Tag Archives: FLSA

Out-of-State Employees Have to be Treated Differently

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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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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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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.

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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?

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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?

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DOL Finalizes New Salary Minimum

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Update: This post from March 2019 has been updated as of September 24, 2019, because on that day the DOL issued the final salary minimum rule, which changed a couple of important items from what was proposed six months ago.

A new federal overtime rule that has been finalized by the U.S. Department of Labor will become effective on January 1, 2020, and employers need to start preparing now to get into compliance.

The final rule 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 (and not pay that person overtime) as long as the employee is performing exempt duties, such as executive work or professional work.

On January 1, 2020, the final minimum salary threshold for exempt employees is going to increase to $684 per week ($35,568) annually)(the proposed rule was $5 per week less, so we thought that the annual number was going to be $35,308). That means that if you have any employee whom you are paying on salary in an amount less than $35,568 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 one workweek.

In addition to meeting this increased salary level to $35,568 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 all of 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 confirm that those salaried employees are making at least $684 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 $684 every week, not just averaged out over the year. The final rule does provide employers the ability to make up 10% of the salary basis test with non-discretionary bonuses and commissions. So, if you pay an executive, administrator or professional employee no less than $32,011.20 in yearly salary (divided by 52 weeks) and then the employee earns another $3,556.80 annually in non-discretionary bonuses and commissions (paid on at least a quarterly basis), you will not be in violation of the final 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 properly paying their salaried employees in 2020.

Employer should also be aware that the “highly compensated employee” exemption under the final rule for 2020 has slightly increased. 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 final rule raises that salary threshold for highly-compensated employees to $107,432 per year (the proposed rule was to raise the highly-compensated employee salary minimum to $147,432, which was universally criticized and so reduced by $40,000).

Obviously, if you have to move an employee from exempt status to non-exempt status because of this salary minimum change, you should find a way to clearly communicate that this change is not a demotion, but simply a change in a governmental regulation. You’ll also need to train anyone moving from exempt status to non-exempt status on your timekeeping rules so that all time worked is properly recorded.

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

Compensation, Employee Rights, , , ,

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?

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Best Employment Law Training To Be Offered in Amarillo

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One of the best employment law training opportunities for managers, human resources personnel and business owners of your company is happening in Amarillo on September 21, 2018.

The Texas Workforce Commission only offers its Texas Business Conference in Amarillo every few years and I recommend it to my clients as a “not to be missed” event. The cost is only $125 per person and just the written materials you will receive at the one-day conference are worth that.

The TWC’s speakers will cover the following in detail:

  • Wage and Hour Law (which is arguably the most violated business law in the country);
  • Independent Contractors;
  • Policies and Handbooks;
  • Worker’s Compensation: How to Control Costs of an On the Job Injury;
  • Hiring/Employment Law Update; and
  • Unemployment Claims and Appeals.

The great news is that the conference will help you no matter whether you are new to human resources issues or have been dealing with them forever.  I’ve been practicing employment law for 30 years, yet I learn something new every time I attend this conference.

If you would like to sign up for this training event, you can find more information and registration here. I hope I see you there on September 21.

Taking Care of Your Employees After A Natural Disaster

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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.

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