I was presenting a “Hot Topics in Employment Law” update at our 12th Annual Labor Law Forum in Bloomington, Minnesota today, and realized that I had gotten woefully behind on staying updated as to the status of the FLSA white-collar overtime regulations overhaul. So, here it is. As of April 19, 2017, the 5th Circuit Court of Appeals has granted the U.S. Department of Labor’s second unopposed motion to extend the deadline to file its reply brief, as the nominee to be the Secretary of Labor had not yet been confirmed. The Court granted the motion, allowing the DOL until Friday, June 30, 2017 to file its reply brief (or withdraw its appeal).

On April 28, 2017, R. Alexander Acosta was sworn in as the 27th United States Secretary of Labor. Accordingly, I suspect there will be no more delays, and, looking into my crystal ball, will not be shocked if the DOL chooses to withdraw its appeal.

checklistThe old adage is right on – prepare for the worst and hope for the best. In this case, my spring cleaning tip #3 is to review your policies, practices and records as if the U.S. Department of Labor (DOL) were to investigate your business practices tomorrow.  A few issues I’ve dealt with (a lot) this year are listed below:

  • Verify employees are properly classified as exempt/non-exempt.
    • Pay particular attention to sales employees, marketing, and office workers.
    • The DOL overtime regulations overhaul is still on hold pending the Trump administration’s decision whether to pursue the appeal. However, as I mentioned before, the DOL’s revised salary threshold was not all that far from what is usually reality for what an exempt person makes in many industries (excluding small business owners, small towns, etc.). Point is, just because it is on hold does not mean you shouldn’t ensure that salaried employees meet the duties test (and current salary threshold).
  • Ensure independent contractors are properly classified.
    • Have a contract with the entity, and keep records of payments made and Form 1099s.
    • Think twice before a former employee is made an independent contractors…no matter how badly the individual asks for it.
  • Be sure you are properly calculating travel time for non-exempt employees.  I’ve blogged about this in the past as this can get very tricky.
  • Ensure employees are provided “sufficient time” to eat a meal.  Record meal time on time cards for hourly employees.
  • Recordkeeping – these are the easiest violations to spot. You’ve either kept the required records or not.
    • Have a document retention policy and use it.
  • Have employee time cards accessible for three years.
  • Have payroll stubs/history and employee wages accessible for three years, including W-2s.

Keep in mind that, should you receive a visit, the DOL investigator is just there to address and audit compliance with federal wage and hour laws. I just sat in an audit where the DOL investigator instructed the employer as to a withholding issue that is inconsistent with Minnesota law. Accordingly, recall that just because the FLSA permits something, does not mean that Minnesota law allows it. If Minnesota laws are more strict (advantageous to employee), Minnesota law must be followed instead.

paperwork2In the second of my spring cleaning series, I wanted to provide some thoughts for those Minnesota government contractors who must maintain certain documents in order to continue to enter into contracts for State projects.  Below are some frequent violations/issues found by the MDHR when auditing contractors.  This is by no means an exhaustive list, however, these are issues I see time and time again…

  • Have an affirmative action plan for each year.
    • A four (4) year Minnesota compliance certificate does not mean you need an affirmative action plan every four (4) years.  Your affirmative action plan must be updated annually.
  • You should also have an annual training on the results of your affirmative action plan (both in the changes from year to year, and goals for following year).
    • Provide management training and have the hiring managers (and up) sign off that they were there.
  • Have a document retention policy.
    • The MDHR continues to insist (though I can find no legal support for it) that an employer must have a document retention policy, and that the policy should state that all documents related to administrative charges be retained until final disposition of the charge. That being said, it would be best practices to have such a policy, since you need to retain documents for specified periods of time in any event.
  • Review your employment application – especially if you’ve been using the same one for a long time.
    • The MDHR has objected to questions such as how a person was discharged from the military, whether the applicant knows anyone in the business, and any relation. Review your application and ask whether a question would elicit a response which would provide information that may screen out minority or other protected class applicants. If you are still asking for dates of birth, social security numbers, or date of graduation from schools, you should update your application.
  • Be sure to send – and save – the required letter to the Minnesota Department of Employment and Economic Development for each job posting.
    • The MDHR will require a copy of “all correspondence that the company has sent to the Minnesota Department of Employment and Economic Development during the last 12-month period requesting referrals for qualified individuals with disabilities.” Thus, for every job posted, a letter must be sent to DEED regarding the position and asking for such referrals. If you are not doing this, start.
  • Keep (or put in writing) training materials concerning the hiring process.
    • Since all individuals must be trained who are “involved in the recruiting, screening, selecting, promotion, disciplinary and related processes” to “ensure elimination of bias in all personnel action”, you should maintain proof of such training. This goes further than human resources! The MDHR will require documentation for managers. Management training with sign-off sheets would accomplish this.
  • Retain documents related to the use of referral sources for minority or female applicants (such as secondary schools, colleges and trade groups). Often clients do this, but don’t think the documentation is significant. For example, keep your emails to recruiters and schools, proof of sponsorship and career fairs.
  • Retain documents related to internship and apprenticeship programs. If you “promote from within”, they will want to see “good faith efforts” to develop and maintain “on-the-job training opportunities for females and minorities.”
  • Finally, an issue I just handled this morning…if you are a construction contractor, make sure your contractor registration is current (which is not the same thing as your licence). You can do that online here.

Of course, this list could go on and on. The key is to not become complacent. Review your policies, practices, and records at least yearly.

PaperworkSpring Clean Before You Get Audited!  

For whatever reason, this past year I have seen a marked increase in clients getting audited by various agencies such as the Minnesota Department of Human Rights, the U.S. Department of Labor, and the U.S. Department of Homeland Security (I-9s). Unfortunately for those employers audited, once the agency comes knocking, they are pretty much stuck in damage control with very little time to respond (especially with unannounced “visits”). Accordingly, as you are thinking about spring cleaning at home, keep your business in mind as well. This post is one of several spring cleaning tips that I will be posting this spring. The first topic is I-9s.  It is so easy to get a technical violation as it must be perfectly filled out. Hopefully you can learn from other employer’s mistakes…

  • Have all your I-9s in one binder or file as you will have very little time to produce them (consider filing by employee date of hire).
  • The new version (dated 11/14/2016) must now be used exclusively.
  • Section 1 must be completed by the employee on the first day of employment (not the third day).
  • The rest of the Form I-9 must be completed by the employer by the employee’s third day.
  • If you use E-Verify, it will alert you when a document is going to expire. If you do not use E-Verify, be sure to calendar the due date for re-verification of expired documents; also be sure this is done in a manner so that the due date is not tied to an individual’s calendar (they may not be employed in two or three years when it expires and then you have a violation).
  • Do not be sloppy or abbreviate. The entire corporate name and address must be completed (if not, it is a technical violation).
  • Verify the employee has filled in the correct information. For example, if an employee puts the current date where it says “Date of Birth”, it will be your technical violation.
  • On the top of page 2, be sure the Employee’s information from Section 1 is completed.
  • If you find errors, correct them now, but be careful how you make the corrections. For example, an employer cannot change an employee’s answer, but can make a notation in the margin with your initials.
  • If you get audited and you get a Notice of Suspect Documents, you will have a very limited time to verify an employee’s employment eligibility; use caution with this process and the continued employment of such individuals (some may be correctable document errors and some may not be authorized to work).

If you want much more information, you can access the Employer Handbook for I-9s here. However, the most important thing is to fill it out completely and accurately, and to correct errors properly when discovered.

Lady LibertyGone are the days of the 15 day wait period for H-1B petitions (both regular and master’s cap)…at least for now. On March 3, 2017, the United States Citizenship and Immigration Services (USCIS) announced that, effective April 3, 2017, the USCIS will no longer accept premium processing for H-1B petitions. This means that for those employers waiting to file a new H1B for FY2018 that would normally pursue premium processing (because you know the regular track takes an inordinate amount of time), you will have to get in line with everyone else and wait. And wait. And wait.

According to the USCIS, this suspension is temporary, and does not apply to other nonimmigrant classifications that also use the Form I-129. Also, there are some exceptions to this suspension for several financial loss, emergency situations, humanitarian reasons, etc. – most of which will not apply to a normal business. For more information on the expedited criteria, click here. Unless you truly have a unique situation, I would not count on this exception.

Why is the USCIS temporarily suspending premium processing? It appears they are going to use their resources to work on processing long-pending petitions (with priority to extensions pending for around 240 days). Given the high volume of incoming petitions in the past few years, they have continually been running slow (this is an understatement…which is why I typically suggest to employers, if possible, to use premium processing).

So, what should employers do? Get any H-1B extensions filed NOW. Educate new H-1B beneficiaries about the timing of the process – and that there will be a wait if selected. For extensions that cannot be filed until after April 3, file it as soon as possible due to the long wait for the extension approval. And work with counsel to determine the best strategy for your situation.

vote- scrabbleAfter almost 8 hours of debate, on March 2, 2017, the Minnesota House passed a new bill, the Uniform State Labor Standards Act 76-53, also known as the “preemption” bill (because the idea is to preempt – overrule – numerous local laws with a single state law). As I mentioned in my earlier post, this bill seeks to prohibit cities from adopting ordinances which requires employers to pay employees a higher wage than state minimum wage; mandating paid or unpaid leave; mandating certain scheduling of work time; and providing other certain benefits. The purpose of the bill is to address the concerns of multi-location employers, and the administrative hassles with not only complying with various states’ laws, but local ordinances as well.

The bill would not prohibit local governments from setting their own employees’ wages, benefits, etc., or mandating the same when a private employer works on a local government project (contract) or receives local government funds and subsidies. Today, March 6, 2017, the House bill was received by the Minnesota Senate and was introduced and first read. The companion bill to the House’s HF600 is SF580. What’s next? Well, according to KSTP, Governor Mark Dayton is apparently not a supporter of this bill in its current form, so unless changes are made, he has indicated he’s like to veto it. So, this could all be much ado about nothing.

3D_Judges_GavelGood news for employers doing business in Minneapolis, but not located in Minneapolis…as the result of a lawsuit brought by the Minneapolis Chamber of Commerce and others, a Hennepin County judge has temporarily enjoined Minneapolis from enforcing its Sick and Safe Leave Ordinance against employers not residing in Minneapolis, until the hearing on the merits. What does this mean? For employers not located in the City of Minneapolis, you do not need to modify your paid time off just yet. As I wrote about earlier, the ordinance is set to go into effect on July 1, 2017,  (though it won’t be meaningfully enforced for a year) and, as written, would affect all employers, wherever located (such as trucking companies driving through Minneapolis). This Order puts a hold on it’s reach…for now.

However, as I noted earlier, other Minnesota cities are following suit. On February 14, 2017, a Duluth task force, called the “Earned Safe and Sick Time Task Force” has started its series of 8 public meetings to debate a similar ordinance. As a result of the various city leave ordinances taking effect (Minneapolis, St. Paul and perhaps Duluth), a bill has been introduced, the Uniform State Labor Standards Act, HF600, which would prohibit cities from: adopting ordinances which requires employers to pay employees a higher wage than state minimum wage; mandating paid or unpaid leave; mandating certain scheduling of work time; and providing other certain benefits (unrelated to its own city government workers). The bill certainly has a long way to go, but it recognizes the concerns of multi-location employers and the administrative nightmare with not only complying with various states’ laws, but local ordinances as well.

American FlagThere is no question that President Trump will have significant impact on various federal labor and employment issues. First, he will be nominating (at least) one individual to the U.S. Supreme Court. That pick could certainly be the deciding vote in a number of issues, and even whether a case is heard. Additionally, President Trump has nominated Andrew Puzder for Secretary of Labor. Puzder is currently the CEO of CKE Restaurants, Inc., which owns and operates Carl’s Jr. and Hardee’s. His confirmation hearing, however, first set for January 11, 2017, has been delayed again to February 2.

There is no doubt that any Trump nominee will run a very different Department of Labor than that under the Obama Administration. Wage and hour laws are not going to magically change overnight, but employers may see operational, investigation, and guidance/opinion letters start to change first. For example, the new DOL Administrator could chose to not pursue the Texas overtime regulation appeal pending before the Fifth Circuit, and then start issuing guidance letters which interpret the rules and regulations differently than the earlier administration.

Additionally, when the Obama administration came to office, the DOL promptly retracted numerous opinion letters which they decided were not mailed in time – “Some of the posted opinion letters, as designated by asterisk, were not mailed before January 21, 2009. While the Wage and Hour Division is making these letters available to the requestor and to the public, the agency has decided to simultaneously withdraw these letters for further consideration. A final response to these opinion letter requests may be provided in the future in an Administrator Interpretation issued in accordance with the guidance provided in the Administrator Interpretations section of the Final Rulings and Opinion Letters Web page.”  No shock here, but the WHD never finalized these responses and they’ve been sitting since 2009.  Accordingly, I would not be surprised if they are promptly finalized now.

That being said…forget not, we are in Minnesota. In the world of wage and hour law (or even employment law for that matter), the more employee-friendly rules and laws apply. Thus, Minnesota employers will see far less local impact than a more employer-friendly state.

The United States Department of Labor has added yet another website, this time providing a framework for individuals to research whether they are properly classified as an “independent contractor” or an “employee”. This new site provides information about pay and misclassification; health and safety concerns on the job; unemployment insurance and misclassification; anti-retaliation/anti-discrimination rights; federal taxes and misclassification; health care and retirement benefits; and state and federal government resources. Why is classification important? Independent contractors have no taxes withheld (responsible for paying their own), are not provided benefits, minimum wage, overtime, fringe benefits, unemployment compensation, workers’ compensation and the like through the hiring business. So, the DOL is responsible to ensure that an employer does not skirt those obligations by falsely labeling a worker.

There has been no change in the law, just heightened awareness and enforcement. Accordingly, employers who are heavy users of independent contractors (outside of the computer sciences arena) should take a look at how the individual is being utilized to ensure a true independent contractor relationship is appropriate. There is no bright line test, unfortunately, and the IRS, DOL and courts all have different factors they consider. The IRS uses the “control test” which looks at the degree of control over the worker based on three areas: (1) behavior control; (2) financial control; and (3) the relationship of the parties. For more information on this method, click here. Keep in mind that, especially with long-term independent contractors, if the degree of control changes, a worker may start out in one classification and end up in another. Thus, when you are doing an HR audit of wages and compensation, that is a good time to also look at your independent contractor classifications as well.



fireworksI realize I am late to this blog party, but as they say, better late than never, right?! As I was starting a new post today, I realized I had 99, which meant my next would be 100. It kind of feels like earning your first $1 on a new business (okay, I haven’t had that experience, but it’s in all the movies). In any event, I wanted to pause and say thanks to all my readers for your support – and my friends and colleagues early on who helped me develop this idea (Emily, Brittany, Caitlin, and anyone else who would listen). Here’s to another 100 – and 1,000!