BREAKING NEWS: U.S. DOL Announces New FLSA Proposed Rule

By Scott A. Holt

 

The U.S. Department of Labor (DOL) released its proposed rule today that would broaden federal overtime pay regulations by raising the minimum salary threshold to $50,440 per year in order qualify for an exemption from overtime under the Fair Labor Standards Act (FLSA).

To help understand what this means, below are answers to some questions you might have:

Q.        Why is the DOL making this change?

A.        The proposed change was prompted by a memorandum President Obama issued in March 2014 which directed the DOL to “modernize and streamline” the regulations on exemptions from the FLSA’s minimum wage and overtime pay requirements.  Continue reading

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Marriage Equality and the FMLA

The Supreme Court’s 2013 ruling in United States v. Windsor created a lot of uncertainty in the area of federal employment benefits. Because the federal government’s definition of marriage as being between one man and one woman was held to be unconstitutional, the decision left open the question of when same-sex couples were eligible for spousal benefits in a variety of contexts. In a move that is sure to simplify issues for multi-state employers, the Department of Labor is taking steps to clarify that issue under the Family & Medical Leave Act (FMLA).

The FMLA

The FMLA is a federal law providing unpaid leave to employees who have worked for a company for at least twelve months, and who worked at least 1,250 hours in the calendar year preceding the request for leave. Leave may be taken for a variety of reasons, including to care for a spouse with a serious health condition. Thus, a key consideration in determining eligibility for FMLA leave is whether the person for whom you intend to care is a “spouse” under applicable law. The term “spouse” used to be defined by the Defense of Marriage Act (DOMA). However, DOMA’s definition of marriage was declared to be unconstitutional under the Windsor decision.

The Reaction to Windsor

In the wake of the Windsor decision, the federal government was forced to come up with a new approach to federal benefits impacting spouses. Different agencies adopted different approaches, and sometimes applied different standards to different laws administered by the same agency. With regard to the FMLA, the U.S. Department of Labor adopted a “state-of-residence” rule, meaning that if a same-sex couple’s marriage was not legal in the state where they lived, they were not entitled to spousal leave under the FMLA. So, for example, in 2003 a same-sex couple living in Pennsylvania, who are employed in Delaware and came to Delaware to get married, would not be entitled to spousal leave benefits under the FMLA because their marriage would not be recognized by the Commonwealth of Pennsylvania (a federal judge in Pennsylvania struck down the state’s ban on same-sex marriage in 2014).

This “state-of-residence” rule imposed a significant administrative burden on employers, who would have to research the legality of a couple’s marriage in their home state as part of the FMLA eligibility analysis. The problems are particularly taxing on the East Coast, where individuals frequently live and work in adjacent states. It also created a problem for businesses with a telecommuting workforce, where the HR professionals could have to familiarize themselves with the laws in all 50 states.

A New Approach

Recognizing the administrative burden imposed on employers, the Department of Labor had revised its approach to spousal benefits under the FMLA, adopting a “place-of-celebration” rule. Under the new rule, so long as the marriage is legal in the location in which it is celebrated, the couple will be considered spouses for purposes of being entitled to leave under the FMLA. This approach reduces the administrative burden on employers, who can now treat same-sex marriages the same way that they treat traditional marriages: by reviewing a copy of the marriage certificate of simply assuming that the marriage is valid.

The new rule is part of a formal rule-making process, and will be issued on February 25, 2015. It becomes effective March 27, 2015.

Bottom Line

The Department of Labor’s revised approach to spousal leave benefits is intended to give same-sex spouses the same access to FMLA leave as all other married partners. It has the added benefit of simplifying the administrative process for employers, which is already onerous under the FMLA. Employers who have already voluntarily extended FMLA leave to all same-sex spouses will not experience any change in the process, and can breathe an added sigh of relief!

A Reminder About Comp Time

It’s summer and that means it’s time for summer vacations.  Some employers are unaware of the law regarding when an employee may be paid “comp time” instead of wages.  So here’s a brief recap of what you should know.logo_from_dev

Rule #1

Absent an exemption (see below), all employees must be paid at an overtime rate of 1.5 times the normal hourly rate for all hours worked in excess of 40.

This means that an employee who earns $20/hr. must be paid $30/hr for each hour worked over 40.

If the employee works 40 hours, he is paid $20 x 40 = $800.  If he works 42 hours, he is paid $20 x 40 ($800) plus $30 x 2 ($60) as overtime compensation.

But he may not be paid his regular rate for the first 40 hours ($800) plus 2 hours of “comp time.”  No, no, no.  All time in excess of 40 must be paid (money in an amount equal to) 1.5 times the normal hourly rate.

Rule #2

Provided the employer complies with Rule #1, the employer may offer comp time as a supplemental form of wages.

One common example of this is paying comp time for hours 35-40.  So, in addition to his regular wage of $800, the employee may also be paid 5 hours in comp time as an incentive or reward for working those last five hours.  Similarly, some employers offer comp time for premium shifts.

Both scenarios are totally kosher, so long as the employee is receiving his regular wage.  Comp time is a supplement not a substitute.

Rule #3

As with any rule, there are exceptions.

But, with comp time, the exceptions are few.  An employer may pay an employee comp time in lieu of  wages in certain situations.  First, exempt employees (those who are not entitled to overtime in the first instance) can be paid comp time for time worked in excess of 40 in a week.

Second, certain public-sector employees may be paid comp time, including state and local government employers.  In the public sector, under certain conditions, employees may receive compensatory time off at a rate of 1.5 hours for each overtime worked, instead of cash overtime pay.

Law enforcement, fire protection, and emergency response personnel and employees engaged in seasonal activities may accrue up to 480 hours of comp time; all other state and local government employees may accrue up to 240 hours.

Recap

There are exceptions to every rule.  For example, some states do not permit the use of comp time or limit accrual to a lesser number than provided by federal law.  Before you implement a comp-time system in your workplace, you should consider having it reviewed with legal counsel.  And, if you have a comp-time system in place for non-exempt employees as a substitute for overtime pay, you should consider consulting with your employment lawyer to determine whether the system violates state or federal wage payment laws.

See also U.S. DOL Fact Sheet #7 State & Local Governments Under the FLSA

Other FLSA posts

Auto-Deduct Meal-Break Policies Live to See Another Day

The number of FLSA lawsuits filed each year continues to rise.  See The Wage & Hour Litigation Epidemic Continues, at Seyfarth Shaw’s Wage & Hour Litigation Blog.  Often, the lawsuits follow certain trends, targeting a particular industry, job type, or claim.  One such trend, which I’ve written about previously, is meal-break claims.  In these suits, the plaintiffs allege that their pay was automatically deducted for meal breaks that they never received.logo_from_dev

Although this has been a popular claim, it’s not been a very successful one.  And a recent case from the Eastern District of New York gives employers real reason to believe that meal-break claims are all but dead upon arrival.

In DeSilva v. North Shore-Long Island Jewish Health System, Inc., the court decertified a collective action of 1,196 plaintiffs who had alleged that they were subject to automatic deduction of meal breaks that they didn’t receive.  In its opinion, the court makes clear that such claims will have a difficult time proceeding as a collective action:

In the time since this action was initially filed, mounting precedent supports the proposition that [the employer’s] timekeeping system and system-wide overtime compensation policies are lawful under the FLSA.

The court explains that this “mounting precedent” has resolved any doubt about the validity of auto-deduct policies, which require an employee to report a missed break to his supervisor in order to be paid for it.  If no report of a missed break is made, the break period (usually 30 minutes) is automatically deducted from the time worked.  This timekeeping system has the benefit of not requiring that employees clock in and out during their breaks-only at the beginning and end of each shift.  The court reiterated that “automatic meal deduction policies are not per se illegal” and:

[w]ithout more, a legal automatic meal deduction for previously scheduled breaks cannot serve as the common bond around which an FLSA collective action may be formed.”

This decision continues to build on the growing body of case law dismissing or decertifying FLSA collective and class actions arising from auto-deduct meal-break policies.  Good news for employers, particularly in health care, where these policies are commonplace.

DeSilva v. N. Shore-Long Island Jewish Health System, Inc., No. 10-CV-1341 (PKC) (WDW), 2014 U.S. Dist. LEXIS 77669 (E.D.N.Y. June 5, 2014).

 

See also

2d Cir. Drops the FLSA Hammer (Dejesus v. HF Mgmt’s Servs., LLC, No. 12-4565 (2d Cir. Aug. 5, 2013).

Another Auto-Deduct Case Bites the Dust (Raposo v. Garelick Farms, LLC (D. Mass. July 11, 2013)).

8th Cir- FLSA Plaintiffs Must Spell It Out (Carmody v. Kan. City Bd. of Police Comm’rs (8th Cir. Apr. 23, 2013)).

2d Cir- FLSA Does Not Cover Gap Time (Lundy v. Catholic Health Sys. (2d Cir. Mar. 1, 2013)).

Another Employer’s Auto-Deduct Policy Is Upheld (Creeley v. HCR ManorCare, Inc., (N.D. Ohio Jan. 31, 2013)).

6th Cir. Affirms Dismissal of FLSA Gotcha Litigation (White v. Baptist Mem’l Health Care Corp. (6th Cir. Nov. 6, 2012)).

The Legality of Automatically Deducting Meal Breaks (Camilotes v. Resurrection Health Care Corp. (N.D. Ill. Oct. 4, 2012)).

E.D. Pa. Dismisses Nurses’ Claims for Missed Meal Breaks, Part I and Part II (Lynn v. Jefferson Health Sys., Inc. (E.D. Pa. Aug. 8, 2012)).

FLSA Victory: Class Certification Denied (Pennington v. Integrity Comm’n, LLC (E.D. Mo. Oct. 11, 2012)).

Chefs and Employment Law: A Valentine’s Day Post

Rumor has it that today is Valentine’s Day.  Being married to a chef-restaurateur, Valentine’s Day doesn’t mean “romantic holiday” to me as much as “very, very busy workday.”  And, for that reason, I’ll dedicate today’s post to the food-service professionals who have a long weekend of work ahead of them.

There are plenty of employment-law topics with a chef or restaurant connection.  Here are a few stories from recent history that come to mind.love heart tattoo art_thumb

Wage-and-Hour Claims

Certainly, restaurants are not the only industry subject to wage-and-hour claims by employees.  But there does seem to have been a recent proliferation of settlements of such claims by businesses owned by famous-name chefs.

There was the $5.25 million settlement forked out by Chef Mario Batali in March 2012, over allegations that servers’ tips had been improperly withheld.  Then there was the January 2014 settlement agreement that Chef Daniel Boulud reached with 88 workers who alleged that their pay had been improperly reduced to account for tips, resulting in payment of overtime at an incorrect rate.  The amount of that settlement is confidential.  And, even more recently, there was the $446,500 settlement agreement reached to resolve the wage claims of 130 servers at two NYC restaurants owned by Chef Wolfgang Puck.

Why are so many wage claims against restaurants?  One reason is the complexity of the laws in this area.  The overtime laws are complicated even in the context of an employee who receives hourly wages only.  But, add to that tip credits, earned tips, and tip pooling, and you’ve got a virtual maze of complex issues.  The laws are not easy to navigate, especially without guidance from experienced legal counsel.

Social-Media Use and/or Misuse

I’d be remiss, of course, if I didn’t give at least one social-media related story, too.  So I will end today’s post with a reference to a story about a chef who sent a bunch of not-so-nice tweets from the restaurant’s official Twitter account after he’d been fired but before (apparently) the restaurant had changed the password on its account.

Chef Grant Achatz, owner of Alinea in Chicago, landed in hot water when he tweeted about a couple who brought their 8-month old to dinner.  I have a definite opinion on this story.  Having been to Alinea, I feel very comfortable saying that it is not a place where an 8-month old needs to be and, if the 8-month old is crying at the top of his lungs, it’s not a place where that baby should be.  The restaurant is very expensive, with meals starting at more than $200 per person.  Reservations are wickedly difficult to get with only 80 seats.

Most important, though, is the nature of the experience.  Diners fight for reservations and pay big bucks for a reason–the meal is something you remember forever.  The food is so far beyond anything else, it’s almost an Alice-In-Wonderland experience.  And to have that be ruined by the guests at the table next to you would be, to me anyway, a crushing disappointment.

So, there.  That’s where I stand on the question.  Chef Achatz’s tweet did not offend me or make me adore his restaurant any less.

FMLA Master Class: Feb. 12, 2014

The Family and Medical Leave Act has been a part of the workplace for more than a decade, so it’s gotten easier for HR to administer, right?  Not so.  Confusing regulations, coupled with numerous recent changes at both the legislative and regulatory levels and conflicting court decisions, ensure that FMLA continues to be one of the biggest compliance headaches for employers.

Let us help you clarify the confusion surrounding the numerous legislative and regulatory changes to the FMLA and get answers to all your FMLA questions at this advanced-level seminar just for Delaware employers.  Learn More.

Register now for the one-day seminar, and you’ll learn:

  • The latest expansion, so you don’t risk noncompliance
  • What recent FMLA court decisions really mean, so you can adjust your policies accordingly
  • Why FMLA record-keeping continues to trip up even the savviest human resource managers, and effective solutions to avoid similar mistakes
  • How to tame the intermittent leave and reduced schedule beasts, and put a stop to abuse and fraud
  • How FMLA, ADA, and your state’s leave and workers’ comp laws overlap, so you don’t violate any statute
  • What to expect when an employee’s expecting, so you can balance your business needs with her personal requirements, all within the spirit and letter of the law
  • How to judge a “serious health condition” the way a real judge would, and eliminate disputes about what does and doesn’t constitute it
  • And more

Visit HRhero.com to see your full Agenda.

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  • Please mention Seminar Code S1694A when calling

Delaware Mini-COBRA Law Grows

Editor’s Note:  This post was written by Timothy J. Snyder, Esq.  Tim is the Chair of Young Conaway’s Tax, Trusts and Estates, and Employee Benefits Sections. 

Delaware’s Mini-COBRA law, enacted in May 2012, allows qualified individuals who work for employers with fewer than 20 employees to continue their coverage at their own cost, for up to 9 months after termination of coverage.  When it was passed, the legislature provided that the provisions of the Mini-COBRA statute:

shall have no force or effect if the Health Care bill passed by Congress and signed by the President of the United States of America in 2010 is declared unconstitutional by the Supreme Court of the United States of America or the provisions addressed by this Act are preempted by federal law on January 1, 2014, whichever first occurs.<img style="border-bottom: 0px;border-left: 0px;margin: 10px;padding-left: 0px;padding-right: 0px;float: right;border-top: 0px;border-right: 0px;padding-top: 0px" title="health care" border="0" alt="health care" align="right" src="http://www.delaware

I’m not sure what the Legislature meant when they provided that the Mini-COBRA statue would be preempted by federal law on January 1, 2014 but the intent was for the Mini-COBRA law to sunset on that date. However, in a little-publicized move in July of 2013, the legislature eliminated the January 1, 2014 sunset date for Mini-COBRA. They described their rationale for doing so as follows:

The Mini-COBRA Bill was originally passed as a short-term bill that was needed until the provisions of the Patient Protection and Affordable Care Act (“PPACA”) became applicable to states, which was to occur on January 1, 2014. However, because PPACA’s legislation relating to small employer group health policies now permits insurance companies to impose a ninety (90) day waiting period prior to the effective date of coverage, which was not anticipated when the Mini-COBRA Bill was passed, it is desirable to remove the sunset provision of the Mini-COBRA Bill so that the Mini-COBRA Bill remains in the Delaware Code, at least until a point in time when PPACA or other law may no longer permit an insurance company to impose waiting periods.

I initially thought that the Legislature provided for a January 1, 2014 sunset date because that is the date that coverage begins under the healthcare exchanges, which do not impose waiting periods in the typical COBRA scenario.  Thus, an individual terminated from a small employer could purchase his or her coverage for at least the 90-day waiting period from the exchange rather than requiring the former employer’s insurer to provide the mini-COBRA benefit.  In fact, the U.S. Department of Labor, which oversees regular COBRA benefit administration, has issued revised model COBRA Notices that inform the qualified beneficiaries that they can acquire COBRA coverage through their former employer or they can obtain new coverage from the healthcare exchange.