DOL Issues New Proposed FLSA Overtime Regulations

At long last, on Tuesday, June 30, the Department of Labor released its Notice of Proposed Rulemaking seeking public comment on proposed changes to the Fair Labor Standards Act’s  “white collar” overtime exemption regulations. The DOL’s proposal contained a few expected changes, along with a few surprises.

The Primary Proposed Change – Huge Increase in the Minimum Salary Requirement 

Most significantly, the DOL proposes to more than double the minimum salary required for the FLSA’s white-collar exemptions from the current $455 to an amount equal to the 40th percentile of weekly earnings for all full-time salaried workers.  The DOL projects that this minimum salary amount would be approximately $970 per week in 2016, when it expects to issue its final rule.  The DOL also proposes to automatically update the minimum salary requirement each year based on the 40th percentile calculation or inflation, such that the minimum salary requirement would change (and likely increase) every year.

We expected the DOL to propose a significant increase to the minimum salary requirement, and the DOL did not disappoint.  The DOL estimates that with the proposed increase in the minimum salary requirement, the number of salaried employees who qualify for the FLSA’s white-collar overtime exemptions would decrease by more than 50%.  Employees who earn less than $50,440 annually and currently are classified as exempt would become non-exempt on the effective date of the final regulations, regardless of their job duties.

What About Changes to the Duties Tests?

The minimum salary requirement is only one half of the FLSA’s white-collar overtime exemption tests.  To establish that an employee qualifies for the one of these exemptions, an employer typically must prove both that the employee meets the minimum salary requirement and that the employee’s job duties qualify for one of the exemption’s duties test.

Interestingly, the DOL did not make any specific proposals to change any of the exemptions’ duties tests.  Instead, the DOL sought comments on specific issues related to the duties tests including:

  1. What, if any, changes should be made to the duties tests?
  2. Should employees be required to spend a minimum amount of time performing work that is their primary duty in order to qualify for exemption?  If so, what should that minimum amount be?
  3. Should the Department look to the State of California’s law (requiring that 50% of an employee’s time be spent exclusively on work that is the employee’s primary duty) as a model?  Is some other threshold that is less than 50% of an employee’s time worked a better indicator of the realities of the workplace today?
  4. Does the single standard duties test for each exemption category appropriately distinguish between exempt and nonexempt employees?  Should the Department reconsider our decision to eliminate the long/short duties tests structure?
  5. Is the concurrent duties regulation for executive employees (allowing the performance of both exempt and nonexempt duties concurrently) working appropriately or does it need to be modified to avoid sweeping nonexempt employees into the exemption?  Alternatively, should there be a limitation on the amount of nonexempt work?  To what extent are exempt lower-level executive employees performing nonexempt work?

Some observers fear that with this unanticipated approach, the DOL will place sweeping changes to the duties tests in the final regulations, without ever having these changes subject to public notice and comment prior to their implementation. Should it do so, the DOL almost certainly will trigger legal challenges to the enforceability of such changes in the final regulations.

What Now?

It is important to remember that these are only proposed regulations.  The proposed regulations have not changed the existing law or regulations, and employers are not required to take any action now in response to proposed regulations.  Final regulations likely would not take effect until late 2015 or 2016.

Employers and other members of the public will be able to submit comments to the DOL regarding the proposed regulations for a 60-day period after the proposals are formally published in the Federal Register.

We do not know what the final regulations will contain.  However, the proposed regulations confirm that the DOL intends to make sweeping changes to the current regulatory requirements, limit the applicability of the FLSA white-collar exemptions, and make millions of currently exempt workers eligible for overtime compensation.  Employers should begin considering the impact that the proposed changes would have on the status of their exempt workforce and determine whether affected exempt employees may be covered by another FLSA exemption.  If not covered by another exemption, now is the time to start thinking about changes that may be required if/when the proposed changes become law.

What Does The Supreme Court’s Same-Sex Marriage Decision Mean For Your Employee Benefits?

Our very own Employee Benefits Attorney Sarah K. Ivy spoke to PennLive about the United States Supreme Court’s recent ruling making same-sex marriage legal nationwide. While many questions still exist about the meaning of the ruling, Sarah answered a number of questions about the case, including implications for employee benefit plans. Check out the article here!

If you have questions about the same-sex marriage decision or the recent Affordable Care Act decision, please contact Sarah or any member of our Labor & Employment Practice Group.

ACA Update: Supreme Court Rules that Federal Insurance Exchanges May Issue Tax Subsidies

On June 25, 2015, the U.S. Supreme Court issued its decision in King v. Burwell, ruling that Section 36B of the Patient Protection and Affordable Care Act (“ACA”) authorizes insurance exchanges run by the federal government to issue tax subsidies like their state-run counterparts. The 6-3 decision was authored by Chief Justice Roberts, an appointee of President George W. Bush.

The case involved whether Section 36B of the ACA permits only state-run exchanges to issue tax subsidies to qualifying purchasers of coverage.  That Section defines “premium assistance amount” in part by referring to insurance plans that are enrolled in “an Exchange established by the State.”  The absence of any reference to federal exchanges in these portions of Section 36B led opponents of the Act to argue that only state-run exchanges have the power to issue ACA tax subsidies.  Since only 16 states (plus the District of Columbia) elected to run their own exchanges, the opponents’ position, if adopted, could have made ACA tax subsidies unavailable to residents of 34 states (including Pennsylvania) – and may have rendered the “individual mandate” penalty unenforceable in those states.

The preliminary issue facing the Court was whether the Act, and specifically Section 36B, was ambiguous with respect to its use of the phrase “Exchange established by the State.” Acknowledging that the ACA is replete with “more than a few examples of inartful drafting,” Justice Roberts recited a number of passages in the ACA in which Congress blurred the distinction between state-run and federal exchanges. Given this ambiguity, the Court looked to the greater context of the Act and legislative intent. Finding ample provisions in the Act to support the notion of subsidies being issued by all exchanges, the Court ruled that Congress intended the Act to be interpreted to allow for such subsidies. Otherwise, the Court surmised, the individual insurance markets in states with federal exchanges may experience a “death spiral” – a result that the ACA was intended to prevent.

In sum, the Court found that the opponents of the law were arguing that “Congress made the viability of the entire Affordable Care Act turn on the ultimate ancillary provision: a sub-sub-sub section of the Tax Code.  We doubt that is what Congress meant to do.”

Employers with 50-99 employees are expected to comply with the “pay or play” provisions of the Act in 2016.  For those employers that have already begun to plan to comply, today’s decision is an endorsement to “carry on.”  For employers that have delayed planning in hopes that the Supreme Court would derail the ACA, it is now time to catch-up.

If you have any questions regarding this article or the ACA, please contact any member of our Labor and Employment Practice Group.

Understanding Workers’ Compensation Mental Injury Claims: Part 3

In Part 1 of this post, we explored the three types of work related mental injury claims addressed by the Pennsylvania Workers’ Compensation Act. In Part 2, we discussed how courts are increasingly easing the burden of proving abnormal working conditions. Now, we will discuss practical steps you can take to ensure you are not faced with a workers’ compensation claim for a mental condition completely unrelated to the workplace.

There are, of course, many reasons why people experience unhappiness or depression or feelings of insecurity or imbalance completely unrelated to their work environment:

Family Situations

  • a parent and a child do not talk to each other;
  • a spouse has left a marriage;
  • a wife is physically incapable of having a child;
  • a spouse is abusive, physically or emotionally;
  • a spouse is drug dependent or alcohol dependent;
  • a spouse has had an extramarital affair;
  • a parent suffers from Alzheimer’s or Dementia requiring the son or daughter to institutionalize him or her;
  • an adult experiences for the first time memories of abuse inflicted years earlier by a parent or other family member;
  • a parent’s child is killed or physically harmed;
  • a parent’s child suffers from a dysfunctional condition such as Attention Deficit Disorder or Schizophrenia or becomes drug dependent or has encounters with law enforcement

 Self-Induced Depression

  • the individual experiences anger/frustration over his or her lack of achievement, e.g. failing to land a job promotion or having never attended college;
  • the individual is inherently self-driven due to family expectations or unrealistic self-expectations;
  • an individual experiences frustration/anger over his or her confrontation with middle age;
  • the individual experiences delusions of grandeur causing profound employee dissatisfaction with job;

Other Causes

  • seemingly unrelated non-work related psychiatric conditions such as “histrionic personality syndrome” resulting indirectly in the filing of a workers’ compensation claim;
  • a false claim filed for purposes of secondary gain or monetary reward

What many lawyers fail to consider and investigate, are the circumstances surrounding, and leading up to, the occurrence of the mental injury at issue.  The lawyer who explores and analyzes those circumstances has a distinct advantage over the lawyer who does nothing more than respond to the basic allegations of the claim.

Employers, adjusters and nurse case managers can greatly assist their lawyers by conducting a thorough investigation after notice of a “stress claim.”  Some investigation best practices are as follows:

  • Conduct a thorough interview of the employee, ask questions about history of mental health treatment or diagnoses and ask about any other potential contributing factors.
  • Review employee’s attendance record for a history/pattern of absences that may be related to a stress or mental health reasons.
  • Obtain a HIPAA  and mental health release allowing the release of mental health information by the employee’s treating doctors and then obtain such records; also look for increased blood pressure, sleep disorders and cardiovascular disease, which may be related to non work stressors.
  • Speak to supervisors and co-workers to determine if the employee has mentioned any stress related issues in the past.
  • Investigate the working condition the employee alleges is abnormal or that led to the mental injury claim. Is it truly abnormal? Did the employee’s job recently change? Were there any reports of problems, issues or concerns prior to receiving notice of the claim? Have similar incidents occurred with other employees and is there any training provided to employees regarding such situations, etc?

Once the facts have been investigated, it is the responsibility of the attorney to present the facts to the workers’ compensation judge from the proper perspective.  Proper development of the facts, including the events leading up to the claim, ultimately allows defense counsel to provide the workers’ compensation judge with the full flavor of the dispute.

If you have questions regarding an alleged work-related stress or mental injury claim, please contact Paul Clouser or Denise Elliott in the Lancaster office.

Understanding Workers’ Compensation Mental Injury Claims: Part 2

In Part 1 of this blog post, we explored the three legal classifications of potentially work related mental injury claims addressed under the Pennsylvania Workers’ Compensation Act: physical/mental, mental/physical, and mental/mental. In this part, we will take a closer look at the rapidly developing area of mental/mental cases. We will also provide practical advice on how you can protect your company from mental stress claims in Part 3 of this post.

As you will recall from Part 1, to succeed in establishing a Workers’ Compensation claim for a mental/mental injury (mental stimulus/mental injury), the employee must demonstrate that the injury resulted from an abnormal working condition. Historically, this has been a difficult burden for employees to meet. Consider, for example, the convenience store hold-up cases, where a convenience store clerk is held-up at gun point, is not physically touched or harmed, but suffers from anxiety, panic attacks and PTSD thereafter. In such cases, the employee cannot meet his/her burden of proving an abnormal working condition because, hold-ups are common in the industry, clerks are told as such, and clerks are trained regarding what to expect and how to handle a hold-up.

Recently, however, the courts have begun to ease the burden of proving abnormal working conditions.

In Payes v. WCAB (2013), the Pennsylvania Supreme Court notably eased the burden of proof in mental/mental cases, by holding that mental injury cases are highly fact-sensitive and that the Workers’ Compensation Judge (“WCJ”), as fact finder, must be given broad latitude in determining whether or not “abnormal working conditions” exist, given the specific facts of each individual case. In Payes, a State Trooper sustained PTSD after striking and killing a pedestrian who ran in front of his patrol car while he was traveling to the barracks. The WCJ awarded benefits, but the Appeal Board ruled in favor of the employer, finding that there was no abnormal working condition.  The Commonwealth Court affirmed, holding that a police officer can be expected to witness horrible tragedy and that “it is not beyond the realm of possibility for an officer to have to take someone’s life.” Further, the Court found it was normal for a police officer to administer first aid, including CPR, to a crash victim and that not all first aid attempts are successful.

The Supreme Court reversed, finding that the trooper was entitled to an award of benefits caused by “a singular extraordinary event occurring during [the claimant’s] work shift.” An abnormal working condition was found to exist, even though state troopers are routinely exposed to vehicle accidents, mayhem, bodily injury, death, murder and violent acts, in the normal course of their duties.  In this case, the death was found to be a “suicide by cop” situation, in which the responding officer was also placed in the zone of danger due to oncoming traffic, while attempting to revive the decedent, prior to the arrival of emergency personnel. The Supreme Court held that a State Trooper is not normally exposed to a mentally disturbed individual running in front of his vehicle, thus requiring the Trooper to perform CPR on such individual on a busy interstate highway. The lesson from Payes is that deference will be given to the fact finder, the WCJ, in these cases, to decide whether or not an abnormal working condition exists.

Recently, the Commonwealth Court followed the Supreme Court’s lead in Payes, by vacating and remanding a mental/mental case to the WCJ, for further consideration as to whether an armed robbery of the general manager of a check cashing business involved an “abnormal working condition.” The manager and her husband were abducted at gunpoint while opening the store. The husband was handcuffed and forced into the backseat of the gunman’s car, while the Claimant was led into the office at gunpoint, shoved to the ground and hog-tied. A panic button she had been given by her employer was inoperable, although she was eventually able to free herself and call 911. Following the assault, Claimant had regular nightmares, panic attacks, bouts of crying, and difficulty getting dressed or bathed.  She was diagnosed with PTSD as a direct result of the armed robbery. Noting that Claimant had been trained on how to respond in the event of a robbery and that a robbery was foreseeable and more than just a remote possibility, the WCJ nevertheless found no abnormal working condition. On remand, however, the Court held that the Judge is obligated to consider the facts surrounding this specific robbery, in deciding whether abnormal working conditions were present. Murphy v. WCAB (Pa. Cmwlth. Ct. 2015).

The trend toward compensability of stress claims is likely to continue in Pennsylvania, based on these developments.  Accordingly, employers would be wise to consider taking steps to reduce potential exposure to such claims.  A thorough investigation of the circumstances surrounding the filing of a claim for workers’ compensation benefits is perhaps the most important initial step to take.  Why?  Because there are so many causes for psychological or psychiatric conditions. We will explore this more in Part 3, tomorrow!