Category Archives: Wage and Hour

Proposed Changes to the Department of Labor’s Tip Pooling Rules

Yesterday, the U.S. Department of Labor published a Notice of Proposed Rule Making (“NPRM”) to alter limitations on tip pooling when an employer does not take a tip credit and pays the tipped employees a direct cash wage of at least the federal minimum wage. According to a DOL fact sheet on the NPRM:

As the NPRM explains, since 2011, there has been a significant amount of litigation involving the tip pooling and tip retention practices of employers that pay a direct cash wage of at least the federal minimum wage and do not claim a Fair Labor Standards Act tip credit. There has also been litigation directly challenging the department’s authority to promulgate the provisions of the 2011 regulations that restrict an employer’s use of tips received by its employees when the employer pays a direct cash wage of at least the federal minimum wage and does not take a tip credit. Moreover, in the past several years, several states have changed their laws to require employers to pay tipped employees a direct cash wage that is at least the federal minimum wage. This means that fewer employers can take the FLSA tip credit. The department is issuing this NPRM in part because of these developments and the department’s serious concerns that it incorrectly construed the statute when promulgating the 2011 regulations.

The proposed rule would allow employers to distribute customer tips to larger tip pools that include non-tipped workers, such as cooks and dishwashers. This would likely increase the earnings of those employees who are newly added to the tip pool and further incentivize them to provide good customer service. The proposed rule would additionally provide employers greater flexibility in determining pay practices for tipped and non-tipped workers. It also may allow for a reduction in wage disparities among employees who all contribute to the customers’ experience.

This proposed change does not impact tip pooling when an employer takes a tip credit toward the minimum wage requirement. Employers impacted by this proposed rule have until January 4, 2018, to provide comment on the rule. Comments may be submitted electronically at regulations.gov.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

Florida’s Minimum Wage Is Set to Increase: What Are You Doing New Year’s Eve?

It is only October and across the state, in department stores not named Nordstrom, holiday decorations are appearing. It may seem that, like these stores, reporting to you that on January 1, 2018, Florida’s minimum wage will increase, may be premature. But, like the holidays, the new minimum wage will be here before you know it. If you are not prepared, then you may be updating your payroll on New Year’s Eve.

Great, now I have Harry Connick Jr’s melancholy version of the 1947 classic by Frank Loesser stuck in my head (and it’s only October):

Maybe it’s much too early in the game
Ooh, but I thought I’d ask you just the same
What are you doing New Year’s
New Year’s Eve?

On January 1, 2018, Florida’s minimum wage will increase from $8.10 to $8.25 an hour. Employers should be prepared to make adjustments to their minimum wage earners. Failing to pay non-exempt employees Florida’s statutory minimum wage can result in claims against employers pursuant to Section 24, Article X of the State Constitution and Section 448.110, Florida Statutes. The maximum tip credit ($3.02) that can be taken by Florida employers with tipped employees will remain the same, but the direct wage paid to tipped employees will increase from $5.08 to $5.23 an hour.

In addition to raising the minimum wage, Florida employers are required to post a minimum wage notice in a conspicuous and accessible location. Before the beginning of 2018 you will be able to download the 2018 Florida Minimum Wage Notice from the Florida Department of Economic Opportunity’s website. This notice requirement is in addition to the requirement that employers post regarding the federal minimum wage (which has not been increased). There will also be commercially available Florida-specific “all-in-one posters” that satisfy both the federal and state notice requirements. The 2018 “all-in-one” posters should also be available in the near future.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
(941) 552-2558

Should I Pay Exempt Employees Who Miss Work Due to Bad Weather Conditions?

As Florida prepares for a potential direct hit by Hurricane Irma, employers have many concerns. At some point, when decisions have been made about if a business will stay open and if goods or people need to be moved out of harm’s way, the following question will most likely be asked: “Should I pay exempt employees who miss work due to bad weather conditions?”

When it comes to deductions from exempt employees’ salaries it is easy to get into trouble.  The general rule is that an exempt employee is entitled to receive his or her entire salary for any workweek he or she performed work. This means, if the worksite closes for a partial week due to bad weather conditions (such as a hurricane), and the exempt employee has worked during that workweek, the employee is entitled to his or her full salary. However, if the employer has a leave benefit, such as PTO, and the employee has leave remaining, the employer can require the employee to use paid time off for this time away from work. If the employee does not have any remaining leave benefit, he or she must be paid.

If the work site remains open during inclement weather and an employee is absent (even if due to transportation issues), the employee can be required to use paid time off.  If the employee does not have any paid time off remaining, the employer may deduct a full-day’s absence from the employee’s salary. For a more detailed explanation see this opinion letter from the U.S. Department of Labor.

As for non-exempt employees, the FLSA only requires that employees be paid for the hours they actually work. However, those non-exempt employees on fixed salaries for fluctuating workweeks, must be paid their full weekly salary in any week for which work was performed.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

BREAKING NEWS: Overtime Rules Overruled

Employers, the wait is over. You finally have an answer regarding the 2016 overtime regulations. Yesterday afternoon, a Texas federal judge issued an order invalidating the U.S. Department of Labor’s overtime rules that had been set for implementation on December 1, 2016, but preliminarily stopped nationwide only days before by that same judge.

As noted in our earlier blog posts (“Breaking News: Federal Judge Halts Implementation of the DOL’s New Overtime Regulations” from November 23, 2016 and “2016 Overtime Regulations: They Are Still Out There” from June 13, 2017), the DOL had issued a final rule that was predicted to affect over 4.2 million workers, with Florida as the third most effected state. Those workers would no longer be exempt from overtime compensation due to increases in the minimum salary level for “white collar” exemptions from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and highly compensated employees from $100,000 to $134,000 annually.

The DOL quickly appealed the preliminary injunction to the Fifth Circuit Court of Appeals, which left employers wondering whether the hold would be lifted by the appellate court or the appeal withdrawn. The uncertainty increased on July 25, 2017, when the DOL published a formal Request for Information so the DOL could issue a new proposal related to overtime regulations.

In the order, the court granted summary judgment to the business group and other plaintiffs who had challenged the new overtime rules and issued a final judgment on their behalf. The court held that the white collar exemptions were intended to apply to employees who perform “bona fide executive, administrative, or professional capacity” duties, and that the DOL does not have the authority to use a salary-level test that will effectively eliminate the duties test or exclude those who perform the duties based on salary level alone.  Because the new overtime rules would have “exclude[d] so many employees who perform exempt duties” and are “not based on a permissible construction of [the law]”, the DOL did not carry out Congress’s unambiguous intent, exceeded its authority, and has “gone too far” with the rules.  In sum, the overtime rules have been overruled, and may be disregarded by employers.

Read the full order here.

Gail E. Farb
gfarb@williamsparker.com
(941) 552-2557

2016 Overtime Regulations: They Are Still Out There

Like a science fiction television show from the 90s, the 2016 overtime regulations are still out there, as is the injunction preventing their implementation. To bring those that may just be returning from Close Encounters of the Third Kind up to date, in the latter part of 2016 employers rushed to get ready for December 1, 2016, the effective date for the regulations. On November 22, 2016, just days before the effective date and as employers scrambled to make their final preparations for the changes, a federal judge blocked the implementation. With the speed of Quicksilver, the Obama administration initiated an appeal. The Fifth Circuit Court of Appeals granted expedited review of the injunction, and many anticipated witnessing The War of the Worlds play out during oral argument. Then, as if a spacecraft had landed in Roswell and this time everyone stopped to watch the aliens disembark, the momentum came to a crashing halt just like a hirsute alien spacecraft piloted by Jeff Goldblum.

Shortly after President Trump took office, the U.S. Department of Labor (“DOL”) requested a postponement of its deadline to submit a reply brief. This request was granted. Just as that deadline was filed, the DOL again requested a postponement. Currently, the DOL’s reply brief is due on June 30, 2017. Although the new Administration could have withdrawn the appeal, it has not. Therefore, there still may be a chance for a strategic showdown such as that seen in Pixels.

Wage Theft Ordinances: Dandelions in the Spring

“Wage theft” ordinances have been popping up in Florida like dandelions in the spring. At first glance, these ordinances look like a lovely spring flower providing employees an administrative and/or legal avenue to recover unlawfully withheld wages. However, these ordinances are really weeds causing headaches not only to employers, but also to employees who are not prepared to navigate the unique procedures for making such claims. A growing list of municipalities, including Miami-Dade County, Broward County, City of St. Petersburg, Pinellas County, and Hillsborough County, have all implemented some variety of a wage theft ordinance, and there is a lack of uniformity among procedures and rules for bringing claims pursuant to these ordinances. Companies operating in one or more of these areas should be aware of the additional regulations that may apply to their businesses, some of which call for triple damages and attorneys’ fees. This task can be quite daunting for any company that operates statewide or in two or more of the participating municipalities. Now, in addition to defending wage claims under the Fair Labor Standards Act, Florida Minimum Wage Act, Florida Statute Section 448.08, and common law unjust enrichment claims, companies will also be defending claims brought pursuant to these ordinances and sometimes will be defending such claims in two different forums, possibly at the same time.

Knowledge of these ordinances can serve as legal Roundup to help employers defeat attempts by employees to obtain damages. This is best evidenced by Green v. Stericyle, Inc., No. 1:16-CV-24206-CMA (S.D. Fla. Dec. 15, 2016), a case in which an employee brought a wage theft claim that was dismissed by the court because the employee failed to comply with the prescribed procedure. The ordinance did not grant an initial private right of action, but rather provided an exclusive administrative procedure to bring the claim to the county. The employee failed to follow the administrative procedure, thereby compelling the court to dismiss the case. As this case illustrates, although emergence of wage theft ordinances causes problems for employers, the onus remains with the employee to navigate a municipal code to bring a proper claim. Failure to do so could be fatal to the claim.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
(941) 552-2558

A Successful Challenge to Local Minimum Wage Ordinances in Florida

With efforts to raise both the federal and state minimum wage meeting lackluster success, advocates of raising the minimum wage have been focusing on effecting change at the local level. In Florida, such efforts have led to ordinances raising the minimum wage in municipalities such as the City of Miami and the City of West Palm Beach. However, on March 27, 2017, a court struck down the City of Miami’s Living Wage Ordinance, finding that it is prohibited by Florida Statute § 218.077, which proscribes a municipality from establishing a minimum wage separate from the state or federal minimum wage. In reaching its decision, the court rejected the City of Miami’s argument that Article X, § 24(f), of the Florida Constitution provides explicit authority for municipalities to enact their own wage ordinances. The City still has time to appeal the decision to Florida’s Fourth District Court of Appeal.

The decision will lend support to challenges to other wage ordinances in the state. In addition, this decision may cull current efforts in other municipalities to increase minimum wages.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
(941) 552-2558

Going into Overtime in the Search for a Secretary of Labor: What is Next for the 2016 Overtime Rule?

For weeks now, rumors have been circulating that the President’s nominee for Secretary of Labor, Andrew Puzder, would withdraw his name. As his confirmation hearing was delayed over and over again (five times), he repeatedly issued statements that he was fully committed to becoming Secretary of Labor and looking forward to his confirmation hearing. However, yesterday, on the eve of his scheduled appearance for questioning before the Senate Committee on Health, Education, Labor & Pensions, he issued a statement withdrawing his name for consideration.

As detailed in a previous blog post, Mr. Puzder is a fast-food executive who many believed would run the Department of Labor in a pro-business manner. Thus, labor organizations were greatly opposed to the President’s nominee and view his withdrawal as a win for workers.

This afternoon, it was announced that the President has selected former U.S. Attorney R. Alexander Acosta to serve as Secretary of Labor. Acosta is a former U.S. Attorney for the Southern District of Florida, a former member of the National Labor Relations Board, and a former assistant attorney general in the Department of Justice’s Civil Rights Division. He currently serves as the dean of Florida International University College of Law. Acosta has a very different background from the prior nominee.

If confirmed, it is not yet clear what approach Acosta will take in handing the pending appeal of the stay imposed on the 2016 overtime rules. The original briefing deadline on appeal was delayed as a result of the DOL’s request for additional time “to allow incoming leadership personnel adequate time to consider the issues.” The existing briefing deadline is currently March 2, 2017. It is possible that the administration will request additional time from the 5th Circuit Court of Appeals now that Puzder has withdrawn his name and Acosta is the new nominee. Oral argument has not been set.

Even though oral argument has not been set in the appeal, Washington is not taking a break from focusing on this issue. Today, a subcommittee of the House Education and the Workforce Committee is holding a hearing on “Federal Wage and Hour Policies in the Twenty-First Century Economy.” It is anticipated that the stayed overtime rule will take center stage at this hearing.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558

Florida and Several of Its Cities will Ride the 2017 Wave of Minimum Wage Hikes

During the course of 2017, 21 states including Florida, plus the District of Columbia (D.C.), are increasing their minimum wage rates for nonexempt employees. Florida, along with 18 other states, increased its minimum wage as of January 1, 2017. As discussed here, Florida increased its minimum wage to $8.10. Maryland, Oregon and D.C. are set to raise their respective minimum rates in July 2017.

Several cities in Florida are also set to raise minimum wages above Florida’s minimum wage. For example, as of October 1, 2017, the City of West Palm Beach’s minimum wage rises by $1.00 per hour to a new minimum of $14.25, and then to $15 in fiscal year 2018-2019. On January 1, 2018, the City of Miami Beach’s minimum wage is set to increase to $10.31 and ultimately to $13.31 over a four-year cycle. There are other cities in Florida that either have approved or are also contemplating similar increases.

This is an important juncture for Florida employers, especially those who employ low-wage workers affected by the new minimum wage changes, to carefully audit their pay practices to ensure legal compliance. In addition to federal, state and even local minimum wage laws, many Florida counties and cities (for example Miami-Dade, West Palm Beach, and St. Petersburg) have wage theft ordinances designed to protect employees wages. Employee claims alleging violations of local, state, or federal wage and hour laws can be costly and significantly affect a company’s bottom line. Despite minimum wage increases at the state and local level, the federal minimum wage has remained stagnant at $7.25 per hour since 2009. Employers should be aware that where several different minimum wages may apply, the employer must pay the higher wage rate.

2.2% of Florida wage earners, or approximately 187,000 employees, are expected to receive pay raises due to the state minimum wage adjustment. About 4.4 million employees are expected to benefit from state minimum wage increases nationwide.

The states’ minimum wage increases and resultant minimums vary quite dramatically when compared on a national scale. At the low-end, for example, is Florida’s five cents ($0.05) per hour increase which raises the state minimum wage from $8.05 to $8.10. This matches the five cent increase in Alaska (to $9.80), in Ohio (to $8.15 ) and in Missouri (to $7.70). By contrast, at the high-end of the spectrum is Arizona with a $1.95 per hour increase to a new minimum wage rate of $10.00, followed by Maine with a $1.50 per hour increase to a new minimum of $9.00, Washington state with a $1.53 per hour increase to a new minimum of $11, and Massachusetts with a $1.00 per hour increase to a new minimum of $11 per hour.

John M. Hament
jhament@williamsparker.com
(941) 552-2555

BREAKING NEWS: Federal Judge Halts Implementation of the DOL’s New Overtime Regulations

On Tuesday evening, just days before the U.S. Department of Labor’s new overtime regulations were set to go into effect, a Texas federal judge blocked the December 1, 2016 implementation of the regulations, issuing a temporary injunction with nationwide applicability. The regulations blocked by this order not only provided for a substantial increase in the salary threshold required for the “white collar” exemptions, but also provided for automatic increases in the salary threshold every three years. The judge stated that, in drafting these rules, the DOL exceeded its authority and ignored congressional intent.

This order is not a final order, but merely a finding by the court that the plaintiffs have established they will likely succeed in their challenge to the rules. What happens next is yet to be determined. The DOL may appeal to the 5th Circuit Court of Appeals, Congress could pass one of the two pending bills drafted to alter the DOL’s regulations or draft a compromise bill, or the case is litigated absent a DOL appeal.  For now, the walk away for employers is that the rule will not take effect on December 1, 2016.

For employers that were not quite ready for the new rules, this decision will provide some additional time to evaluate and plan, just in case the temporary injunction is overturned. For employers that have already made changes to employees’ pay structures, there is no legal requirement or prohibition that such changes be maintained.

Jennifer Fowler-Hermes
jfowler-hermes@williamsparker.com
941-552-2558