New Overtime Regulations Effective December 1st: Are you ready?

The new salary minimum for employees to be considered exempt under the White Collar exemptions becomes effective in just 7 business days.  Companies that haven’t already taken steps to confirm compliance and plan for this change need to act quickly to meet this deadline.  While litigation seeking to stop the regulations is still pending, it is likely that the regs will go into effect as scheduled on December 1st.

As we’ve previously reported, the new regulations more than double the salary minimum for the Executive, Professional and Administrative exemptions from $455/week ($23,660/year) to $913/week ($47,476/year).  The new regulations also increase the minimum salary for the Highly Compensated Employee exemption (though employers should keep in mind that some state minimum wage laws, including Illinois’, don’t adopt the Highly Compensated Employee exemption).

Employers need to act now to confirm that all employees who are classified as exempt under the White Collar exemptions are paid at least the new salary minimum.  Likewise, to the extent that the new regulations have led you to reassess other employees’ exempt status, it is important to act before they become effective.

We would be happy to answer any questions you might have regarding how employees are classified, the logistics of converting employees to non-exempt status and recording their time, and other related issues.

Motion Filed to Stop New Overtime Regulations… but for now keep focusing on December 1st deadline!

pillarsThis week twenty-one states filed an emergency motion for a nationwide injunction to block the new overtime regulations that are set to go into effect on December 1st.  However, as we’ve previously reported, the success of this and other efforts to stop or delay the regulations is far from clear.  Unless and until one of these efforts is successful, companies should move forward with their planning and make sure that they are prepared to be in compliance on December 1st.

2016 Labor and Employment Law Checklist

Each year, LP’s Labor & Employment Practice Group is pleased to provide a short checklist of steps that all companies should consider taking to measure their readiness for the coming year. We hope you find this 2016 Labor and Employment Law Checklist a helpful guide to best practices for the year ahead.

􀂅 Look out for the new FLSA overtime regulations and prepare for them. The proposed Fair Labor Standards Act (FLSA) overtime regulations likely will be issued in late 2016. The new regulations will drastically increase minimum salary thresholds with annual increases after implementation.  It’s possible that the final regulations also will include changes to the job duties tests. We expect that the new regulations will take effect 30 days after they are published. To prepare, check how many of your exempt-classified employees are paid a salary (or other guaranteed pay) of less than $52,000 per year and consider which of the two options for these employees – increasing salary or paying overtime – is the better solution for your business. Also consider whether you have any larger issues with how employees are classified, as the new regulations will provide a good opening for reclassification.

􀂅 Carefully reconsider independent contractor relationships. The DOL recently warned employers that most workers qualify as employees under the FLSA – regardless of what the worker and the company may have agreed to. Other agencies, too, are coming after companies for improperly classifying workers as independent contractors when, under applicable legal standards, they should be treated as employees. The consequences of misclassification are steep, including damages and penalties under tax, wage and hour, and other employment laws. In addition, the Affordable Care Act exposes companies that misclassify workers to significant penalties based on failure to offer coverage to the required portion of the workforce and in situations where a misclassified worker obtains coverage on an exchange.

􀂅 Consider instituting a formal policy on after-hours smartphone use. Does your team communicate with non-exempt employees after hours? If so, do you have a clear, formal policy on how after-hours smartphone use is handled (including any procedures to be followed by employees to report time spent after hours)? This type of policy can significantly improve your chances of employees bringing a wage claim.

􀂅 Pay attention to staffing/temporary firm relationships. More and more companies are working with staffing firms to provide a flexible workforce. Unfortunately, the agreements between staffing companies and their clients often lack necessary protections, which could expose both parties to significant liability. Make sure your staffing contracts appropriately allocate responsibilities and risk, require compliance with laws, and provide the framework for the true partnership that is the hallmark of a successful staffing relationship.

􀂅 Review unpaid internship programs. Unpaid internships were in the spotlight in 2015, and we expect that light to continue to shine in 2016. If you have unpaid interns, make sure that they qualify as “non-employees” under the test that applies in your state. If they don’t, they need to be paid at least minimum wage and overtime for hours over 40.

􀂅 Understand the new NLRB “Quickie Election” rules and prepare for organization efforts. The NLRB’s new rules, which took effect on April 14, 2015, shorten the election process and reduce the types of challenges employers can make, giving the union an advantage in most elections. As soon as a representation petition is filed, there may be as few as 10 days until the election is held. Given this short time frame, it’s important that employers prepare for a union campaign before a petition is filed by keeping communication channels open with employees, making sure all employment policies and practices comply with the NLRA, considering possible unit determination issues, and providing periodic training for managers and supervisors on how to detect union “storm warnings.” Employers may also consider drafting a “war plan”—which may include campaign materials—that is ready to go as soon as a petition is filed.

􀂅 Consider sexual orientation and gender identity as protected categories. The EEOC has taken the position that Title VII protects against discrimination based on sexual orientation and gender identity. And while that issue is currently before the courts, many states (including Illinois) separately prohibit discrimination on these grounds. To help guard against claims, include these classifications in your EEO and harassment policies and consider them just as you would other protected categories before taking any adverse employment action.

􀂅 Understand new requirements for federal contractors and subcontractors. The minimum wage for employees of federal contractors and subcontractors increased to $10.15 in 2016. Prohibitions on discriminating against applicants and employees who discuss, disclose, or inquire about compensation (which is defined very broadly to include all types of pay and benefits) or based on sexual orientation or gender identity are now effective as well.

􀂅 Make sure you are complying with new pay and benefit requirements. Chicago’s minimum wage is now $10/hr, as is the state-wide minimum wage in California, while the minimum wage in New York State increased to $9/hr and the minimum wage in the District of Columbia increased to $10.50/hr (and will increase again on July 1st to $11.50/hr). Equal pay requirements are also getting tighter, as the Illinois Equal Pay Act now applies to all employers, regardless of size (with increased penalties for violations), and New York and California have both implemented new, stricter prohibitions on pay discrimination. In addition, certain employers in New York City, San Francisco, and the District of Columbia are now required to provide transit benefit programs.

􀂅 Ensure that sick leave laws are being followed. California, Connecticut, Massachusetts, Oregon, and the District of Columbia now require most employers to provide paid sick leave – though the specific requirements vary from state to state. Likewise, federal contractors and subcontractors will have to provide paid sick/family leave for contracts beginning in 2017.

For a PDF of this checklist, please click here.

New Overtime Regulations — Mid to Late 2016?

600px-US-DeptOfLabor-Seal_svgThe #1 question we’ve been receiving from our clients this fall is “When will the new overtime regs be issued?”  While previously we were left guessing on the specific timing in 2016, the Wall Street Journal and National Law Review are reporting that the Solicitor of Labor has indicated that the final regulations likely will not be issued until mid-to-late 2016.

It remains to be seen what, exactly, the final regulations include.  Per our blog post when the proposed regulations were first issued, the proposed regulations focused on the minimum salary thresholds, significantly raising those amounts.  However, the DOL also invited comment on the duty rules, so it remains possible that the final regulations may include changes beyond the salary threshold.

We will continue to monitor the status of the regulations and keep you posted on any developments.

Hiring Preference to Veterans Permitted Under New Illinois Law

pillarsPrivate Illinois employers may now give preference to veterans in their hiring practices.

Governor Bruce Rauner has signed the Veterans Preference in Private Employment Act, which allows private employers to voluntarily implement hiring policies that give preference to individuals who have served in the military, whether on active or reserve duty, including the Illinois National Guard.

Employers wanting to take advantage of this new law  will need to have a written policy and reference it on job applications.  The policy must also be publicly displayed in the employer’s workplace or on the employer’s website.

EEOC Affirms: Sexual Orientation Is Prohibited Under Title VII

EEOC LOGOThe EEOC has confirmed its position that Title VII prohibits discrimination against employees based on sexual orientation.  The EEOC’s statement followed on its prior determination that Title VII protects individuals against discrimination based on transgender status, gender identity, and an employee’s transitioning between genders. According to the EEOC, sexual orientation bias is “associational discrimination on the basis of sex.” Thus, employees who work for an employer with 15 or more employees can file a charge of sex discrimination with the EEOC if the employee has been discriminated against because of sexual orientation or gender identity or expression.

Notwithstanding the EEOC’s position, there is still no federal law that explicitly protects individuals from employment discrimination based on sexual orientation and gender identity. However, 22 states (including Illinois), Washington, D.C., and Puerto Rico, have state-based employment nondiscrimination laws that cover sexual orientation and/or gender identity that apply to both private and public sector employers.

With so much recent attention, employers should be particularly attentive to issues relating to sexual orientation and gender identity. We suggest updating any employment policies and practices to include prohibitions on discrimination and harassment based on sexual orientation and gender identity to help protect employers against EEOC and state-law challenges.

NLRB “Ambush Election Rules“ Upheld

vote-unionA challenge to the NLRB’s “ambush election rules” has failed.  A federal court sitting in the District of Columbia ruled that the U.S. Chamber of Commerce and other business groups challenging the new election rules – which, as discussed in our prior blog post,  speed up the union election process – failed to prove that the rules violate any laws. The court rejected the groups’ contentions that the rules constitute “sweeping changes to the election process” and impinge on employers’ constitutional rights.

With the new rules seemingly here to stay, employers need to be prepared and ready to go.