order to prove a joint employer relationship, a person alleging an employer/employee relationship would have to show proof of “direct and immediate control” being exercised over the “essential terms and conditions” of that person’s employment. Now, an employment relationship could be established if “the employer possesses the authority to control (whether directly, indirectly or both) or exercises the power to control (whether directly, indirectly or both) one or more of the employees’ essential terms and conditions of employment, regardless of whether the employer exercises such control or the manner in which such control is exercised (emphasis added).” During the rulemaking process, SHRM submitted a public comment to advocate for uniform and clear policies that provide clarity for employers to predictably enter into and manage service arrangements without creating a joint employer relationship unbeknownst to employers and HR professionals, where such a relationship is not necessary for the scope of work. SHRM advocated for the NLRB to create “legal scaffolding” that supports that a joint employer relationship is established when there is sufficient relevant evidence to show regular and continuous control -- not sporadic, isolated, or de minimis control.
Noncompete Agreement Ban
In January, the Federal Trade Commission (FTC) published its controversial proposed rule that would completely ban noncompete agreements. SHRM submitted a comment expressing deep concern that the proposed rule would impede SHRM members’ ability to balance the needs of workers and employers, and would reduce the contractual flexibility of consenting parties. SHRM’s comment featuring member stories was submitted on behalf of 30 SHRM State Councils and received instant media attention from NBC.
AI in the Workplace
The application of Artificial Intelligence (AI) and what it could mean for the workplace are topics of growing interest to SHRM and its members. To demonstrate thought leadership, SHRM submitted multiple comments regarding how AI is being leveraged in the modern world of work. These comments have made the case for policies that allow organizations to properly leverage technology and AI in the workplace as a tool to drive organizational success. SHRM submitted AI-related comments to the White House Office of Science and Technology Policy (OSTP) on June 14 and July 7.
SHRM Supports:
Supporting balanced labor-management relations that follow democratic principles and preserve the inherent right of workers to form, join, assist or refrain from joining a labor organization — and the right of employers to obtain advice on these matters
Providing a uniform, clear and certain set of standards that is readily identifiable and consistently applied so that organizations are able to make the everyday business decisions that relate to worker classifications, employee status as either overtime nonexempt or exempt, (e.g., as an Executive, Administrative or Professional employee), and decisions about entering into reasonably tailored contractual employment agreements that protect employee and employers alike.
Allowing for organizations to shape strategies that advance the recruitment and retainment of top talent that include offering opportunities for training, benefits, flexible scheduling and independent work, which is not only valuable but necessary to compete in the global marketplace during these challenging, dynamic and rapidly evolving economic times.
Government policies affect a wide range of workplace issues, especially the relationship between employers and employees. The pace and complexity of change also affects workplace governance. As a result, clear, balanced rules and guidance on governance issues are critical to creating better workplaces.
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