Calculation of “regular rate” of pay is something which has long given employers fits, and the US Department of Labor (“DOL”) has taken a step which it hopes will clarify the definition, something which hasn’t been done in 50 years.  On December 12, 2019 the Final Rule interpreting “regular rate” was announced.

Under the Fair Labor Standards Act (“FLSA”) employers are required to pay non-exempt workers time and one half the “regular rate” for every hour worked over 40.  According to the regulations, the “regular rate” includes all remuneration paid to the employee except for certain payments specifically excluded under the FLSA.  This would include wages paid by the hour, by salary, or by piecework and most bonuses, commissions, incentive pay, shift differentials, and on-call pay. Excluded payments, by definition, are premium payments for certain work (e.g. Sunday premium pay), discretionary bonuses, holiday gifts, and vacation pay.

Continue Reading USDOL Issues Guidance on “Regular Rate” of Pay

It’s that time of year HR Pros!  Holiday parties, too much food and drink, devolving into that awful HR role of party planner and gift giver, and a list a mile long of things you meant to get to before year end which, somehow, just didn’t get done.  Here’s an idea.  Let’s not think about what we didn’t do, but focus instead on a real plan for what we realistically can accomplish in 2020, the start of a brand new decade!  I’m not talking about strategic planning or high level forecasting for your business, which is of course critical to success.  I’m talking about simple things which you know you should do (or we employment attorneys have been telling you  to do); things you can do yourself or delegate. Here’s my list of 2020 to-do’s!

Continue Reading Happy Holidays, New Year’s Resolutions and All That

On September 5, 2019, the Massachusetts Department of Family and Medical Leave (“DFML”) issued new guidance on when employers must count 1099-MISC workers as part of their workforce for purposes of the Paid Family and Medical Leave (“PFML”) program. In its press release announcing the new guidance, the DFML stated that the guidance was issued after meetings with representatives from hundreds of businesses across Massachusetts during which the businesses consistently sought clarification on whether they are required to collect contributions from, and report on, 1099-MISC workers.

Continue Reading Massachusetts Clarifies When 1099-MISC Workers Should be Counted for Purposes of the Paid Family and Medical Leave Act Program

Online Filing System Sample Form
Component 2 EEO-1 Online Filing System Sample Form

After numerous delays and revisions the deadline for filing enhanced EEO-1 reports is now just three weeks away, due to be filed with the Equal Employment Opportunity Commission (“EEOC”) by September 30.  Component 1 Data should already have been filed…by May 31. The Component 1 data required affected employers to provide a list of employees organized by job category, race, ethnicity, and gender.

Continue Reading Are You Prepared to do Your EEO-1 Reporting?

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Maura Healey – Massachusetts Attorney General

Massachusetts Attorney General Maura Healey released her fourth annual Labor Day Report this week.  As in past years, the report summarizes the AGO’s Fair Labor Division’s enforcement activities over the past year, and provides insight into the office’s priorities and initiatives in the enforcement of the Commonwealth’s wage and hour laws.

Continue Reading Mass. AG’s Labor Day Report Gives Insight Into Wage and Hour Enforcement Priorities

Following both Massachusetts and Maine, New Hampshire will prohibit non-compete agreements for employees who earn an hourly rate that is equal to or lesser than double the federal minimum wage.  The federal minimum wage, which NH follows, is $7.25 per hour.  This means that employers cannot require employees who make $14.50 per hour or less (or just over $30,000 or less) to sign a non-compete agreement as a condition of employment.

NH’s new law defines a noncompete agreement to mean “an agreement between an employer and a low-wage employee that restricts such low-wage employee from performing:

(1)  Work for another employer for a specified period of time;

(2)  Work in a specified geographical area; or

(3)  Work for another employer that is similar to such low-wage employee’s work for the employer who is a party to the agreement.”

The new restriction applies to noncompete agreements as defined under this section, not to other types of employment agreements such as nonsolicitation, nondisclosure, trade secret, intellectual property, or confidentiality agreements.   And under the statute, a “noncompete agreement entered into between an employer and a low-wage employee shall be void and unenforceable.”

Governor Sununu signed S.B. 197 into law in July.  It takes effect on September 8, 2019 and will be cited as RSA 275:70-a.

NH had previously enacted legislation restricting use of noncompete agreements.  Under RSA 275:70, NH employers must give a copy of a required noncompete agreement to a potential employee or applicant prior to the applicant’s acceptance of an offer of employment.

A collective sigh of relief could be heard across the Commonwealth yesterday as anxious business owners, insurers, and employment lawyers heard the news that Massachusetts government leaders had agreed to a three-month delay of the implementation of the first-in-the-nation Paid Family and Medical Leave law.

With a July 1 deadline to begin making payroll deductions looming, many questions remained about the law.  Are the deductions pre-tax or post-tax?  (We still don’t know.)  Which employees and independent contractors are covered?  (It’s complicated.)  Should employers seek an exemption by adopting a private plan?  (Maybe?)  With the deadline now moved to October 1, legislators and employers have some much-needed breathing room to answer these and other questions about the law.

Continue Reading Massachusetts Leaders Agree to Three-Month Delay of Paid Family and Medical Leave Law

The Massachusetts Department of Family and Medical Leave has issued proposed regulations which are scheduled to go into effect July 1, 2019.

Although some of the proposed regulations may change – and there is a push on by certain business groups to have the start date pushed to October – businesses are well advised to begin learning the ins and outs of the complex new law.  Click the link below to download a summary of the major provisions of the law as they are presently formulated.

Department of Family and Medical Leave Requirements

The SJC, Massachusetts’ highest court, issued its long awaited decision in Sullivan v. Sleepy’s LLC,  SJC-12542 on May 8, 2019. The case should be of concern to businesses which pay individuals fully or primarily by commission, especially in the retail context or in automobile sales where the ruling departs sharply from federal law.

Continue Reading SJC Rules Massachusetts Retail and Inside Salespersons Entitled to Overtime and Sunday Premium Pay

In an opinion letter dated April 29, 2019, the U.S. Department of Labor (DOL) explained that some service providers working for a virtual marketplace company (VMC) are independent contractors under the Fair Labor Standards Act (FLSA).   This opinion letter identifies the test the DOL is expected to use when considering the classification of workers in this growing gig-economy under federal law.

Service provider workers are also referred to as “gig,” “on-demand,” or “sharing-economy” workers.  A gig economy is a marketplace where these workers take temporary positions for short-term engagements.  Often using an App-based platform, the market involves these on-demand workers, the consumers who need a specific good or service, and technology platform companies or VCMs that connect the workers to the consumers.  Examples of some VCMs are Etsy, Airbnb, eBay, and TaskRabbit.

The FLSA applies to “employees.”  While the definition of employee — any individual whom an employer suffers, permits, or otherwise employs to work — is very broad, not all workers are employees.  Some workers may be independent contractors and therefore outside of any FLSA requirements.  In other words, the legal protections of minimum wage and overtime pay are not afforded to independent contractors.  The recent growth in popularity of individuals entering into the gig-economy has put center-stage the question as to whether these new gig workers are employees or independent contractors.  The DOL addressed this question through its renewed opinion letter process.

In its opinion letter FLSA 2019-6, the DOL redacted the identify of the VCM seeking the guidance.  And the DOL was noticeably careful to point out that it was considering the facts specific to the situation at hand.  What we do know is that the VMC here helps consumers connect with service providers through a software platform.  “The platform also allows its service providers to communicate with consumers—including through mobile app messaging or masked telephone calls—to exchange details about the requested service, including adjustments to the scope, price, or time.”  Opportunity for repeat business is also provided.  There is no interview of service providers or required training by the VCM.  Onboarding is online and service providers can provide work to customers once the account is activated without any requirement for reviewing materials or physically reporting to any office.  The VCM receives no services from the service providers.

In determining the classification of these particular workers, the DOL used its Economic-Realities Test.  The six factors under that test include:

  1. The nature and degree of the potential employer’s control;
  2. The permanency of the worker’s relationship with the hiring business;
  3. The amount of the worker’s investment in the facilities, equipment or helpers;
  4. The amount of skill, initiative, judgment, or foresight required for the worker’s services;
  5. The worker’s opportunities for profit or loss; and
  6. The extent of integration of the worker’s services into the potential employer’s business.

The DOL went through and analyzed each of the factors above.  Prior to doing so, it noted that other factors may also be relevant to the analysis and that “appropriate weight” for the listed factors would depend on the circumstances.  The key factor came down to how much “control” the VCM had over the service provider worker in doing the job.  In the end, the DOL found that the service providers who use this VCM are independent contractors.

With a growing on-demand market of workers, getting some direction from the DOL as to the legal standard it will use in reviewing these classification issues is helpful.  These opinion letters, however, are not precedent for courts, although courts may defer to the DOL’s interpretation.  More importantly, this is limited to federal law.  Many states have their own tests for determining independent contractor status and under those state tests the same facts may lead to a different result.  For example, Massachusetts follows a more stringent test, making it difficult to classify workers other than as employees.  In New Hampshire, the NHDOL’s test for classification changed in 2012 to a seven-part test.  Employers wanting to engage workers as independent contractors should be careful of this classification minefield and seek legal assistance.