The Final Overtime Rule Explained:  What Every Employer Must Do Next

By: Kara M. Maciel and Lindsay A. DiSalvo

shutterstock_losing moneyAfter receiving over 116,000 comments on its Proposed Rule to revise the version of the Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees Rule (“Overtime Rule”) promulgated in 2016, the U.S. Department of Labor (“DOL”) has issued a final, revised version of the Overtime Rule.  On September 24, 2019, the DOL announced the final Overtime Rule (“revised Overtime Rule”) through a press release touting the impact of the Rule and highlighting its major changes.  Notably, the press release reflects the significant impact the change in the threshold salary level for the white-collar exemptions is projected to have on employees – lowering the number of employees likely to become eligible for overtime pay from 4.2 million under the 2016 version of the Overtime Rule to 1.3 million.  This is due to the DOL decreasing the salary threshold level from $913.00 per week to $684.00 per week under the revised Overtime Rule.    

Significantly, the Rule takes effect on January 1, 2020 – in just under 100 days.  This timeline does not provide for a phase-in period as advocated for by many commenters and trade associations, and is a much shorter time period than 192 days employers were given in 2016 when the Overtime Rule was promulgated, and the 120 days given in 2004.  As justification for this timeline, the DOL stated that 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

Join us for a Briefing on the Impact of the Presidential Election on Employment Law and OSHA in 2017

5b0ac5ef-4c7d-4ae7-9d4a-2a1cffe3a587Newly elected President Trump will have a significant impact on shaping the executive agencies that impact employers, unions and the workplace in general, not to mention the fact that he may hand pick up to four new Supreme Court Justices. There is no doubt that legislation, regulation, and court cases during the Trump Administration will have lasting effects on employers in 2017 and beyond.

On February 20, 2017, Conn Maciel Carey’s Labor & Employment and OSHA attorneys will host an in-person briefing in its Washington, DC office to discuss the practical impact of the Trump Administration on the legal landscape in key areas for the workplace, including:

  • The effort to repeal the Affordable Care Act;
  • The rollback of regulation and former President Obama’s Executive Orders, including the Department of Labor’s overtime rule, the persuader rule, and OSHA’s anti-retaliation rule;
  • The National Labor Relations Board under Philip Miscimarra’s Chairmanship;
  • Anticipated court decisions from the Supreme Court, including whether employers can include class action waivers in arbitration agreements;
  • OSHA enforcement, regulatory and policy developments to expect during the Trump Administration’s inaugural year.

Networking will start at 8:30 am, and the briefing will last from 9:00 am – 10:30 at 5335 Wisconsin Avenue, NW, Suite 660.  To register for this complimentary briefing, please contact info@connmaciel.com.

We hope to see you there!

Exploring FLSA Section 7(i) — Can You Use it to Exempt Commissioned Employees from Overtime?

A common question we often get asked by our health and country club clients is whether their trainers, tennis and golf professionals, and other similar employees may be considered commissioned employees of “retail or service establishment,” and thus exempt from overtime pay pursuant tgolf-pro-shopo Section 7(i) of the Fair Labor Standards Act (“FLSA”).  The short answer is “probably yes,” but there are certain criteria that must be met to ensure compliance with the FLSA.

By way of background, the FLSA generally requires an employer to pay overtime to any non-exempt employee who works over 40 hours during a workweek.  However, as readers of this blog are likely already aware, certain “white collar” employees, such as executive, administrative, and professional employees, may be exempt from the FLSA’s overtime provisions.  The FLSA also exempts from overtime certain employees who are paid mostly on commissions rather than a salary basis.  Specifically, Section 7(i) of the FLSA creates an overtime exemption that applies when all three of the following conditions are met:

  1. The employee is employed by a retail or service establishment;
  2. The employee’s regular rate of pay exceeds one and one half times the minimum wage for every hour worked in a workweek in which any overtime hours are worked; and
  3. More than half of the employee’s total earnings in a “representative period” (of not less than one month) consists of commissions on goods or services.

Continue reading

Trump Picks Fast Food Restaurant CEO Andrew Puzder as Labor Secretary: Seismic Shift Is Anticipated in Agency’s Rulemaking and Enforcement

By: Andrew J. Sommer

President-elect Donald Trump has chosen Andrew Puzder as his Secretary of Labor, according to Trump’s transition team. Puzder is the CEO of CKE Holdings, the parent company of Carl’s Jr. and Hardee’s, and has been a vocal critic of the Obama Labor Department’s overtime regulations and efforts to increase the federal minimum wage. As labor secretary, Puzder will oversee the federal apparatus that investigates violations of minimum wage, overtime and workplace safety laws and regulations.

An increase in the federal minimum wage and an expansion in overtime eligibility have been priorities for the outgoing Secretary of Labor Thomas Perez. On Perez’s watch, the DOL has issued new overtime regulations increasing the minimum salary threshold level in order to qualify an employee as exempt from overtime. Puzder has denounced this new overtime rule, the status of which is presently uncertain after a Texas federal court temporarily blocked the rule from taking effect. The U.S. Court of Appeals for the Fifth Circuit has just granted the DOL’s request to expedite its appeal from the preliminary injunction order. The appeal is unlikely to be decided before Donald Trump is inaugurated as the next president on January 20, 2017.

Accordingly, under Puzder’s leadership, the DOL could very well withdraw the pending appeal before a decision is issued by the Fifth Circuit and otherwise not support the new overtime rule. Even if the overtime rule eventually takes effect, Puzder’s arsenal will include the authority to engage in rulemaking to roll back or modify the overtime rule, consistent with the notice and comment process under the federal Administrative Procedures Act. In an op-ed piece earlier this year in Forbes, Puzder said that the overtime regulation will “add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.” He expressed the opinion that this cost cutting would result in reduced opportunities, bonuses, benefits and promotions.

Other immediate measures that Puzder could take to shift or reverse the direction of the DOL would be to modify interpretive guidance issued under the Obama Administration. For instance, Puzder will likely modify an administrative interpretation by the DOL’s Wage and Hour Division regarding the joint employer doctrine. Under Obama, the DOL has cracked down on employee misclassification and been vocal about its belief that most workers should be treated as employees, insinuating that in a majority of cases, it would hold employers accountable for the specific obligations of an employer-employee relationship. The Wage and Hour Division has offered an administrative interpretation under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act that broadened the definition of joint employment. Under that doctrine, two employers may be responsible for the violations of each other because of how they jointly use the same employees or because of the control an employer exercises over the employees of an intermediary employer such as a contractor or staffing agency.

Puzder’s authority to impact regulatory and enforcement actions will extend to the DOL’s administration of guest worker programs, allowing foreign nationals to immigrate to the United States and work on a temporary basis, as well as the DOL’s coordination with the Department of Homeland Security over the enforcement of immigration laws in the workplace. It is uncertain what will happen under a Labor Secretary Puzder, whose past immigration stance is at odds with the President Elect’s. In an op-ed piece Puzder authored in The Wall Street Journal last year, he counseled Republican presidential candidates to come up with a vision of how to deal with immigration, including the 11 million undocumented workers already in the country. He supported a “path to legal status” that would be “short of citizenship” so long as the undocumented pass a background check, pay a fine and learn English, among other measures.

Ultimately, employers may benefit most from Puzder’s authority to reallocate agency resources away from agency enforcement actions for labor law violations. Under Obama, the Wage and Hour Division has been very active in enforcing labor laws and investigating industries and workplaces with a history of labor law violations. Puzder could slow down enforcement and conduct fewer investigations. The first few months of a Puzder Labor Department may be telling as we continue to read the tea leaves to assess how employers will be affected by the change in administration.

States and Businesses Seek Injunction to Prevent DOL Overtime Rule From Taking Effect on December 1

gavelBy:  Kara M. Maciel and Dan Deacon

On September 20, 2016, business groups and states filed two lawsuits in the U.S. District Court for the Eastern District of Texas challenging President Obama’s new overtime rule that is set to take effect December 1, 2016 .   Twenty-one states banded together to challenge the U.S. Department of Labor’s (“DOL”) new overtime exemption rule in States of Nevada et al. v. United States Department of Labor et al, Case No. 1:16-cv-004070., and the U.S. Chamber of Commerce, leading a coalition of 50 national and Texas business groups, filed a similar lawsuit in Plano Chamber of Commerce et al. v. Thomas Perez et al. Case No. 4:16-cv-00732.  The two lawsuits argue that DOL unconstitutionally overstepped its authority to establish a federal minimum salary level to qualify for the Fair Labor Standards Act’s (“FLSA”) white collar exemption and violated the Administrative Procedure Act (“APA”).

The New Rule & its Impact on Employers

The long awaited controversial rule was released in May 2016 to the disdain of employers, as we’ve explained in prior blog posts.  The most significant change in the final rule is the new $47,476.00 minimum threshold salary required to qualify as an exempt employee, representing more than a 100% increase from the present level and a huge financial undertaking for employers.  All employers throughout 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