White Collar Exemptions
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1 Wage and Hour Issues in 2018 Michael J. Staebell, Compliance Specialist Dickinson, Mackaman, Tyler & Hagen, P.C White Collar Exemptions In August, 2017, the Federal District Court for the Eastern District of Texas struck down the Obama administration s Final Rule on the Fair Labor Standards Act White Collar Exemptions. Previously, in July 2017, the DOL had published a request for information (RIF) soliciting public comments on the White Collar overtime exemptions.
2 White Collar Exemptions The DOL sought comments regarding: whether the standard salary level set in the rule effectively identifies employees who may be exempt; whether a different salary level would more appropriately identify such employees; the basis for setting a different salary level; why a different salary level would be more appropriate or effective. The comment period closed September 25, 2017 White Collar Exemptions DOL has stated they expect to publish a new proposed rule in the fall of Proposed rule will address only salary levels. Salary level of around $33,000/year has been mentioned by Labor Secretary Acosta
3 Employment Relationship Joint Employment When joint employment is established, the employee s hours worked for both employers are added together and considered as one employment for purposes of determining when overtime is due. Moreover, both employers are jointly and severally liable for the total amount of wages due to the employee, even if contracts between them say otherwise. Employment Relationship Joint Employment Traditionally, the amount of control over the employee that was exercised by the potential joint employer was a major factor in determining whether a joint employment relationship existed. January 2016 Wage and Hour guidance announced a joint employment analysis under the FLSA that was much broader than the traditional approach.
4 Employment Relationship Joint Employment The 2016 WHD guidance rejected control as a primary test for determining joint employment and replaced it with the economic realities test. Under this new test any joint employment analysis must primarily determine if the employee is economically dependent on the potential joint employer. Employment Relationship Save Local Business Act In November 2017 the U.S. House of Representatives passed HR 3441, the Save Local Business Act. If passed by the Senate and signed into law by President Trump The legislation would establish that joint employment could only be found if an entity directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over essential terms and conditions of employment of a worker.
5 Employment Relationship The Save Local Business Act sets at least five factors to determine whether businesses are considered joint employers. If passed and signed into law, it would ensure that joint employment could be found only if a business entity directly and actually controlled such aspects of employment as: Hiring and firing; Determining individual employee pay rates and benefits; Day to day supervision of employees; Assigning work schedules, positions, and tasks; and Administering employee discipline. Employment Relationship In essence, the Save Local Business Act limits joint employer liability to entities who have actual, as opposed to potential, control over essential terms and conditions of employment. This law would impact the determination of independent contractors as well, as did the pre 2016 WHD enforcement.
6 Unpaid Interns On January 5, 2018, the U.S. Department of Labor issued a Fact Sheet with new guidelines for determining whether interns and students working for "for profit" employers are entitled to the minimum wage and overtime pay under the FLSA. The new guidelines apply a "primary beneficiary" test to determine whether interns and students must be paid as employees rather than the more restrictive six factor test previously used by the DOL. Unpaid Interns New Guidance Primary Beneficiary Test The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee and vice versa. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands on training provided by educational institutions. The extent to which the internship is tied to the intern s formal education program by integrated coursework or the receipt of academic credit.
7 Unpaid Interns New Guidance Primary Beneficiary Test The extent to which the internship accommodates the intern s academic commitments by corresponding to the academic calendar. The extent to which the internship s duration is limited to the period in which the internship provides the intern with beneficial learning. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship. Opinion Letters Wage and Hour Opinion Letters are official written opinions that set forth how wage and hour laws apply in very specific circumstances as presented to the DOL Wage and Hour Division via specific employer questions. Employers submit questions based on their factual circumstances and policies, and the DOL issues a written opinion as to the legality of the employer s policies. Opinion Letters sometimes can be considered part of a good faith defense in court cases and generally in Wage and Hour investigations.
8 Opinion Letters In June 2017, the USDOL announced that it would be reinstating Opinion Letters issued by its Wage and Hour Division, a practice in place prior to From 2010 to July 2017, Opinion Letters were replaced by Administrator Interpretations, which provided a more general interpretation of the law and regulations as they pertained to a particular industry or set of employees. Opinion Letters In January 2018, the Wage and Hour Division reissued 17 Opinion Letters which were originally published under President Bush, and later withdrawn in the early days of the Obama Administration. Until these most recent letters, no opinion letters had been issued since January 14, 2009.
9 Family and Medical Leave Act Firms with Fewer than 50 Employees (b), (c), (d) Any employee appearing on payroll counts towards the 50 Part time employees count Employees on paid or unpaid leave count Laid off employees do not count If 50 or more EE s on payroll for 20 or more workweeks in current or preceding calendar year, employer is covered
10 Firms with Fewer than 50 Employees Where two or more businesses exert some control over the work or working conditions of the employee, the businesses may be joint employers under the FMLA Employees jointly employed by two firms must be counted by both employers for coverage and eligibility purposes Examples: PEO s and temporary help providers Employee Eligibility Has been employed for at least 12 months (need not be consecutive) Has worked at least 1250 hours in the 12 months prior to the start of the Family Medical Leave Is employed at a worksite where 50 or more employees work within 75 miles
11 Firms/Employees Not Subject to FMLA Employers still have ADA considerations FMLA Issues that Plague Employers and How to Cope With Them
12 Three Key Points Don t lose FMLA focus Hold employees accountable Communicate But I Don t Want FML Part (a) ER has right to designate if it has the facts ER has the right to enquire of the employee
13 Multiple Certs Communicate! Ask EE specifically why they will be absent. Don t accept FMLA Day. ER has a right to get details from EE (a) Untimely Certs (d), (a), ER may delay/deny FML designation If EE never provides cert, ER may deny FML (c), (d).
14 Deficient Certs Clarification/Verification 2 nd /3 rd Opinions Communicate! FMLA Abuse (c)(2) Accountability! Excessive absences; change in SHC? Pattern absences
15 FMLA Abuse Cont ER suspicions re: need for FML (c)(3) With facts, ER may require recertification more often than every 30 days FMLA Fraud (d) EE loses right to reinstatement EE loses right to maintenance of health benefits
16 Failure to Follow Policy (d) Employee does not follow employer s call-in policy EE does not advise employer of status while on FML (a) ER may not deny FML, but may take disciplinary action under firm s policy Exempt Employees Entitlement Exempt EE requests intermittent FML (c) or reduced leave schedule Takes calls or reads s from home while on FML.
17 Exempt Employees Cont FMLA regs are silent on entitlement for White collar workers. (But non-exempts entitlement can vary). Salary pay may be docked for intermittent FMLA leave usage Beware of exempt EE s on a block of leave who work at home. Chiropractic Care Health care provider means: chiropractors (limited to treatment consisting of manual manipulation of the spine to correct a subluxation as demonstrated by X-ray to exist) authorized to practice in the State and performing within the scope of their practice as defined under State law;
18 Eligibility and Timing Employee's SHC commences prior to FMLA eligibility Employee requests FML on the day they become eligible FMLA and Worker s Comp (e), (c), (d) Neither ER or EE may invoke paid leave substitution. ER and EE may agree to use PTO to top off WC benefits. WC light duty implications (d)
19 Fitness for Duty (d) ER may delay return to work if EE fails to provide timely EE may be terminated if fitness for duty cert is not provided (e) EE Has a 2 nd Job ER may prohibit 2 nd job for all EE s, but not just those on FML If ER has no global policy, EE may continue in 2nd job while on FML if duties differ
20 EE is spotted Out & About on FMLA Day OK, if unpaid FML, and EE is not performing duties in conflict with Cert If EE is on paid leave concurrent with FMLA, ER s paid leave policy applies Communicate! Ask the EE about it. Questions?
21 Thank you! Michael Staebell
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