Tag Archives: DOL

Once More, With Feeling: Proposed Increase to Minimum Salary for Highly Compensated Employees

As previously reported, the U.S. Department of Labor issued a proposed rule addressing exemptions for bona fide executive, administrative, professional, and outside sales employees (the “white-collar” exemptions”) under the Fair Labor Standards Act. Presuming the rule goes into effect, the new minimum salary threshold for these employees will be $35,308 per year (or $679 per week).

Beyond changing the minimum salary threshold for the “white-collar” exempt employees, the DOL also proposed increasing the exemption threshold for a smaller category of employees: “highly-compensated” employees. Previously, any employee whose primary duty was performing office or non-manual work and who customarily and regularly performed at least one duty or had at least responsibility of a bona fide executive, administrative, or professional employee could be exempt–if the employee made at least $100,000 a year and received at least $455 each week on a salary or fee basis. In essence, the “highly-compensated” employees exemption combines a high compensation requirement with a less-stringent, more-flexible duties test in comparison to those used under the “white-collar” exemptions.

Like the DOL’s proposed changes to the “white-collar” exemption, the DOL’s proposed changes to the “highly-compensated” exemption does not alter the duties requirements. Rather, the DOL proposes an increase to the annual and weekly salary thresholds. But in this instance, the increase is substantial. The proposed new threshold jumps from $100,000 under the current rules up to $147,414, of which $679 must be paid weekly on a salary or fee basis. That is an approximate 50 percent increase, and it is about $13,000 higher than what had been previously proposed when changes were considered in 2016.

Now, despite the change raising eyebrows, one could question whether it would have significant impacts because most workers paid $100,000 or more often already fall into one or more of the other exemptions. The DOL itself acknowledges in the proposed rulemaking that it estimates only about 201,100 workers nationwide would become eligible for overtime due to this salary increase. In comparison, the DOL expects the “white-collar” salary change will impact approximately 1.1 million workers nationwide.

The common view remains that the new minimum salary thresholds will likely go into place later this year (2019) but likely no later than January 1, 2020. Although that later date is almost seven months away, that deadline is rapidly approaching. Hence, it is worth reiterating that employers should begin evaluating their staff to determine who, if anyone, may be affected and determine how to proceed. Similarly, this rule change provides employers an opportunity to audit all of their employees (even those unaffected by the proposed rule changes) to make sure each one is properly classified. And if they are not, employers can time any reclassifications with those made to meet the new rule changes to possibly minimize bringing attention to and potential liability for any past misclassifications.

In the meantime, the DOL will accept comments from interested parties until May 21, 2019 at 11:59 PM ET. The public will be able to provide electronic comments at regulations.gov (after searching for RIN no. 1235-AA20) or via mail to the address below (identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA20).

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

John C. Getty
jgetty@williamsparker.com
(941) 329-6622

No Fooling: DOL Proposes New Rule to Determine Joint-Employer Status

As a rule of thumb, skepticism is in order for any news blasted out on April Fool’s Day. For that reason, you could easily believe that the U.S. Department of Labor (DOL) was joining in the tomfoolery this year when it issued a new Notice of Proposed Rulemaking on April 1, 2019 to address joint employment under the Fair Labor Standards Act (FLSA), but, that wasn’t the case.

Through its April 1, 2019 notice, the DOL seeks to revise regulations on joint employment issues. A joint employer is any additional individual or entity who is equally liable with the employer for the employee’s wages, including minimum wages and overtime. Presently, the regulations state that multiple persons or companies can be joint employers if they are “not completely disassociated” with respect to the employment of an employee. The phrase “not completely disassociated” is not clearly explained in the regulations, which has led to thorny issues when dealing with the employees of subcontractors, franchisees, and similar relationships.

To address such issues, the DOL proposes a four-factor analysis that considers whether the employer actually exercises the power to:

  • Hire and fire an employee;
  • supervise and control an employee’s work schedules or conditions of employment;
  • determine the employee’s rate and method of payment; and
  • maintain the employee’s employment records.

The DOL indicates that there are other factors that should and should not be considered. It also clarifies certain business models and practices or contractual language that does not make a joint employer status more or less likely. A Fact Sheet issued with this proposed rule does a fair job of summarizing the other factors. For example, the DOL indicates that just because a company reserves the right in a contract to exercise control over another company’s workers does not—by itself—make a company more or less likely to be considered a joint employer. Rather, a company must actually exercise the contractual control to become a joint employer. Likewise, the DOL notes that just because a company can require another contracting party to institute anti-harassment policies, workplace safety measures, or wage floors does not make it more or less likely the two companies are joint employers.

The April 1, 2019 notice began the notice-and-comment process. The DOL will accept comments from interested parties for 60 days. The public will be able to provide electronic comments at www.regulations.gov (after searching for RIN no. 1235-AA26) or via mail addressed to:

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

(identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA26).

John Getty
jgetty@williamsparker.com
(941) 329-6622

Let’s Try this Again: Department of Labor Proposes Salary Increases for White-Collar Exemptions

Please note: This post has been updated to reflect a corrected annual minimum salary threshold of $35,308 which represents a nearly $12,000 per year increase from the current salary requirement of $23,660.

The U.S. Department of Labor issued a much-anticipated proposed rule addressing the “white-collar” exemptions for the Fair Labor Standards Act. If the proposed rule is enacted later this year, the new minimum salary threshold will be $35,308 per year (or $679 per week). This represents nearly a $12,000 per year increase from the current salary requirement of $23,660 (or $455 per week). Thus, once this new rule goes into effect, for an employee to be exempt from the FLSA’s minimum wage and overtime rules, the employee’s salary will need to meet the new threshold.

Importantly though, the DOL will not be altering any other aspects of the “white-collar” exemption tests. It won’t be changing the various tests for executives, administrative staff, or professionals. Nor does the DOL’s new rule include periodic automatic increases to the minimum salary threshold as the Obama-era DOL had proposed before a district court stopped it in 2016.

Depending on how quickly the DOL moves through the rule-making process and issues the new rule, the new minimum salary threshold will likely go into place late summer or early fall of this year. For that reason, as they did in 2016 in response to the prior proposed increases, employers will want to begin evaluating their staff to determine who may be affected and determine how they want to proceed.  Additionally, because of this rule change, employers will also want to audit all of their employees to make sure each one is properly classified, and if not, take this opportunity to reclassify employees in a manner that tries to minimize liability for any past misclassifications.

John Getty
jgetty@williamsparker.com
(941) 329-6622

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

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.

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

Predicting the Unpredictable: Labor and Employment Law in 2017 (Part Two)

This post is part two of a two-part series. Catch up on part one here.

Several of the biggest employment law matters in 2016 were the Department of Labor’s overtime regulations, Florida’s medical marijuana law, LGBT rights, and changes to the joint employer relationship. It is expected that each of these issues will continue to hold the limelight in 2017.

DOL’s Overtime Regulations – Since March 2014, when President Obama issued a Memorandum to the Secretary of Labor directing the Secretary to “modernize and streamline existing overtime regulations,” this has been a hot topic. The discussion has moved from what the regulations will be, to what will happen with the Department of Labor’s appeal of the temporary injunction prohibiting the implementation of the rule.  Oral argument has not yet been set. Thus, the new administration could withdraw its appeal of the temporary injunction, leaving the lower court’s decision intact. If Puzder does take the reins of the DOL, it is likely that this will occur, as he is on record stating that the 2016 overtime regulations diminish opportunities for workers.

Florida’s Medical Marijuana Law – This past election Florida’s voters approved medical marijuana for treatment of certain health conditions.  Although the state has already issued seven licenses for growing marijuana and some of the businesses with licenses are already starting to plant crops, it will not be until summer 2017 that regulations implementing the voters’ directive will be released. Many counties and cities in the state, including Sarasota County, Manatee County, Hillsborough County, Pasco County, and the City of Bradenton, have or are considering instituting temporary bans of the drug until the state’s regulations are issued and/or local zoning and building regulations are implemented.

Even though it is clear from the text of the constitutional amendment that employers will not be required to allow employees to use marijuana at the workplace, there will still be questions regarding zero tolerance policies, Florida specific drug testing, and reasonable accommodation under the Florida Civil Rights Act (arguably the ADA, a federal law, would not require an accommodation that involves a federally prohibited substance). Further, although marijuana (and CBD/hemp oil) may be approved for limited use in Florida, what the voters approved this past election is in direct conflict with the federal Controlled Substances Act. In addition, on January 13, 2017, the Florida’s legislature’s 2014 approval of limited use of CBD will be in direct conflict with the Drug Enforcement Administration’s new rule making CBD a schedule one controlled substance.

State laws will not protect businesses, including those licensed by the state to grow marijuana, from federal prosecution. If Sessions takes over the DOJ, he could overrule the 2009 directive to U.S. Attorneys not to prosecute violations of the federal drug laws when the acts being prosecuted are legal under state law. If this occurs, the federal government could thwart business opportunities in the marijuana industry and put many people in jail.

LGBT Rights in the Workplace and in Places of Public Accommodation – In the last few years, both the Equal Employment Opportunity Commission and the DOJ have taken serious efforts to expand protections afforded to members of the LGBT community. The EEOC’s 2017 Strategic Enforcement Plan indicates that providing this group protections under Title VII will remain a priority. However, depending on who is chosen to lead the EEOC, this focus could change and this aspect of the strategic plan could be ignored. Similarly, with Sessions in charge of the DOJ, a roll back in efforts to use public accommodation laws to provide greater protections to transgender persons is likely to occur.

Joint Employer Status – Recently both the EEOC and the National Labor Relations Board have broken with their own long-standing standards of what constitutes a joint employer, with both agencies expanding their standards to cover a greater number of relationships. The NLRB went as far as to redefine the joint employment test in place for over 30 years. In the past, a joint employer relationship existed when two entities shared or codetermined the essential terms and conditions of the workforce. Thus, for two entities to be considered joint employers, both had to exercise some control over employees’ terms and conditions of employment. However, with the 2015 Browning-Ferris decision, the NLRB removed the actual exercise of control as a requirement and instead focused on whether each entity has a “right to control” regardless of whether that right is ever used. Because of the five-year staggered terms of board members and the fact that a change at the Board level is made through interpretations of the NLRA, the impact of the new administration on this standard will most likely not be immediate. Instead, the NLRB’s new joint employer standard is already being challenged by Congress, and if a bill is passed overriding the NLRB’s new standard, it is likely that the new President will sign the bill.

Aside from the foregoing issues, there are also several other matters that will probably be of interest in 2017: Will Obama’s executive orders for federal contractors regarding minimum wage and paid sick leave stand? Will the new administration continue to push for fair pay? Will we see an increase in INS investigations of undocumented workers? Will the new administration attempt to undo the NLRB’s quickie election rules?

If only we had Dr. Who’s Tardis so we could travel to the future and see for ourselves. Whether the changes will ultimately be positive or negative for employers in 2017 is yet to be seen. Regardless, we are guaranteed a year full of activity in the employment law arena.

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

Predicting the Unpredictable: Labor and Employment Law in 2017

This post is part one of a two-part series.

Since Santa did not leave the Wicked Witch of the West’s crystal ball under my tree, Emmett Lathrup “Doc” Brown’s DeLorean parked outside my house, or provide me with access to Bill and Ted’s telephone booth, I am unable say with certainty what 2017 will hold for employers. However, I am confident that several labor and employment issues will take, or remain, on center stage, as the President-Elect has indicated that once he takes office, he plans to repeal many of the executive orders and regulations implemented by the Obama administration that businesses have generally criticized as burdensome. Further, two nominations for leadership positions made by the President-Elect that will influence the employment arena are the nominations of Jeff Sessions to lead the Department of Justice and Andrew Puzder to lead the Department of Labor.

Jeff Sessions is known for taking positions contrary to those advocated by civil rights organizations, especially those supporting LGBT rights, and he is on record opposing the legalization of marijuana. This will be interesting because under the Obama administration the DOJ has been actively working to expand LGBT rights (think North Carolina), and has not been actively enforcing federal marijuana prohibitions in states where the drug is legal (think Colorado).

As for Andrew Puzder, he is an executive whose businesses have been investigated for wage and hour violations by the DOL. He is on record stating that American workers are overprotected. He is generally opposed to minimum wage increases, and he finds paid sick leave requirements burdensome. As Secretary of Labor, Puzder will be responsible for the agency that enforces many of the employment laws that businesses deal with on a regular basis, including the FLSA, the FMLA and OSHA.

If these two nominations are confirmed by the Senate and their past statements are indicative of how they will manage their agencies, businesses may see regulations curtailed and less aggressive enforcement of employment laws. As a business owner, such changes may equate to fewer regulations, less time dedicated to dealing with government agency investigations, and possibly lower labor expenses.

If some predictions on how Sessions and Puzder will lead their agencies under a Trump presidency come to pass, worker protections may be greatly diminished. If protections are impacted to the extent that workers feel that neither their employers nor their government has their best interests in mind, they may seek advocates to assist in improving the terms and conditions of employment. Think Sally Field in her Oscar willing performance in Norma Rae. If employees seek to unionize, the result may be more burdensome for employers than the existing regulatory framework.

Only time will tell how the new administration will impact the labor and employment arena. If employee protections do begin to decline, employers that value employees and treat them well are less likely to see the involvement of outside advocates.

Part two of this post will specifically address several of the issues mentioned above, including the DOL’s overtime regulations and Florida’s Medical Marijuana Law. Stay tuned.

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