WELCOME. Capital Conversations

Transcription

1 WELCOME Capital Conversations

2 Welcome Capital Conversations: New Overtime Rules & Paid Family Leave Program Title Sponsor: Presenting Sponsors: Event Sponsors: Print Sponsor: Supporting Sponsors: Construction Exchange of Buffalo & WNY GEICO LaBella Associates Niagara University

3 Panelists Mark Moldenhauer, Member Bond, Schoeneck & King PLCC Tim Finney, PHR Alcott HR Amy Hemenway, Partner Harter, Secrest & Emery LLP

4 Countdown to Compliance: DOL Limits Exemptions and Expands Overtime Eligibility Amy Hemenway, Partner Alcott HR

5 Key Changes in Final Rule U.S. Department of Labor published final rule on May 23, Increase minimum salary level for executive, administrative, and professional employees Allows limited use of non-discretionary bonuses, incentive payments, and commissions to satisfy minimum salary requirement Increase minimum salary level for highly compensated employees Automatic adjustments to minimum salary level Effective December 1, 2016

6 Current Salary Level Threshold Federal: $455 per week or $23,660 annually New York: $675 per week or $35,100 annually DOL concern that minimum wage is too close to the salary threshold. Year NYS Upstate Minimum Wage 40 Hours 45 Hours 50 Hours 2016 $9.00 $18,720 $22,230 $25, $10.40 $21,632 $25,688 $29, $11.10 $23,088 $27,417 $31, $11.80 $24,544 $29,146 $33, $12.50 $26,000 $30,875 $35,750

7 New Salary Level Threshold 40 th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region $913 per week or $47,476 annually Based on 2015 Q4 BLS data for the South Census Region Lower than the threshold in proposed rule, but still a 101% increase for employers currently subject to the $455 minimum, and a 35% increase for employers in New York subject to the $675 minimum 40 th percentile nationally is $972, and the 40 th percentile in the highest-earning wage Census Region (currently the West) is $1,050

8 Non-Discretionary Payments Count Employers can count non-discretionary compensation such as bonuses, incentive payments, and commissions toward the minimum salary threshold. Must pay at least quarterly Cannot exceed 10% of the minimum salary threshold Must true up salary to $913 minimum if bonus is not paid Not previously permitted to count these types of payments

9 Non-Discretionary Payments Count Minimum Total Salary Max Bonus (up to 10% of minimum) Remainder to Be Paid on Salary Basis Annual Quarterly Monthly Weekly $47, $11, $3, $ $4, $1, $ $91.30 $42, $10, $3, $821.70

10 Highly Compensated Employees Current Salary Threshold - $100,000 annually New Salary Threshold - 90 th percentile of earnings of full-time salaried workers nationally ($134,004 annually) Based on 2015 Q4 data Must pay at least the weekly minimum salary otherwise required for white collar workers ($913) Cannot use non-discretionary bonus or incentive compensation to cover weekly minimum, but can use it to cover the difference between $47,476 and $134,000

11 Automatic Adjustments Final rule calls for adjustments to the salary thresholds every three years using the same methodology (40 th percentile for white collar; 90 th percentile for HCEs) First adjustment will take effect January 1, 2020 DOL will publish the new thresholds on its website and in the Federal Register at least 150 days in advance Based on historic data, thresholds on January 1, 2020 could rise to $984 per week (or $51,168 annually) for white collar exemptions, and $147,524 for HCEs Proposed rule suggested annual adjustments based on the percentile methodology or rises in the CPU

12 What now? Review exempt positions with salaries below or near the $47,476 annual threshold Opportunity to review all exempt positions Determine course of action for directly affected employees Consider whether other employees are impacted indirectly (compression and morale) Prepare communications strategy, including new WTPA notices

13 Communicating Changes New rules Looked organization wide (i.e., this isn t just about you) Focus on change in eligibility overtime ineligible versus overtime eligible Explain impact in a positive way Show employee that he/she will not lose pay Think about separate communications to address compression and morale issues

14 Overview of New York Paid Family Leave Benefits Law Mark Moldenhauer, Member Bond, Schoeneck & King PLCC

15 The Basics Provides eligible employees up to 12 weeks of paid family leave in a calendar year Qualifying reasons: Providing care for family member with SHC Bonding with child within 12 months of birth or placement for adoption or foster care Attending certain obligations arising from family member s military service Note: Not the employee s own SHC (covered by DBL or WC)

16 The Basics Eligibility: 26 or more consecutive weeks of employment with employer No minimum hours requirement Employer Coverage: All employers in NY covered, regardless of size

17 Funding Scheme To be funded by employee through payroll deductions Amount to be set by NYS by 6/1/17 Per statute, not to be funded by employers

18 Amount of Benefit Eff. Date Leave Allotment Amount of Benefit 1/1/18 8 weeks 50% of EE s average weekly wage 1/1/19 10 weeks 50% of EE s average weekly wage 1/1/20 10 weeks 60% of EE s average weekly wage 1/1/21 12 weeks 67% of EE s average weekly wage Benefit Cap 50% of state average weekly wage 50% of state average weekly wage 60% of state average weekly wage 67% of state average weekly wage In 2015, NYS average weekly wage was $1,296.48; 50% benefit cap would have been $648.24

19 Intermittent Leave Employees may use in increments of 1 full day or 1/5 of weekly benefit

20 Notice/Certification Requirements Employee Notice When foreseeable, employee must provide 30 days notice or as soon as practicable Certification Employee can be required to provide medical certification (to be issued by state) to support leave taken for family member s SHC

21 Employee Protections NYPFLBL: Requires reinstatement to same position or comparable position with comparable benefits Requires the employer to maintain employment benefits (including health insurance) Prohibits retaliation

22 Other Provisions Employer can require employee to choose between using accrued paid time off benefits and paid family leave Cannot compel employees to use accrued benefits Paid family leave runs concurrently with FMLA (but not DBL or WC)

23 Posting Requirements/Penalties An employer must post a notice stating it is in compliance with the paid family leave law The employer must also provide employees taking paid family leave for more than 7 consecutive days with a written statement of their rights under the law Penalties for non-compliance with the NYPFLBL include fines ranging from $100 to $2,000 and/or potential imprisonment

24 Federal and State Wage and Hour Concerns Is Your Business Ready? Tim Finney, PHR Alcott HR

25 Disclaimer The materials herein are prepared by Alcott HR for general informational and educational purposes only. These materials are not intended to be, nor are they, legal advice and should not be relied on as such. Every situation is different and you are advised to consult with your own legal counsel before attempting to address any issues.

26 Agenda DOL Enforcement Initiatives Unpaid interns and unlawful discriminatory practices related to them Use of Independent Contractors and their misclassification

27 DOL Enforcement Initiative Alcott HR

28 What is the DOL Focusing on in Wage & Hour? In FY 2015, 42% of all compliance investigations were agency-initiated, and the Wage and Hour Division (WHD) found more than $246 million in back wages for more than 240,000 workers. That s $676,000 a day! Average recovery per employee was $1,000.

29 What is the DOL Focusing on in Wage & Hour? Blue collar, low-wage industries July 2015: USDOL issues Wage and Hour Administrator s Interpretation Reiterates their view of a strict application of the definition suffer or permit to work (read: most independent contractors are truly employees!) Warns against misclassification of workers as independent contractors

30 What is the DOL focusing on? Budget Proposal FY 2017: WHD 21.5% increase in funding for the WHD Increase of $49.1 million and 318 workers for enforcement Additional $3 million and 12 employees to build and develop data analytic capabilities for systemic enforcement

31 What is the DOL Focusing On? Budget Proposal FY 2017: Employment and Training Administration (ETA) Paid Leave Partnership Initiative $2,213,000,000 to help up to five states set up paid leave programs and help with benefit payments for the first three years According to ETA, NYS study showed that paid leave reduces turnover and paid maternity leave increases likelihood that mothers return to their jobs

32 Use of Interns Only in very limited circumstances, especially with new Second Circuit opinions NYS requirements are much more comprehensive than federal (although some criteria are the same) All federal/state requirements must be met in order for intern to be unpaid Generally, an intern is only exempt from minimum wage and overtime requirements if the intern is not in an employment relationship

33 When Can Interns Be Unpaid? Primary beneficiary test (i) whether the parties understand there is no expectation of compensation; (ii) whether the internship provides training similar to that received in an educational environment; (iii) whether the internship is connected to a formal education program or receipt of academic credit; (iv) whether the internship corresponds with the academic calendar, accommodating the student s school commitments; (v) whether the duration of the internship is limited to the period in which the intern is provided with beneficial learning; (vi) whether the intern s work displaces the work of paid employees; and (vii) whether the parties understand there is no entitlement to a paid job at the conclusion of the program These seven factors are to be balanced No single factor is dispositive

34 Avoiding the Unpaid Internship Trap BEST ADVICE: Always pay at least minimum wage for every hour worked (and overtime if over 40 in a workweek) If interns are unpaid they can never be performing work for your organization Unpaid interns are never on Alcott HR s program

35 Independent Contractors Paying on a 1099 is not determinative and will not carry the day even if the worker asks to be paid that way! Many implications of incorrect classification Workers compensation Unemployment Taxes Employee benefits Payment of overtime and minimum wage Discrimination Recordkeeping

36 Independent Contractors Additional concerns for medium-sized employers because of the Affordable Care Act ( Obamacare ) Misclassifying can cause a mid-size employer to believe it is not subject to the employer mandate, when in fact it is Misclassifying can cause a mid-size employer to incur penalties for failure to offer an employee health insurance

37 Avoiding the Traps of Independent Contractor Misclassification Never classify former employees as independent contractors Only use independent contractors that are incorporated, market their services to the public and carry their own WC Never be an independent contractor s first customer Pay by invoice and negotiate rate by project (not hourly) No training, reporting, evaluations, handbook, firing Never permit an independent contractor to make employment decisions for your employees Have signed agreement (but not determinative as to status) Confirm status No benefits No non-competition agreements

38 Exempt Vs. Non-exempt All employees are non-exempt unless the employer can prove that the duties of the position fit into one of the very narrowly construed exemptions (and the salary-basis test) All non-exempt employees must be paid minimum wage and overtime (based on the regular rate which includes many things)

39 Exempt/Non-exempt Paying a salary is not determinative Non-exempt employees must always track time, even if paid a salary Highly discourage paying non-exempts a salary as opposed to hourly rate Still have to punch Still have to pay overtime

40 Exempt/Non-exempt Exempt employees whose positions fit into one of the narrow exemptions are expected to work until the job gets done and are paid a fixed amount each week regardless of the quantity or quality of work No partial day deductions from pay, generally

41 Avoiding the Exemption Trap Generally, all inside sales personnel are non-exempt (even if commissioned) If you pay a non-exempt employee a salary (NEVER RECOMMENDED) you must still pay them overtime for hours worked over 40 in a workweek Only very high-level computer personnel (programmers) are exempt It s okay to tell an exempt employee the regular business hours they are expected to work even though they are not punching a time clock or getting paid by the hour Docking an exempt employee s pay in partial day increments can cause the position (and others similarly situated) to lose the exemption with expensive results

42 Sponsors Title Sponsor: Presenting Sponsors: Event Sponsors: Print Sponsor: Supporting Sponsors: Construction Exchange of Buffalo & WNY GEICO LaBella Associates Niagara University