2019 FLSA Proposed Overtime Rule

In early March 2019, the Federal Department of Labor proposed an increase in the salary-level threshold for white-collar exempt positions.  The current exemption level at the federal level is $23,660, the proposed exempt threshold is $35,308.  “If finalized, the new overtime rule would result in the reclassification by employers of more than a million currently exempt workers as nonexempt and an increase in pay for others above the new threshold. The proposal does not call for automatic adjustments to the salary threshold, does not create different salary levels based on region of the country and does not make any changes to the duties tests.”[i]

Area’s to Consider under the Current Proposal:

  1. Reclassification: In New York State for Administrative and Executive Exemptions, we have nothing to adjust on levels. However, for the Professional Exemption, it is recommended to review and make the necessary adjustments for your organization.  Options include, implementing restrictive overtime policies, reduce to part-time status and/or reassign tasks to other employees.  Reclassification from exempt to nonexempt is challenging, from my experience this does not go over well with the employee and it is viewed as a demotion.  Prior to making a decision, review all options and do what is best for the organization and the workforce.
  2. Increase Pay: We always have the option to bump pay for the classifications that will be impacted by this change significant change. Review budgets and pay equality within your organization prior to adjusting pay.  Put it in writing, with a signed offer letter and/or the required wage notification form.
  3. Adjust or Not to Adjust, at this Point: That is the question. Review all options prior to making any adjustments.  This is a proposal, it will embark on a long, inefficient process prior to being passed into law, if ever passed.  Continue to monitor for updates and changes to the proposed language.  The change is coming, just as we will more than likely see changes to the federal minimum wage levels.  Seek guidance if you are unclear on classification definitions and wage levels.  State and federal laws do vary.  “In New York, the state’s minimum salary threshold for executive and administrative employees has been increased in phases, and the actual rate depends on geographic location and employer size. For example, the threshold is currently $58,500 (annualized) for employees who work in New York City for large employers and fast-food restaurants and $52,650 for workers at other businesses with 10 or fewer employees. In Nassau, Suffolk and Westchester counties, the threshold is $46,800, and in other areas of the state it’s $43,264.”[ii]

“Employers should note that the DOL’s $35,308 threshold is just a proposal and must go through the formal rulemaking process, which includes a comment period. Employers—and other interested members of the public—that wish to comment on the proposal may do so by visiting www.regulations.gov. They will have 60 days to comment from the time the rule is published in the Federal Register. For now, the FLSA salary threshold is still $23,660 for the white-collar exemptions.”[iii]

“Executive and Administrative Exemption:

  • $727.50 per week on and after 12/31/16
  • $780.00 per week on and after 12/31/17
  • $832.50 per week on and after 12/31/18
  • $885.00 per week on and after 12/31/19
  • $937.50 per week on and after 12/31/20[iv]

burrrrrr

“The 6 exempt level definitions under the FLSA:

Fact Sheet #17A: Exemption for Executive, Administrative, Professional, Computer & Outside Sales Employees Under the Fair Labor Standards Act (FLSA)

  1. The Executive Exemption: Primary duties include managing the enterprise, directing the work of at least two or more full-time employees and has the authority to hire and fire employees. The link(s) goes into specific duties tests on the exemptions.  NY State Law
  2. The Administrative Exemption: Primary duties must be the performance of office or non-manual work related to the management of the business and exercising discretion and independent judgement with respect to matters of significance. NY State Law
  3. The Learned Professional Exemption: Primary duties must be the performance of work requiring advanced knowledge, which is predominantly intellectual in character and requires discretion and judgement.
  4. Computer Employee Exemption: Primary duties consist of the application of systems analysis techniques, design development, documentation, analysis, creation, modification of computer systems and designing, testing or modifying computer programs. This exemption is complex, ensure you read through the FLSA definition prior to deciding and thoroughly understand the duties test.
  5. The Outside Sales Exemption: Primary duties must include making sales, obtaining orders or contracts.  The employee must be regularly engaged away from the employer’s place of business.
  6. The Highly Compensated Employees Exemption: Perform office or non-manual work and paid total annual compensation of $100,000 or more. They regularly perform at least one of the duties of an exempt executive, administrative or learned professional identified in the standard tests of exemption.  The new salary cutoff is proposed at $147,414, almost a $50,000 jump in classification levels.
  7. Other Definitions: Blue Collar Worker

Police Officers, Fire Fighters and First Responders[i]

NYC Bans Hairstyle Discrimination:

“New York City has issued the country’s first-ever ban on employer policies and practices that discriminate against how black people wear their hair…Guidelines from the New York City Commission on Human Rights state that while employers can impose requirements around maintaining a work-appropriate appearance, a grooming policy that prohibits dreadlocks, cornrows, Bantu knots and other such hairstyles will be considered racial bias. The law does not apply to employers with fewer than four employees…Employers may not ban, limit, or otherwise restrict natural hair or hairstyles associated with black communities to promote a certain corporate image, because of customer preference or under the guise of speculative health or safety concerns,” according to the guidelines. “An employee’s hair texture or hairstyle generally has no bearing on their ability to perform the essential functions of a job.”[ii]

Michigan Paid Medical Leave Act Effective March 29, 2019:

The Paid Medical Leave Act requires covered employers to provide paid sick leave to many of their Michigan-based employees.

– Matthew Burr, HR Consultant

[i] Burr Consulting, LLC Article April 16, 2018

[ii] SHRM Email March 11, 2019

https://labor.ny.gov/formsdocs/wp/Part142.pdf\[v]

[i] https://www.shrm.org/ResourcesAndTools/legal-and-compliance/employment-law/Pages/New-FLSA-Overtime-Rule-Proposal-Expands-Worker-Coverage.aspx

[ii] https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/employers-can-not-ignore-state-overtime-exemption-rules.aspx

[iii] https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/employers-can-not-ignore-state-overtime-exemption-rules.aspx

[iv] https://labor.ny.gov/formsdocs/wp/Part142.pdf

[v] Burr Consulting, LLC Article December 21, 2018

5 Thoughts on Payroll Debit Cards

Many organizations are moving to a payroll debit card model for employee payments in lieu of cash (yes cash), checks or direct deposit.  Debit cards and direct deposit are two options many organizations are offering and will continue to offer.  We need to be aware of laws that regulate the use of the payroll debit cards and provide alternative options, per federal and state guidelines.  One of the concerns at the federal level with these cards is that an organization cannot mandate where the funds can be redeemed.  This mandate would violate the Electronic Fund Transfer Act (EFTA).  Payroll debit card laws are written and enforced at the state level, some states prohibit employers from using pay cards without consent, place limitations on fees that can be charged and impose disclosure requirements.  New York State is a state that requires consent and there have been recent court cases on this issue.

Below are 5 considerations on payroll debit cards:

  1. “Do not make their use mandatory.  This is simple advice but necessary, provide options for the workforce to utilize a direct deposit option.  Working with a local bank or credit union is a great way to ensure employees understand direct deposit, checking and savings accounts.
  2. Limit fees.  If it was my money or paycheck, I wouldn’t be happy seeing a fee associated with withdrawals or moving money from one account to another.  Limit or eliminate fees, fees might not be legal in your state.
  3. Disclose every detail.  This doesn’t mean provide a 30-page contract that details everything in legal terms.  Ensure employees can understand the detail and have the option to ask questions.  A frequently asked question list is a great place to start with disclosing details in an easy to understand format.  Work with the debit card company to ensure accuracy and legality.
  4. Ensure that the full amount can be withdrawn each pay period in multiple withdrawals without fees.  This harkens back to the second suggestion.  If it was my money, I wouldn’t be happy with any fees.  It’s the employee’s money, ensure they can access and move it around as needed.
  5. Ensure that there is a reasonable number of establishments nearby from which money can be withdrawn.”[i]  Working with a local bank or credit union with easy to access ATM machines and multiple locations is a great option.  Having a map with locations is another solution to assist employees withdraw cash or bank.  Negotiating zero fees with the financial institution is an option, or at least a question to ask.  Again, create a process that assists employees with the money withdrawal.  Provide alternatives and options for employees.

 

New York State Area’s to Consider:

Beyond the notice and consent requirements, the additional restrictions applicable to using payroll debit cards included:

  1. Imposition of a seven-business day waiting period from execution of consent to initial payment by means of payroll debit card.
  2. A prohibition on a laundry list of potential fees.
  3. Requiring that wages paid by payroll debit card may not be linked to any form of credit.
  4. A prohibition on employers passing on costs associated with payroll debit card accounts or otherwise receiving kickbacks from third parties associated with payroll debit card programs.
  5. A prohibition on expiration of wages.
  6. An additional notice requirement if there are changes in the terms and conditions of the card accounts or fees charged to employees.
  7. A requirement that union approval be obtained for unionized employees.
  8. Providing a detailed written notice to employees.
  9. Obtaining voluntary consent prior to payment by either of these methods.”[ii]

Additional information on New York State:

New York State Rulemaking Activity

New York State Supreme Court Case Ruling

New York State Notice and Consent Direct Deposit Model Form

New York State Notice and Consent Payroll Debit Cards Model Form

Pennsylvania Regulations:

“The new amendments resolve the uncertainty. Under the new law, the use of payroll debit cards is permitted if, among other things:

  1. The employer does not mandate the use of payroll debit cards.
  2. The employer complies with stringent notice requirements.
  3. The employee is allowed one free withdrawal of all wages earned per pay period.
  4. The employee is provided a free method of checking the balance on the card electronically or by telephone.
  5. There are no fees for using the payroll card.”[iii]

Federal Bulletin on Payroll Debit Cards

The laws and regulations vary on payroll debit cards from state-to-state and will continue to evolve as payment options and technology evolves.  Be aware of the regulations in each state you operate in.  My recommendation is to make this an option for employees, just as direct deposit is an option (but strongly preferred).  Don’t force employees into using a payroll debit card or direct deposit, it could violate the law.  Seek guidance prior to implementing payroll debit cards and work with a reputable company.  SHRM’s vendor directory has four options to choose from and there are multiple websites that rank these organizations, based on service, size and reputation.  This should not be a one size fits all model, benchmark and find a solution that works best for your organization.  Your payroll provider and/or local bank might have suggestions on preferred vendors to consider or suggested alternatives.

New York State Department of Labor Drops Proposal Regarding Call-In Pay

“The New York State Department of Labor announced recently that it does not intend to implement its proposed regulations that would have imposed burdensome requirements on employers to provide call-in pay to employees under a variety of circumstances not currently covered under existing regulations. The regulations were initially proposed in November 2017, and then were revised in December 2018 after public comments were received and reviewed. The NYSDOL now intends to let the regulatory process expire with respect to the proposed regulations and potentially revisit this issue in the future.”[iv]  Continue to watch for the revisit in the future, this will impact most organizations in New York State.

NYC Mandates Workplace Lactation Room March 18, 2019

Beginning March 18, 2019, employers in the Big Apple with at least four workers must provide lactation rooms and create a written lactation-accommodation policy that must be given to workers when they are hired. The city’s human rights commission will release a model policy before the effective date.”[v]

[i] https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/employers-payroll-debit-cards-.aspx

[ii] https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/new-york-state-regulations-governing-payroll-debit-cards-revoked.aspx

[iii] https://www.shrm.org/ResourcesAndTools/legal-and-compliance/state-and-local-updates/pages/pennsylvania-law-clarifies-payroll-debit-card-use.aspx

[iv] https://www.bsk.com/news-insights/new-york-state-department-of-labor-drops-proposal-regarding-call-in-pay-for-now

[v] SHRM email

– Matthew Burr, HR Consultant

Labor and Employment Law Postings New York State and Pennsylvania

In the many audits I have conducted over the years; labor and employment law postings continue to be an area that we see as potential red flags and opportunities for organizations.  Many that I see are, outdated, expired, not posted in the correct area’s and/or missing information.  Below is a breakdown of posting requirements in New York State and the State of Pennsylvania.

march

State of Pennsylvania:

mar

Federal Posting Requirements

These are easy areas for organizations to correct and ensure updated compliance.  Worker’s comp, disability and paid family leave postings are a common area that I see as expired or completely missing, work with your providers and update as needed.  I have recently audited combined disability and PFL postings.  The unemployment posting in New York State is another easy miss for organizations.  Ensure the posters are visible in an area that employees gather and have access to the legal information, not in a closet or bathroom.  Keep in mind remote workers and applicants, yes there are specific laws on addressing both remote workers and posting requirements for job applicants.  And yes, there are different requirements across the country in each state.  You can purchase labor and employment law posters that contain most of the information above or you can download each form (weigh the value of your time versus spending time downloading each form from multiple websites).  If you are unclear on what to post, specific organizational requirements, where to post, seek guidance.  I can help any employer address posting questions or concerns, as it is part of the general audit process.  This is low hanging fruit cleanup, it should be reviewed annually, as laws change.  Federal laws will change throughout the year that require new posters, not all changes occur on December 31st or the beginning for a new year.

Pancake Chain IHOP to Pay $700,000 to Settle Sexual Harassment and Retaliation Lawsuit

“LAS VEGAS – Several franchisees of the popular IHOP restaurant chain in Nevada and New York will pay $700,000 and furnish other relief to settle a sexual harassment and retaliation lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency announced today. The U.S. District Court of Nevada has approved a consent decree filed by the EEOC.

According to the EEOC’s lawsuit, IHOP owners, supervisors, managers and co-workers subjected female employees to ongoing egregious sexual harassment in both Nevada and New York locations. The harassment included groping; sending pictures of male genitalia; propositions for sex; viewing of porno­graphy; vulgar comments; and unwanted touching and kissing. The company failed to take corrective action when the victims complained, instead taking retaliatory action against them, including reducing their work hours and firing them.”[i]

Wynn Resorts fined record $20M for failing to investigate sexual misconduct

“Wynn Resorts has been fined a record $20 million for failing to properly investigate allegations of sexual misconduct against its then-CEO Steve Wynn, who grew up in Central New York.

The Las Vegas Review-Journal reports Wynn Resorts Ltd. executives “collectively sank into their seats” as the Nevada Gaming Commission announced its final punishment for the casino. It’s the highest fine ever handed down by Nevada gaming regulators.”[ii]

Christini’s Ristorante Italiano to Pay $80,000 to Settle EEOC Sexual Harassment / Retaliation Lawsuit

“Christini’s Ristorante Italiano to pay $80k to settle EEOC lawsuit. The owner created a work environment that encouraged sexually charged comments and allowed for the repeated propositioning of a female bartender, the suit charged.”[iii]

– Matthew Burr, HR Consultant

[i] https://www.eeoc.gov/eeoc/newsroom/release/2-20-19.cfm

[ii] https://www.syracuse.com/us-news/2019/02/wynn-resorts-fined-record-20m-for-failing-to-investigate-ceo-from-cny.html

[iii] EEOC Twitter 2/28/2019