May 18, 2016

Long Awaited New Overtime Rules Issued

Posted in Administrative Exemption, Computer-related Occupations Exemption, Executive Exemption, Exempt/Non-Exempt Employees, Fair Labor Standards Act, Outside Sales Exemption, Overtime, Professional Exemption, Uncategorized tagged , , , , , , , at 1:15 pm by Tom Jacobson

time clockThe much-anticipated new overtime rules have been issued by the United States Department of Labor. The new rules will go into effect December 1, 2016 so employers will have until then to prepare.

The Society for Human Resource Management (SHRM) has published an excellent summary of the new rules, and I encourage you to review that. Then, contact me to discuss how to implement the new rules in your workplace.

Also, the new rules will be discussed at the 13th Annual West Central Minnesota Employment Law Update. There are still a few seats available at the seminar — click here for registration information.

For more information about these or other employment law issues, please contact me at taj@alexandriamnlaw.com.

The comments posted in this article are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2016 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA.

April 22, 2016

Registration Open for 13th Annual Employment Law Update

Posted in Discrimination, Fair Labor Standards Act, Reasonable Accommodation tagged , , , , at 11:13 am by Tom Jacobson

Swenson Lervick Law FirmPlease join us for the 13th Annual West Central Minnesota Employment Law Update at the Alexandria Technical and Community College on Thursday, June 2, 2016!

This year’s topics include:

  • Hot off the Press — Employment Law News You Can Use
  • The Changing Nature of Accommodation
  • New FLSA Developments and Salary Rules
  • Legal Considerations for Transgender Employees

This annual Employment Law Update will again focus on the significant changes and updates to employment law issues and provide current information and resources in a variety of important areas. In addition, the event will include an informative panel discussion with employement law attorneys who will answer your questions about the featured sessions and other timely topics on employment law. SHRM CP, SCP, and HRCI credits are approved for the sessions, with certificate information available for attendees.

Presenting attorneys will be Tom Jacobson, Mike Moberg, Sara McGrane and Penelope Phillips.

PLUS…this year’s attendees will also enjoy this Bonus HR Session:

Cultivate Courage” presented by Dave Cornell. Dave is a keynote speaker, trainer, and personal development and leadership coach, provides a variety of services to individuals and organizations, all designed to help people be better than they think they can be and do things they think might not be possible: see opportunities instead of roadblocks, embrace change and create a vision for new possibilities, and transform and energize from the inside out.

Please see the full seminar Agenda and Registration information on the attached flyers.

Seating is limited. Registrations are due by May 23, 2016.

We hope to see you there!

February 18, 2016

New Overtime Rules Could Result in Loss of Exempt Status for Salaried Employees

Posted in Administrative Exemption, Executive Exemption, Exempt/Non-Exempt Employees, Fair Labor Standards Act, Hours Worked, Professional Exemption tagged , , , , , , , , , at 4:58 pm by Tom Jacobson

new flsa overtime rules

Many salaried employees would lose their exempt status under the DOL’s new overtime rules.

The U.S. Department of Labor’s proposed changes to the nation’s overtime pay rules would have a profound impact on workplaces throughout the country. The impact would be the potential loss of exempt status for many salaried employees. To prepare, employers should familiarize themselves with the proposed new rule and review their pay practices to ensure compliance in case the new overtime rules take effect.

The new rules would increase the minimum salary an employee must be paid before s/he may be classified as exempt from overtime pay under the Fair Labor Standards Act. This means many employees who are now properly classified as exempt will no longer be exempt. Consequently, they would then be eligible for overtime pay if they work more than forty hours in a workweek.

The change would come about because the FLSA generally requires most U.S. employers to pay overtime (that is, one and one-half times the employee’s regular rate of pay) when employees work more than forty hours in a work week. However, certain categories of employees are exempt from that requirement. To qualify for some exemptions, those employees must not only perform certain duties as specified in the FLSA, but they must also be paid a minimum salary.

Currently, that minimum salary is $455 per week ($23,660 per year). Under the new rule, that threshold would more than double to $970 per week ($50,440 per year).

The impact can be illustrated with a hypothetical workplace where an employee is currently paid a salary somewhere between $24,000 and $50,000 per year and works an average of 45 to 50 hours per week. Assuming that employee meets one of the FLSA’s “duties” tests, the employee would likely be considered exempt and not entitled to overtime pay. Therefore, the employee would be paid the same regardless of how many hours s/he works in a week.

If the new rules take effect, the same employee would no longer be exempt, and s/he would be entitled to overtime pay for the extra five to ten hours of work each week. Therefore, the employer would need to increase the employee’s salary to meet the new threshold and maintain the exemption, or the employer would need to convert the employee to an hourly-rate employee and pay time and a half for any overtime.

The new rules have not yet gone into effect, and it is not entirely clear if and when they will. They were initially slated to take effect this spring. However, the Society for Human Resource Management reports that this may not happen until later this year. SHRM also reports there is a remote chance that Congress could overturn the rules using the Congressional Review Act and/or that the rules will be challenged in court.

In the meantime, employers should pay attention to the potential rule change and be prepared to change their pay practices to remain in compliance. Suggestions include:

  • Determine which currently exempt employees would no longer be exempt if the salary threshold increases;
  • Assuming an employee’s exemption would be lost under the new rules, decide whether to increase the employee’s salary to meet the new threshold or convert the employee’s salary to an hourly rate basis;
  • Budget for any increased overtime costs resulting from employees who would become eligible for it under the new rules;
  • Review scheduling issues to determine whether hours can be reduced to limit the overtime liability for an employee who must be treated as non-exempt;
  • Address morale issues that could result from any perceived “demotion” of employees from exempt/salaried to non-exempt/hourly status.

In addition, although the proposed new rules do not alter the “duties” test for FLSA exemptions, employers would be wise to take this opportunity to review their exempt employees’ duties to determine whether they actually meet those duties tests. This is because even if an employee meets the salary test (whether under the current or proposed new standards), that does not automatically mean the employee is exempt from the law’s overtime pay requirements.

For more information about FLSA exemption issues, please contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2016 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA

July 20, 2015

FLSA Misclassification Proves Costly for Local Employer

Posted in Administrative Exemption, Computer-related Occupations Exemption, Enforcement, Executive Exemption, Exempt/Non-Exempt Employees, Fair Labor Standards Act, Minimum Wage, Outside Sales Exemption, Overtime, Professional Exemption tagged , , , , , , , , , at 10:22 am by Tom Jacobson

US Department of Labor v Patel

Local hotelier ordered to pay $184,000.00 to settle wage violation suit.

A Fargo, ND hotelier with a property in Alexandria, MN will pay nearly $200,000.00 to settle a lawsuit brought by the US Department of Labor (see Court Orders Hotel Owner to Pay More than $180K in Back Wages, Damages to 200 Workers Across North Dakota, Montana and Minnesota, DOL Release No. 15-1294-DAK; Lawsuit Settlement Helps Hotel Workers in Alexandria, Echo Press July 16, 2015). The DOL alleged in the suit that Bharat I. Patel violated the Fair Labor Standards Act by failing to pay minimum wage and/or overtime rates to nearly 200 employees at a number of hotels, including the Country Inn and Suites in Alexandria.

More specifically, the DOL claimed that Patel misclassified nonexempt workers as exempt salaried employees (see US Labor Department Lawsuit Alleges Hotel Owner Owes $200K in Wages, Damages to 192 Workers at 13 Hotels, DOL December 16, 2104). This, the department said, resulted in these workers not receiving minimum wage for all hours worked and not being paid overtime. According to the DOL, the company also failed to combine hours for employees who worked at two locations in the same workweek and failed to maintain accurate records of all hours worked and pay rates.

The lawsuit was resolved via a July 10, 2015 consent judgment in which Patel denied any wrongdoing but agreed to pay $184,000.00 to settle the dispute. In addition Patel agreed to train managers on FLSA wage requirements and to provide workers information on wage laws and contact information for the DOL’s Wage and Hour Division for at least four years.

How are FLSA exemption mistakes made, and why are they so expensive? To answer that, one needs to understand the two basic principles of the FLSA’s overtime rule. First, the FLSA generally requires that employees be paid at 1.5 times their regular hourly rate for their overtime (that is, their hours worked in excess of 40 hours in a workweek). Second, some employees, such as certain executives, administrators and professionals are exempt from that overtime requirement.

Claiming such exemptions may seem simple, but the FLSA has complex definitions of who can lawfully be classified as an exempt executive, administrator or professional. Those definitions all include a requirement that these employees be paid a salary of at least $455.00 per week. They also include a “duties test.” This requires that in addition to the salary requirement, the employees’ actual job duties must meet certain criteria before the employees can be considered exempt.

Thus, one of the most common mistakes starts when employers wrongly assume that by paying someone a salary, they automatically become exempt from overtime. Often, the employers also give that person a title such as “manager.” Then, the employers allow or require those people to work more than 40 hours per week without paying for the overtime.

But paying someone a salary and calling them a manager (or some other authoritative title) does not make them exempt if they do not also pass the duties test for an FLSA exemption.

This mistake is expensive. When non-exempt employees are misclassified as exempt, they are entitled to recover all of the overtime they should have been paid during the preceding two years. Plus, they can recover an additional equal amount as liquidated damages and their attorney’s fees and court costs. These costs are compounded when multiple employees are at issue. And, as was the case in Patel lawsuit, employers can also be ordered to implement other remedial measures such as training.

The DOL’s recent rulemaking actions provide an additional reason for employers to pay close attention to these FLSA exemption issues. On July 6, 2015 the DOL proposed a rule that would raise the salary basis test from around $23,600.00 per year to approximately $50,000.00 per year. If implemented, the new rule would greatly reduce the number employees who would be exempt under the law.

As the Patel case confirms, FLSA exemption mistakes are costly. And, based on recent DOL activity, those mistakes could get even more expensive in the future.

If you are an employer that is wondering if your employees are properly classified under the FLSA, or if you are an employee who wonders if you have been misclassified and underpaid, please contact me at alexandriamnlaw.com or  taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2015 Swenson Lervick Syverson Trosvig Jacobson Schultz Cass, PA

December 9, 2014

Supreme Court sides with employers in security screenings pay case

Posted in Fair Labor Standards Act, Hours Worked, Principal activities, Security screenings tagged , , , , , , at 3:02 pm by Tom Jacobson

time clockThe United States Supreme Court today ruled unanimously in favor of employers in a case relating to whether or not employees must be paid for time spent in security screenings. The case is Integrity Staffing Solutions, Inc. v. Busk.

Integrity Staffing Solutions required its hourly workers to undergo security screenings before leaving the warehouse each day. The workers were not paid for this time, which took about 25 minutes per day. A group of former employees sued, claiming the practice violated the Fair Labor Standards Act (as amended by the Portal to Portal Act). This law generally requires employers to pay employees for all hours worked.

The high court rejected the employees’ claims. Specifically, the court noted that under the FLSA, employers do not have to pay for activities that occur before or after “the performance of the principal activities that an employee is employed to perform.” Under the court’s precedents, compensable “principal activities” include tasks that are “integral and indispensable” parts of the principal activity.

Thus, the legal question was whether or not the screenings were part of the employees’ principal work activities (which would be compensable) or mere pre- or postliminary activities (which would not be compensable).

In siding with the employer, the court ruled that the screenings were not the principal activities the employees were hired to do. Rather, the court said, the employees were hired “to retrieve products from warehouse shelves and package them for shipment,” not to undergo security screenings. The court also ruled that the screenings were not “integral and indispensable” to their retrieving and packaging responsibilities.

The court expressly rejected the employees’ argument that the focus should be on whether the particular activity was required by the employer. Rather, the court said, the focus must be on whether the task was tied to the productive work that the employee was employed to perform.

The decision is a victory for employers in that it re-affirms decades of precedent that hourly employees do not have to be paid for mandatory pre- and postliminary activities that are not the employees’ “principal activities” and are not “integral and indispensable” to those activities. Employers should, however, use caution when applying this standard and should carefully analyze any pre- and post work tasks to determine whether they are or are not compensable.

For more information about this article, please contact me at alexandriamnlaw.com or  taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2014 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

September 12, 2014

FLSA: counting the cost locally

Posted in Exempt/Non-Exempt Employees, Fair Labor Standards Act, Overtime tagged , , , , , , at 11:08 am by Tom Jacobson

time clockA Douglas County, MN employer recently learned a costly lesson when it misunderstood who is and is not exempt from the overtime pay requirements of the Fair Labor Standards Act (FLSA).

In this case, an employee was given a “manager” title and paid a fixed salary, but the employee alleged that his duties were primarily custodial and customer service and did not fit within any exemption allowed by the FLSA. Applying the formula set by FLSA regulations, the employee converted his “salary” to an hourly rate ranging from $11.61 to $13.54 with an overtime premium ranging from $5.81 to $6.77 per hour.

Failing to pay an employee an additional $5.81 to $6.77 per hour may not seem like a terribly expensive mistake, but in this case the employee had evidence suggesting that he had worked about 640 hours of unpaid overtime during his last year of employment. This calculated to approximately $3,800.00 of unpaid overtime, but that wasn’t the end of the story. The FLSA also allows an employee to double the amount of unpaid back wages as liquidated damages, so using the employee’s figures, the $3,800.00 became $7,600.00.

To compound the problem, the employee claimed that the employer also withheld $1,300.00 of the his final wages in violation of Minn. Stat. § 181.13, thus triggering the 15 day wage penalty of that statute. This added another $1,700.00 to the employee’s claim.

Because these laws also allow the employee to recoup his attorney’s fees incurred in trying to recover his wages, he tacked them on as well. Those fees exceeded $4,000.00.

Thus, the employee argued that the employer’s $6.00 per hour mistake became a liability exceeding $14,000.00 (excluding the employer’s own attorney’s fees incurred in defending the claim). The case was eventually settled out of court with a confidential agreement between the parties.

The case illustrates how costly it can be when an employer improperly classifies a non-exempt employee as exempt under the FLSA. Simply calling someone a “manager” and paying her a fixed salary does not automatically make her exempt from overtime. This is because exemptions are highly dependent on the employee’s actual duties, not her title and form of pay. And, while an hour of unpaid overtime may not seem like a huge risk, when those hours accumulate over time and are doubled as liquidated damages, a few dollars can quickly become several thousand, especially when attorney’s fees and court costs are added. Moreover, it’s a much greater problem if multiple employees are involved.

For more information about FLSA exemptions, please contact me at alexandriamnlaw.com or taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2014 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

August 1, 2014

Another day, another Executive Order impacting federal contractors

Posted in Age, Alternative Dispute Resolution, Americans with Disabilities Act, Arbitration, Arbitration, Color, Creed, Disability, Discrimination, Fair Labor Standards Act, Family and Medical Leave Act (FMLA), Gender / Sex, Harassment, LGBT, Minnesota Human Rights Act, National Labor Relations Act, National Origin, Pregnancy, Race, Religion, Sexual Harassment tagged , , , at 11:23 am by Tom Jacobson

White HouseIn another attempt to flex his regulatory muscle, President Barack Obama on July 31, 2014 issued yet another Executive Order aimed at federal contractors. This one, the Fair Pay and Safe Workplaces Executive Order, requires potential federal contractors to disclose past employment and labor law violations before they can secure federal contracts.

Earlier this month, President Obama issued an Executive Order to protect the rights of LGBT employees of federal contractors (see President Issues Order to Protect LGBT Workers).

Yesterday’s Order requires most potential federal contractors to disclose violations in the past three years of thirteen specified federal labor and employment laws. These laws include the National Labor Relations Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the Americans with Disabilities Act, the Occupational Safety and Health Act, the Age Discrimination in Employment Act and Title VII of the Civil Rights Act of 1964, and any state counterparts of these statutes.

The Order also directs employers with contracts of $1 million or more to “agree that the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise.” In other words, the Order will severely limit these federal contractors’ rights to enter into pre-dispute arbitration agreements.

The Order appears to be directed at preventing repeat offenders, but it will have a major impact on employers who will need to overcome this new regulatory hurdle before securing federal contracts.

For more information about the President’s Order, see Obama Signs Executive Order Protecting Federal Contractors’ Employees (CBS News, 7/31/14), President Issues Order Requiring Contractors to Disclose Labor Law Violations When Competing for Federal Contracts (SHRM, 7/31/14), the President’s FACT SHEET: Fair Pay and Safe Workplaces Executive Order, or contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2014 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

July 28, 2014

Minimum wage hike takes effect Friday

Posted in Minimum Wage, Uncategorized tagged at 11:28 am by Tom Jacobson

Minnesota_State_Capitol_5The first phase of Minnesota’s minimum wage increases will take effect this Friday, August 1, 2014. Starting then, small employers must pay at least $6.50 per hour, and large employers must pay at least $8.00 per hour.

The law also allows for a 90-day training wage and a youth wage, both of which mirror the small employer minimum wage rates. It also includes automatic increases on August 1, 2015 and August 1, 2016, and it allows for inflationary increases starting in 2018.

For minimum wage purposes, state law defines a large employer as any enterprise with an annual gross dollar volume of sales made or business done of $500,000.00 or more. A small employer is any enterprise with an annual gross volume of sales made or business done of less than $500,000.00.

For more information about this article, please see the Minnesota Department of Labor and Industry’s fact sheet on minimum wage rates, the DOLI’s related Employer Fact Sheet, or contact me at taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2014 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

July 31, 2013

Things are not always as they seem

Posted in Americans with Disabilities Act, Disability, Discrimination, Fair Labor Standards Act, Minimum Wage, Overtime, Reasonable Accommodation tagged , , , , , , , , , , , , , at 4:50 pm by Tom Jacobson

IMG_5116 Edited“Why is Sam sticking his fingers in Spencer’s mouth?” That’s what ran through my head a couple of years ago when I snapped this picture of one of my sons and a teammate working at a swim meet. When you look closely, you’ll see that things are not always as they seem.

Things are not always as they may seem in the legal world, either. A while back I wrote about an employee who was found eligible for unemployment benefits despite her failure to report to work for two months. For more on that story, click here.

There’s also the more recent case of Lucas v. Jerusalem Cafe, LLC. where a number of workers who were unauthorized aliens sued their employer for overtime and minimum wage violations under the Fair Labor Standards Act. Because they were unauthorized aliens, our first reaction might be to question why they would have a right to sue for a FLSA violation or even collect wages in the first place. That’s what the employer argued, but the court disagreed, noting that “The FLSA does not allow employers to exploit any employee’s immigration status or to profit from hiring unauthorized aliens in violation of federal law.” Interestingly, the court also noted how the employer’s argument rested “on a legal theory as flawed today as it was in 1931 when jurors convicted Al Capone of failing to pay taxes on illicit income.”

But what if an employee sleeps on the job?  Shouldn’t he be fired? Not if waking him would be a reasonable accommodation for a disability under the Americans with Disabilities Act, according to the federal judge in Virginia who is presiding over the case of Riddle v. Hubbell Lighting, Inc.

Unemployment statutes, the ADA and the FLSA are just a few of the many employment laws where outcomes are not always what you might expect them to be. For a better idea of what those outcomes might be, please contact me at alexandriamnlaw.com or  taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2013 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

June 14, 2013

Fox outfoxed by interns

Posted in Fair Labor Standards Act, Interns and Internships, Minimum Wage, Overtime tagged , , , , , at 9:42 am by Tom Jacobson

I’ve previously written about the challenges associated with hiring interns. Generally speaking, except in limited circumstances, interns must be paid at least minimum wage under the Fair Labor Standards Act. That means that unpaid (or barely paid) internships may violate the FLSA.

As reported by The New York Times, Fox Searchlight Pictures is learning this the hard way via a lesson from a New York federal judge who has ruled that the movie maker violated the FLSA by failing to pay two interns who worked on the film, Black Swan. The same judge also ruled that a group of interns from various divisions of Fox Entertainment Group may proceed with their class action FLSA lawsuit.

What you need to know: Unless an internship program fits within narrow exceptions under the FLSA, interns will be subject to the minimum wage and overtime requirements of the FLSA.

For more information about this article, please contact me at alexandriamnlaw.com or  taj@alexandriamnlaw.com.

The comments posted in this blog are for general informational purposes only. They are not to be considered as legal advice, and they do not establish an attorney-client relationship. For legal advice regarding your specific situation, please consult your attorney.

Copyright 2013 Swenson Lervick Syverson Trosvig Jacobson Schultz, PA

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