labor and employment Archives - The National Law Forum

As the Season Changes, Don’t Fall Behind: 4 Key Employment Law Trends

As the seasons change, so do manufacturers’ priorities. Fall is typically one of the busiest hiring periods of the calendar year, so many manufacturers are likely bracing themselves for this challenge. That said, there were several significant labor and employment updates this spring and summer of which manufacturers should be aware; below are four key trends that may require action to ensure compliance.

1. Worker Classification – Independent Contractor Versus Employees

Earlier this year, the U.S. Department of Labor (DOL) issued a final rule regarding employee and independent contractor status under the Fair Labor Standards Act (FLSA). The new rule, which took effect March 11, 2024, adheres to a “totality of the circumstances” approach and involves consideration of six factors. Manufacturers who rely on independent contractors to perform work and provide services should consider reviewing those relationships to ensure they are adequately characterized as independent contractors rather than employees.

2. Salary Threshold for Exempt Employees Increasing

This past spring, the U.S. DOL issued a final rule that included raising in the federal minimum salary threshold for exempt employees. Previously, the salary threshold for executive, administrative, and professional employees was $684 per week (or $35,568 per year). Effective July 1, 2024, however, the salary threshold became $844 per week ($43,888 per year), and on January 1, 2025, it will once again rise to $1,128 per week ($58,656 per year). The final rule also states that the threshold will increase on July 1, 2027, and every three years thereafter. Manufacturers should review these thresholds, as well as any state or local thresholds that may exist to ensure compliance and prepare for the January 1, 2025, increase.

3. Pay Transparency Laws

Pay transparency laws, including those requiring employers to provide the pay range to applicants, candidates, and employees or to include it in job postings, continue to be passed in states nationwide. On July 31, 2024, Massachusetts passed a law requiring employers to include a “pay range” in all job postings, including those posted by third parties, such as recruiters. Massachusetts joins several other states, including Washington, DC, which passed a similar law that recently took effect on June 30, 2024; Maryland, which passed a law taking effect on October 1, 2024; laws in Minnesota and Illinois that both take effect on January 1, 2025; and a Vermont law will take effect on July 1, 2025. Notably, the Massachusetts law also contains pay data reporting requirements for employers that are subjected to annual federal Equal Employment Opportunity (EEO) report requirements, which includes many manufacturers. Specifically, covered manufacturers must submit an annual report of pay data categorized by race, ethnicity, sex, and job category to the Secretary of the Commonwealth, with the first report due no later than February 1, 2025. Manufacturers might consider reviewing the pay transparency and pay data reporting laws in the states in where they employ employees or engage in recruiting.

4. Paid Sick Leave Laws

While paid sick leave has been trending for a number of years, there have been significant developments in recent months. In Connecticut, the sick leave law was recently expanded significantly, and now nearly all private employees are entitled to such leave. New York has also recently become the first state in the nation to enact paid prenatal leave benefits for pregnant workers. Specifically, effective January 1, 2025, pregnant workers will be entitled to up to 20 hours of paid leave in a 52-week period to attend prenatal medical appointments and procedures. This leave is not accrued; rather, it must be immediately available to employees, and it is in addition to the paid sick and safe leave to which employees are already entitled. Manufacturers who are multi-state employers should consider engaging in a comprehensive review of their PTO and sick leave policies to ensure compliance with these recent advancements.

New DOL Salary Threshold for Most White-Collar Exemptions Is Now in Effect

Update July 1, 2024: The U.S. Department of Labor’s new rule on the required salary threshold for employees to qualify as exempt from overtime is now in effect as of July 1, 2024. Although the federal district court for the Eastern District of Texas issued an injunction blocking enforcement of the new rule against the State of Texas as an employer on Friday, June 28, 2024, that injunction does not apply to other employers, including private businesses. Thus, the new salary thresholds for exempt status, as detailed below, are in effect nationwide. Other lawsuits challenging the regulation remain ongoing, and should continue to be monitored for any further developments.

The U.S. Department of Labor (DOL) has issued a final rule that significantly raises the required salary threshold for many salaried exempt employees starting July 1, 2024. Under this final rule, issued on April 23, 2024, the guaranteed salary that most employees must receive to qualify as exempt from the overtime rules will increase dramatically over the next nine months. Effective July 1, it will jump from $35,568 per year to $43,888 per year; and then just six short months later, on January 1, 2025, it will jump to $58,656 per year.

Under the Fair Labor Standards Act, employees who work in executive, administrative, professional, and certain computer positions must generally meet both the salary basis test and the job duty requirements to be classified as exempt from the overtime rules. In addition to being paid on a salary basis (which means there can be no deductions from salary, subject to certain limited exceptions), the threshold salary is currently $684 a week, amounting to $35,568 annually. The final rule raises the threshold for salaried employees significantly, according to the following schedule:

Effective July 1, 2024: $844 per week (equivalent to $43,888 per year)
Effective January 1, 2025: $1,128 per week (equivalent to $58,656 per year)
Effective July 1, 2027, and every three years thereafter: To be determined based on available earnings data

In addition, the new rule increases the total annual compensation threshold for highly compensated employees from $107,432 per year to $132,964 per year effective July 1, followed by yet another increase to $151,164 per year effective January 1, 2025. This will result in an increase of nearly $44,000 per year to the salary threshold necessary to qualify for the highly compensated employee exemption.

It is widely expected that various business and industry groups may file suit to attempt to block these changes from taking effect. Many employers may remember that a similar scenario occurred in 2016, when the DOL under the Obama Administration proposed a large increase in the salary threshold for these white collar exemptions, before that increase was blocked by court action. If the final rule issued by the DOL is not blocked through court action, it will mean significant changes for employers in compensation structure, as more employees nationwide will qualify for overtime pay unless their salaries are increased over the new threshold.

Employers should immediately review their workforces to determine what changes, if any, may be necessary if the final rule takes effect. Possible considerations include:

Raising the annual salary of employees who meet the duties test to at least $43,888 as of July 1, and $58,656 as of January 1, 2025, to retain their exempt status;
Converting employees to non-exempt status and paying the overtime premium of one-and-one half times the employees’ regular rate of pay for all overtime hours worked; or
Converting employees to non-exempt status and eliminating or reducing the amount of overtime hours worked by such employees.

Similar considerations should be undertaken with highly compensated employees. While it is wise to review pay practices proactively and identify potential changes that may become necessary, employers may wish to continue to monitor legal developments prior to actually implementing such changes. As employers will recall from 2016, significant changes can occur between the announcement of a final rule and the date on which it is scheduled to become effective.

Employers are encouraged to consult with legal counsel to discuss their options and strategies for implementing these changes, if necessary.

Best Practices for Associate Compensation

Welcome back to our in-depth exploration of compensation within law firms. In our previous post , we emphasized the significance of establishing a robust compensation system to attract and retain top talent and keep them motivated. In this post, we’ll discuss the crucial components needed to make an effective compensation plan for associates within the firm.

Compensating associates is a multifaceted task that law firms tackle annually to attract and maintain a talented workforce. Unfortunately, numerous small to mid-sized firms lack a robust structure that anticipates market trends and internal changes, and they also often need a simplified process for determining raises and bonuses.

Key Considerations for Developing Compensation Plans for Associates:

Associate compensation programs should incorporate the following elements:

Market Competitiveness: How does the firm’s associate compensation compare with market standards and rival firms?
Progression: Does the firm have a consistent and progressive structure for raises and bonuses that aligns with its associates’ experience and performance progress?
Incentive Alignment: Does the firm incentivize behaviors aligned with its vision and priorities?
Transparency: Does the firm clearly communicate with associates about their earning potential over time and at specific experience and performance levels?
Feedback: Are associates given enough performance feedback to understand the relationship between their salaries, raises, bonuses, and performance?

Capacity and Performance Expectations

Establishing a compensation structure begins with assessing attorneys’ current and future economic and qualitative potential. Firms should project the expected performance and contributions over the first eight to ten years of an attorney’s career in the firm.

Production Capacity – How much work will the attorney handle, and what is the value of that work? Production metrics may include billable hours or caseload, expected billings and collections, and, by extension, rates and realization.
Qualitative Performance – Which skills does the attorney need to succeed in the position/ to create value? Consider legal skills, case management, business development contributions, compliance/ interpersonal skills, recruiting support, etc.
Profitability – How much economic value should the attorney create beyond their cost? (Expected profit or profit margin)

The qualitative increases in value and objective contributions to revenue and profit indicated in the table below provide an example of the most common factors. Contributions should be considered in the context of increasing long-term value and offering short-term profits.

INCREASES IN VALUE	CONTRIBUTIONS TO PROFIT
Quality of professional work	Personal Productivity
Work ethic (consistency of quality and quantity)	Profitability of others (supervision and training)
Client relations and service	Originations
Personal development and accountability	Recruiting profitable lawyers
Business development contributions (networking, publishing, speaking, etc.)	Business hygiene (timekeeping, billing, collections)
Cultural support
Firm building (recruiting, training, process development, etc.)
Adding to the reputation of the firm

The table below indicates an example of expectations by experience level.

PERFORMANCE EXPECTATIONS
KEY	Consistent
	Approaching consistent
	Optional
	Not expected at the experience level

ECONOMIC FACTORS
EXPERIENCE (YR)	Productivity	Realization	Training Supervision	Profit Threshold	Billing Management	Origination
1
2
3
4
5
6
7
8
9
10

A firm may combine all economic scores and consider the aggregate result as a qualitative factor. As long as the selected system is consistently applied, room exists for customization.

QUALITATIVE FACTORS – WEALTH CREATION
EXPERIENCE (YR)	Work Ethic	Work Quality	Bar, Professional Civic	Content Publishing Speaking	Business Development Competence	Recruiting Contributions	Client Relations and Service	Pro Bono
1
2
3
4
5
6
7
8
9
10

Designing a rewarding compensation strategy is essential for maximizing the value from your law firm’s legal team. This involves careful deliberation over economic and qualitative criteria. Balancing these factors and customizing your approach enables your firm to attract and retain top lawyers while nurturing a consistent organizational culture.

Start by clearly defining the skill set that brings long-term value to your firm and reward attorneys accordingly to ensure retention of the most compatible talent.
Employ strategies to recognize and financially reward lawyers who consistently excel in high-value areas such as work ethic, quality, and client service, thus motivating them to sustain their high performance.
For firms with top lawyers nearing retirement, devise a compensation plan that encourages emerging talents to take on leadership roles, guaranteeing a smooth transition and enduring success.
Recognize and remunerate specialized expertise appropriately, for instance, by providing incentives to skilled litigators in a trial-focused litigation firm.
Acknowledge and reward qualitative achievements, like the publication of influential content, encouraging lawyers to align with the firm’s broader objectives.

It is also necessary to acknowledge the value of specialized expertise and reward it accordingly. For example, if trial experience is highly valued in your litigation firm, compensating successful litigators who excel in this area is an excellent strategy. Finally, recognizing qualitative accomplishments, such as publishing high-quality content, can motivate your lawyers to contribute to the firm’s mission.

A compensation strategy that considers both qualitative and economic performance is vital for motivating and retaining the best-fit individuals for your law firm. By extending recognition beyond mere base salary increments to contributions that exceed expectations, you uphold the fairness and prosperity of your organization.

Join us as we continue to explore compensation best practices for law firms. Stay tuned for upcoming articles that will provide in-depth insights and actionable guidance on creating compensation systems that not only draw in and retain top legal talent but also bolster the firm’s long-lasting prosperity and cultural ethos.

Dartmouth Basketball Players Vote to Be First College Athletes Represented by a Union

On March 5, 2024, players on the Dartmouth College men’s basketball team voted to unionize, making the group the first college sports team to do so in the United States. Dartmouth College has already filed an appeal with the National Labor Relations Board (NLRB), setting up a legal challenge that will have significant implications for the status of college athletes and the future of college sports in the United States.

Quick Hits

The Dartmouth men’s basketball team voted to unionize in what would be the first union to represent college athletes.
Dartmouth has filed an appeal with the NLRB that could determine whether college athletes are employees within the meaning of the NLRA.
The union vote could have significant implications for the future of college sports in the United States.

In a representation election overseen by the NLRB, the Dartmouth men’s basketball players reportedly voted 13-2 to be represented by the Service Employees International Union Local 560. The Trustees of Dartmouth College immediately filed a request for a review of the regional director’s decision and direction of election that had allowed the unprecedented election to proceed despite serious implications for college sports.

The election comes after an NLRB regional director in Boston, Massachusetts, ruled on February 5, 2024, that the men’s basketball players at Dartmouth—who compete in the National Collegiate Athletic Association (NCAA) Division I, the highest level of college athletics—are “employees” within the meaning of the National Labor Relations Act (NLRA) and have the right to a union election.

Dartmouth argued in its request for review that the players cannot be considered employees under the NLRA because they are amateur students who are provided with financial aid and academic resources, not compensation, and do not provide any service to the school.

Dartmouth, which is a private institution in New Hampshire and part of the all-private Ivy League collegiate athletic conference, called the regional director’s decision an “unprecedented, unwarranted, and unsupported departure” from applicable legal standards that creates a “new definition of ‘employee’” and “promises to have significant negative labor and public policy implications.”

College Athletes’ Employment Status

NLRB Region 1 Director Laura Sacks found that the Dartmouth men’s basketball players were employees in large part because the school “exercises significant control” over their participation on the team, including determining when players practice and play, review film, engage with alumni, and take part in other team-related activities. During travel, the school controls when and where the players travel, eat, and sleep, the regional director found.

Further, the regional director found that despite questions about the revenue generated, the players generate publicity for the school, and do so to receive various economic benefits, including equipment and apparel, tickets to games, lodging, meals, and other specialized academic and career development support.

The Dartmouth appeal tees up for the NLRB the issue of whether college athletes at private schools are employees after the NLRB punted on a similar issue in a 2015 case involving college football players at Northwestern University that left open the issue of whether college athletes at private universities may be considered employees under the NLRA.

In the Northwestern case, the full Board later declined to assert jurisdiction over the case, finding it “would not serve to promote stability in labor relations,” largely because the majority of schools that compete in college football at the highest level are public institutions not subject to the NLRA.

The regional director in Dartmouth reached her conclusion despite the significant differences in the economics of college basketball and football that distinguished the Dartmouth case from the Northwestern case, where the players received athletic scholarships in a sport—football—that generated more revenue. Further, unlike the highest level of college football, which is comprised mostly of public universities, Dartmouth is a member of a collegiate athletic conference made up entirely of private universities that do not provide athletic scholarships.

Looking Ahead

If the Board agrees that the Dartmouth basketball players are employees and allows the union election to stand, it could have a ripple effect, with college athletes at private universities across the country seeking to organize.

Yet the Dartmouth basketball players’ unionization vote is only the latest in a string of legal developments related to whether college athletes may be considered employees or parties entitled to receive compensation under various legal standards, including under the NLRA and Fair Labor Standards Act (FLSA). On February 23, 2023, the U.S. District Court for the Eastern District of Tennessee issued a preliminary injunction blocking the NCAA from enforcing new rules on athletes’ compensation derived from name, image, and likeness (NIL) rights—specifically, rules restricting the ability of so-called school “boosters” to negotiate with NCAA athletes during the recruiting and transfer processes.

DHS and DOJ Announce Joint Guidance on Electronic Form I-9 Processing

The Department of Homeland Security (DHS) and Department of Justice (DOJ) recently issued a fact sheet to guide employers on electronically completing, modifying, or retaining Form I-9. The joint guidance applies to employers using private sector commercial or proprietary I-9 software programs to complete Form I-9 or participate in E-Verify.

Requirements for Employers Using Electronic Form I-9 Software Programs

DHS permits completing Form I-9 electronically provided that the I-9 software complies with I-9 and E-Verify requirements. The DHS/DOJ fact sheet confirms that employers, rather than the software vendor, are responsible for ensuring compliance with these requirements. It provides the following key requirements and states that an I-9 software must:

Provide employees with access to the current acceptable version of Form I-9, I-9 instructions, and list of acceptable documents.
Allow employees to leave optional fields blank and accommodate employees with only one name.
Meet integrity, accuracy, security, and reliability requirements designed to prevent and detect unauthorized or accidental creation, alteration, or deletion of stored I-9s.
Comply with standards for electronic I-9 signatures.
Comply with general requirements applicable to I-9 documentation, retention, and audit trail requirements.
Ensure the electronic generation or storage of Form I-9 is inspected and monitored periodically.
Ensure the I-9 forms and all information fields on electronically retained I-9s are fully and readily accessible in the event of a government audit.

Specifically related to modifying and retaining Forms I-9 electronically, the fact sheet states that I-9 software must provide employees, employers, and preparers/ translators the option to make and record corrections to a previously completed I-9 form. Further, the software must uniquely identify each person who accesses, corrects, or changes an I-9 form. Modifications to stored I-9 forms must be properly annotated to include the date of access, the identity of the person making the change, and the nature of the change. Commercial or proprietary I-9 software may lack the functionality to comply with these guidelines regarding providing an audit trail and permitting corrections to completed I-9 records, so these are specific considerations employers should be aware of when assessing potential I-9 software for compliance.

Requirements for Employers Using Electronic Form I-9 Software Programs to Create E-Verify Cases

The DHS/DOJ fact sheet notes that employers who participate in E-Verify and access E-Verify through a software must:

Confirm that the software’s functionality allows employers to follow the requirements detailed in the E-Verify Memorandum of Understanding and DHS’s E-Verify guidance.
Refrain from creating new E-Verify cases due to corrections made to the previously completed I-9 if the employee received a prior “employment authorized” result. Depending on functionality, commercial or proprietary I-9 software may require completing a new I-9 instead of allowing a correction to the previously completed form.
Be able to delay creating E-Verify cases as instructed by E-Verify rules. For example, E-Verify instructs employers to postpone creating E-Verify cases for employees who have not yet received their Social Security numbers and for employees who show certain acceptable receipts for the Form I-9. The software’s functionality should permit employers to delay creating the E-Verify case in these scenarios.

Training for Employer Personnel Administering I-9 Software on Behalf of the Employer

The DHS/DOJ fact sheet also reminds employers to properly train personnel completing electronic Forms I-9 on the employer’s behalf. Key points include the following:

Employer personnel should be familiar with the employer’s procedures to complete Form I-9 or create an E-Verify case outside of the Form I-9 software program if, for example, the person completing the I-9 cannot use the I-9 software program or there is a software outage.
Employers should not pre-populate fields on electronic I-9 forms with employee information. An I-9 software may be part of the employer’s other HR-related systems and the system may initiate the I-9 verification process through impermissibility pre-populating the employee’s information on the electronic I-9.
The employer must not use auto-correct, use predictive text, or post-date an I-9 when completing an I-9 with an I-9 software.
The employer should not complete the I-9 on an employee’s behalf and must not change or update the employee’s citizenship or immigration status attestation. For corrections to Section 1, the process is the same as when completing a paper I-9 and changes or corrections to Section 1 must be made by the employee. The I-9 software must have the functionality to allow the employee to make corrections to a previously completed I-9 form.
The employer must not remove or add fields to Form I-9. An I-9 software that adds additional questions seeking information that is not requested by the I-9 form may violate this guidance.
Employers must permit preparers or translators to assist an employee in completing an electronic I-9.
Employers must permit employees to present any valid and acceptable documentation to establish identity and employment authorization, including acceptable receipts, and should not suggest specific documents for this purpose. Thus, an I-9 software should not notify the employer to, for example, request documentation to reverify an employee’s identity document or reverify a permanent resident card.
The fact sheet reminds employers to not impose unnecessary obstacles that make it more challenging for employees to start work or get paid, such as by requiring a Social Security number to onboard or by not paying an employee who can complete the Form I-9 but is still waiting for a Social Security number.

Given the significant penalties for non-compliance, employers should exercise thorough due diligence when evaluating I-9 software, considering compliance with DHS regulations alongside factors like cost, functionality, and interoperability with its other systems. Although government guidance has been minimal, the fact sheet provides some insight into the government’s stance on regulatory requirements for electronic I-9s and may be helpful to employers when selecting an I-9 software.

USCIS Releases H-1B Lottery Information: Registration Process Begins March 6

U.S. Citizenship and Immigration Services (USCIS) released guidance on the Fiscal Year (FY) 2025 H-1B lottery process. The registration system will be open from noon Eastern, March 6, 2024 until noon Eastern, March 22, 2024. The application fee will remain $10 for each case entered into the system.

This year, USCIS will implement a new “Beneficiary Centric Selection” process that will help to ensure all beneficiaries have an equal chance of selection, regardless of the number of times each beneficiary is registered. Please see “Winning Futures? The H-1B ‘Lottery’ Will Open Soon. USCIS Predicts Success” for more details.

Why is H-1B filing season important?

This is the only time of year (with minor exceptions indicated below) USCIS accepts H-1B specialty worker petitions for the next fiscal year, which begins Oct. 1, 2024. For a petition to qualify in the H-1B category, the job offered must be a specialty occupation in which a bachelor’s degree (or its equivalent) is normally the minimum requirement, and the foreign national employee must hold a bachelor’s degree (or its equivalent) in the specialty defined by the position. In some cases, a bachelor’s-level threshold may be met through a combination of the employee’s education and work experience.

There is an overwhelming demand for the annual allotment of 85,000 new H-1Bs. The number of H-1B approvals requested by employers has reached the annual H-1B cap every year for more than 10 years. Last year, USCIS received 780,884 registrations within the electronic lottery system for 85,000 H-1B slots. If you have an employee that needs a “new” H-1B visa, it is imperative that you take action during the H-1B filing season or you will have to wait a full year for another opportunity.

Electronic registration process in 2024

USCIS will use same the electronic registration system from years past to implement the new beneficiary centric selection process. Employers seeking to file H-1B cap-subject petitions must complete an electronic registration for every case the employer wishes to enter into the H-1B lottery. This year, the employer must enter a valid passport or travel number for each registrant. If selected, the passport or travel number used in the H-1B petition filing must be the same number used at the time of registration. This new approach, focusing on the individual registrant, should increase selection odds.

After the registration period closes, USCIS will conduct a random selection lottery from the registrations. The date of the lottery selection has not been announced but will likely occur on or about April 1, 2024. Employers whose cases are selected will then have at least 90 days to complete and file H-1B petitions with USCIS.

Dinsmore attorneys are available to assist employers in navigating the new application process, including completion of the electronic registration and subsequent preparation and filing of selected petitions. USCIS continues to develop its electronic registration system and is expected to release additional details as the registration period approaches.

Are there certain employees we should consider registering?

Yes, four situations come to mind:

Students who hold F-1 visa status and who are working for your organization under a grant of Curricular Practical Training, Optional Practical Training or STEM Optional Practical Training work permission;
Certain L-1 Intracompany Transferees or TN (USMCA/NAFTA) workers who work for your organization;
Candidates who are not yet working for your organization but whom you have an interest in employing in the near future; and
Dependent spouses who hold H-4 status and who have been authorized to work with an Employment Authorization Document (EAD).

Why F-1 students?

Some F-1 students may qualify for an Optional Practical Training (OPT) work permission that is limited to one year following completion of their degree. Other F-1 students may be eligible for an additional 24 months of STEM OPT work permission. Either way, OPT is time-limited. Furthermore, some additional students may hold Curricular Practical Training (CPT). CPT authorizes employment off campus while the student is still taking classes. These students may be pursuing their first degree in the U.S., or they may have returned to school for an additional degree following exhaustion of their first round of OPT if they were not selected in the H-1B cap lottery. Bottom line: If you have a student working for you on OPT or CPT, it is worth evaluating if they need an H-1B cap registration.

Why L-1 intracompany transferees?

The L-1 intracompany transferee visa category applies to foreign nationals who have been employed abroad in executive, managerial or specialized knowledge capacities for at least one year with a commonly owned foreign company, and who are in the United States working for the same or a related U.S. employer.

L-1 executives or managers (L-1A) may remain in the United States for a maximum of seven years. Specialized knowledge (L-1B) employees may remain for a maximum of five years. There is no possibility of an extension once the seven-or five-year limit has been reached and the time table to complete the permanent residence process continues to climb, especially for Indian foreign nationals.

Why H-4 spouses with employment authorization documents?

H-4 spouses are eligible to apply for an H-4 Employment Authorization Document (EAD) if their spouses in H-1B status have an approved I-140 petition. The H-4 EAD allows the spouse to obtain work authorization and engage in employment in the United States. H-4 spouses working with EADs may wish to have their H-4 statuses changed to H-1B for greater long-term employment security.

Why TN employees?

While TN workers under the U.S. Mexico-Canada Agreement (formerly known as NAFTA) are not limited in employment duration like their L-1 counterparts, pursuing permanent residence while holding TN status can be problematic. Employers may want to change their TN employees to the H-1B category to facilitate permanent residence (green card) sponsorship.

Are there any exemptions from the annual H-1B cap?

Persons already counted under the H-1B cap and who need an extension of stay are not subject to the annual limitation. Similarly, persons who already hold H-1B status and are transferring to a new employer are exempt from the cap. The annual limitation applies only to persons not yet counted against the annual cap. Also, certain types of educational or nonprofit organizations that file H-1B petitions are exempt from the H-1B numerical limitation.

2024 FLSA Checklist for Employers in the Manufacturing Industry

Wage and hour issues continue to challenge most employers, especially those in the manufacturing industry. The manufacturing industry tends to be more process- and systems-oriented and generally employ many hourly workers who are not exempt from overtime pay under the Fair Labor Standards Act (FLSA).

It is imperative manufacturers ensure they are on the right side of legal compliance. Indeed, non-compliance can trigger audits, investigations, and litigation — all of which can be disruptive, time-consuming, and costly for manufacturers. The U.S. Department of Labor (DOL), which is charged with investigating alleged violations under the FLSA, assesses hundreds of millions of dollars each year in penalties to employers.

With the new year, we offer this short (by no means exhaustive) checklist of common pay issues the manufacturing industry:

1. Donning and Doffing

The FLSA requires employers to compensate non-exempt employees for all time worked, as well as pay the minimum wage and overtime compensation. Whether pre-shift (donning) and post-shift (doffing) activities are included as compensable time is not always clear. Activities including putting on or taking off protective gear, work clothes, or equipment could be compensable time under the FLSA depending on the unique facts of the situation. At bottom, to be compensable, such activities must be found to be integral and indispensable to the “principal activity” of the employer’s work under the FLSA and the Portal-to-Portal Act of 1947.

Courts differ on whether time spent donning and doffing is compensable because these issues often implicate mixed questions of law and fact. Moreover, collective bargaining agreements can affect whether time spent changing clothes and washing is compensable for the purposes of determining hours worked for minimum wage and overtime calculations under the FLSA. Employers should carefully review their policies to ensure the compensability of pre-shift or post-shift activities being performed by non-exempt employees.

2. Rounding Time

Accurately keeping up with time worked by non-exempt employees is critical to compliance with the FLSA. Further, employees forgetting to clock-in and clock-out timely is a persistent issue. While the FLSA allows employers to round employees’ clock-in and clock-out times rather than pay by the minute, it is generally unnecessary (and not recommended) with today’s sophisticated time clocking systems. If employers choose to round time, they must ensure that any rounding policy is neutral on its face and neutral in practice — that is, the policy rounds both in the favor of the employer and the employee at roughly an equal weight. For employers engaging in rounding, audits are crucial as even a facially neutral rounding policy that, in practice, has disproportionately benefited the employer and cumulatively underpays the employees can be found to violate the FLSA.

3. Meal Breaks

Under the FLSA, employers must compensate for short rest breaks that last 20 minutes or less. However, employers do not have to compensate employees for a bona fide meal break, which ordinarily lasts at least 30 minutes. Importantly, an employee must be completely relieved from work duties during this uncompensated time and cannot be interrupted by work (even for a short time). Indeed, some courts have held that, where a meal break has been interrupted by work, the entire meal break (not just the time when work was performed) becomes compensable.

To ensure compliance under these rules, employers should have policies and practices in place so that employees can take an uninterrupted meal break. Employers should also have a well-communicated reporting system in place for employees to record any interrupted meal break to ensure the employee is compensated for the meal break or, when possible, a new meal break is scheduled.

4. Regular Rate

A common and incorrect assumption many employers make is that overtime pay under the FLSA is calculated at one-and-a-half times a non-exempt employee’s hourly rate when they work more than 40 hours in a workweek. In fact, the FLSA states overtime is calculated based on the non-exempt employee’s “regular rate” of pay. The FLSA requires that all payments to employees for hours worked, services rendered, or performance be included in the “regular rate” unless the payment is specifically excluded in the law. Thus, any non-discretionary bonuses, shift differential pay, and other incentive payments such as commissions should be included in the regular rate of pay calculation for purposes of calculating overtime under the FLSA.
This is relatively easy when a bonus is paid during a week where the non-exempt employees work more than 40 hours, but it can become complicated when the additional pay is paid on a monthly or quarterly basis. In this scenario, the payment must be averaged out over that longer time period to determine the regular rate such that overtime can be properly calculated. Thus, employers should review their payment processes on the front end to ensure compliance before any small errors or omissions (quite literally) multiply out of control.

Finally, state wage laws should always be top of mind as well. Employers should work with their employment counsel to ensure compliance with all state wage requirements.

A Holiday Surprise: New York Governor Vetoes the Proposed Non-Compete Ban

On December 22, New York State Governor Kathy Hochul provided New York State employers with a welcome holiday surprise by announcing her veto to the proposed ban on non-compete agreements. As noted in our prior client alert concerning the New York legislatures’ 2023 passage of its non-compete ban bill, S3100, its restriction was expansive and would have provided a broad ban on non-compete agreements.

The bill sat on Governor Hochul’s desk awaiting her signature for several months, keeping New York State employers in a state of uncertainty. Earlier this month, Governor Hochul publicly commented that she would consider a bill which struck the right balance to protect low and middle-income workers, while she recognized that higher income workers have more negotiating power and are in industries that are an important part of New York’s economy.

In recent weeks, many anticipated that a compromise may be reached behind the scenes. While it is clear that a compromise has not yet been reached with regard to this specific bill, the Governor has stated that she is open to legislation banning agreements that limit workers’ mobility.

We will continue to monitor the situation. Given the debate concerning New York’s law in this area, as well as an evolving patchwork of state legislation nationally and a growing movement to restrict such agreements at the federal level (such as proposed by the Federal Trade Commission and the National Labor Relations Board), we recommend that employers take proactive steps now. Employers should consider evaluating their existing confidential information protections exclusive of restrictive covenants; specifically, their policies, confidentiality agreements, employee handbooks, and employee training in light of the evolving current law, and take action to update those protections.

Chicago’s New Paid Leave and Paid Sick Leave Ordinance Delayed Six Months

Just over a month after passing the Chicago Paid Leave and Paid Sick Leave Ordinance (the Ordinance), which brought sweeping new paid leave and paid sick leave requirements to employers with Chicago employees, the city has amended the Ordinance to delay its effective date and limit the number of covered employees.

As amended, the Ordinance will not take effect until July 1, 2024, rather than December 31, 2023. In addition, the Ordinance no longer covers employees who have worked merely two hours within the city in any two-week period. Instead, the Ordinance now reverts to the definition of “Covered Employee” found in the current Chicago and Cook County paid sick leave ordinances: an employee who has worked at least 80 hours in any 120-day period within the city’s geographic limits.

The amended Ordinance also potentially gives employers an opportunity to remedy Ordinance violations before being subject to claims for non-compliance. Specifically, employees will be prohibited from filing claims against their employers until the earlier of 16 days or the next regular payday after the employer’s alleged violation. While described by some as a “cure” period, there is no requirement that an employee actually notify their employer of an alleged violation before bringing a claim. For employers concerned about fielding claims for inadvertent violations, this change may be small comfort.

With the effective date of the Ordinance delayed until July 1, 2024, Chicago employers now have six more months to prepare for its new requirements. In the meantime, the city’s current paid sick leave ordinance remains in effect, so for now that benefit is business as usual for Chicago employers.

COVID Vaccine Class Action Reminds Employers to Individually Consider Accommodations

Tyson Foods, Inc. (“Tyson”) is no stranger to religious accommodation lawsuits over the impact of its COVID-19 vaccine mandate given its continued efforts to operate through the height of the pandemic in 2021—but the battle just heated up with a proposed class action complaint filed in the Eastern District of Arkansas.

Tyson’s recent troubles derive from its 2021 vaccine mandate (the “Vaccine Mandate”) requiring all leadership team members to be vaccinated by September 24, 2021, all corporate team members to be vaccinated by October 1, 2021, and all other team members to be vaccinated by November 1, 2021. The Vaccine Mandate coincided with an OSHA rule (which the Supreme Court subsequently ruled unconstitutional) requiring workers with at least 100 workers to be vaccinated or to produce weekly test results showing that they were virus-free. Tyson, a huge company with warehouse operations, clearly fell within its ambit and had strong incentives to keep its workforce safe.

Notably, while in place, the OSHA rule required employers to grant medical and religious exemptions from the mandate. Likewise, Tyson’s Vaccine Mandate required Tyson to afford reasonable accommodations to employees with sincerely-held religious beliefs that prevented them from receiving the vaccine, as required by the OSHA rule. However, various plaintiffs have alleged that the only accommodation typically offered to religious objectors was to be placed on an unpaid leave of absence called LOA+, which lasted approximately one year. Plaintiffs claim that requests to telework were refused in favor of this unpaid leave.

One of the first suits to be filed was Reed, et al., v. Tyson Foods, Inc., No. 21-CV-01155-STA-JAY, 2022 WL 2134410 (W.D. Tenn. June 14, 2022), in which several plaintiffs sought injunctive relief against the Vaccine Mandate in part on religious and disability theories under Title VII and the ADA. Though parts of the case were allowed to proceed, these specific claims were dismissed without prejudice for failure to exhaust administrative remedies. Tyson also succeeded on defeating religious claims based on the Religious Freedom Restoration Act (“RFRA”) on a motion to dismiss in another Tennessee case, after failing to secure dismissal in another, similar case based on Title VII and the RFRA. Compare Johnson v. Tyson Foods, Inc., No. 21-CV-01161-STA-JAY, 2023 WL 3901485 (W.D. Tenn. June 8, 2023) with Hayslett v. Tyson Foods, Inc., 636 F. Supp. 3d 900 (W.D. Tenn. 2022). The latter case settled out-of-court in July 2023.

Beyond these, Tyson also faced other single-plaintiff suits on religious vaccine accommodation grounds in Tennessee, Kentucky, and Missouri, with varying results. Matthews v. Tyson Foods, Inc., No. 1:22-CV-1192-STA-JAY, 2023 WL 25733 (W.D. Tenn. Jan. 3, 2023)(motion to dismiss denied under Tennessee state law); Collins v. Tyson Foods, Inc., No. 1:22-CV-00076-GNS, 2023 WL 2731047 (W.D. Ky. Mar. 30, 2023)(motion to dismiss granted under RFRA, ADA, and Kentucky state law, but denied under Title VII); Reese v. Tyson Foods, Inc., No. 3:21-05087-CV-RK, 2021 WL 5625411 (W.D. Mo. Nov. 30, 2021) (motion to dismiss granted as to public policy and invasion of privacy claims, but denied under state discrimination law). Some of these cases were subsequently settled, as well.

On November 16, 2023, plaintiff Sarah Pearson brought a proposed class action complaint in Pearson v. Tyson Foods Inc., 4:23CV01080, purporting to represent:

All Arkansas based Tyson employees or former Arkansas based Tyson employees who worked remotely (telework) prior to August 3, 2021, who requested a religious accommodation to continue working remotely (telework) in response to Tyson’s COVID Vaccine Mandate, and who were instead placed on LOA+ by Tyson;

and

All Arkansas based Tyson employees or former Arkansas based Tyson employees who worked remotely (telework) prior to August 3, 2021, who requested a religious accommodation when Tyson ended its COVID Vaccine Mandate on October 31, 2022, and who were subsequently not reinstated to the same job and terminated.

For each, Pearson recites the allegations required to sustain a class action: numerosity (in excess of 50 putative class members, per her complaint), commonality, typicality, and adequacy. These allegations can prove tricky in the case of sincerely-held religious beliefs and leaves of absence, but not necessarily impossible. Compare Robinson v. Gen. Motors Co., No. 4:15-CV-158-Y, 2015 WL 13731154 (N.D. Tex. Oct. 21, 2015) (denying class certification in part because “determining individual class members would require the Court to wade through thousands of leave requests and evaluate each individual’s circumstance . . . to determine whether a GM employee even qualifies . . .”) with Jennings v. St. Luke’s Health Network, Inc., No. 5:23-CV-1229, 2023 WL 5938755 (E.D. Pa. Sept. 12, 2023) (denying without prejudice motion to strike class action allegations in religious discrimination vaccine case, pending discovery).

Here, Pearson’s complaint reveals numerous specific allegations which are likely specific to her, including that Tyson offered her an in-person job in a different city once the Vaccine Mandate ended, which she declined. However, it remains to be seen if Tyson’s alleged policy of placing all religious objectors on leave may break through the barriers to commonality, typicality, and adequacy otherwise posed by, e.g., different religions, belief systems, communications with human resources, and leave requests.

Following these recent developments, employers are advised to remember that religious discrimination accommodation requests should not be taken lightly, and should result in an individualized interactive process with each employee. Even apparently implausible religious beliefs, associated with religions that do not otherwise espouse such beliefs, may be (or be deemed by a court to be) sincerely-held.

Tag: labor and employment

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