Tag Archives: Fair Labor Standards Act

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

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

Business Resolutions: Ensuring Your Business Starts the New Year Off Right

When was the last time that your business had a wage audit to evaluate whether your employees are properly classified under the Fair Labor Standards Act, or had your employee handbook reviewed and revised to bring it up-to-date with the law and current company practices? If it has been a few years, then this may be the year that your business resolves to invest in a wage audit and/or handbook review.

Wage audits include an evaluation of your job positions, pay and overtime policies, as well as payroll records of each position within an organization or department. Sometimes, audits can also include interviews with employees to ascertain if there are any issues that management should be aware of. Audits can reveal if a business has any issues with, not only misclassification of employees as exempt when they should be non-exempt, but whether managers are following the organization’s policies regarding overtime. As a company grows and changes, often the duties of its employees also change. Sometimes these changes are significant enough that a change in classification is in order and a failure to adjust the classification could result in liability. Further, a wage audit can often help to determine if an organization’s accountant or payroll company is calculating overtime in accordance with the applicable regulations. Many a lawsuit are filed against employers who believe that since they have enlisted the assistance of a third party, employee overtime is being calculated appropriately. That is not always the case.

Employee handbooks should be reviewed every couple of years, not only to ensure that the handbook reflects the current state of the law, but also that it reflects the actual practices of a company. Businesses grow and change, and actual practices can start to diverge from what is reflected in the handbook. It is always better to have a handbook that provides policies and procedures that the company is currently using and enforcing. It is never recommended for a company to have policies that it does not follow.

This post is part of a series of business resolutions to consider for the new year. In case you missed them, our previous posts in the series discussed Florida minimum wage and employee performance management.

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

Nonprofits Misuse of Volunteers During the Holidays Can Be Frightful

Although every penny saved may help support a valuable cause, it is important that an organization not let its use of volunteers lead to legal liability. Volunteers are the foundation upon which many successful nonprofits are built. Properly utilized, volunteers enable a nonprofit to devote valuable capital and resources elsewhere in the organization, allowing it to have a greater impact on its desired cause. Although the work of volunteers is valuable to a nonprofit’s mission, an organization’s management must exercise caution in engaging volunteers to ensure the nonprofit does not inadvertently misclassify individuals as volunteers when they may be considered employees under applicable law. With the holidays upon us, nonprofit organizations often rely more heavily on volunteers. Consequently, they should take extra care that its volunteers are not in fact employees.

As Ryan Portugal explains in our latest edition of Requisite, which focuses on issues related to the operation, management, and sustainability of nonprofit organizations, circumstances in which a volunteer will be treated as an employee under wage and hour laws can have costly legal ramifications for nonprofit organizations.

Read the full article. 

For more articles, giving data, and an interview with A.G. Lafley, view the digital version of Requisite X – The Nonprofit Edition.

Office Holiday Parties: Avoid Adding Your Company to the Naughty List

Harvey Weinstein, Kevin Spacey, Michael Oreskes, Brett Ratner, Louis C.K., Charlie Rose, and Matt Lauer are a few well-known names that have already appeared on the naughty list for 2017. Although the Mad Men days of the sexy secretary sitting on Santa’s lap (the boss’s lap) with his arms wrapped around her while both are drinking a dry martini SHOULD be a vestige of the past, there are those that believe that “keep your hands to yourself” does not apply to them.  And, there are those that understand the “hands-off” rule, yet when under the influence of alcohol, find their inhibitions on the copy room floor.

This year, with stories of sexual harassment and abuse dominating the news, it is more important than ever for employers to consider the potential risks associated with any planned celebration. Employers should keep in mind that office policies that are generally recognized in the workplace sometimes are forgotten when there is a party, especially a party with libations. A holiday office party can embolden inappropriate behavior, from simple innuendos to unwelcome touching that could lead to claims of sexual harassment. The office holiday party can be a quagmire of potential employment issues, even beyond sexual harassment. These issues can include claims due to on-the-job injuries (workers compensation), unpaid wages for attending the party (the Fair Labor Standards Act), or other types of workplace harassment or discrimination (e.g. religion).

As you prepare for your office party, consider whether alcohol should be available, as most issues arise due to someone bending the elbow a bit too much. If you do decide to provide spirits make sure you have someone (a designated responsible adult) that is watching to ensure that your workforce does not get too “relaxed” and cross the line. Possibly limit how much alcohol is served and make sure any employee that drinks a little too much has a ride home. Evaluate in advance whether the party is going to be mandatory or not. If its voluntary and employees do not feel compelled to attend, then employers are not required to compensate employees for their attendance. Review the plans for the party in advance to see if there are any activities that could be considered inappropriate or offensive to members of any protected class.  Finally, make sure that employees understand that the company’s policies and procedures, especially those related to conduct, are still in effect at the party. Most parties are benign and conclude with no real issues to speak of, but you don’t want to be the exception to the rule. You do not want your CEO or VP added to the naughty list.

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

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

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

Guidance for Employers from the Dark Side?

A long time ago in what seems like a galaxy far away, Congress passed the National Labor Relations Act. Since then, Congress has continued to pass laws governing the employee/employer relationship. In 1938, it passed the Fair Labor Standards Act; in 1964, it passed the Civil Rights Act; and in 1993, it passed the Family and Medical Leave Act. These acts and many others can make businesses feel like they have been thrown into a trash compacter or frozen in carbonate. Management attorneys, a.k.a the light side of the force, provide guidance and counsel to businesses and assist in navigating these laws which seem to appear and/or change as if powered by a hyper drive. On Thursday, April 27, from 8:00 a.m. to 12:00 p.m. at Michael’s on East in Sarasota, businesses will have an opportunity to learn about recent developments and current trends related to wage and hour compliance, employee criminal conduct, and sexual orientation and gender identity not only from their Jedi, but also from a Sith, a.k.a. a plaintiff’s employment attorney. It is not often that businesses have an opportunity to learn from both sides of the Force.

This seminar will provide guidance in important areas of employment law to assist professional service providers in their role as employers. The workshop will include best practices from legal compliance and human resources perspectives, and will conclude with a Sith providing insight into employers’ mistakes that strengthen the dark side. This seminar is intended to be an interactive presentation with the aim of providing solutions to troublesome employment issues confronting law firms and other professional service providers. To learn more about this event and to register, visit the Sarasota County Bar Association website.

Disclaimer: This seminar does not have a Star Wars theme; I just watched The Force Awakens on HBO this weekend.

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

Office Holiday Parties: Avoiding the Naughty List

pexels-photoIf you have not yet seen the movie Office Christmas Party, watch the trailer and you will see a perfect example of what not to do at your annual office holiday party. The Mad Men days of the secretary sitting on Santa’s lap (the boss’s lap) while both are drinking a dry martini SHOULD be a vestige of the past. Most employers and employees now recognize that in today’s world there is a different expectation as to how to behave appropriately at work then there was in say the 1950s or 1960s. However, social norms that are generally recognized in the workplace sometimes are forgotten when there is a party, especially a party with libations. A holiday office party can embolden inappropriate behavior from simple innuendos to unwelcome touching. The office holiday party can be a quagmire of potential employment issues, even beyond sexual harassment, including but not limited to, workers compensation, the Fair Labor Standards Act, and religion.

As this holiday season heads into full throttle, it is important for employers to consider the potential risks associated with any planned celebration. Consider whether alcohol should be available, as most issues arise due to someone “bending the elbow” a bit too much. If you do decide to provide spirits, make sure you have someone (a designated responsible adult) that is monitoring to ensure that your workforce does not get too “relaxed” and cross the line. Possibly limit how much alcohol is served and make sure any employee that drinks a little too much has a ride home. Evaluate in advance whether the party is going to be mandatory or not. If it’s voluntary and employees do not feel compelled to attend, then employers are not required to compensate employees for their attendance. Review the plans for the party in advance to see if there are any activities that could be considered inappropriate or offensive to members of any protected class. Finally, make sure that employees understand that the company’s policies and procedures, especially those related to conduct, are still in effect at the party. Most parties are benign and conclude with no real issues to speak of, but you don’t want to be the exception to the rule.

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