Many states are beginning to re-open their economies, and employers are resuming or increasing business operations in some fashion. As employers make this transition, there are several key employment considerations that employers should pay close attention to. Below is an overview of some of the topics employers should carefully analyze when reopening or increasing business operations.
Exempt and Non-Exempt Employee Classification Issues
As employers begin to ramp up business or begin plans to do so, employers should carefully evaluate whether exempt employees performing a majority of work on non-exempt tasks still meet the administrative exemption Continue reading →
Although 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 →
On May 2, 2017, the U.S. House of Representatives passed the Working Family Flexibility Act of 2017 – a bill that would amend the Fair Labor Standards Act (FLSA) to permit private employees to take paid time off instead of receiving monetary overtime compensation when working more than 40 hours per week. While uncertainty looms over the fate of the bill as it moves to the Senate, if the bill is passed and becomes law, it would be a major amendment to the FLSA.
Private sector employers must be vigilant of this bill as it progresses through Congress and be prepared to implement procedures to offer comp time instead of overtime wages, and establish a system to keep track of the amount of comp time employees accrue. Continue reading →
In late September 2016, twenty-one states led by Texas and Nevada, along with the U.S. Chamber of Commerce and other business groups, challenged the U.S. Department of Labor’s (“DOL”) new overtime exemption rule set to take effect on December 1, 2016, and sought a nationwide injunction preventing the rule from taking effect.
The states argued that the DOL unconstitutionally overstepped its authority by establishing a federal minimum salary level that more than doubled the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (“FLSA”) white collar exemption, and that the rule would result in a substantial increase in employer operating costs.  In particular, the states took issue with the policy behind the rule change, arguing that salary level alone does not reflect the type of work an employee performs, and that the DOL’s regulation disregarded the text of the FLSA by imposing a salary threshold without regard to whether an employee actually performs bona fide executive, administrative or professional duties.
On Tuesday November 22, 2016, U.S. District Judge Amos Mazzant of the Eastern District of Texas granted the states’ preliminary injunction, stopping (or at least delaying) the DOL from implementing the rule that would have expanded overtime protections to more than 4 million employees nationwide.
“Off-the-clock” work has become an ever increasing concern for employers in the past few years as the use of smartphones has permeated into all areas of our lives, including work. The U.S. Department of Labor’s release of its Final Rule revising the “white collar” exemptions of the Fair Labor Standards Act (“FLSA”) has only served to make this issue even more significant.
As reported in this blog, the Final Rule doubles the minimum salary threshold level for an employee to qualify as exempt from overtime and thus will dramatically increase the number of workers who will now receive overtime pay, resulting in a significant additional financial burden for employers. Thus, as an employer, the last thing you want to do now is to inadvertently increase your overtime costs even more. As a result, employers need to seriously consider reviewing their current practices regarding employee use of smartphones during non-working hours. Continue reading →
As of July 1, both Maryland’s and the District of Columbia will increase the minimum wage. Maryland’s minimum wage will increase to $8.75 per hour while the District of Columbia’s will increase to $11.50 per hour. Employers should be prepared to implement these changes on July 1 to avoid wage complaints and make the appropriate changes to their business models to remain competitive.
The raise in the Maryland minimum wage is a result of legislation that was passed in May of 2014. The Maryland Minimum Wage Act of 2014 calls for the minimum wage to ultimately be raised to $10.10 per hour by July of 2018. The raise that will go into effect in less than two weeks is a .50 cent increase from the current $8.25 minimum wage. Although the minimum wage is set to increase, there is no increase in the amount employers are required to pay tipped employees. Therefore, employees receiving over $30 per month in tips only need to be paid $3.63 per hour, and the remainder may be supplemented by the tip credit.
Employers in Montgomery County and Prince George’s County, Maryland, the two counties neighboring the Washington, D.C. area, should also take note that the counties Continue reading →
In response to the final overtime rule, which increases the minimum salary level to qualify for the white collar exemptions under the Fair Labor Standards Act (“FLSA”), employers must begin to evaluate and alter their current employee classifications and pay structures in preparation for the rule’s December 1st effective date. For many employers, it may not be possible to raise every exempt employee’s salary level to the new minimum of $47,476.00, over double the current threshold level of $23,660.00. If employers cannot raise salary levels, exempt employees will have to be reclassified as non-exempt employees entitled to overtime pay. This can be a very challenging situation for employers because many exempt employees are expected, and regularly do, work a certain amount of overtime each week to complete the required responsibilities of their positions. Furthermore, exempt employees are used to being paid on a salary basis with some level of certainty in their take home pay.
To address these issues and create some predictability for both the employer and the employee, one option is to implement a compensation structure that pays certain non-exempt employees an annual salary factoring in a certain amount of overtime. The FLSA permits non-exempt employees to be paid on a salary basis as long as Continue reading →
The day that has been looming over employers for the past 2 years since President Obama directed the U.S. Department of Labor (“DOL”) to update and modernize the existing Fair Labor Standards Act’s (“FLSA”) white collar exemptions has finally arrived. Today, the DOL released its final rule revising the regulations governing who is exempt from overtime, along with guidance on its major provisions. The final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, largely reflects what the DOL had proposed in 2015, with some important revisions, including a slightly lower salary threshold level at $47,476.00. However, that salary floor still sits at more than double the current salary threshold of $23,660.00.
There is no doubt that the final rule will dramatically increase the number of workers who will now qualify for overtime pay, forcing every employer in the country to carefully assess how to handle the additional financial burden. Indeed, the DOL projects that the rule will extend overtime eligibility to 4.2 million workers.
As we transition into 2016, it is essential that employers are aware of and plan for changes to employee wage requirements and the increased emphasis on wage and hour compliance. For at least the past decade, the number of wage and hour claims filed in federal courts has increased exponentially and 2016 looks like it will be much of the same with fuel for a significant rise. In Fiscal Year (FY) 2000, employees filed only 1,935 claims for violations of the Fair Labor Standards Act. At the end of FY 2014, that number had increased by more than 420% to 8,160 wage and hour lawsuits filed in federal court. In FY 2015, the trend continued with 8,781 wage and hour cases based on data released by a national law firm from the Federal Judicial Center. This represents a 7.6% rise in these types of suits from 2014. With employees filing wage and hour claims on a much more frequent basis, compliance is of even greater importance and 2016 looks to present some additional challenges on that front.
An Increasing Minimum Wage
Last year, many employers saw an increase in the required minimum wage at the state level, as well as a rise at the federal level for federal contractors. For many states and federal contractors, 2016 will bring another round of higher minimum wages. Continue reading →
It is no secret that during the last few years, we have seen a surge in class action lawsuits alleging a variety of improper tip practices against restaurants and other employers in the hospitality industry. These lawsuits are typically brought under both the federal Fair Labor Standards Act (“FLSA”), which governs which employees are eligible to share in tips, as well as analogous state and local laws. These laws are extremely nuanced and complex, with violations often resulting in significant liability.
For these and other reasons, on October 14, 2015, Danny Meyer’s Union Square Hospitality Group announced that starting in November, it will begin eliminating tips at each of its thirteen full-service venues, and implement a new program called “Hospitality Included.” While several high-end restaurants in New York City and Los Angeles have already eliminated tipping the past few years, this new program is extremely significant, as it is the first time a major American restaurant group will institute a zero-gratuity policy. You can read more about Danny Meyer’s program here.