DOL Announces FLSA Self-Audit Program

1On March 6, 2018, the U.S. Department of Labor (“DOL”) announced that it would soon be implementing its Payroll Audit Independent Determination (“PAID”) program, which will permit employers to self-report potential violations of the Fair Labor Standards Act (“FLSA”) without fear of exposure to liquidated damages.  Although the DOL’s news release frames this program as a boon for employees as they can receive back wages without the substantial cost of litigation, the program could also be beneficial to certain employers.  Indeed, the program is designed to encourage proactive resolution of potential minimum wage and overtime violations by limiting potential damages to solely the back wages owed.  The DOL’s Wage and Hour Division (“WHD”) intends to employ the PAID program nationwide for 6 months, at which time it will evaluate the effectiveness of the program and its future options.

Under the FLSA, an employee may be entitled to penalties and liquidated damages if she can successfully show that her employer failed to pay the required minimum wage or make overtime payments.  The FLSA establishes that liquidated damages are equal to the amount of back wages owed.  In other words, an employer could be required to pay double the employee’s back pay.  Courts have generally held there is a presumption in favor of liquidated damages unless the employer can show (1) it acted in good faith; and (2) it had reasonable grounds to believe it was complying with the law.  This puts a burden on the employer to provide evidence that substantiates both these elements.  If it cannot present such evidence, the employer faces a substantial financial burden in damages owed, particularly in the case of a collective action – a very common occurrence under the FLSA. Continue reading

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

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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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.

2018 Legislative Update for California Employers

By: Andrew J. Sommer and Daniel C. Deacon

california-flagCalifornia has had yet another banner year closing the 2017 legislative session with a spate of new employment laws imposing additional compliance obligations on employers.  Bucking the anti-regulatory tide in Washington, DC, California has passed dozens of new laws impacting both private and public sector employers.  Overall, Governor Jerry Brown has vetoed just over 12% of the bills passed by the California legislature this year.

Conn Maciel Carey LLP provides this summary of key new employment bills, regulations and local ordinances impacting California private sector employers.  Unless otherwise indicated, these new employment laws take effect January 1, 2018.

 Statewide “Ban the Box” Law

Continuing a national trend at the state and municipal level, California has passed Assembly Bill (AB) 1008, a statewide “ban the box” law limiting any inquiry into an applicant’s criminal history.  AB 1008 applies to employers with five or more employees, and is markedly different from San Francisco’s “ban the box” ordinance.

The statewide law makes it unlawful for an employer to inquire into or consider an applicant’s criminal history, including seeking such information on any job application, before the employer has made a conditional offer of employment.  In addition, an employer that intends to deny an applicant a position solely, or in part, because of the applicant’s conviction history ascertained after the conditional job offer has been extended must make an individualized assessment of whether the applicant’s conviction history has a “direct and adverse relationship” with the specific duties of the applied for position.  In making this assessment, the employer must consider:  (1) the nature and gravity of the offense or conduct; (2) the time that has passed since the offense or conduct and/or completion of the sentence; and (3) the nature of the job held or sought.

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Best Practices for Handling Trade Secret, Restrictive Covenant, and Choice of Law Issues in Employment Agreements [Webinar Recording]

On November 15, 2017, Andrew J. Sommer and Daniel C. Deacon of Conn Maciel Carey’s national Labor and Employment and OSHA – Workplace Safety Practices presented a webinar regarding Best Practices for Handling Trade Secret, Restrictive Covenant, and Choice of Law Issues in Employment Agreements.

The webinar tackled a number of different subjects associated with these topics and reviews a number of best practices when dealing with trade secret, non-compete, and choice of law issues.  The meaning of “trade secret” is essential in properly classifying and protecting this type of information, and this webinar discusses how different courts interpret the meaning of trade secret and what types of information are typically considered a protected trade secret.  In addition, the webinar addresses the numerous factors to consider when drafting a restrictive covenant for employees during the hiring process, how to protect a business when hiring a prospective employee under a restrictive covenant with a former employer, and steps to take to protect your business when you terminate an employee with a restrictive covenant.  Furthermore, this webinar examines the nuances of choice of law issues and how conflicts of law rules in different jurisdictions may affect the validity of a restrictive covenant or other aspects of an employment agreement.  It is critical that employers carefully draft employment agreements in consideration of all of these factors to ensure that its trade secrets are protected and the policies maintained in its employment agreement are enforced.

Here is a link to a recording of the webinar.

This webinar concludes Conn Maciel Carey’s 2017 Employment Webinar Series.  If you missed any of our prior webinars or would like a refresher on any of our prior topics, you can visit Conn Maciel Carey’s Webinar Recordings.

We look forward to presenting on a number of new and interesting topics in 2018 when we commence our 2018 Employment Webinar Series after the New Year.  We hope you will join us!


Accommodating Pregnancy Under State and Federal Law

shutterstock_pregnant employeeLaws requiring both public and private employers to accommodate their pregnant employees have become a trend over the past several years.  Indeed, this past July, Massachusetts became the 22nd state, along with the District of Columbia, to pass a law that requires an employer to engage in the interactive process and provide an accommodation to a pregnant employee, where that accommodation would not put an undue burden on the employer.  It joins the states of Nevada, Vermont, and Washington, all of which passed similar laws in 2017.  Additionally, many of these state laws provide clear protections against discrimination based on pregnancy and pregnancy-related conditions.  Although the Americans with Disabilities Act (“ADA”) does cover some impairments related to pregnancy and the birth of a child, state laws regulating pregnancy accommodation generally expand that coverage to pregnancy, child birth and related conditions that may not rise to the level of a disability under the ADA.

Pregnancy Accommodation Under Federal Law

Title I of the ADA prohibits discrimination against employees or applicants due to their disability or perceived disability, and requires employers to accommodate disabled employees if they can still perform the essential functions of their job.  The ADA applies to employers with 15 or more employees and mandates that those employers accommodate a disabled employee’s condition as long as the accommodation would not cause undue hardship on the company.  Under the ADA, pregnancy itself is not a disability; however, the ADA does cover impairments related to pregnancy and birth that would qualify as disabilities under the ADA.

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