Tag Archives: Fair Labor Standards Act

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

Employers are Required to Post New Federal Posters This Month

All employers who are subject to the Fair Labor Standards Act’s (“FLSA”) minimum wage provisions and the Employee Polygraph Protection Act (“EPPA”) must post, and keep posted, notices explaining these laws. The notices must be posted in a prominent and conspicuous place in every establishment where they can readily be observed by employees and applicants for employment. These posters have been revised, and as of August 1, 2016, employers must post the revised versions.

You may download the revised posters from the United States Department of Labor (“DOL”) website at:

FLSA:  https://www.dol.gov/whd/regs/compliance/posters/flsa.htm

EPPA:  https://www.dol.gov/whd/regs/compliance/posters/eppa.htm

If you are unsure about whether you are required to post these new federally mandated posters, or would like more information about which federal posters you are required to post, you may access the DOL’s FirstStep Poster Advisor for guidance at: http://webapps.dol.gov/elaws/posters.htm.

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

A Challenge to the New Overtime Rules

On July 14, 2016, several house democrats, including Representative Gwen Graham from Florida, sponsored the Overtime Reform and Enhancement Act. The OREA (H.B. 5813) proposes to change the Department of Labor’s new overtime rules in two significant ways. First, the OREA would provide a gradual schedule to increase the minimum salary required to meet the salary basis test for purposes of determining whether an employee is exempt from overtime. Second, the OREA would eliminate one of the more controversial aspects of the DOL’s new rules, the automatic three-year increase to the salary threshold. The OREA was read twice and then referred to the House Education and the Workforce Committee. The OREA is supported by the US Chamber of Commerce and the Society for Human Resource Management, and opposed by the AFL-CIO.

See a summary of the proposed changes here:  http://schrader.house.gov/overtime/

For a list of members of the Education and Workforce Committee (there are two Florida members), see http://www.house.gov/representatives/#state_fl. Phone numbers of Florida’s Representatives can be found here: http://www.house.gov/representatives/#state_fl

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

App-Based Business Models May Generate a New “Hybrid” Employee Classification

Online, app-based companies such as Uber and Lyft recently attempted to settle class action lawsuits brought by drivers who contend they were misclassified as independent contractors rather than employees. Uber recently reached a proposed $100 million dollar settlement with drivers who worked in California and Massachusetts which keeps drivers classified as contractors. A federal judge unsealed the originally proposed settlement deal, which reflects potential damages closer to $852 million. On June 2, 2016, Uber drivers in New York also filed a federal class action lawsuit seeking millions of dollars in minimum wage and overtime pay. Lyft had also recently agreed to settle its class action lawsuit for $12.25 million, but a separate federal judge rejected the deal because it only represented about 9% of the drivers’ claims. Business models utilized by companies such as Uber and Lyft do not lend themselves to the traditional classification of employee versus independent contractor, and these lawsuits do not resolve the issue. There are proponents of a “hybrid” employee classification that would afford workers certain protections provided to employees, however, any third classification would require corresponding modifications to laws like the Fair Labor Standards Act, which can only occur through congressional action. As there is no indication from Congress that this issue will be addressed in the near future, we will likely continue to see the filing of class action lawsuits against Uber, Lyft, and similar companies alleging worker misclassification.

Lindsey L. Dunn
ldunn@williamsparker.com
941-552-2556

New Overtime Regulations are Anticipated to Have the Greatest Impact in California, Texas, and Florida

The day before the final rules extending overtime protections to 4.2 million workers were released, the White House provided its state-by-state and demographic breakdowns of the workers that as of December 1, 2016, will no longer qualify as exempt employees. It is not surprising that Florida was identified as one of the top three states, behind California and Texas, in terms of the percentage of total workers that are anticipated to be affected by the new rules. By percentage, the largest impact of the new rules will be on workers between the ages of 25-34, and those workers that have a bachelor’s degree. When considering not only those that have attained a bachelor’s degree, but also those that have some college, or an associate/occupational degree, that group will constitute 67.8% of the total affected workers.  Employers are encouraged to consult with legal counsel to discuss options and strategies for ensuring compliance with this new regulation.

For additional information on state-specific impacts, see: https://www.whitehouse.gov/sites/whitehouse.gov/files/documents/OT_state_by_state_fact_sheet_final_rule_v3.pdf

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

DOL Issues Final Rule Revising Overtime Regulations

On May 18, 2016, the Department of Labor raised the minimum salary level that certain employees must be paid to qualify as exempt from the overtime pay requirements of the Fair Labor Standards Act. Under current regulations, executives (supervisors), administrative employees and professionals, must both perform “exempt” duties as defined by the DOL and be paid a guaranteed salary of at least $455 a week ($23,660 annually). This new regulation significantly increases the salary threshold to $933 a week ($47,476 annually), however, it does not alter the primary duty test. The federal government predicts that the new rule will result in companies having to pay an additional 4.2 million employees overtime, boosting wages for workers by $12 billion over the next ten years.

Additionally, as noted in comments included in a recent Law360 article, the DOL’s rule, while potentially extending overtime protections to 4.2 million more employees, may also have adverse effects for certain employees. In an effort to offset costs businesses may incur as a result of the new rule, both in terms of the expense associated with ensuring compliance, as well as having to pay overtime to formerly exempt employees or sufficiently increasing an employee’s salary so as to maintain the exemption, certain employers may reduce rates of pay, cut back scheduled hours to reduce risk of overtime, or offer less generous benefits to non-exempt employees.

A link to the new rule can be found here: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-11754.pdf

Related guidance issued by the DOL can be found here: https://www.dol.gov/sites/default/files/overtime-overview.pdf

Lindsey L. Dunn
LDunn@williamsparker.com
(941) 552-2556