Bass, Berry & Sims attorney Tim Garrett provided insight on the impact that hospitals may encounter as a result of the Department of Labor’s (DOL) new overtime pay rule, set to take effect December 1, 2016. The new rule will more than double the salary level for those employees classified as exempt from overtime pay
The U.S. Department of Labor (DOL) has announced a new “salary level” to the so-called white collar overtime exemptions under the Fair Labor Standards Act. In short, the new rules take effect December 1, 2016, and will more than double the salary level for those employees classified as exempt from overtime pay from the current level of $23,660 to the new level of $47,476, or $913 per week. The highly compensated executive salary level has been raised to $134,000. The new rule is expected to impact millions of employees and is expected to be especially hard on small businesses, nonprofits, many retailers, and employers in some regions of the country.
The DOL also announced that the salary level will be adjusted automatically every three years, based on the 40th percentile of the weekly earnings of full-time salaried workers in the lowest-wage Census region. Historically, the DOL has taken the position that future adjustments in salary level required new rule-making.
Home healthcare agencies and other third party employers of home care workers recently lost a key fight to prevent the Department of Labor (“DOL”) from eliminating Fair Labor Standards Act (“FLSA”) exemptions for employees who provide companionship services and live-in care within a home. On August 21, the District of Columbia Court of Appeals reversed a district court decision invalidating the regulations, meaning that employers in at least 27 states (where state law has not afforded the home care workers with minimum wage or overtime protections) should now modify their pay practices to conform with the new regulations.…
Continue Reading New Ruling Impacts Home Care Worker Exemptions Under the FLSA
The Armed Services Board of Contract Appeals (ASBCA) recently granted a claim sponsored by the prime contractor for its subcontractor’s employee severance costs under a fixed-price contract. Appeal of Government Contracting Resources, Inc., ASBCA No. 59162 (March 12, 2015).
Government Contracting Resources, Inc. (GCR), sought additional compensation for severance costs it incurred, along with its subcontractor, upon expiration of its service contract with NASA for the distribution of mail at the Kennedy Space Center. A collective bargaining agreement (CBA) between GCR subcontractor Creative Management Technology Inc. (CMT) and the International Association of Machinists and Aerospace Workers (IAMAW) granted severance pay to CMT bargaining unit employees who were not rehired by a successor company at the end of the service contract. The provisions of the CBA had been incorporated, through a modification, into GCR’s service contract with NASA.
On October 28, 2014, the National Labor Relations Board (the “Board”) again held that employers violate Section 7 of the National Labor Relations Act (“NLRA”) when they require employees to sign class action waivers as a condition of their employment. The Board first so held in D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012). Although numerous courts have since rejected the Board’s reasoning in D.R. Horton, the Board nonetheless reaffirmed its position, meaning that employers who maintain such agreements will continue to face significant hurdles to their enforcement.
In Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014), the employer (“Murphy Oil”) required, as a condition of employment, that all employees sign a Binding Arbitration Agreement and Waiver of Jury Trial (the “Agreement”). The agreement specifically provided:
Lawsuits under the minimum wage and overtime laws have become a cottage industry. Filings of these lawsuits have increased 400% from 2000 to 2011. Why? While some reasons may depend upon whom you ask (and their political leanings), there are clearly some trends, as noted in a recent article here.
A few reasons:
- The Fair Labor Standards Act (FLSA) was passed in 1938 and the substance of its provisions has remained constant since then. But, our economy has changed dramatically – from a primarily manufacturing-based economy then, to a primarily service-based economy now. This leads to some “square peg/round hole” problems as employers try to apply concepts from a bygone era to a new economic reality.
Continue Reading Wage and Hour: Why So Many Lawsuits?
On February 13, 2012, the federal district court for the Middle District of Tennessee granted conditional certification of a class action case under the Fair Labor Standards Act (“FLSA”) against Coyote Ugly saloons. As reported by Law360, the court conditionally certified several distinct classes, the most interesting of which is all employees who “worked as bartenders, barbacks, or waitresses at any company-owned Coyote Ugly saloon at any time within the last three years who were required to contribute their tips to a “tip pool” in which security guards also participated.” Under the FLSA, an employer may take a “tip credit” against the minimum wage owed to employees. That is, an employer may pay a tipped employee $2.13 an hour under the FLSA (note that the amount of the tip wage can vary by state or local law), and then rely on the tips received by a server to make up the difference between $2.13 and the minimum wage. (If the tips received by the employee are insufficient to bring the employee’s compensation up to minimum wage, the employer must make up the difference.)
The FLSA also permits a “tip pool”; that is, an employer may require servers to contribute a portion of their tips to a tip pool and then pay out the funds in the tip pool to other employees who “customarily and regularly” receive tips (See Wage and Hour Fact Sheet #15: Tipped Employees under the Fair Labor Standards Act). Such a rule immediately reveals the nature of the challenge in complying with the FLSA regulations regarding a tip pool. If the employees “customarily and regularly” received tips directly, they wouldn’t need to be in a tip pool! The regulations and case law have gradually come to define an employee who “customarily and regularly” receives tips as an employee who participates in directly providing service to the customer – such as the hostess at the front door and perhaps a busboy or bartender (as opposed to the dishwasher in the “back of the house”.) One of the factors used to determine whether an employee may be paid out of the tip pool is the extent to which they have any “face-to-face” contact with the customer. See Kilgore v. Outback Steakhouse of Florida, Inc., 160 F.3d 294 (6th Cir. 1998). …
Continue Reading Do Bouncers Provide Customer Service? The Challenges of Tip Pooling
A Cautionary Reminder for Employers
A Texas Federal Court recently ruled that terminating an employee because she wanted to pump breast milk at work is not sex discrimination. The Equal Employment Opportunity Commission sued on behalf of an individual employee who had mentioned her need to pump breast milk at work and soon thereafter was fired for job abandonment. The employer claimed that the employee had not kept the employer informed during her leave or about her desire to return to work. The employer explained that its decision to terminate the employee for job abandonment already had been made before the employee’s request.
The Washington Post reported on this ruling last week.…
Continue Reading Texas Court Rules Against EEOC – “Lactation Discrimination” Is Not Unlawful Sex Discrimination But …
In a move that could significantly increase employer costs in the home care market, the Department of Labor has published proposed rules that will severely limit the current minimum wage and overtime exemptions for those who provide “companionship services.”
The proposed rules basically do two things:
- The rules narrow the definition of “companionship services. The
A federal appeals court recently held that a job applicant cannot sue a prospective employer for retaliation under the Fair Labor Standards Act (FLSA).
In the case, Dellinger v. Science Applications International Corp., the employee had to complete a security clearance form after a conditional offer of employment. The form asked the applicant if she had been involved in any non-criminal court actions. The applicant disclosed she had sued her former employer for wage/hour violations. The employer then withdrew the offer of employment. As a result, the job applicant sued for retaliation.
In ruling that the applicant did not have a claim, the Fourth Circuit Court of Appeals (the federal appeals court for appeals from Maryland, North Carolina, South Carolina, Virginia and West Virginia), explained that the anti-retaliation provision of the FLSA applies only to actual employers, not prospective employers. The Court recognized the compelling argument of the job applicant but still held that extending the law as requested would go beyond the law’s plain language. An applicant who never began or performed any work could not, by the language of the FLSA, be an ’employee,’ the Court said.