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Posts Tagged ‘Fair Labor Standards Act’

U.S. Department of Labor Issues COVID-19 Guidance on FLSA and FMLA

Posted on: March 20th, 2020

By: Catherine Scott

As the federal government continues to grapple with questions from employers regarding COVID-19, the federal agencies have begun to roll out new guidance. The latest comes from the U.S. Department of Labor (DOL), which has issued guidance for employers seeking answers concerning their obligations pursuant to the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA).

DOL Guidance for FLSA

The FLSA provides rules and regulations concerning how employees must be paid, including the payment of wages and overtime. Employers around the country have wrestled with whether they can reduce salary and/or hours or furlough or lay off employees as the economy slows down due to COVID-19 and whether employees are required to be paid and in what manner.

The DOL has answered several frequently asked questions concerning these issues. The latest guidance provides as follows:

  • For non-exempt, hourly employees, employers can reduce their hours and/or pay, so long as minimum wage and overtime requirements are met. Non-exempt, hourly employees also can be placed on an unpaid leave of absence or furlough or be laid off due to an economic slowdown;
  • For exempt employees, employers are generally required to pay these employees their full weekly salary if any work is done during the workweek (subject to exceptions, such as when the employer is open for business and an employee, who has no PTO remaining or hasn’t qualified, misses an entire day of work).  Of course, exempt employees can be required to use any accrued, unused vacation or paid time off under the FLSA for any missed time so long as they are still being paid their salary.
  • All employees must generally be paid for telework performed at home, subject to the limitations described above;
  • Employees of private organizations are generally not allowed to volunteer their normal services without pay, subject to a few limited exceptions. Employees may volunteer for public organizations without pay if they (a) perform such services for civic, charitable or humanitarian reasons without promise, expectation, or receipt of compensation; (b) offer their services freely and without coercion, direct or implied; and, (c) are not otherwise employed by the same public agency to perform the same services as those for which they propose to volunteer.

Pay issues can be complicated and very fact-specific (and state-specific) so if you have a question about furloughs, layoffs, or schedule or compensation reductions (whether temporarily or permanently), please contact us so we can assess the individual factual and legal circumstances of your situation.

DOL Guidance for FMLA

Similarly, employers have wrestled with their obligations under the FMLA and whether they must provide job-protected leave to employees who need time away for a qualifying reason.  Initially, it is important to understand that any employer that has between 50 – 500 employees should first familiarize itself with the Families First Coronavirus Response Act as that Act (which will be effective April 2, 2020) substantially expands some of the obligations traditional imposed on employers under the FMLA.  For those employers, however, that are below 50 or above 50 employees, you should keep the following principles in mind in dealing with the Coronavirus.

  • Employees who develop complications from COVID-19 may have a “serious health condition” that would trigger FMLA leave. The same is true of a “family member,” defined by the FMLA as a spouse, child, or parent, who develops complications from COVID-19;
  • However, leave taken by an employee to avoid exposure to COVID-19 would not be covered by the traditional principles of the FMLA;
  • The traditional FMLA does not currently cover employees who require leave to tend to healthy children or children who have been dismissed from school or childcare by their state governments;
  • The traditional FMLA provides only for unpaid leave to employees who qualify; however, the FMLA allows for employees to substitute paid leave in place of unpaid leave in certain circumstances and if the employer’s policies provide for such paid leave;
  • Employees seeking to use FMLA leave are required to provide 30-day advance notice of the need to take FMLA leave when the need is foreseeable and such notice is practicable.  In addition, employers may require employees to provide:
    • medical certification supporting the need for leave due to a serious health condition affecting the employee or a spouse, son, daughter or parent, including periodic recertification;
    • second or third medical opinions (at the employer’s expense);
    • periodic reports during FMLA leave regarding the employee’s status and intent to return to work; and
    • consistent with a uniformly-applied policy or practice for similarly-situated employees, a fitness for duty certification. (Employers should be aware that fitness-for-duty certifications may be difficult to obtain during a pandemic.)

The Department of Labor is generally encouraging employers to be flexible in dealing with situations involving employees affected by COVID-19, including re-examining both paid and unpaid leave policies in place at the employer and allowing paid telecommuting to occur.

Additional information: 

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues every day for the next week. We will discuss the impact of Coronavirus for companies in general, but also for business in insurance, healthcare, California specific issues, cybersecurity, and tort. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients. Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the Coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments. For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER: The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19. The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement. We can only give legal advice to clients. Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG. An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest. As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce educational content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such. We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

Securing the Bag: California Supreme Court Rules Exit Searches Compensable

Posted on: March 2nd, 2020

By: Gregory Blueford

Shunning the position of the United State Supreme Court’s decision in Busk v. Integrity Staffing Solutions, Inc., the California Supreme Court has ruled that time spent on the employer’s premises waiting for and undergoing company-mandated exit searches of bags and personal technology devices brought to work purely for personal convenience by employees is compensable as “hours worked” in California.

In Frlekin v. Apple, Inc., the employer, Apple, had a bag search policy that required search of employees’ bags, packages, purses, backpacks, briefcases, and personal Apple technology devices whenever the employee left the store. Apple said the time spent waiting for and undergoing these searches was not compensable as “hours worked” in California, in part because employees could opt not to take a bag and therefore would not be required to undergo the search; in other words, the decision to bring a bag to work was “voluntary.”

The California Supreme Court said that the California Wage Orders had to be reviewed “liberally” and with an eye towards “protecting and benefiting employees.” The Court ruled that Apple’s search policy “controlled” employees by (1) requiring employees to comply with the policy under the threat of discipline, including termination, (2) confined employees to the premises as they waited for and underwent a search, and (3) required employees to complete tasks while awaiting and during the search like finding a manager and waiting for that person to conduct the search, thus, making the time is compensable. The California Supreme Court reasoned that the wage and hour standards of the Fair Labor Standards Act and subsequent decision in Busk, which generally exempts non-required work activities, “differs substantially” from California law, and that a State may enact law that provides employees greater protection than the FLSA, which California has done.

Employers with bag or any similar exit searches must be weary of this decision and ensure that this time is considered compensable and employees stay on the clock until the conclusion of the search.

If you have questions or would like more information, please contact Greg Blueford at [email protected].

PA Supreme Court Elevates State Pay Standards Above the FLSA on Fluctuating Work Week

Posted on: February 12th, 2020

By: Justin Boron

Going forward, Pennsylvania employers should be wary of relying on federal rules for their pay policies.

As a general principle, courts and regulators interpret Pennsylvania’s wage and hour laws consistently with the Fair Labor Standards Act.  But the Pennsylvania Supreme Court called this principle into question when it held that the fluctuating workweek method of calculating pay—which federal regulations expressly authorize—is not permitted under the Pennsylvania Minimum Wage Act.  See Chevalier v. Gen. Nutrition Ctrs., Inc., 220 A.3d 1038 (Pa. 2019).

The fluctuating workweek allows employers to meet their overtime obligations to nonexempt employees—under certain conditions—by paying the employee a fixed salary for fluctuating hours and paying a rate of at least one-half of the regular rate of pay for the hours worked each workweek in excess of 40.  See 29 C.F.R. 778.114(a).  But because the Pennsylvania wage law is silent on this issue, the Pennsylvania Supreme Court concluded that this method of pay calculation was not available.

The ruling itself is not breaking new ground.  Several Pennsylvania federal courts had previously held that the fluctuating workweek was not available under Pennsylvania law.  But it sounds a note of caution to Pennsylvania employers and their advisors about assuming that Pennsylvania wage law will agree with the FLSA and the regulations interpreting it.

It also could be a harbinger for shifts in interpretation of state wage laws in light of the DOL’s new proposed wage rules or rollbacks.  In fact, the Chevalier ruling came just weeks after the DOL proposed a revised version of the fluctuating workweek aimed at clarifying its application and potentially expanding its use under federal law.[1]

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

[1] https://www.dol.gov/agencies/whd/overtime/fww .

DOL Releases New Overtime Rule And Increases Minimum Salary To $35,568

Posted on: September 30th, 2019

By: Brad Adler

On Tuesday, September 24, 2019, the U.S. Department of Labor released its long-awaited new minimum salary threshold for the Fair Labor Standards Act’s white collar exemptions (i.e., executive, administrative and professional exemptions).  Under the new rule, which is set to take effect on January 1, 2020, the DOL has set the minimum salary threshold at $684 per week, or $35,568 per year (up from $23,660).  The DOL anticipates that the updated threshold will expand overtime pay obligations to an estimated 1.3 million additional workers.

Commenting on the new rule, acting U.S. Secretary of Labor Patrick Pizzella stated: “For the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans. . .This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers.”

Here are the highlights of the new rule:

  • The minimum salary threshold will be $684 per week, which equates to $35,568 per year.
  • Employers will still be able to use a nondiscretionary bonus, incentive pay or commissions to satisfy up to 10% of the standard salary level for the white collar exemptions (and the highly compensation exemption)
    • A one-time “catch-up” payment of up to 10% of the total standard salary level may be made within one pay period falling at the end of the 52-week pay period for those employees who have not earned enough to maintain their exempt status.
  • The highly compensated employee exemption’s additional total annual compensation requirement will increase to $107,432 per year.
  • The new rule did not make any changes to the duties test of the white collar exemptions
  • There are no automatic increases included within this new rule

Finally, while it seems inevitable that employee advocate groups are going to challenge the threshold, which they wanted to see much higher, we still believe it makes sense for employers to prepare for this new rule now.  As a part of their preparation, employers should be assessing whether they have employees they are classifying as exempt, but are making less than the new $35,568 requirement.  If so, employers need to decide whether to increase the employee’s salary, convert the employee to a non-exempt employee paid on an hourly basis or consider use of the fluctuating workweek method.

Please reach out to Brad Adler (Chair of FMG’s National Labor & Employment Practice Group) at [email protected] if you have any questions or need any assistance in navigating the new overtime rule.

Panera Assistant Managers Granted Cert. In Overtime Suit Reminds Franchisees that Duties, Not Title, Prevail

Posted on: October 22nd, 2018

By: Brad Adler & Hillary Freesmeier

While retail employers have tightened up their wage and hour practices, there are still too many companies in the retail industry, including fast food and fast casual employers, that have failed to take inventory of their compliance with current wage and hour laws. One such example is how some retail employers classify their assistant managers.  For years, there have been contentious fights over whether assistant managers can be classified as exempt under the administrative exemption.

And that fight continues as a federal judge in the District of Columbia has granted conditional certification of a nationwide collective and D.C. collective of Panera bread assistant managers who have sued the national chain for alleged denial of overtime wages under both the Fair Labor Standards Act and the District of Columbia Minimum Wage Act.

In conditionally certifying the collectives, U.S. Magistrate Judge G. Michael Harvey found that the plaintiffs had presented sufficient evidence that the assistant managers were classified as exempt from FLSA overtime provisions, but the bulk of the work they performed was nonmanagerial – a reminder that under the FLSA an employee’s duties, not title, determine exemption status. The plaintiffs assert that their assistant manager training focused on nonmanagerial tasks that involved customer service, cashiering, food preparation, and cleaning, while general managers took on the actual managerial work, and management issues such as budgets, prices, restaurant layouts, marketing and promotion strategies, hours of operation, and dress code were set by Panera’s corporate headquarters.

This suit is not the first Panera has seen in relation to assistant managers and overtime pay in recent months. In February of this year, Covelli Enterprises, a Panera franchisee which owns and operates approximately 260 Panera bakery-cafes in five states and Ontario, Canada, was sued in an Ohio federal court by a proposed class of assistant managers alleging they were improperly classified as exempt and deprived of overtime wages. This action is still pending. Additionally, in June a federal judge in New Jersey conditionally certified a collective action by Panera assistant managers with similar claims.

As these cases develop, employers and franchisees should be mindful of their management structure and duty assignments to ensure FLSA compliance. These suits serve as a reminder that FLSA exemption does not necessarily rest on an employee’s title, but their duties and responsibilities within their role.

If you have any questions or would like more information, please contact Brad Adler at [email protected] or Hillary Freesmeier at [email protected].