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Nationwide Injunction Imposed Against New FLSA Rules

It looks like Christmas has come early for employers all around the country.  On November 22, 2016, a federal judge from Texas issued a nationwide preliminary injunction prohibiting the U.S. Department of Labor from enforcing its new rules regarding the executive, administrative, and professional (“EAP”) exemptions under the Fair Labor Standards Act.

Hooray!

hooray

For all those employers who were going to be converted to non-exempt status solely because of the increased salary threshold, those employees can remain exempt.  For those employees who were set to receive a pay increase due to the new FLSA rules, employers will need to make the tough decision on whether they will still increase employees’ salaries.  Some factors to consider are whether the pay increases have already been implemented or announced, the potential impact on morale, and the company’s budget.

To view a copy of the court’s decision, please click on the following link:  FLSA Rules Preliminary Injunction.

 
Two Lawsuits and Several Bills Challenging the DOL’s New FLSA Rules

UPDATE:  OMG!  Contrary to very-widely-held speculation, a federal district court actually did issue a preliminary injunction against the new FLSA rules!  And, the injunction applies nationwide!  Click here for further details:  Nationwide Injunction Imposed Against New FLSA Rules

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This has been a busy couple of weeks for the U.S. Department of Labor’s (“DOL”) new FLSA rules.  First, two lawsuits have been filed in a Texas federal court to seek an order preventing the DOL from enforcing its new overtimes rules.  In addition, a House bill - HR 6094 – is making its way through Congress to postpone implementation of the new FLSA rules for six months.  The new rules are currently set to take effect on December 1, 2016, which is just about two months away.

lawsuit

The first lawsuit was filed by 21 states and argues that the DOL overstepped its authority by raising the salary level for the FLSA’s Executive, Administrative and Professional exemptions (“EAP exemptions”).  The lawsuit argues that, instead of raising the salary level, the DOL should have reexamined the duties of the EAP exemptions.  In addition, the 21 states also challenged the automatic increases that are set to increase every three years “without regard for current economic conditions or the effect on public and private resources.”  Finally, the lawsuit posits that new DOL’s rules violate the Tenth Amendment because employment budgetary matters such as the pay requirements of state employees are subject to state sovereignty.

The second lawsuit was filed by a coalition of business groups, including the National Federal of Independent Businesses (“NFIB”) and several Chambers of Commerce.  This lawsuit argues that setting new salary threshold at an exceedingly high level and scheduling automatic increases both violate the Administrative Procedure Act.

(Both lawsuits have been assigned to Judge Amos Mazzant, who was appointed to the bench by President Barack Obama.  So, that’s not exactly great news…)

Finally, there are several bills pending in Congress that seek either (1) a delay of the new rules or (2) a phase-in of the increased salary threshold over several years.  Specifically, HR 6094 and S. 3462 both seek a six-month delay of the effective date of the new rules and HR 5813 and S. 3464 seek to phase-in the increases over several years.

Recently, the U.S. House of Representatives just voted 241-177 in favor of passing HR 6094.  The bill will now go to the U.S. Senate for consideration.  However, President Obama has previously threatened to veto the measure if it is passed and the Office of Management and Budget issued a statement that “strongly opposes” the bill.

Therefore, despite all these legal challenges to the new FLSA rules, employers should plan to implement whatever changes they deem necessary by the December 1, 2016 effective date.

 
FAQ: Hepatitis A and the Workplace

Hawaii is currently experiencing a major outbreak of Hepatitis A.  At last count, nearly 140 individuals in Hawaii have been infected with the Hepatitis A virus (“HAV”).   As a result, many Hawaii employers are left with a myriad of questions about the rights of employers and employees with regards to HAV in the workplace.

Many People Thinking of Questions

Examples of questions raised by employers regarding Hepatitis A include the following:

  • What is Hepatitis A?
  • How long is a person with Hepatitis A contagious?
  • Who should get tested for Hepatitis A?
  • Is there a vaccine that can prevent Hepatitis A infection?

In addition, workplace-specific questions have included the following:

  • Does the Department of Health (“DOH”) require employees in certain fields of work, such as food service or healthcare, to obtain Hepatitis A vaccinations prior to working?
  • How does a food service employer know if an employee has been found to have been infected with Hepatitis A?
  • How does a food service employer know which employees are a “contact” that needs to obtain a negative IgM test before resuming work?
  • Can an employer require employees to get vaccinated?  If so, can the employer limit this requirement only to certain job classifications?
  • Is the employer required to pay for Hepatitis A vaccinations?
  • Is time spent getting a Hepatitis A vaccination compensable under wage and hour laws?
  • Is there anything else an employer can do to help prevent the spread of Hepatitis A?
  • If an employee informs his employer that he has tested positive for Hepatitis A, what if anything can the employer tell its employees?
  • If an employee informs his employer that he has consumed food from a business that has an infected employee, what can the employer do?
  • Where can I read more information about Hepatitis A?

In response to the multitude of questions that employers have been asking the past few weeks, the Hawaii Employers Council (“HEC”) has prepared a FAQ on HAV and the workplace.  The FAQ can be accessed on HEC’s website here:  HEC Issues FAQ for Hepatitis A and Workplace Issues.

For any questions that have not been answered in the FAQ, please feel free to contact me

 
Brace Yourselves: The DOL’s New Overtime Rules Are Here

On Tuesday, May 17, 2016, news broke that the U.S. Department of Labor (“DOL”) will be publicly issuing their final rules regarding overtime exemptions under the Fair Labor Standards Act on Wednesday, May 18, 2016.  The final rule will raise the salary threshold exemption from $23,660 to $47,476, which is more than double the current amount.  While the salary threshold is not quite the $50,440 that was initially proposed by the DOL, it is still certainly a very high number that will negatively impact many small businesses, non-profit organizations, and other companies that simply cannot afford to raise salaries to $47k for all of their exempt employees.

The final rule will also trigger automatic increases to the salary threshold every three years, beginning on January 1, 2020.  To put it lightly, this escalator clause could prove to be a real back breaker for many companies.  Under the DOL’s estimation, this would increase the salary threshold to $51,168 in 2020.  It is also not clear whether the DOL has fully thought about the implications of this escalator clause, but that is a different discussion for another day (see below).

In addition, the final rule also raises the salary threshold that is used for the “highly compensated employees” exemption from $100,000 to $134,004.   With the escalator clause, this number is estimated by the DOL to be $147,524 in 2020.

Finally, the new rule also provides that non-discretionary bonuses and incentive payments (including commissions) can be used to satisfy up to 10% of the new standard salary level, as long as they are paid on a quarterly basis (or sooner).

The new rules will take effect on December 1, 2016.  This gives employers just under 200 days to start preparing for these major rule changes.

Certainly, this is BIG NEWS!  And bad news, too.

In order to assist employers with understanding and preparing for the DOL’s final overtime rule, the Hawaii Employers Council (“HEC”) will be conducting a seminar/webinar next Wednesday from 8:30 to 10:30 am.  This program will contain three main components:  (1) a discussion of the current and new rule; (2) actions plans employers can implement in response to the new rule; and (3) how to communicate with employees about changes that are (or will be) implemented by the employer.  I will be presenting the first part of the program.  

Here are some links for further information:

Oh, one last thing – I should also note that the final rules do not make any changes to the duties tests for the Executive, Administrative and Professional exemptions.  Employers can probably view that as a good thing, although I do not think such changes were likely because the DOL did not include them in its proposed rule.  Therefore, implementing such changes would have probably been in violation of the Administrative Procedures Act anyway.

 
End of Legislative Session Update

The 2016 legislative session has come to a quiet ending.  As part of my duties at the Hawaii Employers Council (“HEC”), I track and report on bills that may be of particular interest to companies doing business in the State of Hawaii.  I also prepare a digest of all the bills I’m tracking and a separate article that highlights a few of the more significant employment-related bills.

For this year’s session, some of the employment-related legislation that Hawaii employers should know about address the following topics:

  • Social Media Privacy
  • Workers’ Compensation Treatment Plans
  • Penalties for TDI and Workers’ Compensation Violations
  • Additional Unemployment Insurance Benefits

The HEC legislative digest provides a brief overview of these bills, as well as all the other bills I have been tracking this legislative session.  The digest can be viewed here:  Legislative Digest After Sine Die.  The highlights article contains a more detailed discussion of employment-related bills that I found to be of particular significance.  The article is available to HEC members only, and can be accessed here:  Highlights of Bills After Sine Die.

All the bills that have been passed by the legislature have been sent to the Governor for his approval or veto.  The deadline for the Governor to give notice of any vetoes is June 27, 2016.  The deadline to make the actual veto is July 12, 2016.