U.S. Department of Labor Headquarters

A federal district court in Texas yesterday struck down (once and for all?) the changes to the overtime rules proposed by the Obama Administration.  Previously, those rules (affecting the white collar exemptions) had been stayed, but the Court’s ruling suggests that there is a fatal flaw to the proposed rules and barred its implementation.

In doing so, the Court said that the salary-level test that was proposed was too high to determine which workers were exempt from overtime compensation.

Of course, there was little chance that these rules were going to get the go-ahead anyways because the Trump administration has shown no desire to support them either politically or in court.  Indeed, in July, the Department of Labor sought public feedback on ways to revise the proposed rule.

The ruling applies to employers nationwide.

While you’ll see a round of headlines today about how this is a big decision, it really should come as no surprise for those of us who have been following this for many months.

So all that guidance last year about how to comply with the new rules? Forget about it for now.

Keep calm and carry on.

 

Continuing a look back at some “basics” posts you might have missed, back in 2009, I tackled an exemption that may be overlooked when it comes to employment laws.  

Connecticut has a proud history of farms. Many, like Lyman Orchards, have been passed down for many generations. (And if you’ve never visited Lyman Orchards, don’t miss out on their Corn Maze and apple orchards. I visited it recently and highly recommend stopping by.)

For many of these farms, the growing season is short, which is why some of the wage & hour rules for farms are a bit different.  Indeed, overtime rules in Connecticut specifically do not apply to “agricultural” employees.  (Conn. Gen. Stat. Sec. 31-76i(k) is the specific provision if you’re looking for it.)

But what exactly is “agriculture”?

Turns out, it’s probably much broader than you think.  In fact, you have to look elsewhere in the statutes for thatdefinition.  It is found in the very first statute, Conn. Gen. Stat. 1-1(q), which states, in part:

[T]he words “agriculture” and “farming” shall include cultivation of the soil, dairying, forestry, raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training and management of livestock, including horses, bees, poultry, fur-bearing animals and wildlife, and the raising or harvesting of oysters, clams, mussels, other molluscan shellfish or fish; the operation, management, conservation, improvement or maintenance of a farm and its buildings, tools and equipment, or salvaging timber or cleared land of brush or other debris left by a storm, as an incident to such farming operations; the production or harvesting of maple syrup or maple sugar, or any agricultural commodity, including lumber, as an incident to ordinary farming operations or the harvesting of mushrooms, the hatching of poultry, or the construction, operation or maintenance of ditches, canals, reservoirs or waterways used exclusively for farming purposes; handling, planting, drying, packing, packaging, processing, freezing, grading, storing or delivering to storage or to market, or to a carrier for transportation to market, or for direct sale any agricultural or horticultural commodity as an incident to ordinary farming operations, or, in the case of fruits and vegetables, as an incident to the preparation of such fruits or vegetables for market or for direct sale.

So, under this broad definition, everyone from horse breeders, to maple sugar houses (you know about places like the Lamothe Sugar House, right?) to those who freeze blueberries from local farms, are exempt from paying workers overtime.

Thus, whenever agriculture is implicated in your business, be sure to see if the overtime rules actually apply to your workers.

I had a lot of plans this week to do another deep dive into an employment law issue but then, well, let’s just say life happens.

Among the things? Lots of questions from clients about the new overtime rules.  While everyone has had months to plan, there are definitely a few procrastinators out there.

But this may (and I emphasize and underline MAY) work out to those procrastinator’s advantage.   Reports this week are that a Texas court is considering issuing an injunction that would stop the overtime rule in its tracks.  The court has indicated that it will consider the matter by November 22nd. And moreover, even if it doesn’t issue an injunction on that date, it will consider the entirety of the case by 11:59:59p on November 30th.

While I still think the lawsuit may be a reach, it doesn’t seem as far fetched as it did a few weeks ago. Earlier this week, a similar Texas court issued a permanent injunction prohibiting the implementation of the so-called “Persuader Rule” from the NLRB.  Government overreach seems to be a theme in Texas.

What should this mean for employers? Well, I still think planning is very much in order. But if employers haven’t yet flipped the switch on their plans, they may want to hold out for a few more days to see if this Texas case leads to anything.

Why? Because once you raise an employee’s salary, for example, it’d be very hard to roll it back.

So procrastinators take heart! Maybe, just maybe, your tardiness will pay off.

But I still wouldn’t count on it.

Author’s note: I will be proverbially “going fishing” for a few days, so don’t expect any late breaking posts until after Thanksgiving here.  I’ll be posting a few “From the Archives” posts in the interim.

Making Lemonade Out of Lemons
Making Lemonade Out of Lemons

Are you tired of lawyers commenting already on the new overtime rules?

(The answer should be no, of course, since you’re reading this blog and thus have room for one more view.)

But I think it’s fair to say that we haven’t seen a feeding frenzy like this on employment law in many, many years.  And with the massive publicity of this rule comes an opportunity, as I’ll explain too.

So, dear readers, deep breath time.   We’ll get through it together.

There’s already been lots of pixels spilled about how employers can “solve” their overtime issues that will arise under this rule by making various changes in their workplace.

For example, employers can increase an employee’s salary to $47,476 annually if that employee otherwise meets the duties test, to keep an employee “exempt” from overtime.

Or the employer can limit the overtime that the employee can work, explaining that it is concerned with controlling costs.

But in all the analysis, I think one big thing has been overlooked: Employers can use this announcement as an opportunity to review and re-classify all sorts of employees — even if they are not directly impacted by the new rule.

Too often, employers who discover that they have misclassified employees believe that they are in a conundrum. Keep their head down and hope no one notices, or properly classify the employee and keep their fingers crossed that they don’t get sued for back pay.  Neither option is a great one for employers who need to get into compliance. (I once proposed an amnesty proposal to solve this dilemma.)   Sometimes, employers have legitimate reasons why an employee has been classified as non-exempt but wants to avoid any future issues. Perhaps in other situations the employee isn’t working overtime anyways.

But here is where the opportunity comes in: As I highlighted at the start, the new overtime rule has received unprecedented amounts of publicity in the workplace. No doubt most of your employees have now heard something about it.  So, some won’t be surprised if they are notified that things are changing for their position as a result of the new rule.

While the rule doesn’t provide amnesty for employers who make such changes, the new rule does remove some of the suspicions employees may have about the changes — even when those changes are perfectly legal.  Employees may be more understanding.  Employers can explain truthfully that the new rule has required them to review the classification of all of its employees and the changes are as a result of the rule.

So, yes, the rule may be difficult to comply with. But don’t miss out on the opportunities that may arise from this rule as well.  Full compliance with the law will be so much cheaper than paying for a massive wage-and-hour suit.  And as I’ve said before, compliance is the ultimate goal. You should not be looking for ways to circumvent the law.

So ultimately, perhaps you’ll view the new overtime rule as more about lemonade than lemons, as the saying goes.

presentsIf you like to open your presents on Christmas Eve, the U.S. Department of Labor is for you. Last night, the DOL posted the final revised rule on overtime on its website ahead of its planned announcement this afternoon.

What a gift for employment lawyers!  Needless to say, I was up late unwrapping all my “gifts.”

Remember: These changes apply only to the so-called white-collar exemptions: Executive, Administrative and Professional.  So, if the employee falls within a different exemption, this rule does not apply.

And, as I’ll explain below, for Connecticut employers, the challenges are just beginning.  The rule applies to all employers covered by the FLSA (FLSA covers employers engaged in interstate commerce and gross volume of $500,000.00 in sales) but Connecticut employers will also have to worry about state law as well.

Here are the highlights (the DOL has released a chart comparing all the changes as well):

  • As expected, the new rule changes the salary basis to $47,476 annually ($913/week) — slightly less than the proposed rule last year. In plain English, anyone who makes less than this amount must be paid overtime for any hours over 40 in a work week — regardless of his or her duties.
  • This threshold will change every three years, and will be tied to the salary level at the 40th percentile of earnings of full-time salaried workers in the lowest-wage Census Region, currently the South.
  • The new rule makes no changes to the duties test.   If an employee had duties that fell within the executive exemption, for example, they will still be exempt — that is, if their minimum salary now meets the threshold of $47,476.
  • The rule increases the “highly compensated employee” exception to the exemption to $134,004 – and that too will change every three years. (But note that Connecticut law does not have such an exception.)
  • The rule becomes effective December 1, 2016. Note that December 1 is a Thursday, so employers will have to make sure that the entire pay period is compliant with the new rule.
  • The new rule will now permits employers to use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.  This is a brand new element and should help employers meet that threshold (a bit).

The USDOL also released guidance for non-profits and higher education to address concerns in those areas.  Those employers should review that guidance specifically.

For Connecticut employers, though, take a deep breath before jumping in.  Connecticut has its own state law and regulations that are now in conflict with this federal rule. And as the CTDOL notes in its guide to wage & workplace laws: “The laws that provide the higher or stricter standard shall apply.”

What does that mean here? We’ll have to wait and see if the Connecticut Department of Labor updates its guidance for starters.  It is challenging for Connecticut to update its regulations so, for now, we can only hope that the CTDOL might at least shed some light on how it might enforce the state rules. (There is a helpful chart that it has used in the past, for example, that could be updated.)

But here, on first glance, are three other items of concern I have for now:

  1. The salary test in Connecticut does not contain an allowance to consider nondiscretionary bonuses.  Will that change (at least as a matter of enforcement) now that the federal regulations allow employers to consider that? And how should the deduction rule be applied in such an instance? Would Connecticut recognize an increased salary basis but without such bonuses as the more “protective” of the law?
  2. The CTDOL has previously recognized a “no man’s land” (its words) where the interaction of the rules is confusing; how will it deal with a similar (and much larger) no man’s land where the salary is higher, but the duties test has been met?
  3. Connecticut does not have an exemption for highly compensated employees. The new federal rule does not change state law and thus the HCE exemption will still not apply here.  Will the CTDOL reconsider that in light of the increased threshold at a federal level?

What’s the Takeaway for Employers in Connecticut?

For employers in Connecticut, do not just blindly adopt the new federal rule into your workplace.

For example, increasing the base salary to avoid overtime obligations under the federal rule may not matter if the employee does not meet the duties test under Connecticut law for the same exemption.

This is one of those situations that will require a case-by-case look at specific positions and the interaction between state and federal law.  Unfortunately, you’ll probably want to consult heavily with various HR consultants or lawyers specializing in employment law.

So, as a said before, stay calm. You can do this.  You have until December.

 

U.S. Department of Labor Headquarters
U.S. Department of Labor Headquarters

Over the last few days, Twitter has been a-twittering with buzz that the Department of Labor has sent the final overtime rules to the OMB.

This is the equivalent of one department sending another one an e-mail with the new rules. Why? Because it’s just the next step in getting the rules approved.  But nothing more than that. Moreover, this step always happens in the issuance of regulations.

And here’s the really important point: We still don’t know what these final rules will be.

So ask yourself, is it really worth getting excited about one department sending the rules to another?

That said, SHRM had some additional information from a speaker at a conference this week about when we can actually expect to see the new rules:

At the SHRM Employment Law & Legislative Conference yesterday, Tammy McCutchen, an attorney with Littler in Washington, D.C., and a former administrator of the DOL’s Wage and Hour Division, advised attendees to keep an eye on reginfo.gov, which tracks government agencies’ regulatory actions as they are submitted for review to OMB. Sure enough, the rule appeared on the site late March 14.

At the conference, McCutchen told attendees she believed the rule would work its way quickly through OMB and most likely be published by July 7, and take effect on Labor Day, Sept. 5. Alternatively, she said, the rule would be published the Friday before Labor Day, Sept. 2, to take effect Nov. 1—just prior to Election Day.

If you recall, I first reported on the timing of this back in November 2015.  In that post, I reported on what I heard at the ABA Labor & Employment Law conference — “late 2016”.

Despite all the Twitter posts this week: Things are still on target.

For employers in Connecticut, this is really wait-and-see territory.  First, we don’t know what the new overtime rules are going to be. And second, Connecticut has it’s own rules and we will need to analyze the interaction between existing state laws and these new federal overtime regulations.

Remember: Keep Calm & Carry On.

It appears that for the second year in a row, Connecticut employers will not be able to take advantage of a cost-saving opportunity as a result of inaction by the Connecticut Department of Labor.

In two letters to the Connecticut Department of Labor by the CBIA and the Republican leadership, the details of the state’s failure to submit a waiver application for a Benefit Cost Rate (BCR) add-on have been outlined.  The deadline for doing so is July 1 and, according to various reports, the CTDOL has shown no interest in doing so.  As a result, Connecticut employers will pay higher federal unemployment taxes for every employee.

What will this mean in practical terms?

As stated by the CBIA, “Filing for the waiver from the BCR add-on will reduce the federal unemployment tax burden faced by Connecticut businesses, which was the highest in the nation last year. Businesses in a state with no federal debt (such as New York, Massachusetts and Rhode Island) pay federal taxes in the amount of $42 per employee. ”

The CBIA goes on to state:

If Connecticut does not apply for the waiver this year, businesses here will pay $196 per employee in federal unemployment taxes. However, if we apply for the waiver and are approved, businesses could instead by $147 per employee.”

The issue is that Connecticut’s Unemployment Compensation Trust Fund remains in debt and, according to the CBIA, requires that we “make the same benefit adjustments made by our neighboring states many years ago.”

Unemployment taxes remain a significant issue for employers in Connecticut and employers should continue to be vigilant on the various issues impacting them this year.

Over the past month, after the Supreme Court’s Hobby Lobby decision, much has been made in the press about how it is unprecedented for the court to consider a company’s religious beliefs in making its decisions.

The issue of taking into account a corporation’s religious belief in the workplace has been also catapulted to the center of the discussion regarding consideration of the Employment Non-Discrimination Act (ENDA), a bill which would prohibit discrimination in employment on the basis of sexual orientation on a federal level.

Some are now asking that ENDA, if passed, have an exception for religious organizations.  In response, a number of prominent civil rights groups have withdrawn their support for the bill.

A joint statement issued by several organizations, including the ACLU, said the following:

ENDA’s discriminatory provision, unprecedented in federal laws prohibiting employment discrimination, could provide religiously affiliated organizations – including hospitals, nursing homes and universities – a blank check to engage in workplace discrimination against LGBT people. The provision essentially says that anti-LGBT discrimination is different – more acceptable and legitimate – than discrimination against individuals based on their race or sex.

Here’s the thing, rightly or wrongly, the notion of a religious exemption in an employment discrimination law isn’t unprecedented; Connecticut passed one 23 years ago.

And it hasn’t been amended since.

I can now hear from many of you: Wait, what?

Yes, right there in Conn. Gen. Stat. Section 46a-81p is a specific exemption for religious corporations to the prohibition of sexual orientation employment discrimination.

The provisions of sections 4a-60a and 46a-81a to 46a-81o, inclusive, shall not apply to a religious corporation, entity, association, educational institution or society with respect to the employment of individuals to perform work connected with the carrying on by such corporation, entity, association, educational institution or society of its activities, or with respect to matters of discipline, faith, internal organization or ecclesiastical rule, custom or law which are established by such corporation, entity, association, educational institution or society.

Now, before you start reading “religious corporation” to include companies like Hobby Lobby, the answer may not be that simple.

For one thing, the sexual orientation anti-discrimination laws don’t define what they are explicitly; elsewhere in state law there is a reference however, to “religious corporations” and societies.  Conn. Gen. Stat. § 33-264a states that: “Three or more persons uniting for public worship may form a corporation or a voluntary association. Such a corporation shall be called a religious corporation and such a voluntary association shall be called a religious society.”

So perhaps including a company like a Hobby Lobby into this definition may not fit.

But what IS meant by “religious corporations” in this particular section on employment law? How do courts define it? Is it just a church or something more, like an organization’s for-profit bookstore? Well, I haven’t located a court case that has confronted the issue head on.

The Connecticut Supreme Court has only cited the statute by off-handed refereces that the legislature made an exemption for “religious organizations.”  But that too is a bit odd, because the word “organizations” isn’t in the statute itself. (See, for example, the court’s use in Patino v. Birken Manufacturing.)

I’ve taken a look at the bill analysis from the Office of Legislative Research from its passage in 1991 and it isn’t all that helpful. It states merely that “the bill exempts religious organizations from these employment provisions but only as to their employment of people to carry out their work.” (There’s that use of “organizations” again.)  An earlier version of the bill had a narrower exemption too, but that was expanded through a bill amendment at the time.

The Connecticut legislature has considered amendments, over time, that would, for example, put the sexual orientation anti-discrimination laws into the more general provisions prohibiting discrimination, but even this year’s Senate Bill 385, which would make that type of change, would keep the language of the “religious corporation” exemption as is.

I suppose that the lack of litigation on the state’s law exempting “religious corporations” from compliance with the anti-discrimination law may be indicative of its general acceptance here in Connecticut or its narrow application. And perhaps a court looking at this will find that for-profit corporations are just inherently different than religious ones and that the use of the language here precludes a broader interpretation.

But I suspect that the lack of discussion of this exemption is also due to the fact that many people are unaware of its existence or the specific language of the exemption either.

Either way, in light of the Hobby Lobby decision from the Supreme Court, perhaps we will see the Connecticut General Assembly revisit this statute. While an exemption for a “religious corporation” may have been a necessary compromise in 1991 at the time of the bill’s original passage, I wonder if legislators believe it should be construed as broadly as some might argue after Hobby Lobby.

After all, if corporations are “people” too, it’s not that far of a leap for someone to argue that they can be “religious corporations” as well.

The New York Times reported this morning that President Obama will ask the United States Department of Labor to revamp its regulations on the so-called “white collar” exemptions to the federal overtime laws.

Specifically, he will direct the DOL “to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as ‘executive or professional’ employees.

The article also suggests that “he will try to change rules that allow employers to define which workers are exempt from receiving overtime based on the kind of work they perform. Under current rules, if an employer declares that an employee’s primary responsibility is executive, such as overseeing a cleanup crew, then that worker can be exempted from overtime.”

As of mid-morning, the order was still not available on the White House’s website but you can check here. 

However, based on the article, it seems that the executive and professional employee exemption would be most directly impacted, but it is unclear what the impact would be on the administrative exemption.

But before you start throwing out your position descriptions just yet, realize that the President’s direction is just the first step in a process, not the last.

The regulations still need to be drafted, proposed and then adopted by the United States Department of Labor. It is certainly possible that further revisions will occur during that process.  The timing of this is still unclear.

For employers in Connecticut, understand that if these new proposals do come into effect, it would provide a new “floor” for wage & hour laws in Connecticut and many employers would have to adopt them, even though Connecticut’s own rules would be different.  As I’ve noted before, when federal law provides more protection to employees than state law, federal law will control. (The vice versa also applies too.)

However, this suggests the most significant change we’ve seen in the wage and hour area in a decade and could potentially open up a new front on the wage & hour class action battles.

So stay tuned.

As the temperature starts to dip this week and our thoughts start turning from fall to winter, so starts slow climb up the absenteeism ladder.

Around many workplaces, flu shot clinics are starting to pop up.  Not surprisingly, studies show that flu shots reduce the rate of absenteeism.  (Employees who get vaccinated get sick less — go figure!)

The Connecticut Department of Public Health has a whole website devoted to employers who wish to run a flu clinic. And the CDC has lots of information like the button below.

Learn about Who Needs A Flu Vaccine.
http://www.cdc.gov/flu/protect/whoshouldvax.htm

But can an employer mandate that employees get a flu shot? Around Connecticut, numerous healthcare institutions started instituting mandatory vaccinations for their workers…and the local press made it a big issue.

Lost in that so-called debate, however, was the clear-cut guidance that came out from the Commission on Human Rights and Opportunities.  In an article last December, the CHRO said unequivocally that there was no issue with mandatory flu shots.

Charles Krich, principal attorney for the Connecticut Commission on Human Rights and Opportunities, says this corporate policy [of mandatory flu shots] does not violate constitutional rights. It also does not qualify as discrimination.

“About a hundred years ago, the Supreme Court said the state absolutely has the right to require vaccinations of people to protect the public health,” Krich explained.

Despite the undisputed public health benefits to such a policy, State Senator Joe Markley introduced a bill earlier this year into the Connecticut General Assembly that would ban such mandated vaccinations.  Thankfully, the bill went nowhere. 

Employers should, however, still be mindful of federal laws that mandate some accomodation of an employee’s religious beliefs and may, on a case-by-case basis, consider some flexibility.

Many hospitals have created a system to analyze requests for exceptions to the policy and created an exception as follows:  “Those who cannot receive the flu vaccine, whether for religious or medical reasons, will be required to properly wear a protective surgical mask over their mouth and nose when within 6 feet of any patient and when entering a patient room during the influenza season.”

Employers with unions and collective bargaining agreements should also be mindful that some have argued that mandatory flu shots should be a bargained-for term of employer. Last year, the NLRB ruled that a hospital did not violate the federal labor laws when instituting a mandatory policy over the objections of the nurses’ union.  But that decision relied on a broad “management rights” provision so employers should have their own situation reviewed by their labor counsel.