This morning the Department of Labor announced that it is seeking to increase the number of employees eligible for overtime pay by increasing the minimum salary required if an employee is to be considered exempt under the administrative, executive and professional exemptions. The proposed increase would take the minimum annualized salary from $23,660 to $50,440. In addition, under the proposed rule the threshold for the FLSA’s Highly Compensated Employee exemption would rise from $100,000 to $122,148. Both the minimum salary and the Highly Compensated Employee threshold would be indexed for inflation. The DOL also suggested that it may seek other changes to limit the available overtime exemptions. If this change becomes a final rule, we would expect it to become effective in 2016.
Note that even if employees meet the higher minimum salary requirement, they still must meet the other requirements for exempt status — being paid on a salary basis and satisfying one of the duties tests — to qualify as exempt from overtime requirements.
No action is necessary at the moment as the proposed rule is not final. We will keep you updated on future developments.
The U.S. Department of Labor (DOL) has released its spring 2015 regulatory agenda, which provides a window into what we can expect from the agency over the coming months. The agenda provides updates on 70 rulemaking measures and suggests that — with President Obama’s term approaching its end — the DOL is putting its rule-making into high gear.
Here are some highlights from the agenda:
The DOL indicates that we should see the proposed rule redefining the white-collar exemption under the Fair Labor Standards Act (FLSA) in June. As we reported last year, President Obama has directed Labor Secretary Thomas Perez to “modernize and streamline” the regulations defining this exemption for executive, administrative, professional, outside sales, and computer employees. We expect that the proposed rule will narrow the white-collar exemptions, resulting in fewer employees qualifying as exempt from overtime requirements.
Use of Technology during Non-Working Hours
Also on the agenda is information seeking – in the pre-rule stage – on “the use of technology, including portable electronic devices, by employees away from the workplace and outside of scheduled work hours.” It appears that the DOL is seeking this information with an eye toward proposing a rule clarifying how this type of 21st Century off-the-clock work is compensated (likely to the benefit of employees). The request for information is expected in August.
Reporting under the Labor-Management Reporting and Disclosure Act
Lastly, the DOL agenda also indicates that we should expect a controversial final rule on the narrowing of the “advice” exception under the Labor-Management Reporting and Disclosure Act (LMRDA) in December. The LMRDA requires employers and labor relations consultants (or other similar individuals) to report any agreement or arrangement they have to engage in activities to persuade employees concerning the right to organize or bargain collectively. The LMRDA contains an exception for “advice,” stating that no employer or consultant has to file a report concerning services of a consultant if that consultant just gives “advice” to the employer. The proposed rule would limit the definition of “advice” to “oral or written recommendations,” so that any other activity would need to be reported. This proposed rule has been on the books for a number of years and continues to face serious opposition from many groups — including the American Bar Association — because it raises critical concerns about attorney-client privilege. We expect lengthy legal challenges to this rule.
It should be a busy second-half of the year for the DOL. We will keep you updated on any new developments.
The District of Columbia has joined New York and California in enacting a Wage Theft Prevention Act. And while D.C. employers have been required to provide certain notices since late February, the deadline for providing notices to current employees and meeting record-keeping requirements (including keeping more specific time records) is Wednesday, May 27th.
Wage Theft Prevention laws require employers to provide employees with a detailed notice setting out details about their compensation and how they are employed. While in California these notices need only be presented to non-exempt employees, in New York they must be given to all new employees (a requirement that employees be provided with notices annually was recently repealed).
The D.C. law requires that a notice similar to those required in these other jurisdictions be provided to all current employees by Wednesday, May 27th (a sample of the “Notice of Hire” to be provided to employees notice can be found here). Employers with employees in the District of Columbia need to act fast to provide these notices and post the required posting regarding the Wage Theft Prevention Act by the deadline.
But that’s not all…. the D.C. law also requires employers to record non-exempt employees’ “precise time worked”, rather than just “hours worked”. While the law doesn’t define “precise time worked,” it presumably requires that the employer record the employee’s start time, end time, and the beginning and end of any break time, rather than simply “eight hours worked.” The law requires that employers maintain these records for all employees who are non-exempt under D.C. standards (which are more employee-friendly than federal standards).
Companies with D.C. employees should confirm that notices are provided, that the required poster is posted and that a method for recording “precise time worked” is in effect by the time employees return from the Memorial Day holiday.
Statistics released earlier this month by the Administrative Office of the U.S. Courts show an 8.8% increase in the number of Fair Labor Standards Act (“FLSA”) cases in the year ending in September 2014 as compared to the prior year.
This dramatic increase is the result of a variety of factors. First, the law itself has many ambiguities in its terms and definitions. Although the Department of Labor has attempted to reduce ambiguity in its guidance and regulations, many terms and issues are still unresolved and leave open the potential for legal claims. Also, the law is old. Applying a law passed in 1938 to the modern workplace, with drastic advances in technology, can be very difficult and often times leads to confusion. Finally, both employees and the attorneys to whom they may go to challenge a termination are becoming more savvy regarding wage and hour issues. As a result, we are seeing many cases where a terminated employee who comes into an attorney’s office looking to sue for “wrongful termination” walks out with a wage and hour claim – potentially even a class claim.
Employers should continue to review wage and hour practices to make sure that employees are properly classified as exempt or non-exempt and are being paid in accordance with local requirements. In addition, employers with specific concerns about class or collective actions should consider an arbitration program, which would require all claims to be dealt with in arbitration on an individual – not class or collective – basis.
Yesterday, the Supreme Court ruled 9-0 (in a rare, labor and employment law unanimous decision) that workers supplied by a staffing agency for positions in Amazon’s warehouses do not have to be paid for time spent in security screening lines, reversing a federal appeals court ruling that found workers should be paid because the screenings were a necessary part of their jobs and benefited their employer. The Supreme Court disagreed. “The security screenings at issue are noncompensable postliminary activities,” the Justices wrote. “The workers were employed not to undergo security screenings, but to retrieve products from warehouse shelves and package them for shipment.”
The case is Integrity Staffing Solutions, Inc v. Jesse Busk and Laurie Castro, U.S. Supreme Court, No. 13-433.
White House officials announced this week that President Obama intends to sign an executive order banning federal contractors from discriminating against employees based on sexual orientation or gender identity.
Many states and local governments already have laws, applicable to all employers, banning this type of discrimination. Last year, the Senate passed the Employment Non-Discrimination Act that would have prohibited this type of discrimination against all workers in the United States, but the bill stalled in the House.
Obama’s executive order would protect up to sixteen million employees working for employers with federal contracts. In the meantime, federal contractor employers may wish to consider reviewing their non-discrimination and non-retaliation policies to ensure that sexual orientation and gender identity are explicitly covered.
$10.10 Minimum Wage for Employees of Federal Contractors
Seeking to fulfill President Obama’s executive order (issued in February), the Labor Department proposed a rule this week to raise the minimum wage for employees of federal contractors to $10.10 an hour.
The wage increase would benefit about 200,000 workers, an estimate that was not available when the executive order was announced. If enacted, the rate would apply to contracts issued on or after Jan. 1, 2015. The DOL is expected to issue the final rule on October 1, 2014.
It was a big week for the Fair Labor Standards Act.
On March 7th, the Supreme Court let stand a decision that the owner, president and CEO of a supermarket chain in New York is personally liable for his company’s failure to make required payments on a FLSA settlement agreement. The owner argued that to be held personally liable he had to be responsible for the violations (rather than just have general control over corporate operations). However, the Supreme Court refused to hear his arguments against the court of appeals’ decision, which can be interpreted broadly to suggest that an individual may be held personally liable for FLSA violations by virtue of general control of over corporate affairs.
On March 10th, the Supreme Court declined to review an appeals court decision finding that undocumented workers can sue — and recover wages owed — under the FLSA.
Then, on March 13th, President Obama directed the Secretary of Labor to update the FLSA’s overtime exemptions to provide more employees with overtime pay. Some have speculated that the change will be to significantly raise the minimum weekly salary for an employee to be considered exempt under most exemptions (currently $455/week), but changes could also include rewrites of the job duties tests for the frequently used “white collar exemptions” or other limitations on current exemptions. It remains to be seen what changes will be proposed by the administration and whether they can be implemented before the end of the President’s term. We will keep you posted as we learn more.