Category Archives: Fair Labor Standards Act (FSLA)

Fair Labor Standards Act (FSLA), FLSA Requirements, Uncategorized

The Overtime Rule Clock is Ticking Down

As we previously reported, the newly released Final Rule updating overtime regulations under the Fair Labor Standards Act takes effect December 1, 2016.

Among other changes, these new regulations nearly double the minimum salary for “white collar” exempt executive, administrative and professional workers to $913 per week ($47,476 annually for a full-year worker).  Here are a few key points to keep in mind as your company prepares for the new rules to kick in:

  • Now is the time to reevaluate your overtime exposure. The pending application of the new overtime regulations should prompt each employer to reexamine whether it is properly applying the overtime laws – old and new.  If changes are needed, this is the time to make them, coordinating with the December 1 effective date of the Final Rule.
  • Advance preparation is essential to anticipate and make any adjustments to your workforce to limit the costs of complying with the law.  Taking action to reorganize the workforce, change employees from salary to hourly, limit overtime, and redefine jobs to meet the exemptions can all dramatically reduce overtime risk, cost, and exposure.
  • Job descriptions should be reviewed and revised to fit the job being performed and any exemption being claimed. Job descriptions are often important evidence that the Department of Labor and courts examine to determine whether an exemption applies.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Conscientious Employee Protection Act, Fair Labor Standards Act (FSLA), Whistleblower, Whistleblower Complaints

Whistle-blowers and Watchdogs – Beware of the Bite

Three courts recently confirmed that employers need to beware of retaliation claims by human resources professionals and other compliance employees who identify and report unlawful practices as part of their jobs.

In July, the New Jersey Supreme Court in Lippmann v. Johnson & Johnson, Inc. rejected lower court decisions that had limited the applicability of the state’s main whistleblower law, the Conscientious Employee Protection Act (CEPA), when the whistle-blowing at issue was part of the employee’s job duties.  The Supreme Court found no statutory basis for that court-developed limitation and held that CEPA therefore applies with equal force to protect “watchdog employees” like compliance and human resources officers who object to unlawful conduct while performing their normal job duties. 

Similarly, on August 24, in Kavanaugh v. C.D.S. Office Systems, Inc., a federal court in Illinois refused to dismiss a retaliation claim by a human resources director who was fired shortly after she reported to her boss, the CFO, concerns that the company was not paying its IT engineers overtime, in violation of the Fair Labor Standards Act.  And on August 10, the U.S. Circuit Court of Appeals for the Fourth Circuit reversed a ruling in DeMasters v. Carilion Clinic that a “manager rule” prevented retaliation claims by an EAP counselor whose job responsibilities included reporting discrimination and harassment claims.

It remains true that some laws, including the First Amendment, limit the protections against retaliation for employees who are engaging in the protected conduct as part of their job duties.  But these three recent cases make clear that many anti-retaliation laws do not have such limits.  Managers are well-advised to check the applicable legal standards under state and federal law before taking an adverse action against an employee who has reported – internally or externally – a suspected violation of the law, even if the report was part of his or her job and even if the report had nothing to do with the reasons for termination.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Fair Labor Standards Act (FSLA), FLSA Requirements, Independent Contractors, US DOL

Crisis = Opportunity with FLSA Changes

time is moneyFrom the outrage and dread being spewed on the blogos-fear, one would think that the latest moves by the U.S. Department of Labor (DOL) on overtime pay and the misclassification of independent contractors are nothing but bad news for employers.

But the Update is here to report a silver lining.

As you may have seen reported in July, President Obama announced proposed federal regulations for the Fair Labor Standards Act that would substantially revise the law on “white collar” exemptions to overtime pay, including more than doubling the minimum salary required for such exempt positions.  As a refresher, “white collar” employees who perform certain executive, professional and administrative duties can be exempt from overtime pay, if they are paid a base salary that exceeds the minimum threshold (currently $455 per week).  The proposed DOL regulations are far from final, but they give employers a great opportunity to review – and change  – any problematic treatment of employees who, arguably, should have been overtime eligible all along.

The same applies to the recent “interpretation” published by the DOL on July 15, 2015, in relation to the misclassification of employees as “independent contractors.”  According to the DOL, “most workers” now should be considered employees rather than independent contractors, and the DOL intends to “crack down” on employers that misclassify portions of their workforce as independent contractors in order to avoid overtime pay obligations, wage taxes, benefit costs and other expenses.  If a worker performs tasks that are “integral to the employer’s business,” then that worker is most likely an employee, according to the DOL.  Likewise, if the worker is “economically dependent” on the employer, then he must be an employee, the DOL contends.

Instead of merely complaining about this double-barreled DOL attack, employers should seize the opportunity to review and revise any longstanding and improper treatment of employees, thus emerging stronger than ever — before any new rules kick in.  If employers find that some employees are currently not being paid overtime – or treated as employees – but they should be, the new DOL efforts provide a good rationale for making a change now, without highlighting to employees that any pre-existing practices could support a claim for back pay.

For example, an employer that has not been paying overtime wages to “assistant managers” who might be seen by the DOL as non-exempt senior retail sales clerks, could use the proposed DOL regulations as a reason to shift the employees from salaried to hourly, with overtime.  A typical announcement in such a situation could state, “In light of newly proposed federal regulations that will change the rules with regard to ‘exempt’ salaried employees, ABC Company has reviewed and updated its pay policies.”  The employer can then bring the employees’ pay into compliance with less chance of raising a red flag — or class action lawsuits – by an employee asking, “Hey, should I have gotten overtime pay in the past?”

Likewise, employers can change independent contractors to employees – where existing law supports the reclassification – and can explain that the DOL has just come out with “new” guidance that, in the company’s view, makes it more appropriate to pay the worker as an employee going forward.

Using the DOL initiatives as the driving force behind such changes in pay is a proven strategy that can reduce the employer’s risk of wage and hour claims, and bring the workforce into greater compliance with federal law.

Action item:  The first step in this process is to conduct a “wage and hour audit,” either internally or with outside employment counsel, to determine whether the employer has any compliance vulnerabilities (most employers do), either under existing law or the proposed changes in the law.  Once that is done, the employer can then work with counsel to determine the best path forward to make any changes needed, including the important “messaging” noted above that can limit the risk of individual or class action suits.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Fair Labor Standards Act (FSLA), FLSA Requirements

Paralegal Payback.

Most lawyers, especially those who deal with the Fair Labor Standards Act (FLSA), know that paralegals are generally considered non-exempt employees, entitled to overtime pay. One would think that Pasricha & Patel, a law firm in Edison, N.J., that occasionally handles plaintiffs’ FLSA claims, would know that, too.

But maybe not.

Jason Barros, a former paralegal at the firm, has filed a collective action lawsuit alleging he and four other firm paralegals have been paid a flat salary and denied premium pay for hundreds of hours of overtime over the past three years. Barros claims the violations are willful, as the law firm should know better.

The case serves as a reminder to everyone in the legal field – be sure your paralegals are paid by the hour and paid overtime, or be prepared to justify their treatment as exempt professionals through some unusual facts, such as having a principal duty of managing other employees or a requirement that the paralegal have an advanced degree (such as an engineering degree) to perform specialized paralegal work.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Collective Action Claims, Fair Labor Standards Act (FSLA), FLSA Requirements

Human resources managers claim overtime.

In a decision that may surprise readers of this Update (many of whom are human resources professionals), a court this month granted conditional certification of a collective action seeking overtime pay for human resources managers of Lowe’s Home Centers, Inc.

In Lytle v. Lowe’s Home Centers, Inc. , a federal judge in Tampa ruled in favor of human resources manager Lizeth Lytle, basically telling her, “you can do it, we can help,” with regard to her collective action claims under the Fair Labor Standards Act.  Lytle asserts that she and nearly 1,750 salaried human resources managers nationwide should be paid overtime, as they are required to work more than 40 hours every week.  Lytle claims that unlike most human resources professionals, the human resources managers at Lowe’s do not exercise discretion or independent judgment with respect to significant matters, and do not have the authority to make any decisions (such as hiring or firing).  To support her claims, Lytle submitted declarations by nearly 60 current and former HR managers at Lowe’s.

In granting conditional collective action certification, the court noted that a “fairly lenient standard” applies at this first step.  With conditional certification granted, all potential members of the class will get written notice to “opt in,” and discovery will ensue.  Lowe’s can then file a motion for decertification, which applies a much stricter standard.  That being said, a major battle is now lost for Lowe’s, it will be required to expend thousands of hours and dollars in discovery, defending these claims.

The lesson for other employers is basic:  do not presume that just because an employee has a “manager” title or is paid a salary, that he or she is exempt from overtime.  Analyze the position under the FLSA requirements, including those as to independent judgment, discretion and primary duties, and seek legal advice if the case is close.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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Employee Rights, Fair Labor Standards Act (FSLA)

Don’t fluctuate with your workers in Pennsylvania

Reinforcing the basic rule that employers must comply with both state and federal wage and hour laws, a Pennsylvania employer recently learned the hard way that the “fluctuating workweek method of paying overtime” is not allowed in Pennsylvania.

Under the federal Fair Labor Standards Act, an employer may use the fluctuating workweek method to pay certain employees overtime at the rate of one-half of the employee’s regular rate, as opposed to the standard overtime rate of one-and-one-half times the employee’s regular rate. The FLSA allows this treatment if (1) the employee is paid a base salary above minimum wage every week, regardless of hours worked; (2) the employee’s hours fluctuate from week to week; and (3) there is a “clear mutual understanding” that the salary covers all hours during the workweek, regardless of hours worked.

In Foster v. Kraft Foods Global Inc., Kraft paid a sales representative under the fluctuating workweek standard. After her employment ended she sued under the Pennsylvania Minimum Wage Act, alleging that Kraft had failed to pay her overtime at the rate of one-and-one-half times the regular rate.

The federal court for the Western District of Pennsylvania refused to dismiss her claim, despite Kraft’s apparent compliance with the FLSA, noting that Pennsylvania law does not allow payment of overtime by the fluctuating workweek standard, and citing two prior court decisions that reached the same conclusion.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.

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