OT Exemption Threshold Salary: Take 2 2019-03-08T09:55:15-06:00

Posted on March 8, 2019

The news is everywhere: the DOL has issued its new proposal for the salary threshold for executive, administrative, and professional exemptions. Don’t panic – the announcement concerns a Notice of Proposed Rulemaking. The DOL still has to take public comments and prepare a final set of regulations.

The proposal (this time) is to increase the salary threshold from the current $455 per week (annualized to $23,660) to $679 per week (annualized to $35,308). If the proposal makes it to the final form, executive, administrative and professional employees who make less than $35,308 annually will no longer be “exempt.” Employers would have to pay these lower-paid employees overtime premium pay for hours worked over 40 each week. The proposed rulemaking also includes an increase for the highly compensated employee exemption from $100,000 to $147,414. Instead of proposing that the thresholds would increase automatically, the DOL is now proposing scheduling period reviews of the thresholds. The full proposal appears at https://www.dol.gov/whd/overtime/overtime2019-nprm.pdf

For anyone who would like to respond to the DOL’s proposals, comments will be accepted electronically or by mail. Check out the instructions at http://www.regulations.gov/

Dear Santa 2018-12-22T09:00:46-06:00

Posted on December 22, 2018

John Alan Doran

Dear Santa,

We all got together and put together our wish-list for your visit. We realize it’s been a fascinating year on the Labor & Employment front. And we don’t want to seem greedy (and end up on the naughty list) in light of all the recent developments in Labor & Employment law that have started to level the playing field for employers. But much still needs to be accomplished for employers in order to encourage job creation and reinvestment in our workforce. Stemming the tide of frivolous litigation and abuse of agency authority would go a long, long way toward that end. And so, dear Santa, here are just a few things we would like to see in or around our tree next week:

A cooperative Congress that can actually get things done. Employers and employees, alike, suffer from the uncertainty of our current, volatile political climate.
We need more judges. Lots more judges. Federal judicial vacancies are delaying justice for employers and employees at a mind-boggling pace, and the highly politicized process of appointing new judges is a mess.
A national, unified approach to paid leave. For multi-state employers, navigating the hopelessly contradictory state laws governing paid leave is daunting, if not impossible.
An end to certain states “under-turning” the Supreme Court’s arbitration jurisprudence at every opportunity. While some states refuse to believe this, there is a controlling federal policy favoring arbitration agreements even in employment, it’s the law of the land.
Marijuana-induced clarity. As more and more states roll out pro-marijuana laws, employers are increasingly caught between a rock and a hard place given the conflicting state and federal laws governing marijuana use.
An end to EEOC overreach and litigation abuse. Courts have repeatedly called out the EEOC for its over-the-top bullying and litigation abuse. It’s time for something to be done legislatively to curb the agency’s abusive conduct.
Simplified, unified, and practical rules determining the existence or non-existence of independent contractor relationships. The current hodge-podge of separate and distinct contractor tests throughout the states and conflicting tests within the federal government make it nearly impossible to enter into contractor agreements with any assurance that there will not be expensive litigation to follow.
Conclusive guidance on LGBT and related protected categories. Legislative clarity in this arena is long overdue.
A simplified, and realistic approach to FLSA white-collar exemptions, and a less pedantic enforcement strategy from the DOL.
A Senate vote on the countless agency vacancies that remain open but ready to be filled. Positions such as the Assistant Secretary of Labor—OSHA, and many more, could be filled in an instant, but won’t be due to gridlock.

And, for a stocking stuffer, how about amending labor and employment laws to make patently clear that the party who prevails in a lawsuit or agency proceeding shall recover costs and attorneys’ fees. File a bogus unfair labor practice charge, and you pay the price. Initiate a baseless FLSA collective action, and you pay the price. The playing field has been turned on its side in this respect, as employers are forced to settle frivolous or specious claims simply to avoid the costs of litigation. When both sides face the specter of litigation expenses, there will be less abuse and more efficient processing of legitimate claims.

DOL Doubles Back on Interns 2018-01-09T12:50:51-06:00

Posted on January 9, 2018

By James Korte

On January 5, 2018, the US Department of Labor (“DOL”) endorsed the seven-factor “primary beneficiary test”, also known as the “Glatt Test,” to determine whether interns qualify as employees under the FLSA. See DOL Press Release. The DOL scrapped its 2010 six-factor test to better align its guidance with the test adopted by four Circuit Courts. Under the newly-endorsed primary beneficiary test, the DOL (and presumably courts) will look at a non-exhaustive list of seven factors which include, whether there’s a clear understanding that no expectation of compensation exists, whether interns receive training similar to what they would get in an educational environment, and to what extent the internship is tied to a formal education program. In stark contrast, the now-discarded 2010 test began with the presumption that an intern was an employee unless all six-factors were found to be in the employer’s favor. The 2018 primary beneficiary test provides the courts more flexibility to deal with the unique circumstances of each case. It also provides employers with more wiggle room for unpaid interns, but tread carefully.

The More Things Change… The More They Stay The Same. 2018-01-09T11:59:27-06:00

Posted on January 9, 2018

By Chance Hill

On January 5, 2018, the U.S. Department of Labor (DOL) reissued 17 previously withdrawn opinion letters addressing a wide variety of topics under the Fair Labor Standards Act (FLSA). Such letters respond to specific questions submitted to the DOL’s Wage and Hour Division (WHD) and constitute an important form of guidance for employers and employees regarding the application of FLSA requirements and other laws to their workplaces. Employers may be able to use opinion letters for their affirmative defenses and receive deference by the courts if employers act “in conformity with” an opinion letter and in “good faith,” according to the Portal-to-Portal Act of 1947. The aforementioned 17 letters concerned inquiries ranging from questions about the exempt status of civilian helicopter pilots under Section 13(a)(1) of the FLSA to whether bonuses should be included in calculating employees’ regular rates pursuant to Section 7(e) of the FLSA.

The Obama Administration had withdrawn these opinion letters and discontinued the longstanding practice of issuing such letters while in office. (Instead, the Obama Administration issued a handful of documents that it referred to as “Administrator’s Interpretations.”) In his statement regarding these 17 opinion letters, the Trump Administration’s WHD Acting Administrator Bryan L. Jarrett reissued “the verbatim text” of each withdrawn opinion letter and asserted that it “is an official statement of WHD policy and an official ruling for the purposes of the Portal-to-Portal Act, 29 U.S.C. § 259.”

Click here to view DOL’s reissued opinion letters.

Salary Threshold Regs Un-enjoined? 2017-06-09T13:56:36-06:00

Posted on June 9, 2017

By John Alan Doran

Wednesday a group of Chipotle employees brought suit in New Jersey federal court alleging FLSA violations stemming from Chipotle’s failure to follow the Obama-era salary-basis regulations. As you will recall, these regulations doubled the salary threshold for the so-called white collar exemptions, thereby rendering millions of workers eligible for overtime. But, you will also remember that a federal judge entered an order last year enjoining those regulations before they became effective, and that injunction was nation-wide (S&H Blog Post: Salary Threshold Change Stopped). So are these Chipotle employees just sore losers or did we just misunderstand the meaning of “injunction?” The plaintiffs in this case are arguing that, while a federal court did preliminarily enjoin the DOL from implementing and enforcing the salary-basis regs, the regs nonetheless became effective automatically under the Administrative Procedures Act because the court did not enter a permanent injunction. The plaintiff’s argument seems like a real long-shot, but it is yet another twist in the unbelievably circuitous route these regs have taken.

Trump’s Puzder Gets Pulled 2017-02-15T15:23:52-06:00

Posted on February 15, 2017

By John Alan Doran

Andrew Puzder will not be the next Secretary of the DOL. The fast food magnate of Hardee’s and Carl’s Jr. fame “withdrew” his name from the confirmation process a few hours ago. The White House confirmed his withdrawal. When then-President-Elect Trump nominated Puzder to be the next DOL head on December 8, 2016, we all expected a radical turnaround at the DOL. But over the last few weeks Puzder has faced a wave of dramatic setbacks and challenges to his appointment, with some Republicans publicly crossing the aisle to oppose the appointment. Puzder is known for his outspoken views against an increased minimum wage, the Affordable Care Act, Obama-era trade treaties and policies, and more. His prospects diminished recently when it became public that he once employed an undocumented housekeeper, that his ex-wife had previously accused him of spousal abuse, and that his Carl’s Jr. and Hardee’s employees were suing him in dozens of states for alleged wage/hour violations. What President Trump does next to fill the DOL’s top spot is anybody’s guess, but we can be sure that it will be someone with the same political outlook as Puzder, sans the incredible baggage.

DOL Brief Argues Against Injunction 2016-12-16T09:23:44-06:00

Posted on December 16, 2016

By Bill Wright

As we all know, a federal judge blocked the Final Rule from the Department of Labor (“DOL”) that would have roughly doubled the salary threshold for executive, administrative and professional exempt employees. Now, the DOL has filed its appellate brief, looking to overturn that injunction.

The DOL’s arguments are predictable. Although the judge said he was only blocking the new salary threshold, not blocking all use of a salary threshold test, the DOL brief argues that judge’s reasoning would apply to any salary threshold test; but, both the appellate court and the Supreme Court have approved the use of salary threshold tests in the past. In addition, the DOL brief argues that the Final Rule did not merely add context to ambiguous terms in a statute; instead the DOL was exercising authority explicitly granted under the FLSA. The salary threshold test is neither arbitrary, capricious, nor manifestly contrary to law.

We knew the DOL would turn this brief around quickly, but barring a miracle, the new administration will take office before the appellate court reaches a decision in the case. Of course, ‘tis the season for divine intervention.

DOL Worm About to Turn 2016-12-08T16:53:06-06:00

Posted on December 8, 2016

By John Alan Doran

President-Elect Trump continued on his streak of appointing controversial cabinet members today when he announced Andrew Puzder as his choice to head the DOL. Mr. Puzder’s name may be familiar to those of you who crave charcoal-broiled fast food. He is the CEO of Hardee’s and Carl’s Jr. He is also an extremely vocal critic of increasing the minimum wage, the Affordable Care Act, the DOL’s currently-enjoined overtime regulations, and the immigration and trade policies of the Obama Administration. Whatever game employers, employees, and unions have been playing for the last eight years, the rules are about to change. TOTALLY. We can expect Mr. Puzder to do all in his power to recalibrate the employer/employee dynamic in a pro-business paradigm that will make heads spin. In light of the appointment of this very vocal opponent of pro-employee movements such as the $15 an hour campaign, we can’t begin to imagine who the President-Elect will select to fill the two vacancies on the National Labor Relations Board when he takes office. It will be nearly impossible for the President-Elect to “trump” this appointment when he turns his attention to the NLRB. (See what we did there? A Trump pun. Get it?)

Salary Change Stopped – Now What? 2016-11-22T17:05:15-06:00

Posted on November 22, 2016

By Bill Wright

A federal court has ruled that the U.S. Department of Labor might have overstepped its boundaries by implementing a salary threshold of $913 a week for executive, administrative and professional exemptions. But if you have been planning to comply with the regulation by next Thursday, what are you supposed to do about it?

First, there is a possibility that the court of appeals will see the issue differently than the district court. Consequently, we have no certainty about the salary threshold for these exemptions.

Second, the injunction is not permanent. Consequently, again, we have no certainty about the salary threshold for these exemptions.

Third, if you changed previously salaried employees to hourly and made them non-exempt, everything is fine. You can leave them as non-exempt, pay them overtime premium pay, and you will be complying with the law however it turns out.

But, if you gave exempt employees raises, how do you roll them back now? Everything depends on how you communicated the raises. If you made no contracts or other enforceable promises, you can reduce salaries again just as easily as you increased them. The problem is the employee relations – smoothing over the employee’s unhappiness over the bait and switch. At this point, we don’t know whether to laugh or cry.

Given the late date for this ruling, it is hard to see how we could have certainty about this rule before DJ Trump takes office. His administration might decide to drop the appeal, or to accept a permanent injunction.

Salary Threshold Change Stopped 2016-11-22T16:41:03-06:00

Posted on November 22, 2016

By Bill Wright

The U.S. District Court for the Eastern District of Texas has temporarily enjoined the Department of Labor’s new salary threshold test for executive, administrative and professional employees. The court found that the terms – executive, administrative and professional – had functional meanings but did not imply any particular salary or status. The court also found that the new threshold — $913 a week – was so high that it effectively took over the duties test, substituting status for function. Consequently, the court found the plaintiffs had shown a likelihood of success on the merits; the new regulation was likely to be contrary to the Fair Labor Standards Act.

The result is that, as of this moment, employers nationwide do not have to comply with the new regulation on December 1, 2016. Watch for a fast run to the court of appeals!

Nevada et al. v. US DOL, Civil Action No. 4:16-CV-00731 (E.D. Tex. Nov. 22, 2016).

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