New Wage/Hour Rules, Issues and Concerns for Dealerships NYSADA February 13, 2018

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1 New Wage/Hour Rules, Issues and Concerns for Dealerships NYSADA February 13, 2018 Douglas Greenhaus Chief Regulatory Counsel Environment, Health, and Safety

2 NADA Regulatory Affairs Assists NADA s legislative advocacy efforts. Advocates on wide variety of issues before numerous federal agencies. Educates members on compliances responsibilities. Suggests best practices and importance of other applicable laws. Works with ATAEs to address state and local initiatives.

3 Caution! New York and local laws can be different and even stricter than federal. For example, the federal minimum wage is currently $7.25 per hour. Please check with NYSADA, the state, or your dealership legal counsel for specifics applicable to your operations and facilities.

4 4 NADA Driven Guide How to obtain: Customer Service: NADA/ATD Members: included w/membership

5 5 Intro To Fair Labor Standards Act (FLSA) Enacted in 1938 Key federal law governing compensation Establishes minimum wage mandate Requires overtime pay and recordkeeping Restricts child labor

6 6 Introduction to Overtime Hours worked in excess of forty in a workweek. Entitlement: premium of ½ of regular rate of pay. Cannot average hours across multiple workweeks. Key Definitions: Workweek Hours Worked Regular Rate of Pay

7 7 Who s Exempt From Overtime? Many dealership employees potentially exempt from overtime, and more than one exemption may apply. Three Main Buckets: Salesman, Partsman, Mechanics Section 7(I) Commission Employees White Collar Employees

8 8 Changes to DOL White Collar Rules? 7/15: DOL proposes to revise White Collar overtime exemptions. 9/15: NADA challenges increased salary thresholds. 5/16: DOL issues final rule; NADA files suit. 8/17: Rule enjoined in federal court. 7/17: DOL seeks comment on various strategies moving forward. 9/17: NADA again challenges salary threshold increases.

9 9 Current White Collar Exemption Rules To qualify for White Collar overtime (and minimum wage) exemption, employees must meet: A salary level threshold test, and A duties test. Paying a salary does not in itself exempt employees from overtime! For most White Collar employees: Salary threshold is $455/week ($23,660/year); bonuses/incentive pay do not count.

10 10 Job Duties Tests Primary job duty must involve work associated with the relevant sub-exemption. Executive Employees: Manage enterprise or recognized department of enterprise. Regularly direct work of two or more employees. Have authority to hire/fire. Examples: owner, G.M., department head.

11 11 Job Duties Tests Administrative Employees: Engage in office or non-manual labor directly related to management or general business operations of dealership or its customers. Use discretion and independent judgment regarding matters of significance. Examples: office managers, controllers, assist. managers.

12 12 Job Duties Tests Learned Professionals: Perform work requiring advanced knowledge in field of science or learning customarily acquired by prolonged course of specialized intellectual instruction. Typically applies to in-house attorneys and accountants, but not clerks or bookkeepers. Computer Professionals: Detailed criteria. Must receive $455/week and $27.63/hour.

13 13 Job Duties Tests Outside Sales: Make sales or obtain orders or contracts for services. Regularly engaged away from employer s place(s) of business. Typically applies to employees who make sales at a customer's location, rather than by mail, telephone, or the Internet. Parts drivers not covered unless primary duty is sales, not deliveries. No minimum salary for outside sales exemption.

14 14 Job Duties Tests Highly Compensated Employees (HCEs): A safe harbor exemption that applies to highly-paid white collar employees. Must earn total annual compensation of $100,000 or more and $455 per week salary/fee without regard to receipt of nondiscretionary bonuses or incentives. Regularly perform at least one duty of an executive, administrative or professional employee.

15 15 Compliance Strategies Carefully review how and how much white collar employees are paid. Confirm salaries meet thresholds; or Increase commission compensation to satisfy commissioned employee exemption; or Reduce or eliminate overtime where possible, or divide jobs between two or more employees.

16 16 Commission Employee Exemption To qualify as a commission employee: Dealership must be retail or service establishment, i.e., not derive more than 25% of gross annual sales from wholesale/fleet sales, sales pursuant to formal bids, etc. Regular rate must exceed 150% of minimum wage. Compensation for representative period (not less than a month) must primarily derive from commissions on goods or services.

17 17 Salesmen, Partsmen and Mechanics Salesmen: primarily engaged in sale of new or used vehicles or service. Not leasing? Partsmen: primarily engaged in requisitioning, stocking, dispensing, or selling parts. Not parts drivers. Two NY cases challenge exemption. Mechanics: primarily engaged in exempt mechanical work. Get-ready, body, etc. Not lube techs, painters.

18 18 Status of Service Advisors? Since 1978: DOL treats as exempt salesmen. 2011: DOL finds salesman excludes service advisors. 3/15: Ninth Circuit decides CA dealership s service advisors not exempt as salesmen. 6/20/16: U.S. Supreme Court rules in Encino Motorcars that 2011 DOL rule improper; remands to Ninth Circuit. 1/17: Ninth Circuit again rules exemption doesn t apply. 9/17: Supreme Court grants cert.; oral argument last month; decision by mid-year. Still exempt in NY!

19 19 Liability and Enforcement The DOL and New York. Injunctions, penalties, back wages, damages. Private actions All of the above and attorney s fees Big business, very active plaintiff s bar.

20 20 Other Issues In NADA Guide How best to pay commissions Settlement vs. pay periods Minimum wage subsidy recoupment Recordkeeping Non-exempt employees Exempt employees Records retention and posters

21 21 Other Issues In NADA Guide Child labor restrictions year-olds year-olds Teen driving Equal Pay and Compensation Discrimination Equal Pay Act Title VII, ADEA, PDA

22 Questions 22

23 COMPLIANCE WITH NEW YORK STATE LABOR LAW

24 PAYMENT OF WAGES: Minimum Wage General Minimum Wage Rate Schedule Location 12/31/16 12/31/17 12/31/18 12/31/19 12/31/ * NYC - Large Employers (of 11 or more) $11.00 $13.00 $15.00 NYC - Small Employers (10 or less) $10.50 $12.00 $13.50 $15.00 Long Island & Westchester $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 Remainder of New York State $9.70 $10.40 $11.10 $11.80 $12.50 * TIP: PIECE-RATE WORKERS MUST, OVER THE COURSE OF A PAYROLL WEEK, AVERAGE AT LEAST AS MUCH AS THE ESTABLISHED STATE MINIMUM WAGE.

25 Payment of Wages: Notification Employers must give newly-hired workers written notice of the rate at which they will be paid and their regular payday, under Section of NYS Labor Law. The notice must be given before they do any work. The notice must include the employee s overtime rate of pay, if they qualify for overtime. A sample of this form is available on the DOL website at:

26 Payment of Wages: NYS Labor Law 194 Differential in Rate of Pay Because of Sex Prohibited No employee shall be paid less than the rate at which an employee of the opposite sex in the same establishment is paid for equal work on a job the performance of which requires equal skill, effort and responsibility, and which is performed under similar working conditions, except where payment is made pursuant to a differential based on: a. a seniority system; b. a merit system; c. a system which measures earnings by quantity or quality of production; or d. A bona fide factor other than sex, such as education, training, or experience.

27 PAYMENT OF WAGES: Minimum Wage EXCEPTIONS EXECUTIVES, ADMINISTRATORS AND PROFESSIONALS STUDENTS OBTAINING VOCATIONAL EXPERIENCE TIP: THESE EXCEPTIONS MAY OCCUR UNDER SPECIFIC CIRCUMSTANCES THAT SATISFY AN ESTABLISHED CRITERIA.

28 PAYMENT OF WAGES: Overtime FOR EMPLOYEES COVERED BY STATE M.W. BUT EXEMPTED FROM FEDERAL M.W. THE OT RATE IS 1.5 TIMES BASIC M.W. RATE EXAMPLES The higher minimum wage will be the wage enforced by the NYS Department of Labor s Labor Standards division. For Salespeople, parts people, mechanics of automobile dealers must be paid for at least minimum wage and 1 ½ times minimum wage for all hours worked above 40 hours. TIP: Employees that earn set weekly salaries or piece rates and work overtime must have their pay adjusted by deriving an hourly rate and then calculating 1.5 times that rate for OT calculation.

29 PAYMENT OF WAGES: Tip Appropriation TIPS BELONG EXCLUSIVELY TO THE SERVICE EMPLOYEES THAT EARN THEM. PROHIBITION AGAINST THE EXPROPRIATION (CONFISCATION) OF AN EMPLOYEE S TIPS EXTENDS NOT ONLY TO THE EMPLOYER AND HIS/HER AGENT BUT TO ANY OTHER PERSON. TIP: The law does NOT prohibit tip sharing or tip pooling when voluntary and not a condition of hire or continuing employment.

30 Commission Salespersons Commission salespersons.--a commission salesperson shall be paid the wages, salary, drawing account, commissions and all other monies earned or payable in accordance with the agreed terms of employment, but not less frequently than once in each month and not later than the last day of the month following the month in which they are earned.

31 Commission Salespersons The employer shall furnish a commission salesperson, upon written request, a statement of earnings paid or due and unpaid. The agreed terms of employment shall be reduced to writing, signed by both the employer and the commission salesperson, kept on file by the employer for a period not less than three years and made available to the commissioner upon request. Such writing shall include a description of how wages, salary, drawing account, commissions and all other monies earned and payable shall be calculated.

32 Commission Salespersons The failure of an employer to produce such written terms of employment, upon request of the commissioner, shall give rise to a presumption that the terms of employment that the commissioned salesperson has presented are the agreed terms of employment.

33 AYMENT OF WAGES: Frequency of Payment Commission Salespersons) Must be paid not less frequently than MONTHLY In accordance with the agreed terms of employment Not later than the last day of the month following the month in which the commissions were earned Upon request an employer must furnish to its commission salespersons a statement of earnings paid or due and unpaid

34 Flat Rate A flat rate hour is not an actual clock work hour. The painter or mechanic may work only 7, 8 or 9 hours a day and still receive credit for 10, 11 or 12, etc., flat rate hours depending upon how much work he or she has done, therefore the employer must keep track of all hours worked and all flat rate hours. The employee must still pay the employees minimum wage and 1 ½ times M.W. for work hours above 40, if the flat rate falls below the minimum wages each week. The Notice of pay must spell out the pay rates to the employees.

35 PAYMENT OF WAGES: Frequency of Payment (Manual Workers) Wages should be paid to manual workers on a weekly basis or at least within seven days after the end of the week in which wages are earned. Final checks must be paid within 7days after the week that the wages were earned. No training weeks, it is considered work time, therefore the workers must be paid.

36 PAYMENT OF WAGES: Frequency of Payment (Clerical and Other Workers) Must be paid not less frequently than SEMI-MONTHLY in accordance with the agreed terms of employment. This also applies to Executives, Administrators and Professionals earning $900 per week or less

37 PAYMENT OF WAGES: Wage Order Rates-Additions to MW CALL IN PAY: An employee who by request or permission of the employer reports for work on any day shall be paid for at least four hours, or the number of hours in the regularly scheduled shift, whichever is less, at the basic minimum hourly wage. An example is car jockeys, if called in must be paid 4 hours at Minimum Wage. (SEE SECTION )

38 PAYMENT OF WAGES: Wage Order Rates-Additions to MW UNIFORM MAINTENANCE: No allowance for the supply, maintenance or laundering of required uniforms shall be permitted as part of the minimum wage. Where an employee purchases a required uniform, he shall be reimbursed by the employer for the cost thereof not later than the time of the next payment of wages. Where an employer fails to launder or maintain required uniforms for any employee, he shall pay such employee in addition to the minimum wage prescribed. (SEE SECTION )

39 HOURS OF LABOR One Day Rest In Seven: Most employers are required to permit manual employees at least one day, defined as a consecutive twenty-four hour period, off each week. Hours: For adults, there is no restriction or legal restriction on the quantity of hours per day or per week than one may work. TIP: The law regarding the requirement for certain employees to have at least one day off per week is applicable only to specified industries and occupations.

40 OURS OF LABOR: EAL PERIOD NTITLEMENT ONLY ON DAYS WHEN SHIFT IS OVER 6 HRS) IF THE SHIFT SPANS THE ENTIRE LUNCHTIME PERIOD (starts before 11 AM and continues up to 2 PM) Then the employee is entitled to ½ hour lunch sometime between 11:00 AM and 2:00 PM IF THE SHIFT DOES NOT SPAN THE ENTIRE LUNCHTIME PERIOD (starts between 1 PM and 6 AM) Then the employee is entitled to meal period midway between beginning and end of shift IF THE SHIFT INCLUDES THE DINNERTIME PERIOD (starts before 11 AM and continues later than 7 PM) Then the employee is entitled to additional 20 minute meal period between 5 PM and 7 PM TIP: Other than for meals, breaks are not required. However, if a short break is permitted, then it must be counted as work time. For a meal period to be deemed legitimate, it must last at least 30 minutes and be entirely uninterrupted

41 TIP: As an employer, you are required to provide the agreed upon benefits or wage supplements within 30 days after such payment is required. If terminated, the employee s last wages are due no later than the regular pay day for pay period in which termination occurred. If requested, wages must be paid by mail. WAGE SUPPLEMENTS (Fringe Benefits) The NYS Labor law does not require or grant benefits such as vacation, holiday pay, reimbursement for expenses, etc. to employees. *NYC Law requires certain fringe benefits The law does require that any agreement that you do make to pay or provide wage supplements to employees be honored. FAILURE, NEGLECT, OR REFUSAL TO PAY THE AMOUNTS NECESSARY TO PROVIDE THE AGREED UPON BENEFITS WILL MAKE YOU GUILTY OF A MISDEMEANOR.

42 Wage Supplements In New York State employers are required to put fringe benefits policies in writing and distribute them to the employees. Employers are also required to be able to demonstrate that the employees received the written policies. Failure to have a written fringe benefit policy and failure to provide the policy to employees are violations of NYS LL Section Failure to pay wage supplements in accordance with the policy is a violation of NYS LL Section 198-C. It is recommended to have in the written policy a clear breakdown of what will occur at the point of termination of employment and/or a forfeiture clause in regard to the pay out of wage supplements.

43 Wage Supplements LL Every employer shall notify his employees in writing or by publicly posting the employer s policy on sick leave, vacation, personal leave, holidays and hours. LL 198-C Benefits or wage supplements. 1. In addition to any other penalty or punishment otherwise prescribed by law, any employer who is party to an agreement to pay or provide benefits or wage supplements to employees or to a third party or fund for the benefit of employees and who fails, neglects or refuses to pay the amount or amounts necessary to provide such benefits

44 LL198-C cont d or furnish such supplements within thirty days after such payments are required to be made, shall be guilty of a misdemeanor, and upon conviction shall be punished as provided in section one hundred ninety eight of this article. Where such employer is a corporation, the president secretary, treasurer or officers exercising corresponding functions shall each be guilty of a misdemeanor. 2. As used in this section, the term benefits or wage supplements includes, but is not limited to, reimbursement for expenses; health, welfare and retirement benefits; and vacation, separation or holiday pay.

45 TIPS: An employee manual is a popular method for communicating a company s policies. The employer must prepare a poster indicating the work schedule of any employees that are minors. NOTICE REQUIREMENTS Further posting requirements apply to: Apparel Industry Agricultural Employer Employment Agencies Every employer shall notify its employees in writing or by public posting of the employer s policy the fringe benefits previously mentioned. The employer must display a minimum wage poster as well as the posters regarding prohibited wage deductions and tip appropriations. These posters are produced by the Department of Labor and the law requires their display. CERTAIN INDUSTRIES HAVE ADDITIONAL POSTING REQUIREMENTS Employers engaged in the sale or service of food or beverages: Must post reprints of Section 193 regarding prohibited deductions from wages and Section 196-d regarding tip appropriation

46 ILLEGAL DEDUCTIONS NO DEDUCTIONS MAY BE MADE FROM WAGES EXCEPT THOSE REQUIRED BY LAW (SUCH AS FOR SOCIAL SECURITY), THOSE WHICH ARE FOR THE BENEFIT OF THE EMPLOYEE AND ARE AUTHORIZED IN WRITING BY THE EMPLOYEE EXAMPLES OF PERMISSIBLE DEDUCTIONS ENUMERATED IN 193 (NOT SUBJECT TO 10% LIMITATION) Insurance Premiums Pension or Health and Welfare Benefits Contributions to Charitable Organizations Payment for U.S. Bonds Dues or Assessments to a Labor Organization TIP: Some illegal deductions are payment by an employee for breakage, spoilage, cash shortages or losses, cost and maintenance of required uniforms. Indirect deductions are also prohibited.

47 RECORD KEEPING DATA REQUIRED REGARDING MOST EMPLOYEES: Name, address and social security number Wage rate Number of hours worked daily and weekly Amount of gross wages, deductions from gross wages, and net wages paid Allowances claimed, if any, as part of minimum wage Arrival and departure time for each employee working split shift or spread of hours exceeding ten Number of units produced daily & weekly by piece rate workers THESE RECORDS MUST BE MAINTAINED FOR AT LEAST SIX YEARS (EXCEPTION: FARM = 3 YEARS)

48 AGE STATEMENTS REQUIRED: FOR EVERY EMPLOYEE FREQUENCY: WITH EVERY PAYMENT OF WAGES MUST CONTAIN- GROSS WAGES DEDUCTIONS NET WAGES FOR EMPLOYEES COVERED BY A WAGE ORDER, THE WAGE STATEMENT MUST ALSO CONTAIN: a listing of hours worked rates paid allowances claimed, if any, as part of the minimum wage. IF REQUESTED, THE EMPLOYER MUST PROVIDE EXPLANATION OF HOW WAGES WERE COMPUTED

49 EMPLOYMENT OF MINORS MINORS MAY BE EMPLOYED DEPENDING ON MANY FACTORS INCLUDING THEIR AGE,THE TYPE OF WORK, THE WORK SCHEDULE, AND THE ATTENDANCE SCHEDULE OF THE CHILD S SCHOOL. POTENTIALLY DANGEROUS OCCUPATIONS SUCH AS CONSTRUCTION, DEMOLITION, ROOFING, LOGGING, MINING, AND SLAUGHTERING ARE PROHIBITED FOR MINORS OF ALL AGES. An example of a prohibited occupation for the any occupation involved in the operation of power-driven hoisting apparatus; TIP: For most occupations, an Employment Certificate must be obtained. Yardwork and household chores at a residence do not require the obtention of an Employment Certificate.

50 135. Duties of employers. 1. The employer of any minor required to have an employment certificate: a. Shall, before employment begins, file at the place of the minor's employment such certificate so that it may be readily accessible to any person authorized by law to examine such document; b. Shall, upon the termination of the minor's employment, return the employment certificate to the minor;

51 Minors and the posting of a schedule 144. Posting of hours. 1. The employer shall make a schedule for all minors employed by the employer, setting forth the hours of beginning and stopping and the time allowed for meals, which shall be kept conspicuously posted in each establishment where such persons are employed.

52 206-c. Right of nursing mothers to express breast milk. An employer shall provide reasonable unpaid break time or permit an employee to use paid time or meal time each day to allow employee to express breast milk for her nursing child up to three years following child birth. The employer shall make reasonable efforts to provide a room or other location, in close proximity to the work area, where an employee can express milk in privacy. No employer shall discriminate in any way against an employee who chooses to express breast milk in the work place.

53 202-j. Leave of absence for blood donation granted to employees An employer must either, at its option: a) Grant three hours of leave of absence in any twelve month period to an employee who seeks to donate blood b) Allow employees without use of accumulated leave time to donate blood during work hours at least two times per year at a convenient time and place set by the employer, including allowing employee to participate in a blood drive at the employee s place of employment. An employer should not retaliate against an employee for requesting or obtaining a leave of absence under this section. (Please refer to guidelines)

54 NYS Wage Orders Miscellaneous Part 142 Hospitality Part 146 Building Services Part 141 Farms Part 190

55 QUESTIONS? Web site - Or contact any District Office of the Division of Labor Standards Tel NYSDOL ( ) Or (518)