Tag: wage

Understanding the New FLSA Overtime Rule: What Employers Need to Know

Changes to overtime rules under the Fair Labor Standards Act (FLSA) announced on April 23, 2023 affect most U.S. employers. The Final Rule substantially increases the number of employees eligible for overtime pay. It is critical that employers understand the rule and its implications for their business.

Current FLSA Overtime Regulations: The Basics

The FLSA requires employers to pay overtime pay of at least 1.5 times an employee’s standard pay rate for hours worked in excess of 40 hours per week. However, “white collar” and “highly compensated” employees are exempt from this overtime pay requirement if they meet a three-part test:

  • Salary Basis Test – an employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Salary Level Test – the amount of salary paid must meet a minimum specified amount. (Spoiler Alert: The new rules change the salary level.)
  • Duties Test – the employee’s job duties must primarily involve executive, administrative, or professional duties.

THE WHITE COLLAR EXEMPTION

The white-collar exemption applies to employees who perform primarily executive, administrative, and professional tasks. Workers who perform these tasks are considered to have more autonomous, managerial, or specialized roles justifying exemption from overtime. Therefore, if an employee’s duties are executive, administrative, and professional, and they satisfy the salary basis and salary level tests in the FLSA, they are not entitled to overtime pay under the FLSA.

HIGHLY COMPENSATED EMPLOYEES

A highly compensated employee (HCE) is someone who earns a high annual compensation (according to salary thresholds in the FLSA) and whose role includes one or more executive, administrative, or professional duties. The FLSA exempts “highly compensated employees” from the overtime pay requirement.

Key Changes to the FLSA Overtime Rules

The new rule increases the salary thresholds in the salary level test for highly compensated and white collar employees. As a result of the changes, less employees will be considered exempt and employers will be liable for significantly more overtime pay. Notably, the types of duties eligible for exemption are not impacted.

The new salary thresholds are introduced in two phases with the first increase becoming effective on July 1, 2024, and the second occurring on January 1, 2025. Importantly, the new rule also includes a mechanism for automatically updating these salary thresholds every three years based on current wage data. This means employers will need to stay vigilant for future increases.

THE NEW SALARY THRESHOLDS

In general, the minimum annual salary to qualify for the white collar exemption is increasing from $35,568 to $58,656 and the total annual compensation requirement for the highly compensated employee exemption is increased from $107,432 to $151,164. Here’s a detailed breakdown of the higher salary thresholds and their effective dates:

New FLSA Overtime Rule - The New Salary Thresholds

Why This Rule Matters: Essential Steps for Employers

This rule will have a significant impact on Pennsylvania employers, potentially reclassifying millions of currently exempt employees as non-exempt and eligible for overtime pay. Employers who fail to comply risk costly back pay, penalties, and lawsuits.

There are practical steps that employers can consider to ensure compliance with the new FLSA rule:

  • Review Current Employee Salaries, Hours, and Duties: Audit current salaries, hours, and job duties. This review will help identify which employees’ status may be affected by the new salary thresholds for exempt status under the FLSA.
  • Reclassify Employees as Non-Exempt as Necessary: Based on the review, determine which employees will need to be reclassified from exempt to non-exempt, or awarded a salary increase, to comply with the new rules. This reclassification will make them eligible for overtime pay, altering how their work hours are managed and compensated. It is advisable to consider an employee’s perception of this reclassification when taking this step.
  • Time Recording Policies and Processes: For employees who are reclassified as non-exempt, implement or update timekeeping procedures to accurately track hours worked. This may also require training employees on time-keeping systems. Effective and accurate time recording is essential for managing overtime and ensuring compliance.
  • Update Overtime Policies: Revise company overtime policies to reflect changes in employee classifications. Include clear procedures for overtime approval to manage overtime work more effectively and ensure it aligns with budget constraints and business needs.
  • Bonuses, Incentive Pay, Commissions: Evaluate how non-salary forms of compensation will factor into the new salary thresholds for exempt status. The FLSA determines how this compensation should be treated in determining total annual compensation, which could influence exemption status.
  • Remember Contractual Obligations: The FLSA is a federal law which applies to all U.S. employers. However, any additional salary commitments in an employment contract still legally bind the employer. These should not be ignored.

Despite the quickly approaching compliance date, we also anticipate legal challenges to this rule, which could delay or change the rules. For now, though, employers should proceed on that basis that the updated regulations will take effect on July 1, 2024. Preparing for this deadline ensures that employers will not be caught off guard and can avoid any potential legal and financial repercussions.

©2024 Strassburger McKenna Gutnick & Gefsky
For more news on FLSA Regulations, visit the NLR Labor & Employment section.

Federal Court Strikes Down NLRB Joint Employer Rule

On March 8, 2024, just days before it was set to take effect, U.S. District Judge J. Campbell Barker of the Eastern District of Texas vacated the National Labor Relations Board’s (“NLRB’s”) recent rule on determining the standard for joint-employer status.

The NLRB issued the rule on October 26, 2023. It established a seven-factor analysis, under a two-step test, for determining joint employer status. Under the new standard, an entity may be considered a joint employer if each entity has an employment relationship with the same group of employees and the entities share or codetermine one or more of the employees’ essential terms and conditions of employment which are defined exclusively as:

  • Wages, benefits and other compensation;
  • Hours of working and scheduling;
  • The assignment of duties to be performed;
  • The supervision of the performance of duties;
  • Work rules and directions governing the manner, means and methods of the performance of duties and grounds for discipline;
  • The tenure of employment, including hiring and discharge; and
  • Working conditions related to the safety and health of employees.

Set to take effect on March 11, 2024, the NLRB’s decision would have rescinded the 2020 final rule which considered just the direct and immediate control one company exerts over the essential terms and conditions of employment of workers directly employed by another firm. The new rule would have expanded the types of control over job terms and conditions that can trigger a joint employer finding.

In the lawsuit, filed by the United States Chamber of Commerce and a coalition of business groups, the Chamber and coalition claimed that the NLRB’s rule is unlawful and should be struck down because it is arbitrary and capricious. Judge Barker agreed as he held that the NLRB’s new test is unlawfully broad because an entity could be deemed a joint employer simply by having the right to exercise indirect control over one essential term. Judge Barker faulted the design of the two-step test which says an entity must qualify as a common-law employer and must have control over at least one job term of the workers at issue to be considered a joint employer, finding that the test’s second part is always met whenever the first step is satisfied. The Court vacated the new standard and indicated it will issue a final judgment declaring the rule is unlawful.

The NLRB quickly responded to the Court’s ruling. In a statement on March 9, 2024 NLRB Chairman Lauren McFerran said the “District Court’s decision to vacate the Board’s rule is a disappointing setback but is not the last word on our efforts to return our joint-employer standard to the common law principles that have been endorsed by other courts.” According to the NLRB, the “Agency is reviewing the decision and actively considering next steps in this case.”

What Employers Need to Know

The legality of the NLRB’s joint-employer standard has been a contested issue since the October 2023 announcement. The rule will not go into effect as scheduled, but Judge Barker’s decision is unlikely to be the final word on the matter.

© 2024 Dinsmore & Shohl LLP. All rights reserved.
by: Brian J. Moore of Dinsmore & Shohl LLP
For more on the NLRB, visit the NLR Labor & Employment section.

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.

Jackson Lewis P.C. © 2024
For more news on FLSA Standards, visit the NLR Labor & Employment section.

What Is the CARES Act and How Can It Help Legal Professionals?

On March 27, Congress passed the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES) to mitigate the negative economic impact of COVID-19. The CARES Act provides small businesses and individuals with extended unemployment insurance benefits, loans for paycheck protection, refundable tax credit, and business tax provisions. Attorneys who own their own practice can take advantage of the 2020 CARES Act to protect their business and employees during the economic downturn brought on by COVID-19.

How the CARES Act Applies to Lawyers

The CARES Act could alleviate the negative economic impact of COVID-19 on your law firm while the entire world waits for what’s next.

The CARES Act helps law practices with:

  • Paycheck protection program (PPP): completely forgivable loan to cover payroll costs
  • Employee retention credit
  • 2020 Payroll tax deferment
  • Economic injury disaster loan emergency advance (EIDL)

Paycheck Protection Program (PPP) for Attorneys, Legal Administrators, and Staff

For more detail, please refer to the PPP FAQs published by the Treasury Department on Wednesday, April 8, 2020.

Coverage for Payroll Costs

  • Salary, wages, commissions, or tips
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave
  • Allowance for separation or dismissal
  • Payments required for the provisions of group health care benefits including insurance premiums
  • Retirement benefits
  • State and local taxes assessed on compensation

For more detail, please refer to the Tax Foundation’s summary of the SBA Paycheck Protection Program in the CARES Act.

Coverage for Sole Proprietor or Independent Contractor

  • Wages, commissions, income or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee
  • Extends duration of benefits from 26 weeks (available in most states) to 39 weeks
  • Provides an additional $600 per week in benefits for first four months

For more detail, please refer to the summary from the law firm Rudman Winchell.

Paycheck Protection Program (PPP) Loan Forgiveness

Applications are already in play. While there is a lot of money available, it is not unlimited. Apply as quickly as possible.

  • You use the money strictly for allowed expenses
  • 75% of the loan amount is spent on payroll costs
  • You maintain your entire full-time staff until June 30
  • Rehire fired or laid-off employees quickly
  • Caps payment at $100,000 per person
  • You do not cut employees wages more than 25% for any employee who made less than $100,000 in 2019
  • For whatever amount is not covered, PPP loans have a 1% interest rate and payments are deferred six months with interest during the deferment.  The loan must be fully repaid in two years.

For more detail, please refer to the Small Business Administration’s Docket No. SBA-2020-0015.

Employee Retention Credit

You may qualify for a refundable payroll tax credit for 50% of wages if:

  • your law practice was fully or partially suspended due to COVID-19 related shut-down orders.
  • you lost more than 50% in gross receipts compared to last year’s same-quarter performance.

Payroll Tax Deferment

To further lower expenses at your law firm, you may defer your share of payroll taxes and split the deferred payments over the next two years, with half due by Dec. 31, 2021, and the other half due by Dec. 31, 2022.

Economic Injury Disaster Loan Emergency Advance (EIDL)

If you are a sole proprietor, you may be eligible for a EIDL loan of up to $2 million, repayable over 30 years at 3.75% interest rates for small businesses and 2.75% for most private non-profits under the EIDL. Payments are deferred for the first year, but interest accrues during that time.

  • You’ll have to put up collateral for loans over $25,000 and a personal guarantee for loans exceeding $200,00.
  • If you qualify for an EIDL, you can use the money for any business expense (with a few exclusions).
  • Under the same provision, small business owners may be eligible for a one-time grant of up to $10,000 that you won’t have to pay back.

For more detail, please refer to the U.S. Small Business Administration’s “Economic Injury Disaster Loan Emergency Advance” overview page.

What Happens If You Enroll for PPP and EIDL?

If you decide to enroll for both the EIDL and PPP, the amount of the EIDL grant will be subtracted from the PPP amount eligible for forgiveness. In other words, you’ll ultimately wind up paying it back.

The 2020 CARES Act Can Help Your Law Firm

Law firms are uniquely poised to understand the full extent of the CARES Act and its protections. With the financial boost from the CARES Act, attorneys are more likely to retain talent and be ready to hit the ground running when court activity ramps up again.

CARES Act 2020 Resources

 

© Copyright 2020 PracticePanther
ARTICLE BY Reece Guida at PracticePanther.
For more on the CARES Act, see the National Law Review Coronavirus News section.

SBA Provides Guidance on Affiliation Rules for Paycheck Protection Program

Many issues have arisen related to the Small Business Administration’s (SBA) “affiliation rules” for determination of whether a small business is eligible for a loan under the Paycheck Protection Program (PPP), which is part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Since April 3, 2020, the SBA has provided guidance relating to the PPP, including guidance titled “Affiliation Rules Applicable to U.S. Small Business Administration Paycheck Protection Program,” and a Letter Re: Size Eligibility and Affiliation Under the CARES Act. The SBA has also provided responses to a number of FAQs posted on the SBA’s website and updated through April 7, 2020. Pursuant to this guidance, the SBA has modified the affiliation rules (which are codified 13 C.F.R. §§121.103 and 121.301, the “Rules”) for purposes of determining eligibility for a PPP loan [1].

What Is a Small Business Generally?

One of the bedrock principles for SBA loans is that they are to be provided solely to “small businesses.” The SBA has generally defined a small business as one with fewer than 500 employees [2]. To ensure loans are not provided to larger businesses, the SBA enacted the Rules, which aggregate the number of employees of multiple affiliated businesses (each, a “Business Concern”). Although affiliation is generally determined based on control, the Rules are encompassing and provide the SBA with significant flexibility to determine if affiliation exists under a variety of circumstances. Such flexibility permits the SBA to look beyond a Business Concern’s creative structuring to determine if affiliation exists and exclude a Business Concern from meeting the SBA’s definition of a small business.

In practice, the Rules have generally prevented Business Concerns backed by private equity and venture capital investors (as a majority or minority investors) from receiving SBA loans because of the multiple investments typically maintained by these investors. Given the breadth of the Rules, many Business Concerns appeared to be initially ineligible for PPP loans, and therefore, the SBA has provided additional guidance which modifies the Rules (the “Modified Rules”) to permit certain Business Concerns to be eligible for PPP loans. Except as specifically addressed in the Modified Rules and the SBA and Treasury guidance with respect to the same, the Rules remain in full force and effect. Of particular importance, the SBA has opined that the Modified Rules waive the affiliation rules with respect to any Business Concern receiving financial assistance from a company licensed under §301 of the Small Business Investment Act of 1958, and such affiliation rules are waived no matter the amount of the financial assistance or whether there are other non-SBIC investors.

Modified Affiliation Rules

Although the Modified Rules are more limited in determining affiliation, the principle of aggregating the number of employees for a Business Concern that is controlled by a common entity or person (the “Presumed Owner”) remains in place. Under the Modified Rules, affiliation exists, and therefore the number of employees of a Business Concern is aggregated, in the following situations:

  • Affiliation Based on Common Ownership: If the majority of equity (stock, membership interests, partnership interests, etc.) of two or more entities is owned by the Presumed Owner, then the employees of such entities will be aggregated as the same Business Concern. In the most obvious instance, this would involve a Presumed Owner that owns greater than 50 percent of the equity of one or more business entities. As noted below, however, a Presumed Owner cannot circumvent the Modified Rules by divesting its equity in exchange for options, convertible securities or similar contractual rights to ownership.
  • Affiliation Based on Control: If the Presumed Owner has contractual rights to control two or more entities (even if such rights are not exercised), then the employees of such entities will be aggregated as the same Business Concern. Mere ownership of equity is not the sole determinative factor, and a Presumed Owner that owns a minority amount (or no amount) of the equity of an entity can be determined to be in control of such entity if such Presumed Owner has potential ownership of the entity (via options to purchase equity, convertible securities or equivalent) [3] or can control the management of such entity (via contractual rights that prevent a quorum of the governing body or otherwise prevent the governing body or equity holders from controlling the direction of such entity) [4]. This determination is based on contractual rights and therefore, agreements to negotiate future acquisitions, consolidations or mergers (such as letters of intent) do not alone cause an affiliation of entities.
  • Affiliation Based on Common Management: If two or more entities are managed by common management (same governing bodies, officers, managers, directors, partners, etc.), then the employees of such entities will be aggregated as the same Business Concern. Affiliation is also determined if a Presumed Owner can control, directly or indirectly, the management of two or more entities.
  • Affiliation Based on Familial Relations: If two or more entities are owned or managed by “close relatives” [5] and have identical or substantially identical business or economic interests, then the employees of such entities will be aggregated for SBA loan eligibility purposes. Unlike the Modified Rules for control and common management, this presumption may be rebutted by a potential borrower that can show that the interests are separate (e.g., in the case of estranged parties).

Based on the guidance provided by the SBA, the Modified Rules only supersede the Rules in specific instances, such as the elimination of the economic-dependence and common-investment affiliation rules that were in effect under the Rules. The remainder of the Rules, however, including the ability of the SBA to assess size eligibility and affiliation issues based on the totality of the facts and circumstances with respect to a Business Concern, should be presumed to remain in full force and effect.

The guidance provided by the SBA has been fluid in nature and is subject to ongoing modification. Given that and the potential criminal sanctions upon borrowers that seek PPP Loans in contradiction with the Modified Rules, we recommend having an open dialogue with your lender and that you err on the side of over-disclosure in all applications relating to PPP loans. In addition, if you have heeded the SBA’s advice and already applied for a loan under the PPP, you are entitled to rely upon the laws, rules and guidance that were available to you at the time you submitted your application; provided, if your application has not yet been processed, you are also entitled to update such application if your underlying assumptions and analyses are affected by subsequent regulations and interpretations.

If you have questions about small business loans and the PPP’s affiliation rules, we encourage you to reach out to your Much attorney.

  1. Under the Act, the Rules are waived for any business a) with 500 or fewer employees, that as of the date the PPP loan is disbursed, is assigned a North American Industry Classification System code beginning with 72, b) that is operating as a franchise with a franchise identifier assigned by the SBA, or c) that receives financial assistance from a company licensed under §301 of the Small Business Investment Act of 1958 (15 U.S.C. 681). Furthermore, under the Religious Exemption Guidance, the Rules do not apply to persons or entities that are affiliated based on a faith-based relationship.
  2. Under the guidance, the SBA has stated that the determination of whether a Business Concern is a “small business” can also be determined based on the applicable employee-based/revenue-based standards or the alternative size standard, each of which is provided under the SBA’s regulations, provided the Rules are applied with respect to these standards, if applicable.
  3. Affiliation is not created if the options, convertible securities, or equivalent, are subject to certain conditions precedent that are a) incapable of fulfillment, b) speculative, conjectural or unenforceable under federal law, or c) the probability of exercise is extremely remote.
  4. Under the guidance, the SBA has stated that if a Presumed Owner irrevocably waives or relinquishes such rights, then such Presumed Owner would not trigger the Rules (assuming no other circumstances relating to the Presumed Owner would trigger the Rules).
  5. “Close relatives” is a defined under the SBA and means a spouse, parent, child or sibling, or the spouse of any such person.

Disclaimer: We are providing the current SBA Loan Application and links to related information as a convenience. The application and related requirements may change and we are not responsible for updating this information. By providing this information, we are not giving legal or tax advice. For advice on your specific situation, please contact your advisors.

© 2020 Much Shelist, P.C.

For more on the SBA PPP Loans, see the National Law Review Coronavirus News section.

End of the Year Bonuses – Do They Have to Be Shared with My Ex?

The end of the year is coming, and for many employees that means end of the year bonuses will be included in their paychecks this month. Many question whether their bonus should be included as “income” for the purpose of support obligations, as well as equitable distribution in the context of a divorce.

A baseball manager from Arizona, Anthony DeFrancesco, recently faced issues surrounding his year-end bonus and how it related to his support obligations. Mr. DeFrancesco, the manager of the Houston Astros AAA minor league team, was given a $28,000 bonus in 2017 when the Astros won the World Series. The Arizona Appeals Court recently found that the bonus was considered a gift, as opposed to earnings, and he did not have to provide a portion of the bonus to his now ex-wife.

This result is not typically what happens in New Jersey when courts consider whether bonuses are a part of income. In the vast majority of cases, bonuses are awarded to employees for their exemplary work during the preceding year, often resulting from meeting specific targets, going above and beyond the work of a typical employee, and sharing in the success of the company without which the company would have not have otherwise reached. While employees are not legally entitled to bonuses in most cases, bonuses are most often the result of the employee’s hard work. Thus, in the eyes of most courts, the bonus was earned. Any earned income is considered by courts when setting support obligations.

In connection with equitable distribution, money that is earned during the marriage is considered an asset of the marital estate. Therefore, even if the complaint for divorce has already been filed, an end-of-year bonus may be considered a part of the marital estate. For example, if a complaint for divorce is filed on July 1, and an employee receives a bonus of $50,000 at the end of the year for work performed during the previous calendar year, half of that bonus would be attributable to time spent during the marriage.

New Jersey is a court of equity. Arguments can be made that bonuses, or portions of bonuses, should or should not be considered for support and equitable distribution purposes.

Several years ago there was a case in New Jersey in which a private company had been working for many years to go public. One of the company officers had been a long-time employee and, in fact, his dedication to the company to the exclusion of all else contributed to the failure of his marriage. Two years after the divorce complaint was filed, the company went public. The SEC filings noted that the employee received a bonus in excess of $1 million for his dedication to the company and work over the last five years. His wife was successful in her application to reopen the divorce and obtain a portion of that payout due to the evidence that it was for work conducted during the course of their marriage. While this case may be unique, it speaks to why each case has to be evaluated on its own merits, and why each case may have a different result.

COPYRIGHT © 2019, STARK & STARK

For more on spousal support obligations, see the National Law Review Family Law, Divorce and Custody law page.

New York Legislature Passes Bill Allowing Employees to Place a Lien on Employer’s Property for Wage Claims

The New York Senate and Assembly recently passed Senate Bill S2844B to strengthen current laws for employees who are victim of wage theft to secure and collect unpaid wages for work already performed from their employers. This bill would amend five sections of the law (Lien Law; Labor Law; Attachment under the Civil Practice Law and Rules; the Business Corporations Law; and the Limited Liability Law). If signed by the Governor, this bill would create a broad right for any employee to obtain a lien on an employer’s property based on the allegation of a wage claim and would significantly increase employee power in such disputes.

This bill would expand on current lien remedies and create an “employee lien,” that would allow an employee who has a wage claim to place a lien on his or her employer’s interest in property (real or personal property) for the value of that employee’s wage claim, plus liquidated damages. “Wage claim” is defined as any claim constituting a violation of New York Labor Law § 170 (overtime), § 193 (improper deductions), § 196-d (gratuities) , or § 652 and § 673 (minimum wage). Wage claims also include claims for breach of employment contract where wages are not payed under the contract, and Federal minimum wage claims pursuant to 29 U.S.C. § 206 and § 207. The employee’s lien cannot be placed on an employer’s deposit accounts or goods.

Notice of the lien must be filed within three years of the end of employment which gave rise to the wage claim. Real property notice must be filed in the clerk’s office of the county where the property is located. Personal property notice must be filed with a financing statement pursuant to section 9-501 of the Uniform Commercial Code. Employee’s liens may be filed by the employee or the New York State Department of Labor and the New York Attorney General for wage claims that are subject of their investigations, court actions or administrative agency actions. Notice of an employee’s lien must be served upon the employer within five days before or 30 days after filing notice. The lien is valid for one year unless extension is filed with the county clerk. If no action is commenced during the extension period, the lien will be automatically extinguished unless extended by a court order.

If passed, this bill would also streamline the procedures to which employees may hold the ten largest shareholders of a non-publicly traded corporation and the ten members with the largest ownership interests in a limited liability company personally liable for wage theft. The bill also contains a provision that would allow employees to examine a business corporation’s and limited liability company’s records to obtain the shareholders’ or members’ (as the case may be) names, addresses, and ownership value in the company.

Once the bill is signed by the Governor, it will take effect 30 days after becoming law and will apply to all claims for liabilities that arose prior to its passage.

Copyright © 2019 Robinson & Cole LLP. All rights reserved.
For more on wage-hour issues, see the National Law Review Labor & Employment page.

Let’s Talk Turkey: Wage/Hour and Other Laws to Feast on Over Thanksgiving

We all know that employers do not receive “time off” from applicable employment laws during the holidays. To avoid unnecessary holiday headaches, be mindful of the following issues as you conduct your workplace holiday staffing and planning.

Comply with your Policies and Collective Bargaining Agreements

Remember to abide by the applicable holiday provisions of your policies, agreements, or collective bargaining agreements. Pay for unworked time on recognized holidays; how time worked on holidays is computed or paid; and eligibility requirements for receipt of holiday pay are often a matter of policy or contract. Breaching such provisions—or disparately enforcing them—can give rise to a claim, charge, or grievance.

Think Beyond your Holiday Policy—Comply with Wage Laws

Be mindful of wage payment laws when you are planning office closures to ensure that you do not run afoul of state requirements governing the time, frequency, and method of paying earned wages. Also, remember that time worked on a holiday should be counted as “hours worked” for purposes of overtime laws, regardless of whether you provide a holiday premium or other benefit.  Further, be careful about making deductions from exempt employees’ salaries for time off around the holidays so as not to jeopardize the exempt status—a company closure for the holidays is not listed among the Department of Labor’s enumerated instances of proper reasons to make deductions under the salary basis rules of the Fair Labor Standards Act.

No Break from Meal and Rest Period Laws

Even if your employees are frantically setting up holiday displays or assisting eager consumers on Black Friday, provide meal and rest periods in accordance with state law. Many states require that employers provide meal and break periods, and the frequency and timing of such periods are often dependent upon the total number of hours worked in a day. For instance, Illinois employers must allow a meal break for employees working 7.5 continuous hours or longer within 5 hours of starting work; New York’s Department of Labor guidelines specify requirements for a “noonday” meal period between 11:00 a.m. and 2:00 p.m., with additional meal periods for shifts extending into specified evening hours.

Also, while bona fide meal breaks of a sufficient duration can generally be unpaid, beware that restrictions, duties, or parameters on such breaks might run afoul of your state’s law and can make a meal period compensable.

A “Blue” Christmas

If your business has operations in one of the few states that impose “Blue Law” requirements for business operations on holidays, then be aware of obligations or restrictions that might apply. For instance, if you operate in Massachusetts, then you might be required to obtain a local permit and/or be subject to extra pay or other standards for employees working on a holiday. In Rhode Island, you might be subject to an overtime pay rate on holidays or other requirements.

Be sure to check your state and local laws to confirm applicable standards.

Accommodate Observation of Holidays Due to Religious Beliefs

Finally, remember that Title VII of the Civil Rights Act of 1964 and many state or local laws require employers to reasonably accommodate employees’ sincerely held religious beliefs, unless doing so would cause an undue hardship. “Religion” can include not only traditional, organized religions such as Judaism, Islam, Christianity, Hinduism, and Buddhism, but also sincerely held religious beliefs that are new, uncommon, not part of a formal church or sect, or only held by a small number of people.

Thus, while your company may be closed on Christmas Day, you may need to allow an employee time off to celebrate a religious holiday that your company does not recognize. Businesses can accommodate in the form of time off, modifications to schedules, shift substitutions, job reassignments, or other modifications to workplace policies or practices.

Donning & Doffing (Wage Disputes): Old Is New Again

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Our Letter of the Law series is focused on current employment law developments, anddonning and doffing wage disputes are anything but “new” to the courts.  The U.S. Supreme Court and Congress were dealing with donning and doffing work clothing and equipment in the 1940s.  (Perhaps that is obvious given that nobody really says “donning” or “doffing” in recent years other than in this context.)

Donning and Doffing

But donning and doffing, and when employees must be paid for getting dressed for work, continues as an important and tricky wage/hour law issue.  That and the 7th Circuit U.S. Court of Appeals’ “novel approach” to judicial curiosity in Mitchell v. JCG Industries, Inc. merits inclusion as this week’s letter D.  The court in Mitchellrecently weighed in on the proper compensation for workers who are required to don and doff safety protective gear at work.  Union workers in a poultry processing plant brought the suit, alleging violations of state and federal wage laws for the employer’s failure to pay wages for time spent donning and doffing protective work gear.  Workers were required to put on jackets, aprons, gloves, hairnets, and other items at the start of every shift.  In addition, they had to remove and put back on the gear at the start and end of lunch breaks.  The principal issue was whether the employer had to compensate workers for the time spent changing in and out of gear.

Relying on Section 203(o) of the federal Fair Labor Standards Act, the court concluded that donning and doffing time is excluded from compensable time.  In its opinion, the court noted that it took very little time to dress in the gear – and indeed noted that the court staff had done so.  Additionally, the court noted that it would be overly burdensome to require employers to track such time for every employee.

Donning and doffing remains a tricky issue, a perfect example of what lawyers call “fact specific” cases.  Compare DeKeyser v. Thyssenkrupp Waupaca, Inc., 735 F.3d 568 (7th Cir. 2013) (holding that summary judgment was improper to the employer in the case involving foundry employees who were required to shower and change after their shifts).  Employers who require safety and other equipment or clothing must, decades after the law was first passed, continue to watch cases like Mitchell that might affect their decision making on what donning and doffing time must be paid.

Article By:

William A. Nolan
Of:
Barnes & Thornburg LLP

Michigan Minimum Wage Increases Enacted

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Michigan Governor Rick Snyder has signed the Workforce Opportunity Wage Act, mandating gradual increases in the state’s minimum wage to $9.25 an hour by January 1, 2018. The Act ties increases to the rate of inflation beginning 2019.

The first of four raises mandated by Senate Bill 934 (Public Act 138), to $8.15 an hour, occurs September 1, 2014. Michigan’s minimum wage since 2008 has been $7.40 an hour for workers who do not receive a tip and $2.65 an hour for workers earning tips, such as waiters.

Also beginning September 1, 2014, tipped employees would have a minimum rate that is 38 percent of the minimum for non-tipped workers, or about $3.51 an hour.

The state’s hourly minimum for non-tipped workers will increase as follows:

  • Beginning September 1, 2014, to $8.15.
  • Beginning January 1, 2016, to $8.50.
  • Beginning January 1, 2017, to $8.90.
  • Beginning January 1, 2018, to $9.25.

Starting in 2019, minimum wage increases will be tied to the rate of inflation, but any increase will be capped at 3.5 percent a year. The rate will adjust annually based on a five-year rolling average of inflation for the Midwest. Annual increases would take effect on April 1 of each year. No increase would occur if the state’s unemployment rate for the preceding year was 8.5 percent or higher.

Several other states, including Delaware and Minnesota, also have adopted increases this year, and the minimum wage for workers on new federal contracts has been raised to $10.10 per hour.

Article By:

Maurice G. Jenkins
Matthew Scott Disbrow
Of:
Jackson Lewis P.C.