Minimum Wage Increases in 13 States
By: Robert Shea
Employers in 13 states begin 2014 with higher minimum wage requirements. Now, 21 states have minimum wage rates exceeding the federal minimum wage rate of $7.25 per hour. Here in New England, as of January 1, 2014, Connecticut’s minimum wage rate is $8.70 (and will go to $9.00 on January 1, 2015), Rhode Island’s rate is $8.00, and Vermont’s rate is $8.73. Minimum wage rates in Maine, Massachusetts and New Hampshire remain at $7.50, $8.00, and $7.25, respectively. Also, note New York’s minimum wage rate will go from $8.00 to $8.75 on December 31, 2014 and to $9.00 on December 31, 2015.
Minimum wage increases are also being discussed in several other states, including Massachusetts. Proposed legislation in Massachusetts would increase the minimum wage rate from $8.00 to $11.00 over three years. The minimum wage is also a hot topic on Capitol Hill where Democrats are seeking a significant increase in the federal minimum wage rate, which has been at its current rate of $7.25 per hour since 2009.
For more information on this topic, please contact MBBP’s Employment Law Group.
Recent Cases Expand Antidiscrimination Laws
Three recent Massachusetts cases expand employee rights under the antidiscrimination laws. Each case impacts a diverse aspect of the state’s antidiscrimination law, including the issue of attorney-client privilege applying to an internal investigation, claims of associational discrimination, and remedies for civil harassment.
For more information, please read our December Employment Law Advisor.
New Proposed Federal Legislation Targets Independent Contractor Misclassification
By: Bob Shea
Government efforts to combat the independent contractor misclassification continue as a new U.S. Senate bill was recently introduced by Sen. Bob Casey of Pennsylvania. The “Payroll Fraud Prevention Act” would amend the federal Fair Labor Standards Act to require employers to “accurately classify” workers as either employees or non-employees, and to provide each worker with a written notice informing the worker “of the classification of such individual … as an employee or a non-employee.” The Act also would require the notice to include a statement directing the worker to a U.S. Department of Labor website providing further information about employee rights.
Under the Act, if an employer failed to provide the required notice to a worker the individual would be presumed to be an employee, as opposed to an independent contractor. The Act also would contain anti-retaliation protections for workers and would amend the Social Security Act to provide for audits of employers who are believed to be misclassifying workers for purposes of avoiding unemployment taxes or benefits.
Please contact our Employment Law Group if you have questions regarding this topic.
Where and For How Long Should Employers Keep Wage Records?
October’s Tip of the Month discussed the obligation employers have under the federal regulations interpreting the Fair Labor Standards Act (FLSA) and under Massachusetts law to keep and retain certain time and wage records. This month we address: where should employers keep those records, and for how long must the records be retained?
Where? Employers should keep time and wage records at the employee’s place of employment or in the employer’s central records office. Wherever they are kept, though, the records must be available for inspection by the U.S. Department of Labor’s Wage and Hour Division.
How Long? Under federal law, employers are required to maintain payroll records and records of any collective bargaining agreements for three years. Employers are required to maintain records which are related to wage computations, including time cards, wage rate tables, work schedules, time records, and records of additions or deductions from wages for two years. Keep in mind, though, that the FLSA has a three year statute of limitations for willful violations and that, as a result, wage computation records should be kept for federal purposes for at least three years.
Moreover, Massachusetts law, specifically M.G.L. c.151A, §45 and 430 CMR §5.01(1), requires employers to keep work records including payroll records, worksheets and any record which the employer uses to prepare submissions to the Massachusetts Department of Unemployment Assistance, for four years.
M.G.L. c. 151, §15 and M.G.L. c. 149, §52 impose a separate obligation to retain payroll records for at least two years. However, employers who comply with the federal requirements and M.G.L. c.151A, §45 and 430 CMR §5.01(1)’s longer four year retention requirement will have complied with the two year requirement.
For more information on recordkeeping requirements or the prevention of wage and hour lawsuits, please contact a member of the Employment Law Group.
Employee Recordkeeping Requirements Under Federal and Massachusetts Wage Laws: Which Records Should Employers Keep?
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:
- Employee’s full name and social security number.
- Address, including zip code.
- Birth date, if younger than 19.
- Sex and occupation.
- Time and day of week when employee’s workweek begins.
- Hours worked each day.
- Total hours worked each workweek.
- Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”).
- Regular hourly pay rate.
- Total daily or weekly straight-time earnings.
- Total overtime earnings for the workweek.
- All additions to or deductions from the employee’s wages.
- Total wages paid each pay period.
- 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.
Scott Connolly to Speak at BBA Event
On Friday, October 11 MBBP Employment Attorney Scott Connolly and Boston Red Sox Senior Manager of Legal Operations Mandy Petrillo will be co-speaking at the Boston Bar Association (BBA) event “Unpaid Internships: Mitigating Risks and Alternatives“. Entertainment companies traditionally have experienced the most problems related to unpaid internships. Join us for a discussion about avoiding pitfalls when hosting unpaid interns and alternative arrangements.
The event takes place at the BBA and runs from 12:00PM to 1:00PM. Please visit the BBA for more details and to register.
MBBP Employment Breakfast Seminar on Employee Terminations
On Tuesday, October 29th MBBP is hosting a seminar on Employee Terminations: Avoiding Claims & Liability. Discharging an employee is one of the most difficult parts of a manager’s (and HR professional’s) job. It is also the employment action most likely to expose a business to legal claims and liability. This Program is designed to help HR professionals, managers and in-house counsel develop a rational and strategic approach to employee terminations. We will review the major areas of risk and the common employer pitfalls and traps for the unwary. We will lead a very practical discussion with attendees focused on developing best practices that will avoid employee claims and liability.
Registration for the event begins at 7:30AM with the program to begin at 8:00AM. To learn more or to register for this event, please visit our event page.
Scott Connolly Presents on Defending Discrimination Claims
On September 26, 2013, MBBP employment attorney Scott Connolly spoke on a panel at Boston College Law School on the subject of defending discrimination and retaliation claims before the Massachusetts Commission Against Discrimination (MCAD). Scott, who has been defending employers against such claims for more than 12 years, presented to a panel of third-year law students on case evaluation, witness interviews, procedure, development of defenses, and preparation of employer Position Statements.
Employers with questions about responding to charges of discrimination or retaliation at the MCAD or the federal Equal Employment Opportunity Commission should feel free to contact Scott about this area of practice.
Governor Patrick Administration Supports “Outright Elimination” of Non-Compete Agreement Enforceability
By: Bob Shea
In testimony before the Joint Committee on Labor and Workforce Department on September 10, Gregory Bialecki, Governor Deval Patrick’s Secretary of Housing and Economic Development, stated that the Patrick Administration now supports the outright elimination of the enforceability of non-competition agreements in Massachusetts. Secretary Bialecki stated that a ban on non-competes should be combined with the adoption of the Uniform Trade Secrets Act (“UTSA”) to protect against the potential loss or disclosure of proprietary information by departing employees.
Secretary Bialecki testified that Massachusetts “should do everything it can to (1) retain talented entrepreneurs; (2) support individual career growth and flexibility; and (3) encourage new innovative businesses that are the engines of economic growth.” According to Bialecki, non-competes “stifle movement and inhibit competition” and, as a result, “we are not seeing the kind of spin-offs and start-ups at the same rate that previously made Massachusetts an enviable model.”
Secretary Bialecki testified that Massachusetts should adopt the USTA, as 47 other states have done. He said that the UTSA “and other tools protect an employer’s trade secrets and proprietary information,” and that, “[e]ven without non-compete agreements, companies still have a disproportionate ability to litigate against the individual.”
There are three pending non-compete bills before the Massachusetts legislature. Two bills would create a presumption that non-competes lasting more than 6 months are unenforceable. One bill would ban non-competes in Massachusetts altogether. At this point, however, any legislative effort to restrict the use of non-competes faces a tough battle. Still, the Patrick Administration’s decision to support a ban on non-competes may be a turning point in the debate.
You may contact a member of MBBP’s Employment Law Group for more information.
Employee Terminations: Avoiding Claims and Liability
Employee terminations result in more lawsuits than any other employment action. Despite the general rule in Massachusetts that the employment relationship is “at-will” and can be terminated at any time, with or without notice, reason or cause, there are many exceptions to the at-will rule, which can make each termination open to potential legal challenge. This Employment Law Advisor focuses on how employers should handle employee terminations and the steps employers can take to reduce the risk of legal claims and liability.
For more information, please read our September Employment Law Advisor.
Employee Terminations: Avoiding Claims & Liability
On Tuesday, October 29th MBBP is hosting a complimentary breakfast program titled “Employee Terminations: Avoiding Claims & Liability“. Discharging an employee is one of the most difficult parts of a manager’s (and HR professional’s) job. It is also the employment action most likely to expose a business to legal claims and liability. Discharged employees can bring a wide array of claims, including breach of contract, wrongful discharge, discrimination, and retaliation. Increasingly, discharged employees also assert claims focusing on the manner in which they were discharged and on post-termination conduct by employers, including claims of defamation, false imprisonment, and non-payment of wages.
Consequently, before discharging an employee, it is critical that employers (1) carefully evaluate the discharge decision; (2) prepare appropriate paperwork and plan for the termination meeting; and (3) be prepared to comply with the legal obligations that arise on and after the date of termination.
This Program is designed to help HR professionals, managers and in-house counsel develop a rational and strategic approach to employee terminations. We will review the major areas of risk and the common employer pitfalls and traps for the unwary. We will lead a very practical discussion with attendees focused on developing best practices that will avoid employee claims and liability.
This event is complimentary, but space is limited! Please visit our event page for more information or to register.
Same Sex Spouses are Now Entitled to FMLA Leave
By: 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.
SJC Rules Employees Can Pursue Wage Claims under Both MA Wage Act and Common Law
On August 12, 2013, the Massachusetts Supreme Judicial Court (“SJC”) ruled that employees claiming they are owed wage or salary compensation are not limited to bringing their claims under the Massachusetts Wage Act, M.G.L. c. 149, § 148, and can also bring claims under common law, including breach of contract claims. The ruling is significant because, although the Wage Act provides very powerful remedies to claimants, including mandatory treble damages and attorney’s fees, the Wage Act has a three year statute of limitations. In contrast, a six year statute of limitations period applies to breach of contract claims in Massachusetts. This means that claimants can seek damages going back six years, though only the last three years of damages would be subject to trebling.
The SJC’s decision in Lipsitt v. Plaud can be accessed here.
You may contact a member of MBBP’s Employment Law Group for more information.
Extra Payments Do Not Jeopardize an Employee’s Status as “Paid on a Salary Basis.”
June’s “Tip of the Month” addressed the importance of paying an exempt employee on a salary basis in order to maintain the employee’s exemption from the overtime requirements of the federal Fair Labor Standards Act (“FLSA”). It also addressed the way in which making a deduction from an exempt employee’s regular paycheck risks the loss of the employee’s “salary basis” and exempt status. This month’s “Tip of the Month” examines what happens to an employee’s “salary basis” and exempt status when an employer adds to, instead of deducting from, an employee’s regular paycheck.
Unlike making a deduction, making an addition to an employee’s paycheck does not jeopardize the employee’s status as “paid on a salary basis.” Department of Labor regulations state that an employer can provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, so long as the employee’s pay includes a guarantee of at least a minimum weekly amount of $455 or greater.
Thus, an exempt employee who receives sales commissions on top of a base salary, or an exempt employee who receives additional “overtime” pay for time worked beyond his or her regular schedule, does not lose his or her “salary basis” status and as a result remains exempt from the overtime requirements of the FLSA.
For more information on this topic, please contact a member of the Employment Law Group.
SJC Holds LLC Managers May Be Personally Liable Under MA Wage Act
The Massachusetts Supreme Judicial Court (“SJC”) recently ruled in Cook v. Patient EDU, LLC, et al. (SJC-11272) that language in the Massachusetts Wage Act imposing personal liability on officers and agents of a “corporation” applies equally to managers of a limited liability company (“LLC”). In doing so, the SJC rejected a Superior Court decision reaching the opposite conclusion. This Employment Law Alert addresses the case Cook v. Patient EDU, LLC, et al. (SJC-11272), SJC’s decision and what this means for employers.
Please feel free to contact MBBP’s Employment Law Group with any questions.
What does paid “on a salary basis” mean?
Generally, to qualify as exempt from overtime requirements under the federal Fair Labor Standards Act’s “white collar exemptions,” an employee must meet certain tests regarding his or her job duties and must be paid on a salary basis. (N.B., applicable regulations provide for exceptions from the salary requirement for certain sales employees, teachers, employees practicing law or medicine or to certain situations where an employee is paid on a fee basis.)
Understanding what qualifies as “a salary basis” and how to maintain the “salary basis” is thus essential to maintaining an employee’s exempt status. An employee is paid on a salary basis only if he or she is paid a predetermined salary of at least $455 per week. To maintain exempt status, the salary amount cannot be reduced because of variations in the quality or quantity of the employee’s work, and in general, employers must ensure the employee’s salary amount is paid for each and every workweek in which work is performed.
This means that if an exempt employee is absent an employer may not dock, deduct, or reduce the employee’s salary without risking the loss of the employee’s exempt status. Employers may not reduce an employee’s salary even if it is the employer who initiates the absence, e.g., by closing the workplace for a holiday or furlough.
There are certain circumstances set forth in Department of Labor regulations, 29 C.F.R. §§ 541.602-605 (and, as applicable, state law), under which an employer might make a deduction without losing the employee’s exemption. For example, employers need not pay exempt employees for any workweek in which they perform no work at all. An employer might also take a deduction when: an exempt employee is absent from work for personal reasons other than sickness or disability; an exempt employee is absent for one or more full days due to sickness or disability if the deduction is made in accordance with a bona fide plan, policy or practice of providing compensation for salary lost due to illness; an employer offsets amounts an employee receives as jury or witness fees, or military pay; an employer imposes good faith penalties for infractions of certain safety rules; and when an employer imposes a disciplinary suspension of one or more full days pursuant to workplace conduct policies. Employers should check with legal counsel before making a deduction pursuant to one of these exceptions.
For more information on this topic, please contact a member of the Employment Law Group.
New Report Concludes that MA Independent Contractor Law “Suppresses” Over 43,000 Self-Employment Jobs Annually
By: Bob Shea
On June 11, 2013, New Jobs for Massachusetts, Inc., a non-profit public policy advocate for growth in private sector employment in Massachusetts, issued a report concerning the impact of the Massachusetts Independent Contractor Law (“MICL”) on self-employment growth in Massachusetts.
Using data from U.S. Bureau of Labor Statistics, the report analyzes 739 occupational classifications and identifies 400 service occupations adversely affected by MICL. The report concludes that the difficulty faced by businesses in meeting the strict requirements of MICL, along with the legal liability associated with MICL non-compliance, “suppresses” the creation of over 43,000 self-employment jobs annually. The report argues that bringing MICL more in line with the independent contractor law tests used under federal law and the laws of other states will lead to significant growth in self-employment in Massachusetts.
MBBP’s Employment Law Group has addressed the problems presented by MICL for businesses using independent contractors in past communications to clients.
Please feel free to contact MBBP’s Employment Law Group with any questions on this topic.
Employer Obligations Under the Massachusetts Personnel Record Law
For employers in Massachusetts, the Personnel Record Law, M.G.L. c. 149, §52C (the “Law”), sets out what must be included in a “personnel record” as well as various employer obligations and employee rights concerning personnel record access, challenges and retention. The Law was amended in 2010 to impose an affirmative duty on employers to notify employees whenever any negative information is added to their personnel record. This Employment Law Advisor addresses the Law’s requirements and implications for employers.
For more information, please read the June Employment Law Advisor.
Massachusetts Employers Must Promptly Pay Departing Employees “Final Wages.”
The Massachusetts Payment of Wages Act, M.G.L. c.149, §148, requires employers to pay a discharged employee his or her wages in full on the date of discharge. Employees who quit must be paid by the employer’s next regular payday.
Importantly, the final “wages” owed at departure include more than just the employee’s salary. Employers must also pay departing employees for all accrued and unused vacation time and for commissions which have been earned by the employee but not yet paid.
Because vacation pay may be owed to departing employees, employers should ensure that vacation policies clearly set forth when vacation is accrued, and whether an employee can carry over unused vacation from one year to the next. Employers with “paid time off” (“PTO”) policies should specify what portion of allotted PTO is vacation time. If an employer’s policy does not distinguish between vacation time and other forms of PTO, a departing employee is should be paid for all earned time off.
Similarly, because commissions which have been definitely determined and have become due and payable to the employee are included in the “wages” due, employers should be careful to define when and how commissions are earned, and under what circumstances an employee will receive payment for a sale which has not been completed at the time of the employee’s termination.
Even when payments of final wages, vacation time, and commissions are delayed by a few days, there is a technical violation of the Wage Act. The Wage Act provides for mandatory trebling of damages, attorneys’ fees, and personal liability of corporate officers. As a result, employers should make every effort to comply with the Wage Act.
For more information on this topic, please contact a member of the Employment Law Group.
D.C. Circuit Court of Appeals Declares NLRB’s Posting Rule Invalid
By: Scott Connolly
On May 7, 2013, the U.S. Court of Appeals for the District of Columbia invalidated a rule issued in 2011 by the National Labor Relations Board (the “Board”) that would have required employers to post notices informing employees of their unionization rights. The case, National Association of Manufacturers v. National Labor Relations Board, was brought by trade associations and other employer representatives who claimed that the Board’s rule violated the National Labor Relations Act (“NLRA”) and the First Amendment to the Constitution.
Specifically, the Board’s rule would have required employers to post notices to employees in conspicuous places informing them of their rights under the NLRA to, for example, form, join or assist a union; bargain collectively; and strike and picket. The Board’s poster also recited more specific employee rights. For example, the poster states that it is “illegal” for an employer to prohibit employees “from wearing union hats, buttons, t-shirts, and pins in the workplace” or to “[s]py on or videotape peaceful union activities.” The rule made failure to post the notice an unfair labor practice, as well as evidence the Board could consider of the employer’s unlawful motive regarding other alleged unfair labor practices, such as plant-closing threats, firings or refusals to hire. The Board claimed the rule was “necessary” because employees were not aware of their union rights. Obviously, employer groups found the required notice pro-union.
The Court held that the Board’s rule violated Section 8(c) of the NLRA, which states:
The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this [Act], if such expression contains no threat or reprisal or force or promise of benefit.
Citing “firmly established principles of First Amendment free-speech law,” the Court determined that Section 8(c) protects the right of employers to both speak and “not to speak.” In other words, an employer’s decision to not disseminate information contained in the Board’s poster is protected to the same extent as an employer’s right to express views and disseminate information about unions. Employers, the court concluded, cannot be compelled by the Board to speak its message. The Board’s rule violated Section 8(c) and First Amendment principles by making an employer’s failure to post the Board’s notice an unfair labor practice, and by treating such a failure as evidence of anti-union animus in cases involving, for example, unlawfully motivated firings.
It remains to be seen whether the Board will appeal the Court’s ruling to the U.S. Supreme Court.
Please feel free to contact Scott with any questions on this topic.
Massachusetts Employment Law Blog 