Out-of-State Employees Have to be Treated Differently

Compensation, Discrimination, Documentation, Hiring, Personnel Policies, Termination, , , , ,

As a Texas employer, your employees in other states are protected by the laws of the state in which they perform their work, not Texas law. In most cases, those laws give your out-of-state workers more rights and protections than employees in Texas are given.

As a rule of thumb, the state and local laws of the physical location where the employee is working will supersede Texas law. That means that Texas businesses are responsible for complying with the laws of those other states when they employ a worker across the Texas state lines.

Many of my business clients are headquartered in the Texas Panhandle, but they also have operations, offices, clients and therefore, employees, in New Mexico, Oklahoma, Kansas, Colorado or other states. In an attempt to simplify their operations, those multi-state employers often prefer to adopt policies that apply across the board to all employees, regardless of where the employee is located.

But you cannot ignore the employment laws of the state in which your employees reside and perform some work, even if they only work in that state part of the time. While it is impossible to list every different employment law for even just the nearby states, here are just some examples that employers need to be aware of:

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Get Ready for Immigration Enforcement Spotlight

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When President-elect Trump takes office next week, he has promised to launch what his aide Stephen Miller called a “shock and awe blitz” of executive orders and actions that will target millions of immigrants and their families. Employers need to be ready to respond to this renewed emphasis on immigration enforcement.

History of Raids on Businesses

Will there be a return to the kinds of raids on businesses that we saw during President Bush’s second term? Time Magazine reported that President-Elect Trump told the magazine in an interview that he wants a return to United States Customs and Immigration Enforcement (“ICE”) raids of businesses. “The strategy, which he also ramped up in his first term, aims to increase the visibility and enforcement of immigration laws in everyday settings, targeting industries that frequently employ unauthorized workers. Trump has suggested that these raids will not only deter unauthorized employment but also lead to significant labor market shifts, benefiting American workers,” Time reported.

For those who don’t remember one of the most infamous ICE enforcement actions during President Bush’s administration, in December 2006, the giant meatpacking plant formerly owned by Swift and now owned by JBS in the Texas Panhandle town of Cactus, was one of the targets of the largest single-site workforce enforcement action in U.S. history. ICE officers in riot gear and armed with assault rifles arrested nearly 300 workers, more than 10% of the population of Cactus. School children were left with no one to pick them up or care for them at home because both parents were arrested in the raid. The community of Cactus was decimated. Seven months later, ICE batted clean up by conducting another, smaller raid on the same plant in Cactus.

The town of Cactus eventually recovered, but the JBS plant is still almost completely staffed by immigrants, some of whom may be at risk if another raid occurs. Many noncitizen workers there are hired to come to the U.S. to work on legal visas, but President Trump has threated even those migrants who are in the country legally, despite that fact that many workers born in the United States don’t seem to want the jobs offered at JBS. If enforcement actions are actively pursued by ICE in Cactus or elsewhere, it will be up to the employer to prove that each of its workers is legally eligible for employment in the United States.

Holding Business Owners and Managers Responsible

After the furor that such raids caused during the Bush administration, President Obama took a different tact. His administration pursued the employers, not the workers. Some  of the 1100 criminal arrests ICE made in 2008 resulted in charges against owners, managers, supervisors or human resources directors who knowingly hired ineligible workers, failed to diligently check employment eligibility or just ignored the requirements.

The owners and managers of the businesses were targeted because it is the employer’s responsibility to certify that each employee is eligible to legally work in the United States. This is done by reviewing the employee’s eligibility documentation (such as passports, work permits, social security cards, driver’s licenses, etc.) within the first three days of employment and properly completing the Form I-9 to show compliance.

How Employers Can Prepare Now

Let’s say that you don’t believe that you employ any ineligible workers. You may still have documentation problems. Just for incorrectly completing the  I-9’s, even if your workers are all actually eligible to work in the United States, you can be fined up to $2789 per worker.

Continue reading Get Ready for Immigration Enforcement Spotlight →

Employers Don’t Have to Raise Exempt Employees’ Salaries to $58K

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On Friday, November 15, a federal judge in the Eastern District of Texas ordered a nationwide halt to the rule increasing the minimum salary that was set to go into effect on January 1, 2025, so that employers no longer have to raise the salary level of employees who are exempt from overtime to $58,656. Instead, the salary minimum level will return to the 2019 level of $35,568 for exempt employees.  

That means that the salary minimum that went into effect on July 1, 2024, of $43,880 per year also was thrown out, but I would not suggest taking back that raise if you just gave it to an exempt employee this summer.

 In addition, the regulation establishing an automatic increase in the minimum salary every three years was overturned by the judge.

The Biden Administration could appeal Friday’s injunction on the salary minimum increase, but it would be futile. The case was heard in Texas, meaning an appeal would have to go to the Fifth Circuit and then the U.S. Supreme Court, neither of which would rule in favor of these increased salary minimums because those courts are packed with conservative Trump appointees. And as soon as President-elect Trump takes office, his administration will abandon the appeal anyway.

It is still very important that employers comply with the Fair Labor Standards Act requirements before making an employee exempt and foregoing overtime pay for that employee. Under the FLSA, which has been the law since 1938, an employee must be paid overtime for all work over 40 hours performed in any one workweek. Paying an employee by the hour and paying overtime is the default category for paying all employees.

Only if a particular employee meets two requirements can he/she legally be paid on a salary basis (and not be paid overtime). Those two requirements are now once again:

  • The employee is paid at least a minimum salary of $684 per week (which is $35,568 per year); and
  • The employee performs the duties of a white-collar executive, professional, or administrator.

The duties test is the much harder test to pass than the salary minimum. For example, someone you are calling a manager must supervise at least two full-time employees and primarily spend most of his/her time in management activities to actually be exempt from overtime. That eliminates almost all fast food assistant managers, working foremen in the construction industry, and others that you may think you could pay on a salary.

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(Out of date) Noncompete Agreements Banned as of September 4

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Update: Almost immediately after this post went live on August 20, 2024, a federal judge in Texas issued a nationwide injunction striking down the FTC’s noncompete ban. So much for my effots to try to help employers get into compliance before the deadline! So the FTC’s ban on noncompetes is blocked for the foreseeable future. As an employer, you don’t have to send the notices mentioned below. For now, you can still enforce a current noncompetition agreement against a former employee who takes a job with a competitor or sets up a business that competes with yours. However, it would be wise to consider other ways to protect your business’s trade secrets and work product because noncompetes will continue to remain controversial and the subject of a lot of expensive litigation in the future.

As I warned you in June, earlier this year, the Federal Trade Commission issued a rule banning employee noncompete agreements. The noncompete ban goes into effect on Wednesday, September 4, 2024. Despite many pending lawsuits, no nationwide injunction has been entered yet that protects employers from this ban. So now is the time to get into compliance.

What Agreements are Banned?

The noncompete ban prohibits employers from offering or requiring employees to sign any new employment agreement on or after September 4 that restricts the employee from competing with the employer when employment ends. In addition, the FTC rule prohibits employers from enforcing noncompete agreements that are already in effect.

The FTC final rule defines a non-compete clause as “a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from” seeking or accepting employment or operating a business after the conclusion of the worker’s employment.

You are allowed to require your current employees to be loyal to their employer and not compete while still working for your company. But that duty of loyalty can be explained in a policy in the handbook, rather than in an agreement that requires additional legal consideration (usually monetary) and agreement of both parties.

There is one notable exception to the FTC noncompete ban. As an employer, you cannot enter into a new noncompete with a “senior executive” beginning on September 4, 2024. But existing noncompetes with senior executives can be enforced after the deadline. The FTC’s final rule defines “senior executive” as a worker who (1) earns more than $151,164 per year, and (2) is in a “policy-making position.”

Send Required Notice to Former Employees by September 4

Perhaps the most urgent part of the FTC rule is the required notice regarding the noncompete ban that you as an employer must send out. Before September 4, employers are required to send out a notice to anyone who has previously signed a noncompete that is now unenforceable (former employees) to let them know that the agreement is unenforceable.

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Deadlines Quickly Approaching for Major Employment Law Changes

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Employers should be preparing for several significant payroll and policy deadlines this summer that are required by new federal employment rules and regulations:

  1. Salaried employees must make a minimum salary of $43,888 annually beginning Monday, July 1, 2024. On January 1, 2025, that annual salary minimum threshold increases to $58,656. Only 10% of that annual salary can be paid in nondiscretionary bonuses or commissions.
  2. Noncompete clauses in almost all employment and severance contracts are scheduled to be banned on the deadline of September 4, 2024.
  3. Pregnant workers and women giving or returning from childbirth have to be reasonably accommodated, including being given individualized maternity leaves, under the broad final regulations as of a deadline last week (June 18, 2024).

Salary Minimum Increases

Employers cannot legally just pay employees on salary because it is convenient for the employer or the employee. Under the Fair Labor Standards Act, which applies to virtually all businesses, employees must receive hourly pay and overtime pay unless (1) the duties performed by that employee fit into one of the narrow white-collar exemptions; and (2) that employee also makes at least the amount required by the FLSA salary minimum threshold.

Since 2019, that salary minimum threshold has been $35,568 annually. But the regulations have been amended so that salaried employees must make at least $43,888 beginning next week. While court cases have been filed to try to stop this change from taking effect, no court has entered an injunction yet. That means that companies are out of time to resist this change. Therefore, as an employer, you need to double-check that your salaried employees are earning enough ($844 per week) to meet this salary minimum as of next Monday.

While you are at it, double-check whether your salaried employees are also actually performing the duties that allow you to pay them as an executive, a professional, an administrator, a computer specialist or outside salesperson (outside salespeople don’t have to meet the salary minimum but do have a duties test). If the employee doesn’t meet the duties test for their position to be exempt, you cannot pay that person on salary even if the employee is paid the salary minimum threshold amount.

Noncompete Contracts Ban

In April 2024, the Federal Trade Commission finalized a rule banning almost all employers (banks, credit unions, nonprofits and airlines excepted) from entering into, enforcing or attempting to enforce noncompetition clauses with employees. The rule goes into effect on September 4, 2024.

The FTC says that noncompete agreements suppress wages and block workers from pursuing better jobs. Employers like noncompetes because they prevent competitors from poaching talent and protects trade secrets and client relationships. But the FTC is siding with the free market and employees who want the opportunity to take their talents anywhere they please.

In addition to banning employers from entering into new noncompete agreements with employees, from enforcing noncompete agreements signed in the past, and from threatening to enforce existing noncompetes against departing employees, the new rule also requires employers to send out notices (FTC provided a model notice) by the deadline to current and former employees telling them that their noncompetition agreements are no longer in effect and won’t be enforced.

Continue reading Deadlines Quickly Approaching for Major Employment Law Changes →

Underpayment of Wages at Local Charity

Compensation, Personnel Policies, , ,

Advo Companies, Inc., a worthy local charity that trains and helps people with developmental disabilities find work, was recently investigated by the United States Department of Labor for underpayment of wages to 134 workers. The company had to repay $52,497 in back wages because, among other mistakes, it miscalculated the special wage rate allowed to be paid to their employees.

I don’t know the facts of this particular DOL investigation, but I know Advo Companies has been providing outstanding vocational services to disabled adults and operating group homes in Amarillo for more than 30 years. I seriously doubt that any of the wage problems discovered by the DOL were intentional underpayments. But Advo’s difficulties provide an example of how a very well-meaning employer can easily run afoul of the notoriously difficult Fair Labor Standards Act (“FLSA”) requirements.

For most employers, the Fair Labor Standards Act “simply” requires payment of minimum wage and overtime if an employee works more than 40 hours in any one workweek. But there are many ways for an employer to unintentionally break this law:

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New FLSA Minimum Salary Requirements

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If you pay any employees on salary instead of hourly, as an employer you need to review new regulations released today by the United States Department of Labor, requiring that the salary you pay to any exempt employee is at least $43,888.00 beginning on July 1, 2024. That minimum increases to $58,656.00 on January 1, 2025. Those are substantial increases from $35,568.00, the salary minimum currently required by the Fair Labor Standards Act (“FLSA”), which governs minimum wage and overtime.

If you aren’t paying an employee by the hour, plus overtime pay for each hour over 40 worked in a 7-day workweek, then you must prove the following about that salaried employee:

  1. The employee is paid a recurring salary regardless of the hours worked; and
  2. The amount that the employee is paid must amount to at least $844 per week beginning on July 1, 2024 and $1128 per week beginning on January 1, 2025; and
  3. The salaried employee must primarily perform executive, administrative or professional duties (commonly referred to as the white-collar duties).

These exemptions for salaried, white-collar workers are the exception to the overtime rules required by the FLSA, and the burden is on the employer to show that the salaried employee meets all of these requirements or the business will owe the employee unpaid overtime (plus punitive damages and possible penalties) for not paying overtime.

FLSA has been the law since the 1940’s, but the salary minimum amount to meet the exemptions has increased over time. The Trump Administration increased the salary amount in 2019, and it has stayed there for five years. The Department of Labor’s new rule will make those increases automatic every three years, meaning that on July 1, 2027, you can expect another increase in the salary minimum amount if you still want to claim that the employee is exempt from the overtime requirements.

In addition to meeting the FLSA salary minimum requirement, your employee must also perform white-collar duties to qualify for the overtime exemption. The duties tests are harder to meet than you might expect. For example, you may believe that an assistant manager is an “executive”, but the FLSA duties test says that employee must have the power to hire and fire and must personally supervise at least two full-time employees, as well as being in charge of a recognizable store, division or branch of your business to be considered exempt. Most assistant managers don’t meet those requirements. Only the general manager does in many circumstances.

In addition, the new regulations increase the FLSA salary minimum for “highly compensated employees”. The 2019 threshold for highly-compensated employees currently says that any employee making a salary of at least $107,432.00 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 (such as managing two employees or performing duties of a professional such as a CPA). The salary minimum for highly compensated employees increases to $132,964.00 on July 1, 2024. On January 1, 2025, it will increase again to $151,164.00.

So what do businesses need to do to get in compliance?

Continue reading New FLSA Minimum Salary Requirements →
Policy revision

Your Employee Policy Handbook Needs Revision (Again)

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Because of a recent decision by the National Labor Relations Board (NLRB), your employee policies probably need a major rewrite to avoid an unfair labor practices charge. This decision applies to big and small companies, those that are unionized and those that are not.

In August 2023 in Stericycle, Inc., the Board adopted a strict new legal standard for reviewing workplace rules. In order to protect the employees’ right to organize and “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection”, as Section 7 of the National Labor Relations Act requires, employers cannot promulgate, maintain or enforce work rules that tend to inhibit employees from exercising their rights under the Act.

What are those concerted activities that employees may engage in together? Just a few examples:

  • Employees discussing or complaining about their salaries, benefits, and other working conditions;
  • Employees refusing to work in unsafe conditions;
  • Employees complaining about unfair treatment by a supervisor;
  • Employees openly talking to each other, on social media, to the press or otherwise about their complaints about their employer;
  • Employees joining with co-workers to grieve any mistreatment, file claims with a governmental agency or otherwise protest any aspect of their jobs.

You as an employer cannot prohibit any of these activities or discipline an employee for engaging in them. Moreover, you cannot have policies that discourage these protected concerted activities.

Policy handbooks have come under scrutiny by the NRLB frequently in the last 10 years, but the Stericycle decision takes this scrutiny to a new level. If the NRLB finds that an employer’s policies have a reasonable tendency to chill employees exercising of their Section 7 rights, then it is presumptively an unfair labor practice.

The NRLB looks at the rules from the viewpoint of an employee who is economically dependent on the employer, rather than just applying a reasonable person standard. The employer can only rebut the presumption that the rule is unlawful by showing the policy serves a legitimate and substantial business purpose and it is as narrowly tailored as possible.

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Employer Religious Accommodation Obligations Increase

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In light of a recent United States Supreme Court opinion, your burdens as an employer to accommodate your employee’s religious beliefs and practices have increased. It is now much harder for a business with at least 15 employees to deny a religious employee whatever changes to their job duties, schedule or conditions that the employee wants.

The Groff case

In Groff v. DeJoy, decided on June 29, 2023, the Court adopted a higher bar for businesses to meet before they can deny a requested religious accommodation. Gerald Groff, a postal worker, wanted Sundays off to observe his religious beliefs. But postal workers deliver Amazon packages on Sundays on a rotating basis. He refused to ever work on Sundays, and other employees had to deliver his packages on his designated Sundays. He received progressive discipline over a long period of time for his continuing refusal to perform that job duty and eventually resigned.

Groff claimed in his lawsuit that the postal service could have accommodated his religious request to not work Sundays “without undue hardship to the business.” For 50 years, that term “without undue hardship” has meant that the employer didn’t have to change its practices to accommodate a religious request if the request required more than a de minimis or trifling inconvenience for the business.

The 2023 Supreme Court overruled 50 years of precedent and now defines “undue hardship” as a financial determination. According to the Supreme Court, you as an employer may only deny a religious accommodation request if you can show that the request would result in substantial additional costs to the company, taking into account to the size and operating costs of your business. So hardship on other employees, inconvenience, disruption to the smooth running of your business and other challenges are not important. And the Court also said that if one accommodation costs too much, the employer still has to look for other, less expensive accommodations that would satisfy the religious employee.

The Equal Employment Opportunity Commission (“EEOC”) has always made it clear that infrequent payment of overtime to employees who cover shifts not worked by the religious employee is not considered an undue hardship. It appears that now even frequent overtime payments may not be enough to rise to the level of undue hardship for certain successful businesses.

The Court also said that co-worker hostility to the requested accommodation is insufficient to deny the change that the religious employee wants. So those coworkers of Mr. Groff’s who resented him not taking his turn in the Sunday delivery rotation were not an excuse for the employer to deny Groff’s demand that he never work on a Sunday.  

If this sounds like you as an employer are required to give preferential treatment to religious employees, you have correctly interpreted the current Supreme Court, the same court that vehemently decreed that even considering race in college admissions, much less preferential admission on the basis of race, is illegal.

What Religious Claims are Protected?

And despite the Supreme Court’s favoritism towards Christianity, U.S. businesses have to accommodate all religions this way—Islam, Buddhism, Judaism, Native American tribal religions, Voodoo, Druidism, Scientology, the Jedi religion, Rastafarianism . . . . The law protects all religious beliefs, including those that are new, uncommon, not part of a formal church or sect, or only held by a small number of people. An employee’s belief or practice can be “religious” even if the employee is affiliated with a religious group that does not espouse or recognize that employee’s particular belief or practice. And it is up to you as an employer to now maneuver around all of the obstacles that this heightened religious accommodation requirement demands.

Continue reading Employer Religious Accommodation Obligations Increase →

New Laws Regarding Pregnant and Nursing Employees

Compensation, Discrimination, Employee Rights, Personnel Policies, , , ,

Every employer with 15 or more names on the payroll needs to understand its obligations under two new federal laws relating to pregnant and nursing employees. With bipartisan support in Congress, the Pregnant Workers Fairness Act (PWFA) and the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP Act) were passed last month and take effect almost immediately.

PUMP Act

Nursing mothers received some protections under the Affordable Care Act in 2010 to take breaks at work to nurse their infants or to express milk to be refrigerated and saved for later. Those protections have been expanded and recodified with this new law.

What’s new under the PUMP Act?

  • Employees who are breastfeeding an infant can take advantage of the nursing protections at work for 2 years instead of 1 year allowed under the ACA. The wording in the PUMP Act is ambiguous as to when that two-year protection starts. It says, “for the 2-year period beginning on the date on which the circumstances related to such need arise”. What does that even mean?  My best legal guess is that if an employee nursing a child returns to work three months after the baby is born, then her two-year time period will start running on the date of her return.  But don’t let this ambiguity make you anxious. Employers should be patient and remember that only 35% of US babies are still breastfed at all after they are 12 months old. So many employees will not request this accommodation for two years. If an employee is still taking these breaks when the child is older than two years, call your employment lawyer for advice.
  • Although few employers made this distinction in the past, exempt salaried workers were not covered by the ACA nursing mothers provisions. They now have the same rights to nursing breaks under the PUMP Act as hourly workers had with the ACA. Of course, the challenging matter for employers of trying to figure out how to pay an hourly employee who takes nursing breaks is not an issue for salaried employees, because they are paid the same amount every day regardless of the number of breaks they take.
  • Before an employee complains to the EEOC or otherwise sues the employer over violating the PUMP Act, the employee has to tell the employer about its violation of the PUMP Act and give the employer 10 calendar days to start providing an adequate space and time for the employee to breastfeed or pump. In other words, there is a 10-day grace period for you to get your act together if you have somehow failed to comply with the PUMP Act with a particular employee.

The other provisions of the PUMP Act will be administered identically to the ACA provisions that have been in effect for 12 years, so most employers will have to make few significant changes to comply:

What do you as an employer need to do right now to comply with the PUMP Act?

Continue reading New Laws Regarding Pregnant and Nursing Employees →