New Compliance Strategies for Food Companies – Publications

Recent changes in labor law, workplace safety regulations, and antitrust enforcement have created an increasingly complex regulatory landscape for employers in the food industry. Companies must navigate a range of compliance challenges at the state and federal levels, including OSHA’s new “union walkround” rule and evolving labor laws such as Fair Workweek and wage disclosure mandates.

Employers are facing increased antitrust scrutiny from the DOJ and FTC, as well as state antitrust regulators and private plaintiffs, and should comply with new enhancements to protections and standards under the Providing Urgent Maternal Protections Act. Food and beverage employers, in conjunction with legal counsel, can mitigate risk in this dynamic environment and ensure that they and their employees are informed and well-trained on new OSHA, employment and labor, and antitrust regulations.

OSHA COMPLIANCE AND NEW LABOR UNION CONDUCT REGULATION

A significant change to OSHA’s inspection procedures is a new process for designating employee walk-around representatives, or the “union walk-around rule” (see our April 3, 2024 LawFlash ), that allows compliance officers to invite third-party representatives to workplace inspections, even at nonunion locations. This gives union organizers and employee advocacy groups potential access to previously restricted areas of grocery stores during OSHA visits.

Best practices for food industry employers to help prepare for this change include:

• Updates to OSHA inspection policies and procedures, including guidance for front-line managers on how to respond when an inspector arrives with a third-party representative
• Considering whether to require search warrants to conduct inspections rather than voluntarily allowing access
• Developing confidentiality agreements for all visitors to protect trade secrets and confidential information
• Training managers to work professionally with third-party representatives while protecting the company’s interests
• Reviewing facility security and access protocols, especially in non-public areas such as warehouses and loading docks

While the legal battle over the rule continues, food employers should prepare because the rule remains in effect. Having clear policies and well-trained staff can help minimize disruptions if inspectors arrive with union representatives or other third parties.

MORE TRANSPARENCY AND SIMPLIFICATION: THE DEVELOPMENT OF LABOR LAW IN THE FOOD INDUSTRY

Fair Work Week Law

More and more cities and states are implementing predictive scheduling laws that require advance notice of work schedules, restrictions on schedule changes, and/or additional compensation for last-minute schedule changes. Employers operating in these jurisdictions should:

• Implementation of systems enabling the publication of schedules in advance during the working week in accordance with applicable law
• Train managers to publish requirements for available hours, shifts and schedules, acceptable reasons for changing shifts and schedules, and any required compensation for such changes
• If necessary, update your hiring practices to provide additional hours to current staff before hiring new employees
• Keep detailed records of employee schedules, shifts and consents

Payroll Disclosure Law

Many states (see our May 15, 2024 LawFlash) and local jurisdictions are implementing laws that require employers to disclose salary ranges in job postings. Employers operating in these jurisdictions should:

• Review of Compensation and Recruitment Practices
• Develop salary ranges for all positions
• Update job posting templates and procedures to include salary information
• Training of HR staff and recruiting managers on compliant practices
• Monitor compliance across all recruiting channels (internal, external, online, etc.)

Changes to Overtime Regulations Under the Fair Labor Standards Act

The Department of Labor has proposed significant increases to the minimum wage thresholds for overtime exemptions (see our April 25, 2024 LawFlash). The first increase went into effect July 1, 2024, and the next is set to go into effect January 1, 2025. Employers should:

• Review current exempt employees to identify those who fall below the new thresholds
• Costs associated with salary increases or reclassification to non-exempt status must be taken into account
• Be prepared to explain any changes in classification or compensation
• Training of new employees not exempt from registration and their managers in working time recording practices

Lactation accommodation

The PUMP Act expands requirements for breastfeeding breaks. Employers should:

• Identify appropriate private spaces for breastfeeding breaks in all locations
• Update break policies and compensation practices
• Training managers on lactation accommodation rights and procedures under the Providing Urgent Maternal Protections Act (PUMP Act) and the Pregnant Workers Fairness Act (see our January 5, 2023 and April 25, 2024 LawFlashes, respectively)

Non-compete agreements

The FTC has proposed strict limits on noncompete agreements (see our May 7, 2024 LawFlash ). While the legal battles continue, employers should:

• Review existing non-compete agreements
• Consider alternative ways to protect trade secrets and customer relationships
• Be prepared to notify employees if the rule goes into effect

ANTITRUST SUPERVISION FOR EMPLOYERS IN THE FOOD INDUSTRY HAS BEEN INCREASED

Antitrust scrutiny of the food sector is becoming increasingly intense, with regulators and private litigants focusing on several key areas:

Agreements on the prohibition of poaching and the fixing of wages

The Justice Department is investigating companies for agreements not to recruit competitors or fix wages (see our January 23, 2024 LawFlash). Employers should:

• Training HR staff and recruiting managers on antitrust risks in labor markets
• Avoid sharing salary data or discussing recruiting practices with competitors.
• Implementing antitrust compliance programs that include employee matters

Sharing information

Sharing competitively sensitive information with rivals or other third parties can raise antitrust concerns (see our April 29, 2024 LawFlash). Employers should:

• Reassessing trade association participation and industry benchmarking to take necessary pro-competitive actions
• If you are doing benchmarking, implement safeguards for competitively sensitive data (for example, using aggregated and historical data from third-party administrators)
• Training employees on antitrust risks associated with exchanging information with competitors

Merger Overview

The FTC has signaled increased scrutiny of consolidation in the grocery sector (see our May 13, 2024 ML Benebits blog post). Chains considering acquisitions should:

• Conduct a thorough antitrust risk assessment early in your transaction planning
• Be prepared for extensive document and data requests from regulatory authorities
• Proactively consider potential remedies such as store sales

Enforcement of the Robinson-Patman Act

Regulators are reviving enforcement of this Depression-era price discrimination law (see our April 16, 2024 LawFlash ). Employers should:

• Analyze pricing and promotional practices, especially differences between large and small customers
• Analyze the justification for any price differences (cost differences, need to meet competition)
• Consider the potential implications of the Robinson-Patman Act on slot fees and other trade promotion practices
• Evaluate not only sales practices but also product purchasing practices, as liability under the Robinson-Patman Act may include: buyer as well as sellers

Food employers can maintain a compliant and productive workplace by taking proactive steps, including reviewing inspection policies, training managers and employees, maintaining confidentiality protocol, systematically scheduling employee work, transparent compensation practices, and meticulous recordkeeping, among other things. Legal counsel can help food employers protect their interests and maintain positive employee relations and compliance with federal and state regulators and laws.