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

The Office Holiday Party: Best Practices to Avoid Legal Trouble

shutterstock_holiday party glassesThe holiday season is here, and employees are looking forward to celebrating with their family and co-workers.  However, the office holiday party – an anticipated yearly tradition in many workplaces – has now become a cause for concern for employers, especially amidst the current national conversation about workplace sexual harassment.

What is the result?  Many companies are cancelling holiday party plans, or hosting alternative parties with less alcohol and more day light.

There is certainly nothing wrong with hosting a holiday party, and employers should not be discouraged from doing so.  Hosting a holiday party for your employees is beneficial, as it helps boost employee morale and demonstrates 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

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

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

Federal Regulatory Activity Remains Active for Employers in 2016

2015 has been a busy year for government agencies in terms of Labor & Employment Rulemaking, and this trend will only continue into the New Year. Thus, as the holiday season swings into full gear and the end of 2015 is right around the corner, we want to take this opportunity update you on important Labor & Employment regulations rules that are set to be released in the coming months.

Rules issued by the U.S. Department of Labor’s Wage and Hour Division

  • Revisions to Overtime Regulation. Department of LaborAs we have previously explained here, the Wage & Hour Division (WHD) of the U.S. Department of Labor (DOL) has released proposed regulations that will dramatically expand the number of workers who could be eligible for overtime. Specifically, the WHD has proposed raising the minimum salary threshold for employees to be exempt from overtime from the current level of $455 per week to $970 per week, or $50,440 per year. In addition, the WHD is considering whether it should modify the existing “duties” test in order for a worker to be exempt from overtime. There have been nearly a quarter of a million comments submitted to the WHD regarding these new regulations. It is currently anticipated that the WHD will issue its final regulations in the summer of 2016.
  • Impact of the Use of Electronic Devices by Nonexempt Employees on Hours Worked. The DOL plans to issue a Request for Information (RFI) to gather information about employees’ use of electronic devices to perform work outside of regularly scheduled work hours and away from the workplace, as well as information regarding last minute scheduling practices being utilized by some employers that are made possible in large part by employees’ use of these devices. While this is not intended to become an actual rule at this time, the information gathered may be used to support some form of guidance in conjunction with the overtime regulation. The RFI is expected that to be issued in February 2016.
  • Regulations Requiring Federal Contractors to Provide Paid Sick Leave. Executive Order 13706 requires federal contractors and all levels of subcontractors to provide paid sick leave at the rate of one hour per every 30 hours worked, up to 7 days annually. Contractors include any company merely leasing space from the federal government such as a day care center in a federal office building. The Executive Order specifies the purposes for which this leave must be available, which include both the employee’s health and those of their family. The terms of when this leave can be used are taken directly from the Healthy Families Act, including making the leave available to deal with domestic violence. It is anticipated that a proposed regulation implementing this Executive Order will be issued in February 2016.

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Hospitality Group Nixes Tipping at its Restaurants — Is This the Wave of the Future?

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 GroupWaiter Serving at Restaurant 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.

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