Category Archives: Compensation

DOL Proposes New Salary Minimum

A new federal overtime rule that has been proposed by the U.S. Department of Labor may become effective early in 2020, and employers need to start preparing now to get into compliance.

The rule, if it becomes final as proposed, requires employers to pay a higher minimum salary to those employees who meet certain white-collar exemptions to the overtime rules of the Fair Labor Standards Act (“FLSA”). Right now, an employer can pay a salaried exempt employee as little as $455 per week ($23,606 annually) and still claim the exemption as long as the employee is performing exempt duties, such as executive work or professional work.

The new minimum salary threshold is proposed to increase to $679 per week ($35,308 annually). That means that if you have any employee whom you are paying on salary in an amount less than $35,308 per year, you as an employer need to spend the rest of 2019 deciding if you will provide that employee with a raise or reclassify that employee as non-exempt and move him to an hourly rate and pay him overtime when he clocks more than 40 hours in any workweek.

In addition to meeting this increased salary level to $35,308 per year, anyone you are paying on a salary must also actually perform the duties of an exempt employee (the white-collar exemptions: executive, a professional or an administrator). These duties tests are much more difficult to meet than most people think, so don’t just assume that your salaried employees are actually exempt. For example, not every “manager” is an “executive exempt employee”, who under the FLSA must have the power to hire and fire and must supervise at least 2 full-time employees, as well as being in charge of a recognizable store, division or branch of your business.

During the rest of 2019, you have time to audit your pay practices to know who you are paying on salary, review their actual job duties to assure that they actually qualify for one of the exemptions, and then assure yourself that those salaried employees are making at least $679 per week. As you are going through this process, remember that the Equal Pay Act also applies to your salary decisions and you must not violate it when trying to comply with the DOL’s new salary minimum.

And yes, the DOL does measure the salary basis in weekly increments, so the employee must make at least $679 every week. The proposed rule does give employers the ability to make up 10% of the salary basis test with bonuses and commissions. So, if you pay an executive, administrator or professional employee no less than $31,777.20 in yearly salary (divided by 52 weeks) and then the employee earns another $3,530.80 annually in bonuses and commissions (paid on at least a quarterly basis), you will not be in violation of the new rule.

If this proposal gives you a sense of déjà vu, that’s because we went through this process in 2016 when the DOL proposed an increase of the minimum salary for exempt employees of $913 per week ($47,476 annually). That rule was enjoined by a federal judge in East Texas just before it was to take effect and then died in the courts and under the new administration. No such messy reprieve is expected this time with this lower salary threshold, so businesses need to start talking now about what they want to do with their salaried employees in 2020.

Interestingly, the Trump Administration’s DOL has made it even harder for companies to claim the “highly compensated employee” exemption under the new proposed rule for 2020. That exemption currently says that any employee making a salary of at least $100,000.00 per year is exempt as long as the employee is performing non-manual work and that employee performs at least one other exempt duty customarily and regularly. The proposed rule raises that salary threshold for highly-compensated employees almost 50%, to $147,414.00 per year. That means that it actually might be cheaper with a highly compensated employee who doesn’t strictly qualify for one of the white-collar exemptions to be paid on an hourly basis plus overtime rather than increasing the employee’s salary that substantially.

“Do As We Say, Not As We Do”: The Lesson for Employers from the Shutdown

As the federal government’s shutdown nears the end of its third week, one has to wonder why many federal employees are required to work even when they aren’t being paid. Could you as a private employer ever require your employees to work without pay during a crisis period at your business? Of course not.

About half of the 800,000-strong federal workforce is sitting at home worrying about their finances because they are “furloughed”. At least that group is not performing any work, so being unpaid is legal, although obviously unacceptable for their financial security.

The other half, those whose jobs involve public health and safety, are required to report to work even though Congress has not appropriated any money to pay their salaries. FBI agents, air traffic controllers, TSA agents, the Coast Guard, and, ironically, Border Patrol officers, are all working without pay right now. If one of these essential employees refuses to report to work because of the lack of compensation, he/she will be considered absent without leave and faces disciplinary action.

Most federal employees are on biweekly pay, so on Friday, January 11, the bulk of that workforce will receive nothing for work performed December 23 through January 4. No money for rent, food, transportation, etc., will be available to those workers until both houses of Congress pass funding legislation and the President signs it.

A federal shutdown has never lasted more than three weeks before, so the fact that the shutdown is dragging on and there are no positive signs of an agreement right now is obviously distressing to these employees, many of whom are poorly compensated and live paycheck to paycheck.

The federal government is unique in its ability to require this kind of unpaid servitude of its employees. As the Atlantic recently explained:

Since the enactment of the Taft-Hartley Act in 1947, federal employees have been legally prohibited from striking. That law was intended to prevent public-sector workers from leveraging a work stoppage that could cripple the U.S. government or major industries in negotiations for better pay, working conditions, and benefits. But it likely did not envision a scenario where the government would require its employees to work without paying them, as is the case now.

What prevents you as a private employer from taking a play from this playbook and requiring your employees to work without pay when your business has a cash flow problem?

Continue reading “Do As We Say, Not As We Do”: The Lesson for Employers from the Shutdown

Texas Employers Must Comply with Election Laws

Since Election Day is Tuesday, November 6, here are some quick reminders for employers about the Texas election laws that you must follow.

Employers must give all employees a reasonable time off to vote on Tuesday, assuming the employee hasn’t taken advantage of early voting.  So here’s how you apply that law:

  • You can ask if the employee voted early, but you cannot retaliate against an employee for his/her failure to take advantage of early voting. 
  • You need to just accept the employee’s word about whether he/she voted early.

A “reasonable time off to vote” is considered two hours. However, since the lines are predicted to be long on Tuesday, do not discipline any employee who has to wait in line to vote and thereby takes a little longer than two hours away from work. 

The time off to vote should be paid time off if it cuts across the working hours, according to a Texas Attorney General’s opinion. 

It is a crime for an employer to:   Continue reading Texas Employers Must Comply with Election Laws

10 Facts Texas Employers Should Know About Unemployment

Do I have to pay unemployment on my employee who just quit/resigned/got fired/was laid off?

During most of my thirty years as an employment lawyer, I have been asked that question at least once a week. Here are ten basic facts that every employer in Texas needs to understand about our state’s unemployment system: Continue reading 10 Facts Texas Employers Should Know About Unemployment

Taking Care of Your Employees After A Natural Disaster

Employers along the Texas Gulf Coast are trying to determine how best to help their employees in the emergency that is the aftermath of Hurricane Harvey. As business owners and managers, we have the responsibility to try to take care of our most important business resources–our human resources–in the face of catastrophe.

While lots of websites and plans are in place telling a business about stocking emergency supplies, sheltering in place and creating evacuation plans, there are fewer guides for what to do for your employees in the long days and weeks afterwards.

After any natural disaster, whether it is a hurricane on the Texas Coast or a tornado or blizzard in the Texas Panhandle, you are going to first need to check on the well-being of your employees. For that reason, you need to keep updated phone records and emergency contact information for your employees in a safe place, preferably electronically so that you can access it from any location.

Organize a group text, a telephone tree or a call-in phone number so you can determine where each employee is, if each employee is physically okay, and whether the employee will be able to report to work. Don’t assume that just because you can get the business open that you will have employees to work in it.

Then you need to worry about money, because your employees certainly are worrying about it. According to a large survey in 2016 by GoBankingRates.com, half of all Americans have less than $1000 in their savings account. Even more sadly, 34% had no savings at all.

In addition, 60% of workers in America are paid by the hour and federal law only requires employers to pay an employee for hours actually worked. So being away from work even for a day or two can have devastating financial consequences for many employees.

Some will brave any conditions to make sure they don’t risk losing a day of pay or losing their job. The New York Times illustrated this in a story about the first day after Houston started getting the four feet of rain that Hurricane Harvey eventually dropped on that city.

Gloria Maria Quintanilla appeared as a speck on the horizon, wading through waist-high waters in the middle of the road with a sack thrust over one shoulder and an umbrella perched on the other. Ms. Quintanilla, 60, seemed to epitomize Houston’s work ethic, its resolve and its shock.

“I worked at the hotel up there,” she said when a reporter approached. As she walked, she explained that she was an immigrant from El Salvador, here since 1982. She makes $10 an hour washing and ironing sheets and towels at the Doubletree.

She had started the journey from home more than an hour before.

“It was my day to work, and I’m a very responsible person,” she said, speaking in Spanish. “I had no idea it was going to be like this.”

The large majority of your hourly employees need to work, want to work and want to fairly earn their pay. However, when their homes are underwater or destroyed in a tornado, they may need extra help. Even if you don’t normally provide salary advances or employee loans, in times of natural disasters, you may need to bend the rules and allow those.

Continue reading Taking Care of Your Employees After A Natural Disaster

Workplaces Must Accommodate A Nursing Mother

A nursing mother in your workplace has certain employment rights that you as an employer must understand. Until the time that the child is one year old, Texas employers must provide the time and space for the mother to breastfeed the baby (if children are allowed at the workplace) or to express milk to be stored for later.

The federal compensation law, the Fair Labor Standards Act (“FLSA”), was amended in 2010 to require employers to provide nursing mothers with “reasonable” break time to pump breast milk. Employers must realize that there is no one definition of what is “reasonable” that applies to every new mother.

The Department of Labor says in its Fact Sheet #73 regarding Break Time for Nursing Mothers, “employers are required to provide a reasonable amount of break time to express milk as frequently as needed by the nursing mother. The frequency of breaks needed to express milk, as well as the duration of each break, will likely vary.” Speaking from experience, nursing may take 10 minutes, 25 minutes, 40 minutes or even longer and isn’t standardized from mom to mom, day to day, or break to break.

If you provide coffee breaks or meal breaks during the day to other employees and pay them during that break (which the FLSA requires you to do if the break is less than 20 minutes), then you should allow your nursing mothers to use those breaks if convenient and be paid during those breaks just like any other employee.

Otherwise, nursing breaks do not have to be compensated, so you can require a nonexempt (hourly) employee to clock out during the break so that the nursing break isn’t paid. If that means that the employee has to stay longer each day to actually perform work for 40 hours per week, you as an employee can require that extra time. Or you can choose to pay the employee for only the hours worked, which may be less than 40 when lots of nursing breaks are taken.

The easiest way to address compensation is to have a written policy that states that all nursing breaks of 20 minutes or less are paid, but longer breaks are unpaid.

You also have a responsibility as an employer to provide a place for the nursing mother to breastfeed or express milk. That place cannot be a bathroom. The area must be private with a lock on the door or another way to assure that the public and/or coworkers won’t barge in while the employee is nursing or pumping. If you have more than one nursing mother employed at a time, it is common practice to have a sign up or reservation-type system for the room you designate for expressing milk.

The secluded place the employer provides must be functional for expressing milk, meaning it should at least be furnished with a comfortable chair. Many employers provide a small dorm-sized refrigerator and a Sharpee in the nursing area so that the expressed milk can be labelled and dated and kept cool until the new mother can take it home.

Texas allows employers who adopt a new mother-friendly written policy to advertise that it is a “mother-friendly” business. If that “carrot” approach doesn’t convince you, then the “stick” is that failure to provide adequate breaks and a secure place for nursing mothers means that not only will your business be violating the FLSA, but also the employee can bring a sex discrimination or sexual harassment action if you have at least 15 employees.

A federal court has also ruled that breastfeeding is a medical condition related to pregnancy and maternity, so you can also be sued under the Pregnancy Discrimination Act. You must additionally prevent an employee from being retaliated against for exercising her rights as a nursing mother, i.e., you must assure that her supervisor doesn’t give her a poor evaluation or demote her because her nursing rights create some disruption in the office.

Small employers (less than 50) have one defense to these kinds of claims. Continue reading Workplaces Must Accommodate A Nursing Mother

2017 New Year’s Resolutions for Employers

At the beginning of each year, I encourage my business clients to make some New Year’s resolutions to achieve better compliance with the myriad employment laws. Based on what many of my clients are telling me and what the courts and enforcement agencies have on their agendas, here are the employment matters that you could improve in 2017:

  • Immigration compliance: President-Elect Trump has promised strong enforcement of the immigration laws. Many of those enforcement efforts will affect employers, such as mandatory use of the E-Verify system to double-check the legal status of every new hire. Even before that requirement is put in to place, resolve to correctly complete the mandatory new I-9 form for every new hire. The best way to make sure the I-9 is correctly completed: consult the government-published Employer’s Guide to the I-9, particularly the color pictures that show you exactly what a valid permanent resident card, for example, looks like. Also, be prepared that some of your employees may lose their work eligibility under the new administration, including young people (known as the Dreamers) who became eligible under the Deferred Action for Childhood Arrivals (DACA) program in 2012.
  • Market rate on salaries: Texas’ unemployment rate was sitting at 4.6% at the end of November 2016. Amarillo’s rate was 3.0%. Economists consider 3% to be full employment, meaning you as an employer maybe finding it difficult to attract and keep the talent that you need. I am always surprised therefore when my clients don’t keep up with the market data on salaries. Resolve in 2016 to tap into the data available on the Bureau of Labor Statistics for your industry and your location to really analyze whether your salaries are sufficient. Employees will also be looking at Salary.com and Payscale.com, so you need to do the same.
  • Improve your PTO offering: I am amazed when I am drafting or revising my client’s employment handbooks how little paid time off many local employers offer. Many don’t give an employee any vacation, sick leave, personal days or other paid time off during the first year and then rarely allow more than five days per year after that. This will not attract top talent or create long-term loyal employees, I promise you. Particularly if you are hiring millennials or need an educated workforce, you need to up your game on PTO. My 22-year-old son was hired in 2015 by a consulting firm in Washington, D.C., right out of college (with a degree in economics and a master’s degree in business analytics) and offered three weeks of PTO that started accruing immediately. After one promotion, employees at his company get four weeks of PTO. I’m not arguing that every job merits that much PTO, but resolve in 2017 to at least consider that two weeks per year should be the minimum to improve your hiring, increase your retention, rejuvenate your employees every year and allow your employees to deal with the inevitable ups and downs of life. As an employment lawyer, I know that most employee lawsuits arise after the worker leaves your employ. Keeping your staff reasonably happy and loyal by providing better PTO will provide you with other benefits too, but I like it because you will spend less time with me in court and instead we can just have lunch and talk about more pleasant topics.
  • Health Reimbursement Accounts: None of us know what the new administration will create to replace the Affordable Care Act, so I can’t give you much advice yet about your group health insurance offerings. However, employers with less than 50 employees who don’t offer group health insurance should resolve to consider using Health Reimbursement Accounts in 2017 because of the bipartisan 21st Century Cures Act that sailed through Congress and the President’s signature in December. That act included permission for small employers to now use HRA’s to pay for qualified out-of-pocket medical expenses for their employees and to fund individual health insurance premiums. In other words, employers can use pretax dollars to help employees to purchase their own insurance on the open market while capping the employer’s contribution at a reasonable amount. There are, of course, many restrictions associated with this opportunity, but it is worth consideration by smaller employers in 2017.
  • Good Documentation: Every employment lawyer would like for you to add this to your resolution list each year. Memories fail and managers move on, so written documents are often an employer’s only evidence of the nondiscriminatory reasons that certain employment actions were taken. Understand and resolve that performance reviews, reasons for bonuses and merit increases, violations of policy, attendance problems, changes in job duties and disciplinary actions will be well-documented in 2017. I’ll help with any of kind of documentation, but I highly recommend that you get me involved whenever the documentation is of disability or religious accommodations, FMLA, harassment claims, overtime or other compensation problems, egregious policy violations, demotions, final warnings, layoffs and terminations.
  • Gratitude: Resolve that you will say “thank you” more often to your employees in 2017. Studies have repeatedly shown that this one action can enhance employee engagement and loyalty even more than raises and promotions. Gratitude can also make your workplace so much more enjoyable for all of your employees.

 

After Hours Work Isn’t Banned, But Must Be Paid

Employers in the US aren’t banned from having employees check emails after hours like companies in France are, but after hours work can create significant overtime issues for American employers. As an employer, you must know the requirements for paying your hourly employees for their after hours work.

AP FRANCE EAVES DROPPING IN EUROPE I FRAhttp://www.usatoday.com/story/news/world/2017/01/04/heres-another-reason-move-france-no-after-work-emails/96148338/

Don’t Forget About the Duties Tests for Exempt Employees

While a federal judge in Texas last week set aside the requirement to pay exempt employees at least $47,476 per year, nothing has changed about the duties tests for exempt employees, and that is where many employers get into trouble. Under the old rules (which are new again), the Department of Labor was collecting $140 million per year for overtime violations.

So even though the judge’s injunction has relieved you as an employer from the obligation to pay yourcowmc8qf8a-crew-1r managers almost $50,000 per year, you still have to be vigilant that you are paying salaries only to those employees who actually are exempt from the Fair Labor Standards Act based on the duties that they perform.

Determining that an employee is exempt from the overtime rules and can be paid on a salary without reference to the number of hours worked each week by that employee has always been a two-step process:

  1. The employee you have designated as a manager, professional or administrative worker must be paid at least $23,660 per year. This is the amount that was in effect before the new rule and the judge’s injunction, which returns us to the status quo of $23,660 per year ($455 per week). But unlike the new rule, bonuses cannot be used to get the exempt employee to that amount. So you have to pay the salary of $23, 660, and,
  2. The employee you are calling exempt must perform certain duties to legally be considered exempt. These duties tests have tripped employers up for years, long before the salary increase was even proposed. And now that the salary increase has been enjoined, your focus as an employer should be back on these duties tests to determine if you really can pay an employee as an exempt, salaried employee without worrying about overtime.

So, in addition to making at least $23,660 per year, your exempt employee must pass all of the duties tests for at least one of the following categories if you want to claim that you don’t have to pay overtime to that particular employee:

Executive Employees Duties Test:

  1. The employee’s primary duty (the most important duty and the one that takes up a significant amount of his/her time) must be the management of a customarily recognized department or subdivision (such as a stand-alone store). Management includes the hiring, training, scheduling, disciplining and supervising of employees and/or the planning and controlling of the budget, workflow, safety and compliance of a department; and
  2. The executive employee must customarily and regularly direct the work of at least two other full-time employees (not full-time equivalents), and
  3. The executive employee has the authority to hire and fire other employees, or at least the executive employee regularly makes recommendations that are relied on in the determination of an employee’s hiring, promotion, firing.

Learned Professional Duties Test: Continue reading Don’t Forget About the Duties Tests for Exempt Employees

How Should Employers Respond to 2016 Election?

Employers are facing a time of uncertainty in the workplace as a result of last week’s election. Does an employer still have to worry about compliance with the revised overtime rules? Do you still have to complete the Affordable Care Act tax forms due in January? What about paid maternity leave—must an employer provide salary for six weeks to new mothers? There will certainly be upheaval in the workplace because of the significant change in the governing philosophy to come in January.

Alth19-ryan-trump-mcconnell-w710-h473ough Mr. Trump is already backing off of some of his campaign rhetoric, there are some workplace issues that you as an employer will be affected by:

  • Immigration compliance should be your top concern under this new administration. As an employer, you must be certain that you are correctly completing an I-9 form on every new employee and assuring that you are only hiring applicants who are eligible to work in the United States.
    • A new I-9 form was released today, so you will need to start using that new form dated November 14, 2016, immediately with your new hires. The old 2013 form you have been using may not be used after January 21, 2017. You do not have to recertify your current employees just because they were hired when a different I-9 version was in use.
    • Trump has said that he wants all employers to use E-Verify, the internet verification program used by federal contractors to verify I-9 information provided by a new hire against records from Social Security Administration and the Department of Homeland Security. E-Verify sounds much easier in theory than it has proven to be in practice. Get ready for significant paperwork and several new steps whenever you receive a tentative non-confirmation letter from E-Verify on a new hire.
    • Remember that it is illegal to discriminate against an applicant on the basis of national origin or ethnicity. As an employer, you cannot have blanket hiring prohibitions against any group. You must individually check the employment eligibility of each person to whom you offer a job.
  • The new overtime law, which requires employers to pay at least $47,476 in salary to employees whom the employer wants to exempt from the overtime requirements, goes into effect in two weeks on December 1, 2016. That means that you as an employer need to comply with that law now without regard to how it may change down the road.
    • A change to the overtime law is not included in the new administration’s first 100-day plans and Mr. Trump only addressed it one time on the campaign trail. Changing the overtime regulation does not seem to be a top priority, but the possible changes that have been mentioned are an elimination of the automatic increases now scheduled every three years and a small business and/or nonprofit exception to the overtime rule.
    • The final overtime regulation took more two years to become effective after President Obama proposed it. Even if a change to it were fast-tracked, I think that you will have to comply with the current regulation at least until the end of 2017.
    • And even if the new rule is changed next year, are you really going to decrease the salaries of your management employees after they saw the increase this year? If you would consider a decrease as a possibility in the future, then think about putting your salaried employees on hourly pay and overtime pay immediately (by December 1) instead of giving them salary whiplash when this regulation changes down the road.
  • The Affordable Care Act is going to change significantly. How it will change, we don’t know, except that Mr. Trump has promised that it will be “replaced”, not just repealed. If that is the case, employers will still have to deal with healthcare headaches. They will just be new headaches rather than the ones we have learned to cope with over the last six years. For now, as an employer, you must continue to comply with the ACA, including sending out the Form 1095-C after the first of the year.
  • Trump has proposed six-week paid maternity leave. Never before has the federal government required a private employer to provide any paid leave, unless the company was a federal contractor. The Family and Medical Leave Act only requires unpaid leave.
    • This would be a radical departure from Republican policies in the past, which have always frowned on mandates to employers to pay people not to work. There is no indication yet that the U.S. Congress would go along with Mr. Trump’s proposal.
    • Meanwhile, employers should be more concerned right now about complying with the Pregnancy Discrimination Act in effect since 1978, but which has grown more teeth in the last couple of years thanks to the U.S. Supreme Court decision in Young v. UPS and stricter enforcement by the EEOC.
  • Title VII of the Civil Rights Act of 1964 remains the law and no administration would dare push for its revision, or the revision of later laws that prevented discrimination on the basis of age or disability. That means that as an employer (if you have 15 or more employees), you must continue to keep your workplace free from discrimination and harassment on the basis of sex, religion, national origin, ethnicity, age, disability, etc.
    • There were 3500 charges of religious discrimination filed in 2015 with the EEOC. That number has risen 44% in the last 10 years. Employers must be extra vigilant that some of the tenor and tone of the election rhetoric doesn’t lead to any hateful actions in their workplace against, for example, a Muslim employee.
    • Discrimination on the basis of sexual orientation and/or gender identity is not prohibited by the actual language of Title VII and it seems unlikely that the new administration would champion gay rights in the workplace. There is also no state law in Texas preventing such discrimination, although most of the larger cities in Texas have local ordinances. But employers need to know that the EEOC has targeted employers who are allowing discrimination against LGBT employees and there are several court rulings that back up the EEOC’s position that “sex” as a protected class includes sexual orientation, so all employers should continue to protect their LGBT employees from harassment and unfair treatment.