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 LLCFor 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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Ban the Box, Binding Arbitration Agreements, FLSA Requirements

New Year’s Resolutions to Stay Out of Trouble at Work in 2016

office partyyyy

With the New Year upon us, this is the perfect time to consider whether your employment policies and
practices need updating or fine-tuning.  Based on recent developments in the law and our experience advising hundreds of employers and employees in 2015, here are five recommended New Year’s Resolutions to stay out of trouble at work:

  1. Consider implementing mandatory and binding arbitration agreements for your workforce, including express waivers of the right to a jury trial and the right to participate in collective or class actions. Per our previous Updates, these agreements must be properly drafted to be enforced, but, if that is done, then they can help an employer avoid thousands and even millions of dollars in legal fees, liabilities and management headaches.
  2. Prepare for Overtime-ageddon. President Obama and the U.S. Department of Labor have proposed new regulations under the Fair Labor Standards Act that would more than double the minimum base salary required for the most common exemptions to overtime pay.  Although recent reports indicate the regulations will not be finalized and take effect until late this year or early 2017, now is the perfect time to audit your company’s wage and hour compliance and take steps to make any cost-saving changes and workforce adjustments before the new, tougher regulations take effect. Updating job descriptions is one powerful step that can support appropriate wage and hour classifications.
  3. Be nicer to job applicants. Numerous states and cities recently have adopted strict measures limiting what and when employers can ask job applicants about their criminal records.  Be sure your company complies with these various “ban the box” laws.  Also check your company’s compliance with the federal Fair Credit Reporting Act, which requires mandatory disclosures and notices to employees whenever an employer seeks background checks by a third party on employees or applicants, or uses the results to make employment decisions.
  4. Keep up with the electronic age. Yes, Virginia, there is an Internet. Most workers are using electronics and mobile devices throughout the day, yet their employee handbooks are often still stuck in the horse-and-buggy days.   Do you have a “don’t text and drive” policy, as recommended by OSHA?  Are there written measures that protect your company’s electronic systems and data from internal misappropriation or external cyber-attacks?  What does your company do with the electronic data on an employee’s personal phone, tablet or computer when he or she resigns or is fired?  Are you limiting non-exempt employees’ after-hours access to work email to avoid potential wage and hour violations?  If you don’t know the answer to one or more of these questions, your company could be facing an expensive wake-up call.  Get help.
  5. Get more organized – find those employment agreements. Often when we are called on to help a client involved in non-compete litigation, we find that key employment agreements are missing or not signed.  This can be avoided by conducting regular reviews of personnel files to ensure all necessary documents and agreements are signed and preserved.  Not having the signed documents can severely hamper an employer’s ability to enforce its rights and protect itself from unfair competition and stolen trade secrets.  This simple annual review can be conducted by a clerical employee and do not require legal fees or expenses.  Do it now, and avoid that painful “D’oh!” moment in the future.

Bonus resolution, free to subscribers:

  • Do not procrastinate. The Update staff needs to work on this one, as this article was supposed to go out in December!

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLCFor 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 LLCFor 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 LLCFor 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 LLCFor 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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