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BREAKING NEWS: DOL has issued the poster REQUIRED to be “posted” re coronavirus sick-/FMLA- leave

Employers who are subject to the new FFCRA (Families First Coronavirus Response Act) sick-/FMLA- leave are required to post a poster by the FFCRA’s effective date, April 1, 2020. The EEOC has just issued the required poster along with a Q&A that answers common questions employers will have regarding the same, including explaining that, where a workplace has suffered reductions due to coronavirus it may be necessary to issue the poster by email or so-called snail mail — but not to already furloughed or laid off workers nor in languages other than English. The Q&A provides, as follows:

 

DEFINITIONS

“Paid sick leave” – means paid leave under the Emergency Paid Sick Leave Act.

“Expanded family and medical leave” – means paid leave under the Emergency Family and Medical Leave Expansion Act.

QUESTIONS & ANSWERS

  1. What is the effective date of the Families First Coronavirus Response Act (FFCRA), which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act?The FFCRA’s paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020.
  2. As an employer, how do I know if my business is under the 500-employee threshold and therefore must provide paid sick leave or expanded family and medical leave?You have fewer than 500 employees if, at the time your employee’s leave is to be taken, you employ fewer than 500 full-time and part-time employees within the United States, which includes any State of the United States, the District of Columbia, or any Territory or possession of the United States. In making this determination, you should include employees on leave; temporary employees who are jointly employed by you and another employer (regardless of whether the jointly-employed employees are maintained on only your or another employer’s payroll); and day laborers supplied by a temporary agency (regardless of whether you are the temporary agency or the client firm if there is a continuing employment relationship). Workers who are independent contractors under the Fair Labor Standards Act (FLSA), rather than employees, are not considered employees for purposes of the 500-employee threshold.Typically, a corporation (including its separate establishments or divisions) is considered to be a single employer and its employees must each be counted towards the 500-employee threshold. Where a corporation has an ownership interest in another corporation, the two corporations are separate employers unless they are joint employers under the FLSA with respect to certain employees. If two entities are found to be joint employers, all of their common employees must be counted in determining whether paid sick leave must be provided under the Emergency Paid Sick Leave Act and expanded family and medical leave must be provided under the Emergency Family and Medical Leave Expansion Act.

    In general, two or more entities are separate employers unless they meet the integrated employer test under the Family and Medical Leave Act of 1993 (FMLA). If two entities are an integrated employer under the FMLA, then employees of all entities making up the integrated employer will be counted in determining employer coverage for purposes of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act.

  3. If I am a private sector employer and have 500 or more employees, do the Acts apply to me?No. Private sector employers are only required to comply with the Acts if they have fewer than 500 employees.[1]
  4. If providing child care-related paid sick leave and expanded family and medical leave at my business with fewer than 50 employees would jeopardize the viability of my business as a going concern, how do I take advantage of the small business exemption?To elect this small business exemption, you should document why your business with fewer than 50 employees meets the criteria set forth by the Department, which will be addressed in more detail in forthcoming regulations.You should not send any materials to the Department of Labor when seeking a small business exemption for paid sick leave and expanded family and medical leave.
  5. How do I count hours worked by a part-time employee for purposes of paid sick leave or expanded family and medical leave?A part-time employee is entitled to leave for his or her average number of work hours in a two-week period. Therefore, you calculate hours of leave based on the number of hours the employee is normally scheduled to work. If the normal hours scheduled are unknown, or if the part-time employee’s schedule varies, you may use a six-month average to calculate the average daily hours. Such a part-time employee may take paid sick leave for this number of hours per day for up to a two-week period, and may take expanded family and medical leave for the same number of hours per day up to ten weeks after that.If this calculation cannot be made because the employee has not been employed for at least six months, use the number of hours that you and your employee agreed that the employee would work upon hiring. And if there is no such agreement, you may calculate the appropriate number of hours of leave based on the average hours per day the employee was scheduled to work over the entire term of his or her employment.
  6. When calculating pay due to employees, must overtime hours be included?Yes. The Emergency Family and Medical Leave Expansion Act requires you to pay an employee for hours the employee would have been normally scheduled to work even if that is more than 40 hours in a week.However, the Emergency Paid Sick Leave Act requires that paid sick leave be paid only up to 80 hours over a two-week period. For example, an employee who is scheduled to work 50 hours a week may take 50 hours of paid sick leave in the first week and 30 hours of paid sick leave in the second week. In any event, the total number of hours paid under the Emergency Paid Sick Leave Act is capped at 80.

    If the employee’s schedule varies from week to week, please see the answer to Question 5, because the calculation of hours for a full-time employee with a varying schedule is the same as that for a part-time employee.

    Please keep in mind the daily and aggregate caps placed on any pay for paid sick leave and expanded family and medical leave as described in the answer to Question 7.

    Please note that pay does not need to include a premium for overtime hours under either the Emergency Paid Sick Leave Act or the Emergency Family and Medical Leave Expansion Act.

  7. As an employee, how much will I be paid while taking paid sick leave or expanded family and medical leave under the FFCRA?It depends on your normal schedule as well as why you are taking leave.If you are taking paid sick leave because you are unable to work or telework due to a need for leave because you (1) are subject to a Federal, State, or local quarantine or isolation order related to COVID-19; (2) have been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or (3) are experiencing symptoms of COVID-19 and are seeking medical diagnosis, you will receive for each applicable hour the greater of:
    • your regular rate of pay,
    • the federal minimum wage in effect under the FLSA, or
    • the applicable State or local minimum wage.

    In these circumstances, you are entitled to a maximum of $511 per day, or $5,110 total over the entire paid sick leave period.

    If you are taking paid sick leave because you are: (1) caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19 or an individual who has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; (2) caring for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons; or (3) experiencing any other substantially-similar condition that may arise, as specified by the Secretary of Health and Human Services, you are entitled to compensation at 2/3 of the greater of the amounts above.

    Under these circumstances, you are subject to a maximum of $200 per day, or $2,000 over the entire two week period.

    If you are taking expanded family and medical leave, you may take paid sick leave for the first ten days of that leave period, or you may substitute any accrued vacation leave, personal leave, or medical or sick leave you have under your employer’s policy. For the following ten weeks, you will be paid for your leave at an amount no less than 2/3 of your regular rate of pay for the hours you would be normally scheduled to work. The regular rate of pay used to calculate this amount must be at or above the federal minimum wage, or the applicable state or local minimum wage. However, you will not receive more than $200 per day or $12,000 for the twelve weeks that include both paid sick leave and expanded family and medical leave when you are on leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.

    To calculate the number of hours for which you are entitled to paid leave, please see the answers to Questions 5-6 that are provided in this guidance.

  8. What is my regular rate of pay for purposes of the FFCRA?For purposes of the FFCRA, the regular rate of pay used to calculate your paid leave is the average of your regular rate over a period of up to six months prior to the date on which you take leave.[2] If you have not worked for your current employer for six months, the regular rate used to calculate your paid leave is the average of your regular rate of pay for each week you have worked for your current employer.If you are paid with commissions, tips, or piece rates, these amounts will be incorporated into the above calculation to the same extent they are included in the calculation of the regular rate under the FLSA.

    You can also compute this amount for each employee by adding all compensation that is part of the regular rate over the above period and divide that sum by all hours actually worked in the same period.

  9. May I take 80 hours of paid sick leave for my self-quarantine and then another amount of paid sick leave for another reason provided under the Emergency Paid Sick Leave Act?No. You may take up to two weeks—or ten days—(80 hours for a full-time employee, or for a part-time employee, the number of hours equal to the average number of hours that the employee works over a typical two-week period) of paid sick leave for any combination of qualifying reasons. However, the total number of hours for which you receive paid sick leave is capped at 80 hours under the Emergency Paid Sick Leave Act.
  10. If I am home with my child because his or her school or place of care is closed, or child care provider is unavailable, do I get paid sick leave, expanded family and medical leave, or both—how do they interact?You may be eligible for both types of leave, but only for a total of twelve weeks of paid leave. You may take both paid sick leave and expanded family and medical leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons. The Emergency Paid Sick Leave Act provides for an initial two weeks of paid leave. This period thus covers the first ten workdays of expanded family and medical leave, which are otherwise unpaid under the Emergency and Family Medical Leave Expansion Act unless you elect to use existing vacation, personal, or medical or sick leave under your employer’s policy. After the first ten workdays have elapsed, you will receive 2/3 of your regular rate of pay for the hours you would have been scheduled to work in the subsequent ten weeks under the Emergency and Family Medical Leave Expansion Act.Please note that you can only receive the additional ten weeks of expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act for leave to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.
  11. Can my employer deny me paid sick leave if my employer gave me paid leave for a reason identified in the Emergency Paid Sick Leave Act prior to the Act going into effect?No. The Emergency Paid Sick Leave Act imposes a new leave requirement on employers that is effective beginning on April 1, 2020.
  12. Is all leave under the FMLA now paid leave?No. The only type of family and medical leave that is paid leave is expanded family and medical leave under the Emergency Family and Medical Leave Expansion Act when such leave exceeds ten days. This includes only leave taken because the employee must care for a child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons.
  13.  Are the paid sick leave and expanded family and medical leave requirements retroactive?No.
  14. How do I know whether I have “been employed for at least 30 calendar days by the employer” for purposes of expanded family and medical leave?You are considered to have been employed by your employer for at least 30 calendar days if your employer had you on its payroll for the 30 calendar days immediately prior to the day your leave would begin. For example, if you want to take leave on April 1, 2020, you would need to have been on your employer’s payroll as of March 2, 2020.If you have been working for a company as a temporary employee, and the company subsequently hires you on a full-time basis, you may count any days you previously worked as a temporary employee toward this 30-day eligibility period.
  15. What records do I need to keep when my employee takes paid sick leave or expanded family and medical leave?Private sector employers that provide paid sick leave and expanded family and medical leave required by the FFCRA are eligible for reimbursement of the costs of that leave through refundable tax credits.  If you intend to claim a tax credit under the FFCRA for your payment of the sick leave or expanded family and medical leave wages, you should retain appropriate documentation in your records. You should consult Internal Revenue Service (IRS) applicable forms, instructions, and information for the procedures that must be followed to claim a tax credit, including any needed substantiation to be retained to support the credit. You are not required to provide leave if materials sufficient to support the applicable tax credit have not been provided.If one of your employees takes expanded family and medical leave to care for his or her child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19, you may also require your employee to provide you with any additional documentation in support of such leave, to the extent permitted under the certification rules for conventional FMLA leave requests. For example, this could include a notice that has been posted on a government, school, or day care website, or published in a newspaper, or an email from an employee or official of the school, place of care, or child care provider.
  16. What documents do I need to give my employer to get paid sick leave or expanded family and medical leave?You must provide to your employer documentation in support of your paid sick leave as specified in applicable IRS forms, instructions, and information.Your employer may also require you to provide additional in support of your expanded family and medical leave taken to care for your child whose school or place of care is closed, or child care provider is unavailable, due to COVID-19-related reasons. For example, this may include a notice of closure or unavailability from your child’s school, place of care, or child care provider, including a notice that may have been posted on a government, school, or day care website, published in a newspaper, or emailed to you from an employee or official of the school, place of care, or child care provider. Your employer must retain this notice or documentation in support of expanded family and medical leave, including while you may be taking unpaid leave that runs concurrently with paid sick leave if taken for the same reason.

    Please also note that all existing certification requirements under the FMLA remain in effect if you are taking leave for one of the existing qualifying reasons under the FMLA. For example, if you are taking leave beyond the two weeks of emergency paid sick leave because your medical condition for COVID-19-related reasons rises to the level of a serious health condition, you must continue to provide medical certifications under the FMLA if required by your employer.

  17. When am I able to telework under the FFCRA?You may telework when your employer permits or allows you to perform work while you are at home or at a location other than your normal workplace. Telework is work for which normal wages must be paid and is not compensated under the paid leave provisions of the FFCRA.
  18. What does it mean to be unable to work, including telework for COVID-19 related reasons?You are unable to work if your employer has work for you and one of the COVID-19 qualifying reasons set forth in the FFCRA prevents you from being able to perform that work, either under normal circumstances at your normal worksite or by means of telework.If you and your employer agree that you will work your normal number of hours, but outside of your normally scheduled hours (for instance early in the morning or late at night), then you are able to work and leave is not necessary unless a COVID-19 qualifying reason prevents you from working that schedule.
  19. If I am or become unable to telework, am I entitled to paid sick leave or expanded family and medical leave?If your employer permits teleworking—for example, allows you to perform certain tasks or work a certain number of hours from home or at a location other than your normal workplace—and you are unable to perform those tasks or work the required hours because of one of the qualifying reasons for paid sick leave, then you are entitled to take paid sick leave.Similarly, if you are unable to perform those teleworking tasks or work the required teleworking hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, then you are entitled to take expanded family and medical leave. Of course, to the extent you are able to telework while caring for your child, paid sick leave and expanded family and medical leave is not available.
  20. May I take my paid sick leave or expanded family and medical leave intermittently while teleworking?Yes, if your employer allows it and if you are unable to telework your normal schedule of hours due to one of the qualifying reasons in the Emergency Paid Sick Leave Act. In that situation, you and your employer may agree that you may take paid sick leave intermittently while teleworking. Similarly, if you are prevented from teleworking your normal schedule of hours because you need to care for your child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you and your employer may agree that you can take expanded family medical leave intermittently while teleworking.You may take intermittent leave in any increment, provided that you and your employer agree. For example, if you agree on a 90-minute increment, you could telework from 1:00 PM to 2:30 PM, take leave from 2:30 PM to 4:00 PM, and then return to teleworking.

    The Department encourages employers and employees to collaborate to achieve flexibility and meet mutual needs, and the Department is supportive of such voluntary arrangements that combine telework and intermittent leave.

  21. May I take my paid sick leave intermittently while working at my usual worksite (as opposed to teleworking)?It depends on why you are taking paid sick leave and whether your employer agrees. Unless you are teleworking, paid sick leave for qualifying reasons related to COVID-19 must be taken in full-day increments. It cannot be taken intermittently if the leave is being taken because:
    • You are subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
    • You have been advised by a health care provider to self-quarantine due to concerns related to COVID-19;
    • You are experiencing symptoms of COVID-19 and seeking a medical diagnosis;
    • You are caring for an individual who either is subject to a quarantine or isolation order related to COVID-19 or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19; or
    • You are experiencing any other substantially similar condition specified by the Secretary of Health and Human Services.

    Unless you are teleworking, once you begin taking paid sick leave for one or more of these qualifying reasons, you must continue to take paid sick leave each day until you either (1) use the full amount of paid sick leave or (2) no longer have a qualifying reason for taking paid sick leave. This limit is imposed because if you are sick or possibly sick with COVID-19, or caring for an individual who is sick or possibly sick with COVID-19, the intent of FFCRA is to provide such paid sick leave as necessary to keep you from spreading the virus to others.

    If you no longer have a qualifying reason for taking paid sick leave before you exhaust your paid sick leave, you may take any remaining paid sick leave at a later time, until December 31, 2020, if another qualifying reason occurs.

    In contrast, if you and your employer agree, you may take paid sick leave intermittently if you are taking paid sick leave to care for your child whose school or place of care is closed, or whose child care provider is unavailable, because of COVID-19 related reasons. For example, if your child is at home because his or her school or place of care is closed, or child care provider is unavailable, because of COVID-19 related reasons, you may take paid sick leave on Mondays, Wednesdays, and Fridays to care for your child, but work at your normal worksite on Tuesdays and Thursdays.

    The Department encourages employers and employees to collaborate to achieve maximum flexibility. Therefore, if employers and employees agree to intermittent leave on less than a full work day for employees taking paid sick leave to care for their child whose school or place of care is closed, or child care provider is unavailable, because of COVID-19-related reasons, the Department is supportive of such voluntary arrangements.

  22. May I take my expanded family and medical leave intermittently while my child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, if I am not teleworking?Yes, but only with your employer’s permission. Intermittent expanded family and medical leave should be permitted only when you and your employer agree upon such a schedule. For example, if your employer and you agree, you may take expanded family and medical leave on Mondays, Wednesdays, and Fridays, but work Tuesdays and Thursdays, while your child is at home because your child’s school or place of care is closed, or child care provider is unavailable, due to COVID-19 related reasons, for the duration of your leave.The Department encourages employers and employees to collaborate to achieve flexibility. Therefore, if employers and employees agree to intermittent leave on a day-by-day basis, the Department supports such voluntary arrangements.
  23. If my employer closed my worksite before April 1, 2020 (the effective date of the FFCRA), can I still get paid sick leave or expanded family and medical leave?No. If, prior to the FFCRA’s effective date, your employer sent you home and stops paying you because it does not have work for you to do, you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it is required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.It should be noted, however, that if your employer is paying you pursuant to a paid leave policy or State or local requirements, you are not eligible for unemployment insurance.
  24. If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but before I go out on leave, can I still get paid sick leave and/or expanded family and medical leave?No. If your employer closes after the FFCRA’s effective date (even if you requested leave prior to the closure), you will not get paid sick leave or expanded family and medical leave but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a Federal, State or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
  25. If my employer closes my worksite while I am on paid sick leave or expanded family and medical leave, what happens?If your employer closes while you are on paid sick leave or expanded family and medical leave, your employer must pay for any paid sick leave or expanded family and medical leave you used before the employer closed. As of the date your employer closes your worksite, you are no longer entitled to paid sick leave or expanded family and medical leave, but you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because the employer was required to close pursuant to a Federal, State or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
  26. If my employer is open, but furloughs me on or after April 1, 2020 (the effective date of the FFCRA), can I receive paid sick leave or expanded family and medical leave?No. If your employer furloughs you because it does not have enough work or business for you, you are not entitled to then take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
  27. If my employer closes my worksite on or after April 1, 2020 (the effective date of the FFCRA), but tells me that it will reopen at some time in the future, can I receive paid sick leave or expanded family and medical leave?No, not while your worksite is closed. If your employer closes your worksite, even for a short period of time, you are not entitled to take paid sick leave or expanded family and medical leave. However, you may be eligible for unemployment insurance benefits. This is true whether your employer closes your worksite for lack of business or because it was required to close pursuant to a Federal, State, or local directive. You should contact your State workforce agency or State unemployment insurance office for specific questions about your eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx. If your employer reopens and you resume work, you would then be eligible for paid sick leave or expanded family and medical leave as warranted.
  28. If my employer reduces my scheduled work hours, can I use paid sick leave or expanded family and medical leave for the hours that I am no longer scheduled to work? No. If your employer reduces your work hours because it does not have work for you to perform, you may not use paid sick leave or expanded family and medical leave for the hours that you are no longer scheduled to work. This is because you are not prevented from working those hours due to a COVID-19 qualifying reason, even if your reduction in hours was somehow related to COVID-19.You may, however, take paid sick leave or expanded family and medical leave if a COVID-19 qualifying reason prevents you from working your full schedule. If you do, the amount of leave to which you are entitled is computed based on your work schedule before it was reduced (see Question 5).
  29. May I collect unemployment insurance benefits for time in which I receive pay for paid sick leave and/or expanded family and medical leave?No. If your employer provides you paid sick leave or expanded family and medical leave, you are not eligible for unemployment insurance. However, each State has its own unique set of rules; and DOL recently clarified additional flexibility to the States (UIPL 20-10) to extend partial unemployment benefits to workers whose hours or pay have been reduced. Therefore, individuals should contact their State workforce agency or State unemployment insurance office for specific questions about eligibility. For additional information, please refer to https://www.careeronestop.org/LocalHelp/service-locator.aspx.
  30. If I elect to take paid sick leave or expanded family and medical leave, must my employer continue my health coverage? If I remain on leave beyond the maximum period of expanded family and medical leave, do I have a right to keep my health coverage?If your employer provides group health coverage that you’ve elected, you are entitled to continued group health coverage during your expanded family and medical leave on the same terms as if you continued to work. If you are enrolled in family coverage, your employer must maintain coverage during your expanded family and medical leave. You generally must continue to make any normal contributions to the cost of your health coverage. See WHD Fact Sheet 28A: https://www.dol.gov/agencies/whd/fact-sheets/28a-fmla-employee-protections.If you do not return to work at the end of your expanded family and medical leave, check with your employer to determine whether you are eligible to keep your health coverage on the same terms (including contribution rates). If you are no longer eligible, you may be able to continue your coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA, which generally applies to employers with 20 or more employees, allows you and your family to continue the same group health coverage at group rates. Your share of that cost may be higher than what you were paying before but may be lower than what you would pay for private individual health insurance coverage. (If your employer has fewer than 20 employees, you may be eligible to continue your health insurance under State laws that are similar to COBRA. These laws are sometimes referred to as “mini COBRA” and vary from State to State.) Contact the Employee Benefits Security Administration at https://www.dol.gov/agencies/ebsa/workers-and-families/changing-jobs-and-job-loss to learn about health and retirement benefit protections for dislocated workers.

    If you elect to take paid sick leave, your employer must continue your health coverage. Under the Health Insurance Portability and Accountability Act (HIPAA), an employer cannot establish a rule for eligibility or set any individual’s premium or contribution rate based on whether an individual is actively at work (including whether an individual is continuously employed), unless absence from work due to any health factor (such as being absent from work on sick leave) is treated, for purposes of the plan or health insurance coverage, as being actively at work.

  31. As an employee, may I use my employer’s preexisting leave entitlements and my FFCRA paid sick leave and expanded family and medical leave concurrently for the same hours?No. If you are eligible to take paid sick leave or expanded family and medical leave under the FFCRA, as well as paid leave that is already provided by your employer, unless your employer agrees you must choose one type of leave to take. You may not simultaneously take both, unless your employer agrees to allow you to supplement the amount you receive from paid sick leave or expanded family and medical leave under the FFCRA, up to your normal earnings, with preexisting leave. For example, if you are receiving 2/3 of your normal earnings from paid sick leave or expanded family and medical leave under the FFCRA and your employer permits, you may use your preexisting employer-provided paid leave to get the additional 1/3 of your normal earnings so that you receive your full normal earnings for each hour.
  32. If I am an employer, may I supplement or adjust the pay mandated under the FFCRA with paid leave that the employee may have under my paid leave policy?If your employee chooses to use existing leave you have provided, yes; otherwise, no. Paid sick leave and expanded family medical leave under the FFCRA is in addition to employees’ preexisting leave entitlements, including Federal employees. Under the FFCRA, the employee may choose to use existing paid vacation, personal, medical, or sick leave from your paid leave policy to supplement the amount your employee receives from paid sick leave or expanded family and medical leave, up to the employee’s normal earnings. Note, however, that you are not entitled to a tax credit for any paid sick leave or expanded family and medical leave that is not required to be paid or exceeds the limits set forth under Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act.However, you are not required to permit an employee to use existing paid leave to supplement the amount your employee receives from paid sick leave or expanded family and medical leave. Further, you may not claim, and will not receive tax credit, for such supplemental amounts.
  33. If I am an employer, may I require an employee to supplement or adjust the pay mandated under the FFCRA with paid leave that the employee may have under my paid leave policy?No. Under the FFCRA, only the employee may decide whether to use existing paid vacation, personal, medical, or sick leave from your paid leave policy to supplement the amount your employee receives from paid sick leave or expanded family and medical leave. The employee would have to agree to use existing paid leave under your paid leave policy to supplement or adjust the paid leave under the FFCRA.
  34. If I want to pay my employees more than they are entitled to receive for paid sick leave or expanded family and medical leave, can I do so and claim a tax credit for the entire amount paid to them?You may pay your employees in excess of FFCRA requirements. But you cannot claim, and will not receive tax credit for, those amounts in excess of the FFCRA’s statutory limits.
  35. I am an employer that is part of a multiemployer collective bargaining agreement, may I satisfy my obligations under the Emergency Family and Medical Leave Expansion Act through contributions to a multiemployer fund, plan, or program?You may satisfy your obligations under the Emergency Family and Medical Leave Expansion Act by making contributions to a multiemployer fund, plan, or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the amount of paid family and medical leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. Such a fund, plan, or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.
  36. I am an employer that is part of a multiemployer collective bargaining agreement, may I satisfy my obligations under the Emergency Paid Sick Leave Act through contributions to a multiemployer fund, plan, or program?You may satisfy your obligations under the Emergency Paid Sick Leave Act by making contributions to a multiemployer fund, plan, or other program in accordance with your existing collective bargaining obligations. These contributions must be based on the hours of paid sick leave to which each of your employees is entitled under the Act based on each employee’s work under the multiemployer collective bargaining agreement. Such a fund, plan, or other program must allow employees to secure or obtain their pay for the related leave they take under the Act. Alternatively, you may also choose to satisfy your obligations under the Act by other means, provided they are consistent with your bargaining obligations and collective bargaining agreement.
  37. Are contributions to a multiemployer fund, plan, or other program the only way an employer that is part of a multiemployer collective bargaining agreement may comply with the paid leave requirements of the FFCRA?No. Both the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act provide that, consistent with its bargaining obligations and collective bargaining agreement, an employer may satisfy its legal obligations under both Acts by making appropriate contributions to such a fund, plan, or other program based on the paid leave owed to each employee. However, the employer may satisfy its obligations under both Acts by other means, provided they are consistent with its bargaining obligations and collective bargaining agreement.

With that, the DOL issued two additional Q&A’s re how coronavirus relates to the FLSA (Fair Labor Standards Act) and the FMLA(Family and Medical Leave Act).

 

 

Colorado finalizes new wage order, COMPS Order no. 36, 7 CCR 1103-1 (2020)

As noted in a previous post, Colorado proposed a new wage order in 2019. On January 22, 2020, the Colorado Division of Labor and Employment finalized its new order — now called COMPS order #36 — effective March 16, 2020.

As noted in the previous post, COMPS order #36 is  radical overhaul of Colorado’s prior wage orders. Among other things the changes include:

  • A title change: Reflecting the fact that this new order addresses far more than simple wages, its title will change from the “Colorado Wage Order” (WO) to the “Colorado Overtime and Minimum Pay Standards Order” (COMPS).
  • COMPS 36 will now reach almost all private employers in Colorado. Previous WOs had applied only to the following four industries: retail and service, commercial support service, food and beverage, and health and medical. COMPS will apply to all employers as a general rule, unless the employer falls within one of the newly defined exemptions set forth in prosed Rule 2 of COMPS. Therefore employers who previously considered themselves exempt from the WOs should now review COMPS to determine if it will become covered.
  • Minimum guaranteed salary: If covered COMPS will increase the minimum guaranteed salary to $42,500, effective 7/1/20, well above that in federal law. COMPS minimum will rise steeply thereafter, each year, to $57,500 effective 1/1/26 and be adjusted thereafter per the CPI.
  • Changes to particular job-specific exemptions have been proposed.
  • Changes to the timing of required rest periods and a requirement that employees who are not allowed their 10-minute rest period receive pay not only for the 10-minute rest period but an extra 10 minutes pay.
  • Changes to the ability to take credits and the ability to charge for uniforms.
  • Changes to the fluctuating workweek method of calculating overtime.
  • Expansion of anti-retaliation protections.
  • Expansion of employer obligations as to “transparency,” “language inclusiveness” and posters.

In addition, the as-finalized COMPS order #36 dramatically expanded the definition of an “employee” and “employer” in Colorado — in apparent reflection of similar narrowing in California — by mandating that a worker will be deemed an “employee” not an independent contractor who otherwise meets all requirements to be an independent contractor but who performs work that is itself part of the company’s own regular business. The CDLE explained this “entirely new factor to the ’employee’ analysis'” in its Statement of Basis, Purpose, Specific Statutory Authority, and Findings in support of COMPS Order #36, as follows:

For example: if a retail clothing store hires an outside plumber on a one-time or sporadic basis to make repairs as needed, the plumber’s services are not part of the store’s primary work — selling clothes. On the other hand, when a clothing manufacturer hires work-at-home seamstresses to make dresses, from cloth and patterns supplied by the manufacturer, that the manufacturer will sell, or when a bakery hires cake decorators to work on a regular basis on custom-designed cakes, the workers are performing the “primary work” of the hiring business.

Other changes to the prior draft order include a rule that workers who are putting on and taking off work clothes and gear (so-called “donning and doffing” cases) are engaged in work and accordingly must be paid for the such time if it takes “over one minute” and if it is not clothes/gear that is “worn outside work as well. Additionally COMPS order #36 will effectively require that, when a 10-minute break is otherwise required, nearly all such workers will need to be made to take their 10-minute breaks every 4 hours. Only workers who work under collectively bargained agreements that say otherwise will be allowed to take breaks outside a 4-hour period, as can some workers who work for certain Medicaid-funded entities.

Perhaps most importantly the final order also implemented a slower increase in the required guaranteed minimum salary for overtime exempt person in 2020 and 2021, then a steeper climb in 2023 to reach the previously planned 2024 minimum salary of $55,000.

Source: final COMPS Order #36 as redlined by the CDLE against its prior draft.

DOL releases final joint employer rule

The DOL has issued a final rule regarding the Joint Employer doctrine.

Analysis of a joint employer issues under the Fair Labor Standards Act (FLSA), the DOL rule says, should start — and will generally end — with the following non-exclusive four factors (quoting the summary in the DOL’s Fact Sheet regarding its new rule):

  • hires or fires the employee;

  • supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;

  • determines the employee’s rate and method of payment; and

  • maintains the employee’s employment records.

The rule emphasizes that no one factor will be controlling and specifically states that the fourth (maintaining employment records) alone will never be sufficient to establish joint employer status. This is a particularly important principle for companies — like franchisors for example — that mandate the use of a software platform hosted by the principle company to encompass a variety of operational needs that include scheduling and HRIS.

The rule eliminates the prior “economic dependence” test that has proven so controversial. Likewise the rule specifies that the worker’s ability to recognize an independent profit or loss is not to be considered. The rule states that, under its application, franchisors, among others, will generally no longer be considered joint employers.  Indeed the rule states that the following are not to be considered indicators of joint employer status (again quoting the DOL’s own summary at its Fact Sheet, above):

  • operating as a franchisor or entering into a brand and supply agreement, or using a similar business model;

  • the potential joint employer’s contractual agreements with the employer requiring the employer to comply with its legal obligations or to meet certain standards to protect the health or safety of its employees or the public;

  • the potential joint employer’s contractual agreements with the employer requiring quality control standards to ensure the consistent quality of the work product, brand, or business reputation; and

  • the potential joint employer’s practice of providing the employer with a sample employee handbook, or other forms, allowing the employer to operate a business on its premises (including “store within a store” arrangements), offering an association health plan or association retirement plan to the employer or participating in such a plan with the employer, jointly participating in an apprenticeship program with the employer, or any other similar business practice.

Additional information, including a FAQ, is available on the DOL’s web page regarding its new rule.

Source: DOL final rule, “Joint Employer Status Under the Fair Labor Standards Act,” 85 Fed.Reg. 164 et seq. (1/16/20).

DOL issues regulations clarifying excludable items from the regular rate of pay

Workers who are not exempt from overtime, in other word, workers who must be paid overtime, under federal law (the Fair Labor Standards Act) must be paid time and one-half of their “regular rate of pay.” The phrase “regular rate of pay” is not what it intuitively sounds like; it is not simply what the worker regularly gets paid. Instead, there are strict rules for what must be included in a regular rate of pay and for what may be excluded. The DOL issued final regulations, to be effective January 15, 2020, “to confirm that employers may exclude the following from an employee’s regular rate of pay:

  • the cost of providing certain parking benefits, wellness programs, onsite specialist treatment, gym access and fitness classes, employee discounts on retail goods and services, certain tuition benefits (whether paid to an employee, an education provider, or a student-loan program), and adoption assistance;

  • payments for unused paid leave, including paid sick leave or paid time off;

  • payments of certain penalties required under state and local scheduling laws;

  • reimbursed expenses including cellphone plans, credentialing exam fees, organization membership dues, and travel, even if not incurred “solely” for the employer’s benefit; and clarifies that reimbursements that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System or the optional IRS substantiation amounts for travel expenses are per se “reasonable payments”;

  • certain sign-on bonuses and certain longevity bonuses;

  • the cost of office coffee and snacks to employees as gifts;

  • discretionary bonuses, by clarifying that the label given a bonus does not determine whether it is discretionary and providing additional examples and;

  • contributions to benefit plans for accident, unemployment, legal services, or other events that could cause future financial hardship or expense.”

(Quoting the DOL’s web page for these final rules, available here, https://www.dol.gov/agencies/whd/overtime/2019-regular-rate.)

The final regulations alsoeliminate() the restriction in (FLSA’s) §§ 778.221 and 778.222 that ‘call-back’ pay and other payments similar to call-back pay must be ‘infrequent and sporadic’ to be excludable from an employee’s regular rate, while maintaining that such payments must not be prearranged.” (Quoting that same web page.)

As the DOL notes in its summary above, some sign-on bonuses are excludable, but not all are. The DOL explains in its final rule and the prefatory comments for that rule that it depends on whether the sign-on bonus requires the recipient to do work. Thus a sign-on bonus that is paid before and irrespective of whether work is actually done is excludable, but if that bonus has a clawback provision (if the worker doesn’t end up working, or doesn’t end up working enough hours/days), then it is payment for work provided and becomes not excludable.

In brief, sign-on bonuses with no clawback provision are excludable from the regular rate; sign-on bonuses with a clawback provision pursuant to collective bargaining agreement (CBA), or city ordinance or policy are included in the regular rate; and sign-on bonuses with a clawback provision not pursuant to a CBA, city ordinance or policy, or other similar document that complies with § 778.212, are excludable from the regular rate.

Likewise, the DOL explains “bonuses contingent upon the employee’s continuing in employment until the time the payment is to be made and the like are” not excludable.

The DOL also spent quite a bit of time in the final rule discussing what is a “discretionary bonus” that may be excluded from the regular rate of pay.

Examples of bonuses that may be discretionary include bonuses to employees who made unique or extraordinary efforts which are not awarded according to pre-established criteria, severance bonuses, referral bonuses for employees not primarily engaged in recruiting activities, bonuses for overcoming challenging or stressful situations, employee-of-the-month bonuses, and other similar compensation. Such bonuses are usually not promised in advance and the fact and amount of payment is in the sole discretion of the employer until at or near the end of the period to which the bonus corresponds.

Employers should consider pulling a list of the payroll codes they use for non-exempt workers, marking which they currently considered excluded versus included in the regular rate of pay calculations, then mapping that against the new regulations. In conducting that mapping, and in order to preserve attorney-client privilege and attorney work product protections, they may wish to involve experienced employment law counsel in their internal audit.

Source: “Regular Rate Under the Fair Labor Standards Act,84 Fed.Reg. 68736 (12/16/19).

DOL issues proposed rule re tip-pooling

In a November 2019 opinion letter the DOL reversed position on tip-pooling. As explained there, the DOL lifted the Obama-era DOL’s 80-20 rule, making it easier for employers (like restaurants) to pool tips among tipped employees, including even those who perform some non-tipped work during their day (like waiters who vacuum, set up and clean up the restaurant as well as work tables). In this proposed rule the DOL is proposing to codify its new approach into a formal regulation. Codification of this approach into a regulation — rather than simply setting it forth in an opinion letter — will have at least two effects: It will generally require courts to defer to this interpretation and make it more difficult for future administrations to deviate.

Third Circuit rejects Uber’s ability to enforce arbitration agreement with its drivers

Applying the Supreme Court’s recent Oliveira decision, the Third Circuit held that Uber cannot enforce its arbitration agreement with drivers engaged in interstate commerce. In doing so, the Court held that the exception in federal law that prohibits arbitration agreements for drivers engaged in interstate commerce applies not only to drivers who transport goods but also drivers who transport services.

Source:  Singh v. Uber Technologies, Inc., — F.3d — (3rd Cir. 9/11/19).

Seven Things You Need To Know About The DOL’s Proposed Salary Rules

Here are answers to seven common questions regarding the DOL’s recent proposal to increase the minimum guaranteed salary for overtime exempt positions.

1.    What has the DOL proposed?

As explained in a prior blog post, the DOL has just proposed increasing the minimum guaranteed salary for most overtime exempt positions from $455 per week ($23,660 per annum assuming the employee works some portion of 52 weeks per year, which amount could be less depending on actual vacation/etc.) to $679 per week ($35,308). It is expected this increase will affect approximately one million workers, who will have to be paid either a raise or overtime.

2.    When will the new minimum salary take effect?

Currently the DOL’s proposal is just that, a proposal. If the proposed rule becomes final, it is expected to take effect in January 2020. Many commentators believe that is likely.

3.    What does the DOL’s proposal mean for employers now?

Employers should begin reviewing their workforce for employees who are classified as overtime exempt to ensure that their salaries exceed the proposed new minimum ($679 per week).

4.    What are an employer’s options?

Employers will have two options for employees who are currently overtime exempt but earn less than the proposed minimum:

  1. Increase the employee’s guaranteed salary to meet the new proposed minimum ($679 per week); or,
  2. Convert the employee to hourly and pay overtime.

Technically there are at least two other options:

  •  Continue paying the current sub-minimum salary, but convert the position to overtime-eligible, then pay overtime on an hourly basis, at half-time, in addition to the salary, for workweeks when overtime is worked. This is called the “fluctuating workweek” method.
  • Continue paying the current salary under an agreement with the employee that the salary includes assumed overtime; pay no additional hourly (or salary) amounts to compensate employees for overtime hours. This is called a Belo agreement.”

Unfortunately while the fluctuating-workweek method and Belo agreements are theoretically available, and sound like ways to “build in” overtime into a salary, they are not as practical as employers (and employees) might hope. Each is disfavored by the DOL and the courts. Each is available only in strictly limited circumstances. Both options are beyond the scope of this article. Neither should be implemented except after consultation with experienced legal counsel.

5.    What are some of the most common considerations for employers weighing their options?

Analyzing the impact of these proposed regulations will depend greatly on the circumstances of every workforce. However, here are some of the most common considerations:

  • The number of workers (and the number of positions) currently overtime exempt but paid under the DOL’s proposed minimum.
  • The financial difference between each worker’s current salary and the DOL’s proposed minimum.
  • The likelihood of overtime hours and the feasibility of converting a currently salaried overtime-exempt worker to an hourly overtime-paid worker.
  • The increased cost of benefits that may be tied to pay (assuming a worker’s pay is increased) and any change to the level or type of benefits available (assuming a worker is converted to hourly).

To help employers with the math of comparing options, a number of spreadsheets are available on the Internet.

Additionally, employers are reminded that consideration should be given to two other features of this proposed rule that may affect the math of their analyses:

  • The ability to do a “catch-up” payment, which may help some employers meet the new proposed salary minimum.
  • The ability to exclude certain bonuses from overtime calculations, which may help other employers afford converting workers into overtime-eligible hourly positions.

Finally, employers should consider with their HR professionals the potential impact on workforce morale. This in particular will vary from company to company. Common questions include the following:

  • How will other workers respond to seeing these positions receive raises?
  • Will raises cause salary compression?
    • In other words, will lower level salaried employees start earning nearly as much as workers in skilled or even managerial level positions?
    • Will skilled and even managerial level positions need to be increased accordingly?
  • Is any part of the workforce unionized?
    • If so will converting salaried positions into hourly positions make them more likely to be claimed by union as part of its bargaining unit?
    • For positions already within a bargaining unit, employers are reminded of their collective bargaining obligations and to review with legal counsel, first, any requirements for notice and an opportunity to bargain, as well as the potential impact of a current agreement’s “zipper” clause.

6.    Reminder, employers still have to meet the “duties” tests for overtime exemptions

Employers are reminded that paying the minimum guaranteed salary is not all it takes to be exempt from overtime requirements. Workers must also meet the DOL’s duties tests for the various kinds of exemption.

7.    In what states will the DOL’s proposal affect employers?

If it becomes effective, the increase will take hold nationwide, at a federal level. Although it will apply in all fifty states, employers are reminded that some states, including Alaska, California and New York, already require minimum guaranteed salaries in excess of even this new proposed increase. Accordingly, employers in Alaska, California and New York should confirm with legal counsel but may find no change is required to their workers’ salary levels.

 

DOL proposes overhaul of Joint Employer rules

Following up on recent efforts by the NLRB to overhaul the Joint Employer doctrine, the DOL has proposed its own revisions.

Like the NLRB, the DOL proposes that the right to control not be considered, but rather that focus be on whether the putative joint employer actually has exercised control.

Only actions taken with respect to the employee’s terms and conditions of employment, rather than the theoretical ability to do so under a contract, are relevant to joint employer status under the Act.

Additionally, the DOL proposes to clarify that “whether an employee is economically dependent on the potential joint employer is (also) not relevant.”

Rather, the DOL suggests that four factors be considered to determine whether the putative joint employer exercised sufficient control, in actuality, to warrant liability:

The Department’s proposed test would assess whether the potential joint employer:

  • Hires or fires the employee;

  • Supervises and controls the employee’s work schedule or conditions of employment;

  • Determines the employee’s rate and method of payment; and

  • Maintains the employee’s employment records.

Source: DOL proposed rules re “Joint Employer Status Under The Fair Labor Standards Act,” 29 CFR Part 791, RIN 1235-aa26 (4/1/19).

Third Circuit expounds on class actions in wage claims

A class action is a way for one or more persons to sue on behalf of a voluminous group of similarly situated persons. The idea is that the claim may not be financially worthwhile for one or a few people to prosecute, but where many people have suffered the same wrong, it makes sense for them to litigate the claims all at once, just as it is more efficient for the courts and defendant.

Wage claims are often for relatively small amounts, when one considers only one plaintiff, but can be for huge amounts when prosecuted on behalf of a claim. Wage claims though aren’t technically called a class action. Wage claims are prosecuted under the Fair Labor Standards Act (FLSA), which provides for “collective” actions; whereas, class actions are prosecuted under Rule 23 of the Rules of Civil Procedure.

What’s the difference between a class action and a collective action? Well, there aren’t many, but the few differences there are, are indeed significant. The biggest difference is conceptual and practical. In a class action, the judge declares a “class,” and members can opt out if they don’t wish to be part of the lawsuit. In a collective action (a FLSA wage claim), the judge declares the potential class, but members have to opt in to become part of the lawsuit.

There are other significant differences in terms of the procedures and standards court follow at the start of the case. Those differences can drive significant outcomes in terms of settlement strategies and litigation approaches.

Still, the differences can be as subtle as they are sometimes significant, triggering relatively frequent litigation in the courts. The Tenth Circuit has, for example, said, in a 2001 decision (Thiessen) that there is “little difference in the various approaches”  under Rule 23 for class actions versus FLSA for collective actions. However the Third Circuit, in a recent decision, Reinig v. RBS Citizens, N.A., held the differences, though often slight, are significant enough that an appeal involving the one did not give it jurisdiction to consider issues related to the other. The Third Circuit, therefore, declined to decide whether certification of a collective action under FLSA was appropriate, even though it did decide that certification of a class under Rule 23 was inappropriate. The court left the collective action certification for the lower court and later litigation.

In so ruling, the court did, though, hold that the class action Rule 23 certification — the issue on appeal before it — had been improper. The Court clarified that, in order to prove that the plaintiffs’ lawsuit alleging “off the clock” work was appropriate for class certification, Rule 23 required them to prove that they, and the requested class members, could all show that their rights were violated using the same evidence of liability. It was not sufficient to prove that they had all been wronged by the same employer, that they had all been shorted wages to which they should have been entitled, or even that they had all been shorted in the same way. Rule 23, the Third Circuit held, requires that they prove they, and the requested class, could establish their cases using common evidence.

As for the merits of their claim, the Third Circuit opined that, to prove an off-the-clock work claim, the plaintiffs would need to show they had worked off the clock, which constituted overtime, and that the employer had at least “constructive knowledge” of the same. The court did not explain what would constitute “constructive knowledge.”

To satisfy their wage-and-hour claims, Plaintiffs must show that: (1) pursuant to Citizens’ unwritten “policy-to-violate-the-policy,” the class MLOs performed overtime work for which they were not properly compensated; and (2) Citizens had actual or constructive knowledge of that policy and of the resulting uncompensated work.  See Kellar v. Summit Seating Inc., 664 F.3d 169, 177 (7th Cir. 2011) (citing Reich v. Dep’t of Conservation & Natural Res., 28 F.3d 1076, 1082 (11th Cir. 1994)); see generally Davis v. Abington Memorial Hosp., 765 F.3d 236, 240–41 (3d Cir. 2014).  Thus, to satisfy the predominance inquiry, Plaintiffs must demonstrate (1) that Citizens’ conduct was common as to all of the class members, i.e., that Plaintiffs’ managers were carrying out a “common mode” of conduct vis-à-vis the company’s internal “policy-to-violate-the-policy,” and (2) that Citizens had actual or constructive knowledge of this conduct.  See Sullivan, 667 F.3d at 299; Dukes, 564 U.S. at 358; see also Tyson Foods, Inc., 136 S. Ct. at 1046 (explaining that, although a plaintiff’s suit may raise “important questions common to all class members,” class certification is proper only if proof of the essential elements of the class members’ claims does not involve “person-specific inquiries into individual work time [that] predominate over the common questions”).  

The Third Circuit’s holding that class and collective actions are sufficient different that it lacked jurisdiction over issues re the one even though it had jurisdiction over issues re the other firmly establishes a split among the Circuits on the issue. Interested readers may wish to check if either party seeks Supreme Court review.

Source: Reinig v. RBS Citizens, N.A.case no. 17-3464 (3rd Cir. 12/31/19).

DOL lifts its 80-20 rule for tipped employees

The Fair Labor Standards Act sets a minimum wage, but it allows employers to take a credit, i.e., pay below the minimum wage, for tipped employees.

To prevent abuse of the tip credit, the DOL under President Obama announced its 80-20 rule, which provided that the tip credit was not available, i.e., the tipped employee must be paid the full minimum wage, if 20% or more of their time is spent performing non-tippped work.

Now, instead of placing a time limit on non-tipped work, the DOL will permit a tip credit if non-tipped work is “performed contemporaneously with direct customer-service duties and all other requirements of the Act are met.”

Source: DOL opinion letter no. FLSA2018-27 (11/8/18).

FLSA’s anti-retaliation provisions permit lawsuits against persons, including entities, even if not enterprises within interstate commerce

The Tenth Circuit held that, unlike its other provisions, FLSA’s anti-retaliation provision applies to persons whether or not they are engaged in interstate commerce. In the case, two workers became convinced that their employer owed them overtime under federal law (FLSA, the Fair Labor Standards Act). They complained to the DOL, were fired and the DOL sued the company alleging that the discharges were retaliation for cooperating with the DOL’s investigation.

FLSA’s overtime (and other provisions) apply only to employers who are engaged in interstate commerce. Here the company argued it had established it was not. The Tenth Circuit held that, whether it was or wasn’t was irrelevant in a retaliation claim. The court held that, as written, FLSA’s anti-retaliation provisions do not require proof that the defendant is engaged in interstate commerce. The court held, therefore, the company could be sued for retaliation, whether or not it was engaged in interstate commerce.

Source: Acosta v. Foreclosure Connection, Inc., case no. 17-4111 (10th Cir. 2018).

Supreme Court ruled driver wasn’t required to arbitrate

The Supreme Court held that a driver for a trucking company need not arbitrate wage and related claims, even though the driver is technically an independent contractor, not an employee. In reaching its holding, the Supreme Court, first, decided that such driving falls within the Federal Arbitration Act’s exclusion for transportation workers, meaning, the Court held, the FAA does not apply. The FAA is of course the federal law that permits the arbitration of federal lawsuits. Next, the Supreme Court held that the FAA’s exclusion applies not only to employees but independent contractors.

Applicability of the decision is expected to be argued in a number of pending cases, including lawsuits brought by independent contractors who drive for social media based delivery services.

Source: New Prime, Inc. v. Oliveira, case no. 17-340 (1/15/19).

Court may enter default judgment if party refuses in “bad faith” to pay arbitration fees

As noted in a previous post, arbitration isn’t just a private form of litigation. It’s a fundamentally different process than litigation. One major difference is that, in arbitration, one or both parties (depending on their arbitration agreement) pays the arbitrator’s fees, and those fees need to be paid as the case is being processed. The parties can’t typically just wait and decide whether to pay after they receive the arbitrator’s award. Refusal to pay those fees — held the Eleventh Circuit — can result in a judgment against a party, if in bad faith, as opposed to inability to afford them.

The case followed a bit of a contorted process.

  • The litigation began when a recently discharged worker (Hernandez) filed a wage claim lawsuit in court against his former employer (Acosta Tractors).
  • The company moved to compel arbitration and provided the court with a copy of the arbitration agreement that Hernandez had signed. The court agreed and ordered the case to proceed to arbitration.
  • Then, additional claims were filed, separately, by Hernandez’s attorney on behalf of other individuals, which also went to arbitration.
  • Acosta Tractors asked the arbitrator to consolidate the various proceedings, but the arbitrator refused.
  • Within a year, the various arbitrations were still being processed, going through pre-hearing discovery.  The arbitrator’s fees alone were nearing $100,000.
  • Acosta Tractors filed a motion back in court asking the judge to take the case back from the arbitrator, saying it was costing too much time and money in arbitration. Acosta Tractors said the whole arbitration agreement had been intended to provide a quicker, less expensive process than litigation, but, it said, at that point “the Arbitration in this matter has failed its essential purpose.”
  • The court refused. Acosta Tractors asked the court to reconsider, and it again refused.
  • Stuck with a process it no longer wanted, and possibly could not afford, Acosta Tractors refused to pay the arbitrator’s fees.
  • At that point the arbitrator cancelled further proceedings, and Hernandez asked the court to enter default judgment against Acosta Tractors on his wage claim. The court did so. Never having had its day in court, this left Acosta Tractors, not only owing the arbitrator $100,000 in arbitrator fees, to process matters that hadn’t even gone to hearing yet, plus owing Hernandez on his underlying wage claim, a claim in which Acosta Tractors had been denying liability.

How much was Hernandez’s underlying claim for wages? According to the Eleventh Circuit decision, he demanded only $7,293, a relatively small amount no doubt in light of the overall time, money and energy spent defending his claim, even before any actual hearing was held on the merits of the case.

On appeal the Eleventh Circuit held that, when a party refuses to pay the arbitrator’s fees, a court can indeed enter default judgment against that party, but only if the court finds, first, that the party’s refusal to pay was in “bad faith,” as opposed to an inability to afford the fees.

On remand, the District Court may well find that Acosta acted in bad faith in choosing not to pay its arbitration fees. After all, Acosta acknowledges it quit paying after the arbitrator failed to consolidate Mr. Hernandez’s case with the other cases brought by other Acosta employees, and because it thought the arbitrator had allowed too much discovery. Acosta also noted that arbitration was set to cost more than Mr. Hernandez’s claim was worth. A calculated choice to abandon arbitration after getting adverse rulings from the arbitrator certainly looks like forum shopping. And this type of behavior would surely be a factor the District Court could consider in deciding whether to sanction Acosta by entering a default judgment. At the same time, a party’s good faith inability to afford the arbitration fees would be a factor properly considered to weigh against such a sanction. See Tillman v. Tillman, 825 F.3d 1069, 1074 (9th Cir. 2016) (finding that plaintiff’s inability to pay arbitration fees was “not culpable and so does not merit a harsh penalty, particularly given the public policy favoring disposition of cases on their merits” (quotation omitted)).

The case is a powerful reminder that arbitration is an entirely different process than litigation, and in arbitration, the courts will rule that parties get what they get. Arbitration agreements are powerful and potentially useful tools. Their pros and cons should be carefully considered.

Source: Hernandez v. Acosta Tractors, Inc.case nos. 17-13057 and 17-13673 (11th Cir. 8/8/18).

Tenth Circuit holds that FLSA’ anti-retaliation provision reaches farther than its other clauses

The Fair Labor Standards Act (FLSA) is the nation’s leading wage-hour law. Most notably it includes requirements such as minimum wage, overtime and child labor laws. Those provisions apply onto to an “enterprise” that is engaged in interstate commerce. It also prohibits retaliation against workers who exercise FLSA rights. In a recent case, the Tenth Circuit held that the anti-retaliation provisions apply more broadly than the rest of FLSA.

As the Court explained the bulk of FLSA applies only to “‘an enterprise engaged in commerce.’ 29 U.S.C. § 207(a)(1). ”Commerce’ means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.’ § 203(b).”

However, the anti-retaliation provision of FLSA does not refer to an enterprise engaged in commerce. It states that “it shall be unlawful for any person . . . to discharge or in any other manner discriminate against any employee because such
employee has filed any complaint . . . related to [FLSA].” § 215(a)(3) (emphasis added). A person is defined as “an individual, partnership, association, corporation, business trust, legal representative, or any organized group of persons.” § 203(a).

Accordingly, the Tenth Circuit held that the anti-retaliation provision in FLSA reaches farther than its other protections to apply to any “person,” not just an “enterprise,” that engages in retaliatory conduct.

Source: Acosta v. Foreclosure Connection, Inc., — F.3d —, case no. 2:15-CV-00653-DAK (10th Cir. 8/15/18).

Supreme Court’s new expansive reading of FLSA is applied for first time by a Circuit Court

The Supreme Court held earlier this year in Encino Motorcars, LLC v. Navarro that the Fair Labor Standards Act (FLSA) should no longer be construed narrowly in favor of employees but should, instead, be given a “fair” reading based on its own language. The Supreme Court’s ruling has just seen its first application in a Circuit Court case, entitled Mosquera v. MTI Retreading Co., decided by the Sixth Circuit.

In Mosquera, the employee held an engineering degree but argued he spent less than 50% of his time doing work that required an engineering degree and should, therefore, not have been classified as a professional employee exempt from overtime. The Sixth Circuit disagreed. The Sixth Circuit noted the evidence that had been submitted in support of the employer’s summary judgment motion and dismissed the plaintiff’s own affidavit to the contrary, saying it was “unsubstantiated” and “self-serving.” The Sixth Circuit noted that, prior to Encino Motorcars, it would have looked on the plaintiff’s claim more favorably, interpreting the professional exemption “narrowly,” but under the Supreme Court’s new ruling, it was required to give the law a broader “fair” reading instead. Under the new approach to FLSA, the Sixth Circuit held the employer’s motion for summary judgment was “compelling” and as such, it held, the employee was properly characterized as a professional who was exempt from overtime.

Mosquera is no doubt the first in a long line of cases to come that will take a less “narrow” approach to interpreting FLSA.

Source:  Mosquera v. MTI Retreading Co. (6th Cir. 8/14/18).

Under the Supreme Court’s new “fair reading” doctrine, will FLSA exemptions be interpreted more broadly?

Historically courts have interpreted the overtime exemptions in FLSA (the Fair Labor Standards Act) narrowly in favor of employees. This “narrow construction” doctrine has made it difficult to treat employees who may be exempt as such unless they clearly fit an exemption. Now, the Supreme Court has rejected the “narrow construction” doctrine, ruling that it has not been “a useful guidepost for interpreting FLSA.”

The Supreme Court held that FLSA’s overtime obligations consist of two basic chunks of statutory language: The first requires employees to be paid overtime; the second chunk of language is a series of exemptions from that general rule. The Supreme Court held that FLSA provided courts with no basis for giving the first chunk of language any greater significance than the second chunk, in other words, to read the overtime requirement broadly at the expense of having to read the exemptions narrowly. Instead the Supreme Court held, both chunks of language should be given equal importance. The Supreme Court called this a “fair reading.”

Those exemptions are as much a part of theFLSA’s purpose as the overtime-pay requirement. See id., at ___ (slip op., at 9) (“Legislation is, after all, the art of compromise, the limitations expressed in statutory terms often the price of passage”). We thus have no license to give the exemption anything but a fair reading.

Having rejected the narrow-construction doctrine, and instead applying its fair-reading doctrine, the Supreme Court then held that, in this case, service advisors at the car dealership in question qualified for an overtime exemption under FLSA’s special exemption for salesmen at car dealerships.

It is likely this ruling will have substantial impact in all FLSA overtime cases. It will not be limited to the FLSA’s exemption for salesmen at car dealerships. Rather the fair-reading doctrine will substantially expand the reach of all of FLSA’s overtime exemptions.

Source: Encino Motorcars, LLC v. Navarro, case no. 16-1362 (2018).

Colorado Supreme Court holds statute of limitations on wage claims runs from pay period following its due date

The Colorado Supreme Court held that the statute of limitations under the Colorado’s Wage Claim Act, CRS. 8-4-101 to -123, begins to run from the pay period when the wage first becomes due and is unpaid.

The facts of the case illustrate the importance of this holding. Like many states, Colorado’s wage claim laws permit an employee to sue at the time of termination for any unpaid wages. Most commonly wage claims involve amounts that are claimed due in that final paycheck, for example, vacation pay, but what about wages that were claimed due in prior periods? This case involved a group of workers who sought wages “as far back as 1992.” Colorado’s wage laws, like federal law (Fair Labor Standards Act, FLSA), set a 2-year statute of limitations on wage claims, or 3 years if the violation is deemed wilful. The plaintiffs argued that the Act allowed them to seek all of their claimed wages, going back decades. In contrast, the company argued that they could seek only wages that came due in their final paycheck, nothing earlier.

The Colorado Supreme Court disagreed with both parties, holding that the plaintiffs can seek any wages that came due in their final paychecks plus any that came due in the 2 years preceding their termination (or 3 if the claim is deemed wilful), but that they cannot seek wages going back farther than that.

We conclude that under section 109, terminated employees may seek wages or compensation that had been earned in prior pay periods but remain unpaid at  termination. This right, however, is subject to the statute of limitations in section 122, which runs from the date when the wages first became due and payable—the payday following the pay period in which they were earned. A terminated employee is thus limited to claims for the two (or three) years immediately preceding termination.

It is noted that the Court there said plaintiffs could seek claims for 2 (or 3) years “immediately preceding termination;” however, it would seem from the language of the Act and the Court’s own reasoning that the Court meant “immediately preceding (the filing of their lawsuit seeking wages upon) termination.” That issue is likely to be litigated in future cases.

Source: Hernandez v. Ray Domenico Farms, Inc., case no. 17SZ77 (Colo. 3/5/18).

California is at it again, this time, how to calculate overtime

Under federal law (the Fair Labor Standards Act, “FLSA”), a non-exempt employee’s regular rate of pay is calculated, for overtime purposes, for each workweek, by totaling their compensation that week (excluding only certain limited things likely discretionary bonuses) then dividing by their total hours worked that week. They receive half that on top of the pay they’ve already received as compensation for overtime hours worked (in excess of 40).

Under a recent California case, California has decided, yet again, to be the odd jurisdiction out and, now, mandates that the denominator is only non-overtime hours.

What’s the difference? Here’s a simple hypothetical to illustrate. Assume in Week-1 of the year, John works 42 hours at a rate of $10 per hour. He gets paid $420 for that straight time (42x$10). That same week, John also receives an attendance bonus of $42. So far, his pay that week totals $462 ($420+$42). His regular rate is therefore, under FLSA, $11 ($462/42). He still hasn’t been overtime, so for overtime, he gets paid half that regular rate $5.50 ($11/2) for the 2 hours he worked overtime, in other words, an extra $11. His total pay that week, under FLSA, is $473.

Under the California approach, when it comes to calculating the regular rate, the company can only divide by 40. So his regular rate of pay is $11.55 ($462/40), nearly a 10% increase. That means his overtime rate is half that, making his total pay that week is $473.50 ($420+$42+$11.50).

Source: Alvarado v. Dart Container Corp. of Calif., case no. S232607 (Cal. 3/5/18).

DOL adopts Primary Beneficiary test for interns under FLSA

The U.S. Department of Labor has adopted the Primary Beneficiary test for deciding whether an intern must be paid as an employee or can be treated instead as an unpaid intern. This brings the DOL into alignment with a number of circuit courts, including the Sixth, Ninth and Eleventh. The Primary Beneficiary test is generally seen as more favorable towards employers and students who wish to be treated as unpaid interns.

The Primary Beneficiary test asks, given the “economic reality” of the relationship, whether the putative intern or the company is the real “primary beneficiary” of the relationship. When asking that question, the DOL and courts that follow this test consider the following seven factors (quoting new DOL Fact Sheet #71):

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

Wonder what a wage-hour class (collective) action complaint looks like?

A group of employees recently filed a lawsuit in federal district court in Denver, Colorado, against DaVita Healthcare Partners, Inc., and Total Renal Care, Inc. Their complaint, which is publicly available in court records, lays out their claims and provides HR professionals with a chance to see what this kind of lawsuit can look like. Reminder as you review, the defendants have yet to respond to the complaint; therefore, the plaintiffs’ allegations are merely, just that, at this time, allegations, which are unproven. The plaintiffs’ allegations have yet to even be tested in litigation.

The complaint alleges violations of the Fair Labor Standards Act (FLSA), which is the nation’s leading, federal wage-hour law.

It was filed as a class action, more specifically, a collective action. Simply put, the difference between a class action and a wage-hour collective action is this: In a class action, representatives can sue on behalf of a group of similarly situated individuals, who can then opt out of the class if they choose not to be involved. FLSA provides for “collective” actions, in which individuals have to opt in to join the class. Either way court approval is required to proceed as a class/collective action, and this Complaint signals the plaintiffs’ intent to seek such approval.

Here the plaintiffs describe their alleged class as a group called the “Trailblazers,” which they describe, as follows:

2. Plaintiffs and those similarly situated are non-exempt hourly employees of Defendants. Plaintiffs and those similarly situated are all located within a geographic area designated and defined by Defendants as encompassing the states of Tennessee and Mississippi, and parts of Indiana, Ohio, Kentucky, Alabama, and Georgia, and are collectively referred to by Defendants as the “Trailblazers.”

3. Plaintiffs and those similarly situated in the “Trailblazers” zone are subject to the same illegal policy and practice of failing to pay workers for all time worked and failing to pay overtime wages. That policy and practice is based, in part, on direct patient care hours per treatment and the calculation of direct patient care hours for each facility established by corporate DaVita that reduces Defendants’ patient to staff ratios and require Plaintiffs and those similarly situated to work more hours for which they are not properly compensated.

They allege, as follows, that wages were not paid for all hours worked and, as a result, overtime is also claimed:

6. Defendants required Plaintiffs and those similarly situated to clock out for
their meal breaks. Plaintiffs and those similarly situated were/are required to perform work-related duties during meal breaks. Plaintiffs and those similarly situated were/are not paid for work-related interruptions that occurred/occur during meal breaks during their shifts wherein they worked more than five consecutive hours. Defendants failed to change Plaintiffs’, and those similarly situateds’, time records to reflect the additional time worked on behalf of the employer even when Plaintiffs and those similarly situated requested that their time records be corrected by management.

7. Plaintiffs and those similarly situated were/are not properly paid for other work-related duties which occurred outside of their scheduled shift hours and/or on weekends. Defendants failed to change Plaintiffs’, and those similarly situateds’, time records to reflect the additional time worked on behalf of the employer even when Plaintiffs and those similarly situated requested that their time records be corrected by management.

Allegedly compounding their claim for failure to pay, they also claim the employer “failed to properly maintain accurate daily records of all hours worked by Plaintiffs and those similarly situated as required by federal law because Defendants are not properly recording all hours worked, including overtime.”

What is sought in a class (collective) action like this under FLSA? These Plaintiffs claim “unpaid wages, overtime compensation, a declaratory judgment, liquidated damages, compensatory damages, punitive damages, costs and attorneys’ fees and pre and post judgment interest associated with the bringing of this action, plus any additional relief that is just and proper for Plaintiffs and those similarly situated under federal law.”

Again, it is emphasized these are merely unproven allegations at this point. Still, the complaint itself, being public, provides HR professionals an opportunity to see what this kind of case can look like.

Congress Takes Shot at Browning-Farris – Law Week Colorado

Interested in reading Bill Berger‘s thoughts about Congress’ efforts to reverse Obama-era expansions of the Joint Employer doctrine, especially H.R. 3441 (which if passed would be the Save Local Business Act)? Check out the August 7, 2017 issue of Law Week Colorado. If passed, the Act would tighten the application of the Joint Employer doctrine (back) to requiring evidence of actual control by the purported joint employer in cases involving the National Labor Relations Act or the Fair Labor Standards Act.

Source: Congress Takes Shot at Browning-Farris – Law Week Colorado

Employer may share in tips if it does not claim a tip credit, at least in Tenth Circuit

The Fair Labor Standards Act (FLSA) is the country’s leading wage-hour law. Among other things, FLSA imposes a federal minimum wage. The federal minimum wage is a baseline; states and local governments are free to adopt higher minimum wages. Employers can, even under federal law, pay tipped employees a lower minimum wage if certain conditions are met. One condition is that the employer not share in the tips. To put it (overly) simply), tips can be pooled among other tipped employees, but not with the company or management.

What if the employer decides it wants the tips and doesn’t care about claiming the tip credit? In other words, can a company take some or all of the tips so long as it pays the full applicable minimum wage? The Tenth Circuit read the law and held, yes, in Marlow v. The New Food Guy, Inc., 861 F.3d 1157 (10th cir. 2017) (Employer that does not claim tip credit may take share of tips; FLSA’s prohibition against same is merely a condition for claiming a tip credit). The U.S. Department of Labor and Ninth Circuit say otherwise. See Oregon Restaurant & Lodging Assoc. v. Perez, 816 F.3d 1080 (9th Cir. 2016) (Employer may not whether or not a tip credit is claimed).

While the Tenth Circuit’s opinion is clear, well reasoned and based on the language of FLSA, employers outside the Tenth Circuit should be aware of the distinction in the event they wish to share in tips.

Employer’s attorney may be held liable for retaliating against client’s former employee

In a decision that is already drawing harsh criticism, the Ninth Circuit held that an attorney may be liable to his client’s former employee for retaliation where the attorney contacted federal immigration authorities at U.S. Immigration and Customs Enforcement (ICE) to advise, “if there is an interest in apprehending” the plaintiff, he would be attending a deposition on a certain date. ICE conducted its own investigation and determined “based on our records he has no legal status.” The plaintiff learned that ICE was aware of him, alleged that realizing the same had caused him severe, and as a result, he said, settled his wage-hour lawsuit against the former employer. After settling with the company, he sued its attorney, again, not his own attorney but opposing counsel. The Ninth Circuit noted that attorney had allegedly communicated with ICE about five other plaintiffs and held that the plaintiff’s claim should be allowed to proceed.

In doing so, the Ninth Circuit reviewed the statutory language of FLSA’s retaliation provisions. The Fair Labor Standards Act (FLSA) is the nation’s primary wage-hour law. The Ninth Circuit read its anti-retaliation language as being broader than its substantive provisions regarding overtime, minimum wage, etc. The Ninth Circuit said the broad anti-retaliation language was more like Title VII’s (the nation’s leading anti-discrimination law). The Ninth Circuit held that, given the breadth of FLSA’s anti-retaliation language, such a claim is viable.

The decision has been called “flat-out bonkers” and possibly “the year’s worst employment law decision” and is being cited as an example of a decision by a court that “has officially lost its mind.”

Source: Arias v. Raimondo, Court of Appeals, 9th Circuit 2017 – Google Scholar