Tag: Department of Labor

Employment Law Landscape Expected to Change Under Biden Administration

Setnor Byer Insurance & Risk

Shortly after delivering his inaugural address, President Biden began taking steps to push his policy agenda forward. This is particularly true in the employment law context. Step 1, as expected, was to stop any pending regulatory activity initiated under the Trump administration. This president’s Chief of Staff issued a memorandum ordering an immediate regulatory freeze of all non-emergency regulatory activity pending review by the new administration.

The memorandum, which is nearly identical to the one issued on President Trump’s first day in office, specifically instructed the heads of all executive departments and agencies, including the Department of Labor, to:

  • not propose or issue any rule in any manner until a department or agency head appointed or designated by President Biden reviews and approves the rule;
  • immediately withdraw any rules that have not already been published in the Federal Register; and
  • consider postponing by 60 days the effective date of any rules issued in any manner, including those published in the Federal Register, which have yet to take effect for the purpose of reviewing any relevant questions of fact, law and policy.

The scope of this regulatory freeze is quite broad in that it applies to any:

  • regulatory actions;
  • guidance documents;
  • substantive actions by an agency, including notices of inquiry, advance notices of proposed rulemaking and notices of proposed rulemaking;
  • agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory or technical issue or an interpretation of a statutory or regulatory issue.

Its effects are already being felt. The Department of Labor’s Final Rule for determining independent contractor status under the Fair Labor Standards Act, which was set to take effect March 8, 2021, is expected to be among the more significant casualties of the regulatory freeze. Three FLSA opinion letters issued by the Wage & Hour Division on President Trump’s last full day in office have already been withdrawn by the Biden administration. Employers should expect more of the same in the coming weeks and months. Unfortunately, the uncertainty that always accompanies regulatory changes significantly increase the risk of employment-related claims and lawsuits. The confusion caused by uncertainty creates an environment where mistakes are inevitable. As a result, employers will likely need Employment Practices Liability Insurance to protect against various employment-related claims. Please contact us to learn more about EPLI coverage.

Florida’s Minimum Wage Going Up In 2020

On January 1, 2020, Florida’s minimum wage will increase by ten cents to $8.56 per hour. The minimum wage for tipped employees, which is in addition to tips, will also increase by ten cents to $5.54 per hour. Florida’s Minimum Wage Act applies to those employees entitled to receive the federal minimum wage under the Fair Labor Standards Act. Employers must pay no less than the federal minimum wage or their state’s minimum wage, whichever is higher.

Florida’s minimum hourly wage is adjusted annually for inflation. According to the Florida Supreme Court, only upward adjustments are permitted. Since 2005, Florida’s minimum wage has gone up $2.41. Florida’s 2020 minimum hourly wage remains higher than the current federal minimum hourly wage of $7.25.

Florida employers must make employees aware of their rights by prominently displaying a minimum wage poster in a conspicuous and accessible place wherever minimum wage employees are employed. Employees can sue for violations of Florida’s Minimum Wage Act, but they must first provide their employer written notice of their intent to sue, which must:

  • identify the minimum hourly wage to which the employee claims entitlement;
  • provide the actual or estimated work dates and hours for which payment is sought; and
  • state the total amount of alleged unpaid wages.

Employers then have 15 calendar days to pay all unpaid wages or resolve the claim to the employee’s satisfaction. Otherwise, the employee may file a lawsuit. The Florida Attorney General can also bring a civil action against employers. Each willful violation can result in a $1,000 fine.

Dealing with state and federal wage and hour laws can be hard. To protect against employment practices liability claims, employers should implement a training program and explore their options for insuring against wage and hour claims.

Please contact us for more information about protecting your business from employment-related liabilities.

FLSA Update: Minimum Salary for Exempt White-Collar Employees Increasing in 2020

It’s actually happening. The Department of Labor is increasing the minimum salary threshold for the Fair Labor Standards Act’s white-collar minimum wage and overtime exemptions. On January 1, 2020, an estimated 1.3 million executive, administrative and professional employees will lose their FLSA-exempt status. Without some form of corrective action, employers will have to start paying overtime compensation to these newly-nonexempt employees.

The current standard salary level for exempt white-collar employees is $455 per week. Under the Final Rule, the minimum standard salary level for exempt executive, administrative and professional employees will be:

Weekly:               $684       (+ $229)

Bi-weekly:           $1,368   (+ $458)

Semi-Monthly:  $1,482   (+ 496.17)

Monthly:             $2,964   (+ $992.34)

Annually:            $35,568 (+11,908)

The Final Rule also:

  • increases the total annual compensation requirement for exempt “highly compensated employees” from $100,000 to $107,432 per year;
  • allows nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and
  • revises the special salary levels for workers in U.S. territories and in the motion picture industry.

Employers don’t have much time to evaluate options and take corrective action, which depending on the circumstances, may include:

Corrective actions should be based on business necessity and applied in a uniform, non-discriminatory manner. They must also be implemented no later than January 1 ,2020.

Since change often creates uncertainty, employers should carry Employment Practices Liability Insurance that includes limited wage & hour coverage. Please contact us if you would like to learn more about employment practices liability insurance.

FLSA Update: DOL Proposes Salary Increase for White-Collar Overtime Exemptions

It’s not déjà vu. The Department of Labor is trying to change the white-collar overtime exemptions …again. On March 22, 2019, the DOL published a proposed rule that would increase the minimum salary requirements for the Fair Labor Standards Act’s executive, administrative and professional overtime exemptions.

The DOL estimates that 1.3 million currently exempt employees would become nonexempt under the proposed rule. Without some form of intervention, employers will have to start paying overtime to these newly-nonexempt employees.

The proposed rule does not change the standard duties tests for exempt white-collar employees. Instead, the DOL focused primarily on updating the minimum salary and compensation levels needed to qualify for the executive, administrative and professional overtime exemptions.

Proposed Salary Level [Current Salary Level]

Weekly:               $679       [$455]

Bi-weekly:           $1,358   [$910]

Semi-Monthly:  $1,471   [$985.83]

Monthly:             $2,942   [$1,971.66]

Annually:             $35,308 [$23,660]

The proposed rule also increases the total annual compensation needed to exempt “highly compensated employees” from $100,000 to $147,414 per year. It also allows employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level, but payments must be made on an annual or more frequent basis.

According to the DOL, salary levels needed to be updated to reflect growth in wages and salaries. The proposed salary levels, however, are lower than the salary levels required under the 2016 final rule, which was blocked by a federal court. The minimum salary needed to qualify for white-collar exemptions under the 2016 final rule was $913 per week ($47,476 per year).

The period for public comment on the proposed rule opened March 22nd and closes May 21, 2019. The DOL anticipates that the proposed rule, once finalized, will become effective in 2020. This gives employers some time to prepare, but not a lot.

Employers are once again facing uncertainty and confusion surrounding the white-collar overtime exemptions. The result is an increased risk exposure. Employment Practices Liability Insurance can protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about employment practices liability insurance.

Insurance 101: Do You Need Longshore and Harbor Workers’ Compensation Insurance?

Did you know that longshoremen aren’t the only employees covered by the Longshore and Harbor Workers’ Compensation Act? If you didn’t, you’re not alone. Identifying who is covered by the Longshore Act isn’t always easy. This can be a huge problem because violations of the Longshore Act’s compensation requirements can result in criminal prosecution, fines, and imprisonment. Corporate officers can also be prosecuted individually and held personally liable.

The Longshore Act is essentially a federal workers’ compensation law for employees engaged in maritime employment who work on the navigable waters of the United States. It generally provides medical benefits, lost wages and rehabilitation services to injured employees. Survivor benefits may also be available if a work-related injury causes the employee’s death.

Some employers are authorized by the Department of Labor to self-insure, but all other covered employers are required to purchase the Longshore Act (USL&H) insurance coverage. Two tests are used to determine whether coverage is required under the Longshore Act.

Status Test. An injured worker must meet the statutory definition of “employee” to possess the necessary employment status. The Longshore Act defines an employee as any person engaged in maritime employment, including:

  • Longshoremen;
  • Harbor workers;
  • Ship repairmen;
  • Shipbuilders;
  • Ship-breakers; and
  • Others engaged in ship loading or unloading operations and traditional maritime employment.

Some individuals, who must be covered under their state’s workers’ compensation law, are specifically excluded from the definition of employee, including those who are:

  • Employed exclusively to perform office clerical, secretarial, security or data processing work;
  • Employed by a marina who are not engaged in construction, replacement or expansion of such marina (except for routine maintenance);
  • Employed by suppliers, transporters or vendors who are temporarily working on the premises of a covered employer but who are not engaged in work normally performed by employees of that employer;
  • Employed to build any recreational vessel under sixty-five feet in length or to repair any recreational vessel or dismantle any part of a recreational vessel in connection with the repair of such vessel; or
  • Masters or crew members of any vessel.

Situs Test. The workplace injury or death must occur upon the navigable waters of the United States or any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining areas customarily used by an employer in loading, unloading, repairing, or building a vessel. Navigable waters may include:

  • Waters that are subject to the ebb and flow of the tide; and
  • Waters that are being used, have been used or may be used to transport interstate or foreign commerce.

Coverage under the Longshore Act isn’t always clear. Even the Department of Labor admits that coverage can be a complex issue, depending on both the location and the nature of the employee’s work. Statutory extensions, like the Defense Base Act and the Outer Continental Shelf Lands Act, can complicate matters further.

Nevertheless, employers need to know if they are covered by the Longshore Act. Employers should not rely on their state-required workers’ compensation insurance because standard workers’ compensation policies do not cover employees who are subject to the Longshore Act. Covered employers must have USL&H insurance coverage.

Please contact us if you have any questions about USL&H insurance coverage. You can subscribe to our newsletter to receive regular insurance and risk management informational updates.

Fair Labor Standards Act: Wage & Hour Law Update

What is the most recent development involving Fair Labor Standards Act? Here’s a hint. It’s not the highly-publicized rise and fall of those new white-collar overtime exemption regulations. In fact, quite a bit has happened since the Department of Labor officially abandoned its fight for new white-collar regulations in late 2017.

Opinion Letters

In June 2017, the DOL announced that it would reinstate the issuance of written opinion letters to help employers and employees better understand the FLSA. These letters provide the Wage and Hour Division’s official opinion of how the FLSA applies in the specific circumstances described by the person requesting the opinion.

On January 5, 2018, the DOL made good on its promise when it re-issued seventeen FLSA-specific opinion letters, the first in nearly a decade. These letters were originally prepared in 2009 by the departing Bush administration and quickly withdrawn under the new Obama administration. Then, on April 12th, the DOL issued two new FLSA-specific opinion letters.

This new round of opinion letters covers various topics, including:

  • Compensability of frequent rest breaks required by a serious health condition;
  • Compensability of travel time;
  • Calculation of salary deductions;
  • Salary deductions for full-day absences based on hours missed; and
  • Year-end non-discretionary bonuses.

Opinion letters are significant because they can provide an affirmative defense for actions that may otherwise be unlawful under the FLSA. An employer may avoid liability for actions:

  • Taken in good faith; and
  • In conformity with and in reliance on any written regulation, order, ruling, approval or interpretation of the DOL’s Wage and Hour Division.

Tipped Employees

In December 2017, the DOL proposed new tip regulations. Under the FLSA, employers can credit tips toward their minimum wage obligation. This “tip credit” is equal to the difference between the cash wages it pays the employee (which must be at least $2.13 per hour) and the $7.25 per hour Federal minimum wage.

Under current regulations, employees must be allowed to keep all of their tips, except for tips distributed through a tip pool. However, the tip pool must be limited to employees who customarily and regularly receive tips, like servers, bartenders and bussers. This restriction applies regardless of whether an employer claims a tip credit.

The proposed regulations remove this restriction for employers that do not take a FLSA tip credit and pay a direct cash wage of at least the full Federal minimum wage. The proposed regulations do not change the rules for employers that do claim a tip credit.

Under the proposed regulations, employers who do not take a tip credit would be allowed to share tips with back-of-house workers and other employees who do not customarily and regularly receive tips. According to the DOL, this lets employers reduce wage disparities among employees who all contribute to a customer’s experience, and also incentivizes all employees to improve customers’ experience.

The period for public comment on the proposed regulations ended February 5, 2018, so we can only wait to see what the DOL does next.

The rapidly changing FLSA can put employers at serious risk. Adjusting to change takes time, but violations can happen in the blink of an eye. Employers should consider Employment Practices Liability Insurance to protect against various employment-related claims, including limited coverage for wage and hour claims.

Please contact us if you would like to learn more about protecting your business with employment practices liability insurance.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Federal Judge Blocks New White-Collar Overtime Regulations

A federal judge in Texas has blocked the Fair Labor Standards Act’s new white-collar overtime exemption regulations. Ten days before their effective date, District Court Judge Amos Mazzant issued a nationwide preliminary injunction that temporarily prohibits the Department of Labor from implementing and enforcing the new white-collar overtime exemption regulations. As a result, the new regulations will not be going into effect on December 1, 2016.

In May 2016, the Department of Labor revised various white-collar overtime exemption regulations to:

  • increase the minimum salary requirement from $455 per week ($23,660 annually) to $913 per week ($47,476 annually);
  • increase the minimum annual compensation requirement for the highly-compensated employee exemption from $100,000 to $134,004; and
  • create a process to automatically update the minimum salary and compensation levels every three years, beginning on January 1, 2020.

In September 2016, twenty-one states filed a lawsuit to challenge the legality of the new regulations. On the same day, more than 50 state and national business organizations filed a separate lawsuit challenging the regulations. Both cases were filed in the Eastern District of Texas and were later consolidated.

The plaintiffs filed an Emergency Motion for Preliminary Injunction to prevent the new regulations from going into effect on December 1, 2016. Though a number of arguments were made, Judge Mazzant, who was nominated by President Obama, ultimately determined that the DOL exceeded its delegated authority and ignored Congress’s intent by promulgating and attempting to implement the new regulations.

According to Judge Mazzant, Congress unambiguously intended the white-collar exemptions to depend on an employee’s duties rather than an employee’s salary. By significantly increasing the minimum salary level, the new regulations essentially supplant the well-established duties test. If the intent is to replace the duties test with a salary requirement, then only Congress can make the change, not the DOL.

Judge Mazzant noted that the new regulations would also be invalid because they are not based on a permissible construction of the FLSA and do not comport with Congress’s intent. The broad purpose of the white-collar exemptions was to exempt from overtime those engaged in executive, administrative and professional capacity duties. However, the DOL essentially created a de facto salary-only test by significantly increasing the minimum salary level.

Judge Mazzant ultimately concluded that the public interest is best served by a nationwide preliminary injunction that preserves the status quo until the case can be fully resolved on its merits. Since the DOL is currently prohibited from implementing and enforcing the new regulations, employers don’t have to change their wage and exemption practices for white-collar employees, at least for now.

The ultimate fate of the new regulations is uncertain. Though the preliminary injunction is temporary, this case can languish in court for more than a year. The DOL is currently considering all legal options. In the meantime, the Obama administration that initially directed the DOL to update the white-collar overtime exemption regulations will be replaced by a Trump administration that may direct the DOL otherwise.

Since the level of uncertainty and confusion surrounding the white-collar overtime exemptions has reached new heights, employers may benefit from having Employment Practices Liability Insurance to protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about complying with the FLSA’s new (old) white collar overtime exemption regulations.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Now What? Preparing for the New FLSA White Collar Overtime Exemptions

On December 1, 2016, it will be more expensive for employers to take advantage of the Fair Labor Standards Act’s (FLSA) so-called white collar overtime exemptions. Since FLSA violations have always been expensive, employers should begin the process of determining whether and to what extent they will be affected by the new overtime exemption regulations .

The new rules focus primarily on the minimum salary and compensation levels needed to qualify for the FLSA’s executive, administrative, professional, and computer employee overtime exemptions. Employers can ask the following questions to determine the potential impact of the new overtime rules.

Are there any employees classified as exempt under one of the FLSA’s white collar overtime exemptions? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees ever work more than 40 hours in a workweek? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees earn a salary of less than $913 per week? (This works out to $1,826 biweekly, $1,978 semimonthly, $3,956 monthly or $47,476 annually.) If no, you should not be affected by the higher standard salary levels under the new rules. If yes, exemption classifications and compensation practices will need to be adjusted before December 1, 2016 to avoid violating the new rules.

Various adjustments can be made to ensure compliance under the new rules. However, the most appropriate adjustment(s) will likely depend on each employer’s specific circumstances, such as the number of newly-nonexempt employees, their salaries, how often they work overtime and how much overtime they work.

Depending on their circumstances, employers may implement one or more of the following adjustments.

Increase Salaries. The obvious adjustment, and the one likely envisioned by those enacting the new rules, would be to increase the salaries of exempt white collar employees to no less than $913 per week. Though this may be the simplest and least disruptive adjustment, it may also be the most unrealistic. Though salary increases for some employees may be nominal, they can be more than double for others.

[Remember, employees are not exempt simply because their salaries satisfy the increased salary levels under the new rules. Their primary job duties must also involve the kind of work associated with the specific white collar exemption. Employees must satisfy the minimum salary level requirement and the applicable “standard duties test” to be exempt.]

Pay Newly-Nonexempt Employees Overtime Compensation. The alternative to increasing salaries is to re-classify these exempt white collar employees as overtime-eligible employees. If they work more than 40 hours in a workweek, they must be paid one and a half times their regular rate. As with other nonexempt employees, employers must track the number of hours worked each day and the total hours worked each workweek by newly-nonexempt employees. For many, this will be an entirely new experience and will take some getting used to.

This may not be a problem for employees who rarely work or who work very little overtime. These employees can continue working the same number of hours. Though employers will pay more for occasional overtime work, they may still be paying substantially less than $913 per week. The same cannot be said about employees who regularly work or who work a lot of overtime. The cost of paying time and a half to these employees could be very high, and may even approach $913 per week.

Prohibit Overtime. Newly-nonexempt employees can be prohibited from working overtime. If no overtime is worked, no overtime compensation is required. This option may be simple, but it may not be easy. Exempt employees typically work more than 40 hours in a workweek because they have more than 40 hours of work to do. This work must still get done, but someone else will have to do it.

Adjust Personnel, Schedules or Assignments. Those who prohibit overtime may have to make various operational adjustments. For example, workload distribution and workforce scheduling may need to be adjusted to compensate for the loss of overtime work. In some cases, new employees may need to be hired to make up for any lost productivity.

Adjust Wages. If newly-nonexempt employees are allowed to continue working overtime as always, employers will end up paying more money for the same amount of work. Reallocating regular wages and overtime compensation is a way to keep the hours worked by and the amount paid to newly-nonexempt employees largely the same. However, employers may not reduce an employee’s hourly wage below the highest applicable minimum wage (federal, state, or local) or continually adjust wages each workweek in order to manipulate the regular rate.

Employers cannot wait too long to begin planning for the upcoming change. It takes time to properly implement organizational adjustments to exemption classifications and compensation practices, particularly if they are substantial or complex. With all the publicity surrounding the new white collar overtime exemption rules, it’s probably safe to assume that violations will be noticed not only by those employees who are affected by the new rules, but by the Department of Labor too.

Since the Final Rule is sure to bring a level uncertainty and confusion, employers may benefit from having Employment Practices Liability Insurance to protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Please contact us if you would like to learn more about complying with the FLSA’s new white collar overtime exemption rules.

To receive regular updates about developments which may affect your business, subscribe to Setnor Byer Insurance & Risk’s weekly risk management news brief.

Employee Assistance Programs under the Affordable Care Act

Employee Assistance Programs (EAPs) are designed to help employees prevent, identify and resolve various personal issues and matters. Many employers include EAPs in their benefits packages to enhance employee effectiveness and maintain workplace productivity. In addition to providing benefits like pre-paid legal, crisis intervention or professional development services, EAPs commonly provide health-related benefits, such as mental health, substance abuse and wellness services. Does this mean that they must comply with the Affordable Care Act?

According to final regulations issued by the Departments of Labor, Treasury and Health & Human Services on October 1, 2014, the answer is…maybe.

If an EAP qualifies as an excepted benefit, it will generally be exempt from the ACA’s requirements. Otherwise, the EAP must incorporate the market reforms mandated by the ACA, such as no lifetime or annual limits. Under the final regulations, an EAP must satisfy four requirements to qualify as an excepted benefit.

  1. The EAP cannot provide significant benefits in the nature of medical care.

The amount, scope and duration of services are considered when determining whether an EAP meets this requirement. For example, an EAP that provides only limited, short-term outpatient counseling to substance abusers without requiring prior authorization or review for medical necessity, will not be considered an EAP that provides significant benefits in the nature of medical care. Alternatively, EAPs providing disease management services (lab testing, counseling, prescription drugs, etc.) for chronic conditions, such as diabetes, do provide significant benefits in the nature of medical care.

The Departments may provide additional clarification in the future regarding when a program provides significant benefits in the nature of medical care.

  1. Benefits provided by the EAP cannot be coordinated with benefits under another group health plan.

This requirement has two elements:

  • Participants in the other group health plan must not be required to use and exhaust benefits under the EAP (making the EAP a “gatekeeper”) before becoming eligible for benefits under the other group health plan.
  • Eligibility for EAP benefits must not be dependent on participation in another group health plan.
  1. Employee premiums or contributions cannot be made a condition of participation in the EAP.
  2. The EAP cannot impose any cost-sharing requirements (co-pay, etc.).

These final regulations apply to group health plans with plan years beginning on or after January 1, 2015. Until then, the Departments will consider EAP benefits meeting the conditions of the 2013 proposed regulations or these final regulations to qualify as excepted benefits.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the ACA’s market reforms. Check back with us periodically for future informational updates about the Affordable Care Act.

If you have specific questions about the ACA or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

If you’d like to subscribe to our weekly newsletters please click here.