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

House Passes Amendment to Fair Labor Standards Act Permitting Private Sector Comp Time

WFFA Pic

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

District Court Judge Grants Injunction Putting DOL Overtime Rule on Hold

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.  stop-sign-2

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. [1]  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.

Continue reading

Final Overtime Rule Creates New Challenges in Limiting Off the Clock Work

“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 hand-apple-iphone-smartphoneFinal 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

D.C. and Maryland Set to Increase Minimum Wage on July 1, 2016

As ostack of moneyf 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.

Maryland

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

Struggling with the New Overtime Rule?  Here is One Compensation Option for Newly Non-Exempt Employees

time clockIn 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 Final Overtime Rule Explained:  What Every Employer Must Do Next

Increasing Money GraphThe 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.

Significantly, the rule takes effect on Continue reading