Thursday, May 7, 2015

FLSA in the News…

In March of last year, President Obama ordered the U.S. Department of Labor (DOL) to revisit and revise the "white collar" overtime exemption regulations.  The goal was to make many more workers eligible for overtime pay for hours worked over 40 in a workweek. On May 5, 2015, Secretary of Labor Perez announced that the DOL submitted the proposed changes to the White House’s Office of Management and Budget (OMB) for approval.
In a blog post, Secretary Perez stated "We’ve worked diligently over the last year to develop a proposed rule that answers the president’s directive and captures input from a diverse range of stakeholders. After extensive research, study and careful analysis, we have submitted the proposed rule to the Office of Management and Budget for review. In the near future, the public will have an opportunity to weigh in and help us craft a final rule."

It seems certain that the proposed rules will increase the minimum salary level required for exemption from the FLSA overtime requirements.  Presently, the threshold is $455 per week ($23,660 annually), which was set in 2004. 

According to Littler, rumor has it that the DOL was ready to propose $42,000. We’ve seen many reports that others want the figure to be much higher. The Economic Policy Institute has called for a minimum salary of over $51,000. And, thirty Democrats sent a letter to Secretary Perez calling for a salary level of $69,000, reportedly to cover the same percentage (65%) of salaried employees that were entitled to overtime in 1975.  At $69,000, an estimated additional 10.4 million employees will be newly entitled to overtime pay.

Correcting for inflation over the 1975 salary threshold of $155 per week, would result in a salary level of $31,720 annually – a figure most assuredly to be better received by businesses.

It is additionally expected that there will be a change in the duties test for the "executive" level exemption (keep in mind, "executive" does not solely mean senior management, but is a term used by the FLSA to define duties that are more than manual labor or administration support work). It’s been expected that the exemption for retail and restaurant managers and assistant managers will be narrowed.  Littler opines that it is likely DOL will propose a California-style rule that exempt employees must spend more than 50% of their time performing exempt level work.  Currently, the FLSA primary duties test treats time as an important factor but not in itself determinative.  Secondly, the DOL may eliminate the concept of "concurrent duties" – or when an exempt manager or assistant manager continues to perform exempt management duties even while performing non-exempt work of the people they manage. In other words, if the manager continues to perform non-exempt level work, the manager’s position cannot be exempt from the overtime regulation.

Keep in mind, that the criteria for exemption to the overtime requirements are all "and" statements. This means the position must meet all the criteria in order to qualify. So, a change to the minimum salary level alone will cause many jobs to fail the test for exemption and therefore will be subject to overtime payments.

In news from another Obama administration move, the "blacklisting" amendment was voted down last week. This amendment to the 2016 Military Construction and Veterans Affairs Appropriations Bill (H.R. 2029), would have automatically debarred federal contractors that (self) reported having a FLSA violation over the last 5 years. Current laws already have suspension and debarment processes for employers with a history or pattern of violating laws and other bad behavior. This amendment would have created a one-strike rule. It’s still possible that similar amendments could show up in other bills this year, but this defeat should make future efforts easier to block.

And for the bonus round……………….the NLRB! Again. Still. *sigh*

The National Labor Relations Board (NLRB) has issued a call for briefs asking whether a union should be able to charge nonmembers fees for processing grievances in right-to-work states. In right-to-work states, union security clauses that require employees to become members and pay dues and fees as a condition of continued employment are not legal. So, it follows that charging a fee to process a grievance when one is not a member of the union should not also be allowed. This action is seen as a direct reaction to states passing right-to-work laws (Michigan, Wisconsin and Indiana most recently).

In the case before the board that prompted its call for briefs, Jimmie Ray Williams, an employee of Buckeye Florida Corp., alleged that the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 1192, AFL-CIO, CLC violated the National Labor Relations Act (NLRA) by requiring him to pay a fair share fee (equal to the dues paid by union members for the remained of the collective bargaining agreement term) to process his grievance concerning an alleged overtime violation. This is in the state of Florida which is a right-to-work state. Williams filed an unfair labor practice charge against the union with the NLRB, which ruled on March 24, 2014, that the union’s Fair Share Policy violated the NLRA. So, now the NLRB is looking to change that. Hmmmmm. Apparently the NLRB is questioning if they can have it both ways. The rest of us are questioning just how far the NLRB will be allowed to go to stack the deck in favor of unions that are being seen as less and less relevant to today’s workforce.

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