The Cost of Doing Business Just Went Up (Again) – The DOL Proposes New Overtime Pay Regulations

“Money can’t buy you happiness, but it can buy you a yacht big enough to pull up right alongside it.”
 
– David Lee Roth (Lead Singer – Van Halen)

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The U.S. Department of Labor (“DOL”) just released proposed rules that will significantly increase the number of employees entitled to receive overtime pay under the Fair Labor Standards Act (“FLSA”). The highly anticipated changes will make an estimated 5 million currently “exempt” employees eligible for overtime pay for all hours worked over 40 in a workweek.

The major changes relate to the amount of salary required for the “executive, administrative, and professional” exemptions, and the amount of total annual pay required for the “highly compensated employee” exemption.

The proposed rule for the executive, administrative, and professional exemptions more than doubles the minimum salary level from its current level of $455 per week ($23,660 annualized) to approximately $921 per week ($47,892 annualized) in 2015, and $970 per week ($50,440 annualized) in 2016. The DOL has proposed automatically updating this salary amount so that it will increase without additional rulemaking.

The proposed rule also raises the total annual compensation required to qualify for the highly-compensated employee exemption from the $100,000 to at least $122,148. Like the base salary requirement, the DOL has also proposed updating the total annual compensation amount for this exemption so that it will increase without additional rulemaking.

Many stakeholders expected the DOL to propose changes to the “duties test” applicable to the executive, administrative, and professional exemptions. The DOL did not propose specific changes to any of the duties tests, but rather, solicited public comments on them, as well as on the proposed salary levels.

As the changes are “proposed,” they do not currently have the force of law.  They could also be modified after the public “comment period” and further DOL review.  When the final regulations are issued they will likely not take effect for several months after publication. These administrative steps will likely push the effective date of the legally binding “final” regulations into 2016.

In the interim, employers would be well served  to revisit their current “salaried exempt” classifications, as they will have some important decisons to make, including: (1) whether to increase certain job classifications’ salaries to meet the new salary thresholds; (2) whether to convert certain salaried employees to hourly non-exempt and track hours worked; (3) when to implement any changes; and (4) figuring out how to pay for the increased labor costs.

 

Four Recent HR & Employment Law Developments

As those working in human resources and my fellow employment lawyers can attest, the last few years have given us constant change.  New employment laws, new labor regulations, federal agencies aggressively enforcing both, and significant cases being issued almost daily make it tough for even the most seasoned “HR Genius” to keep on top of all of the developments.  I try to lighten the load through this Blog, but like you, only have so many hours in the day.

So,  this week I am going to lean on my management-side employment law colleagues at Michael Best & Friedrich.  Below are just a sampling of the recent articles and “client alerts” they have authored recently:

1.  Wisconsin just enacted its “Right-To-Work” Law.  What does this mean for employers in Wisconsin? Click here.

2.  The Department of Labor just issued its Final Rule revising and expanding the definition of “spouse” to include those from same sex marriages.  For more details, click here.

3.  Utah just enacted a new law prohibiting discrimination against employees on the basis of their sexual orientation and “gender identity.”  If you have operations there, then you should  click here.

4.  Do you know what constitutes a valid employment claim “release,” and when you can lawfully “require” employees to sign them?  For this information and more, click here.

Hopefully you will find these helpful in your quest to becoming (or remaining) an “HR Genius.”

Mitchell W. Quick, Attorney/Partner
Michael Best & Friedrich LLP
Suite 3300
100 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
414.225.2755 (direct)
414.277.0656 (fax)
mwquick@michaelbest.com
http://www.linkedin.com/in/mitchquick
Twitter: @HRGeniusBar
@wagelaws

 

 

 

Wisconsin Modifies Wage Law’s Recordkeeping Requirements

Wisconsin employers recently received some good news from the Legislature: effective April 17, 2014 employers are no longer required to keep payroll records tracking the “hours worked” of their salaried employees who are “exempt” from Wisconsin’s overtime compensation laws.  This change brings Wisconsin’s payroll recordkeeping requirements in line with those of the Federal Fair Labor Standards Act (“FLSA”). Wisconsin companies no longer have to keep precise daily or weekly time records for their salaried exempt professional, executive (i.e. managerial and supervisory), administrative, and computer professional employees.  See Wis. Stats. §104.09.

Employers who previously struggled complying with Wisconsin’s recordkeeping obligations will obviously welcome the lowered administrative burden. But this lower burden may come at a higher price – what if an employee files an overtime pay claim in court or at the Department of Labor (“DOL”) alleging that the employer “misclassified” him/her as overtime exempt?

Often in these cases an employee claims to have worked substantial amounts of overtime hours each week, and offers as “evidence”: (1) a self-serving log or spreadsheet showing a huge number of overtime hours worked; and/or (2) self-serving testimony that he/she worked all hours of the day and night, including weekends. Employers who do not have time cards to refute the claimed amount of overtime hours worked are then forced to rely on anecdotal evidence such as: (1) observations of when the employee “typically” arrived at and/or left work; or (2)  the employee’s computer “log on” and “log off” times.  The DOL or jury then decides how many overtime hours the employee worked each week.

Given this risk, employers would be well served to re-examine whether the employees they classify as “salaried exempt” truly satisfy all of an applicable exemption’s requirements.

Mitchell W. Quick, Attorney/Partner
Michael Best & Friedrich LLP
Suite 3300
100 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
414.225.2755 (direct)
414.277.0656 (fax)
mwquick@michaelbest.com
http://www.linkedin.com/in/mitchquick
 Twitter: @HRGeniusBar
 @wagelaws

 

Better Call Saul

“You were smart to call me. Now you just sit back, relax and let a professional take over.”             Saul Goodman – Breaking Bad

Saul Goodman, the street smart, delightfully sleazy criminal defense attorney from the ground breaking television drama, Breaking Bad, had a simple but memorable marketing slogan to attract clients – “Better Call Saul.”  Unfortunately for most of his clients (but good for Saul), they only called after they had gotten into trouble with the law.  It then became all about damage control.

But one client, Walter White, the cancer stricken high school science teacher turned virtuoso meth lab cook, often did call and consult with Saul before he took certain actions that he knew could potentially result in serious legal consequences.  Perhaps it stemmed from his scientific background, but Walter would often discuss options with their potential outcomes and associated legal risks with Saul before ultimately settling on a course of action.

Human resources managers would be well served to follow Mr. White’s lead in one limited respect.  (NO, I repeat, NO, not cook meth nor plan criminal acts).   Companies can reduce the possibility of significant monetary damages and legal expenses from employment law claims by investing a little time and money in consulting with their legal counsel about difficult employment situations before litigation is commenced. Below are just a few of scenarios where the “call to Saul” (or whoever your employment lawyer is) should be made:

  • An Employee (Or His Attorney) Makes A Personnel File Request.  The employee is not asking for her personnel file to check for spelling errors, or to make sure her emergency contact information has been updated.  The employee wants ammo, or better yet, the actual “smoking gun.”  The request is the legal equivalent of a warning shot across the bow.  An employment attorney can advise on how to respond to the request, including what not to provide, as well as establishing parameters to ensure the preservation of files and emails for future litigation.
  • The Employer Wants To Terminate An Employee Who Falls Into One Or More Protected Classifications.  As there are almost 100,000 discrimination charges filed with the Equal Employment Opportunity Commission (“EEOC”) every year, a company who wishes to terminate an employee who falls into a “protected classification” such as age, race, gender or disability faces potential liability.  As literally every employee falls into some protected classification, the company should make sure that it has all of its legal ducks in a row before termination.  Talk through the facts, evidence and reasons for the termination with employment counsel, paying special attention to how the company has disciplined similarly situated employees not in the same protected classification(s).
  • The Employee Mentions The “L Word”.  Frequently employees claim that they are contacting a “lawyer,” or intend to file a “lawsuit.”  Although many times this is simply bluster, sometimes they actually follow through.  Regardless, the simple mention of these words greatly increases the likelihood of the employee filing a retaliation claim in the event the company takes an adverse employment action against him.  Any discipline or discharge that comes shortly after utterance of an “L word” will likely trigger the filing of a retaliation claim.  Bottom line – when an employee starts talking about his lawyer, you should probably call yours.
  • The Government Comes Knocking.  If you receive a letter, phone call or surprise visit from a government investigator representing OSHA, the Department of Labor, the EEOC, or OFCCP, contact your employment lawyer immediately.  Often, steps can be taken to narrow down the government’s burdensome requests for information, and secure adequate time to gather relevant information in order to prepare a coherent response.

Just like an ounce of prevention can be worth a pound of cure, a billable hour spent on one of the tricky employment situations described above could avoid potentially costly legal consequences.  Take a page out of Walter White’s (cook)book and make the call.

Mitchell W. Quick,
Attorney/Partner – Michael Best & Friedrich LLP
Suite 3300, 100 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202
414.225.2755 (direct)
414.277.0656 (fax)
mwquick@michaelbest.com
http://www.linkedin.com/in/mitchquick
Twitter@HRGeniusBar @wagelaws