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DOL Overtime Threshold Might Be $47K (Instead of $50K)

The Department of Labor’s (“DOL”) proposed new rules regarding the administrative, executive and professional exemptions (“EAP Exemptions”) under the Fair Labor Standards Act have created quite a stir, mainly because the DOL has proposed to raise the salary threshold for the EAP Exemptions from $23,660 to $50,440.  In addition, the DOL has also proposed to raise the salary threshold for the highly-compensated employee exemption from $100,000 to $122,148.  According to the DOL, these increases to the salary thresholds might cause as much as 4.7 million workers in the country to lose their exempt status.

That’s right.  4.7 million people.  Losing their exempt status.  Can you say “oh no…”?

oh no

Just recently, news has leaked from a “Democratic staffer” that the salary threshold for the EAP Exemptions might be raised to $47,000 per year (instead of $50,440).  While this figure it not as high as originally proposed, it is still going to be double the current salary threshold amount.  So yeah, you can still say “oh no…”

Otherwise, it sounds like the DOL is putting its finishing touches on the new FLSA rules and could be issuing the rules shortly.

 
New DOL Fact Sheet on Joint Employers and the FMLA

The U.S. Department of Labor just issued a new fact sheet discussing Joint Employment and Primary and Secondary Employer Responsibilities Under the FMLA.

Under the FMLA, two or more employers can simultaneously employ an individual, making them joint employers of the individual.  Joint employment exists when an employee is employed by two (or more) employers such that the employers are responsible for compliance with the FMLA.  The analysis for determining joint employment under the FMLA is the same as under the FLSA.

Here are some highlights from the new fact sheet:

  • Where joint employment exists, one employer will be the primary employer while the other(s) will be the secondary employer(s).  Determining which employer is primary will depend on (1) who has authority to hire, fire, place and assign the worker; (2) who decides how, when and the amount the employee is paid; and (3) who provides the employee’s leave or other employment benefits.
  • In the case of temporary placement or staffing agencies, the agency is most commonly the primary employer.
  • Employees who are jointly employed get counted towards the 50-employee threshold for coverage under the FMLA for all employers.
  • For purposes of determining whether an employee works at a worksite where the employer empoys at least 50 employees within a 75 miles radius, the employee’s worksite is the primary employer’s office from which the employee is assigned.
  • Primary employers are responsible for giving required notices to the employees, providing FMLA leave, maintaining group health insurance benefits, restoring the employee to the same/equivalent job upon return from leave, and preserving all records required under the FMLA.
  • Secondary employers are prohibited from interfering with an employee’s exercise or attempt to exercise FMLA rights, or from discriminating against such an employee.

The end of the fact sheet also contains a helpful chart summarizing the responsibilities of primary and secondary employers.  A copy of the fact sheet can be viewed here:  DOL Fact Sheet #28N.

 
New Regulatory Requirements for Federal Contractors Take Effect

This is a brief summary of regulatory changes that recently took effect for federal contractors.

federal_contracts_left

First, the pay transparency requirements under Executive Order 13665 just took effect earlier this week and apply to covered contracts entered into or modified on or after January 11, 2016.   As a reminder, EO 13665 prohibits federal contractors from discharging or otherwise discriminating against any employee or applicant because the individual has inquired about, discussed, or disclosed his own compensation or the compensation of another employee or applicant.  In addition, covered contractors must include a Pay Transparency Nondiscrimination Provision - and are prohibited from including any “pay secrecy” policies – in their employee handbooks.  The Pay Transparency Nondiscrimination Policy must use the language provided by the Office of Federal Contracts Compliance Programs, which can be found here:  PTNP.  (Also, as a reminder, the National Labor Relations Act also provides employment protection for individuals who discuss wages and other terms and conditions of employment with others.)

In addition, there is a new EEO is the Law Poster Supplement that federal contractors need to utilize in conjunction with the existing EEO is the Law poster.  The supplemental poster includes updated language regarding Executive Order 11246 with respect to gender identity and sexual orientation discrimination, pay secrecy, disability discrimination, and protected veterans.

Finally, the minimum wage for federal contractors who are covered by EO 13658 has increased to $10.15 per hour (or $5.85 per hour for tipped employees).  The current minimum wage poster for federal contractors can be found here:  Federal Contractor MW.

 
Holiday Office Parties

Happy Holidays, everybody!

As we are all aware, holiday parties are an excellent way for employers to boost employee morale, build camaraderie, and celebrate a successful year of business.  At the same time, however, employers should be cautious about the pitfalls that throwing a holiday party can bring.

Alcohol

Employers should take caution when serving alcohol at a company-sponsored holiday party.  First and foremost, employers should make sure that somebody is checking the ID’s of anybody who consumes alcohol.  The purpose of checking ID’s is to avoid serving alcohol to a minor.

Second, employers should also make sure that any individual who is visibly intoxicated is not served any more alcohol.  The purpose of this is to avoid “dramshop” type liability for anybody who drinks at a company-sponsored party and then attempts to drive afterward.  It is also a good idea to provide several non-alcoholic drink options, so guests don’t feel like alcoholic drinks are their only option.  Some employers also limit the amount of drinks their employees can consume by the use of drink coupons.

Third, employers should also provide guests with alternative forms of transportation if they are unable to drive, such as cab rides or designated drivers.

Fourth, in order to avoid some of the problems mentioned above, employers should remind employees (and their guests) to drink responsibly.

Finally, employers should also review their insurance policies to determine if they can serve alcohol at a company-sponsored party in the first place.

Sexual Harassment

Oftentimes, when employees attend company-sponsored parties, they forget they are still in a work-related setting.  Once you add some alcohol into the mix, there is a potential that employees may engage in conduct that would violate a company’s anti-sexual harassment policy.  Therefore, employers should make sure to remind employees that the party is work-related, and that all workplace rules still apply at the party.

For example, while it may be festive to have somebody dressed in a Santa Claus suit during the event, employees should not be “sitting on Santa’s lap” because such behavior could be deemed inappropriate under Hawaii and Federal sexual harassment laws.  As another example, employees should be reminded to dress appropriately, so that they don’t dress in a manner that could be deemed inappropriate for a work-related event.

Finally, employers are warned to NOT hang a mistletoe at the party.  See, Exhibit A:

Voluntary Attendance

Employees should be reminded that the holiday parties are completely voluntary, and therefore, they are not required to attend the event.  (You don’t want to be hit with a workers’ comp or wage and hour claim, right?)

Raffles and Prizes

Raffle drawings are also fun way to spruce up a holiday party (as long as the company is giving away good prizes!), but employers should be aware that most state laws consider raffles to be a form of gambling.  One common loophole to such gambling laws, however, is to allow employees to participate in the raffle for free.  As a practical matter, offering the opportunity to enter the raffle for free might help a company avoid violating gambling laws, and most employees won’t actually request a free raffle ticket anyway (unless they happen to be named “Scrooge”).

Speaking of prizes…employers are also advised to make sure that any gifts they provide to employees are compliant with IRS rules.  Generally speaking, any prizes given to employees should have a “de minimus” value; otherwise, it must be taxed.

Date of Party

Finally, employers should weigh the pros and cons of having a holiday party on a weekday versus the weekend.  If the party is on a weekday, the employees might not drink as much alcohol or get too rowdy, which alleviates some of the concerns above.  On the other hand, if employees do drink too much alcohol or stay up late, they might be unproductive at work the next day.  If the party is on a weekend, employers do not have to worry about employees’ loss of productivity on the day after the party, but there is a high likelihood the employees will consume more alcohol than they would on a weekday.

 
New DOL Rules Regarding Exempt Employees Expected in Late 2016

Earlier this year, the United States Department of Labor (“DOL”) issued a Notice of Proposed Rulemaking which would more than double the salary basis requirement under the Fair Labor Standards Act (“FLSA”).

salary-increase

Currently, an employee can be exempt from the FLSA’s requirements if he (1) performs certain duties (e.g. executive, administrative, professional) and (2) is paid a guaranteed salary of $455 per week (or $23,660 a year).  Under the DOL’s proposed rules, that salary guarantee would increase to around $970 per week (or $50,440 a year), which means that any executive, administrative, or professional employee who is paid under $50,440 a year would no longer be exempt.  In addition, the DOL has also proposed a couple of alternative escalator clauses, which would automatically update the salary threshold amount each year.

Ever since the DOL issued its proposed rules, one of the questions that has been on virtually every employers’ minds is “When are the final rules going to be issued?”   Many employers are trying to set their operating budgets for 2016, and the uncertainty surrounding the timing of the new rules and the new salary basis amount has been a cause of frustration.

At a recent American Bar Association conference, Solicitor of Labor Patricia Smith reportedly stated that the Final Rules are not expected before “late 2016.”  While it is not clear how soon the rules would take effect after they are issued, the federal rulemaking process requires a notice period of at least 30 days, or 60 days for any  “significant” or “major” rules (and to me, doubling the salary basis requirement should certainly be considered significant and major).