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DOL Pumps It Up With New Guidance on PUMP Act Enforcement

May 19 - Posted at 2:49 PM Tagged: , , , ,

The U.S. Department of Labor Wage and Hour Division (WHD) published Field Assistance Bulletin No. 2023-02 providing guidance to agency officials responsible for enforcement of the “pump at work” provisions of the Fair Labor Standards Act (FLSA)  including those recently enacted under the 2022 PUMP Act.

The PUMP Act was adopted along with the Pregnant Workers Fairness Act when President Biden signed the Consolidated Appropriations Act, 2023 in December 2022.

This guidance provides employers a glimpse into how the WHD understands and will enforce the rights now available to most employees under the Fair Labor Standards Act for reasonable break time and a place to express breast milk at work for a year after a child’s birth.

Here are a few highlights from the WHD’s bulletin.

  • Frequency and Duration of Breaks. The WHD emphasizes that employees are entitled to breaks every time they need to pump and the length and frequency of breaks will vary by employee. Employers and employees may agree to a certain schedule based on the employee’s need to pump, but the WHD advises that employers cannot require employees to comply with a fixed schedule. The WHD also reminds employers that an employee’s needs and break schedule may need to be adjusted over time.
  • Compensation. Time for pump breaks may be unpaid unless otherwise required by federal, state, or local law. Employers should pay careful attention to the FLSA’s standard requirements for counting and compensating hours worked. Employees must be paid for any time spent pumping when they are not fully relieved from duty or when pumping during an otherwise paid break.
  • Privacy Requirements. The FLSA requires that employees have access to a place to pump at work that is (1) shielded from view; (2) free from intrusion from coworkers and the public; (3) available each time it is needed by the employee; and (4) not a bathroom. To ensure privacy, the WHD advises that an employer could display a sign when the space is in use or a lock on the door. Teleworking employees must also be free from observation from a computer camera or other similar device while pumping.
  • Functional Space Requirements. The WHD advises that the location must be “functional” for pumping: “A space must contain a place for the nursing employee to sit, and a flat surface, other than the floor, on which to place the pump. Employees must be able to safely store milk while at work, such as in an insulated food container, personal cooler, or refrigerator. Ideally, spaces to pump breast milk should also include access to electricity, allowing a nursing employee to plug in an electric pump rather than use a pump with battery power, which may require more time for pumping. Access to sinks near to the space provided to pump so that an employee can wash their hands and clean pump attachments also improves the functionality of the space and may reduce the amount of time needed by nursing employees to pump breast milk at work.”
  • Small Employer Exemption. In limited circumstances, employers with less than 50 employees nationwide may be exempt from the pump time requirements if they can demonstrate that compliance with the pump at work provisions for a particular employee would cause an undue hardship. The burden of proving this hardship is on the employer. “To assert the exemption, an employer must be able to demonstrate that the employee’s specific needs for pumping at work is an undue hardship due to the difficulty or expense of compliance in light of the size, financial resources, nature, and structure of the employer’s business.”
  • Anti-Retaliation Provisions. Like most employment laws, the FLSA prohibits retaliation against anyone who has engaged in protected activity, including requesting break time or space to pump or requesting payment of wages. As an example, the WHD states that employers cannot hold time the employee took for pump breaks against them for quotas or require employees to work additional hours to make up for the time missed due to pump breaks.
  • Poster. Employers should post the WHD’s updated FLSA poster.

The WHD also provides additional resources for employers on its Pump At Work webpage.

DOL Issues Guidance on Handling Telework under FLSA & FMLA

February 20 - Posted at 2:25 PM Tagged: , , , , , ,

The U.S. Department of Labor (DOL) has issued guidance on the application of the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) to employees who telework from home or from another location away from the employer’s facility.

The Field Assistance Bulletin (FAB) 2023-1, released on February 9, 2023, is directed to agency officials responsible for enforcement and provides employers a glimpse into how the DOL applies existing law and regulations to common remote-work scenarios. FAB 2023-1 addresses FLSA regulations governing “hours worked,” rules related to break time and privacy for nursing employees, and FMLA eligibility factors.

Hours Worked

In the FAB, the DOL reviews the rules governing compensability of work time, explaining that, regardless of work location, short breaks (typically, 20 minutes or less) generally are counted as compensable hours worked, whereas, longer breaks “during which an employee is completely relieved from duty, and which are long enough to enable [the employee] to use the time effectively for [their] own purposes[,] are not hours worked.” Examples of short breaks, whether at home or in the office, include when an employee takes a bathroom or coffee break or gets up to stretch their legs.

Longer rest breaks and periods of time, when employees are completely relieved from duty and able to use the time for their own purposes, are not considered work time. Just as would be the case when an employee is working in the office, if during remote work an employee’s 30-minute lunch break is interrupted by several work-related phone calls, that 30-minute period would be counted as hours worked. Conversely, if an employee working from home takes a three-hour break to pick up their child or to perform household chores, that time does not count as work time under the FLSA. In short, the FAB reiterates the telework guidance set forth by the DOL in a Q&A series published during the height of the COVID-19 pandemic.

The FAB emphasizes that, regardless of whether an employee performs duties at home, at the worksite, or at some other location, if the employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. Importantly, the FAB notes that an employer may satisfy its obligation to exercise reasonable diligence to acquire knowledge regarding employees’ unscheduled hours of work by providing a reasonable reporting procedure for employees to use when they work non-scheduled time and paying employees for all hours worked. This guidance was addressed in greater detail in FAB 2020-5.

Guidelines for Nursing Employees

The FAB further clarifies that, under the FLSA, an employer’s obligation to provide employees “reasonable break time,” as well as an appropriate place to express breast milk, extends to employees who are teleworking or working at an off-site location. Just as an employer has an obligation to provide an “appropriate place” for an employee to express milk while working at a client site, the employer should ensure a teleworking employee has privacy from a “computer camera, security camera, or web conferencing platform” to express milk.

Employers are not required to pay employees for otherwise unpaid breaks simply because the employee is expressing breast milk during the break, but if an employee is working while pumping (or if the pumping occurs during an otherwise paid break), they must be paid for that time. For example, in most cases, if a remote employee attends a call or videoconference off camera while pumping, that employee would be considered on duty and must be paid for that time.

The recently enacted PUMP Act expanded existing employer obligations under the FLSA to cover exempt employees, as well as non-exempt employees. The DOL has published more guidance on breast milk pumping during work.

Eligibility Under FMLA

The DOL also addresses FMLA eligibility requirements for remote employees both in terms of hours worked (employee must work 1,250 hours in the previously 12 months) and the small worksite exception (employee must work at a worksite with at least 50 employees in a 75-mile radius).

As with the FLSA, it is important for employers to have a system to track their remote workers’ hours. With respect to hours worked, the FAB reiterates that the 1,250 hours determination for remote worker is based on compensable hours of work under FLSA principles.

With respect to the worksite size determination, the FMLA regulations explain that an employee’s personal residence is not a worksite. Instead, whether a remote employee is FMLA-eligible is based on the size of the worksite from which “they report to” or “their assignments are made.” If a remote employee reports into or receives assignments from a site with 50 or more employees working at that site (or reporting to or receiving assignments from that site) or within 75 miles, then that employee would meet that eligibility factor.

The DOL provided two examples of this rule:

  • When both a store employee and their supervisor are working from their homes temporarily due to a weather emergency, for FMLA eligibility purposes, the store remains their worksite.
  • When remote employees are working in various cities more than 75 miles away from the company headquarters but receiving assignments from a manager working at the headquarters, for FMLA-eligibility determination, the company’s headquarters would be considered the workplace for the remote employees.

Employers are reminded to review state and local wage and hour laws, paid and unpaid leave laws, and lactation accommodation laws. If you have any questions about applying the FLSA, the FMLA, or state and local laws to your remote workers or any other questions about remote work considerations, please reach out to any Jackson Lewis attorney.

Managing Remote Workers May Be More Complicated Than You Think

April 19 - Posted at 1:07 PM Tagged: , , , , ,

One of the biggest trends that arose from the pandemic has undoubtedly been the “work from anywhere” mindset. Once both employers and employees realized that work could be performed effectively without sitting in a traditional office, things started to change. Some employers chose to close their brick-and-mortar worksites for good, while some workers decided to relocate to be closer to family or to live in a region with a lower cost of living.

Employers often wonder whether there are legal implications for allowing employees to work temporarily or permanently from a state in which their organization has no business presence. It comes as a surprise to many that allowing an employee to work remotely from a new state is not as simple as they originally thought.

When employers allow an employee to work remotely from a different state, the employer must register to do business in that state and comply with its labor laws. This includes employer payroll and income tax withholding obligations, as well as wage and hour laws and statutory benefits, just to name a few.

Tax Implications

Because income tax requirements are based on where income is sourced, rather than where an employer is headquartered, employers must determine their tax obligations based on the state in which their remote employee is performing work. This generally includes registering with the state as a new employer, withholding employee state income tax, and remitting employer state payroll and unemployment taxes.

Wage and Hour Laws

The Fair Labor Standards Act (FLSA) governs wage and hour requirements at the federal level. However, many states have enacted their own laws that are more generous to workers than the FLSA, and employers must comply with these policies, as well. For instance, some states require that meal and rest breaks be provided, where federal law does not. Minimum wage rates and overtime pay laws differ by state, as do final pay requirements. A handful of states also have minimum salary thresholds for exemption that exceed the federal requirements.

Paid Leave Laws

While not required at the federal level, many states and localities have passed laws mandating paid sick leave for employees. The laws vary by jurisdiction with respect to employer size and the amount of leave required, and they often include notice requirements.

Similarly, numerous states have laws regulating vacation leave when voluntarily offered by employers. These laws might require employers to pay out accrued vacation leave upon separation, prohibit use-it-or-lose-it provisions or impose other limitations on employer leave policies.

Additional state leave laws might also entitle employees to time off from work for other reasons, such as absences related to domestic violence, voting or jury duty, or family and medical leave.

Other Considerations

The nuances of state laws do not end there. Worker anti-discrimination protections vary at the state level, as do pay equity laws and sexual harassment training requirements. Some states require employers to reimburse employees’ business expenses; others have statutory disability benefits. The list goes on. Employers will need to examine their obligations under various state laws when determining how to manage their remote workforce.

 

OSHA Issues ETS Requiring COVID-19 Tests or Vaccinations for Most Employers

November 04 - Posted at 4:36 PM Tagged: , , , , , ,
Less than two months after receiving direction from President Joe Biden, the Occupational Safety and Health Administration (OSHA) has issued an Emergency Temporary Standard (ETS) covering employers with at least 100 employees. Employers must comply with many of the requirements within 30 days and begin required testing within 60 days of the November 5, 2021, effective date. 

The ETS places additional burdens on employers (and employees) already straining under workforce shortages, supply chain issues, and varying standards and guidance related to COVID-19. The ETS is expected to face multiple legal challenges.

Employers Covered

The OSHA ETS applies to employers with at least 100 employees company-wide.

It does not apply to:

  • Workplaces covered under the Safer Federal Workforce Task Force COVID-19 Workplace Safety: Guidance for Federal Contractors and Subcontractors; or
  • Settings where any employee provides healthcare services or healthcare support services when subject to the Emergency Temporary Standard for healthcare employers (Subpart U – 29 CFR §1910.502).

The ETS also does not apply to the employees of covered employers:

  • Who do not report to a workplace where other individuals, such as coworkers or customers, are present;
  • While working from home; or
  • Who work exclusively outdoors.

At any time during the duration of the ETS, if an employer employs at least 100 workers, the requirements of the ETS will apply regardless of fluctuations in the size of the employer’s workforce.

Required Policy

OSHA’s ETS requires employers who have at least 100 employees (company-wide, not just at one facility) to institute either a mandatory vaccine policy or a weekly testing and mask policy.

Employers must inform employees of their policies and procedures designed to comply with the ETS, the Centers for Disease Control and Prevention’s “Key Things to Know About COVID-19 Vaccines,” OSHA’s prohibition against retaliation for reporting workplace illnesses or injuries and OSHA’s whistleblower protections, and the criminal penalties associated with knowingly supplying false statements or documentation.

Vaccination Exceptions Allowed in a Mandatory Vaccination Policy

If an employer adopts a mandatory vaccination policy to comply with the OSHA ETS, it must require vaccination of all employees (and of all new employees as soon as practicable), other than those:

  • For whom a vaccine is medically contraindicated;
  • For whom medical necessity requires a delay in vaccination; or
  • Who are legally entitled to a reasonable accommodation under federal civil rights laws, because they have a disability or sincerely held religious beliefs, practices, or observances that conflict with the vaccination requirement.

How is Vaccination Status Determined?

The employer must require each vaccinated employee to provide acceptable proof of vaccination status, including whether they are fully or partially vaccinated.

Acceptable proof of vaccination status is:

  • The record of immunization from a healthcare provider or pharmacy;
  • A copy of the COVID-19 Vaccination Record Card;
  • A copy of medical records documenting the vaccination;
  • A copy of immunization records from a public health, state, or tribal immunization information system; or
  • A copy of any other official documentation that contains the type of vaccine administered, date(s) of administration, and the name of the health care professional(s) or clinic site(s) administering the vaccine(s).
  • Where an employee is unable to produce acceptable proof of vaccination (as outlined above), a signed and dated statement by the employee:
    • Attesting to their vaccination status (fully vaccinated or partially vaccinated);
    • Attesting that they have lost and are otherwise unable to produce proof required by this section; and
    • Including the following language: “I declare (or certify, verify, or state) that this statement about my vaccination status is true and accurate. I understand that knowingly providing false information regarding my vaccination status on this form may subject me to criminal penalties.”
    • An employee who attests to their vaccination status, to the best of their recollection, should include the following information in their attestation: the type of vaccine administered; date(s) of administration; and the name of the health care professional(s) or clinic site(s) administering the vaccine(s).

What Records Must Be Maintained?

According to the OSHA ETS, the employer must maintain a record of each employee’s vaccination status. The employer must preserve acceptable proof of vaccination for each employee who is fully or partially vaccinated, along with a roster of each employee’s vaccination status. Significantly, employers that have already ascertained vaccination status prior to the effective date of the ETS through another form, attestation, or proof and retained records, are exempted from re-determining the vaccination status of individuals whose fully vaccinated status has been previously documented.

In addition, the employer must maintain a record of each test result provided by each employee.

These records and roster are considered employee medical records and must be maintained as such records. They must not be disclosed except as required or authorized by federal law. These records and roster must be maintained and preserved while this section remains in effect, but are not subject to OSHA’s standard 30-year retention requirement.

Paid Time Off for Vaccine Time

According to the ETS, employers must provide paid time off for employees to get vaccinated (up to four hours) and to recover from any side effects. The ETS requires up to four hours of paid time to receive each dose of the vaccine, including travel time, at the employee’s regular rate of pay. The ETS requires “reasonable time and paid sick leave” to recover from the side effects of each dose of the vaccine.

Who Pays for Testing?

OSHA permits employers to pass the expense for testing to employees, subject to the requirements of other laws.

Whether employers can require employees to pay for their own tests will depend on state law and whether testing is offered as a reasonable accommodation. Many states have laws requiring employers to pay the cost of any required medical exams or tests or expense reimbursement laws, which may be implicated.

The Fair Labor Standards Act (FLSA) and state law will govern whether employers have to pay for the time associated with getting testing and awaiting results.

It is also unclear at this time whether, under the FLSA, the cost of testing may drop an employee’s effective rate of pay below the federal minimum wage.

Conflicting State Law?

Although some states have their own state OSHA plans, such plans generally must be “at least as effective as” the standard set by OSHA. In those states, the federal OSHA ETS will not apply immediately. 

There are currently 22 states that have OSHA-approved State Plans regulating private sector employers. (Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Tennessee, South Carolina, Utah, Vermont, Virginia, Washington, Wyoming, and Puerto Rico.) Those states have 30 days to adopt the federal standard or inform OSHA of their plans to do something else. In addition to their own OSHA plans, some states have passed laws prohibiting or limiting employers’ ability to require COVID-19 vaccines.

OSHA’s ETS is intended to comprehensively address the occupational safety and health issues of vaccination, wearing face coverings, and testing for COVID-19. It, therefore, preempts any state or local requirements on these issues, except those from an OSHA-approved State Plan. Thus, the ETS preempts any state or local requirements banning or limiting an employer from requiring vaccines, face coverings, or testing.

What Type of Tests are Required?

According to the OSHA ETS, the COVID-19 test must be:

  • Cleared, approved, or authorized, including in an Emergency Use Authorization, by the Food and Drug Administration to detect current infection with the SARS-CoV-2 virus (e.g., a viral test);
  • Administered in accordance with the authorized instructions; and
  • Not both self-administered and self-read, unless observed by the employer or an authorized telehealth proctor.

Examples of tests that satisfy this requirement include tests with specimens that are processed by a laboratory (including home or on-site collected specimens that are processed individually or as pooled specimens), proctored over-the-counter tests, point-of-care tests, and tests where specimen collection and processing is done or observed by an employer.

When Must Testing Occur?

Employees who are not fully vaccinated must submit to testing at least weekly if present in the workplace at least once a week or within seven days before returning to work if away from the workplace for a week or longer.

For individuals who have received a positive COVID-19 test or who have been diagnosed with COVID-19, the ETS provides an exception from testing for the 90-day period following the positive diagnosis or test.

Employees who are not fully vaccinated and do not meet the testing requirements must be removed from the workplace pending a test result.

Removal for Positive Tests

Regardless of vaccination status, employees who test positive for COVID-19 or who are diagnosed with COVID-19 must be removed from the workplace until they meet certain return-to-work criteria. The ETS does not require paid leave for employees who are removed, but acknowledges that other laws may impose such obligations.

What Other Requirements Apply?

Masking: Subject to limited exceptions, employers are required to enforce the wearing of masks for those who are unvaccinated when indoors and when occupying a vehicle with another person for work purposes. Like testing costs, the ETS does not mandate employers to pay for face coverings required by the ETS.

Reporting: Employers are required to report work-related COVID-19 hospitalizations and fatalities to OSHA (within 24 hours of hospitalization and eight hours of a fatality). Under OSHA’s normal reporting standards, work-related hospitalizations and fatalities must be reported only if they occur within a certain time period following the work-related incident (24 hours for hospitalization and 30 days for a fatality). Those time periods do not apply to work-related COVID-19 hospitalizations or fatalities, meaning, employers must still notify OSHA even if the hospitalization or fatality occurs after those time periods.

Notice: Employers must require employees to provide prompt notice when they receive a positive COVID-19 test or are diagnosed with COVID-19.

When Does the ETS Take Effect?

The OSHA ETS takes effect immediately, except in those states that have their own state plans. However, employers have 60 days to comply with the testing requirements of the ETS and 30 days to comply with the remaining provisions. State plan states have 30 days from the effective date to adopt the federal standard or inform OSHA of their plans to do something else.

The Feds Are Coming, Is Your Business Ready? Part 1: New DOL Outreach

June 08 - Posted at 8:31 AM Tagged: , , , , , , , , , ,

The Department of Labor (DOL) has launched a new concentrated outreach initiative. For business owners, that means the DOL has promised to actively reach out via radio announcements, social media platforms and neighborhood posters informing employees of their rights under the Fair Labor Standards Act (FLSA). 

You may now be thinking “What does that have to do with me? I pay my employees to work”.  While this may be mostly true, often we (or our managers) inadvertently allow or encourage our employees to work off the clock.  Before your internal defenses kick into high gear, let me provide a few examples of how this could occur: 

  • Have you or one of your managers ever interrupted an employee during lunch to ask a “quick” work related question?
  • Do you auto deduct time for lunch each day?
  • Do your managers understand that if they need to reach out to employees before or after hours, even if it is a quick text or phone call, they should ensure the employee accounts for that time on their timesheet?
  • Do non-exempt employees have access to their work email on their personal phone?
  • How do you confirm time worked for remote employees is accurate?
  • Do you have a policy for your employees to report unauthorized or unapproved overtime?

Over the past year, business owners and managers have dedicated their time, energy and focus to keeping the essential business doors open or attempting to reopen and get employees back in the office.  To allow employees to safely return to work, you have had to operate/reopen your business within CDC guidelines, transition your business to accommodate a remote workforce, follow OSHA’s recommendations, keep up with Federal Equal Employment Opportunity Laws related to the COVID-19 pandemic, as well as the interaction between the Americans with Disability Act (ADA), Title VII of the Civil Rights Act of 1964, and the Genetic Information Nondiscrimination Act (GINA).  It is no wonder some of our focus on day-to-day compliance may have slipped. 

My company’s mission is to be The Employer Advocate.  Under the new administration, changes are happening at lightning speed and, as your advocate, we are here to help you navigate through changes as they occur.  Administrators Advisory Group (AAG) is a benefits brokerage that works with small to mid-size businesses, specializing in human resources compliance.  We work alongside your human resource team to keep you up to date with the latest workplace rules and regulations.

The Department of Labor (DOL) campaign is the first in our four-part series designed to let you know what changes have taken place that may affect your business. In the following weeks, we will cover changes regarding the Family First Coronavirus Response Act (FFCRA) as amended under the CARES Act, changes occurring within OSHA, and a new federal taskforce created whose goal is to unionize your employees. 

While Wage & Hour rules have not changed, the informational outreach by the DOL has just begun.  The biggest change comes in the form of visibility and accessibility of the information, beginning with the revamp of their website.  The DOL has promised to proactively reach out to employees using radio public service announcements, national webinars, social media messages, and posters. 

Reminding employers and employees alike that employees must be paid for ALL hours worked is the center of this outreach!  Even if you don’t ask an employee to work overtime, even if it’s done remotely, and even if you aren’t aware (but should have been), the employee is entitled to be paid.

Wage & Hour rules can be one of the many landmines that employers have to navigate on a daily basis. With AAG on your side, we will help you ensure you are prepared in case the DOL shows up on your doorstep. Let us know if you have questions or would like to review some of your existing practices or policies.

 

Labor Department Issues Guidance On Tracking Employees’ Teleworking Hours

August 27 - Posted at 11:27 AM Tagged: , , , , , ,

The U.S. Department of Labor just released a Field Assistance Bulletin (FAB) to provide employers with guidance regarding their wage and hour obligations to track the hours of employees working remotely or teleworking. Importantly, while the August 24 FAB directly speaks to employers’ Fair Labor Standards Act (FLSA) requirements under remote work arrangements that have arisen amid COVID-19, it also applies to all other telework or remote work arrangements. This guidance may be especially useful to employers who are new to the remote work world.

The Basics: What Does Federal Law Require?

As a reminder, the FLSA requires that an employer compensate employees for all hours it “suffers or permits” them to work. This means that employees must be compensated for time that may be unscheduled, but during which the employee still performs work. Thus, if an employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. 

A challenge for employers is preventing work that it does not want performed. Notably, the employer cannot rely exclusively on its stated policy. Indeed, the guidance notes that it is not easy to define when an employer “has reason to believe that work is being performed.” The FAB reinforces that employers are not required to compensate employees for work they do not know about and have no reason to know about. 

New Challenges Raised By Remote Work

Rather, employers are only required to compensate employees for hours worked that are based on “actual knowledge” or “constructive knowledge” of that work. Employers will be deemed to have “actual knowledge” of employees’ regularly scheduled hours and through employee reports or other notification “actual knowledge” of the hours worked. Employers might be deemed to have “constructive knowledge” if it could have acquired information regarding additional work done through the exercise of “reasonable diligence.” 

Importantly, the FAB clarifies that “reasonable diligence” is limited to what the employer should have known, not what it “could have known.” This means employers are not necessarily required to “cross-reference” phone records or otherwise review other non-payroll records to determine whether or not employees were working beyond their scheduled hours, especially during these remote work times. 

What Should Employers Do?

Instead, you should provide employees with a process and procedure to report hours worked, particularly to ensure that unscheduled hours also are recorded. If the employee fails to utilize the process or procedure, you might be able to make an argument that the employee has prevented you from satisfying your obligation to compensate employees and thwarted your efforts to prevent unwanted work. Thus, you may be able to avoid FLSA liability for failing to compensate employees for work performed that you did not know about and that the employee didn’t advise you about. 

You should review your remote work and telework policies to ensure that they provide clear guidance to employees about your expectations regarding schedules and working hours. You should also implement a policy or procedure by which employees can report work that was performed outside their regularly scheduled time frames or their recorded hours.

Conclusion

Overall, you should exercise reasonable diligence to ensure that you capture all hours worked (whether scheduled or not, just as they must for employees working onsite). But you can take some solace in the USDOL’s guidance reminding us all that “constructive knowledge” is not without limits.

Labor Department Offers Guidance On Families First Coronavirus Response Act, Effective As Of April 1

March 25 - Posted at 1:54 PM Tagged: , , , , , , , ,

The U.S. Department of Labor released a preliminary “Questions and Answers” page today, attempting to answer some preliminary compliance questions related to the new Families First Coronavirus Response Act, which will bring emergency family and medical leave, as well as paid sick leave, for many employers across the country. The agency stated it also will be issuing implementing regulations regarding the new law in the near future. The big news is that the law will take effect April 1, 2020 – not April 2 as originally expected – but there are also plenty of other helpful pieces of information in the document. What do employers need to know about this latest development? 

Not An April Fool’s Joke: Law Effective April 1, 2020

As a major surprise, the Department of Labor (DOL) announced the paid leave provisions of the Families First Coronavirus Response Act (FFCRA) are effective on April 1, 2020 and will apply to leave taken between April 1, 2020 and December 31, 2020.

This effective date took many by surprise. The FFCRA states the leave provisions “shall take effect not later than 15 days after the date of enactment.” As the FFCRA was signed by President Trump on March 18, 2020, many assumed DOL would implement the law on April 2, 2020.

The DOL gave no reason why it chose to move up implementation by one day, but there is speculation this was done to line up the effective date of the law with the calendar quarter.

How Do You Count To 500?

Both leave provisions of the FFCRA apply to private employers with fewer than 500 employees. One of the most common questions for employers regarding the FFCRA involves uncertainty as to how and when you count employees for these purposes, and when you consider separate entities to be a single employer for these purposes. The DOL’s Questions and Answers attempt to address the following by stating:

You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States, which includes any State of the United States, the District of Columbia, or any Territory or possession of the United States. In making this determination, you should include employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.

Typically, a corporation (including its separate establishments or divisions) is considered to be a single employer and its employees must each be counted towards the 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two corporations are separate employers unless they are joint employers under the FLSA with respect to certain employees. If two entities are found to be joint employers, all of their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act and expanded family and medical leave must be provided under the Emergency Family and Medical Leave Expansion Act.

In general, two or more entities are separate employers unless they meet the integrated employer test under the Family and Medical Leave Act of 1993 (FMLA). If two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.

Therefore, the DOL provides the opinion that an employer is covered if, at the time the leave is to be taken (a “snapshot” approach), the business employs fewer than 500 employees.  Moreover, the analysis addresses important issues regarding whether separate entities are counted as one employer for purposes of the new leave laws. First, the DOL states that if two entities are found to be “joint employers” under the FLSA, all of their common employees must be counted in determining whether leave must be provided under for Emergency Paid Sick Leave and Emergency Family and Medical Leave.

The DOL document also states that if two entities are an “integrated employer” under the Family Medical Leave Act (FMLA), all of the employees of the integrated employer will be counted in determining employer coverage for purposes of Emergency Family and Medical Leave.

The “joint employer” analysis under the FLSA and the “integrated employer” analysis under the FMLA are complicated and involve a critical analysis of specific facts. Employers with questions about how these tests may apply to their specific situation should reach out for legal opinion.

Is The FFCRA Retroactive?

Another common inquiry was whether employees can take paid sick leave under the FFCRA prior to the effective date (that would count towards their FFCRA paid sick leave entitlement), and whether the law will have retroactive effect. The DOL attempted to address these issues by stating:

Can my employer deny me paid sick leave if my employer gave me paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect?

No. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.

Are the paid sick leave and expanded family and medical leave requirements retroactive?

No.

Does Emergency Paid Sick Leave And Emergency FMLA Run Concurrently For Leave Related To School Closures?

The qualifying reason for leave under the Emergency FMLA involves caring for a child when their school or place of care is closed. One of the six qualifying reasons for Emergency Paid Sick Leave similarly addresses this same reason. Therefore, many employers have inquired as to whether these leaves will run concurrently when taken for the same qualifying reason. The DOL addressed this issue when it stated:

If I am home with my child because his or her school or place of care is closed, or child care provider is unavailable, do I get paid sick leave, expanded family and medical leave, or both—how do they interact?

You may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period thus covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless the you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first ten workdays have elapsed, you will receive 2/3 of your regular rate of pay for the hours you would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act.

Next Steps

Employers should note that this is an initial and informal compliance assistance document from DOL. These answers may change or be added to over time. Moreover, the DOL will be developing more formal guidance and regulations that may definitively answer these questions and may do so in a different manner. Nevertheless, this preliminary “Questions and Answers” document may give some indication about how the agency is likely to formally interpret and enforce the new law in the near future.

We will continue to monitor the rapidly developing COVID-19 situation and provide updates as appropriate. 

What Employers Need to Know About the Families First Coronavirus Response Act

March 19 - Posted at 2:14 PM Tagged: , , , , , , , ,

The afternoon of March 18, 2020, the Senate passed H.R. 6201, the Families First Coronavirus Response Act. Division C of the Bill details the Emergency Family and Medical Leave Expansion Act, and Division E provides additional protections under the Emergency Paid Sick Leave Act. Both divisions apply to employers with fewer than 500 employees.

At a high level, these laws work together so that, under the Emergency Paid Sick Leave Act, qualifying employees will receive 80 hours of paid leave for immediate use, then they will received paid leave at two-thirds of the employee’s wages for the duration of a COVID-19 related Family and Medical Leave Act leave.

Key provisions of both laws are described below.

Emergency Family and Medical Leave Expansion Act (Effective 15 days after enactment)

This statute provides for additional benefits under the FMLA so that eligible employees will receive job protection and a paid component for certain COVID-19-related absences.

Which employers are covered? 

Employers with fewer than 500 employees are subject to the expansion. Part-time employees are included in this count to assess coverage.

The Secretary of Labor has authority “for good cause” to exempt (1) certain healthcare providers and emergency responders; and (2) small employers with fewer than 50 employees where the added expense would jeopardize the business. Under certain circumstances, the requirement to restore employees to their employment will not apply to businesses with fewer than 25 employees.

Additionally, an employer of employees who are healthcare providers or emergency responders may exclude these employees.

As a practical matter, larger employers that break up their workforce across smaller employing entities should review the respective employee populations for each entity to determine whether the expansion will apply to that population. In making this decision, consider what company is listed as the employer on an employee’s pay statement or review each Employer Identification Number separately.

Which employees are eligible?

Employees who have been employed for at least 30 calendar days will qualify for leave. Notably, the other FMLA employee eligibility requirements (e.g., hours worked) do not apply here.

Employers appear to have the discretion to exclude healthcare providers and emergency responders, though this language of the statute is in tension with the delegation of rulemaking authority to the Secretary of Labor to determine such exemptions.

What events will trigger coverage?

Employees who are unable to telework may use this leave if they must care for a child following the closure of a school or daycare, or other unavailability of childcare due to the coronavirus.

How does paid leave apply?

The first ten (10) days of FMLA leave may be unpaid (but see the Emergency Paid Sick Leave Act provisions, below).  Employees may elect to use their accrued vacation, personal or sick leave to cover this window, but employers may not require it. After this initial period, the employer will be required to pay at least two-thirds of an employee’s regular wages, according to their normally scheduled hours.

Payment is capped at $200 per day and $10,000 total for the duration of the leave.

The statute provides a formula for calculating payments for employees with varying or irregular schedules.

The expansion allows for up to twelve (12) weeks of coverage for all eligible employees in addition to the initial 10-day supplement provided by the Act.

Emergency Paid Sick Leave Act (Effective 15 days after enactment)

This statute provides for immediate use of up to 80 hours of paid leave for eligible employees, in addition to any other leave policies afforded by the employer.

Which employers are covered?

Employers with fewer than 500 employees are subject to the statute.  Part-time employees are included in this count to assess coverage.

The Secretary of Labor has authority to exempt (1) certain healthcare providers and emergency responders; (2) small employers with fewer than 50 employees where the added expense would jeopardize the business.  Under certain circumstances, the requirement to restore employees to their employment will not apply to businesses with fewer than 25 employees.

Which employees are eligible?

All employees, full and part-time, are covered. Unlike the FMLA expansion, there is no tenure requirement.

However, an employer of employees who are healthcare providers or emergency responders may exclude these employees. Employers appear to have the discretion to exclude health care providers and emergency responders, though this language of the statute is in tension with the delegation of rulemaking authority to the Secretary of Labor to determine such exemptions.

When can employees take leave?

Immediately.  There is no accrual or waiting period.

What events will trigger coverage?

Employees who are unable to telework may use this leave for COVID-19 related medical leave, including self-isolation due to a positive COVID-19 diagnosis; obtaining a medical diagnosis or care if the employee is experiencing coronavirus symptoms; complying with a recommendation or order of a public health official or healthcare provider; caring for a family member who is self-isolating because of a positive diagnosis or experiencing coronavirus symptoms; or is experiencing any other “substantially similar condition” specified by the Secretary of Health and Human Services in consultation with the Secretary of Treasury and the Secretary of Labor.

As with the FMLA component above, coverage will also be triggered where an employee must care for a child following the closure of a school or daycare, or other unavailability of childcare due to the coronavirus.

How does paid leave apply?  

Full-time employees are entitled to 80 hours of paid leave. For part-time employees, employers should use the employee’s average weekly hours over a two-week period. State and local minimum wage rates are automatically adopted for calculating payments if they are higher than the employee’s effective hourly rate.

Payment is capped at $511 per day or $5111 in the aggregate if the employee is home due to any qualifying reason listed above other than school closure or care for an ill family member under specific circumstances. Payment is capped at $200 per day or $2000 in the aggregate if the employee is home caring for a family member with the virus or due to a child’s school closure.

How does the statute interact with state and local law?

This leave is to be given in addition to any required paid leave provided by state or local law.

Does this paid leave ever expire?

Yes. Leave will automatically expire on December 31, 2020 and cannot be carried over into the following calendar year.

What happens if an employer violates the Act?

Failure to pay sick leave will be treated as a minimum wage violation under the Fair Labor Standards Act (FLSA). Remedies for a private cause of action include unpaid wages, liquidated damages (double damages), attorneys’ fees and costs. Employers should be conscious of the heightened risk for a collective action for failure to comply, as well as the potential for personal liability for owners, corporate officers, and other supervisors provided by the FLSA.

Discrimination or retaliation against employees who take leave under the Act or file a complaint relating to the Act is also prohibited. Employers contemplating cost saving measures, including a reduction in force, layoff, or hours reduction, against employees availing themselves to this benefit are strongly encouraged to seek legal counsel to assess risk.

How do employers alert their employees of the Act?

Within seven days from enactment, the Secretary of Labor will provide a model notice to be posted in areas that are readily accessible to employees (e.g., kitchens and breakrooms). We anticipate direct notice might also be required in the form of an email or letter.

Refundable Payroll Tax Credits for Paid Leave (Effective 15 days after enactment)

The statute also provides for refundable payroll tax credits through 2020 for employers that provide paid leave in accordance with either the Emergency Family and Medical Leave Expansion Act or the Emergency Paid Sick Leave Act.

How is the tax credit determined?

Section 7001 of the act provides a tax credit for the cost of paid leave provided under the Emergency Paid Sick Leave Act. Section 7003 of the act provides a similar tax credit for the cost of paid leave provided under the Emergency Family and Medical Leave Expansion Act.

Both credits are applied against section 3111(a) or 3221(a) of the Internal Revenue Code, which imposes the employer portion of Social Security and Medicare (FICA) taxes.  Accordingly, even employers that do not pay income tax may benefit from the credit.  The credits are refundable to the employer.

Section 7001 permits a tax credit for up to 10 days of paid leave per employee under the Emergency Paid Sick Leave Act in the amount of up to (a) $511 per day for amounts paid to employees who must self-isolate, obtain a diagnosis, or comply with medical advice regarding a COVID-19 diagnosis, or (b) up to $200 per day for employees on paid leave due to caring for a family member or for a child due to school closures or unavailability of care.  In addition, employers may obtain a credit for “qualified health plan expenses” that are allocable to providing qualified paid sick leave determined above.

Section 7003 provides a similar tax credit for paid leave under the Emergency Family and Medical Leave Expansion Act, but that credit is limited to $200 per day and an aggregate of $10,000.  A credit is also available for the cost of providing qualified health plan expenses allocable to providing the qualified family leave determined above.

Similar refundable tax credits are available for self-employed workers.

When does the tax credit apply?

The tax credit applies only to paid wages beginning on the effective date of the law (15 days after its enactment), and will expire on December 31, 2020. The Internal Revenue Service (IRS) is expressly empowered to issue additional guidance implementing these changes, and the bill includes additional funding reserved to the IRS for this purpose.

*****

As with any new legislation, the Act will result in a lot of unanswered questions regarding implementation.  We will continue to make available guidance as it becomes available. 

Congress Makes Significant Changes to Proposed FMLA and Sick Leave Requirements in COVID-19 Bill

March 17 - Posted at 12:58 PM Tagged: , , ,

On March 16, 2020, the U.S. House of Representatives unveiled legislation revisiting the sweeping COVID-19 response bill it passed only days earlier.  While listed as “corrections” to the prior legislation, this new bill dramatically changes a number of provisions it had previously adopted.

It is stressed that this bill—like the prior iteration of H.R. 6201—is but one step in the process.  The U.S. Senate is preparing to debate its own legislation responding to COVID-19. What the House and Senate ultimately pass separately must be reconciled before a single bill can be approved and sent to the president for his signature. 

By way of brief background, the House originally approved sweeping legislation to address COVID-19, including several proposals relating to employer-mandated paid sick leave, as well as expansion of the federal Family and Medical Leave Act (FMLA).  Specifically, that bill required private employers with 500 or fewer employees, and most public-sector employers, to provide extended “emergency” FMLA leave for a variety of COVID-19-related contingencies.  It further adopted an emergency paid sick leave requirement for these same employers, while providing refundable tax credit relief for emergency FMLA and sick leave.  Although the bill was adopted on a bipartisan basis, it immediately drew concern from many quarters, particularly small businesses facing a dramatic downturn in business relating to the current public health emergency, and the real-time economic impact these new requirements would have on these employers. 

The new legislation released by the House generally narrows and targets these relief programs, and attempts to harmonize their interaction. This revised bill now provides as follows:

Emergency Family and Medical Leave Act

The revised bill provides that private-sector employers with fewer than 500 employees, and covered public-sector employers, must provide up to 12 weeks of job-protected FMLA leave for “a qualifying need related to a public health emergency” to employees who have been on the payroll for 30 calendar days.  This “qualifying need” is limited to circumstances where an employee is unable to work (or telework) due to a need to care for a minor child if the child’s school or place of child care has been closed or is unavailable due to a public health emergency.  This is a dramatic scaling back from the prior iteration of the bill, which would have provided extended FMLA for a far broader range of COVID-19-related reasons.

As with the prior bill, the first segment days of emergency FMLA leave (which has been reduced from 14 days to 10 days in the revised bill) can be unpaid.  An employee can opt to substitute accrued vacation, personal, or sick leave, but an employer may not require an employee to do so.

The remainder of FMLA leave is required to be paid, generally at two-thirds of the employee’s regular rate, for the number of hours the employee would otherwise be scheduled to work.  Unlike the prior bill, the revised bill limits the amount of required pay for leave to no more than $200 per day and $10,000 in the aggregate. 

Emergency FMLA leave taken is generally job-protected, meaning the employer must restore employees to their prior positions (or an equivalent) upon the expiration of their need for leave.  As in the prior version, the bill includes an exception to this requirement for employers with fewer than 25 employees, if the employee’s position no longer exists following leave due to operational changes occasioned by a public health emergency (e.g., a dramatic downturn in business caused by the COVID-19 pandemic), subject to certain conditions.

The revised bill retains language allowing the Secretary of Labor to exclude health care providers and emergency responders from the definition of employees who are allowed to take such leave, and to exempt small businesses (defined as those with fewer than 50 employees) if the required leave would jeopardize the viability of their business.

Further, the bill appears to exclude employers with fewer than 50 employees in a 75-mile radius from civil FMLA damages in an employee-initiated lawsuit.  Finally, the bill expressly provides that employers may exclude employees who are health care providers or emergency responders from this emergency FMLA entitlement. 

The bill would take effect 15 days after enactment, and sunset on December 31, 2020.

Emergency Paid Sick Leave

The bill requires private employers with fewer than 500 employees, and covered public employers, to provide paid sick time to an employee who is unable to work or telework because: (1) the employee is subject to a federal, state, or local quarantine or isolation order related to COVID-19; (2) the employee has been advised by a health care provider to self-quarantine because of COVID-19; (3) the employee is experiencing symptoms of COVID-19 and is seeking a medical diagnosis; (4) the employee is caring for an individual subject or advised to quarantine or isolation; (5) the employee is caring for a son or daughter whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 precautions; or (6) the employee is experiencing substantially similar conditions as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.

An employer may exclude employees who are health care providers or emergency responders from this coverage. The bill also grants the Secretary of Labor the authority to issue regulations to: (a) exclude certain health care providers and emergency responders from the definition of employee by, among other things, allowing them to opt out; (b) exempt small businesses with fewer than 50 employees from these requirements if they jeopardize the viability of a business as a going concern; and (c) ensure consistency between the paid family and paid sick standards and tax credits.

In general, an employee is entitled to 80 hours of paid sick time (pro-rated for part-time employees).  Unlike the 30-day payroll requirement, employees are immediately eligible for this leave. 

The bill limits an employer’s requirement of paid leave to $511 per day ($5,110 in the aggregate) where leave is taken for reasons (1), (2), and (3) noted above (generally, an employee’s own illness or quarantine); and $200 per day ($2,000 in the aggregate) where leave is taken for reasons (4), (5), or (6) (care for others or school closures).

The bill includes a prohibition on retaliating against any employee who takes leave in accordance with the new law.  The bill further provides that the failure to pay required sick leave will be treated as a failure to pay minimum wages in violation of the Fair Labor Standards Act.

The bill would become effective 15 days after its enactment, and sunset on December 31, 2020.

Tax Credits and Other Efforts

The bill includes refundable tax credits for employers that are required to offer Emergency FMLA or paid sick leave, including self-employed individuals.  Note that these credits are only available to those employers that are required to offer these benefits under the new law, and these new credits are not generally extended to employers not subject to the new mandates under the bill.

In addition, the Department of Treasury is reported to be exploring means within its administrative powers to allow small businesses the liquidity and cash flow they need to maintain operations.

Finally, it seems likely that Congress will next turn its attention to broader economic relief measures.  Many have suggested a reduction or suspension in the payroll tax.  Others are calling for targeted relief for specific industries (travel, lodging, restaurants, retail), which have been rapidly and dramatically impacted by the pandemic.

Going Forward

The bill still leaves many questions unanswered.  For example, the bill does not define “full time” employment.  Similarly, it does not state explicitly how employers will be expected to calculate the number of their employees for purposes of the fewer-than-500 cap.  Both the existing FMLA and FLSA include provisions relating to the aggregation of employees where there is common control or an integrated enterprise.  Absent congressional change, it is likely courts and agencies will apply these tests for purposes of the emergency leave expansion thresholds.

More broadly, and as noted above, the landscape changes daily as Congress considers (and now, potentially reconsiders) legislative and policy responses to this unprecedented public health emergency.  

USDOL Releases Overtime Rule 2.0 For 2020

September 25 - Posted at 6:44 PM Tagged: , , , , , , , ,

The suspense is over – the Department of Labor announced  yesterday the revised Overtime Rule, which will set the minimum salary threshold for the Fair Labor Standard Act’s white-collar exemptions at $684 per week, or $35,568 per year. The rule, which will expand overtime pay obligations to an estimated 1.3 million additional workers, will take effect on January 1, 2020. The big question is what do you need to know about this breaking news?

Proposed Rule In A Nutshell

  • The minimum salary threshold will be $684 per week, annualized to $35,568 per year.
    • The rule provides for one threshold regardless of exemption, industry, or locality, subject to a few exceptions that already existed.
    • Employers will be able to credit certain non-discretionary payments in limited ways.
  • The highly compensated employee exemption’s additional total annual compensation requirement will be set at $107,432 per year.
  • No changes will be made to the duties tests – the crux of the relevant exemptions.
    • The changes are limited to the executive, administrative, professional, and highly compensated employee exemptions.
    • No change has been made to the various other exemptions (for example, outside sales) that do not specifically include a salary requirement even if the employee happens to earn a salary.
  • There will be no “automatic” updates, or even a formal schedule of future adjustments to these figures.
    • However, you can expect that the salary threshold will be assessed more frequently than it has been in the past, but hopefully not so often that it essentially drives the market.

A Brief History Of The Overtime Rule Saga

It seems an eternity ago when President Obama directed the U.S. Department of Labor (USDOL) to revise the regulations governing the outdated white-collar exemptions of the Fair Labor Standards Act (FLSA). The proposal eventually released by the USDOL would have radically altered the federal compensation rules. Most notably, the agency would have more than doubled the salary threshold and applied, essentially, a formula to update the amount every three years. This minimum threshold was set to become effective on December 1, 2016, and the “updating” would begin, ironically, on January 1, 2020.

But concerned states and business groups sought to block the rule from taking effect, and, at the last minute, a federal court issued a preliminary injunction preventing the rule from being implemented on a nationwide basis. Since the Texas court put the final nail in Overtime Rule 1.0’s coffin by striking down the rule once and for all in August 2017, employers have been patiently awaiting a revised rule.

Under the current administration, USDOL leadership indicated that it would no longer advocate for the $913 per week proposal but would instead undertake further rulemaking to determine what the salary level should be. In what seemed like a painstakingly long process, the agency held public forums, issued a request for information, and sought comments on a proposed rule that, like Overtime Rule 1.0, focused solely on the pay component but without completely overshadowing the duties tests. After all, the FLSA authorizes the agency to define and delimit the executive, administrative, and professional exemptions – not supplant them. Today, finally, all of the work culminated in the release of Overtime Rule 2.0.

Will This Rule Survive?

After the drama surrounding the last-minute injunction blocking the 2016 proposal, it would be natural for employers to feel gun-shy about adjusting to these changes. After all, isn’t there a chance that another court will once again block these changes and put us in yet another state of limbo? While there is always a chance for litigation to unfold in such a way that it would impact the implementation of this rule, there are several reasons why you should be preparing as if this rule will go into effect as planned on January 1, 2020.

First, while there is no magic number for setting the salary threshold (that’s the whole point), there is something to be said for certainty. The new rule skirts some of the more problematic areas that existed with the first attempt at revisions. The $684 per week threshold will require the reclassification (or pay increases) of some employees, but a far less significant portion than would have seen increases had the $913-per-week proposal of three years ago was adopted. 

Second, while the rule contains some of the same flaws as Overtime Rule 1.0, they generally are not the kinds of concerns that were previously raised in lawsuits. Employer advocates will have more difficulty taking the position that this particular threshold eclipses the duties tests. Likewise, while employee advocates might feel that the threshold is set at too low a level, meeting the pay component does not make someone exempt in and of itself, so this argument is more philosophic in nature and may not warrant the rule being blocked.

Finally, the USDOL must be well prepared at this point to defend the rule. Even aside from the litigation, it has received voluminous public feedback on an increase from $455 per week numerous times, including those shared in 2015, 2017, and 2018. So, while litigation seems inevitable, employers should not be idle in preparing for this rule to take effect.

Avoiding The Last-Minute Panic

As recounted above, the drama surrounding Overtime Rule 1.0 was a painfully long process for employers as they waited to see what might happen. The best practice, though, is to assume Overtime Rule 2.0 is the real thing. That said, you should not run out tomorrow and make immediate changes to your compensation structure. Instead, you should use this time to start evaluating not just whether changes will be necessary, but how best to make those changes (timing, communications, etc.).

If you made changes in 2016 in anticipation of the $913 per week threshold, you are certainly ahead of the curve. If you did some of the work but decided to wait to implement once the preliminary injunction was put in place, you also have a great head start. Nonetheless, in both cases, you must keep in mind that three years have passed and it is possible that an employee’s work has changed in the interim. 

It is imperative to confirm your prior findings at least for any employee that might receive a salary increase to qualify for exempt status under Overtime Rule 2.0. No employee is automatically entitled to be treated as exempt; in contrast, increasing the salary for an employee that does not meet the duties tests can only make matters worse.

Right now, you should begin:

  • Analyzing whether those exemptions you have been relying upon will still apply;
  • Considering the possible application of alternative FLSA exemptions; and
  • Developing FLSA-compliant pay plans for employees who have been treated as exempt but who no longer will be.

Courtesy of Fisher Phillips LLP

 

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