Yesterday, the U.S. Department of Labor released its long-awaited updated overtime rule proposal. Under the proposed rule, the minimum salary level at which an employee can be exempted from federal overtime and minimum wage requirements (assuming other criteria are met) would increase from $455 per week ($23,660 annually) to $679 per week ($35,308 annually). If enacted, more than a million more workers would become eligible for overtime under the proposed rule.
During the month of September, the Department of Labor will be holding a series of “Listening Sessions” throughout the country in order to hear public comments about planned changes to the overtime rules under the Fair Labor Standards Act.
On this blog, we have followed the long and winding path of the years-long efforts to update the FLSA’s overtime rules (see our posts on the subject here, here, here, here, here, here, here, here, here, and here). To recap, in 2014, the Obama Administration set out to overhaul the overtime rules, and, after nearly two years, issued a set of final regulations, which were to have gone into effect on December 1, 2016. Among other things, these regulations would have increased the minimum salary threshold for exempt workers from $455 per week to $913. This change would have dramatically increased the number of workers who would be classified as non-exempt, and therefore eligible to earn overtime pay. However, after President Trump’s election, and just days before the regulations were to take effect, a federal court issued an injunction halting the changes. After almost a year of litigation and uncertainty, the Trump Administration finally abandoned the Obama Administration’s regulations and went back to the drawing board and started the entire rulemaking process over from scratch.
A bill just passed by the Massachusetts House and Senate, with uncharacteristic speed and bipartisan support, has been touted as a “grand bargain,” meant to circumvent political wrangling over several contentious ballot questions slated to be put before the voters this fall. The wide-ranging bill establishes paid family and medical leave, raises the minimum wage, and eliminates premium Sunday pay, among other things. The bill now goes to Governor Baker, who is expected to sign the measure into law. Continue Reading Massachusetts Legislators’ “Grand Bargain” Establishes Paid Medical Leave and Increases Minimum Wage
Back in September, we reported that the Trump Administration had abandoned the appeal of an injunction blocking new overtime rules from going into effect. That action effectively killed the Obama Administration’s effort to update and expand the overtime rule by raising the “salary level test” for executive, administrative, and professional workers from $455 per week to $913 per week. At the same time, the Trump Administration signaled that a scaled-down update of the overtime rule was on the way … eventually.
The U.S. Department of Labor recently initiated a nationwide pilot program referred to as the Payroll Audit Independent Determination (“PAID”) program. The stated purpose of the program is to facilitate resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”). The expectation is that FLSA claims will resolve more expeditiously and without litigation thus improving employer compliance with wage and hour laws and getting back wages to employees more quickly.
In a brief court filing on Tuesday, the Trump Administration dropped its appeal of the injunction preventing the Obama Administration’s new overtime rule from going into effect.
The new overtime rule, which was supposed to have gone into effect last December, would have raised the “salary level test” for executive, administrative, and professional workers from $455 per week to $913 per week. Continue Reading Overtime Rule Update: Trump Administration Drops Its Appeal
Yesterday, Judge Amos Mazzant, a federal judge based in Texas, issued an order invalidating the Obama-era overtime rule that would have made more than 4 million additional workers eligible to earn overtime.
A few weeks ago, the Department of Labor filed a brief with the Fifth Circuit Court of Appeals in which it backed away from the $913 per week salary level test set in the 2016 amendments to the FLSA overtime rules. In that brief, the DOL stated that it would soon publish a request for information seeking public input to be used by the DOL in drafting a new proposed overtime rule.
In Tyson Foods, Inc. v. Bouaphakeo, the U.S. Supreme Court held that statistical or representative evidence could be used by a class of employees to prove liability for an employer’s failure to pay them for donning and doffing protective gear in violation of the Fair Labor Standards Act (FLSA). In this class action lawsuit, workers at a meat-processing plant alleged that Tyson failed to give them credit for time spent donning and doffing protective gear and walking to and from their production line. The workers were claiming overtime pay as a result of all hours worked over 40 hours a week when adding this additional time.
A jury found for the workers and awarded the class about $2.9 million in unpaid wages. At trial, the court allowed the employees to use representative or an average sample of time it took workers in donning and doffing their gear rather than requiring each class member to present individualized proof of time spent. Plaintiffs’ expert testified at trial that he determined the average time it took 53 of the 3,344 workers in the class to do these tasks and concluded that an average of 18 minutes a day needed to be added to weekly hours worked for one department and 21.25 minutes a day for another department. Plaintiffs claimed it could be presumed that all class members were identical to the statistical average and that the workers were owed overtime for all time over 40 hours when adding the representative time to the weekly time worked.
Tyson argued that the trial court erred because the time per employee to perform those tasks was so different that they cannot rely on averages and the class should not have been certified under Federal Rule of Civil Procedure 23(b)(3). The U.S. Supreme Court disagreed and found that a categorical exclusion of the use of samples made little sense. It held that it would allow statistical samples to establish liability on a case by case basis — depending on the purpose for which the evidence was being introduced and on the elements of the underlying action. In reaching this decision, the Supreme Court highlighted the employer’s violation of its duty to maintain records of this time. Because there was a gap in employer required records of work-time, each employee could have relied on the average sample of time to prove liability and therefore the representative evidence could be used on a class-wide basis.
The Supreme Court explained that its holding was consistent with its 2011 decision in Wal-Mart Stores, Inc. v. Dukes as that case involved 1.5 million employees who were not similarly situated because they were at different stores and under different policies. The class in Dukes failed to meet even Rule 23(a)’s basic requirement that class members share a common question of fact or law. On the contrary, in Tyson, the employees worked out of the same facility, did similar work, and were under the same policies for pay.
While refusing to establish a general rule governing the use of such evidence, the Supreme Court widened the potential liability for employers in defending class action suits by allowing representative samples. This is particularly the case where there are record keeping violations by the employer in the wage and hour area. Employers should make sure that they review their practices and procedures and confirm that they are maintaining appropriate records of time for all employees.
The wait is over; well sort of. In March 2014 President Obama directed the US Department of Labor (“DOL”) to review the so-called “White Collar” exemptions under the Fair Labor Standards Act (“FLSA”) to determine whether they were in need of revision having last been updated in 2004. Today the DOL announced a new proposed rule regarding the salary basis which applies to the executive, administrative and professional tests which employees must meet in order to be exempt from the minimum wage and overtime requirements of the FLSA. This exception to overtime eligibility was originally meant for certain highly-compensated or white collar workers.
An employee’s salary level was typically viewed as the best test of exempt status. However, the current minimum salary level required for the exemption is $455 per week or $23,660.00 per year. If an employee meets that test, then his or her duties are evaluated to determine whether the job itself is of the type which should be considered exempt. Also, under the current rule, certain highly compensated employees, those making a salary of $100,000.00 per year or more, are automatically exempt.
The proposed revision would increase the salary threshhold to $921 per week or $47,892.00 per year. The DOL also proposes to raise the threshhold for a highly compensated employee to $122,148.00 per year. The department estimates that these changes would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation. Finally, the proposed rule would automatically update the standard salary and compensation levels annually “to make sure that they maintain their effectiveness,” either by maintaining levels at a fixed percentile of earnings or by updating amounts based on changes to the CPI-U.
What the DOL did NOT do is make specific proposals to modify the standard duties tests, something which was expected. Rather, the department is seeking comments on whether the tests are working as intended to screen out individuals who are not appropriately classified as executive, administrative or professional employees.
So what happens next? As soon as the proposed rules are published in the Federal Register, a comment period of sixty days begins. Interested parties may submit comments electronically through the Federal eRulemaking Portal at http://www.regulations.gov. Comments by mail should be addressed to Mary Ziegler, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue, N.W., Washington, D.C. 20210. It is expected that the DOL will receive comments from organized labor as well as any number of business and trade associations. Industries expected to be most affected by the proposed changes include retail and hospitality where managers often work long hours for low pay with many non-management responsibilities. Also likely to be impacted are businesses which employ individuals who might otherwise qualify as executive, administrative or professional based on their education and duties on a part time basis for reduced pay. In the rare week that such an employee works more than 40 hours, he or she could receive overtime pay at a rich hourly rate.