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President Obama has proposed expanding the availability of overtime pay, which would cause the Department of Labor to do its first overhaul of Fair Labor Standards Act (FLSA) regulations in 10 years.
The President signed a memorandum on March 13, 2014, instructing the Department of Labor to update regulations about who qualifies for overtime pay. In particular, he wants to raise the threshold level for the salary-basis test from the current $455 per week in order to account for inflation. The threshold has been raised just twice in the past 40 years. The President did not specify the exact amount the threshold should be raised though.
“Unfortunately, today, millions of Americans aren’t getting the extra pay they deserve. That’s because an exception that was originally meant for high-paid, white-collar employees now covers workers earning as little as $23,660 a year,” Obama said in his remarks on overtime pay.
The memorandum also suggests that both the primary duties and pay of some exempted employees do not truly fit in the executive, administrative and professional employees exemptions, referred to as the white-collar exemptions under FLSA.
In a fact sheet on the President’s memorandum, the White House said: “Millions of salaried workers have been left without the protections of overtime or sometimes even the minimum wage. For example, a convenience store manager or a fast food shift supervisor or an office worker may be expected to work 50 or 60 hours a week or more, making barely enough to keep a family out of poverty, and not receive a dime of overtime pay.” The FLSA’s minimum wage would not protect a salaried worker because salaried workers’ pay must satisfy the weekly salary-basis test rather than the Federal hourly minimum wage, which is $7.25 per hour. The hourly minimum wage in Florida is currently $7.93 per hour.
The memo also pointed out that “only 12% of salaried workers fall below the threshold that would guarantee them overtime and minimum wage protections.“ The fact sheet also called the current FLSA regulations outdated, noting that states such as New York and California have set higher salary thresholds.
Small businesses will be hit particularly hard by a change in the FLSA regulations.
If the regulations shrink the current white-collar exemptions, employers would have two main options to hold down costs. They would have to either increase workers’ salary above the new salary-basis threshold (to avoid paying overtime) or leave employees in the nonexempt category and pay them overtime. Companies could also hire more employees, but the other two options are more likely.
Implications for HR
Once tightened white-collar exemptions are implemented, which is not likely to happen for months now, it could result in far-reaching implications for HR, including wage and hour audits and layoffs. The money to pay for increased overtime wages has got to come from somewhere which might mean layoffs, reducing overtime and taking a fresh look at the fluctuating workweek.
When asked at a press briefing about the burden on businesses if the Obama administration succeeds in efforts to both increase the federal minimum wage and revise FLSA regulations, Betsey Stevenson, a member of the White House’s Council of Economic Advisers, said, “We think these two items are very different, but, obviously, they do feed into the same thing, which is people should be rewarded for fair work.” She suggested that some workers in the white-collar exemptions aren’t even earning minimum wage for all the work they do at low salaries.
Even though the president did not assign a number for the minimum salary-basis threshold, Stevenson said the overtime “protections have been eroded over time. This threshold in 1975 was nearly $1,000 in today’s dollars; today it’s $455.” Stevenson believes that the rule should be modernized as a matter of the “basic principle of fairness.”
We will continue to keep you abreast of any changes to FLSA as well as other regulations that can impact your business. If you have any questions about the current or proposed FLSA regulations, please contact our office.
The media, paired with political figures, have paid increased attention to workplace bullying in recent years. Legislators in 21 states have even introduced bills to address and combat workplace bullying, starting with California in 2003.
However, none of the legislatures in states which these bills have been introduced have passed the bills into law. There are a variety of explanations for why there has not been a change in the law despite workplace bullying becoming a hot button employment issue, but the most obvious explanation is this: it truly is difficult to define workplace bullying.
What Is It….Exactly?
The general definition of work place bullying is a behavior in which an individual or group uses persistent, aggressive, or unreasonable behavior against a coworker or subordinate. As with childhood bullying, we often think of workplace bullying as being physical acts against another, such as assaulting a coworker or invading a coworker’s personal space in a threatening manner, however it often takes a more subtle forms. For instance, a supervisor can act as a bully by manipulating work tasks, like giving a victim repetitive or irrelevant assignments as a means of control. Supervisors can also act as a bully in the way they provide feedback. For instance, a supervising bully can choose to belittle a subordinate in a public setting so as to humiliate them, as opposed to delivering the constructive criticism in a private setting.
Because bullying comes in many forms and is often understated, it is a challenge to create a proper definition for it. Most notably, it is difficult to draw precise lines between assertive managers and bullying conduct. Employers depend on their managers to evaluate the performance of the employees under their supervision and to provide feedback so employees can learn from mistakes and improve. The big question is how do we know when that vital evaluation process has crossed the line and become bullying behavior, especially when criticism by its nature entails negative statements.
Employers can use two simple rules of thumb to aid in analyzing if certain behavior constitutes bullying, especially with respect to supervisor/supervisee relations:
Problems Are Both Legal and Practical
State legislatures might struggle to define workplace bullying, but the absence of specific anti-bullying laws should not deter employers from being wary to this phenomenon. If left unchecked, bullying can create a host of workplace headaches, such as (1) increased use of sick leave, (2) increased use of medication, such as anti-depressants, sleeping pills, and tranquilizers, (3) social withdrawal, (4) decreased productivity and motivation, (5) increases in the frequency and severity of behavior problems, (6) erratic behavior, such as frequent crying spells and increased sensitivity, and (7) increased turnover.
And the fact that there is no designated legislation for workplace bullying does not mean that the behavior cannot create lawsuits in other ways. Assault and battery claims are the most obvious legal actions that bullying can cause, but there are a host of other ways that employees who are bullied (or who perceive they were bullied) can gain access to the courts.
For instance, a bullying victim can bring a claim pursuant to Title VII for harassment or discrimination if the individual ties the activity to a protected characteristic, such as “my female boss degrades men under her supervision.” A bullying victim can also bring a claim against an employer for negligent hiring and retention on the theory that the employer knew about a supervisor’s bullying tendencies (either during the hiring process or thereafter) and did nothing. There are even implications under OSHA which requires that employers complete a Workplace Violence Incident Report in any instance which an employee commits a violent act against another employee.
Closing Advice
In light of the performance, and litigation, related reasons to combat workplace bullying, you should take steps to handle this problem, if you have not done so already. Every employer should have an anti-bullying policy that : (1) defines workplace violence and bullying behaviors, (2) provides a reporting procedure that identifies multiple managers to whom incidents or threats can be reported, and (3) encourages employees to report incidents, especially by assuring them that the employer will not tolerate retaliation against an individual who complains of bullying.
The last point is especially important because bullying victims often feel powerless as a result of the power dynamic that the bully has fostered. You should also train your managers on workplace bullying so they have a basic understanding of the warning signs and the potential impacts for not addressing bullying at the first possible instance.
While the law has not caught up to the problem of workplace bullying, a savvy employer can get in front of the issue by taking basic steps to ensure a bully-free workplace.