By: 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.
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.
The Administrator of the U.S. Department of Labor (“DOL”) Wage & Hour Division issued a formal Interpretation to provide “additional guidance” concerning the misclassification of workers as independent contractors under the federal Fair Labor Standards Act (“FLSA”). Businesses continuing to utilize independent contractors need to understand that combating misclassification is a priority for DOL and this latest action may lead to increased misclassification litigation.
To learn more about this important issue read our Employment Law Advisor.
Significant Amendments To The Overtime Regulations Proposed By The DOL Will Result In Many More Workers Becoming Entitled To Overtime
If the U.S. Department of Labor’s (DOL) proposed rule is adopted, any exempt employees who earn less than $50,440 per year will need to be reclassified as non-exempt. These employees will now earn overtime if they work over 40 hours per week.
This proposal would increase the salary level required significantly in order for the employee to remain qualified for the “white collar” exemptions.
To learn more about this proposal and how it may affect you if it goes into effect, please read our full Employment Law Advisor.
The end of last summer’s internship season was marked by a wave of class-action lawsuits filed by interns against entertainment, sports, and publishing companies. The interns sued for unpaid wages and overtime claiming that they in reality were employees of these companies. These much publicized lawsuits, including those against Condé Nast Publications, Fox Searchlight Pictures, Inc., Hearst Corporation, and Sean “Diddy” Combs’s Bad Boy Entertainment, led many businesses to end their internship programs altogether. Here is what you must know before allowing an unpaid intern to “work” for your for-profit business.
An intern for a for-profit business must be paid unless the internship meets the requirements of the narrow “learner/trainee” exemption under the federal Fair Labor Standards Act (“FLSA”), the law governing payment of minimum wages and overtime. Failure to meet this narrow exemption could result in costly litigation and possibly significant liability; some of the businesses recently sued have had thousands of interns in the purported “class” of plaintiffs.
The U.S. Department of Labor (the “DOL”) applies a six-criteria test to unpaid interns at private-sector, for-profit businesses to determine whether the “learner/trainee” exemption is met. The DOL’s six criteria are:
- The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
- The internship experience is for the benefit of the intern;
- The intern does not displace regular employees, but works under close supervision of existing staff;
- The employer that provides the training derives no immediate advantage from the activities of the intern, and on occasion its operations may actually be impeded;
- The intern is not necessarily entitled to a job at the conclusion of the internship; and
- The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
This test may be hard for a for-profit business to pass if it receives an advantage from the services of the intern, for example if the intern performs low-level administrative and clerical tasks. Although most courts have applied a more flexible test, a number of courts have deferred to the DOL’s more stringent test, which in turn has prompted the wave of recent lawsuits. To avoid claims, companies in doubt about whether they will pass the DOL’s test should pay their interns at least minimum wage (and overtime unless they restrict interns from “working” for more than 40 hours per week) and keep accurate records of the interns’ time “worked.”
For more information on this topic, and other information about having an internship program, please contact a member of the Employment Practice Group.
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.
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.