The Salary Requirements . . . for Now.

Now we have to skip around a bit in the Regulations. You see, in order to be exempt, an employee generally has to meet the salary requirements and the duties requirements for the exemption that is applicable. So it would seem logical that the way to write the Regulations would be to do the intro, which we talked about last time, and then discuss the salary requirements that apply to all (well, most) of the various exemptions and then talk about the individual duties. It would make complete sense to do it that way, so of course that is not the way the government did it.

So let’s you and I be logical and hit the salary test first. To do that we skip down to Subpar G of part 541 of the Regulations. And we are going to start with how much salary is required. And before we do that I need to say this:

ALL OF THIS IS GOING TO CHANGE!!! Look here.

What? Then why are we doing this? Because I’m sick of waiting. So I’ll do my best. Again, how much do I need to make to be exempt? Right now, not much.

To qualify as an exempt executive, administrative or professional employee under section 13(a)(1) of the Act, an employee must be compensated on a salary basis at a rate of not less than $455 per week (or $380 per week, if employed in American Samoa by employers other than the Federal Government), exclusive of board, lodging or other facilities. Administrative and professional employees may also be paid on a fee basis, as defined in §541.605.

29 CFR §541.600(a).

By the way, if you did the math, in order to be paid on a salary basis, you only need to be paid $23,660 per year. Now when the proposed Regulations are finalized, that number will go to “an amount that is equal to the 40th percentile of weekly earnings for full-time salaried workers” which for 2016 is estimated to be $970 per week or $50,440 annually. So while the numbers are going to change, the principle should stay the same. So on we go.

But I don’t pay my exempt employees by the week, you say. I offer them an annual salary and pay bi-weekly, so do I still get the exemption? Yep.

The $455 (FOR NOW) a week may be translated into equivalent amounts for periods longer than one week. The requirement will be met if the employee is compensated biweekly on a salary basis of $910 (FOR NOW), semimonthly on a salary basis of $985.83 (FOR NOW), or monthly on a salary basis of $1,971.66 (FOR NOW). However, the shortest period of payment that will meet this compensation requirement is one week.

29 CFR §541.600(b). (And in case you are wondering, yes, I added the (FOR NOW). That is not in the Regulations.

So that is the basic rule. But right off the bat, before we even get out of this Regulation, there are some exceptions to this basic rule. For example, academic administrative employees meet this requirement if they are paid “on a salary basis at a rate at least equal to the entrance salary for teachers in the educational institution by which the employee is employed.” 29 CFR §541.600(c). And for certain computer employees, you can actually pay an hourly rate as long as it is at least “$27.63” per hour. And that is $27.63 per hour, not $27.62. Who comes up with these things? 29 CFR §541.600(d). And for professional employees who are teachers, lawyers or doctors and who are actually engaged in teaching, the practice of law or medicine, or are medical interns or residents, this section does not apply at all. That’s right, you don’t have to pay them a salary, you can pay them by the hour. And frankly, we will have to wait for the final Regulations to see what will happen to these numbers.

And that is not all. If an employee makes $100,000 per year and customarily and regularly performs any one or more of the exempt duties of an “executive, administrative or professional employee” that person is also exempt. In short, that means that if your employee makes $100k per year, that employee does not have to meet the entire duties test. That is a simplified way of putting it, but that is the basic rule. 29 CFR §541.601. Oh, and you get to prorate this in the first and last year of employment without losing the exemption. And the $100k does not have to be all “salary”, it can include commissions, nondiscretionary bonuses, stuff like that. And under the proposed Regulations, what happens to this number? Well, under the proposed Regulations “the highly compensated employee annual salary will be set at the 90th percentile of earnings for full-time salaried workers or an estimated $122,148 annually in 2016.”

So Steve, what the heck do I do between now and when the proposed Regulations are finalized? If you have salaried employees making more than $23,660 but less than $50,440, you might want to give us a call. We have some work to do.

White Collar Exemptions even if your collar isn’t white.

Oh man has it been a while. But the last time we were in this series we were going to start talking about “exemptions” and then we had proposed regs and then I got really busy and well, you know how it goes. So back to Exemptions.   And by exemptions I mean not having to pay overtime. That is what you thought I meant right? And we are going to start with the biggest category of exemptions, the White Collar Exemptions. I love that old school term. According to Wiki:

 The term refers to the white dress shirts of male office workers common through most of the nineteenth and twentieth centuries in Western countries, as opposed to the blue overalls worn by many manual laborers.

 The term “white collar” is credited to Upton Sinclair, an American writer, in relation to contemporary clerical, administrative, and management workers during the 1930s, though references to white-collar work appear as early as 1911.

 I love the term because I am a so called “white collar worker” but I don’t wear that many “white collars.” Mine tend to be a bit more colorful.

MeSee!

So what do the regulations mean when taking about this particular topic? Excellent question:

(a) Section 13(a)(1) of the Fair Labor Standards Act, as amended, provides an exemption from the Act’s minimum wage and overtime requirements for any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of an outside sales employee, as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of the Administrative Procedure Act. Section 13(a)(17) of the Act provides an exemption from the minimum wage and overtime requirements for computer systems analysts, computer programmers, software engineers, and other similarly skilled computer employees.

29 CFR §541.0

Look at the list, now you know.   Seems like an easy solution to having to pay overtime right, just classify your employees as “executive, administrative or professional” and away you go. Not so fast. First, the regulations make it clear that a job title alone is not enough. “A job title alone is insufficient to establish the exempt status of an employee. The exempt or nonexempt status of any particular employee must be determined on the basis of whether the employee’s salary and duties meet the requirements of the regulations in this part.”   29 CFR §541.2.

If I can’t just change the job title, how do I meet one of these exemptions. For there are whole lists of jobs that are excluded: (a) The section 13(a)(1) exemptions and the regulations in this part do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy.” 29 CFR §541.3(a).   Similarly,

(b)(1) The section 13(a)(1) exemptions and the regulations in this part also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work.

 29 CFR §541.3(b).   Why not? “Such employees do not qualify as exempt executive employees because their primary duty is not management of the enterprise in which the employee is employed or a customarily recognized department or subdivision thereof as required under §541.100.” “Such employees do not qualify as exempt administrative employees because their primary duty is not the performance of work directly related to the management or general business operations of the employer or the employer’s customers as required under §541.200.” And “Such employees do not qualify as exempt professionals because their primary duty is not the performance of work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor as required under §541.300.” Id. at (2)(3) & (4). That’s why.

 

 

IT TOOK A YEAR TO COME UP WITH THIS . . . you’ve got to be kidding!

No, they are not kidding. On Tuesday, June 30, 2015, the long awaited proposed rules on the so‑called “white collar” exemptions under the Fair Labor Standards Act were released by the Department of Labor. You remember the proposed regulations, right? About a year ago, the President directed the DOL to look into the exemptions and determine if changes were in order. Seems they were.

So finally, after a year, we have those changes. 295 pages of them. That seems like a lot of proposed changes, but wait . . . . most of that 295 pages is a history lesson on the previous changes. There are really only two big proposed changes in the regulations and both of them have to do with the salary level test. Before we get into those, let’s recap a bit – if it’s good enough for the DOL, it is good enough for us too.

In order to be exempt from overtime under the white collar exemptions, an employee must meet three tests. The salary basis test, the salary level test, and a duties test. The salary basis test means that an employee is paid a fixed salary in each workweek that does not vary depending on the quality or quantity of the employee’s work. That one is unchanged in the proposed regulations. The duties test is what the exempt employee’s job is. Or what the employee does. There are executive, administrative, professional, outside sales, and computer professional duties tests. Again, no change in the proposed regulations . . . BUT . . . the DOL is asking for comments on whether there should be changes. So stay tuned.

And finally, there is the salary level test and here is where the big change comes in. The current salary level test for the white collar exemptions is $455 per week or $100,000 per year for highly compensated employees. $455 per week is $23,660 per year and that amount is actually below the poverty level for a family of four. The proposed regulations will change how the salary level is set from this flat amount to an amount that is equal to the 40th percentile of weekly earnings for full-time salaried workers. The proposed regulations estimate that in 2016 that will be $970 per week or $50,440 annually. In addition, the highly compensated employee annual salary will be set at the 90th percentile of earnings for full-time salaried workers or an estimated $122,148 annually in 2016. That is a big change. In fact, according to the DOL, about 11 million employees will be impacted.

But there is another big change. For the first time ever, the DOL is proposing that the salary level automatically update on an annual basis without having to go through additional notice and comment rule making. They haven’t decided how yet, but are proposing either a percentile of earnings for full-time workers’ basis or changes based on inflation.

Now that you know all this, what do you do? Well first, don’t forget that these are proposed regulations. There is a 60 day public comment period, so the first thing you might want to do is comment. That having been said, the salary level is not likely to change and that or a number very close to it will likely be the final rule.

The next thing you ought to do is figure out how many of your employees fall within the gap. How many exempt employees do you have that make more than $23,660 and less than $50,440? Once you have that done you have some time to decide how to react. And you can react in several ways. You can leave everything alone, continue to pay a salary to these folks and pay them overtime when they work overtime, or make sure that they don’t work overtime. For those that are close, give them a raise to get them above the $50,440. Or you can convert these folks to hourly pay rates. But whatever you decide, remember this – for all those employees who used to be exempt and soon will not be, once the proposed regulations become final and take effect, you MUST begin keeping records of hours worked.

How not to Contribute to the Talent Shortage or What the Heck are my Supervisors Doing?

I have been watching some of the Mackinac Policy Conference live stream on Detroit Public TV online this week. You can find it at http://www.dptv.org/blogs/mivote/detroit-public-tvs-coverage-of-the-mackinac-policy-conference-begins-wednesday-5272015/

One of the things I am hearing over and over again is that we have a talent shortage. Seems like it is a talent shortage everywhere in Michigan and it runs across occupations, from a shortage of engineers to a shortage of skilled tradespersons. It is a problem, a significant problem, and one that we are not going to be able to solve overnight. We will solve it, we will get people educated and motivated. But it is going to take time and we all know that. So what do we do in the meantime? I know, how about we spend a little time talking about keeping the talent we already have?

So let’s start with why people leave good jobs. If I asked you that question, what would you say? Would you say that people leave because they can get more money someplace else? You might, and a lot of people would agree with you. But you would be wrong.

In her article Strategies for Retaining Employees and Minimizing Turnover, Sarah K. Yazinski, an Admissions Counselor at the University of Scranton, cites strategic planning consultant Leigh Branham, SPHR, who claims:

“88% of employees leave their jobs for reasons other than pay: However, 70% of managers think employees leave mainly for pay-related reasons. Branham says there are seven main reasons why employees leave a company:

  1. Employees feel the job or workplace is not what they expected.
  2. There is a mismatch between the job and person.
  3. There is too little coaching and feedback.
  4. There are too few growth and advancement opportunities.
  5. Employees feel devalued and unrecognized.
  6. Employees feel stress from overwork and have a work/life imbalance.
  7. There is a loss of trust and confidence in senior leaders.”

http://hr.blr.com/whitepapers/Staffing-Training/Employee-Turnover/Strategies-for-Retaining-Employees-and-Minimizing-

Think about that. 88% of people leave a job for reasons other than pay. And then think about the disconnect. 70% of managers think it is all about pay. I wonder why that is? I could speculate, but it wouldn’t be flattering. So what do you do, how do you keep people?   Elena Bajic is the founder and CEO of IvyExec.com. She is also a contributing author to Forbes online. Ms. Bajic outlines 6 steps for retaining good employees:

  1. Communicate, communicate, communicate.
  2. Coach rather than manage.
  3. Establish clear performance metrics and make employees accountable for delivering.
  4. Leverage performance reviews to gain insights into employee’ goals and aspirations.
  5. Create growth opportunities.
  6. Underscore positive feedback with something tangible.

http://www.forbes.com/sites/elenabajic/2013/07/15/the-6-steps-for-retaining-good-employees/

You know what? I think that is a pretty good list. And when you take Ms. Bajic’s list and compare it to the reasons employees leave jobs, you see that there is a lot of overlap. I get too little coaching and feedback. No problem, we are going to coach rather than manage. I feel undervalued. No problem, we are going to provide something tangible (no, it does not have to be money) for positive performance. I can’t grow or advance. No problem, I will create growth opportunities.

And you know what else I find striking about Ms. Bajic’s suggestions? Every one of those 6 steps (except maybe number 5) is accomplished by frontline supervision. Sure, you need upper management buy-in. And yes, you need help from HR. But it is really about frontline management.

So ask yourself this, how equipped are your frontline supervisors to do this? Now be honest! And that gets us to what is the job of a supervisor. I’ve said this before and now I’m going to say it again, it is not making widgets, or breaks or bumpers. And if you think it is, then you are probably part of the disconnect. So, I’m a supervisor; what exactly do I do for a living?

The answer should be that I motivate and inspire people to do a better job. In short, I make sure I have happy people who are satisfied with their work so that they in turn can be more productive and make better widgets in a more cost-effective manner to contribute to the bottom line.

Is that what your supervisors do? Or better yet, are you hiring and promoting supervisors who have these talents? Do you screen for talents like communication skills and empathy? Or do you just promote the best widget maker? If you are doing the former, you are way ahead of the curve. If you are doing the latter, you have some work to do.

And that is where we start. Yes, we have a talent shortage and, yes, it is going to take time to develop that talent. So shouldn’t we do everything we can to keep the talent we have? Sure we should, and we do that by making sure that our frontline supervisors are equipped to do the job they should be doing. Motivating and inspiring people to do their jobs better and ensuring that they feel valued when they do. And we reward them when they do it right. So here is your homework. Take a look at what your criteria is for hiring and promoting supervisors. Are you screening for the right skill set? If not, change the criteria. And once that is done, ask yourself this: Are we rewarding supervisors properly? Are they judged simply on production numbers? If so, why? Why don’t we reward supervisors for lower employee turnover numbers? Why don’t we reward supervisors for increased employee job satisfaction? We should, and if we do we will keep the good people we have. And that is how we start solving the talent shortage problem. It is not the whole solution, but it is a start. And it is something we can do right now.

Department of Labor Issues Updated FMLA Forms

If you have been dealing with FMLA issues for the last month or so, you have probably noticed that the core FMLA forms available on the Department of Labor’s website expired on February 28, 2015. Or maybe you didn’t notice. If you didn’t, don’t worry, most people didn’t.

With very little, ok no, advance notice, the DOL over the Memorial Day holiday issued updated FMLA forms. The new forms are available on the DOL’s website. You can find them here: http://www.dol.gov/whd/fmla/

I’m not entirely sure why it took the DOL so long to issue the new forms or why they felt they had to do it over the holiday with no notice. As far as I can tell from a quick review, the only substantive change in the forms from the expired ones is the addition of Genetic Information Nondiscrimination Act (GINA) language to the medical certification forms.

So, that stack of forms you printed out and have in a file cabinet? Throw them away and print out the new ones.

Moving On. Eventually.

First of all, I’m back. Given what a great job Emily did making my life easier and drafting the last 8 or so posts on the FLSA, I’m not sure that me being back is such a good thing for you, but I’m back anyway. And why am I back you ask, why not keep letting some young associate draft these posts? Well let me tell you why. Mostly it’s because after the first of the year all of our new young associates have to start earning their keep. That means billing hours to clients and contributing to the bottom line. And while this little old blog of mine certainly contributes to the bottom line indirectly, it doesn’t do so directly, so all the time spent writing this does not count toward a young associate’s billable contribution to the firm. And while I am sure there are some older lawyers out there that are perfectly happy making a young associate do work that they don’t actually get any credit for, I like to think I am not one of them. So, I’m back. Sorry if you don’t like that. Write Emily, maybe she will start her own blog.

So, is that what the title of this one is all about, moving on from Emily? Sort of, but it means more than that. It means we are moving on from the regular rate and what goes into it and how to compute overtime. There are more regs on that topic, but we have hit the high points, so we are going to leave the detail stuff out and move on to something else. What you say?

Exemptions, that’s what. Yes, after all that time we talked about how you compute overtime, we are going to start talking about who does not have to be paid overtime. And we are going to start with the big ones, the White Collar Exemptions. You all know what they are and we are going to spend some time in them. And before we get into the detail, let’s get one thing out of the way. A lot of you call these people “salaried” employees. That is not right. Just because you pay an employee a salary, does not mean you don’t have to pay them overtime. I am going to explain that over the next couple of weeks. But for now, just take my word for it. But here is one other caution and the reason why we are not just moving on quickly.

The Department of Labor was supposed to have issued new proposed regulations on this very topic by now. And I thought, just by luck mind you, that I had the blog timed pretty well to hit this topic as the proposed regulations came out. Unfortunately, the proposed regulations have been delayed. Here is what we know, nothing. No that’s not true. What the DOL is now telling everyone is that we can expect the proposed regulations sometime this “spring.” Now here in Michigan, that means July. Just kidding, it only feels that way. Hopefully before the end of May. And once we get the proposed rules I will start back up again. In the meantime I’m sure something will pop up to keep us busy.

See you next time.

Losing Sight of the Forest for the Trees . . . or maybe the Trees for the Forest? Either way, it’s bad.

Someone who can’t see the forest for the trees has typically become so focused on details that he or she begins to ignore the overall situation. . . . As early as the 1500s, “you can’t see the forest for the trees” was in wide enough use that it was published in collections of proverbs and slang.

* * *

This proverb is also sometimes reversed, as in “you can’t see the trees for the forest,” referencing the idea that it is also possible to be too broad when looking at a situation. Someone who makes sweeping pronouncements without considering various details could exhibit just as much of a logical flaw as someone who only focuses on the details.

See http://www.wisegeek.org/what-do-people-mean-when-they-say-someone-cant-see-the-forest -for-the-trees.htm.

I haven’t decided which one of these applies, but on March 31, 2015 the NLRB lost sight of something that’s for sure.  Maybe it was common sense? In a case called Pier Sixty, LLC, 02-CA-068612 and 02-CA-070797 (March 31, 2015) the Board found that the employer Pier Sixty violated Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act when it fired an employee for posting on his Facebook page that his supervisor was a “NASTY M—ER F—ER.” That’s right, the Board ordered reinstatement of the employee who posted that language on a Facebook site that could be viewed by, according to the Board, “his Facebook friends, which included some coworkers and to others who visited his personal Facebook page.” OK, so let that sink in a bit, and I will try to catch my breath before I try to explain what the Board did here.

So here is exactly what this classy guy posted:

Bob is such a N—Y M—ER F—ER don’t know how to talk to people!!!!!! F–k his mother and his entire f—ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!

OK, it’s not exactly what he posted; he filled in the blanks. And when one of your employees posts something like this, you want to fire him, right? Of course you do, and when you call me and ask me if it is legal to do so, I was going to say, yes it is. And, at least according to the Board, in this case, I would be wrong. You see, the Board said:

“We agree with the judge that Perez’ Facebook comments, directed at McSweeney’s asserted mistreatment of employees, and seeking redress through the upcoming union election, constituted protected, concerted activity and union activity. As stated by the judge, “Perez’ Facebook comments were part of a sequence of events involving the employees’ attempts to protest and ameliorate what they saw as rude and demeaning treatment on the part of Respondent’s managers, including McSweeney.” Toward that end, Perez’ Facebook posting protested such mistreatment and exhorted employees to “Vote YES for the UNION.”

“We also agree with the judge that Perez’ comments were not so egregious as to exceed the Act’s protection.”

What? Or, if I was the employee in this case, WHAT???????

That is seeking redress of mistreatment through the upcoming union election? That is “not so egregious”? You have got to be kidding me!

Easy, easy now. So how did the Board get to this decision? Well, they used a 9 factor test from a previous case.

“In evaluating Perez’ posting under the totality of the circumstances, the judge considered the following factors: (1) whether the record contained any evidence of the Respondent’s anti-union hostility; (2) whether the Respondent provoked Perez’ conduct; (3) whether Perez’ conduct was impulsive or deliberate; (4) the location of Perez’ Facebook post; (5) the subject matter of the post; (6) the nature of the post; (7) whether the Respondent considered language similar to that used by Perez to be offensive; (8) whether the employer maintained a specific rule prohibiting the language at issue; and (9) whether the discipline imposed upon Perez was typical of that imposed for similar violations or disproportionate to his offense.”

And then, after an “objective review” of these factors the Board said: “We find that an objective review of the evidence under the foregoing factors establishes that none of them weighs in favor of finding that Perez’ comments were so egregious as to take them outside the protection of the Act.” Now the Board went through each one of these factors and found that they did not support termination of the employee. But here are my two favorite comments:

“The location and subject matter of Perez’ post (factors four and five) also do not weigh in favor of finding that Perez’ comments lost the protection of the Act. He posted his comments while alone, on break, and outside the Respondent’s facility. There is no evidence that his comments interrupted the Respondent’s work environment or its relationship with its customers. Further, his comments echoed employees’ previous complaints about management’s disrespectful treatment of service employees and encouraged employees to vote in favor of union representation.”

He posted his comments “while alone, on break and outside.” Are you kidding me? He posted his comments on Facebook where, as the Board itself admitted, they could be viewed by “his Facebook friends, which included some coworkers and . . . others who visited his personal Facebook page.” But wait, as the Board said, these comments encouraged employees to vote in favor of the union? Again, are you kidding me? Does that mean if I stick “Vote YES for the UNION” on any statement I make, it gets the protection of the Act?

And here is my second favorite “rationalization” in this opinion: “Nor was Perez’ reference to McSweeney’s family beyond the Act’s protection. We agree with the judge that Perez’ comments were not a slur against McSweeney’s family but, rather, “an epithet directed to McSweeney himself.” Of course it was. I wasn’t really talking about your family, I was talking about you. And that makes it so much better.

And just one more little thing, the Board actually said: “Although we do not condone Perez’ use of obscene and vulgar language in his online statements about his manager, we agree with the judge that the particular facts and circumstances presented in this case weigh in favor of finding that Perez’ conduct did not lose the Act’s protection.” Sorry, but it looks to me like the Board does condone his language. After all, they gave him his job back.

What does all this mean? Well, strictly speaking from a legal point of view, it means that these social media cases, which were hard enough to figure out just got harder. It means that no matter what an employee says, no matter how bad it is, if you have a union election campaign going on, you need to look at everything that is going on in the workplace before you fire him.

And it seems to me it means one more thing. The Board has lost sight of the forest for the trees.

Shifting the Burden for Pregnancy: That’s Clear, Right?

On Wednesday, March 25, 2015, the Supreme Court issued its decision in Young v. United Parcel Service. Those of us that are employment lawyers have been anxiously awaiting this decision because it is going to clear up just what we have to do with light duty and pregnant employees. You see, there has been some confusion under the federal law regarding what, if any, duty an employer had to provide light duty work to pregnant employees when that same employer provided light duty work to other employees. It has been pretty common for an employer to provide light duty work to employees who were, say, hurt on the job, but not provide light duty work to any employee who was hurt off the job. Is that OK? Well, Young was going to clear all that up and answer that question.

Not so fast, my friend.

OK, what did the Court do? Well let’s start with the issue before the Court. The Pregnancy Discrimination Act (the “Act”) amended Title VII to say that discrimination because of pregnancy was discrimination because of sex. Simple enough, right? But it doesn’t stop there. The Act also says that an employer must treat “women affected by pregnancy the same for all employment-related purposes . . . as other persons not so affected but similar in their ability or inability to work.” 42 U.S.C. § 2000e(k). Now, that does not come out and say you have to provide accommodations for pregnant employees who are limited because of their pregnancy like the ADA does about disability, but it’s as close as you can get without actually saying it, now isn’t it? And this second clause of the Act is the one the Court was dealing with in Young.

And what the Court did in interpreting this second part of the Act was first reject the arguments made by both sides in the case.   Ms. Young (and the United States by the way) argued that this second part of the Act essentially meant that if you accommodated anyone, you had to accommodate a pregnant employee who is similarly impaired. No, said the Court, that is creating what the Court called a “most favored nation” approach for pregnant employees and Congress could not have meant that.   And that means that the recent EEOC Guidance on Unlawful Discrimination Against Pregnant Workers has to be reworked. And the EEOC knows it. UPS, on the other hand, argued that this second clause really only helped define that pregnancy discrimination equals sex discrimination. And the Court rejected this out of hand for reasons we don’t have to get into.

Well, what is the answer? The Court held that the way to determine if Ms. Young was discriminated against was to apply the McDonnell Douglas burden shifting analysis. Simple enough for an employment lawyer, we have been using this to litigate employment cases for years. So, says the Court, a plaintiff alleging that the denial of an accommodation constituted disparate treatment under the Act’s second clause may make out a prima facie case by showing:

. . . that she belongs to the protected class, that she sought accommodation, that the employer did not accommodate her, and that the employer did accommodate others ‘similar in their ability or inability to work.’

Id. at 20-21. The burden or production then shifts to the employer to show a legitimate, nondiscriminatory reason for its decision, and if the employer does so, the employee can still prevail by showing that the “legitimate, nondiscriminatory reason” is actually a pretext for intentional discrimination.

Easy enough. Been there, done that. But wait a minute. Just a couple of things to point out here. First, when discussing the “legitimate, nondiscriminatory reason” the Court noted:

But, consistent with the Act’s basic objective, that reason normally cannot consist simply of a claim that it is more expensive or less convenient to add pregnant women to the category of those (‘similar in their ability or inability to work’) whom the employer accommodates.

Id. at 21. Does that mean we can’t continue to have a policy that provides light duty to only those who are hurt on the job? Not sure, because that was not the case here. In this case, UPS provided light duty to a number of categories of workers including those hurt on the job, those “disabled” under the ADA, and those who lost their DOT certification to drive. Might it be different if ONLY those hurt on the job got light duty? It might, it might. After all, the Court did say:

Young might also add that the fact that UPS has multiple policies that accommodate nonpregnant employees with lifting restrictions suggests that its reasons for failing to accommodate pregnant employees with lifting restrictions are not sufficiently strong. . . .

Id.

But the Court didn’t stop there either. When discussing how a plaintiff might survive summary judgment the Court noted:

We believe that the plaintiff may reach a jury on this issue by providing sufficient evidence that the employer’s policies impose a significant burden on pregnant workers, and that the employer’s ‘legitimate, nondiscriminatory’ reasons are not sufficiently strong to justify the burden, but rather—when considered along with the burden imposed—give rise to an inference of intentional discrimination.

The plaintiff can create a genuine issue of material fact as to whether a significant burden exists by providing evidence that the employer accommodates a large percentage of nonpregnant workers while failing to accommodate a large percentage of pregnant workers. Here, for example, if the facts are as Young says they are, she can show that UPS accommodates most nonpregnant employees with lifting limitations while categorically failing to accommodate pregnant employees with lifting limitations.

Id.

What the Court did here essentially was apply a really tried and true method for litigating discrimination complaints to the Pregnancy Discrimination Act but with a bit of a disturbing twist. Justice Scalia in his dissent points out:

Normally, liability for disparate treatment arises when an employment policy has a ‘discriminatory motive,’ while liability for disparate impact arises when the effects of an employment policy ‘fall more harshly on one group than another and cannot be justified by business necessity’. . . . In the topsy-turvy world created by today’s decision, however, a pregnant woman can establish disparate treatment by showing that the effects of her employer’s policy fall more harshly on pregnant women than on others.

Young, (Scalia, dissenting at 8).

OK, that’s all clear, right? You know just what to do, right? No? Here is what you do. If you have a policy that provides benefits to one class of employees, say, a light duty policy that only applies to employees hurt on the job, and pregnant employees don’t get the same benefit, we need to talk. So give us a call.

The regular rate exclusions: well, you showed up. I guess that’s worth something.

Editor’s Note:  OK you guys know how much I have really enjoyed Emily’s work on this blog but I have to give her a bit of constructive criticism here.  Don’t you think a better way to start this thing would have been “I woke up, got out of bed, dragged a comb across my head . . . ” etc. etc.?  Those of you that are old enough are all singing the Beatles’ “A Day In the Life” right about now, aren’t you?  Well, in fairness to Emily, she’s pretty young, and she may not even know who the Beatles are, then again one of them is singing with Kanye so. . . Maybe?  Anyway, we will leave it the way she wrote it.  Thanks again Emily for all of your hard work.

You get up in the morning. You drag yourself out of bed, into the car, and go to work. After all that, there is no work for you to do. The FLSA does not in any way require that employers compensate employees for coming in when there is no work to do if no hours are actually worked. Many employers do offer “show-up” or “reporting” pay for this situation, whether it be part of a collective bargaining agreement or as a voluntary benefit. Also, a few state laws require reporting pay: check with your labor attorney for details. Similarly, employers may offer “call-back” pay for cases where an employee is called back after the employee’s regular hours. Again, it’s not required by the FLSA, but it’s a relatively common term in a collective bargaining agreement.

The extra payments for showing up or being called back or reporting are not payment for hours worked, and so can be excluded from the regular rate. Of course, any part of the payment that is compensation for hours worked must still be included.

For example, say I get paid $10.00 per hour, but my employer and I have an arrangement where if I show up and there is no work to do, I will get paid for at least three hours of time. One day I show up and there is only one hour of work to do, so I do the hour of work and get paid $30.00. I worked for one hour, so $10.00 of the $30.00 is compensation for hours worked, which must be included in the regular rate. The other $20.00, however, is payment for hours not worked, and so need not be considered when calculating the regular rate. However, that $20.00 also cannot be credited towards overtime compensation since it is not payment for hours worked.

Back when I was a toy store salesperson, (I told you I was a toy store salesperson when we talked about bonuses and you were just as fascinated then as you are now) if the store needed extra help, there was a bargaining process to try to get us to come back in. Usually the currency was food, alcoholic beverages, or the use of the boss’s boat. Once it was to be allowed to take on the most coveted job in the store for the next day, which was to go out to a field, set up a bunch of kites, and supervise them all day. It all sounds like fun and games until a 12-foot ghost delta (that is a kite for those of you that aren’t geeks like me) is falling out of the sky and you have to keep it from hitting the horrified bystander children. I think call-back pay would have been a better option.  So this was fun (OK not really, but I got credit for it) and maybe Steve will “let” me do it again (but I hope not) so until then. Thanks, and now back to this blog’s regularly scheduled author.

The regular rate exclusions: premium pay

Many employers operate on holidays, or weekends, and pay employees more on holidays to encourage them to work. Some do this the wrong way – for example, it always seems wrong to me that it’s New Year’s Day, not New Year’s Eve, that gets the “holiday” status. Once, I worked at a video store that was open 365 days a year, and I worked New Year’s Eve. That year there was a huge snowstorm and everybody wanted movies. They paid me time and a half, all right – but only for the hour and a half that my 5 p.m. to 1:30 a.m. shift bled over to New Year’s Day from New Year’s Eve. But, I digress. I don’t work in video rental now for a reason (plus my employer declared bankruptcy about six months after I left along with most other traditional video rental companies).

But I digress, so back to how to treat this premium pay when calculating the regular rate? A burning question, I know. The FLSA considers these premiums a form of overtime pay only if the premium is at least time and one-half of the employee’s rate for similar work in non-overtime hours. 29 CFR § 778.203(a). For pieceworkers or workers with more than one rate, this rate is “either (1) the bona fide rate applicable to the type of job the employee performs on the “special days,” or (2) the average hourly earnings in the week in question.” 29 CFR § 778.203(a). If the premium meets that requirement, it need not be included in the regular rate and can be credited towards overtime compensation.

The other type of premium considered an overtime premium is extra pay for hours outside of an employee’s normal working hours; for example, if the employer pays a premium for working more than eight hours a day. That can be credited toward your overtime obligation.  Here is what I mean.  If you promise to pay time and one half for all work in excess of 8 hours in a day and the employee works say 10 hours on Monday so by the end of the week they have worked 42 hours you don’t have to pay the overtime premium twice.  In other words, you get credit at the end of the week for the 41st and 42nd hours because you already paid the employee time and one half for the 9th and 10th hour they worked that workweek.

The catch is that you can’t give an employee arbitrary “normal working hours” to avoid paying overtime. For example, say my employee’s “regular” working hours are 8 a.m. to 12 p.m., and during that time I pay an artificially low hourly rate. From 12 p.m. to 5 p.m., I pay the employee time and one-half for working outside of her “regular working hours.” That way I can get out of rolling the higher rate into the regular rate for overtime, right? No – the regs call this scheme out as “a device to contravene the statutory purposes and the premiums will be considered part of the regular rate.” 29 CFR § 778.202(c).

The regulations do make a distinction between paying employees a premium for work outside of regular working hours and paying a premium for undesirable working conditions, like a standard shift differential. If you pay a premium for work outside an employee’s regular working hours (which must not exceed eight hours per day) or outside of the regular workweek (which must not exceed 40 hours per week) and the pay with premium is at least time and one-half, then that is considered overtime compensation and you need not include the premium in the regular rate. However, if you pay a premium for undesirable working conditions, such as paying more for hours worked between midnight and 6 a.m. only, that premium can neither be excluded from the regular rate nor credited towards overtime compensation. 29 CFR § 778.204(b). The rationale is that you are not really paying an overtime premium, you are paying more because no one likes working overnights.   And by the way, if you don’t like working overnight, don’t go to law school.  Lawyers work all the time.

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