Monthly Archives: June 2015

SALARIED EMPLOYEES JUST RECEIVED A BIG RAISE: DOL ISSUES PROPOSED RULES

Today the Department of Labor announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.  This proposed rule was anticipated and discussed in last week’s HR Law Insider article.

If enacted, the proposal will guarantee overtime pay to most salaried workers earning less than an estimated $50,440 next year.

As part of its annual brown bag employment law seminar for businesses, in October Bourque Law Firm will be holding informational seminars on how to deal with the proposed rules, which will likely become law sometime in 2016. The seminars will also include a more general discussion of current trends in employment law and ways to reduce exposure to employee and government claims.

Please contact Mr. Bourque if you are interested in attending these free seminars, which are Mr. Bourque’s way of “giving back.”

Note:  to add some spice — or salsa — we are moving the venue from Bourque Law Firm’s offices to across the street at Aunt Chilada’s.

 

Regarding the proposed rules, the White House issued the following press release:

“The salary threshold guarantees overtime for most salaried workers who fall below it, but it is eroded by inflation every year.  It has only been updated once since the 1970s, when the Bush Administration published a weak rule with the strong support of industry.  Today, the salary threshold remains at $23,660 ($455 per week), which is below the poverty threshold for a family of four, and only 8 percent of full-time salaried workers fall below it.

President Obama directed the Secretary of Labor to update regulations relating to who qualifies for overtime pay so that they once again reflect the intent of the Fair Labor Standards Act, and to simplify the rules so they’re easier for workers and businesses to understand and apply.  Following months of extensive consultations with employers, workers, unions, and other stakeholders, the Department of Labor developed a proposal that would:

  • Raise the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers.  As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) – below the poverty threshold for a family of four – to a projected level of $970 a week ($50,440 a year) in 2016.
  • Extend overtime pay and the minimum wage to nearly 5 million workers within the first year of its implementation, of which 56 percent are women and 53 percent have at least a college degree.
  • Provide greater clarity for millions more workers so they – and their employers – can determine more easily if they should be receiving overtime pay.
  • Prevent a future erosion of overtime and ensure greater predictability by automatically updating the salary threshold based on inflation or wage growth over time.

In conclusion, big change is coming, which is the perfect segue for this week’s HR Law Insider music video — a sweet ditty named Change by Blind Mellon:

PLAN NOW: THE OVERTIME EXEMPTION FOR SALARIED EMPLOYEES MAKING LESS THAN $50,000 IS GOING AWAY SOON

Does your business have any salaried employees making less than $50,000 per year?  Not for long, if a widely anticipated federal law goes into effect.

This week, the US Department of Labor (DOL) is expected to propose new regulations that may abolish the overtime exemption for all currently salaried employees that make less than $50,000 per year. 

When enacted, the regulations will greatly reduce businesses’ ability to claim executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act (FLSA). The regulations will affect millions of workers  and their employers.

Does your business have any managers, assistant managers, supervisors, bookkeeper/accountants, office administrators, or other salaried employees earning less than $50,000 per year?  If so, start planning NOW for what appears to be inevitable change.

THE OVERTIME EXEMPTION:  FROM $23,660 TO $50,000 WITH THE STROKE OF A PEN

Employers currently need not pay overtime to salaried employees who make more than $23,660  and meet the other criteria for one of the FLSA’s exemptions (administrative, executive, professional, etc.).

However, many employees and pro-labor groups have argued that $23,660  is inadequate as a minimum threshold for “managerial” employees that are often forced to work up to and beyond 60 hours per week.

They also contend that many employers abuse the exemption by falsely labeling manual workers as “assistant managers” and “managers.” In truth, they say, the label is nothing more than an end run around paying overtime to these hard working employees.

The Obama administration and Department of Labor have listened.  In a 2014 memorandum to the Secretary of Labor, President Obama said that the exemptions “have not kept up with our modern economy.” The administration then requested that the Department of Labor propose new regulations that could more than double the minimum salary necessary for employers to meet the overtime exemption.

In a “Rewarding Hard Work” blog post just last month, the Secretary of Labor made no bones about his belief that “millions of salaried workers have been left without the guarantee of time and a half pay for the extra hours they spend on the job and away from their families.”

PLANNING FOR THE INEVITABLE CHANGE:  WHAT CAN EMPLOYERS DO?

If your business has salaried employees making less than $50,000, it should begin evaluating how it will deal with being forced to pay such employees overtime.

Many employers will simply reclassify the workers as hourly and pay overtime when it is due; others will reduce hourly wages, such that the employees’ overall compensation is the same as it is now when overtime is calculated; and yet other businesses will ensure that no overtime is worked.

Businesses should be careful, however, not to get too “crafty” with any changes — lest such changes violate the FLSA.  Consult with legal counsel regarding the legality of changes, as the DOL is sure to be on the lookout for companies trying end runs around the new regulations.

There are many other aspects of the upcoming regulations that will affect the proper classification of workers as hourly or exempt.  When the proposed regulations are announced, the HR Law Insider will provide an update on the central issues confronting employers.

One final note:  it is possible that the threshold for salaried workers will be something less than $50,000.  In any event, it will be substantially greater than $23,660 given the President’s and Secretary’s pronouncements.

Regardless of what businesses will do when the new regulations become law — likely in 2016 — they should annually conduct internal audits with counsel to determine whether employees are properly classified. I have recently defended a number of Department of Labor Audits in the construction, real estate, manufacturing, and restaurant industries.  Properly classifying employees and paying appropriate overtime is almost always the DOL’s top priority.

TIME TO MAKE THE DONUTS:  THE CLASH BETWEEN EMPLOYEES AND BUSINESSES PLAYS OUT AT DUNKIN DONUTS

This week’s video — “Are Bosses Cheating Workers Out of Overtime”  — crystallizes the battle between employees and businesses regarding overtime:

For further information on this or other employment law topics, contact Art Bourque at Bourque Law Firm.

BREAKING NEWS: ABERCROMBIE AND FITCH DRESSED DOWN BY SUPREME COURT IN MUSLIM HEADSCARF CASE

Today, the US Supreme Court held that clothing store Abercrombie and Fitch could be held liable for its neutral, even-handed application of a policy prohibiting head ware.

The decision is a lesson for employers:  when a person seeks a religious or other accommodation, applying a policy in a neutral manner can still be a violation of Title VII, which grants special treatment for certain classes of employees.

 

WHERE ABERCOMBIE AND FITCH WENT WRONG

Abercrombie & Fitch Stores, Inc., operates several lines of clothing stores, each with its own “style.” Consistent with the image Abercrombie seeks to project for each store, the company imposes a Look Policy that governs its employees’ dress. The Look Policy prohibits “caps”—a term the Policy does not define—as too informal for Abercrombie’s desired image.

Samantha Elauf is a practicing Muslim who, consistent with her understanding of her religion’s requirements, wears a headscarf. She applied for a position in an Abercrombie store, and was interviewed by Heather Cooke, the store’s assistant manager. Using Abercrombie’s ordinary system for evaluating applicants, Cooke gave Elauf a rating that qualified her to be hired; Cooke was concerned, however, that Elauf ’s headscarf would conflict with the store’s Look Policy.

Cooke sought the store manager’s guidance to clarify whether the headscarf was a forbidden “cap.” When this yielded no answer, Cooke turned to Randall Johnson, the district manager. Cooke informed Johnson that she believed Elauf wore her headscarf because of her faith. Johnson told Cooke that Elauf ’s headscarf would violate the Look Policy, as would all other headwear, religious or otherwise, and directed Cooke not to hire Elauf.

THE EEOC SUES ABERCROMBIE AND FITCH AND OBTAINS A SUPREME COURT VICTORY

The EEOC sued Abercrombie on Elauf ’s behalf, claiming that its refusal to hire Elauf violated Title VII.  After winning in the trial court, the EEOC lost before the court of appeals.  Today, the US Supreme Court reinstated the EEOC’s initial victory, ruling that:

“The rule for disparate-treatment claims based on a failure to accommodate a religious practice is straightforward:  An employer may not make an applicant’s religious practice, confirmed or otherwise, a factor in employment decisions. For example, suppose that an employer thinks (though he does not know for certain) that a job applicant may be an orthodox Jew who will observe the Sabbath, and thus be unable to work on Saturdays. If the applicant actually requires an accommodation of that religious practice, and the employer’s desire to avoid the prospective accommodation is a motivating factor in his decision, the employer violates Title VII.”

The Supreme Court rejected Abercrombie’s argument that its neutral policy — which treated Muslims and non-Muslims alike — was lawful:

“Abercrombie’s argument that a neutral policy cannot constitute “intentional discrimination” may make sense in other contexts.  But Title VII does not demand mere neutrality with regard to religious practices—that they be treated no worse than other practices.  Rather, it gives them favored treatment, affirmatively obligating employers not “to failor refuse to hire or discharge any individual . . . because of such individual’s” “religious observance and practice.”  An employer is surely entitled to have, for example, a no headwear policy as an ordinary matter. But when an applicant requires an accommodation as an “aspec[t] ofreligious . . . practice,” it is no response that the subsequent “fail[ure] . . . to hire” was due to an otherwise-neutral policy.  Title VII requires otherwise-neutral policies to give way to the need for an accommodation.”

CONCLUSION

For employers, applying a clothing or other policy in a neutral manner may still be a violation of the law when there is a requirement to accommodate.

Therefore, ALWAYS determine whether there is a duty to accommodate before woodenly applying any employment policy.

 

 

 

 

 

SUMMER INTERNS: TO PAY OR NOT TO PAY, THAT IS THE QUESTION

Summer is upon us — school is out and it was a toasty 107 degrees in Phoenix this past weekend.  Ouch.

Summer internships can take the sting out of the heat for students by giving them the opportunity to gain valuable experience in the workplace.  In turn, businesses benefit from summer interns; it is refreshing to have up and comers in the workplace — up and comers who may one day become employees.

This HR Law Insider edition examines when employers are required to pay summer interns, so that employers are not stung by the heat of a Department of Labor investigation.

FACTORS GOVERNING WHETHER SUMMER INTERNS MUST BE PAID

The determination of whether an internship or training program requires participants to be paid depends upon all of the facts and circumstances of each program.

The United States Department of Labor applies the following six criteria to determine whether an employer is not required to pay a summer intern:

  1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

If all of these are met, an employment relationship does not exist under the Fair Labor Standards Act (FLSA), and minimum wage and overtime provisions do not apply to the intern. Conversely, if one or more of these are not met, an “intern” may be an employee and entitled to rights as an employee — including the right to earn a minimum wage, among other things.

WHO DOES THE SUMMER INTERNSHIP BENEFIT?

In general, the more an internship program is structured around a classroom or academic experience as opposed to the employer’s actual operations, the more likely the internship will be viewed as an extension of the individual’s educational experience (this often occurs where a college or university exercises oversight over the internship program and provides educational credit).  The more the internship provides the individual with skills that can be used in multiple employment settings, as opposed to skills particular to one employer’s operation, the more likely the intern would be viewed as receiving training.  Under these circumstances the intern does not perform the routine work of the business on a regular and recurring basis, and the business is not dependent upon the work of the intern.

On the other hand, if the interns are engaged in the operations of the employer or are performing productive work (for example, filing, performing other clerical work, or assisting customers), then the fact that they may be receiving some benefits in the form of a new skill or improved work habits will not exclude them from the FLSA’s minimum wage and overtime requirements because the employer benefits from the interns’ work.

IS THE INTERN MERELY A SUBSTITUTE FOR OTHER EMPLOYEES?

If an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek.  If the employer would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled compensation under the FLSA.

Conversely, if the employer is providing job shadowing opportunities that allow an intern to learn certain functions under the close and constant supervision of regular employees, but the intern performs no or minimal work, the activity is more likely to be viewed as a bona fide education experience.  On the other hand, if the intern receives the same level of supervision as the employer’s regular workforce, this would suggest an employment relationship, rather than training.

MISCELLANEOUS

The internship should be of a fixed duration, established prior to the outset of the internship.  Further, unpaid internships generally should not be used by the employer as a trial period for individuals seeking employment at the conclusion of the internship period.  If an intern is placed with the employer for a trial period with the expectation that he or she will then be hired on a permanent basis, that individual generally would be considered an employee under the FLSA.

CONCLUSION:  THERE AIN’T NO CURE FOR THE SUMMERTIME BLUES

Now that you are armed with the knowledge of whether summer interns must be paid, be sure to (1) stay hydrated, (2) apply generous portions of sunscreen, and (3) enjoy The Who’s ode to summer.  Actually, The Who did not write Summertime Blues, which song’s awesome lyrics and little known writer appear below the video.

Well, I’m a gonna raise a fuss, I’m a gonna raise a holler
I’ve been working all summer just to try and earn a dollar
Well, I went to the boss, said I got a date
The boss said “No Dice, son, you gotta work late”

Sometimes I wonder, what am I gonna do
There ain’t no cure for the summertime blues

Well, my mom and poppa told me, “Son you gotta earn some money
If you want to use the car to go out next Sunday”
Well, I didn’t go to work, I told the boss I was sick
He said “You can’t use the car ’cause you didn’t work a lick”

Sometimes I wonder, what am I gonna do
There ain’t no cure for the summertime blues

Gonna take two weeks, gonna have a fine vacation
Gonna take my problems to the United Nations
Well, I went to my congressman, he said, quote
“I’d like to help you son but you’re too young to vote”

Sometimes I wonder, what am I gonna do
There ain’t no cure for the summertime blues

Songwriters
COCHRAN, EDDIE/CAPEHART, JERRY