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Avoid Wage & Hour Mistakes in 2017

A comprehensive guide on changes at DOL, important wage and hour issues, and steps employers can take to protect themselves from legal pitfalls.

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Avoid Wage & Hour Mistakes in 2017

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  1. Do Not Repeat the Same Wage & Hour Mistakes in 2017 Janet Goldberg McEnery, Esq. Stearns Weaver Miller (813) 222-5037 jmcenery@stearnsweaver.com August 30, 2017

  2. Background: What we will cover! • Changes at DOL • Hot-button wage and hour issues that continue to haunt employers • What should employers be doing to protect themselves

  3. 1. New Overtime Exemption Regulations • What are they? • In May 2016, DOL announced a change to the overtime exemption regulations • Increased the annual salary threshold for exempt employees from $23,660 to $47,476

  4. Increased the annual salary threshold for highly compensated exempt employees from $100,000 to $134,004 • Employers would have been allowed to use non-discretionary bonuses to satisfy up to 10% of the salary threshold • New regulations were set to take effect on December 1, 2016

  5. What happened? • On November 22, 2016, a U.S. District Court judge in Texas granted an emergency motion for a preliminary injunction, prohibiting the DOL from implementing and enforcing the final new rule on overtime exemptions • Nevada v. United States Department of Labor, 2016 WL 6879615 (E.D. Tex. 2016)

  6. DOL first appealed, but then filed a motion to uphold the injunction while clarifying that it has the power to base overtime eligibility on salary levels • Employers are in legal limbo, or are they?

  7. Reaction from State and Local Authorities • Several states have looked at raising the salary thresholds for the exemptions • A number of states and even local governmental units have contemplated raising their minimum wage

  8. DC, and several local jurisdictions in California, Oregon and Arizona raised their minimum wage (e.g. $15.20 in one California town). Illinois started looking at increasing its minimum wage to $15 an hour by 2022. • Maine enacted changes to the tip credit rules, effective 2018. Employers in Maine can no longer deduct any amount from credit card tips, including service fees (attributable to the tip)

  9. Ohio’s law banning local jurisdictions from establishing a minimum wage different from state law was declared unconstitutional, but on a technicality Pitting cities against state legislatures. St. Louis recently enacted a $10 an hour minimum wage ordinance. Missouri then enacted a state law preempting a city’s right to establish its own minimum wage law

  10. What’s next from DOL? • On June 27, 2017, DOL sent a request for information to the Office of Information and Regulatory Affairs – signaling new rule making • Local DOL officials confirmed that for the present, they are under orders not to enforce the new minimum salary threshold for exemptions

  11. DOL seems to be moving toward proposing multiple salary levels for white-collar exemptions through proposed rule‑making • Employing a cost-of-living salary test could address a number of concerns raised by employers • But will it work? Some employees work in multiple locations even within a single work week

  12. Great idea – difficult to implement • The deadline to weigh in on those issues is September 25, 2017 • Some anticipate seeing more “cooperative efforts” by DOL to seek compliance

  13. New Jersey Case re: Private Enforcement of the New Overtime Regulations • Alvarez v. Chipotle Mexican Grill, Inc., Case No. 2:17-cv-04095 (D.N.J. 2017) • A group of Chipotle employees filed a lawsuit against Chipotle on June 7, 2017, in the U.S. Dist. Ct. of New Jersey

  14. In a complaint that raises class allegations, Plaintiffs allege that a judge blocked the DOL from enforcing the overtime rule, but did not block private plaintiffs from suing under that regulation

  15. The named Plaintiff argued that Chipotle began paying overtime to manager trainees in anticipation of the overtime rule taking effect in November 2016, but then stopped paying overtime to the manager trainees when the injunction was announced

  16. Chipotle filed its answer and affirmative defenses on July 26, 2017 • Case could have a far-reaching impact on employers

  17. 2. Even Without The New DOL Regulations, FLSA Claims Continue To Be On The Rise 17

  18. 3. Trends a. Collective & Class Actions • Based on uniform practice impacting large group of employees • Exempt Classifications • Deductions • Improper Tip Credit • Off the Clock Work • Collective Action = Opt-In • Class Action = Opt-Out 18

  19. Arbitration & Class Action Waivers • What About Jury Trial Waivers? 19

  20. Florida Minimum Wage Act Claims • Minimum Wage subject to annual increases • $8.10/hour as of January 1, 2017 • FL one of 29 states with MW above federal MW • No Overtime Component • Interpreted consistent with FLSA • Must post Florida Minimum Wage Poster andFLSA poster • www.floridajobs.org • dol.gov/whd/regs/compliance/posters/flsa.htm 20

  21. 5 year limitations period v. 3 year limitations period • Pre-suit Notice Requirement • 15 days to cure • If cured, no entitlement to attorney’s fees • $1,000 fine per willful violation – Attorney General 21

  22. 4. Other Hot Topics in Wage & Hour Law • Overtime pay for mortgage underwriters • McKeen-Chaplin v. Provident Savings Bank FSB, No. 15‑16758, 2017 WL 2855084 (9th Cir. July 5, 2017) • A group of mortgage underwriters filed a putative class action claiming that they were shorted OT • At issue was the “administrative exemption”

  23. Does the employee’s primary duty involve office or non-manual work directly related to the management policies or general business operations of the employer? • Are underwriters producing, or are they assisting in running the business (and making decisions about whether the Bank should take on certain risks)? • Employers bear the burden for any exemption defense

  24. The circuits have split • The lower court found the underwriters were exempt. The appellate court reversed. The question is not whether an employee is essential to the business, but rather whether the employee’s tasks are related to the production side of the business

  25. Human Resources subcontractor to pay $3.4 million in unpaid overtime to misclassified account executives • Zenefits FTW Insurance Services • Zenefits provides payroll and timekeeping software, hiring and benefits services and insurance brokering for small employers • DOL found that the employer misclassified 743 account executives and sales representatives

  26. Market and restaurant will pay $660k in unpaid OT, liquidated damages under FLSA • Iovine Bros Inc., d/b/a Iovine Brothers Produce and Iovine Brothers Bar and Grill Inc., d/b/a Molly Malloy, June 21, 2017 • DOL entered into a stipulation agreement • Note DOL will be issuing press releases on its settlements

  27. Tip Pools • DOL stopped enforcement of Obama-era tip-pooling rule • Tip Credits • Circuit split re: whether the DOL can force employers who pay minimum wage to share tips with employees • Marlow v. New Good Guy, Inc., No. 16-1134, 2017 WL 281887 (10th Cir. June 30, 2017). The FLSA’s tip-credit provision did not require the employer to pay tips to an employee who was paid above the full minimum wage • Nat’l Rest. Ass’n v. Dep’t of Labor, No. 16-920, petition for cert filed, 2017 WL 360483 (U.S. Jan. 19, 2017) • Trejo v. Ryman Hosp. Props., 795 F.3d 442 (4th Cir. 2015)

  28. Eldridge v OS Restaurant Services LLC a/k/a Outback Steakhouse of Florida LLC, MD Fla., May 18, 2017 • 80-20 rule cases

  29. Joint Employers • DOL withdrew its joint employment guidance • Previously, companies became joint employers when they hired or fired, or set wages • During the prior administration, DOL changed that definition. The critical issue then became the level of a worker’s “economic dependence” on the putative joint employer • The expanded definition of joint employment upset the business community. Some said it threatened all franchise arrangements • On June 7, 2017, the DOL withdrew the 2015 Obama-era Guidance

  30. Independent Contractors • DOL also withdrew the independent contractor guidance, issued in January of 2016

  31. 5. Trends – Recordkeeping Issues • Maintaining proper records of hours worked • Default Settings • Edits to Time Records • Inadequate Backup when Electronic Systems Fail • Inconsistent Records

  32. Trends – Recordkeeping Issues • What about Exempt employees? • Records establishing exemption • Time records ??? • Preserving Records • Verification by Employee 32

  33. 6. TRENDS – Compensable Work Time • Rest/Meal Breaks • Breaks of at least 30 minutes with NO WORK – Not Compensable • Short Breaks (5-20 minutes) – Compensable • Training Time • Waiting Time • “Engaged to Wait” vs. “Waiting to be Engaged” 33

  34. Home to Work: Regular – Not Compensable Home to Work: Special Location – Compensable Distance travelled minus normal travel time Travel During Work Hours – Compensable Overnight Travel – Maybe? Pay for work-day hours on work days and non-work-days (Saturday/Sunday) Non-work hours (i.e., - after 5:00 PM) not Compensable 7. Compensable Work Time – Travel 34

  35. Several factors determine whether an employee’s “on-call” time is compensable Required response time Ability to trade on-call shifts Excessive geographical movements Employee’s ability to engage in personal activities Frequency of calls An employee required to remain “on-call” on the Employer’s premises is generally considered compensable 8. Compensable Work Time - On-Call Time 35

  36. 9. Additional Labor Department Changes/Priorities • Agency merger • Priorities • Healthcare • Hotels and restaurants (name brands)

  37. MOU with IRS (Particularly important if the amount exceeds $25k) • Misclassification • Franchisor/eerelationships – DOL states that the intention is to put pressure on franchisors to police it franchisees

  38. DOL also may contact the liquor commission • Locally, DOL is de-emphasizing “vulnerable workers” • DOL is now using forensic accountants to review an employer’s books before agreeing to a payment plan • DOL’s Liquidated Damages Position • Will start issuing opinion letters

  39. QUESTIONS?

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