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.

 

abahod1As I have for over a decade now, I attended the American Bar Association’s Annual Meeting last week serving on the ABA’s House of Delegates – the organization’s main governing body.  My exact position is actually State Delegate — a position that nominally makes the lead delegate of Connecticut’s delegation, though in practice it’s much more democratic than that.

Among the items up for deliberation was a change to the model rules of professional conduct — the set of guidelines advanced by the ABA that are used as guides to set ethics rules in various states.

We considered a change to Model Rule 8.4 that would make it an ethical violation for a lawyer to discriminate or harass on the basis of various protected categories.  You can watch the debate here. 

The actual proposed rule went through several iterations as it was debated before the meeting.  The rule that was voted on changed the language to better match other rules by making it a violation to engage in conduct that the lawyer “knows or reasonably should know” is harassment or discrimination.

One of the issues, for example, that was discussed was whether the addition of a protected category of “socioeconomic status”.  In fact, during one of our caucuses, I asked one of the sponsors about the inclusion of this language. While he said that there was some mild disagreement about its inclusion, he noted that various states had already included it and pointed to an Indiana ethics matter from 2009 where it was used the basis for a grievance. He said to remove it now could send the wrong message.

Ultimately, the matter was approved nearly unanimously on a voice vote as any opposition to it melted away.

The model rule has a number of comments attached to it, the most interesting of which is that “The substantive law of antidiscrimination and anti-harassment statutes and case law may guide application of [the new model rule].”  On its face, that seems to suggest that caselaw in employment discrimination cases can help provide guidance — though there still remain open questions about how that might apply in a non-employment context.

But from my perspective, the rule is a step in the right direction.  Lawyers behaving badly — such as to opposing counsel — have no place in our profession and this new rule can hopefully make it clear that such behavior will not be tolerated.

wheelchairOver the weekend, I finished planning for our webinar tomorrow on the new overtime rules.  In digging deeper into the materials produced by the Department of Labor on the final rule, I looked at the use of volunteers as a solution — particularly for non-profit organizations.

For the “for-profit” world, this is probably not a realistic option.  The DOL really frowns on any such designation.

But on the last page of the 10-page guidance for non-profits, is a whole section on how non-profit organizations can use volunteer services if certain conditions are met.

To be sure, the new overtime rule doesn’t change the existing rules governing volunteers, but as non-profits look at how to address the issue internally, the use of volunteers may pop up.

So who is a volunteer? According to the DOL: 

A volunteer generally will not be considered an employee for purposes of the FLSA if the individual volunteers freely for public service, religious, or humanitarian objectives, and without contemplation or receipt of compensation. …  Under the FLSA, a person who works in a volunteer role must be a bona fide volunteer.

Some examples of the many ways in which volunteers may contribute to an organization include:
• members of civic organizations may help out in a community rehabilitation program;
• men’s or women’s organizations may send members to adult day care centers to provide certain personal services for the sick or elderly;
• individuals may volunteer to perform such tasks as driving vehicles or assisting with disaster relief; and
• individuals may volunteer to work with children with disabilities or disadvantaged youth, helping in youth programs as camp counselors, scoutmasters, den mothers, providing child care assistance for needy working parents, soliciting contributions or participating in benefit programs for such organizations, and volunteering other services
needed to carry out their charitable, educational, or religious programs.

So, problem solved right? Well, not exactly. The DOL suggests that volunteers serve on a part-time basis and, here’s the key point:
“should not displace employees or perform work that would otherwise typically be performed by employees.”

And what about having paid employees volunteer their extra time? According to the DOL: paid employees of non-profit organizations may not volunteer to provide the same type of services to the non-profit organization that they are otherwise
typically employed to provide.

The DOL provides two examples:

  1. A non-profit medical clinic has an office manager who handles office operations and procedures. The clinic hosts an annual 5K fun run in order to raise funds for its free services. In past years, the office manager also spent time on race day working by registering runners the morning of the run. Newly non-exempt under the Final Rule, the non-profit clinic may permissibly choose to utilize more volunteers this year to register runners instead of tasking the office manager with that assignment (provided all the conditions for bona fide volunteers are met), thus avoiding the accumulation of overtime hours in that week for the office manager.
  2. Using the same facts as above, many other individuals from the community volunteer on race day. The volunteer activities, such as packet pickups, course marshaling, water distribution, and staffing food tables at the finish line, are activities that are not typically performed by employees of the medical clinic. Based on these facts, the individuals are likely bona fide volunteers.

The use of volunteers can be part of a solution to rising overtime costs at a non-profit, but only just part.  The notion that you can just replace your employees with volunteers is not realistic.

We’ll talk more about this and other overtime issues tomorrow.  Hope you are able to join us.

USDOL Headquarters in DC
USDOL Headquarters in DC

Late Monday, several reports on Twitter indicated that the Department of Labor would be announcing and releasing the final version of the revisions to the white-collar overtime regulations.  You can see my prior posts on the subject here and here.

This has been a long time coming. It was way back in 2014 (!) that the President indicated that he wanted the USDOL to revisit them.

And the anticipation on Twitter has been breathless with so-called experts predicting for months that the new regulations would be released any day. Or last week.  Or in July.  And speculation on what would be in the final overtime rule has run rampant.

So, rather than predict what will be in the final regulations, I want to highlight three areas that I’ll be looking at in my initial review of the regulation.

  1. Salary Test: The proposed rule last year raised the salary test to $50,440 from its current level of $23,660 (which the vast majority of employees meet in Connecticut due to minimum wage being high.)  The latest thinking is that the final rule will set that threshold at $47,000.  (UPDATED: News reports on Tuesday afternoon indicated that the threshold will be set at $47,476 and be updated every three years.)  What does that mean? It means that any employee who is paid less than that amount regardless of his or her duties would need to be paid overtime for any work over 40 hours.  That would indeed be a big change.  So, when we look at the new rule, first item to look at is the salary threshold set by the USDOL.  There is no question it will be high; it’s just a question of how high.  Bonus item to look at: Will the salary test be tied to inflation? In other words – will the threshold keep up with inflation automatically in future years? The proposed version tied it to the 40 percentile of income; will that remain in the final rule?
  2. Duties Test: The proposed rule did not explicitly change the duties test for overtime — meaning that the administrative, professional and executive exemptions would still apply as current framed — albeit at a higher salary threshold.  However, the proposed rule solicited input from the public about how best to alter the duties part of the test.  Would the USDOL be so bold as to introduce changes to the duties test without first floating it in a proposed rule? The prevailing wisdom is no, but keep an eye on that and any hints about future revisions to this rule. (UPDATED: News reports on Tuesday suggest that no changes to the duties tests will be forthcoming.)
  3. Timing: Another thing to look for in the final rule: How much time will employers have to comply? And how long until the rules go into effect? Back in November 2015, a government official suggested that employers would have 60 days to comply. Will that hold up? (UPDATED: News reports on Tuesday also indicated that employers will have until December 1, 2016.) 

For employers in Connecticut, the new rules will make things particularly challenging. For years, Connecticut’s stricter overtime rules have been the go-to source for employers. However, with the new federal rules being even stricter (or, more favorable to the employee) than the state rule, we may see a return to federal dominance.  So a bonus thing to look for in Connecticut: How will these rules interact with Connecticut’s rule? Don’t just read the federal rule in isolation.

And to be clear, there are other aspects of this rule that we will undoubtedly have to look for.  But I’m not going to make predictions about a rule we haven’t seen.

I will make one overall prediction, however: Publications, blogs and people on Twitter are going to be hysterical over the pronouncements of the new rule. My suggestion? Ignore them.  The hype is designed, in part, on scaring employers into a frenzy.

What to do instead? Employers should view this new overtime rules with a bit of detachment.  Get the facts.  Then, figure out what applies to your business and start work on a plan to meet those requirements.

For several years, one of the most popular posts on my blog was the one where I listed the mileage reimbursement rate for businesses.  It’s been relatively stable, but this year brings about another small change.

In any event, the new rate became effective January 1, 2015. Remember, this is the optional standard mileage rates. These rates are typically used by businesses to help calculate mileage expenses for employees but it is not mandatory.

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 57.5 cents per mile for business miles driven (up from 56 cents in 2014.)

As a reminder, companies with personnel policies about their mileage reimbursement should consider updating their policies immediately to reflect this change. In the future, employers can draft a policy that states that their standard mileage rate will be consistent with the IRS’s rate without reference to a particular number.

Readers of a certain vintage, will remember Gilda Radner’s character Emily Litella who often said “Never Mind”.  (If you’ve never heard of Gilda Ratner or this, then I’ll pause while you watch this classic video.)  Readers of a later vintage will think of Nirvana’s “Nevermind”. If you just want the dictionary definition, here it is.

My work colleague, Jarad Lucan (vintage: timeless), has an informative post today updating us the status of a certain notice being advanced by the National Labor Relations Board and why “Never Mind” comes to mind.

Despite twice requesting extensions of time within which to file petitions for a writ of certiorari with the United States Supreme Court, the NLRB officially announced this week that it will not seek review of two U.S. Court of Appeals decisions invalidating its Notice Posting Rule.

That rule would have required most private sector employers to post a notice of employee rights under the National Labor Relations Act.

As many of you may recall, back in May of 2013, the D.C. Court of Appeals, in National Association of Manufacturers v. NLRB (which Dan discussed here), struck down the notice posting rule on the grounds that it violated an employer’s right to speak (or more accurately, right to remain silent) as protected by Section 8(c) of the NLRA.

One month later, the Fourth Circuit Court of Appeals in Chamber of Commerce of the United States v. NLRB likewise struck down the notice posting rule on the grounds that the NLRB was not empowered to promulgate such a rule.

What does this all mean for private employers in CT?

Well, at the 30,000 foot level, both Court of Appeals decisions now set binding precedent that may prove (it is far too early to tell) to restrain what has been viewed as the NLRB’s attempts to expand its powers, particularly in the nonunion context.

At the ground level, employers can stop asking “when do we need to post this thing?” You don’t need to.  A big “Never Mind”. 

It should be noted, that while the NLRB has decided not to seek Supreme Court review, in a recent press release, the NLRB stated that it will “continue its national outreach program to educate the American public about the statute.”

As part of that program, the NLRB has decided to post the same message that was to be printed on the notice on its website here. Some of you may find it interesting that the NLRB has taken it upon itself to translate that message into 26 different languages and promises to provide additional translations as they become available.

Of course, nothing prevents an employer from putting up such a poster; as the NLRB suggests on its website now, “Important note: Appellate courts have enjoined the NLRB’s rule requiring the posting of employee rights under the National Labor Relations Act. However, employers are free to voluntarily post the notice, if they wish.”  But employers who thought they needed to add this one to their poster arsenal can put those worries aside for now.

 

Update: Late yesterday afternoon, the NLRB officially delayed implementation of the rule.  No new date has been set. 

The NLRB developments keep coming fast and furious.

This morning, the D.C. Circuit Court of Appeals issued a ruling essentially blocking the NRLB from going forward with its new poster requirements for employers on April 30, 2012.

You can download the decision here.

The Court noted:

The uncertainty about enforcement counsels further in favor of temporarily preserving the status quo while this court resolves all of the issues on the merits.

As a practical matter, this is likely to mean that employers across the country will not be required to comply with the posters on April 30th.  Given the schedule set forth by the court, it is now unlikely that this rule will go into effect before fall 2012. 

Stay tuned for further developments.

(H/T: Rich Meneghello who broke the news on Twitter)

Update: The NLRB has announced an indefinite postponement of the rules. See this updated post here. 

Another month has passed, and we are now ever closer to the effective date of the NLRB’s new posting rules. 

Posters for Your Lunchroom

Thus far, many of the legal challenges to the proposed rule have been ineffective, as the Employer Law Report recently noted.

Unless something dramatic occurs in the next three weeks, the NLRB’s new posting requirements will take effect on April 30, 2012.  This applies to both unionized and non-unionized employers.

I’ve long felt that the publicity surrounding this rule was a bit overblown.  As I noted in a prior post:

In this age of technology, employees don’t need to rely on posters in the back of a lunch room for information on their rights anymore. (And really, how many times have you REALLY seen employees even look at these.) They can use their smart phones to check out the NLRB website from anywhere.  

But in addition to worrying about the posters, employers should use this new requirement as an opportunity to take a fresh look at their workplace policies and procedures. Among the issues that were identified by the Employer Law Report:

  • Does your employee handbook prevent discussion among employees of wages or have any other restrictions that run afoul of the NLRA? …
  • Are your managers aware of the NLRB posting and attuned to how best to respond to questions or concerns that might be raised by employees?
  • Most important, have your managers been trained in and are they committed to the kind of management behavior and communication with workers that makes employees less susceptible to union organizing efforts?

Three weeks to go. Are you ready?

The American Bar Association submitted a letter today to the U.S. Department of Labor to express its “serious concerns” over a proposed rule that would “substantially narrow” the longstanding interpretation of what lawyer activities constitute “advice” to employer clients.

Currently, most work from attorneys is exempt from the substantial reporting requirements in federal law that require “persuaders” (or, for ease of understanding, those brought in during a union campaign to help persuade employees to vote against unionization) to report their activities.

You can download the entire letter here.

The ABA’s position here is important because on many labor & employment matters, it abstains because there is typically not a consensus between management-side and employee-side attorneys.  This issue, however, touches all attorneys and is necessary, in the ABA’s words , to defend “the confidential client-lawyer relationship” and would impose an “unjustified and intrusive burden on lawyers and law firms and their clients”.

The rule is still in its proposed stage, but the ABA’s input here could be quite important for another reason as well.  The ABA’s involvement in the “red flag” rules was crucial to getting that rule overturned. Time will tell if the ABA’s involvement here will have a similar impact.

Seth Borden of Labor Relations Today had a good recap of these proposed rules back in July.