Alison B. Crane Jackson Lewis P.C. Chicago (312)

Transcription

1 Neil H. Dishman Jackson Lewis P.C. Chicago (312) Alison B. Crane Jackson Lewis P.C. Chicago (312) Jackson Lewis P.C.

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4 Understand key current traps in exempt vs. non-exempt classifications Executive Administrative Professional Understand key future challenges based on DOL s proposed rule announced in June A note on federal vs. state law... 4

5 An overview of the DOL s January 20, 2016 Administrator s Interpretation related to jointemployment relationships under the FLSA Update on common missteps related to: Off-the-Clock Work Meal and Rest Breaks Housekeeping About us; questions; slides 5

6 Everyone gets overtime pay unless employer can prove an exemption Plainly and unmistakably is the standard Covering the three most common executive, administrative, and professional Basics of exemptions Common traps 6

7 Can these jobs be classified as exempt? Manager of 10-employee operation in factory Assistant manager of a large retail store Insurance claims adjuster Accounts payable manager Accountant at Big 4 firm with 3 years exp. MAYBE. Not one is a slam dunk to be exempt. Many are the subject of massive collective actions. 7

8 The three most common executive, administrative, and professional have two big parts: Duties Salary basis (including a minimum salary level) 8

9 Primary duty is the management of the company or of a customarily recognized department or subdivision of the company. Customarily and regularly directs the work of (i.e., supervises) two or more other employees. Has power to hire and fire employees, or recommendations about hiring, firing, and other changes of status for other employees are given particular weight. Customarily and regularly exercises discretionary powers. And, in Illinois... The employee does not devote more than 20 percent of his time to activities which are not directly and closely related to the above. 9

10 Jobs commonly misclassified as exempt here: Foreman Crew Leader or Line Leader Assistant Manager Shift Manager [insert name of department here] Manager [insert verb or noun here] Supervisor Industries at particular risk: Retail Manufacturing And the second level up at just about any employer 10

11 Primary duty is performing office or non-manual work directly related to management policies or general business operations of the company or the company s customers. Customarily and regularly exercises discretion and independent judgment. Does one of the following things: Regularly and directly assists the proprietor of the company or another executive or administrative employee; Performs under only general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or Executes under only general supervision special assignments and tasks. And, in Illinois... the employee does not devote more than 20 percent of his/her time to activities which are not directly and closely related to the above. 11

12 Jobs commonly misclassified as exempt: People who report to someone who fits this exemption, such as low-level HR, accounting, IT Administrative assistants Industries at particular risk: Any white-collar business or department Financial services 12

13 Primary duty is the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or Primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor. And: Consistent exercise of discretion and judgment Work predominantly intellectual and varied in character And, in Illinois... the employee does not devote more than 20 percent of his/her time to activities which are not directly and closely related to the above. 13

14 Jobs commonly misclassified as exempt: Junior accountants Junior engineers Social workers Paralegals Industries at particular risk: Professional firms, particularly CPA firms Social-service/humanitarian agencies 14

15 Salary basis : a portion of compensation must be a fixed weekly amount that is not subject to reduction based on quantity or quality of work. So, no docking the employee for being late, leaving early, or doing poor work. A few exceptions where docking is allowed. Salary must be at least $455/week ($23,660/year) for now. 15

16 June 30, 2015: U.S. DOL NPRM Proposes to raise $455/week minimum salary to $970 this year. From $23,660 annually to $50,440. Likely to become law sometime in Q Hints that duties tests may change for the worse also. 16

17 This would mean: any EAP exempt employee making less than $50,440 would lose his or her exemption, period. Would not matter what duties are. Choices: Give a raise to $50,440; or Convert to non-exempt, track hours, pay OT over

18 Employers hardest hit: Non-profits Restaurants Retail Rural / low-cost-of-living areas Departments hardest hit: Front-line operational managers Finance, IT, customer service, HR DOL says: 25% of current EAP employees will lose exemption That s 5 million workers nationwide. 18

19 Source: Oxford Economics (August 18, 2015) 19

20 Employers should plan for this now. Assuming it becomes law, major impact on finances, operations, scheduling, telecommuting, etc. It will create many new problems: Labor costs for more overtime Hiring needs in order to avoid overtime Employee morale; demotions Work/life problems: time off, telecommuting, etc. Employee who is right around the new floor Silver lining: golden opportunity to fix existing problems. 20

21 January 20, 2016 WHD s Administrator s Interpretation (AI) An AI is not the law Courts need not follow it Although, it does provide some guidance and may be given some weight The DOL certainly will follow it - its investigators will use it and may interpret it to find the existence of joint employment where courts might not 2016 Jackson Lewis P.C.

22 WHD s enforcement priority is to protect workers in fissured workplaces, where more than one business is involved in the work being performed FLSA contains the broadest definition of employment - to suffer or permit to work Broader than the common-law concepts, which look to amount of control Joint employment relationships should be defined expansively Goal: to increase the FLSA s reach 2016 Jackson Lewis P.C.

23 Joint employment will be considered in cases where: (1) The employee works for two employers who are associated or related in some way with respect to an employee (horizontal); or (2) The employee s employer is an intermediary or otherwise provides labor to another employer (vertical) 2016 Jackson Lewis P.C.

24 When two (or more) employers each separately employ an employee and are sufficiently associated with or related to each other with respect to an employee Factors to consider include: Who owns the potential joint employers (any common owners?); Whether they have overlapping officers, executives, managers; Whether operations are intermingled (e.g. payroll, overhead); Whether one potential joint employer supervises the work of the other; Whether the potential joint employers treat the employees as a pool of employees available to both of them; and Whether there are any agreements between them Jackson Lewis P.C.

25 2016 Jackson Lewis P.C.

26 When an employee of one employer, referred to in the AI as an intermediary employer, is also, with regard to the work performed for the intermediary employer, economically dependent on another employer, referred to as a potential joint employer. The potential joint employer typically has contracted or arranged with the intermediary employer to provide it with labor or perform some of its employer functions. Example, hiring or payroll 2016 Jackson Lewis P.C.

27 Factors to consider draw from the economic-reality factors: Directing, controlling, or supervising the work performed; Controlling the conditions of employment; Permanency or duration of the relationship; Repetitive or rote nature of work; Integral to the potential joint employer s business; Work performed on the potential joint employer s premises; Performing administrative functions commonly performed by employers Jackson Lewis P.C.

28 2016 Jackson Lewis P.C.

29 Trend of expanding FLSA coverage to hold lead businesses liable for intermediary employers FLSA violations, such as tip credit violations, misclassification (exempt and independent contractors), off-the-clock claims, and meal-and-rest claims Many ordinary business relationships potentially could be impacted: supplier-user (staffing companies); franchisorfranchisee, parent-subsidiary, contractor-subcontractor, predecessor-successor Potentially enormous implications for lead businesses Instant impact in DOL investigations Signal to the plaintiffs bar to name more lead businesses as defendants 2016 Jackson Lewis P.C.

30 Evaluate likelihood of joint employment finding Review quality of business partners For example, pay and time keeping practices of staffing companies Conduct privileged analysis on risk/reward of shoring up joint employment factors or changing nature of relationship Determine whether risks addressable through indemnification or other avenues 2016 Jackson Lewis P.C.

31 Work that employees perform for which they do not receive payment Again, think suffer or permit Common Causes: Misconceptions regarding what constitutes compensable time Inadequate or improper record keeping Supervisor or employee misconduct Risk can be exacerbated by frontline supervisors who demand non-exempt employees go above and beyond 31

32 Portable work creates the inability to monitor off-theclock work and overtime Phone calls at home Laptops, tablets, phones Remote access programs Supervisors who know or have reason to believe work is being performed outside of work hours Especially tricky for employees who travel 32

33 Your most conscientious supervisors and employees may be the worst offenders Changing time cards to stay within budget Taking extra work home to get a jump on projects Do not confuse payment and punishment Have a clear policy against off-the-clock work All hours suffered or permitted must be paid Progressive discipline should be employed 33

34 FLSA does not require meal or rest breaks Illinois State Law - ODRISA An employee who is to work 7.5 continuous hours or more shall be provided a meal period of at least 20 minutes Must start no later than 5 hours after beginning work Applies to exempt and non-exempt Company must permit the break but what does that mean? 34

35 For non-exempt employees, if break is unpaid, there are two additional requirements: The break is at least 30 minutes long The break is not subject to being interrupted by work OK to have different break policies for different departments/positions Don t forget reasonable unpaid break time for an employee who needs to express breast milk for an infant (FLSA and IL Nursing Mothers in the Workplace Act) 35

36 Have clear policies in place Supervisors and employees should acknowledge policies through signed or other provable records Publicized procedure for complaints Identify multiple supervisors in chain of command Treat wage and hour complaints with same importance and sophistication as discrimination or harassment complaints Conduct prompt and thorough investigations 36

37 DO A SELF AUDIT OF WAGE-HOUR PRACTICES REVIEW RELATIONSHIPS WITH BUSINESS PARTNERS TRAIN/REFRESH SUPERVISORS ON ISSUE SPOTTING AND EFFECTIVELY HANDLING WAGE- HOUR COMPLAINTS Find, and fix, the problems before the DOL or a plaintiff s attorney does it for you. 37

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