Taxing Decisions: New Rules on Deductions and Credits in the Employment Context

By: Aaron Gelb

CalculatorAs many individuals turn their attention to preparing and filing their tax returns on or before April 15, there are two notable changes to the tax code of which employers should take note.  These changes, tucked away in the 2017 Tax Act (also known as the Tax Cuts and Jobs Act) (the “Act”), have gone largely unnoticed while most Americans have focused on the on-again, off-again government shutdown drama.  The first change involves the deductibility of settlement payments made to resolve sexual harassment/abuse claims, while the second is a tax credit available, in certain circumstances, to employers that offer paid family leave to their employees.

Sexual Harassment and/or Abuse Settlement Payments

Section 13307 of the Act prohibits employers from deducting any settlement or payment related to sexual harassment or abuse claims if the settlement or payment is made subject to the sort of nondisclosure provisions commonplace in settlement agreements.  This means that if an employer insists that the complaining employee keep the terms of the agreement confidential, the monies paid in exchange for the release are not deductible.  The same presumably holds true if the employer conditions said payments on the claimant agreeing not to disclose the allegations set forth in the original claim that precipitated the settlement. Continue reading

Kara Maciel to Speak at HR in Hospitality Conference on Marijuana Laws

marijuana pictureOn March 6, 2018, Kara Maciel, Chair of Conn Maciel Carey’s Labor & Employment Practice Group will present at the HR in Hospitality Conference on the recent trend of medical and recreational marijuana laws.

As we have written about in the past, to date, 26 states and the District of Columbia have legalized medical marijuana, and eight states (plus D.C.) permit its recreational use.  As marijuana laws become more liberal and usage becomes more pervasive, employers must address the emergent issue of marijuana in the workplace and the legal implications of employee use. For example, must employers make accommodations for employees with valid marijuana prescriptions, allowing them to use the drug on the job?  At this session, Ms. Maciel will discuss solutions to these and other accommodation issues, with a look at recent court opinions.

The HR in Hospitality conference is a unique event where hundreds of human resources and labor relations professionals from hotels, resorts, restaurants, casinos, cruise lines come together to learn legal and practical guidance on issues specifically tailored to the hospitality industry!  To learn more about the conference and to register, click here.

 

 

All Handbooks On Deck

By Mark M. Trapp

shutterstock_policies and procedures (002)A little-noticed decision on Monday from the United States Court of Appeals for the D.C. Circuit illustrates the profound difference in the way the National Labor Relations Board (“Board”) under new General Counsel Peter B. Robb intends to evaluate employer rules and workplace policies versus the perhaps overzealous and less employer-friendly approach of the Obama-era Board.

On January 29, 2018, in Grill Concepts Services, Inc. v. NLRB, Case No. 16-1238, (D.C. Cir. January 29, 2018), the D.C. Circuit remanded back to the Board for reconsideration numerous rules previously found unlawful by the Board. This step was taken at the request of the Board following its decision just over six weeks ago in The Boeing Company, 365 NLRB No. 154 (December 14, 2017).

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Maryland Employers Beware — Paid Sick Leave is Quickly Approaching

On January 12, 2018, the Maryland General Assembly overrode Gov. Larry Hogan’s veto to pass the Maryland Healthy Working Families Act (the “Act”), and in so doing, Maryland became the ninth state in the country to require paid sick and safe leave for qualifying employees. shutterstock_fever sick

Pursuant to the Act, any business in Maryland with 15 or more employees during the preceding year, including part-time, full-time, temporary, and seasonal workers, must provide their workforce with paid sick leave.  Maryland employers with 14 or fewer employees are also required, at a minimum, to provide employees with unpaid sick and safe leave.

The Act currently is scheduled to take effect as of February 12, 2018.  However, on January 23, 2018, as a result of concerns expressed by various lawmakers that employers would not have a sufficient amount of time to come into compliance with various provisions of the Act, Senator Thomas Middleton, the chief sponsor of the law, introduced a bill that would delay enforcing requirements of the law until mid-April.  Senator Middleton stated that the delay in enforcement would give labor officials the requisite time to draw up necessary regulations and to spread the word to companies that are affected.  He also emphasized that he wanted to “hold harmless” companies that are figuring out the details of how to set up their sick leave programs, and that “ninety days should give the administration enough time to get a guide together.”

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DOL Provides Guidance on FLSA Issues in 17 Revived Opinion Letters

DOL LettersOn January 5, 2018, the Department of Labor’s (DOL) Wage and Hour Division issued 17 Opinion Letters addressing issues under the Fair Labor Standards Act (FLSA) that had been originally drafted in 2009.  Specifically, in the last days of the Bush Administration, the DOL prepared these Opinion Letters, which were pulled back less than two months later after President Obama took office.  Interestingly, these are the first Opinion Letters that have been issued since 2009.  These letters largely examine application of the White-Collar Exemptions under Section 13(a) of the Act, but they also explore treatment of on-call time, bonuses, commission compensation, and joint-employment vs. volunteer status.  Although none of these letters represent ground-breaking interpretations of the law and the DOL characterizes the guidance as very fact specific, issuing them provides some additional guidance on which employers may be able to rely, who are faced with similar factual situations, and indicates how the Trump Administration will interpret these topics going forward.

In relation to on-call time, two letters – FLSA2018-1 and FLSA2018-7 – address when on-call time is compensable, as well as deductions from exempt employee pay for failure to be available for an on-call shift.  FLSA2018-1 starts from the premise that on-call time need not be compensated if the employee can use the time for their own purposes “unless the restrictions [on their time] are so burdensome and the call-backs so frequent as to prevent free use of their time.”  In this context, the letter explains that requiring ambulance personnel in a small town to respond in five minutes to call-backs made on a relatively infrequent basis (about three per week) did not present the type of restrictions that would make the on-call time compensable.

In FLSA2018-7, the DOL explains when an employer can deduct time from an exempt employee’s pay, who is not available to be called in for her on-call hours.  According to the DOL’s interpretation, if the employee’s unavailability for on-call time would constitute a full day of work, the hours actually missed can be deducted from the employee’s pay.  Accordingly, this guidance indicates that the DOL under President Trump may take a narrower view of compensable on-call time and a broader view of when its permissible to deduct time from exempt employee pay, although the DOL did emphasize that the time away must be equivalent to a full day of work to be deducted.

Another common FLSA issue addressed by these reissued letters is the treatment of employee bonuses.  Specifically, in FLSA2018-9, the DOL revised a prior Wage and Hour interpretation and explained that providing a non-discretionary bonus paid at the end of the year, calculated as a percentage of straight-time and overtime earnings, is compliant.  As to the change to a prior interpretation, FLSA2018-9 explains that, to the extent Opinion Letter WH-241 requires all remuneration to be used in calculating a percentage bonus, even payments outside what’s required to be included in the regular rate of pay, this portion of the prior Opinion Letter is withdrawn.  Moreover, the DOL makes clear its understanding that a non-discretionary bonus calculated from a percentage of straight-time pay and overtime compensation does not require additional overtime compensation be provided because payment of the bonus would increase the straight-time and overtime compensation by the same percentage.

Under the FLSA employers are required to pay overtime based on the regular rate of pay, which includes non-discretionary bonuses, and this letter indicates that this requirement is met by calculating the bonus using a percentage of straight-time and overtime compensation.  Indeed, FLSA2018-11 reiterates this concept in verifying that a bonus paid to non-exempt employees for all days worked, and not conditioned on any other factor, must be included in determining each employees’ regular rate of pay.

Furthermore, several of the letters address which types of employees fall into one of the exemptions identified in Section 13(a)(1) based on the specific types of duties performed.  These letters generally start from the assumption that the employee is earning at least $455.00 per week – the former salary threshold level for exempt employees prior to the DOL’s 2016 rulemaking to increase that salary threshold level.  For example, in one letter, FLSA2018-4, the DOL addresses whether a project superintendent at a construction site can be classified as an exempt employee under the FLSA.  Assessments of this type of position have been split on whether an employee can be treated as exempt because the evaluation is so dependent on the specific type of duties assigned.  FLSA2018-4 opines that a project superintendent could fall within the administrative exemption where, as is the position is described in the letter, he or she primarily is responsible for overseeing the construction project from start to finish, exercises independent judgment in securing and hiring subcontractors and overseeing their work (among other, similar duties), and made significant decisions about how the project would be performed.  In addition to addressing the specific situation described in the inquiry, the Letter also demonstrates how the DOL would analyze a question of exempt status under Section 13(a)(1), as this letter considers three potential exemptions under Section 13(a)(1) – professional, executive, and administrative.

Although these guidance documents do not establish new law or even necessarily apply to many employers, companies should be aware of them because they may be very helpful in trying to determine how to navigate the FLSA under similar facts as those addressed in each letter.  Additionally, employers may be able to rely on these letters to show the DOL’s interpretation of a specific provision in defending itself against claims alleged by employees or enforcement actions initiated by the DOL.  We may see more guidance of this type once a new head of the Wage and Hour Division is confirmed.  On January 18, 2017, Cheryl Stanton was approved by the Senate Health, Education, Labor, and Pensions Committee, but her nomination must still face a full Senate vote before she can be confirmed.

U.S. Department of Labor Changes Position on Internships under the FLSA

interns wantedAlthough summer seems far away, now is the time when most employers begin to prepare for their summer internship programs.  Internships are a great way to give college students or new professionals some hands-on experience in your industry.  However, one major question that has plagued employers over the past decade is whether an intern must be paid under the Fair Labor Standards Act (“FLSA”) based on the duties he or she performs in the intern role and the structure of  internship program.

While some employers offer paid internships, other internships are unpaid or only provide a stipend lower than the minimum wage.  Given the recent string of high-profile class action cases brought by unpaid interns, for-profit, private sector employers must be aware of the FLSA’s requirements as it relates to unpaid interns.  Specifically, employers need to carefully evaluate whether an intern qualifies as an “unpaid intern” or an “employee” entitled to compensation.   Continue reading

Conn Maciel Carey Opens Chicago Office with Prominent OSHA and Labor Lawyers Aaron Gelb and Mark Trapp

Washington, D.C.-based OSHA and Labor & Employment law firm Conn Maciel Carey LLP is pleased to announce the launch of a Midwest Office in Chicago, IL and the addition of two prominent Chicago attorneys – Aaron R. Gelb and Mark M. Trapp.

“We are thrilled not only to expand the Firm’s national footprint to the Midwest, but especially to be doing so with such great lawyers as Aaron and Mark,” said Bryan Carey, the firm’s managing partner.  “This move will enable us to better serve our existing national platform of clients, and will strengthen the firm’s specialty focus on Labor & Employment and Workplace Safety Law.  We look forward to bringing Aaron and Mark on board, as they will add depth to all areas of the firm’s practice, including OSHA, litigation and labor counseling on behalf of our management clients.”

Mr. Gelb, former Labor & Employment Shareholder and head of the OSHA Practice at Vedder Price PC, in its Chicago office, represents employers in all aspects of the employer-employee relationship.  Aaron GelbAaron’s practice has a particular emphasis on advising and representing clients in relation to inspections, investigations, and enforcement actions involving federal OSHA and state OSH programs, and managing the full range of litigation against OSHA.

“Aaron and I share the same vision of how we want to practice law and do business, thus entrusting him with the keys to our new Chicago office, and combining our expertise, talent, and resources together made so much sense,” said Eric J. Conn, Chair of the firm’s national OSHA practice“We look forward to partnering with Aaron to build a solid brand for our Midwest practice among our client base and doing what we know best, providing top-notch service and excellent value to clients.”

Aaron also has extensive experience litigating equal employment opportunity matters in federal and state courts having tried a number of cases to verdict and defending employers before the EEOC as well as fair employment agencies across the country.  In the past 5 years alone, Aaron has successfully handled more than 250 discrimination charges.

Mr. Gelb said “I am incredibly excited to join what I believe to be the country’s leading OSHA practice as the experience and expertise of the Conn Maciel team will enable me to enhance the workplace safety legal support I currently provide to my clients in the Midwest and beyond.  I’ve known Eric for years and have great respect for what he and his colleagues have accomplished in the OSH field.  At the same time, Kara’s employment defense group fits perfectly with my practice as we share a common client-focused philosophy and deep experience in many of the same industries.  While leaving Vedder Price after nearly 20 years was not an easy decision, I simply could not pass up the opportunity to partner with two dynamic attorneys that so perfectly complement the dual aspects of my practice.”

Mr. Trapp joins the firm with seventeen years of experience, during which he has represented employers in all types of labor disputes, from union campaigns and collective bargaining to grievances and arbitrations. Mark M. Trapp (3)Mr. Trapp has defended employers before administrative agencies and in litigation brought under the ADA, ADEA, Title VII and other federal anti-discrimination laws.

Mr. Trapp said “I am thrilled to again have the opportunity to work with the top-notch legal professionals at Conn Maciel Carey.” According to Mr. Trapp, the expertise of a boutique firm focused on OSHA and other labor and employment matters “complements my experience handling labor and employment issues. I look forward to helping strengthen the team’s ability to provide exceptional knowledge and insights to labor and employment clients, and expanding the firm’s presence in the Midwest.”

Mr. Trapp is perhaps best known as a leading authority on multi-employer pension withdrawal liability.  His articles on withdrawal liability and other labor and employment issues have been published in respected legal publications.

“I have worked with Mark for over a decade at various law firms, so I am excited that he has joined our boutique practice that focuses on positive client solutions and effective client service.  His unique knowledge of traditional labor issues and multi-employer pension disputes is unparalleled and he has proven to be a creative and out-of-the-box adviser when counseling clients,” Kara M. Maciel, Chair of the Labor & Employment Practice reported.