- U.S. Department of Labor’s Changes Poised to Take Effect in 2024, But Challenges Likely
- Circuit Courts Are Split on FLSA Collective Actions Against Out of State Employers
- Get it Right or Pay the Price: 5 Pro Tips for Classifying Independent Contractors
- Does This Work Rule Prevent the Discussion of Wages? Stericycle and Beyond
- The Michigan Sales Representative Commission Act: A Costly Trap for the Unwary Business
- Artificial Intelligence Could Create Wage and Hour Risks for the Unwary
- Sixth Circuit Scraps Two-Step Process and Sets Demanding New Requirements for Wage and Hour Collective Actions
- Employers Beware: Most Highly Compensated Employees Still Must Meet the FLSA’s Salary Basis Test to Be Exempt from Overtime Pay
- Sixth Circuit Set to Weigh in on the Current, Burdensome Two-Step Collective Action Standard
- A New Year Brings New Wage and Hour Laws
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While the advent of artificial intelligence tools that produce large volumes of written, audiovisual, and graphic content may be a boon for many businesses, it also could dramatically change the landscape of wage and hour practices, including how the Fair Labor Standards Act (FLSA) applies to U.S. workers. Among other things, large language models (LLMs) (a form of AI that is “trained” on volumes of data to effectively create certain kinds of output) could readily be used for a variety of office functions – fundamentally changing how office work is performed in the very near future. Previously, businesses have incrementally adopted AI for specific tasks, such as screening resumes or identifying key attributes in large volumes of documents. However, as AI progresses, it is posed to apply to a much broader swath of office and other work.
On May 19, the Sixth Circuit Court of Appeals set a new, substantially more demanding standard for employees to proceed on a collective basis in federal wage and hour lawsuits. The court’s decision in Clark v. A&L Home Care and Training Center will cause trial courts throughout Michigan, Ohio, Kentucky and Tennessee to approach wage and hour litigation very differently than previously.
Many employers remain unaware that employees making over six figures can still be entitled to overtime pay under the federal Fair Labor Standards Act (the “FLSA”). While there is a separate exemption for highly compensated employees (the “HCE exemption”), which reduces the showing that must be made under the “duties” portion of this exemption, a question arose as to whether the “salary basis test” still applied under the HCE exemption. In Helix Energy Solutions Group, Inc. v. Hewitt, the U.S. Supreme Court recently resolved that question, holding that the salary basis test did indeed apply to the HCE exemption. This ruling reinforces the importance of providing sufficient weekly or monthly guaranteed compensation to even some of the most well-paid employees, and not relying solely on commissions or another compensation structure unless some other exemption would apply.
Many employers already have personal experience with the costly two-step process for collective overtime or minimum wage claims under the Fair Labor Standards Act (“FLSA”). This process permits employees to commence expensive class-type lawsuits against an employer with almost no factual support for their ability to represent other employees. However, this soon may change. The Sixth Circuit Court of Appeals is scheduled to review the proper process for certifying FLSA collective actions, and potentially could reduce the significant costs employers now routinely endure when defending themselves in wage and hour litigation. The outcome of Clark v. A&L Home Care and Training Center, LLC could change the course of numerous wage and hour cases in Michigan, Ohio, Kentucky and Tennessee.
For decades courts have followed the de minimis rule when analyzing whether small fractions of time are compensable under the Fair Labor Standards Act (“FLSA”). However, recent court cases may be eroding the application of this de minimis rule. Employers should carefully assess whether the time employees spend on short tasks before they clock in for work, and after they punch out, must be considered compensable worktime under the FLSA and related laws.
On October 13, 2022, the United States Department of Labor (the “DOL”) published a new proposed rule to clarify who is an independent contractor under federal wage and hour law (the “Proposed Rule”). The Fair Labor Standards Act (FLSA) protects workers against unfair employment practices by requiring employers to provide certain benefits and protections to employees. Independent contractors are not employees under the FLSA. As such, employers that misclassify workers as independent contractors may wrongfully deny workers of benefits and protections under the FLSA and other laws.
As companies continue to struggle with staffing shortages, many employers may consider offering bonuses or other incentives to employees as a means of attracting talent to their workforce. While this may be a prudent and effective means of hiring and retaining employees, companies should be aware of the potential overtime implications arising from awarding certain bonuses to nonexempt employees.
As the COVID-19 pandemic drags into its third year, and many employees continue to work remotely, a spike of wage and hour class actions has emerged regarding claims for unpaid business expenses. During the early days of the pandemic, employers scrambled to comply with the wave of stay-in-place orders that swept the country. This required the transfer of millions of employees to remote work settings. Sometimes these changes occurred without fully considering what expenses an employer must cover for remote work. The answer to that question is not a simple one. Both federal and state laws must be considered, and the legal obligation may be determined by the location of your employee’s home or other remote work site.
Once again, the California Supreme Court has held that California’s wage and hours laws do not always follow well-established rules applicable to claims under the federal Fair Labor Standards Act (the FLSA). More specifically, on July 26, 2018, in Troester v. Starbucks Corp., the California Supreme Court rejected Starbucks’ argument that the FLSA’s de minimis exception to compensable working time applied to wage claims brought under California wage and hour laws. Instead, the court ruled that California employees must be paid for every minute (and possibly every second) of working time.
The Department of Labor (DOL) recently issued its first set of opinion letters since 2010, when the Obama administration suspended the practice of issuing such guidance. The return of opinion letters is welcome news for employers. Among other things, obtaining the DOL’s informal opinion on a wage and hour compliance question may help avoid costly disputes and, in certain circumstances, provide affirmative defenses to liability in the event of litigation.
Recently, the U.S. Supreme Court issued a ruling concluding that service advisors at car dealerships are exempt from overtime pay under the Fair Labor Standards Act (FLSA). In doing so, the Court abandoned 70 years of precedent, construing FLSA exemptions fairly rather than under the historic narrow standard. This change may signal a more level playing field for employers when courts interpret FLSA exemptions.
On December 4, 2017, the U.S. Department of Labor (“DOL”) announced proposed changes that could have a large impact on many businesses that employ tipped workers. Citing changes in state laws and significant litigation involving tip pooling, the DOL is considering rescinding certain restrictions on tip pooling for employers who do not claim a tip credit against the federal minimum wage. A Notice of Proposed Rulemaking regarding these potential changes was published on December 5, 2017 for public comment.
The Sixth Circuit’s recent decision in Stein v. hhgregg, Inc. should be required reading for any employer with a commission workforce.
On September 5, 2017, the U.S. Department of Justice (DOJ) dropped its appeal in support of the U.S. Department of Labor’s (DOL) intended increases to the Fair Labor Standards Act’s (FLSA) salary-basis test for the white-collar overtime exemptions. The appeal stemmed from a preliminary injunction issued by a federal district court in Texas, which halted the nationwide implementation of the DOL’s 2016 amendments to the FLSA. The DOJ’s request to dismiss the appeal comes just days after the same federal judge permanently struck down those amendments.
The Department of Labor (DOL) recently issued a request for information (RFI) relating to the 2016 amendments to the Fair Labor Standard Act’s (FLSA) overtime regulations. The DOL seeks information “to aid in formulating” revisions to the amended regulations that remain subject to a nationwide injunction. Once again, companies face uncertainty regarding impending changes to the FLSA’s regulations.
Today, in a return to pre-Obama era standards, the U.S. Department of Labor (DOL) announced the withdrawal of two informal guidance letters impacting the “joint employer” doctrine.
A hot topic in 2016 was the implementation of new regulations more than doubling the minimum required salary amount for the executive, administrative and professional exemptions under the Fair Labor Standards Act (FLSA). In late November 2016, a federal court in Texas enjoined the rules from taking effect, and in December, President Obama’s administration appealed that ruling.
As most employers know by now, on November 22, 2016, a federal court in Texas issued a preliminary injunction that, at least temporarily, halted the implementation of the U.S. Department of Labor’s (DOL) amendments to the Fair Labor Standards Act’s (FLSA) white-collar exemptions. The amendments were to have gone into effect on December 1, 2016, and would have more than doubled the salary requirements for exempt executive, administrative, and professional employees. Much to the business community’s chagrin, this saga continues.
The long-awaited presidential election is over. Although a new President will be sworn in next year, the amendments to the white collar exemptions are scheduled to take effect less than three weeks from now. Are you ready?
A franchisor may find itself between a rock and a hard place when the U.S. Department of Labor (DOL) comes calling; particularly when the call concerns franchisee compliance under the federal Fair Labor Standards Act (FLSA). On the one hand, a franchisor can refuse to cooperate. Though such refusal risks an aggressive response by the DOL, including costly litigation and increased damages claims. On the other hand, a franchisor can agree to cooperate. However, such cooperation is not without its own risks. Among other things, such cooperation may spur on “joint employer” claims under the FLSA (and other laws) against the franchisor.
On June 20, 2016, the U.S. Supreme Court decided the case of Encino Motorcars, LLC v. Navorro, which concerned the Fair Labor Standards Act (FLSA) classification of service advisors working at automobile dealerships. While the High Court did not actually decide the classification issue, it sent a strong message to the U.S. Department of Labor (DOL) that it “has some explaining to do” before it reverses its position and changes its interpretation regarding FLSA exemptions.
They’re here! The U.S. Department of Labor (DOL) is set to unveil the new overtime regulations concerning the exempt status of executive, administrative and professional employees (the Final Rules) today at 2:00 pm (EST) at an event in Columbus, Ohio, which will feature Vice President Joe Biden and Secretary of Labor Tom Perez. In advance of the formal release, the DOL has published a Fact Sheet that outlines the key provisions of the Final Rules.
The grapevine is abuzz! The word on the street is that the Department of Labor (DOL) could release the final amendments to the Fair Labor Standards Act’s (FLSA) white-collar exemptions as soon as this week.
The United States Department of Labor’s long-anticipated revisions to the Fair Labor Standards Act’s (FLSA) overtime regulations may become effective sooner than expected. The Department announced on March 14, 2016 that it submitted its final overtime rules to the Office of Information and Regulatory Affairs (OIRA), part of the Office of Management and Budget. Once OIRA signs off on the final rules, publication could take place as early as April or May. The Department of Labor previously estimated publication would take place in July of 2016.
Under the Fair Labor Standards Act (FLSA), a non-exempt employee generally must be paid time and a half (1.5x) his or her regular rate of pay for all time worked in excess of 40 hours in a workweek. The law nevertheless provides some exceptions. One such exception is the “fluctuating workweek method” for calculating overtime (FWW method). Using the FWW method, an employer need only pay an employee half (0.5x) his or her regular rate of pay for every hour over 40. This method makes pay more predictable and less variable to an employee where his or her hours fluctuate week-to-week.
The final amendments to the Fair Labor Standards Act’s (FLSA) white-collar exemptions soon will be upon us. Employers should begin preparing now for substantial changes to the federal minimum-wage and overtime exemptions that currently apply to bona fide executives, managers, supervisors, administrative employees, and professionals. At the opening session of the American Bar Association’s mid-winter meeting for the Federal Labor Standards Legislation Committee (FLSL Committee), Solicitor of Labor M. Patricia Smith confirmed again that the Department of Labor (DOL) anticipates publishing the final amendments to the white-collar regulations by late spring or summer of 2016. The DOL also is committed to making the amendments effective before the end of the year.
Wage and hour class and collective actions have sky-rocketed in recent years. This increase in “bet the business” litigation has been facilitated, in part, by the unique process courts must follow under the Fair Labor Standards Act (FLSA) to certify an FLSA collective action (versus a typical class action under Rule 23 of the Federal Rules of Civil Procedure). Citing the “modest” showing necessary to conditionally certify an FLSA collective action, plaintiffs’ attorneys regularly obtain employee lists without establishing that a case actually can proceed on a class basis. Employers should know, however, that the fight is not over once a court conditionally certifies a collective action.
On January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division (DOL) articulated a new standard that it will use to identify joint employment relationships. Specifically, the DOL published Administrator’s Interpretation No. 2016-1 (AI 2016-1), which is the first Administrator’s Interpretation this year, following the DOL’s similar pronouncement regarding independent contractor classifications in July 2015.
In June 2015, the Department of Labor (DOL) announced proposed changes to overtime regulations that would significantly increase the minimum salary required to classify an employee as an exempt executive, administrative, or professional employee, and proposed indexing those wages to the Bureau of Labor and Statistics data on annual earnings in future years. Those proposed regulations would increase the minimum weekly salary to the 40th percentile of weekly earnings for full-time salaried workers, which in 2016 the DOL projects will be $970 per week, or $50,440 per year. For highly compensated employees, the threshold would increase to the 90th percentile, or $122,148 annually.
The dust has settled and now it is official: Businesses that provide home care services can no longer rely on industry-specific exemptions to federal overtime and minimum wage requirements, and the final rule that says so now has the force and effect of law.
The status of live-in home care workers and companionship employees under the Fair Labor Standards Act (FLSA) has become a moving target in recent years, and the most recent move spells big changes for the home care industry.
Are you paying the intern you just sent out to grab your morning cup of coffee? If not, you may have a wage and hour violation on your hands. Private employers have increasingly come under attack over their use of unpaid interns by the Department of Labor and private litigants. This is especially the case where an unpaid intern performs tasks more akin to an administrative assistant than an on-the-job student/trainee.
On July 15, 2015, the U.S. Department of Labor (DOL) articulated a standard that will be used to call into question independent contractor classifications. Specifically, the DOL published Administrator’s Interpretation No. 2015-1 (AI 2015-1), which is the first Administrator’s Interpretation in more than a year.
Further information has been made available to the public concerning the proposed changes to the FLSA’s “white-collar” exemptions in the 295 pages of materials released by the Department of Labor yesterday.
The White House announced that the long-awaited proposed amendments to the Fair Labor Standards Act regulations concerning the so-called “white collar” exemptions will include a substantial increase to the salary required to maintain exempt status for most executive, administrative, and professional employees.
The use of independent contractors has come under attack in recent years. Several states have passed laws increasing the penalties for misclassifying independent contractors. Further, the U.S. Department of Labor aggressively investigates independent-contractor classifications. Courts also have limited the use of independent contractors by expanding the definition of “employee.”
Earlier this week, the United States Supreme Court unanimously ruled that time spent by employees in employer mandated security screenings is not compensable under the Fair Labor Standards Act (FLSA).
Yesterday, President Obama directed the Secretary of Labor to draft new regulations that will require the payment of overtime wages to many white collar employees who presently do not receive overtime pay.