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UPDATED: Federal District Court Reinstates EEO-1 Pay Data Reporting Requirements (For Now)

May 9, 2019 Leave a comment

AET Headshot Photo 2019 (M1344539xB1386)By: Amanda Thibodeau

As we previously reported, in March 2019 the U.S. District Court for the District of Columbia issued a ruling concluding that the White House Office of Management and Budget (“OMB”) did not have a sufficient basis to stay pay reporting data requirements (known as “Component 2”) previously announced by the U.S. Equal Employment Opportunity Commission (“EEOC”).

On April 3, 2019 the OMB filed a brief with the U.S. District Court for the District of Columbia proposing a September 30, 2019 deadline for the EEOC to complete the Component 2 pay data collection, which was approved by the Court later that month.

On May 1, 2019, the EEOC announced it expects to begin collecting the Component 2 pay data for both 2017 and 2018 calendar years in mid-July 2019 in anticipation of the September 30, 2019 deadline. The EEOC expects to open a submission portal for employers to submit that data this summer. A copy of the published announcement can be found here.

Employers are still expected to submit their 2018 Component 1 data by the May 31, 2019 deadline.

The Morse Employment Law Group will continue to monitor this issue and provide updates as they become available.

For more information, please contact Matthew Mitchell or Amanda Thibodeau.

Department of Labor Proposes New Interpretation of Joint Employer Status Under The Fair Labor Standards Act

April 9, 2019 Leave a comment

AET Headshot Photo 2019 (M1344539xB1386)By: Amanda Thibodeau

On April 9, 2019, the United States Department of Labor (“DOL”) published a notice of proposed rulemaking (the “NPRM”) to amend its existing regulations regarding so-called “joint employer” status under the federal Fair Labor Standards Act (the “FLSA” or the “Act”).

The FLSA requires covered “employers” to pay nonexempt employees at least the federal minimum wage for all hours worked and overtime for all hours worked over 40 hours in a workweek.  The Act also contemplates scenarios in which other “persons,” in addition to the nominal employer, may be jointly liable for wages due to an employee under the Act.  This concept is generally known as joint employer wage liability (although the term “joint employer” is not specifically used in the language of the FLSA).  Joint employer status under the FLSA implicates questions such as:

  • Is a franchiser liable for the wage obligations of its franchisees?
  • Is an institutional investor liable for the wage obligations of its portfolio businesses?
  • Is a parent corporation liable for the wage obligations of its subsidiaries?

In 1958, the DOL issued regulations interpreting joint employer status under the Act.  Those regulations instructed that multiple persons or entities may be jointly liable for wage obligations due to an employee if they are “not completely disassociated with” respect to the employment of an employee.  This open-ended standard, which remains the current DOL benchmark on the subject, has been the subject to debate for nearly sixty years.

The DOL indicates that the purpose of the NPRM is to make the determination of joint employer status under the FLSA “simpler and more consistent.”

A New Test For Joint Liability Status

The NPRM proposes a four-factored test to determine when a person or entity shares wage liability for an employee with the nominal employer.  The four factors are whether the person or business entity:

  • hires or fires the employee;
  • supervises and controls the employee’s work schedule or conditions of employment;
  • determines the employee’s rate and method of payment; and
  • maintains the employee’s employment records.

The NPRM clarifies that that “the potential joint employer must actually exercise . . . one or more of these indicia of control to be jointly liable under the Act.” (Emphasis supplied).  The reserved, but unexercised, contractual right to act in relation to an employee “is not relevant for determining joint employer status.”   In addition, the NPRM provides a set of examples that illustrate the limits of the four-factor test:

  • The potential joint employer’s business model—for example, operating as a franchisor—does not make joint employer status more or less likely under the Act.
  • The potential joint employer’s contractual agreements with the employer requiring the employer to, for example, set a wage floor, institute sexual harassment policies, establish workplace safety practices, require morality clauses, adopt similar generalized business practices, or otherwise comply with the law, do not make joint employer status more or less likely under the Act.
  • The potential joint employer’s practice of providing a sample employee handbook, or other forms, to the employer; allowing the employer to operate a business on its premises (including “store within a store” arrangements); offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer; jointly participating in an apprenticeship program with the employer; or any other similar business practice, does not make joint employer status more or less likely under the Act.

What’s Next?

It should be noted that NPRM is a proposal.  The DOL is now soliciting comments from interested parties with respect to the NPRM, and will begin the process of developing a final rule on the subject.  Whether the DOL ultimately adopts the rules proposed in the NPRM is unclear.  What is clear is that the DOL is focused on clarifying standards with respect to this contentious area of employment law.  Morse will continue to monitor, and report on this subject.

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Morse’s Employment Law Group regularly advises clients with respect to compliance with the Fair Labor Standards Act and its developments.

For more information, please contact Amanda Thibodeau or Matthew Mitchell.

Equal Pay Day in Massachusetts: Are you in compliance?

April 2, 2019 Leave a comment

2015-01-05_8-57-41By: Amanda Thibodeau

April 2, 2019, is National Equal Pay Day – a date designated by the National Committee on Pay Equity to highlight inequities in wages between men and women. Equal Pay Day marks how far into the next calendar year the average American woman would have to work in order to make as much as the average American man made in the preceding year. With the recent passage of the Massachusetts Equal Pay Law, Equal Pay Day also serves as a reminder to all Massachusetts employers that they have specific legal obligations to examine, identify, and eliminate wage gaps among their male and female employees.

Read about the obligations in our Employment Law Alert.

U.S. Department of Labor Proposes Significant Changes to FLSA Overtime Regulations

March 25, 2019 Leave a comment

2015-01-05_8-57-41By: Matthew Mitchell

On March 7, 2019, the U.S. Department of Labor announced a long-awaited Notice of Proposed Rulemaking (“NPRM”) that proposes new regulations that relate to overtime and minimum wage exemptions under the Fair Labor Standards Act (“FLSA”). The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked, and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.

Read about the proposed changes, including how they could change employee exempt or nonexempt status in our Employment Law Alert.

Federal District Court Reinstates EEO-1 Pay Data Reporting Requirements (For Now)

March 22, 2019 Leave a comment

MLM Headshot Photo 2019 (M1341570xB1386)By: Matthew Mitchell

In September 2016, the U.S. Equal Employment Opportunity Commission (“EEOC”) announced plans to collect employee compensation data as a component to its annual EEO-1 employer information reporting requirement. This pay data reporting requirement – known as “Component 2” – was slated to go into effect in March 2018, and would have required all private employers with over 100 employees, and certain smaller, government contractors, to report W-2 wage information and total hours worked, for all employees, by race, ethnicity, and sex, within 12 proposed pay bands. Component 2 was an aspect of Obama-era reforms aimed at strengthening EEOC capacity to identify and prevent pay discrimination.

In August 2017, the White House Office of Management and Budget (“OMB”), under the Trump Administration, stayed the implementation of Component 2, indicating that Component 2 disclosure requirements were unreasonably burdensome for employers – the U. S. Chamber of Commerce estimated that Component 2 would result in $400 million in additional administrative costs to employers. That action by the OMB prompted a lawsuit by the National Women’s Law Center and the Labor Counsel for Latin American Advancement against the OMB and the EEOC.

On March 4, 2019, the U.S. District Court for the District of Columbia issued an opinion reinstating Component 2, concluding that the OMB did not have a sufficient basis to support its decision to stay Component 2. The Court’s decision may have significant implications for employers. The current EEO-1 Report filing deadline is on May 31, 2019, and it is unclear whether Component 2 pay data disclosures will be required for the May 31 reporting cycle.

It remains to be seen whether the ruling is appealed, whether the EEOC issues any special instructions in light of the ruling, or whether the EEOC takes steps to revise its EEO-1 reporting guidelines (although the EEOC does not presently have a quorum to effect such a change). Morse Barnes-Brown Pendleton’s Employment Law Group will continue to monitor this issue, and will provide updates as they become available.

For more information, please contact Matt Mitchell.

Scott Connolly Discusses Properly Classifying Workers in Accounting Today

August 3, 2017 Leave a comment

SJC Headshot Photo 2015 (M0846523xB1386)In Accounting Today’s article “Properly Classifying Workers Remains a Major Problem“, employment attorney Scott Connolly comments on how worker misclassification is a prevalent issues for both the Internal Revenue Service and state taxing officials. Companies that misclassify employees as independent contractors avoid paying minimum wage, payroll taxes, overtime, worker’s compensation, and other payments under the Federal Family and Medical Leave Act.  However, this mislabeling can lead to trouble with the IRS, including the company owing taxes it failed to withhold by classifying a worker as an independent contractor instead of as an employee.

Additionally, as Scott notes:

The employer should be concerned about misclassification claims from the workers themselves… Many service providers want to be classified as independent contractors, but companies run the risk because later there might be disharmony in the relationship.”

Read the full article for more information on the potential consequences of misclassifying workers, or contact Scott Connolly for more information.

Federal Judge Temporarily Blocks New Overtime Rule From Taking Effect On December 1

November 23, 2016 Leave a comment

2015-01-05_8-57-41By: Scott J. Connolly and Sandra E. Kahn

On November 22, a federal judge in Texas issued a preliminary order that temporarily blocks the U.S. Department of Labor (DOL) from implementing changes to the salary basis for white collar overtime exemptions.  The new salary rule, which was to become effective on December 1, 2016 would have required employers to increase exempt employees’ minimum salary from $23,660 to $47,476.  The preliminary court order blocking the rule appears to apply to all public and private employers nationwide.SJC Headshot Photo 2015 (M0846523xB1386)

Find out how the judge’s order will affect the new salary rule, which was to become effective on December 1. Read this month’s Employment Law Alert.

Are You Ready to Reclassify? New Overtime Regulations Go Into Effect on December 1, 2016

October 5, 2016 Leave a comment

By: Sandra E. Kahn

2015-01-05_8-57-41On December 1, 2016, any employees who earn less than $47,476 annually will be entitled to overtime and must be treated as non-exempt, as per the U.S. Department of Labor’s final rule (“Final Rule”).
Don’t wait any longer to address this critical change in the law.
Find out how the Final Rule will affect your current employee classifications and pay practices, and the consequences of not complying with the law.

Read this month’s Employment Law Alert.

New Overtime Regulations Will Result In Many More Workers Becoming Entitled To Overtime

May 18, 2016 Leave a comment

By, Sandra E. Kahn

On May 18, 2016, President Obama announced the publication of the U.S. Department of 2015-01-05_8-57-41
Labor’s final rule (“Final Rule”) updating the overtime regulations, and providing that employees who earn less than $47,476 annually will be entitled to overtime.

The federal Fair Labor Standards Act (“FLSA”) “white collar” exemptions are familiar to most employers. Under the FLSA, employees must be paid the minimum amount required by the statute on a salary basis, and the employee’s job duties must primarily involve executive, administrative, or professional duties. The Final Rule changes only the salary basis test, leaving in place the existing duties test.

For more details, read our full alert and visit our Employment Law Group page.

New Federal Law Protects Trade Secrets But Also Requires Changes to Employee and Contractor Agreements

May 5, 2016 Leave a comment

By: Sandra E. Kahn

The new Defend Trade Secrets Act of 2016 (DTSA) is expected to be signed into law by President Obama.  The Act will allow claims for trade secret theft to be brought under a federal civil cause of action.

Under certain circumstances, the Act will provide protection for whistleblowers who divulge trade secrets to the government in order to report wrongdoing.  As such, employers will now have to inform their employees of that protection in any agreement or contract.  It is advised that employers consult with their counsel to revise contracts as necessary.

For a more detailed explanation of the DTSA, read the full post on our Good Company blog.

Retaliation Once Again Is the Top Type of Claim Filed with the EEOC

February 24, 2014 Leave a comment

Employment Attorney Bob SheaBy: Robert Shea

The federal Equal Employment Opportunity Commission (“EEOC”) has released its statistics for fiscal year 2013 and for the fourth straight year charges alleging unlawful retaliation by employers was the leading type of discrimination alleged. Retaliation claims accounted for 41.1% of the charges filed with the EEOC, up three percent from 2012. Retaliation was followed by race discrimination (35.3%), gender, including sexual harassment and pregnancy discrimination (29.5%), disability discrimination (27.2%), and age discrimination (22.8%). The EEOC’s enforcement and litigation statistics for FY 1997 through 2013 can be found here.

For more information on this topic please contact any member of our Employment Law Group.

Employee Recordkeeping Requirements Under Federal and Massachusetts Wage Laws: Which Records Should Employers Keep?

October 3, 2013 Leave a comment

Employers have an obligation under the federal regulations interpreting the Fair Labor Standards Act (FLSA) and separately under Massachusetts law to keep and retain certain time and wage records.

Keeping complete and accurate time and wage records is not just a legal requirement– it is also a good business practice. In a lawsuit for unpaid wages or overtime, the burden of proving when and for how long an employee worked is placed on the employer. An employer who has kept thorough and accurate time and wage records will be better equipped to defend against a wage and hour lawsuit.

For each non-exempt employee, federal regulations require that employers retain at least the following records:

  1. Employee’s full name and social security number.
  2. Address, including zip code.
  3. Birth date, if younger than 19.
  4. Sex and occupation.
  5. Time and day of week when employee’s workweek begins.
  6. Hours worked each day.
  7. Total hours worked each workweek.
  8. Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”).
  9. Regular hourly pay rate.
  10. Total daily or weekly straight-time earnings.
  11. Total overtime earnings for the workweek.
  12. All additions to or deductions from the employee’s wages.
  13. Total wages paid each pay period.
  14. Date of payment and the pay period covered by the payment.

For each exempt employee, federal regulations require that employers retain at least the records listed above, except those listed in numbers 6 through 10 and a description of the basis on which wages are paid, e.g. the dollar amount of earnings per month, per week, per month plus commissions, benefits, etc.

For more information on recordkeeping requirements or the prevention of wage and hour lawsuits, please contact a member of the Employment Law Group.

Same Sex Spouses are Now Entitled to FMLA Leave

September 5, 2013 Leave a comment

Attorney Maura MaloneBy: Maura Malone

In June, the United States Supreme Court issued a decision in United States v. Windsor which struck down the federal Defense of Marriage Act (DOMA) and cleared the way for federal recognition of same-sex marriage.

To comply with the Supreme Court’s decision, the U.S. Department of Labor (DOL) has now revised previously issued guidances on the Family Medical Leave Act (FMLA) and expanded FMLA coverage to legally married same-sex couples.

The FMLA entitles eligible employees to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employees had not taken leave. Prior to the DOL’s revisions, although same-sex couples could take FMLA leave to care for or bond with a child, they were not entitled to FMLA leave to care for a same-sex spouse.

The DOL’s revisions delete references to DOMA from its FMLA guidances and clarify that under the FMLA, the term “spouse” means:

. . . a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.

Because the definition of “spouse” is tied to the definition of marriage in the state where the employee resides, FMLA spousal rights do not apply to employees whose same-sex marriage is not recognized by the state in which they live.

As a result of the DOL’s revisions, employers with employees in states which recognize same-sex marriage should ensure that their FMLA policies and practices provide for leave to an employee whose same-sex spouse requires care.

Employers should contact a member of the Employment Group with any questions related to FMLA benefits for employees in a same-sex marriage.