Legal market overview in United States
Labor and employment teams have seen increasing demand for counseling work as the varying federal, state and local employment laws challenge, in particular, national employers. Compliance and due diligence are the order of the day and often the regulations of the strictest jurisdiction are implemented to avoid disputes. Several states and municipalities, in particular the traditionally Democratic ones, have adopted new laws and ordinances on a variety of topics, including protected time off, sexual harassment training, and salary history inquiries that will take effect in 2019. The Trump administration has meanwhile kept busy in rolling back pro-employee rules and executive orders made under Obama. Together with gaining a Republican majority in the NRLB and the Supreme Court, many are anticipating more drastic changes to the law with time.
Unsurprisingly, one of the continuously dominant topics has been #MeToo. An unparalleled amount of people has come forward with alleged sexual misconduct in the workplace; social media and fast travelling news have made such accusations an inevitable danger to the company’s reputation and revenue that employment lawyers are instructed right away resulting in busy counselling practices. Also in connection with #TimesUp, employees feel more empowered and a spike in sexual harassment, pay equity and discrimination lawsuits is observable.
In a landmark decision, the Supreme Court in May 2018 upheld the enforceability of arbitration agreements containing class and collective action waivers of wage-and-hour disputes. With an increase in filings of multi-plaintiff wage-and-hour lawsuits over the last few years, employers started to implement an arbitration program with class and collective action waivers; however, their enforceability has continued to divide opinions in courts until the Supreme Court had the final say. With this decision, arbitration numbers have increased again.
Immigration has been another hot topic. The Trump administration has at least been consistent in its rhetoric, which signals its intention to reduce business immigration. Every case now stands on its own, and it no longer matters how long somebody has been in the US and how often a particular visa has been approved in the past. While there have been no changes in the law in itself, adjudication has changed, with issues being adjudicated that were not seen before, for instance what counts as a ‘specialty occupation’.
Existing rules are more stringently interpreted and the level of scrutiny has increased by USCIS, which, apart from causing a lot of frustration, resulted in a sharp increase in the requests for additional evidence across all visa categories and a higher denial rate. When it comes to permanent residence application, while these are pending, an applicant cannot leave the country, as otherwise the application will be considered abandoned. Premier processing for H-1B (specialty occupation) visas have been suspended since March 2018. For law firms, this means that not only will every application have to be more carefully reviewed to make them watertight, but they will also need to keep up with the fast-changing policies.
Questions that companies face in this rather hostile and uncertain environment include what they are able to do now and how to manage their workforce. Companies also face huge pressures, with an uptick in workplace investigations being conducted by US Immigration and Customs Enforcement. Moreover, investigations into visa fraud are said to have increased as well. Despite these developments there is still a huge demands for US visas, so much so that there is a significant backlog, particularly for green card applications with an average of 18 months waiting time.
Moreover, advancing globalization and the overall good health of the economy raise new issues regarding employee mobility. Lawyers are noting an increase in the complexity and occurrence of non-compete agreements, restrictive covenants and trade secret disputes. In addition, tax reforms implemented by the Trump administration continue to affect the field of executive compensation. Most notably, the repeal of exemptions to the deductibility of performance-based remuneration under IRC Section 162(m) has influenced the structuring of executive pay. Further, transparency in the field of executive pay is increasingly a hot-button topic. The employee benefits space saw a shake-up due to the Fifth Circuit Court of Appeal’s decision to vacate a DOL fiduciary rule, which sought to significantly expand financial advisors’ fiduciary responsibility under ERISA. Finally, pension plan design is in a transition phase as preference shifts from defined benefits plans to 401(k) defined contribution plans.