My colleague, Gabe Jiran, returns the blog today with this quick post updating us on where things stand on the DOL’s proposed changes to the overtime rules (and providing me with an excuse to link to one of the few songs to mention “overtime” in the title.)

As you may recall from some of the prior posts here, employers scrambled to address the Department of Labor’s changes to the salary threshold for white collar exemptions under the Fair Labor Standards Act.  That change would have increased the salary threshold from $23,360 to $47,476 annually in December, 2016.

However, several states challenged this increase, resulting in a federal court in Texas issuing a nationwide injunction stalling the increase.  Of course, many employers had already made changes to address the increase, but the injunction still stands.

Then the election happened. Which changed everything.

Now, the DOL under the new Trump administration has indicated that it will not advocate for a specific salary level under its regulations, but will instead gather information about the appropriate salary levels.

The DOL has thus issued a request for information to get feedback, which can be accessed here.

What does this mean for employers? While this process will most likely result in an increase in the salary levels, it seems that the DOL will do so based on responses to its request for information rather than arbitrarily setting a salary level.

For now, employers should continue to follow the current regulations and the $23,360 salary level while, of course, also following the Connecticut guidelines where applicable too.

But stay tuned here: Developments in this area now seem on the way.

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.

DOLOn Monday night, details of the revised white-collar overtime regulations were released. But we’ll know more once the actual details get posted on the Department of Labor website on Tuesday. (Bloomberg was the first to report it Monday evening.)

(Update 6/30/15: The proposed regulations are now available online from the U.S. Department of Labor here.)

As you may know, in order to be exempt from overtime, typically two tests must be met: a “salary” test and a “duties” test. Employees who are paid below that threshold must be paid overtime even if the “duties” test is met.

But in recent years, the salary test has been very easy to meet. Enter the proposed changes to the regulations.

Among the details released tonight:

  • The regulations will raise the salary threshold from $23,660 per year to $50,440 – nearly $1000 a week ($970 a week if you’re really particular).
  • This threshold will not be linked to inflation but, according to Politico, will be tied to the 40 percentile of income (meaning, in essence, that 40 percent of the working population should be eligible for overtime pay)
  • Importantly, the regulations will NOT include changes to the duties test. Instead, it “solicits questions from the public about how best to alter it. As in the past, the new threshold will not affect teachers, lawyers, doctors and judges, who are all automatically exempt from overtime.”

What this means practically is that employers who have employees making less than $50k, need to review their practices now to see who may be impacted by these new regulations.

But don’t go revising all your policies yet. According to The New York Times, the new rules wouldn’t be implemented until at least 2016 — giving employers many more months to understand the changes.’

Taking advantage of new media, the President released his own op-ed on the subject on the Huffington Post Monday night.

This week, I’ll head to Wisconsin to discuss my plan to extend overtime protections to nearly 5 million workers in 2016, covering all salaried workers making up to about $50,400 next year. That’s good for workers who want fair pay, and it’s good for business owners who are already paying their employees what they deserve — since those who are doing right by their employees are undercut by competitors who aren’t.

That’s how America should do business. In this country, a hard day’s work deserves a fair day’s pay. That’s at the heart of what it means to be middle class in America.

Interestingly, some anticipate that employer will respond to these rules by actually lowering salaries:

Assuming the rule is put in place, economists believe that many employers will most likely reduce workers’ hours so as to save on overtime pay. Even so, the White House believes the rule could affect nearly five million workers in the short term. Meanwhile, any attempt to scale back hours could increase hiring.

Over the longer term, the effect of the rule could diminish substantially as employers offer new hires a lower base wage. This could make their overall pay, including the higher overtime wage, equivalent to what comparable employees make today in the absence of the overtime rule.

Again, we’re anticipating more details when the proposed regulations are now released as early as Tuesday morning.

 

In the hours before the General Assembly’s 2014 session closed, there were a number of bills being watched by employers.  I’ll have an additional recap of the session in the days ahead, but one bill that passed on Wednesday night made a number of small, but important, changes to the state’s Paid Sick Leave law that employers should take note of.

For background on Paid Sick Leave, you can check out some of my prior posts here and here.

House Bill 5269 — which still requires the Governor’s signature — makes several changes that have long been sought.  (For a full recap, see the OLR Bill Analysis here.)  The changes become effective January 1, 2015, when the bill is signed.

First, the bill changes the method for figuring out if a non-manufacturing business employs 50 or more employees.   Under the bill, the company will determine if it satisfies the annual 50-employee threshold based on the number of employees on its payroll for the week containing October 1, rather than the quarterly formula presently used.

Next, the bill prohibits employers from firing, dismissing, or transferring an employee from one job site to another to come under the 50-employee threshold.   Any affected worker can file a complaint with the Labor Commissioner.

The bill also changes the timeframe for accruing paid sick leave and makes it more in line (though not exactly parallel) with the state FMLA law.  As noted by the OLR: “Under current law, employees accrue one hour of sick leave for every 40 hours worked per calendar year. Under the bill, they accrue one hour of paid sick leave for every 40 hours worked during whatever 365-day year the business uses to calculate employee benefits. This allows the employer to start the benefit year on any date, rather than only on January 1.”

And lastly the bill adds radiologic technologists to the list of job categories eligible to accrue and take paid sick leave.

Employers who have been close the 50 employee cut-off should review these rules in particular but all employers should take note of the changes to the accural methods. That should make it easier, in the long run, for employers to track such time.

 

It’s not very often that the Connecticut Supreme Court considers employment law issues.

But today, two notable cases are being argued in front of the court. Both could have an impact on employers in the state.

Court Considers Employment Law Cases

In Patino v. Birken Manufacturing, the court is being asked to consider whether a hostile work environment harassment claim can be brought under state law (Conn. Gen. Stat. Sec. 46a-81c if you’re keeping track at home). 

The court’s summary of the case is as follows:

The plaintiff, Luis Patino, was employed by the defendant, Birken Manufacturing Company (Birken), as a machinist. Beginning in 1991, some of Patino’s coworkers began calling him derogatory homosexual names. The derogatory words were not spoken to Patino directly but were made in his presence. In 2005, Patino commenced this action, alleging that Birken violated General Statutes § 46a-81c by failing to prevent its employees from creating a hostile work environment for Patino on the basis of his sexual orientation. Section 46a-81c provides in relevant part: “It shall be a discriminatory practice . . . [f]or an employer, by himself or his agent, . . . to discriminate against [an individual] . . . in terms, conditions or privileges of employment because of the individual’s sexual orientation . . . .” (Emphasis added.)

After trial, the jury returned a verdict in favor of the plaintiff. Birken filed a motion to set aside the verdict, arguing that no cause of action exists for a hostile work environment claim under the plain and unambiguous language of § 46a-81c. The trial court acknowledged the absence of an explicit hostile work environment provision in § 46a-81c but found that this was not dispositive. Rather, the court opined that the answer to the question before it turned on the interpretation of the phrase “terms, conditions or privileges of employment” in § 46a-81c. The court observed that in Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57 (1986), the United States Supreme Court, in the context of a sexual harassment claim under Title VII, broadly interpreted the phrase “terms, conditions or privileges of employment” to include protection from a hostile work environment. Relying on Vinson, the trial court ruled that the phrase “terms, conditions, or privileges of employment” in § 46a-81c imposes liability on an employer who fails to prevent its employees from creating a hostile work environment for a coworker on account of his sexual orientation.

Next, Birken argued that the evidence was insufficient to establish a hostile work environment because the derogatory words Patino heard were not directed at him. Relying on federal court precedent, the trial court ruled that discriminatory conduct does not have to be directed at the plaintiff or to his face to be actionable. Thereafter, noting that Patino consistently overheard his coworkers making derogatory remarks about his sexual orientation in his presence, the court rejected Birken’s insufficiency of the evidence claim, stating that Patino’s workplace was both objectively and subjectively hostile. Accordingly, the trial court denied Birken’s motion to set aside the verdict.

On appeal, Birken contends that § 46a-81c does not provide a cause of action for a hostile work environment claim. Alternatively, Birken claims that the evidence was insufficient to establish that the conduct of the coworkers created a hostile work environment for Patino.

The other case to be argued today is Velez v. Connecticut Department of Labor.  I’ve previously written about the case here and here.  The crux of the case surrounds whether employers need to count out-of-state employees for purposes of the state FMLA laws.  Notably, both the employer AND the Connecticut Department of Labor argue together that out of state employees should not be counted.

The court’s summary of the case states:

The plaintiff filed a complaint with the state department of labor alleging that her employer, defendant Related Management Company, had violated the Connecticut family and medical leave law, General Statutes § 31-51kk et seq., in firing her. The department of labor dismissed her complaint, finding that Related Management was not subject to the state family and medical leave law because it employed only thirty-five employees in Connecticut, and General Statutes § 31-51kk (4) defines an “employer” for purposes of the family and medical leave law as one “who employs seventy-five or more employees.”

The plaintiff appealed to the Superior Court, and the parties stipulated that, while Related Management employed only thirty-five people in Connecticut, it had over a thousand employees nationwide. The trial court disagreed that Related Management was not an employer for purposes of the family and medical leave law. The court noted that § 31-51kk (4) contains no geographic limitation on counting employees and ruled that, in determining whether an employer meets the statutory seventy-five employee threshold, out-of-state employees should be counted. The court refused to defer to two previous department of labor decisions that concluded that § 31-51kk (4) did not allow the counting of out-of-state employees, finding that those decisions were not reasonable and that the agency’s interpretation of the statute would ignore the underlying purpose of protecting small employers and instead skew the exemption in favor of those employers having few employees in Connecticut but many employees in other states.

Related Management and the department of labor appeal. They claim that the trial court should have deferred to the agency’s reasonable and time-tested interpretation of § 31-51kk (4) and that its interpretation is supported both by reference to the agency’s regulations and the legislative history of the family and medical leave law. The department of labor also argues that the court’s interpretation of § 31-51kk (4) would lead to unworkable results.

 A decision on both of these cases is expected later this year.  (The briefs are not yet available online, but will be posted here soon.)

In a 5-4 decision released this morning in Rent-A-Center, West, Inc. v. Jackson (download here), the U.S. Supreme Court rejected a challenge to an arbitration agreement that purported to address all matters arising out of an employment dispute.  Copyright 2010, Daniel A. Schwartz. All rights reserved.

This decision isn’t the easiest to digest.   First, understand that arbitration provisions governed by federal law have been — overall — blessed by the court. The court in Rent-A-Center, had to address a different question — can the parties agree to arbitrate "gateway" or threshold questions.  In other words, can the parties agree that an arbitrator — rather than the court — is to decision issues like "unconscionability".  The court refers to this as a "delegation" provision.

The court said that some challenges will still be allowed to proceed to court:

Thus, in an employment contract many elements of alleged unconscionability applicable to the entire contract (outrageously low wages, for example) would not affect the agreement to arbitrate alone. But even where that is not the case…we nonetheless require the basis of challenge to be directed specifically to the agreement to arbitrate before the court will intervene.

The court concludes that the provision here is fine but that in any event, it was not properly preserved below.  As the court said, "The District Court correctly concluded that Jackson challenged only the validity of the contract as a whole. Nowhere in his opposition to Rent-A-Center’s motion to compel arbitration did he even mention the delegation provision."

There is a fairly vigorous dissent by Justice Stevens in which he states that the subject matter of the agreement should make a difference in the court’s analysis: "Its breezy assertion that the subject matter of the contract at issue—in this case, an arbitration agreement and nothing more—“makes no difference,” is simply wrong."

What does this mean for employers? It means that if you have an arbitration agreement or arbitration provisions, they should be reviewed by counsel yet again to ensure maximum enforceability.  That’s not to say that all challenges to an arbitration provision will be defeated, but the court’s decision today just made those challenges harder still.