On June 27, 2017, U.S. Secretary of Labor Alexander Acosta announced that the U.S. Department of Labor (USDOL) will reinstate the issuance of opinion letters. You might be wondering why this decision is important to businesses. The answer is two-fold: (1) opinion letters provide interpretation of the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) so that employers understand their rights and responsibilities under the law; and (2) opinion letters may be relied upon as a good faith defense to wage claims arising under the FLSA.
The US Department of Labor (“DOL”) announced today that Secretary of Labor Alexander Acosta has withdrawn the DOL’s 2015 and 2016 informal guidance on joint employment and independent contractors. We previously reported on these issues when the guidance was published under the prior Secretary. For more information on the guidance please refer to our posts dated January 28, 2016 and September 29, 2015. The press release cautioned that:
Removal of the administrator interpretations does not change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act, as reflected in the department’s long-standing regulations and case law. The department will continue to fully and fairly enforce all laws within its jurisdiction, including the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.
What does this mean for employers? Effectively, not a great deal. The Fair Labor Standards Act (“FLSA”) and the Internal Revenue Code provide fairly clear guidance on the independent contractor tests, and other federal agencies such as the National Labor Relations Board (“NLRB”) and the Equal Employment Opportunity Commission (“EEOC”) have spoken to the issue of joint employment.
More importantly, however, many states, including ALL of the New England states, have very restrictive independent contractor laws. Caution should continue to prevail when supplementing one’s workforce with contractors or consults. Similarly, those businesses which utilize temporary workers from staffing companies or share employees with other related companies should continue to assume that those workers will be considered the joint employees of all who direct their performance or benefit from the services.
It is unknown whether the DOL intends to issue any new guidance on either of these topics.
Typically with an incoming administration there is a waiting period of sorts before changes in pending and certainly existing regulations kick in. The current administration, however, appears to be working at an accelerated pace toward upending the status quo. So, it appears time for a quick check-in on where we are and what to expect.
On Inauguration day, White House Chief of Staff Reince Priebus Jan. 20 instructed federal agencies to freeze all pending regulations, a move that seems to include a number of labor and employment initiatives that were in the works under the Obama administration.
This type of freeze is not unusual when a new president takes office. An action of this nature does not necessarily mean that significant changes are coming, but given candidate Trump’s campaign promise to roll back regulation on business, we can at least predict that the administration will be in no rush to move on the pending matters. Continue Reading Two Weeks Into the Trump Administration: Where are we with Labor and Employment Regulations?
Annually, the New Hampshire Department of Labor issues a list of the top ten most frequent violations it sees in audits and claims filed before it. The list doesn’t change dramatically from year to year, but violations move up and down the list giving us a clue as to where the DOL may focus its enforcement efforts in 2017. So here we go….
- Failure to Secure and Maintain Worker’s Compensation Coverage for Misclassified Workers. The issue of employee misclassification has been a focus of both state and federal agencies for the past ten years. We have written many blog posts directing the attention of business to the issue of independent contractors and how difficult it is to meet the criteria set out by the various agencies who address it. This year, misclassifying workers and failing to provide worker’s compensation coverage for them is at the top of the list.
- Failure to Pay All Wages Due for Hours Worked. Employers must be very cognizant of making sure that their employees properly record their hours worked and that employees are paid for all time. Approximations, auto-deductions, and flat time entries are insufficient. Non-exempt employees must record, time in, out for lunch, back in and out for the day as well as time spent answering calls at night, stopping at the post office on the way home and checking email on weekends.
- Failure to Have a Written Safety Plan, Joint Loss Management Committee and Safety Summary Form on File. All employers with 15 or more employees must comply strictly with RSA 281-A:64 and the related regulations.
- Employing Illegal Aliens (Undocumented Workers). Although this issue is typically within the purview of the federal government, DOL inspectors will review I-9’s and supporting documentation during audits and cite employers for missing or incomplete forms.
- Failure to keep accurate records of all hours worked. Similar to number 2 above, the DOL frequently cites employers for failing to maintain accurate documentation of time work and then to follow the legal requirements for paying employees. Non-exempt employees are entitled to a 30 minute unpaid meal break after five continuous hours of work, and employers should make sure that this time is accurately recorded. Similarly, employers may not dock employee pay for breaks of less than 20 minutes.
- Failure to Provide Written Notice to Employees of Their Wage Rate, Pay Period, Pay Day and Notice of Fringe Benefits At the Time of Hire and At the Time of Any Change. With careful education, this one has dropped down the list, but is still a frequent issue, especially for businesses which come from out of state. All of this information must be provided to the employee in writing, and the document must be signed by the employee and kept on file. This is a very NH specific requirement. A good way to handle this is to provide an offer letter which the employee needs to sign or at least a pay status document which can be updated with changes such as annual raises.
- Youth Employment Violations. The DOL is not forgiving of youth employment violations. Employers must make sure proper parental consent certificates or letters should be on file before a minor begins work. There are also very specific rules about hours and days of work and restrictions on dangerous occupations with which businesses should become familiar if they are going to hire younger workers.
- Failure to Pay Two Hours Minimum Pay on Any Day an Employee Reports to Work at the Request of the Employer. This is sometimes referred to as “show up pay” or the
“snow day” or “not enough work day” rule. If an employee is scheduled for work and comes in, he or she must be paid a minimum of two hours even if the business closes down for the day or sends the employee home due to lack of work. The employer can certainly require the employee to stay and work for the two hours.
- Improper deductions from wages. Not following list of approved deductions. New Hampshire has a very specific list of what deductions employers can make from wages and very clear rules on how and when those deductions may be taken. Employers should carefully review RSA 275:48 and the attendant regulation. Although the approved list has been expanded, the deductions must still be voluntary and in most cases authorized in writing by the employee.
- Failure to Pay Minimum Wage for All Hours Worked. It is hard for most to imagine that this is still an issue. New Hampshire follows the federal minimum wage ($7.25) which is lower than the minimum wage of all of our neighboring states. The difficulty typically comes into play in very specific scenarios such as commissioned inside sales employees, tipped employees and others who are paid at special rates.
This time of year is a good time to do some risk avoidance planning. It might be a good time to schedule a wage and hour audit or self-audit for January or February, once the dust settles on the New Year celebrations.