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.

 

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.

Employees generally are eligible for overtime if they work more than 40 hours of work, unless one of the limited exceptions applies.

Employers typically rely on one of the three white-collar exemptions — administrative, executive or learned professional — when making arguments as to why an employee is not eligible for overtime.

A new federal district court case out of Connecticut illustrates the danger in assuming that one of the exemptions will apply, without a searching factual examination.

In Arasimowicz v. All Panel Systems, LLC et al (download here), the court was asked to review whether a CAD detailing and drawing position was exempt from overtime rules. The court, after a searching examination of the record, concluded it was not.

The court’s opinion is worth a read because the judge thoroughly addresses some typical arguments made by an employer — that the position involved specialized knowledge, or that the position involved direct support of management policies — and disposes of them fairly easily.

Notably, there haven’t been many cases in Connecticut to address this type of position, but employers in Connecticut who have CAD draftsmen ought to do a detailed review of the position to ensure their compliance with state and federal wage laws.

For remaining employers, the case is worth a review because it demonstrates that positions aren’t always what they seem.  Many employers have had exempt employees for so long that they have stopped worrying about whether their employees are actually exempt. This case ought to serve as a wake up call that if don’t audit yourself, you run the risk that a court will do it for you.

 

In a decision that will be officially released on Tuesday, November 24th, the Connecticut Appellate Court has ruled that wrongful termination and breach of implied contract claims cannot be brought against the State of Connecticut due to the protections of sovereign immunity. 

The case Ware v. State of Connecticut (download here), will be of greater interest to private employers because it also held that the employee did not file a hostile work environment or retaliation claim first with the CHRO — the state agency responsible for investigating such complaints — and therefore was barred from bringing those claims in Court (for failure to exhaust her administrative remedies). 

The employee had brought a CHRO claim alleging gender and pregnancy discrimination, but the Appellate Court found that the new claims brought "are not so closely related to the allegations in her complaint to the commission that they reasonably would have been investigated by the commission."

The case presents another chapter in the litany of cases that have been coming down defining the limits of sovereign immunity. Earlier this year, the Connecticut Supreme Court in Lyon v. Jones reversed an appellate court that had relied on sovereign immunity to dismiss an employee’s claims.  The claims here are different, but it’ll be interesting to see how the Supreme Court reacts to this case and if it decides to weigh in on this issue. 

As a final matter, the court also held that punitive damages cannot be sought against the state in discrimination claims. Again, this decision will bring some clarity on claims brought against the state.

Within a 702 page state budget, you should always expect surprises. 

This year’s budget — passed by the Connecticut General Assembly earlier this week on essentially a party-line vote — has a few surprises including a provision that establishes a new independent Office Of Administrative Hearings. 

The OAH will be housed in the Commission on Human Rights & Opportunities for administrative purposes, and will include several agencies, including CHRO, the Department of Children and Families, the Department of Transportation, the Department of Motor Vehicles, and Firearms Permit Examiners, according to analysis prepared by the state government.  .

The General Assembly’s Office of Fiscal Analysis has provided a brief summary of the provision in it’s "Budget Highlights":

The budget results in a net savings of $629,969 in FY 10 and FY 11 through the creation of the Office of Administrative Hearings within the Commission on Human Rights and Opportunities. The agencies that will be included in this centralized hearing office are: CHRO (1 position), Department of Children and Families (3 positions), Department of Transportation (2 positions), Department of Motor Vehicles (11 part-time positions paid through a per diem), and the Firearms Permit Examiners (1 position). The annualized funds that are transferred to CHRO for these positions are $1,031,733 in FY 10 and $1,107,879 in FY 11.

So, what are the additional details? Well, there aren’t any. At least that are easy to find in the budget (which you download here).  There is an appropriations line for the CHRO on line 350 or so of the document, but that appears to be it. A search for  "office of administrative hearings" (and some other key terms) reveals no explicit reference to this action in the text of the bill or the legislative analysis.

Currently, there is a detailed administrative scheme at the CHRO where all complaints that have passed a "reasonable cause" standard are sent to human rights referees for a determination on the merits. Indeed, the law called for the appointment of seven human rights referees on three year terms.  So what happens to those provisions?

Answers to this and other questions are unknown right now. But one thing is for certain, we’re likely to see some changes coming soon to the state agency responsible for oversight of the state’s anti-discrimination laws. For employers, stay tuned.

In this blog, I often focus on the substantive law prohibiting discrimination cases, such as those courtesy morgue file - "mailbox"under ADEA.  But a case decided late last week demonstrates the importance of making sure that employees follow the procedural requirements required by law under anti-discrimination provisions..

In Cassotto v. Potter (D.Conn, Oct. 21, 2008) (Hall, J.) (download here), a terminated employee sued for his employer (the U.S. Postal Service) for age discrimination under ADEA without having filed with the Equal Employment Opportunity Commission (EEOC).  The employer moved for summary judgment arguing that the employee never exhausted his administrative remedies.

What does that mean? Well, according the Court, ADEA has two options for employees to sue: Either exhaust the EEOC administrative procedures and, if not satisfied with the outcome, bring suit in federal court; or, bypass the administrative procedures by giving the EEOC a "notice of intent" to sue and waiting 30 days.

Here, the court said, the employee did neither and instead tried to rely on other discrimination claims that he filed in the past with the EEOC. The court rejected that argument and said that Second Circuit law puts the burden squarely on the employee to show that he or she has complied.  

For employers, the case is a simple reminder that defending cases of discrimination is often a two-front battle.  Ensuring that employees meet both the procedural requirements and substantive requirements to prove their case may increase the employer’s likelihood of successfully defending such claims.