Category Archives: Overtime Rules

2019 Law At Work – Year In Review

Medical Marijuana Act, Medical marijuana in the workplace, Overtime Rules, Tips for Employers, Wage & Hour December 23, 2019 Leave a comment

New Year 2020 Loading Bar ConceptThey say the only thing in life that is constant is change, and we certainly saw that in 2019.  This was a big year for change in employment law as legislators, courts, and regulators, shaped the workplace to reflect societal changes.  The changes we saw included new requirements that address continued fallout from the #MeToo movement, concerns about wage distribution and equity, and balancing the rights of employers and unions.  Coupling these legal changes with competitive pressures due to labor shortages in certain industries, the stakes are higher than ever for employers.  We are seeing rapid change in the workplace and now is not the time fall behind.  In case you missed it, here are some issues that we brought to employers this year:

New 2020 Overtime Rule Means Employers Must Reevaluate Which Employees Are Overtime Eligible 

As you may recall, the U.S. Department of Labor released a Final Rule which was to go into effect on December 1, 2016, but, due to a court-issued injunction, followed by change of administration, it never did.  Now, we have an updated version that goes into effect on January 1, 2020.  Although the proposals leading up to these new rules garnered a lot of ink, the new rules make some changes that were not expected and maintain the status quo in areas that were expected to change. The DOL says the increase in salary thresholds will boost wages for 1.3 million U.S. workers. More here.

What Employers Need to Know About New Jersey’s Tough New Wage Theft Law 

On August 6, 2019, New Jersey amended its Wage and Hour Law and adopted the new Wage Theft Act (WTA), creating one of the toughest wage and hour enforcement laws in the country.  This law puts a high burden on employers and imposes significantly increased liability for employers who fail to pay wages owed, including potential jail time.

Click here to read more about what this means for employers and what employers should do to protect themselves from liability under the WTA.

New Jersey Prohibits Employers From Asking Prospective Employees About Their Salary Histories  

Beginning in January, employers will no longer be able to screen job applicants based on their wage or salary history, or inquire about their historical salary, compensation and benefits. However, a prospective employee may still voluntarily provide salary information. The bill doesn’t go into effect until January 25th, but employers should be preparing to amend their recruitment processes before it is enacted.

Practically, this law means employers will need to rely on measures other than a candidate’s salary history in setting compensation, including internal pay policies and market-based analysis. Click here to learn more.

SCOTUS Rules Requirement to File Charge Before Suing Under Title VII is Nonjurisdictional: Employers Must Raise Defense Timely 

The main takeaway from the opinion named in this legal alert is that employers faced with violations of Title VII must be careful to promptly raise the defense, when available, that the employee failed to file a charge with the EEOC within the allotted time period. In many Circuit Courts of Appeal, including the Third Circuit, this has long been the law, while in other Circuits, employers could raise this defense at any time. Now, all employers must raise it timely. Employers and their counsel should be careful to do so.

If you are facing any complaints under Title VII and/or any state equivalents, click here to read about this case in more detail.

New Jersey Creates Employment Protections for Medical Cannabis Patients and Providers

In addition to the range of court decisions that shape how employers treat employees who use medical cannabis, in July, New Jersey’s legislature weighed in with new requirements. Now, no matter how an employer ultimately chooses to treat employees and applicants who use medical cannabis lawfully under the Jake Honig Compassionate Use Medical Cannabis Act, employers need to amend their drug screening programs and hiring processes to ensure that they are in compliance with this law. Employers also need to consider whether they will accept a valid medical explanation as a basis to disregard a positive test, especially in light of recent court rulings that may create liability for employers who take adverse action against employees and applicants who use medical cannabis in accordance with state law. Click here to learn more.

New Jersey Requires Pre-Tax Transportation Fringe Benefits 

The federal Tax Cuts and Jobs Act of 2017 eliminated a federal tax deduction for employers which had allowed them to deduct the cost of providing qualified transportation benefits to employees (thereby removing the tax incentive for employers to do so). In response, earlier this summer New Jersey enacted “An Act Concerning Pre-Tax Transportation Fringe Benefits” requiring all New Jersey employers with 20 or more employees to offer employees the opportunity to set aside wages on a pre-tax basis for the purchase of qualifying transportation services, such as transit passes and commuter highway vehicle travel. Click here to learn more about what this means for employers, including next steps and how to ensure your company is in compliance.

What Employers Need To Know: New Jersey’s Appellate Division Issues Historic Ruling On Medical Marijuana Users’ Rights in the Workplace

New Jersey employers need to be mindful that they no longer have a free pass to take adverse employment actions against employees and candidates solely because they use medical marijuana; those affected by such decisions will be emboldened by this new case, and their lawyers will be confident that a lawsuit challenging the adverse actions is more likely to survive a motion to dismiss at the beginning of the case. As the law in New Jersey now stands, employers are not required to accommodate medical marijuana use, but there is now an increased risk if they refuse. Additionally, various bills have been proposed and are being considered by the New Jersey legislature, which, if adopted, may expand employee rights in this area of the law.

As of right now, employers remain free to take adverse action if an employee shows any sign of impairment from use of medical marijuana, or, for that matter, any other drug, legal or not. More here.

Medical Cannabis Goes to Work 

Employers who take action against a candidate or employee based on a positive result for cannabis when the employee has a valid medical authorization and no evidence of impairment should be prepared for a fight.  Employees and their lawyers are looking for these cases in many states to try to change the law. Employers need to decide if screening out medical cannabis users is worth the risk of a potentially expensive court battle. More here.

Unions High on Cannabis 

As businesses across the country look to capitalize on the “green rush” from states’ expanded medical and adult use cannabis laws, unions are also eager to take advantage of the opportunities presented by this burgeoning, and quickly maturing, industry.  For instance, the United Food and Commercial Workers International Union has formed a cannabis-focused division and is actively representing cannabis workers in many states and seeking to expand to others.  These unions may also get a boost from legislative action in certain states.  Under New Jersey’s proposed cannabis expansion law, for example, licensee applicants who have entered into a labor peace agreement or a collective bargaining agreement receive preference in the license competition.  Expect unions to seek to represent workers in cannabis-related construction, retail, farming, cultivation, security, and processing.

Employers operating in and/or servicing the cannabis industry should consider and plan for the potential impact of labor unions in their industry.

Walmart Takes a Seat in California 

Earlier this year, Walmart reportedly agreed to pay $65 million to settle a case brought on behalf of nearly 100,000 current and former California cashiers who claimed the company violated their rights under a state law dating back to 1911 when it failed to provide them with seating.  The workers claimed Walmart, which denied any wrongdoing, breached its duty to make seating available “when the nature of the work reasonably permits.” This case is a friendly reminder that employers need to look carefully at their duty to offer reasonable accommodations to employees and to engage in an interactive process to make sure that the employer can justify any denied accommodation. More here.

What New Jersey’s New Law On Employment Contracts Means for Employers: Are Non-Disclosure and Arbitration Provisions Out? 

On March 18, 2019, New Jersey Governor Phil Murphy signed a new law, which, among other things, bars employers from requiring employees to sign or enforcing employment contracts that require employees to agree to waive certain rights or remedies and bars agreements that conceal details relating to discrimination claims. Click here for a checklist of what employers need to know, including what this law prohibits and applies to in the workplace.

Questions? Let me know.

Recall Alert: The Service Advisor Exemption The Courts Just Can’t Fix

Fair Labor Standards Act, Overtime Rules January 10, 2017 Leave a comment

In what Yogi Berra might describe as a case of “déjà vu all over again,” the U.S. Court of Appeals for the Ninth Circuit issued a January 9th decision holding that dealership service advisors are not exempt from overtime requirements under the Federal Fair Labor Standards Act (“FLSA”).  In short, the Court ruled service advisors, who were historically exempt under a dealership-specific exemption, must now be paid overtime for hours over 40, unless another exemption applies.

What was the ruling? 

As you may recall, this same Court made a similar ruling in 2015, but the U.S. Supreme Court reversed the earlier ruling in a June 20, 2016 decision that sent the case back to the Ninth Circuit.  This protracted legal back-and-forth revolves around an interpretation of whether the U.S. Congress intended service advisors to be included within the FLSA’s exemption for certain automobile dealership positions and the weight that courts should give to the U.S. Department of Labor’s historical interpretation that service advisors were exempt.

Specifically, the FLSA expressly exempts certain dealership employees from the requirement to pay overtime (1.5 times the hourly rate for hours worked over 40).  This exemption applies to, “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles, trucks, or farm implements, if he is employed by a nonmanufacturing establishment primarily engaged in the business of selling such vehicles or implements to ultimate purchasers.”  29 U.S.C. § 213(b)(10) (2016).  From 1978 to 2011, the U.S. Department of Labor interpreted this exemption to apply to dealership service advisors (as salesman of services), however, in 2011, the Department reversed course and issued a new rule that applied the exemption only to “salesman”, meaning service advisors would have to be paid overtime.

Since the Department of Labor issued this rule, dealerships have been challenging it, arguing the Department of Labor overstepped its bounds by changing course so dramatically and misinterpreted the FLSA.  When the U.S. Supreme Court weighed in in 2016, it ruled only that the Ninth Circuit improperly gave too much weight to the Department of Labor’s interpretation, without deciding whether the Court’s interpretation was correct.  The U.S. Supreme Court sent the case back to the Ninth Circuit with guidance on the level of deference it should give to the Department of Labor.  Now, the Ninth Circuit weighed in again and decided, without giving any weight to the Department of Labor, the FLSA is clear enough on its own that its exemption does not extend to service advisors.  According to the Ninth Circuit, the FLSA is meant to exempt workers who sell cars, not services.

Where does it apply? 

This decision applies to Courts in the Ninth Circuit (Alaska, Arizona, California, and Hawaii) and is binding on those courts.  While it contradicts earlier decisions by courts in the Fourth (Maryland, South Carolina, North Carolina, Virginia, and West Virginia) and Fifth (Louisiana, Mississippi, and Texas) Circuits and the Supreme Court of Montana, those decisions are now in question.  As far as the U.S. Department of Labor is concerned, dealerships should be prepared for the Department to enforce the FLSA in a consistent manner on a nation-wide basis by requiring service advisors to be paid overtime.

What is next? 

Unfortunately, this new decision is not likely to end the debate.  For now, the Ninth Circuits ruling allows the U.S. Department of Labor to interpret the FLSA consistent with its 2011 rule and for it to require service advisors to be paid overtime for hours worked over 40.  However, there will likely be another appeal to the U.S. Supreme Court and there may even be new legislation to extend the exemption to the service advisors.  Moreover, with the new administration and new Secretary of Labor, the Department of Labor may, once again, change course.

What should dealerships do? 

First, dealerships need to assess whether, in fact, their service advisors are working in excess of 40 hours per weekly pay period.  Second, if the service advisors are exceeding 40 hours, dealerships should evaluate their pay plans and staffing structure to determine the scope of their potential overtime obligations and options for mitigating them.  For instance, even if the dealership-specific exemption does not apply to service advisors, certain service advisors on compliant commissioned pay plans may fall within other FLSA exemptions.

Ultimately, dealerships should buckle up for a bumpy ride.  In spite of multiple attempts, courts, legislators, and the Department of Labor have not been able to fix the ambiguity with any certainty (if this were a new car, it would be a lemon), but Flaster Greenberg can help and, to learn how, we invite you to contact Ken Gilberg, Adam Gersh, or any member of Flaster Greenberg’s Labor and Employment Practice Group.

Employers Should Not Go Overboard On Proposed Changes to Overtime

Fair Labor Standards Act, Overtime Rules July 8, 2015 Leave a comment

Benny Frank ClockDespite last week’s alarmist press reports, employers can hold off on calling their payroll providers and authorizing overtime for previously exempt managers.  When President Barak Obama disrupted the news cycle by proposing changes to the overtime rules under the Fair Labor Standards Act, as is too often the case when the press reports on legal developments, many of the press reports covering the topic glossed over important details even suggesting that the President had changed the rules.  The President’s proposed rules have a number of hurdles to overcome before they transform overtime and there is significant opposition that may in fact limit or refine the proposed rules changes.

What is proposed?

Since 2004, federal law treated salaried workers who earn at least $23,660 and meet certain “white collar exemption” requirements as exempt from overtime.  Salaried employees who meet the white collar exemption need not be paid overtime, or even minimum wage, no matter how many hours they work.  For employees to be exempt from overtime, they must meet both the salary and the duties test, which means workers whose annual salary is less than $23,660 do not qualify for the white collar exemption and must be paid both minimum wage and overtime, even if they are otherwise white collar workers.

Under new rules proposed by President Obama, the threshold will move to $50,440 as early as 2016 and be adjusted annually based on the pay of the 40th percentile of full-time U.S. workers, although alternate methods of computing an ongoing adjustment are also being considered. If this rule is implemented in 2016, it would mean salaried employees whose annual earnings are less than $50,440 would not qualify for the white collar exemption even if they otherwise met the criteria for white collar employees.  Additionally, under the proposal rule changes, those classified as “highly compensated employees”  must earn at least $122,148 (rather than the current $100,000) in total annual compensation to be automatically exempt from overtime. This sweeping change is being touted as an income equality measure to combat employer’s practices of using the white collar exemption to avoid paying overtime to low level managers.  In essence, if adopted, the new rule will mean employees who earn between $23,660-$50,440 and were not overtime eligible will have to be paid for overtime if they work more than 40 hours in a workweek.

What is next?

The proposal is not ready to be adopted by the Department of Labor.  The Department of Labor is accepting comments from interested parties, including employers, for 60 days and considering additional changes which may materially affect which employees must be paid overtime.  For instance, the Department of Labor may refine other non-salary aspects of the white collar exemption tests.  Additionally, business groups and elected officials who oppose this change are vowing to fight it with legislation and litigation, which may delay its implementation.

What should employers do now?

First, employers should be sure that they are properly using the white collar exemption even for employees with salaries above the current threshold.  Employers need to remember that a salary that meets the threshold does not in and of itself make an employee exempt from overtime.   There are specific tests for executive, administrative, professional, computer, outside sales and highly compensated employee exemptions that depend on the duties these employees perform and recent court rulings have refined and narrowed the application of these tests.  Employers who have questions or concerns about compliance should consult with their counsel and consider a wage and hour audit to determine if they are currently in compliance with applicable federal and state laws regarding overtime pay.

Second, employers should plan for an increase in the salary threshold.  Even if this rule change is not fully implemented, employers should expect that the threshold will increase from its current level.  Employers, with the guidance of counsel, should begin to analyze how to best structure their workforces in light of coming changes.  For example, employers should be evaluating whether it makes more business sense to start paying more employees overtime or hire more staff or restructure certain aspects of their workforces.

Third, employers should be careful not to forget about compliance with applicable state wage laws, which differ from the federal law and will not automatically change, even if the federal law does.

In sum, employers should expect that, one way or the other, the white collar exemption will be narrowed and more employees will be eligible for overtime.  Now is the time for employers to ensure their current payroll practices and policies comply with the Fair Labor Standards Act and state law, but they can hold off on making any sweeping payroll changes until the new regulations are finalized and adopted, and the nuances of the new rules are ironed out.

Questions? Let me know.

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