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Hot Off the Press: New Overtime Rules

October 4, 2019

The Federal Labor Standards Act requires employers to pay overtime to employees who work over 40 hours in a workweek, unless the employee works in an “exempt” position. There are various classes of exempt employees, one of which is the executive, administrative and professional employees (i.e., the “white-collar” exemption). Generally, to qualify for the “white-collar” exemption, an employee:

  • must be paid a fixed weekly salary (the “salary basis test”), and

  • must primarily perform executive, administrative or professional duties in accordance with the Department of Labor regulations (the “duties test”).

Released on September 24, 2019 but effective January 1, 2020, the Trump Administration has announced its intention to revise the salary threshold for white collar employees and highly compensated employees. The new regulations do the following:

  1. Increase the threshold salary earnings for exempt executive, administrative and professional employees (i.e., the “white-collar” exemption) by 50% from $455 per week ($23,660 annually) to $684 per week ($35,568 annually) and for highly compensated employees from $100,000 annually to $107,432 annually.

  2. Allow employers to use non-discretionary bonuses and incentive payments, in kind commissions paid at least annually, to satisfy up to 10 percent of the salary threshold.

  3. Permit employers to make a “catch up” payment if an employee does not earn enough non-discretionary bonuses or incentive payments in a given year, as long as the payment is made within one payday of the end of the 52-week period.

  4. Omit any automatic updates to the salary threshold and instead reiterates its determination to update the earnings thresholds more regularly through notice-and-comment rulemaking.

Repercussions for Employers:

  1. Employers who fail to satisfy the minimum salary level will lose the exemption for their employees and be required to pay overtime at the legal rate.

  2. Thus, employers must immediately audit and reclassify affected employees in order to ensure overtime eligible employees are paid their due, that salaries are increased or other compensation is introduced to avoid overtime eligibility. The Department of Labor estimates that 1.3 million workers will become non-exempt when the proposed rule becomes effective, yours might be one of the 1.3 million to be affected.

    1. An audit would consist of reviewing payroll records for salary history, reviewing job descriptions for exempt/non-exempt classification, consider options to pay the affected employees more, or reassign their duties to avoid the need for overtime hours.

    2. An audit should also include a review and revision of benefit plans that determine eligibility and other metrics on salary or exempt/non-exempt status.

  3. Some states have thresholds higher than the federal even after this change, such as New York. Georgia follows the federal rules. Apply the rules appropriate to the state in which you have employees.

  4. Call our office or visit the Department of Labor’s website for more information on how to implement these changes in your workplace.

#metoo movement – Sexual Harassment and Discrimination at Work

November 30, 2017

In a world where publicizing the intimacy of what goes on behind closed doors is both easy and pervasive, employers are urged to audit their anti-harassment processes and employees are encouraged to come forward if they have experienced or are experiencing sexual harassment at work.

The U.S. Equal Employment Opportunity Commission enforces federal equal employment opportunity (EEO) laws, which strive to create harassment-free workplaces by ensuring that employers fulfil their duties under federal legislation, including Title VII of the Civil Rights Act. Among a vast array of other things, these laws require that:

  • Employers do not condone sexual harassment in hiring, firing, compensation, promotion, layoff, recruitment, training, benefits, etc.
  • Employers do post notices visible to all employees outlining their rights under EEO laws

Sexual harassment is offensive behavior towards someone based on their gender, sexual orientation or sex. Harassment can be a wide range of actions. For instance, bullying, whether physical, verbal or nonverbal; targeted pestering; stalking; antagonistic teasing; name calling; damage to person or property; threatening or derogatory comments. Add sexual assault, including unwanted indecent touching and rape; lewd gestures and exposure. These all fit under the harassment umbrella. Unwelcome sexual advances, request of sexual favors and other verbal or physical conduct of a sexual nature constitute sexual harassment when:

  • Submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment
  • Submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual
  • Such conduct has the purpose or effect of substantially interfering with an individual’s work performance or creating an intimidating, hostile, or offensive work environment

Although most people thing of sexual harassment as something that happens only to women, men can be sexually harassed as well.

Clients have reported that being sexually harassed can devastate the victim’s psychological health, physical well-being and vocational development. Women who have been harassed often change their jobs, career goals, job assignments or educational pursuits. In addition, women have reported psychological and physical reactions to being harassed that are similar to reactions to other forms of stress and abuse.

Sexual harassment, especially in the workplace has gained increasing recognition in every society, causing employers to wake up to the potential of it going on amongst co-workers, supervisors and subordinates.

Employers: audit your policies now, revise them as necessary, implement them uniformly across genders and treat every case seriously.

Employees: it can be scary to say #metoo; however, it is important that you let someone know about your difficulties before it goes too far, or before someone suffers the same abuse.

Quick Tip: Avoid Misclassification Claims – Guaranteed Regulatory and Legislative Compliance

August 20, 2017

The Internal Revenue Service (IRS) SS-8 Determination is an audit conducted by the IRS of an employer’s employee/independent contractor classification. The IRS would conduct an investigation to determine whether an individual is properly classified, in turn, this determination would be binding on the IRS and US DOL for that worker and other similarly situated workers should any subsequent issues arise. It is a fool-proof defense.

Few useful facts about the SS-8:

  • Application form and application guide are available online (lengthy and detailed)
  • No costs whatsoever
  • Entails investigation of the employer and a representative worker over a period of at least 6 months
  • Can be initiated by employer, employee or contractor

Ideally, endeavor to complete the audit before incurring heavy liability for unemployment insurance premiums and withholding taxes for misclassified workers.