Archive
The Complex Web of Employment Law Regulations Expands: The Latest COVID-19 Considerations for Massachusetts Employers
By: Matthew Mitchell & Amanda Thibodeau
In response to the COVID-19 outbreak, government regulators have created a web of legal requirements intended to promote employee safety and economic stability. The count, scope, issuance rate, and complexity of these new rules are unprecedented.
Compliance with this ever-expanding, and sometimes inconsistent, landscape of COVID-19 regulations is a clear and present challenge for employers.
We’ve prepared a summary of the most recent COVID-19 regulations that apply to Massachusetts employers, as of July 2020. It is critical that Massachusetts employers identify, understand, and comply with these standards.
Learn more in our COVID-19 Alert.
DOL Issues New Final Rule on Fluctuating Workweek Calculations
The U.S. Department of Labor (DOL) issued a final rule under the Fair Labor Standards Act (FLSA) allowing employers to offer bonuses, hazard pay, and other premium pay to employees whose hours, and regular rate of pay, vary from week to week. The final rule seeks to clarify the calculation of overtime pay for salaried, non-exempt employees who work hours that vary each week (known as the “fluctuating workweek”).
The DOL sought to clarify the rules around the fluctuating workweek now as employers bring employees back to work and implement new procedures for social distancing, such as with flexible or variable schedules.
Continue reading in our COVID-19 Alert.
DOL Issues New Final Rule for Exempting Executive, Administrative, and Professional Employees under the FLSA
By: Amanda Thibodeau
The Department of Labor (DOL) released a final rule today, updating its regulations under the Fair Labor Standards Act (FLSA). The final rule raises the threshold salary and annual compensation levels for exempting executive, administrative, and professional employees, including raising the “standard salary level” for exempting executive, administrative, and professional employees from the currently enforced level of $455 per week (the equivalent of $23,660 per year for a full-year worker) to $684 per week (the equivalent of $35,568 per year for a full-year worker). It further allows employers the ability to apply a portion of bonuses or commissions received by those employees towards that salary level, for purposes of meeting the exemption. The final rule will be effective January 1, 2020. For more information, or to review the final rule itself, visit the DOL’s announcement here.
For more information, please contact Matthew Mitchell or Amanda Thibodeau.
DOL Issues Opinion Letter Classifying Workers in the Gig Economy As Independent Contractors
The U.S. Department of Labor (DOL) recently issued an Opinion Letter analyzing the classification of workers in the virtual marketplace or “gig economy.” This refers to companies that operate in the “on-demand” or “sharing” economy, using online and smartphone applications to connect consumers to service providers in a wide variety of services, such as transportation, cleaning, delivery, and shopping.
The DOL was asked to analyze the classification of such service providers under the Federal Labor Standards Act (FLSA), ultimately deciding that based upon the facts provided by the unidentified company in question, the service providers were independent contractors.
This is vitally important in that independent contractors are not afforded the same protections under the FLSA as employees. For example, employees are entitled to minimum wage, overtime pay, and other benefits under the FLSA, while independent contractors are not. Continue reading in our Employment Law Alert.
U.S. Department of Labor Proposes Significant Changes to FLSA Overtime Regulations
By: 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.
New Overtime Regulations Will Result In Many More Workers Becoming Entitled To Overtime
By, Sandra E. Kahn
On May 18, 2016, President Obama announced the publication of the U.S. Department of 
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.
U.S. Department of Labor Issues Interpretation on Independent Contractor Misclassification
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.
Tip of the Month: Implement a Payroll Deductions Policy to Take Advantage of the FLSA “Safe Harbor”
Last month’s Tip of the Month reminded employers that communicating and maintaining an overtime policy can minimize liability for unauthorized overtime hours. This month, we focus on a second way employers can protect against wage and hour liability: the inclusion of a payroll deductions policy to take advantage of the “safe harbor” protection against liability for misclassification of employees based on the failure to pay employees on a salary basis.
As you recall, to be exempt from overtime, an employee must be performing duties recognized as exempt under the Fair Labor Standards Act (“FLSA”) and must be paid on a “salary basis.” To be paid on a “salary basis” the employee must receive a predetermined amount of compensation each pay period (at least $455/week) which cannot be reduced due to variations in the quality or quantity of the employee’s work. An exempt employee must receive the full salary for any week in which the employee performs any work, subject only to certain limited deductions.
Employers jeopardize employees’ exempt status by making improper deductions from salaries. A payroll deductions policy which meets certain requirements provides employers with the opportunity to reduce overtime liability which might otherwise accrue under the FLSA if improper deductions are made and employees are therefore found to be inappropriately treated as exempt.
A payroll deduction policy only provides a safe harbor if the employer: (1) has a “clearly communicated” policy prohibiting improper deductions, including a complaint mechanism; (2) reimburses employees for any improper deductions; and (3) makes a good faith commitment to comply in the future. The safe harbor is not effective where the employer willfully violates the policy by continuing to make improper deductions after receiving employee complaints.
A good payroll deduction policy should include an explanation of how exempt employees will be paid on a salary basis, with only limited deductions for certain reasons permitted by law, including for social security, taxes, participation in company-sponsored benefit and retirement plans, absence from work for one or more full days taken in compliance with the company’s sickness or disability policy, absence from work which is covered by the Family and Medical Leave Act, absence due to certain types of suspensions, and full or partial days not worked during the initial or terminal week of employment.
For more information on implementing or reviewing a payroll deductions policy, contact a member of the Employment Group.
When was the last time you updated your employee handbook?
It’s important to communicate the policies and expectations regarding employer conduct and with the recent legal developments you are required to make frequent updates to your employee handbook. We’ve outlined several policies that should be reviewed to be sure they are compliant. In addition if these are not in your handbook, they should be added!
To learn what steps employers should take, read the full advisor.
Employment Law Clip: FLSA Classifications – Salaried Does Not Necessarily Mean Exempt From Overtime
A common misconception is that paying a salary to an employee makes the employee exempt from the overtime requirements of the Fair Labor Standards Act (FLSA). In reality, many salaried employees do not qualify for any exemption from overtime obligations, and relying solely upon whether employees are paid a salary in classifying them as exempt or nonexempt will almost certainly result in misclassifications. In this video Massachusetts Employment Lawyer Maura E. Malone discusses the process of determining whether your employees are exempt or non-exempt and the risks of failing to properly classify them.
Want more information? Try some of our other resources on this topic:
- Wage & Hour Tip: Salaried Does Not Necessarily Mean Exempt From Overtime
- Caution: Administrative Assistants Only Rarely Are Exempt From Overtime Pay
- What Does Paid “On A Salary Basis” Mean?
- New Treble Damages Requirement Makes Compliance
with Wage/Hour Laws Even More Critical - Wage & Hour Tip: Certain Bonuses Must Be Included
When Calculating Overtime Pay
Please feel free to contact any member of our Employment Law Group with any questions on Massachusetts wage payment laws.
MBBP’s Employment Law Clip Series provides quick, easy-to-digest snapshots of common Employment issues, as well as practical information on how to avoid complicated, expensive and time-consuming pitfalls. Stay tuned for the next topic on Restrictive Employment Agreements.
Will Your Interns Sue You for Unpaid Wages?
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.
Are Your Commissioned Sales Employees Entitled to Minimum Wage and Overtime?
Many employers use commission payments to increase the productivity of their sales force. Commissioned sales people can earn significant compensation. But, are commissioned sales people also entitled to minimum wage and overtime?
The federal Fair Labor Standards Act(FLSA) establishes a minimum wage and requires that employers pay overtime, or 1.5 times the employee’s regular rate of pay, to employees who work more than 40 hours in a workweek. The FLSA’s minimum wage and overtime requirements apply to all employees, including commissioned employees, unless the employee comes within one of the statutory exemptions to the FLSA.
Many commissioned sales employees come within one of two statutory exemptions to the FLSA, the “outside sales exemption” or the “inside/retail sales exemption.” An employee is exempt under the outside sales exemption if the employee’s primary duty is making sales or obtaining orders or contracts for services or the use of facilities from paying clients or customers, and the employee is customarily and regularly engaged away from the employer’s place of business. Qualified outside sales people are exempt from both minimum wage and overtime requirements.
Commissioned sales people employed by a retail or service establishment are exempt from overtime (but not minimum wage) under the inside/retail sales exemption if (1) the employee’s regular rate of pay (including commissions) exceeds one and one-half times minimum wage and (2) more than half the employee’s total earnings are in the form of commissions.
If a commissioned sales employee does not come within one of these two narrowly defined exemptions (sales people will usuallynotqualify for other FLSA exemptions) the sales employee is not exempt and is entitled to overtime on top of commissions.
For help determining whether your sales force is exempt, or for more information on this topic, please contact a member of our Employment Law Group.
Can you deduct from an Employee’s Pay for a Snow Day?
This winter’s polar vortex and its seemingly unending supply of snow and cold raise the question of how to pay exempt and non-exempt employees when an office closes due to inclement weather, and whether deductions from pay for those closures are permitted.
Can you deduct when the office is closed due to weather?
When an employer is forced to close its business for a full day due to weather conditions, the federal Fair Labor Standards Act (“FLSA”) does not require that the employer pay non-exempt employees for that day, even if they were scheduled to work, since the employees are unable to provide any work for that day.
The employer may not, however, take a deduction from an exempt employee’s salary for an inclement weather closure without risking the loss of the employee’s exempt status. (N.B., though, that if the closure lasts for one week or more, then the employer does not need to pay the exempt employees for that week).
Can you deduct when the office is partially closed due to weather?
Although federal law does not require that employers pay non-exempt workers during a partial closure, in some circumstances Massachusetts law may. If a Massachusetts non-exempt employee reports to work but there is no work to be performed, or there is less work than the employee was scheduled to perform, the employee is entitled to “reporting pay” of at least three hours pay at the minimum wage. For example, if the office is closed but an employee wasn’t aware of the closure and reports to work, or if the office closes early because of inclement weather, then a Massachusetts non-exempt employee is entitled to reporting pay.
If the employer’s office is closed for only part of the day due to inclement weather, the employer cannot make a deduction from an exempt employee’s salary without losing the employee’s exemption.
Can you deduct when the office is open but the employee is absent due to weather?
The rules shift slightly when the employer remains open for business but an exempt employee is unable to make it into work due to inclement weather.
Nothing changes in this situation for a non-exempt employee; a non-exempt employee does not need be paid for hours not worked, and so an employer may make a deduction for a weather-related absence.
However, the usual rule that an employer cannot deduct from an exempt employee’s wages without risking the loss of the employee’s exemption changes in this situation. The U.S. Department of Labor (“DOL”) has advised that when an office is open, but an exempt employee is absent due to inclement weather, the Department of Labor will treat the absence as one for “personal reasons” and the employer may deduct that day’s wages from the employee’s salary without losing the employee’s exemption.
Note, however, that this loophole only applies if the exempt employee takes the entire day off for weather-related reasons. An exempt employee who chooses to leave an hour or two early to get a jump on weather-related traffic should not have a deduction taken – to do so would risk the loss of the exemption.
For more information on how to pay exempt and non-exempt employees when an office closes due to inclement weather, please contact a member of the Employment Law Group.
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.
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