Insight August 23, 2024
Recent labor laws, workplace safety regulations, and antitrust enforcement have created an increasingly complex regulatory environment for employers in the luxury retail industry. Companies must navigate a variety of compliance challenges at the state and federal levels, including the Occupational Safety and Health Administration’s (OSHA) new “union walk-around” rules and evolving employment laws, such as fair work weeks and pay disclosure requirements.
Employers face increased antitrust scrutiny from agencies such as the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), state antitrust regulators, and private plaintiffs, and as such must comply with new and expanded protections and standards under the Emergency Maternal Protection Act (PUMP). Luxury retail employers, in partnership with their legal counsel, should make every effort to mitigate risks in this dynamic environment and ensure that employers and their employees are informed and adequately trained on new occupational safety and health laws, employment and labor, and antitrust developments.
OSHA Compliance and the New Union Walkaround Rules
A major change in OSHA’s inspection procedures is the new worker walk-around representative appointment process, or “union walk-around rule” (see LawFlash, April 2024). The rule allows compliance officers to bring in a third-party representative for workplace inspections, even at non-union sites. This allows union organizers and worker advocacy groups to access previously off-limits areas of high-end retail and manufacturing facilities during OSHA visits, including when customers are present at the store during business hours.
Here are some best practices for luxury retail employers to prepare for this change:
Update your OSHA inspection policies and procedures to include guidance for site managers on how to respond if an inspector brings in a third-party representative Consider whether to require a search warrant for an inspection, rather than voluntarily granting access Develop site confidentiality agreements for all visitors to protect trade secrets and confidential information Train managers on how to interact professionally with third-party representatives while protecting the company’s interests Review site security and access protocols, especially for non-public areas such as stockrooms and areas where product work is being done
Litigation against the rule is pending, but luxury retail employers should prepare for the changes as the rule remains in effect. Having clear policies and well-trained staff will help minimize confusion when inspectors arrive, often accompanied by union representatives or other third parties.
More Transparency and Flexibility: Employment Law Developments in Luxury Retail
Fair Work Week Act
A growing number of cities and states are implementing predictive scheduling laws that require advance notice of work schedules, limitations on schedule changes, and/or additional compensation for last-minute schedule changes.
Employers operating in these jurisdictions must:
Implement a system for posting schedules in advance of the work week in accordance with applicable law. Train managers on available times, shifts, schedule posting requirements, acceptable reasons for shift and schedule changes, and required compensation for such changes. Update hiring practices to offer existing staff additional hours before hiring new employees, as necessary. Keep detailed records of schedules, changes, and employee consents.
Salary Disclosure Law
Many states (see LawFlash for May 2024 (Maryland) and July 2024 (Vermont)) and local governments have enacted laws requiring employers to disclose salary ranges in job advertisements.
Employers operating in these jurisdictions must:
Reviewing compensation and recruiting practices, developing salary ranges for all positions, updating job ad templates and procedures to include salary information, training HR and hiring managers on compliance practices, and monitoring compliance across all recruiting channels (internal, external, online, etc.)
Changes to Fair Labor Standards Act overtime rules
The Department of Labor has proposed significantly increasing the minimum wage threshold for overtime pay exemptions (see LawFlash, April 2024). The first increase would take effect on July 1, 2024, and the next increase would take effect on January 1, 2025.
To ensure compliance with the new standards, employers should:
Review your current exempt employees to identify those who fall below the new threshold. Consider the costs associated with increasing pay or reclassifying to non-exempt status. Be prepared to explain any classification or compensation changes. Train newly exempt employees and their managers on time management practices.
Nursing room
The PUMP Act expands lactation break requirements. To ensure compliance with the PUMP Act, employers must:
Identify appropriate private spaces for lactation breaks at all locations Update policies regarding break times and compensation practices Train managers on lactation accommodation rights and procedures under the PUMP Act and the Pregnant Worker Fairness Act (see LawFlashes for January 2023 and April 2024, respectively)
Non-competition agreements
The FTC has proposed placing strict limitations on non-compete agreements (see our May and July 2024 LawFlashes). While litigation is pending, employers should:
Review existing non-compete agreements, consider alternative means to protect trade secrets and customer relationships, and prepare to provide any notice to employees if the rule goes into effect.
Luxury retail employers face growing antitrust scrutiny
Antitrust scrutiny of luxury retail is increasing, with regulators and private litigants focusing on several key areas.
No-poaching and wage fixing agreements
The Department of Justice is scrutinizing companies for agreements not to hire or fix wages for competitors’ employees (see the January 2024 LawFlash). Employers should:
Educate HR staff and hiring managers about antitrust risks in the labor market; Prevent sharing compensation data or discussing hiring practices with competitors; Implement an antitrust compliance program that covers labor issues.
Information sharing
Sharing competitively sensitive information with competitors or other third parties may raise antitrust concerns (see LawFlash, April 2024). Employers should:
Reevaluate participation in trade associations and industry benchmarks as necessary pro-competitive activities. If benchmarking is conducted, implement safeguards for competitively sensitive data (e.g., use of aggregated or historical data, third-party custodians). Educate employees about the antitrust risks of exchanging information with competitors.
Merger Review
As the FTC has signaled increased scrutiny of consolidation in the grocery sector (see ML BeneBits article from May 2024), chains considering acquisitions should keep the following in mind.
Conducting a thorough antitrust risk assessment early in transaction planning, preparing for extensive document and data requests from regulators, and proactively considering potential remedies, such as store divestitures
Robinson-Patman Law Enforcement
As regulators reinstate enforcement of Depression-era price discrimination laws (see LawFlash, April 2024), employers should:
Review pricing and promotional practices, especially those that differentiate between large and small customers. Analyze the justification for price differences (cost differences, response to competition). Consider potential Robinson-Patman Act implications of slotting fees and other trade promotional practices. Evaluate product acquisition practices as well as selling practices, because liability under the Robinson-Patman Act can extend to buyers as well as sellers.
Luxury retail employers can maintain a compliant and productive work environment by taking proactive measures such as reviewing testing policies, training managers and staff, adhering to confidentiality protocols, strategic employee scheduling, transparent compensation practices, and thorough record-keeping. Legal counsel can help luxury retail employers protect their interests, maintain positive employee relationships, and comply with regulatory agencies and federal and state laws.
