Late yesterday, various press reports signaled what could be the beginning of the end for 2011 Department of Labor guidance that had greatly expanded legal claims against restaurants.

The 2011 rule barred businesses (mainly restaurants) from including nontipped workers in their tip pools.  That practice – if done involuntarily – then entitles the servers or waitstaff who have contributed those tips to the tip pool to minimum wage for their hours (not the tip-credit minimum wage.)

As of this morning, the DOL had not released its’ rule publicly, but according to a Law 360 report the description “suggests it would roll back the DOL’s 2011 rule amending its interpretation of the Fair Labor Standards Act to blog businesses from giving a portion of service employees’ tips to traditionally nontipped workers, such as kitchen staff.”

The attack on this 2011 guidance is also making its way through the courts.  The U.S. Supreme Court is expected to decide soon whether to review a case out of the Ninth Circuit that upheld the tip pooling rule.

The timing of the DOL’s expected rollback is unclear, but it could have a significant impact on many cases pending in the court systems or being threatened now.  At the current rate, a change could be expected in the first quarter of 2018.

For restaurants and other employers such as hotels that have tipped employees, this change ought to be closely followed.  Until we see the scope of the proposed rule change, it is unclear what the full impact on existing cases will be but given past practices on situations like this, but it might just evaporate a whole host of lawsuits that have popped up.

Stay tuned.

Last week I talked about the new state law regarding pregnancy discrimination that is going into effect on October 1, 2017.  In that post, I mentioned a new notice that was required to comply with the law.

Although there is no set form that is required to be used, the Connecticut Department of Labor has created one that is available for employers to use that will comply with the state law.  It is free to download here.  

Because the content is useful, I’m using it down below so that employers can cut and paste it into a handbook or into a notice to be given to employee upon starting work too.  One can quibble with some of the word phrasings that are used, but overall — and stating the obvious — if you use this, you’ll be in compliance according to the state.

Covered Employers

Each employer with more than 3 employees must comply with these anti-discrimination and reasonable accommodation laws related to an employee or job applicant’s pregnancy, childbirth or related conditions, including lactation.

Prohibition of Discrimination

No employer may discriminate against an employee or job applicant because of her pregnancy, childbirth or other related conditions (e.g., breastfeeding or expressing milk at work).

Prohibited discriminatory conduct includes:

  • Terminating employment because of pregnancy, childbirth or related condition
  • Denying reasonable leave of absence for disability due to pregnancy (e.g., doctor prescribed bed rest during 6-8 week recovery period after birth)*
  • Denying disability or leave benefits accrued under plans maintained by the employer
  • Failing to reinstate employee to original job or equivalent position after leave
  • Limiting, segregating or classifying the employee in a way that would deprive her of employment opportunities
  • Discriminating against her in the terms or conditions of employment

    *Note: There is no requirement that the employee be employed for a certain length of time prior to being granted job protected leave of absence under this law.

Reasonable Accommodation

An employer must provide a reasonable accommodation to an Employee or job applicant due to her pregnancy, childbirth or needing to breastfeed or express milk at work.

Reasonable accommodations include, but are not limited to:

  • Being permitted to sit while working
  • More frequent or longer breaks
  • Periodic rest
  • Assistance with manual labor
  • Job restructuring
  • Light duty assignments
  • Modified work schedules
  • Temporary transfers to less strenuous or less hazardous work
  • Time off to recover from childbirth (prescribed by a Doctor, typically 6-8 weeks)
  • Break time and appropriate facilities (not a bathroom) for expressing milk

Denial of Reasonable Accommodation

No employer may discriminate against employee or job applicant by denying a reasonable accommodation due to pregnancy.

Prohibited discriminatory conduct includes:

  • Failing to make reasonable accommodation (and is not an undue hardship)**
  • Denying job opportunities to employee or job applicant because of request for reasonable accommodation
  • Forcing employee or job applicant to accept a reasonable accommodation when she has no known limitation related to pregnancy or the accommodation is not required to perform the essential duties of job
  • Requiring employee to take a leave of absence where a reasonable accommodation could have been made instead
    ** Note: To demonstrate an undue hardship, the employer must show that the accommodation would require a significant difficulty or expense in light of its circumstances.

Prohibition of Retaliation

Employers are prohibited from retaliating against an employee because of a request for reasonable accommodation.

Notice Requirements

Employers must post and provide this notice to all existing employees by January 28,2018; to an existing employee within 10 days after she notifies the employer of her pregnancy or related conditions; and to new employees upon commencing employment.

Complaint Process

CHRO:

Any employee aggrieved by a violation of these statutes may file a complaint with the Connecticut Commission on Human Rights and Opportunities (CHRO). Complainants have 180 days from the date of the alleged act of discrimination, or from the time that you reasonably became aware of the discrimination, in which to file a complaint. It is illegal for anyone to retaliate against you for filing a complaint. CHRO main number: 860-541-3400 CHRO website: www.ct.gov/chro/site/default.asp CHRO link “How to File a Discrimination Complaint”: http://www.ct.gov/chro/taxonomy/v4_taxonomy.asp? DLN=45570&chroNav=|45570|

DOL:

Additionally, women who are denied the right to breastfeed or express milk at work, or are discriminated or retaliated against for doing so, may also file a complaint with the Connecticut Department of Labor (DOL). DOL phone number: 860-263-6791 DOL complaint form: For English: http://www.ctdol.state.ct.us/wgwkstnd/forms/DOL-80%20fillable.doc For Spanish: http://www.ctdol.state.ct.us/wgwkstnd/forms/DOL-80S%20fillable-Spa.doc

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.

file0001835967537The Connecticut Supreme Court, in a unanimous decision that will be officially released April 4, 2017, has ruled that employers may not use the “tip credit” for pizza delivery drivers and therefore, the employees must be paid the standard minimum wage.

You can download the decision in Amaral Brothers, Inc. v. Department of Labor here.  The decision is no doubt a disappointment to employers who believe that the Connecticut Department of Labor’s regulations in this area far outstretch the plain language of the applicable wage/hour statute.

The case arises from a request by two Domino’s franchises for a “declaratory ruling” from the Connecticut Department of Labor (DOL) that delivery drivers are “persons, other than bartenders, who are employed in the hotel and restaurant industry, …who customarily and regularly receive gratuities.” The request arises from Conn. Gen. Stat. §31-60(b), which has been amended over the years.

Why would the employer make such a request? In doing so, the employer wanted to take advantage of the “tip credit”, in which employees are paid below the conventional minimum wage, but his or her salary is supplemented by tips from customers.

Originally, as noted by the employer’s brief to the Court: “The DOL denied Plaintiff’s Petition for the following stated reasons: (1) the regulations were valid because they served a remedial purpose, were time-tested and subject to judicial scrutiny…; and (2) the only act of “service” was handing the food to the customer at the customer’s door and so delivery drivers’ duties were not solely serving food as required under Regulations of Connecticut State Agencies § 31-62-E2(c). The DOL’s decision was that only employers of “service employees” as defined by the DOL could utilize the credit, and Plaintiff’s employees were not service employees.

A lower court upheld the DOL’s conclusions “agreeing that the regulations were ‘reasonable’, ‘time tested’, and had ‘received judicial scrutiny and legislative acquiescence’. The court also determined that the ‘minimum wage law should receive a liberal construction.'”  (You can also view the DOL’s brief to the Court here.)

The Connecticut Supreme Court upheld the Department of Labor’s interpretations here finding that the regulations issued by the agency were “not incompatible” with the enabling statute.  In doing so, the Court noted that this is a bit unusual because the employer was contending that the regulations were originally valid when issued, but repealed by implication when there was an amendment to the statute at issue.

The Court’s decision traced the origin of the tip credit in a portion of the decision that only lawyers will love. But then they get to the heart of the matter: “It was reasonable for the department to conclude that the legislature did not intend that employees such as delivery drivers, who have the potential to earn gratuities during only a small portion of their workday, would be subject to a reduction in their minimum wage with respect to time spent traveling to a customer’s home and other duties for which they do not earn gratuities.”

While the court’s decision directly implicates delivery drivers, it only impacts those employed directly by the employer (see also: UberEats, GrubHub etc.).  Nevertheless, in upholding the DOL’s interpretation here, the scope of who falls within the tip credit at restaurants is going to be further challenged in the courts.

Before employers make any further conclusions, Connecticut businesses should also be aware that the scope of the tip credit and of tip pooling is being debated at the federal level as well.  The National Restaurant Association has joined many others in asking the U.S. Supreme Court to hear a case on the subject. We should hear shortly whether the Court will accept such a case.

The Court’s decision is yet another reminder that restaurants in Connecticut should review the situations in which the tip credit is being utilized. Issues regarding tip pooling should be reviewed as well.  This case doesn’t answer all the questions that come up in the restaurant context. But in terms of figuring out the scope of the law, it helps to answer (albeit in a manner not helpful to employers overall) some outstanding questions.

USDOL Headquarters in DC
USDOL Headquarters in DC

Over the last few weeks, there’s been a lot of bluster about lawsuits filed that are challenging the new overtime rules that are set to take place in just a few weeks. And there was also news that Congress was considering a law restricting the law as well.

Both seem unlikely to come to pass and employers that have been postponing action in the hopes of a “white knight” on the issue should think twice.

I covered the new rules in several prior posts (here and here, for example). But as a reminder, 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.

So, that leaves you with precious few weeks to get into compliance.  There are a number of different approaches to take and its definitely not a one-size-fits-all type of law.

One suggestion though is to have your trusted attorney or HR consultant take a look at any questions you have.  We have done this for several and there are some challenges that may seem unique to your business that other companies have struggled with as well.

If the court suspends implementation of the new rules, you can still decide then, but it may be a game-time decision given how late we are in the process.

As Connecticut employers of a certain size know, Connecticut implemented Paid Sick Leave recently which affords employees up to five days off a year.   Now, federal contractors (including those in Connecticut) have another layer to deal with. As my colleague Ashley Marshall explains below, paid sick leave will now be a requirement later this year.  Thanks too to my partner Gary Starr who helped pull this together today on short notice.

marshall If we travel back in time to September 2015, President Obama signed Executive Order 13706 (EO) which established a mandate on federal contractors to give their employees up to 56 hours (7 days) of paid sick leave each year.

Today, the Secretary of Labor has issued regulations to implement President Obama’s Executive Order that established a mandate on federal contractors to give their employees up to 56 hours (7 days) of paid sick leave each year.  The regulation goes into effect on November 29, 2016.

Here are some of the highlights:

  1. The Final Rule covers new contracts and replacements for expiring contracts with the fdoctorederal government that result from solicitations on or after January 1, 2017.
  2. Employees will accrue 1 hour of paid sick leave for every 30 hours worked on or in connection with a covered federal contract.
  3. Paid sick leave is capped at 56 hours (7 days) in a year.
  4. Employees may use paid sick leave for their own illnesses or other health care needs, for the care of a loved one who is ill, for preventive health care for themselves or a loved one, for purposes resulting from being the victim of domestic violence, sexual assault, or stalking, or to assist a loved one who is such a victim.
  5. The Final Rule allows for coordination with existing paid time off policies and labor agreements
  6. Employers may require that employees using paid sick leave provide certification from a health care provider of the employee’s need for leave if they use 3 or more days of leave consecutively.

A few other tidbits:

  • Whether an employee has to work a certain number of hours  for coverage depends on whether they work “on” a covered contract or “in connection” with a covered contract.
  • Employees that work “on” a covered contract are those that are performing the specific services called for by the contract. They are covered, regardless of the number of hours worked in a year and regardless of whether they are full or part time.
  • Employees that work “in connection” with a covered contract are  those that perform work activities that are necessary to the performance of the contract, but are not directly engaged in the specific services called for in the contract.  An employee who spends less than 20% of his or her hours working “in connection” with a covered contract in a particular workweek is not covered.

As with many new benefits, employees may try to take advantage of the new regulation, particularly since no medical excuse needs to be provided until the employee is out of work 3 or more days.  Employers are going to need to be vigilant against abuse.

The Final Rule will be published in the Federal Register September 30, 2016, and will go into effect exactly 60 days after its publication. More information can be found on the U.S. Department of Labor’s website in its Fact Sheet and Overview.

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.

 

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.

USDOL Headquarters in DC
USDOL Headquarters in DC

Over the years in the employment law “blawgosphere” (isn’t there a better term by now?), I’ve had the pleasure of meeting with and conferring with several other attorneys who blog. One of those is Jeff Nowak, whose FMLA Insights blog has become a go-to place on all things FMLA.

So, it was no surprise yesterday that Jeff was one of the first to talk about a new FMLA notice that will be issued by the U.S. Department of Labor that can be used interchangeably with the existing notice. He also added this scoop:

After today’s announcement, I had the opportunity to connect with the DOL’s Branch Chief for FMLA, Helen Applewhaite, about the timing and obligations to post the new General FMLA Notice. She confirmed that employers would be allowed to post either the current poster or the new version. In other words, employers will not be required to change the current poster. For those that want to use the new poster, I will post a link as soon as DOL releases it.

Jeff also linked to a new employer’s guide to the FMLA, a companion of sorts to a 2012 release by the DOL for employees.   This 71-page guide will be a good starting point for employers on the basics of the law but it leaves more complex issues about the law unanswered.  For more on it, see Jeff’s post and a followup post by Jon Hyman, of the Ohio Employer’s Law Blog this morning as well.

Connecticut employers though should exercise extreme caution about using this guide as a bible.  As most employers in Connecticut are aware, there are significant differences between Connecticut’s FMLA law and the federal counterpart.  And because employers with 75 or more employees in Connecticut are covered by both, there is a significant risk that employers using only the federal FMLA guide will get the law wrong.

Connecticut has historically posted a comparison of the two laws that is helpful, again as a starting point.  But that comparison is now 17 years old and doesn’t address many of the current issues or things such as a military exigency leave that have occurred through changes to the FMLA law over the years.

So what’s an employer in Connecticut to do? Ignore it? Read it?

Probably a little of both.

There are certainly items helpful in both guides but, in my view, they aren’t a substitute for talking with counsel about more complicated issues such as intermittent leave and FMLA’s interaction with the ADA and Connecticut’s Paid Sick Leave law.

If nothing else, be aware that when FMLA leaves do occur, there may be more to the solution than what is posted in the USDOL’s employer guide.