The federal Department of Labor is making up for lost time with a lot of activity by the Wage and Hour Division. Three notices of regulatory changes have been proposed, as well as several enforcement actions and five Opinion Letters. The regulations concern the minimum salary for white collar overtime exemptions, what to include in the regular rate for calculating overtime and who is a joint employer for purposes of the FLSA. While all of the regulatory proposals could change before final enactment, employers can use the time to prepare for any adjustments.
White Collar Exemptions. The prior administration proposed to raise the minimum salary to almost $50K (from $23K) and to require an automatic annual increase. This regulation was enjoined at literally the last second. Instead of moving to dismiss the litigation, the Trump Administration merely requested that it be stayed while it developed a slightly different proposal: The proposal released on March 7, 2019 provides:
¡ Raise
minimum annual salary from $23K to 35,308/year
¡ Raise
highly compensated executive minimum salary from $100K to $134K
¡ No
change in duties test
¡ No
automatic annual increase
¡ Nondiscretionary
bonuses and incentive pay (i.e., commissions) can count up to 10% of salary
test if paid at least annually
Joint Employment. The DOL proposed a regulation on April 1 to regulate joint employment for purposes of the FLSA. The DOL would examine whether a business is a “joint employer”—equally liable for liability under federal wage and hour laws—with a simple four-part test, assessing whether the potential joint employer:
¡ hires
or fires the employee;
¡ supervises
and controls the employee’s work schedule or conditions of employment;
¡ determines
the employee’s rate and method of payment; and
¡ maintains
the employee’s employment records.
The DOL will ignore right to control, economic dependence, and business model or arrangements.
Regular Rate: The DOL proposed on March 28 a new regulation clarifying (but not necessarily changing) what is and is not included in the “regular rate” for purposes of calculating overtime pay. This issue is still mostly governed by statute and is defined as any and all remuneration for employment paid to, or on behalf of, an employee. This includes not just cash wages but many other types of compensation (such as meals and lodging, commissions, shift differentials, certain nondiscretionary bonuses, etc.) Nonetheless, the regular rate does not include other types of compensation, such as paid time off, show-up pay where the employee is paid for hours not worked, and discretionary bonuses.
The proposed regulation clarifies that certain compensation need not be included, such as:
¡ Cost
of providing wellness programs, onsite specialist treatment, exercise
opportunities, employee discounts on retail goods and services, and certain
tuition benefits;
¡ Discretionary
bonuses as provided in examples;
¡ “Call-back"
pay and other similar payments similar when "infrequent and
sporadic," but not when such payments are so regular that they are
essentially prearranged;
¡ Reimbursed
expenses which are not be incurred "solely" for the employer's
benefit;
¡ Unused
paid leave, meal periods and PTO pay;
¡ Most
travel reimbursements
¡ Benefit
plans contributions (like accident, legal services)
Settlements. The DOL has also investigated two Ohio employers for failing to properly pay overtime, improper deductions and recordkeeping violations and recovered $37,658 from a Lebanon employer and $48,698 from a Dayton employer.
NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can be changed or amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.
