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Posts Tagged ‘FLSA’

New Rule, Who Dis? DOL Proposes Changes to Joint Employment Regulations

Posted on: April 8th, 2019

By: Will Collins

On April 1, 2019, the U.S. Department of Labor (“DOL”) announced notice of proposed rulemaking, amending the DOL regulations addressing joint employers under the federal wage and hour law (i.e. the Fair Labor Standards Act (“FLSA”)) and providing guidance and clarification long sought by employers.

The proposed changes announced last week mark the first revision to the DOL’s joint employment regulations since originally promulgated in 1958.

The proposed changes, which seek to address the situation where an employee works for his or her employer and that work simultaneously benefits another person or entity, offer a Four-Part Test to determine if an organization is a joint-employer by assessing whether that organization:

  1. Hires or fires the employee;
  2. Supervises and controls the employee’s work schedule or conditions of employment;
  3. Determines the employee’s rate and method of payment; and
  4. Maintains the employee’s employment records.

The DOL’s proposed changes also makes clear that only actual actions taken, “rather than the theoretical ability to do so under a contract, are relevant to joint employer status.”

The proposed changes also clarify that certain business models (such as franchises), practices, and agreements do not make joint employment more likely.

Under the proposed changes, examples activities not indicative of joint employment include:

  • Providing a sample handbook or other forms as a part of a franchise agreement;
  • Allowing employer to operate a facility on its premises; or
  • Offering or participating in an association health or retirement plan.

And examples of agreements that do not indicate joint employment include contractual provisions requiring an employer to maintain:

  • workplace safety practices;
  • a wage floor;
  • sexual harassment policies; or
  • other measures to encourage compliance with the law or to promote desired business practice

Take Away

The proposed changes would provide welcome clarity for employers and, through its articulation of a Four-Part Test, examples of business models, practices, and agreements that do not indicate joint employment, and the list of illustrative hypotheticals addressing specific joint employment scenarios, the proposed changes would provide needed guidance and certainty to joint employment in the FLSA context.

Now subject to a 60-day public comment period, we will continue to monitor the DOL’s proposed changes to the joint employment regulations.

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

Department of Labor Unveils Its Long-Awaited Proposed Overtime Rule

Posted on: March 11th, 2019

By: Brad Adler

On March 7, 2019, the U.S. Department of Labor (DOL) released its long-awaited proposed rule that would revise the white collar overtime exemption regulations.  In its proposed rule, the DOL proposed raising the minimum annual salary for exempt status from $23,360 to $35,308 (an increase in the weekly rate from $455 to $679).  This is a significantly smaller increase than the increase that had been adopted by the DOL in 2016 ($47,476 per year) while President Obama was in office.  Of course, a court blocked that increase from taking effect.

Like the 2016 final rule, the DOL’s new proposal would allow employers to satisfy up to 10% of the $35,308 minimum salary requirement by the payment of nondiscretionary bonuses, incentives and commissions.  Notably, however, while the 2016 rule required that the bonuses be paid at least quarterly, the new proposal contemplates that they can be paid annually (or more frequently if desired).  Specifically, employers would have one catch-up period at the end of a 52-week period to make up any shortfall in the employee’s salary to bring it up to the required minimum.

As a result of this proposed provision, the employer could pay the employee a guaranteed minimum salary of $611.10 per week (90% of the weekly salary) and, if bonus and incentive compensation do not bring the person up to the minimum salary level by the end of the year, the employer would have one chance to make up the difference.

In addition to increasing the minimum salary, the DOL also proposed increasing the minimum annual compensation to qualify for the FLSA’s “highly compensated employee” exemption, from $100,000 to $147,414 (of which, at least $679 per week must be paid on a guaranteed salary or fee basis).

The public will have 60 days to submit comments on the proposed rule, but the rule ultimately is expected to take effect on January 1, 2020.

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

U.S. Supreme Court Holds All Public Employers Are Covered By The ADEA

Posted on: November 9th, 2018

By: Brent Bean

On November 6, 2018, the U.S. Supreme Court issued its long-anticipated opinion in Mount Lemmon Fire Dist. v. Guido, 586 U.S. __ (2018), which FMG previously discussed here.  At issue was whether the Age Discrimination in Employment Act (“ADEA”) applies to all state and political subdivisions, regardless of the size of their workforce.

The ADEA generally prohibits employers from discriminating in their employment decisions against employees over the age of forty.  29 U.S.C. § 621-634.  The ADEA, however, only applies to private sector employers with more than twenty employees.  To that end, ADEA defines “employer” as:

a person engaged in an industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year. . . .  The term also means (1) any agent of such a person, and (2) a State or political subdivision of a State and any agency or instrumentality of a State or a political subdivision of a State, and any interstate agency, but such term does not include the United States.  29 U.S.C. 630(b) (emphases added).

The Supreme Court took this case to resolve the circuit split among the Sixth, Seventh, Eighth, and Tenth Circuits on the one hand, all of which had held that the ADEA’s twenty-employee threshold applies to a State or political subdivision, and the Ninth Circuit, on the other hand, which ruled that the ADEA’s twenty-employee minimum does not apply to those employers.

Writing for a unanimous Court, Justice Ginsburg held that the plain language of the statute, “also means,” is additive, rather than clarifying.  As such, there is no twenty-employee threshold for a State or political subdivisions.  The Court rejected the fire district’s argument that the ADEA should be analogized to Title VII, where numerical limits apply to private and public sector employers with equal force.  Instead, Justice Ginsburg wrote, the ADEA, amended in 1974 to cover state and local governments, was more akin to the FLSA, amended that same year, which has no workforce limit.

Accordingly, the ADEA applies with greater scope to cover all state and political subdivisions without limitation to the size of their workforce.  We recommend that public sector employers, especially those which have smaller workforces, revisit their handbooks and training on complying with, and avoiding litigation under, the ADEA.

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

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].

Is Wellness Activity Participation Compensable?

Posted on: September 25th, 2018

By: Joyce Mocek

The Department of Labor (DOL) recently issued an opinion letter on whether employees must be compensated under the Fair Labor Standards Act (FLSA) for the time they spend participating in wellness activities.   In this inquiry, the employer advised the DOL that it allowed its employees to participate in wellness programs including “biometric screening,” (ie cholesterol levels, blood pressure and nicotine usage screening), during and outside of regular work hours.  The screening information could result in a decrease in the employee’s health insurance deductible.  The screening was not related to the employee’s job, there were no restrictions on the time an employee could participate in the events, and participation was not required by the employer.

In its opinion letter, the DOL noted the employer received no financial benefit as a result of the employee participation in the activities, and the employee’s voluntary participation predominantly benefited the employee.  The employer did not require the employee to perform any job related duties while they were participating in the activities.  Thus, since the activities predominantly benefited the employee, the DOL opined that the time the employees spent participating in the wellness program did not constitute worktime under the FLSA.  Further, since the employee was relieved of all duties, and not restricted in the amount of time they could participate in the activities, the time spent was considered non-compensable “off  duty” time.

Employers with wellness programs should review their policies concerning such programs, to ensure they follow the guidance recently outlined by the DOL in this opinion letter to avoid potential FLSA issues.

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