Still Waiting for Those New Proposed FLSA Overtime Regulations

This post was contributed by Adam R. Long, a Member in the McNees Labor and Employment Group.

You may recall that over a year ago, President Obama directed the Secretary of Labor to “modernize and streamline” the existing Fair Labor Standards Act (FLSA) overtime regulations, specifically with respect to the “white collar” exemptions. The FLSA’s white collar exemptions apply to covered executive, administrative, professional, and outside sales employees. To qualify for an exemption to the FLSA’s minimum wage and overtime compensation requirements, these regulations generally require that an employee receive a guaranteed minimum salary of at least $455 per week and meet one of the duties tests.

Since the President issued this directive, many have speculated about the changes that may be in store for the white collar exemptions. Most speculation has focused on an anticipated significant increase in the minimum salary amount and changes to the duties tests that would eliminate the exemptions’ application to many positions currently exempt from the federal overtime requirements.

The Department of Labor previously announced multiple target dates, including November 2014 and February 2015, to issue the proposed regulations. These dates have come and gone without any announcement. We still fully expect the DOL to comply with the President’s directive and issue proposed regulations in the near future. But with no new target date, when in 2015 that will occur is anyone’s guess.

In the meantime, employers should continue to work to comply with the current FLSA regulations and ensure that all employees they classify as exempt from the overtime requirements safely fall within one of the recognized exemptions. Even after the DOL publishes proposed regulations, those regulations will not take effect until completion of a public notice and comment period and issuance of final regulations. Thus, the rules we have now likely will remain the rules in effect for a fair time to come.

Don’t Forget About State Law!

Regardless of what the DOL does with the FLSA regulations, any changes will have no effect on the overtime requirements and exemptions of the Pennsylvania Minimum Wage Act (PMWA). While it tracks the FLSA in many areas, the PMWA is a separate and distinct state law that applies to Pennsylvania employers. Complying with the requirements of the FLSA is not enough, and employers in Pennsylvania risk liability by failing to ensure compliance with both overlapping wage and hour laws. New FLSA regulations likely will widen the gap between the requirements of the two laws, increasing the compliance headaches that employers currently face.

Waiting Doesn’t Justify Inaction

Wage and hour class actions filed on behalf of current and former employees remain a significant threat to employers, with the number of such actions increasing each year. Overtime exemption misclassification cases remain near the top of the list of types of wage and hour class actions filed. Unfortunately, patiently waiting for new regulations is not a defense to liability in such actions.

Many employers blindsided by wage and hour class action litigation wish they had identified and addressed risk areas long before they resulted in expensive and time-consuming class-based litigation. When the new proposed FLSA regulations are issued, we will let you know and explain their expected ramifications. In the meantime, stay vigilant about wage and hour compliance, as the risks associated with non-compliance continue to grow.

Wage and hour requirements are frustrating, but employers cannot escape them or the significant risks associated with non-compliance. At our upcoming 25th Annual McNees Labor and Employment seminar, we are going to take an in-depth look at key wage and hour cases and regulatory activity from the past year, including the anticipated new FLSA overtime exemption regulations. The session also will highlight critical compliance issues relevant to our evolving 24/7 workplace and provide recommendations for the proactive employer.

 

NLRB GC Release Report Offering Employers Guidance on Handbook Policies

The National Labor Relations Board’s Office of General Counsel recently released a Report of the General Counsel Concerning Employer Rules, which is apparently designed to offer guidance to employers regarding workplace rules. We can summarize the 30 page memo as follows: the GC does not like your rules.

The memorandum contains several examples of rules that the GC had deemed unlawful in the past and then several examples of policies deemed lawful in the areas of confidentiality, employee conduct toward the company, employee conduct toward other employees, employee conduct toward third parties (i.e. the media), rules restricting the use of company logos and trademarks, rules restricting photographs and recordings in the workplace, rules restricting employees from leaving the workplace without permission (which could impact striking workers), and employer conflict of interest rules. The GC provides an explanation regarding the distinctions between the lawful and the unlawful rules.

The GC also uses a recent settlement with a large fast food chain to provide examples of several policies it would view as lawful under the National Labor Relations Act.

The Report is confusing at times and appears to be contradictory, particularly when the sections regarding conduct toward the employer and conduct towards other employees are read together. When you boil those two sections down, there isn’t much that is off limits in the GC’s view.

That view is certainly eye-opening. For example, the Report notes GC’s conclusion that employees have the right to publicly criticize employers, and that protected conduct does not lose the protection of the Act even if it is abusive and inaccurate. To be fair, the Report is helpful to the extent you are seeking to craft policies that will withstand the rigorous review of the Board’s current GC. Whether the Board and the courts will ultimately sustain that aggressive approach remains to be seen. However, we do recommend reviewing the Report and adjusting your policies appropriately.

Jury Awards Families of Murdered Employees Over $8 Million

Recently, a Philadelphia jury awarded over $8 million dollars to the families of two factory workers killed by a co-worker in 2010. Concerns about the employee had been reported in the past, and she was suspended the day she committed the murders for making threats against co-workers.  However, after her suspension she was not stopped by the factory’s security company from reentering the premises, where she shot and killed two co-workers and injured another.

The families’ attorney claimed in a pre-trial memorandum that the security guards were aware of the potential for violence, but were not properly trained and failed to follow protocol, including failure to escort the employee to her car, call 911, or notify employees that she had reentered the plant with a weapon.  An expert report cited by the families’ attorney noted that had the guards followed the security program in place, the violence could have been prevented.  The jury ultimately found the security company to be partially liable for the deaths of the coworkers.  The employee, convicted in 2012, was also found liable by the jury.19-08-10

Although such extreme violence is a rare workplace occurrence, there are valuable lessons to be learned by all employers from this tragedy.  Review your workplace policies and procedures periodically.  If you don’t have workplace violence and/or weapons policies already in place, it may be time to adopt and implement them.  Training your employees on these and all of your workplace policies is crucial.  Providing training can help ensure that they are grounded in all practices, including security and emergency procedures.  Educating your employees can save your company valuable resources and may even help to save a life.

Third Circuit Rules That Drivers Of Vehicles Weighing Less Than 10,000 Pounds Must Be Paid Overtime Under FLSA

In a new decision, the first on the subject by a federal appellate court, the Third Circuit has ruled in McMaster v. Eastern Armored Services Inc. that drivers who spend a portion of their work driving “covered” commercial motor vehicles (those over 10,000 pounds) and non-covered (those under 10,000 pounds) do not fall within the Motor Carrier Act exemption, and therefore must be paid overtime as required by the Fair Labor Standards Act (“FLSA”).  The Motor Carrier Act exemption had previously been construed to exempt interstate truck drivers (regardless of vehicle weight) from the overtime guarantees of the FLSA.  The Third Circuit (the federal appellate court whose decisions are binding in Pennsylvania, New Jersey, and Delaware) considered amendments to the FLSA contained in the Technical Corrections Act of 2008 (“TCA”), and found that Congress therein made:

“a plain statement that a “covered employee” is to receive overtime even where section 13(b)(1)—the Motor Carrier Act Exemption—would ordinarily create an exemption. We see no plausible alternative construction . . . Statutory construction points to one conclusion: ‘covered employees’ are entitled to overtime.”

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Under the McMaster decision, employees who spend at least a “part” of their work week driving vehicles weighing less than 10,000 pounds are entitled to overtime pay for all time worked in excess of 40 hours in the week.  Employers who fail to pay overtime when it is due may be made to pay back wages of up to three years, in addition to attorney’s fees and other types of damages.

Collective actions by employees for overtime pay under the FLSA are on the rise.  This decision creates clear liability and therefore increased exposure for any business that employs drivers to transport property (including some delivery drivers) using vehicles weighing less than 10,000 pounds (e.g., smaller trucks and cars).

Questions? Feel free to contact the author, your McNees Employment attorney, or a member of our Transportation, Distribution and Logistics Group.

Welcome to the new McNees Labor & Employment Blog!

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Welcome to the new McNees Wallace & Nurick Labor & Employment Blog!

Our goal is to provide you with the latest updates, analysis, and commentary on how the law impacts employers at the national, state, and local level. Our attorneys in Harrisburg, Lancaster, Scranton, State College, and Columbus, Ohio discuss topics (with a focus on Pennsylvania law) including employment litigation, wage & hour issues, unions, social media, discrimination & harassment, employee benefits, affirmative action, workers’ compensation, and more.

Over the past year, we have been lucky to welcome five new members to the Labor & Employment Group:

  • Paul Clouser joined McNees in August, practicing in the firm’s Lancaster office. Paul has 25 years of experience representing clients in workers’ compensation matters and employment litigation.
  • Denise Elliott also joined McNees in August and also practices in the firm’s Lancaster office. Denise focuses her practice on defending self-insured employers in workers’ compensation matters and providing representation and counsel to clients in employment discrimination litigation, ADA/FMLA compliance, and safety and health issues.
  • Sarah Ivy joined McNees in July. As an attorney in the firm’s Employee Benefits  group within the Labor & Employment practice group, Sarah brings over 15 years of experience in the areas of employee benefits law, taxation, and executive compensation. She will reside in the firm’s Lancaster office.
  • Finally, Gina McAndrew joined the firm’s Scranton office where her practice focuses on private and public sector labor relations, equal employment opportunity, and general employment and labor law, emphasizing collective bargaining, arbitration, and defense of all forms of wrongful discharge and discrimination claims.

Contributions to the blog and staying ahead of trends and challenges is important–but most important is our “Clients First” mentality and foundation of quality service. It’s a dynamic time to be a business owner, Human Resources professional, or labor & employment attorney. With constantly changing laws and regulations, a new Governor, a looming presidential election, and multiple major employment law cases before the United States Supreme Court, we are excited to bring you articles and stories that impact your business.

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