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Archive for the ‘Wage & Hour’ Category

DOL To Rescind 2011 Tip-Pooling Regulations

Posted on: December 19th, 2017

By: Timothy J. Holdsworth

In 2011, the U.S. Department of Labor (“DOL”) revised its regulations to support its position that the Fair Labor Standards Act (“FLSA”) requires that tipped employees retain all their tips regardless of whether the employer takes the tip credit for those employees. These regulations have repeatedly been challenged in courts, and circuits have split over their legality. In addition, several states (Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington) have enacted legislation requiring employers to pay tipped employees the state minimum wage, effectively abolishing the federal tip credit.

As we predicted, in the wake of this litigation and legislation the DOL has issued a Notice of Proposed Rulemaking (“NPRM”) announcing its intent to reverse these 2011 regulations in part. The DOL now proposes to rescind the portion of the regulations that apply to employers that do not take a tip credit, but instead pay wages of at least the federal minimum wage.

One major effect of this change is that employers would now be able to create tip-pooling arrangements that include employees who do not regularly and customarily receive tips. For example, a restaurant could share tips among both servers and dishwashers. In its NPR, the DOL acknowledges that its proposed changes will allow employers and employees greater flexibility in determining their pay policies and allow employers to reduce wage disparities among all employees that contribute to customers’ experience.

The DOL will be accepting public comments on its proposed changes until February 5, 2018. We will update you once the DOL announces the finalized changes, but we do not expect the DOL to modify the changes significantly (if they decide to do so at all). Until the portions of the regulation are rescinded, employers need to be sure their tip policies comply with the current interpretation of the 2011 regulation in their circuit. Additionally, employers need to comply with any applicable state and local compensation laws and regulations regarding tips and tip-pooling, as they could face liability under those laws regardless of the proposed changes discussed in this blog.

If you have any questions about these changes or would like more information on navigating wage and hour laws, please contact Timothy J. Holdsworth at [email protected].

Are We There Yet?: Auto Service Advisor Exempt Status Under the FLSA Makes Return Trip to the Supreme Court

Posted on: November 28th, 2017

By: Will Collins

Last year, the Supreme Court narrowly avoided a collision with the question of whether service advisors at car dealerships are exempt as “salesmen” under the overtime requirements of the Fair Labor Standards Act (FLSA). However, as Encino Motorcars, LLC v. Navarro returns to the Supreme Court, the case is poised to squarely address this issue and, hopefully, provide much-needed clarity.

As previously discussed, the Supreme Court sent the Encino case back to the Ninth Circuit Court of Appeals to reconsider the exempt status of service advisors, instructing the Ninth Circuit to give no deference to the Department of Labor’s (DOL) regulations providing that service advisors were not exempt.

After considering the case on remand, the Ninth Circuit still held that service advisors do not fall within the FLSA’s exemption for “salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” As a result, the Supreme Court will again consider the exempt status of auto service advisors and all indications are that the Court will resolve the discrepancy between the DOL regulations, the Ninth Circuit decision, and prior decisions by the Fifth and Fourth Circuits.

After a long road of uncertainty, many are hopeful that the Supreme Court will provide clarity when it finally resolves this issue. As the case is scheduled for oral argument in January, we will continue to monitor the case and provide an update of any developments.

If you have any questions or would like more information, please contact Will Collins at [email protected].

Expect Increased Worksite Inspections by ICE in 2018

Posted on: November 15th, 2017

By: Melissa M. Whitehead

One can barely turn on the news (or look at Twitter) without hearing about the current Administration’s immigration views and policies. The topic has become so highly politicized that it can be easy to miss the actual details of new rules and regulations. Employers must pay close attention, though, and be sure they are staying current with the changing regulations. At a recent event titled “Enforcing U.S. Immigration Laws: A Top Priority for the Trump Administration,” keynote speaker and Acting Director of the U.S. Immigration and Customs Enforcement (“ICE”) said that his agency will be cracking down on employers who hire undocumented immigrants. He recently instructed Homeland Security Investigation to increase the amount of time spent on work site enforcement “by four to five times.” He also promised that the number of worksite inspections would significantly increase “in the next fiscal year.” Why? According to Homan, “unless you remove the magnets… they’re gonna keep coming… . As long as they’re coming to get a job, they’ll try to come. So we are stepping up work site enforcement…”

What does this mean for employers?

Employers should expect an increased likelihood of employment immigrant audits, with or without advanced notice. This is likely to come in the form of I-9 audits. For this reason, employers are encouraged to periodically conduct internal Form I-9 audits with the assistance of counsel, to ensure that I-9 forms are being correctly completed and appropriate records are being maintained. Employers must also ensure that the correct Form I-9 is being used, as the approved form frequently changes. The most recent version was released in July 2017 and became mandatory on September 18, 2017. Any errors discovered in the audit should be immediately remedied. Employers should also consider providing training to their HR professionals in I-9 compliance and policies. Both substantive and technical violations alike will result in penalties anywhere from $220 to $2,156 per employee’s I-9.

Employers in states or cities that have declared as “sanctuary cities/states” have an even more complicated burden. For example, California’s “sanctuary state” legislation will go into effect on January 1, 2018. California employers, then, will be prohibited from voluntarily allowing federal immigration enforcement agents into non-public work areas or access to employee records without a warrant. The legislation also places specific requirements for both pre-inspection and post-inspection notice to employees. Failure to comply with sanctuary state legislation will subject California employers to civil penalties between $2,000 to $5,000 per employee for the first violation, and $5,000 to $10,000 for each subsequent violation.


Employers are encouraged to perform internal audits of their policies and practices before or around the start of 2018, and to seek the advice of counsel well-versed in both employment and immigration regulations, for assistance in navigating these tricky waters.

If you have any questions or would like more information, please contact Melissa M. Whitehead at [email protected] or (916) 472-3306.

Updates on the “Joint Employer” Standard

Posted on: October 10th, 2017

By: Tim Holdsworth

More than two years have passed since the National Labor Relations Board (“NLRB”) handed down its new and controversial joint employer standard in Browning-Ferris Industries of California, 362 NLRB No. 186 (August 27, 2015). As you may recall, that decision greatly expanded the standard under which an entity could be found as a joint employer under the National Labor Relations Act (“NLRA”). In departing from its own well-established standards, the NLRB announced that they will no longer require a joint employer to possess and exercise authority to control employees’ terms and conditions of employment, but instead will find sufficient control if the entity merely reserves this authority. They also announced they will no longer require the employer’s control to be exercised directly and immediately. Instead, the NLRB declared that control exercised indirectly, such as through an intermediary, can establish the requisite control.

The U.S. Department of Labor (“DOL”) adopted a similar standard for who it considered a “joint employer” under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Worker Protection Act shortly thereafter.

Neither of these controversial steps has fared well. The Browning-Ferris decision has been under attack in courts, while the DOL rescinded its guidance earlier this year under new Labor Secretary Alex Acosta.

Legislative efforts also have been made to give further guidance to businesses that have struggled with the uncertain and convoluted joint employer scheme. Recently, the U.S. House of Representatives Education and Workforce Committee approved a bill that would amend both the NLRA and FLSA to require that a company exert “direct, actual and immediate” control over workers to be considered an employer.

We will continue to monitor this legislation and provide any updates. For now, however, employers need to know that the Browning-Ferris standard is still in effect.

If you have any questions about federal, state, or local wage and hour laws, please contact Tim Holdsworth at [email protected] or any of the attorneys in FMG’s Labor & Employment Law Section.

Wage and Hour Guidance for Employers Hit by Natural Disaster

Posted on: September 11th, 2017

By: Melissa M. Whitehead

When faced with a natural disaster, such as hurricanes and wild fires, there is so much to worry about – and the primary focus should always be on safety. However, in the immediate aftermath of natural disasters, employers often find themselves in uncharted waters. Because these are unique situations that most employers either never face or rarely face, even the most seasoned employers/HR departments may find themselves unsure of which employees need to be paid, and how much, for time in which the worksite was closed due to natural disasters. This can be an issue facing not only those employees most directly impacted by a natural disaster, but also those who work in branch worksites for companies headquartered in an impacted location. Below is a brief refresher on some of the most commonly asked questions:

Do we have to pay employees for the time our worksite was closed?

Under the Fair Labor Standards Act (FLSA), nonexempt employees need only be paid for hours actually worked, and do not need to be paid for time in which the worksite/company was closed due to a natural disaster. Employers can either treat these as unpaid days or allow employees to use any accrued vacation/PTO leave.

Whether exempt employees need be paid will depend on how long the worksite was closed. Exempt employees must be paid a full week’s salary for any week in which they worked any hours. So, exempt employees must be paid their full salary if the worksite is closed for less than one workweek. Employers can, however, require exempt employees to use any accrued PTO/vacation pay for those days, so long as employees have been given appropriate notice of that policy (typically, such a policy must be in the handbook or introduced to employees well in advance of implementation).

It is also increasingly common for employees to be able to work remotely. If employees are working remotely during the worksite closure, nonexempt employees must track their time (including meal breaks as necessary) and be paid for time worked, and exempt employees must be paid their full salary for any week in which they worked.

Our worksite stayed open, but some employees couldn’t make it into work – do we have to pay them?

Federal law treats such an absence as one for personal reasons if the business remains open for business. Employees (both exempt and nonexempt) can thus be temporarily placed on an unpaid leave of absence or required to use accrued vacation/PTO time. Employers should always be cautious in deducting exempt employees’ salaries, though, and it may be advisable to instead have those employees make up the missed time (this is not permissible for nonexempt employees, who need always be paid overtime if they work more than 8 hours in a day or 40 hours in a week).

Do we pay employees for the time we had our employees wait on site for power to be restored?

Yes. If employees were required to wait on-site, they must be paid for that time.

We let employees go home, but told them to be available for when power was restored and we would call them back to work. Do we pay them for their on-call time?

States have differing requirements for on-call/standby pay. Generally, whether or not you have to pay a nonexempt employee for this time will depend on how much the employer restricted/controlled the employee’s time away from the worksite. The more the employee is controlled/restricted, the more likely the employer is required to pay that employee for time spent on-call. And always remember that exempt employees must be paid full salary for any week in which they worked.


Keep in mind that these are general guidelines under the FLSA, but states may differ in their wage and hour obligations when natural disasters hit – and the statutes/regulations which are most protective of employees’ rights will apply. These guidelines also may not apply where a collective bargaining agreement governs. Again, employers’ first priority during natural disaster should be the health and safety of their employees. In the aftermath, employers are advised to seek the assistance of experienced labor and employment counsel to make sure all employees are properly compensated for their time.

If you have any questions or would like more information, please contact Melissa M. Whitehead at [email protected] or (916) 472-3306.