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.

Well, it’s official.  Connecticut is under a Blizzard Warning as of Sunday afternoon.

This is, of course, nothing new for employers in the state. We’ve had more than our fair share of big “monster” storms. If you’ve been following this blog for some time, you’ll have read more than your share of blog posts about what to do with your employees when a storm hits.

But here are three issues you may not have thought of recently.

Reporting Time or Minimum Daily Earnings Guaranteed: Connecticut has a “reporting time” obligation (as do several of our neighboring states). It is contained in various regulations and applies to certain industries like the “mercantile trade”. You should already be aware of this law, but it has particular application in storm situations where people may not work full shifts.

For example, in Conn. Regs. 31-62-D2(d) for stores, an employer who requests an employee to report to duty shall compensate that employee for a minimum of 4 hours regardless of whether any actual work ends up getting assigned. So if you bring your employees in on Tuesday only to send them home 30 minutes later, you may be on the hook. For restaurant workers, it is typically a minimum of two hours (Conn. Regs. 31-62-E1)

Takeaway? For certain industries, be sure to know whether you will need to pay employees for a minimum amount of time if you send them home early from their shift.

Wage Agreements: Also be aware of any wage agreements (collective bargaining agreements mainly) that require you to provide employees with a guaranteed minimum number of work hours. Typically, these will need to be followed.

Hours Worked: Be aware of Connecticut’s “hours worked” regulation found in Conn. Regs. 31-60-11. That regulation says that “all time during which an employee is required to be on call for emergency service at a location designated by the employer shall be considered to be working time” regardless of whether the employee is called to work.

When an employee is on call, but is simply required to keep employer informed of whereabouts or until contacted by the employer, working time starts when the employee is notified of his assignment and ends when that employee is finished.

As you contemplate whether to close the office this week, make sure you’ve thought about these issues:

  • What are the situations when an office will close?
  • How will employee receive notice that an office is closed? Is there a central number that they can call for information? Will an e-mail be sent out? What about text message?
  • Will employees be paid for the time when the business is closed?
  • Will employees be paid if they don’t report to work due to inclement weather when the business is open?
  • Will the employer discipline or discharge and employee for failing to report to work due to weather conditions when the business is open?

As I said before, none of these issues should really be new for an employer in Connecticut. But with this being the first big storm of the season, it’s time to shovel out those policies.

Stay warm and safe the next few days!

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.

 

At 47 pages, U.S. District Court Judge Hall’s decision last week in Costello v. Home Depot USA (download here) denying an employer’s motion for summary judgment in an overtime case, isn’t exactly a light read. 

More Saving, More Doing? Not so with litigation

She is, of course, not to blame. The case is complicated and has a “somewhat convoluted procedural history” because it was first filed in 2004 (!) and certified (and then decertified) as a collective action that alleged that Home Depot misclassified mechandising assistant store managers as exempt.

But after nine years of litigation, the Court was finally asked to decide whether Home Depot properly classified these two of these assistant store managers as exempt from overtime pay. 

The position of “assistant store managers” has been the source of lots of litigation over the last decade.  So it’s worth taking a look at what the court did.

Procedurally, it denied the motion for summary judgment saying that there were issues of material fact that precluded the granting of the motion. In other words, the case has to be decided by a fact-finder and jury, and not by the court itself on the papers.

Substantively, the crux of the case centers on whether the employee’s “primary duty” was “management of the enterprise”. 

As to one employee, the emplioyer argued that the employee:

(1) ensured his departments were properly staffed; (2) planned the work to be done in each department; (3) delegated work to his subordinates and followed up to make sure it was done in a timely and correct manner; (4) ensured his subordinates were trained, both for their current position and so they would be ready to advance to the next level; (5) ensured proper merchandise was ordered; (6) inspected his departments for safety violations; (7) resolved employee and customer complaints; (8) made recommendations regarding annual raises for his employees; (9) counseled associates on disciplinary issues; (10) recognized his subordinates for exceptional performance; and (11) devised strategies to improved department sales.

Sounds like it should be enough to win the case, right? The employee countered by saying that “while he performed many of these tasks, in many instances — particularly related to hiring, firing, and scheduling decisions — ultimate decision-making power and discretion lay elsewhere.”  The Court actually says that these facts do indeed lean in favor of the employer, not the employee.  

So why did the court still reject the employer’s motion?

Because taking other factors like whether the employee spent a substantial amount of time performing non-exempt work, and whether the exempt duties the employee performed were of relative importance to the job, led the court to the conclusion that there were genuine disputes as to what actually occurred.

No doubt the decision is frustrating to the employer (and other employers) who laid out a number of facts that even the court — at times — found persuasive.

But ultimately, the case is an important one for all employers to understand exactly what factors a court will look at in determining whether assistant store managers are exempt, and how important it is for employers to have its rationale locked in with supporting documents and affidavits.

These types of inquiries are very fact-specific. But even here, where the employer seemed to spell out lots of details to support its argument, sometimes, a lot of evidence isn’t good enough.

Costello v. Home Depot

The U.S. Supreme Court this morning ruled, 5-4, that pharmaceutical representatives are “outside salesmen” under the Fair Labor Standards Act.  In plain English, this now means that those representatives are now considered exempt from overtime.

Supreme Court

This decision is a big victory for pharmaceutical companies who have been facing years of class action suits (some of which settled in a very high profile manner).  For background on the subject, you can see my prior posts here and here.

You can download the decision in Christopher v. SmithKline Beecham Corp. here.

The decision split along familiar ideological lines with Justice Kennedy casting the decisive vote in favor. 

The first part of the decision rests on whether the Department of Labor’s position on the subject requires deference. The Court concludes that it does not because of the agency’s shifting (and unpersuasive) reasons. 

In looking at the text of the statute itself, the court suggests that “The statute’s emphasis on the “capacity” of the employee counsels in favor of a functional, rather than a formal, inquiry, one that views an employee’s responsibilities in the context of the particular industry in which the employee works.”

Ultimately, the court concludes that “petitioners made sales for purposes of the FLSA and therefore are exempt outside salesmen within the meaning of the DOL’s regulations. Obtaining a nonbinding commitment from a physician to prescribe one of respondent’s drugs is the most that petitioners were able to do to ensure the eventual disposition of the products that [the company] sells.”

The pharaceutical representative position here is fairly unique so it remains to be seen whether this decision will have any dramatic impact outside the pharaceutical industry, but at the very least, those companies should be breathing a big sigh of relief today.

The bill's anti-retaliation provisions appear to apply to all "employees".

The U.S. Supreme Court yesterday heard arguments over whether pharmaceutical sales reprsentatives were properly classified as exempt (from overtime) because they fall within the “outside sales” exemption of the nation’s wage & hour laws.

The plaintiffs said that they were not properly classified because, while the representatives do a lot of tasks, the one thing that they don’t do is actual “sales”.   Rather, they encourage doctors to write prescriptions for their patients to buy their company’s drugs.

You can read the entire transcript here and, as always, check out the excellent SCOTUSBlog for further details.     

The New York Times reported that a number of justices (including the “liberal” ones) expressed some skepticism with the employees’ arguments.   

Justice Ruth Bader Ginsburg suggested that focusing solely on whether there were sales was a mistake. She said the representatives had striking autonomy.

“They don’t clock in and out,” she said. “They work outside the workplace. After they’re trained, they have minimal supervision.”

“It includes dinners,” she said to the plaintiffs’ lawyer, Thomas C. Goldstein. “It may be conventions. Entertainment. Maybe golf. If you’re right, would the time on the golf course get time and a half?”

I’ve previously covered this topic in some prior posts here and here

The transcript makes for interesting reading. In one instance, the government’s lawyer noted something that hadn’t been discussed before– that the Department of Labor was asked for an opinion back in 2007 about the practice.  It didn’t provide one.

JUSTICE SOTOMAYOR: I saw in the briefing hundreds of opinion letters by hundreds of different industries. Outside of this 1945 letter, did anybody else, any other pharmaceutical company, ever set out for the government or seek an opinion letter that you’re aware of?

MR. STEWART: I’m aware of only one instance. I think this is not a matter of public record, but there was one request in, I believe, December of 2007, for an opinion to the effect that the detailers [pharmaceutical sales representatives] were covered by the outside salesman exemption. DOL never responded one way or the other.

A decision is expected by late June 2012.

A few years ago, I addressed the issue of what happens when there’s a “leap year” for pay periods.  Every five years or so (and 2009 was one of them), a year will have 27 bi-weekly paydays instead of 26. That issue arises because bi-weekly pay programs pay employees in 14-day increments resulting in a 364 day annual pay cycle.

A "Leap" on Faith?

But 2012 presents a different question: Does an employer have to pay an employee “extra” for the leap day on February 29th?

The answer may seem confusing at first, but it’s really quite simple.

For hourly, non-exempt workers, they only get paid for hours worked. So, if they work on February 29th, they get paid for the work on that date.

For salaried, exempt workers, they are typically paid on an weekly, bi-weekly, or semi-monthly basis.  But an employee’s salary is typically a pro-rata basis of his or her annual salary and they get paid regardless of the amount of time they work each week.

So, for the extra day, the employer really isn’t paying anything more for an exempt worker.  The annual salary is just that, and the paychecks just reflect the portion of the year.  Many employers thus get a “free” day of work from exempt workers because they are not paying anything more than in non-leap years.

Of course, this is really more of an academic issue because in practice, employees are paid on a bi-weekly basis so it’ll be made up at some point.  (It has more of an impact on employees paid on a monthly or semi-monthly basis.)

Interestingly, my cursory review of case law reveals nary a challenge to this practice.  The only reference to leap days and federal wage claims deal with statute of limitations.

Case in point: When you’re claiming you filed a claim on a certain date, be sure you have your leap years right — unlike this party that claimed to have filed on February 29, 2005.  

The court even felt compelled to add the following footnote: “February has twenty-nine days only in leap years, and leap years occur only in years divisible by four, which 2005 is not.”

Glad the court cleared that up.

Updated: August 28, 2011 – As of mid-morning, more than 40 percent of the state is without power, making this storm the highest power outage in state history.  Widespread office closures are expected for Monday and early this week.

It’s the (relatively) calm before the storm on Saturday night.  Hurricane Irene is definitely coming.

But one question that I’ve seen raised on Twitter today is the following: As an employer, do I need to pay employees if we’re closed on Monday?

It’s a question that is looking more and more likely in need of answer.  Widespread power outages and major flooding are forecast.

There are some exceptions (and, as I’ve highlighted before, you ought to consult with your legal counsel about the particulars of your business) but in general, the answer to the question depends on whether the employee is exempt or non-exempt.

As a general rule, exempt employees get paid on a salary basis the same amount each week — regardless of the amount of work that they do. Thus, for these employees, they are going to get “paid” for the day, in the form of their typical weekly salary.

For non-exempt employees, the general rule is that they only get paid for time that they work.  If they don’t work Monday — even if the office is closed — then they don’t get paid for the work.

Of course, as a morale issue, some employers will pay non-exempt employees for the time or may ask employees to merely take the day as “paid time off”  — figuring that these things happen. But there may be some employers who don’t.

For additional information, there are several posts out there discussing this in the context of a snow day.  Ah, snow. Seems very far off now.

Given the fluid power outage situation, I’m not quite sure when the next blog post from me will be.  Hopefully, on Monday.

In the meantime, stay safe until we can safely say, Goodnight Irene.

As employers in Connecticut know, state and federal laws differ when it comes to paying overtime. Some employees (like computer professionals) are exempt from overtime obligations under federal law, but not under state law.

The new Paid Sick Leave bill just makes a mess of this distinction even further.

How?

Well, the definition of “service worker” covers only those workers paid on an hourly basis or “not exempt from the minimum wage and overtime compensation requirements of the Fair Labor Standards Act of 1938 and the regulations promulgated thereunder, as amended from time to time”.

In plain English, it appears to mean that only service workers who are not exempt under federal law are covered by this bill.  It makes no reference to the state law exemptions and thus, it renders state law meaningless in making this determination.

Thus, computer professionals who are paid on a salary basis in Connecticut who are exempt from overtime under federal law (but not exempt under state law) would not be covered under this paid sick leave bill, despite being among the listed occupations.

Confused about the exempt/non-exempt distinction? The Connecticut Department of Labor attempts to clarify the distinction on their website, but as it notes: state and federal law differ.   A full comparison is available here.

In short, when figuring out who is covered, employers should look at the federal law for the overtime exemptions, not state law.

When new laws get passed, the complications that arise from the passage aren’t immediately clear.  But a look at Connecticut’s new family violence leave provisions (effective October 1, 2010) demonstrates how some of those complications are now making themselves apparent. 

As you may recall, the new Family Violence Victim leave law permits employees to take up to 12 unpaid days leave for medical care or counseling arising from a domestic violence situation or to attend court proceedings related to the same (or a variety of other listed reasons.)  If an employee has compensatory time or vacation time or the like, the leave can be paid. 

The law specifies that employers do not need to provide paid leave if (1) the employee is not entitled to paid leave pursuant to the terms and conditions of the employee’s employment or (2) the paid leave exceeds the maximum amount of leave due the employee during any calendar year. However, the bill requires the employer to provide unpaid leave if paid leave is exhausted or not provided.

Easy enough, right?

But when the statute is put in the context of other wage & hour issues, there’s bound to be some confusion.  And indeed, its interaction with exempt employees should have employers scratching their heads a bit.  Let me explain. 

To simplify, for exempt employees in Connecticut (using the standard white-collar exemptions), employers can deduct from an employee’s pay for one or more full days "if the employee is absent for personal reasons other than sickness or accident" or for "sickness or disability" if pursuant to a policy where deductions are made when sick days are exhausted.  Deductions can also be made for FMLA-covered leave in less than a full day increment.

So, suppose an exempt employee is injured during a domestic violence assault and sees a physician. Can the employer not pay the exempt employee for the days not worked without losing the exemption? Part of the answer depends on whether you consider the absence for a "personal reason" or whether its a "accident".    

Now, suppose that an employee is taking only a half day off, can the employer dock the employee for a half-day without losing the exemption? One could argue "no" because less than a day increments are only allowed for FMLA-related leave, not other types of leave.  Which then raises the question, can the employer requires that the family violence leave be taken in increments of not less than a full day?

Now, suppose the employee needs to attend a court proceeding relating to a family violence issue, is that absence also to be considered a "personal reason"? 

Still more questions to ponder: Does the Department of Labor have any jurisdiction to issue regulations or guidance on the impact of this new law? If not, who does and how can we get more guidance on these types of issues as they arise?

Obviously, these types of situations are not going to be the everyday-type of issues that employers have, but I highlight them because even well-intended laws like the new family violence leave bill, can have unintended consequences and raise unexpected issues.   Unfortunately, as history has shown, it is often only through litigation through the courts that we may ultimately get some answers to the interpretation of this law.