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Archive for the ‘Wage & Hour’ Category

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.

DOL’s Overtime Rule Is Struck Down

Posted on: September 1st, 2017

By: Michael M. Hill

If you heard a collective sigh of relief coming from your local business community yesterday, that may be because a federal court in Texas struck down the Department of Labor’s controversial overtime rule, which had been in a state of limbo since the same court temporarily enjoined the new rule in November 2016, days before it was to go into effect. (See our past blogs on this rule here, here, here, and here.)

As many by now are aware, the rule in question sought to redefine the meaning of “bona fide executive, administrative, or professional” employee, whom Congress has deemed exempt from federal law requiring that overtime be paid for working more than 40 hours in a week. Congress gave the DOL authority to define what qualifies one as an executive, administrative, or professional employee; and the DOL traditionally has responded with a “duties test,” setting out the types of job duties one must perform to qualify, and a “salary-level test,” which served as a floor to screen out lower-level jobs that Congress obviously did not intend to exempt.  The challenged rule was going to raise this salary level from $455 a week to $913, with further upwards adjustments every three years.

Now the DOL’s 2016 overtime rule has been held to be invalid, as a step beyond the authority granted by Congress. In the court’s view, by more than doubling the salary threshold for the exemption, the DOL effectively did away with the duties test and entitled many undoubtedly executive, administrative, and professional employees to overtime compensation—the very employees Congress wanted exempt.

One thing that seems to have gotten the court’s attention was the DOL’s rather brazen approach about defying Congress’s direction. The court quoted this passage from the DOL’s final rule:  “White collar employees subject to the salary level test earning less than $913 per week will not qualify for the exemption, and therefore will be eligible for overtime, irrespective of their job duties and responsibilities.”  Hard for the DOL to argue it was not tossing the duties test after making this statement.

What happens now? For now, the old 2004 overtime rule remains in effect.  Employees who are paid at least $455 a week on a salary basis and pass the “duties test” for executive, administrative, or professional employees are exempt from the federal requirement that they be paid overtime for working more than 40 hours in a week.  The current Secretary of Labor has indicated his willingness to raise this salary threshold, just not to the level the 2016 rule attempted.  The DOL is accepting public comment on this topic through September 25, 2017.

For more information, please contact Michael Hill at [email protected].

With DOL’s Overtime Rule Still in Limbo, What Should Employers Do Now?

Posted on: August 31st, 2017

By: Paul H. Derrick

As most employers know, the U.S. Department of Labor announced, during the Obama administration, that it was rolling out new standards for determining when employees are entitled to be paid overtime for all time worked beyond 40 hours in a work week. The so-called “overtime rule” or “white collar” exemptions would have required employers to pay certain executive, professional, and administrative employees a salary of at least $913 each week in order to make them exempt from the overtime requirement.

But in late 2016, a federal judge in Texas enjoined DOL from implementing the new rule anywhere in the country, finding that the DOL lacks the authority to set any salary test at all. Meanwhile, the underlying case continued to progress between the parties to the lawsuit. DOL appealed the ruling to the Fifth Circuit Court of Appeals, but it asked only that the court overturn the judge’s finding that the agency lacks the authority to set a salary test. It did not ask the appeals court to stay the overall case.

Then, in July of this year, the “new” DOL, headed by a Trump appointee, announced that it was seeking public input on ways to revise the Obama administration’s overtime rule. That process remains ongoing, with any possible modification of the rule unlikely until at least late 2018. In the meantime, the Fifth Circuit is scheduled to take up DOL’s appeal during oral arguments on October 3, and a decision could come within just a few months.

Wondering what that decision might be is causing employers a good bit of anxiety these days. On the one hand, the Fifth Circuit could affirm the injunction and maintain the status quo, which would give DOL time to come up with a new rule, but one that might not necessarily be allowed to use some variation of the traditional salary test. On the other hand, the court could decide that DOL does have the authority to establish a salary test and modify or dissolve the injunction, thus paving the way for the Obama-era rule to take effect long before a replacement rule is finalized by the Trump DOL.

That latter scenario, in turn, could put both DOL and employers in a bind. DOL would have to figure out whether and how to implement and enforce a rule it already has announced it plans to change. Employers would have to assess the risk of complying or not complying with a rule that almost certainly will change within the short term. If they were to comply, any new rule that were to come along later could have a significant financial and operational impact on them. If they did not comply, even if DOL decided not to enforce the Obama rule, they could still face legal liability from employees who sued because they were not being paid under the standard set by the Obama rule.

Confusing, isn’t it?

While there are no easy answers for employers, there are a few things to keep in mind to minimize any downside risk:

• In all cases, cap employees’ hours to avoid the possibility of overtime violations during any period when the Obama rule is in place and the Trump DOL is coming up with a new rule.

• For employers who had already made and carried out changes in anticipation of the Obama-era rule going into effect, stick with those changes and wait to see what happens next. There is little to be gained by reversing those changes right now, and any potential gain could be outweighed by disruptions in the workplace and in employee morale.

• For employers who were ready to carry out changes in order to comply with the Obama rule but had not yet put them into effect at the time the rule was enjoined, keep the changes on hold until there is greater certainty about whether, and when, the new regulations will ever become effective.

• For employers who had not yet done anything, simply keep waiting and seeing what the future brings.

We will continue to keep you apprised of developments in this area as they occur. In the meantime, if you have any questions or would like more information, please contact Paul Derrick at [email protected].

Salary History Bans: A Growing Trend

Posted on: August 18th, 2017

By: Allison S. Hyatt

More than 50 years have passed since Congress passed the Equal Pay Act of 1963 requiring employers to pay men and women “equal pay for equal work.” In recent years, cities and states around the country have broadened employee protections as lawmakers seek to curb longstanding gender-based wage disparities in the labor market. Laws prohibiting employers from asking salary history information from job applicants are among these protections.

The City of San Francisco is the latest jurisdiction to ban the practice of requesting salary histories from prospective employees. San Francisco Mayor Ed Lee signed Ordinance No. 170350 on July 19, 2017 making it illegal for employers to seek salary histories for any candidate seeking to work within the City’s geographic boundaries.

Other cities and states that have adopted similar bans include:

Massachusetts. Massachusetts became the first state to prohibit salary history queries from employers with the passage of its Pay Equity Bill in 2016. The law bars employers from asking prospective hires about their salary histories until after the employer makes a job offer that includes compensation. The law takes effect July 1, 2018.

New York State. Governor Cuomo signed Executive Order 161 on January 9, 2017 prohibiting New York state agencies from asking, or mandating in any form, that an applicant provide current or prior salary information until such time as the applicant is extended a conditional offer of employment with compensation.

Philadelphia. On January 23, 2017, Philadelphia became the first US city to adopt its own salary history ban prohibiting employers, including private employers, from asking candidates about their wage history or relying on such information in setting compensation.

New Orleans. The City of New Orleans was next to follow suit with an executive order signed by its mayor on January 25, 2017 prohibiting city agencies from seeking salary histories from candidates during the application and interview process.

Pittsburgh. Five days later, the mayor of Pittsburgh signed a bill on January 30, 2017 that prohibits the city from asking job applicants for information regarding past wages or relying on salary history information in the employment process.

Puerto Rico. Puerto Rico became the first U.S. territory to enact its own Equal Pay Act on March 8, 2017. Like other salary history bans, the law prohibits employer inquiries into applicants’ current or past compensation rates.

New York City. On May 4, 2017 Mayor Bill de Blasio signed a bill to amend the New York City Human Rights Law to include restrictions on New York City employers from relying upon or making inquiries regarding salary histories from prospective employees. This prohibition applies during the hiring process, including contract negotiations. The bill will become effective on October 17, 2017.

Oregon. Oregon joined the list of states banning salary history questions on June 1, 2017 when Governor Kate Brown signed its Equal Pay Act of 2017 into law. The law’s prohibition regarding salary history inquiries takes effect on September 9, 2017. The Act prohibits employers from asking about an applicant’s current or past salary information prior to an offer of employment.

Delaware. On June 14, 2017, Delaware Governor John Carney signed into law a bill that amends Delaware’s Code relating to unlawful employment practices to prohibit employers from engaging in salary-based screenings of prospective employees or seeking the compensation history of a job applicant from the applicant or a current or former employer.

More than two dozen other states are also considering legislation that would bar employers from asking job candidates about prior salaries. In the midst of this changing landscape of pay equity laws across the country, employers must navigate a myriad of sometimes conflicting federal, state and local laws governing use of salary history information. For instance, California state law currently does not directly prohibit employers from asking candidates about their past compensation; however, recent amendments to California’s Fair Pay Act do prohibit Employers from using salary histories as the sole justification for any disparities in compensation.

To ensure compliance with the growing trend of salary history bans, employers should consult with counsel to carefully assess their hiring practices and evaluate how new equal pay laws may impact their organizations.

If you have any questions or would like more information, please contact Allison S. Hyatt at [email protected].

DOL’s Regulation of Tip-Pooling May Change

Posted on: August 10th, 2017

By: Michael M. Hill

We previously have written about the “tip credit” provision under the Fair Labor Standards Act and the developing circuit split regarding whether an employee’s tips belong to the employee or the employer. Since 2011, the U.S. Department of Labor (“DOL”) has taken the view that an employee’s tips are the employee’s property, whether or not the employer takes advantage of the tip credit or pays the full federal minimum wage in direct wages.

The DOL’s position on employee tips may soon change. The DOL has announced it soon will issue a Notice of Proposed Rulemaking that will propose to rescind the 2011 restrictions at least in part. Moreover, the DOL reportedly has instructed its investigators nationwide not to enforce this regulation with regard to employers’ tip-pooling policies.

We will keep monitoring this issue and provide an update when the Notice of Proposed Rulemaking is issued. For now, however, employers should be aware that the 2011 regulation regarding tip-pooling still is on the books. Thus, even though DOL investigators may not be enforcing it, individual employees still may bring claims based on this regulation. As always, employers should make sure their policies regarding tips comply with the interpretation of federal law in their circuit, as well as with the applicable compensation laws of their state.

If you have any questions or would like more information, please contact Michael M. Hill at [email protected].