As we prepare to celebrate Independence Day, Minneapolis workers are celebrating the July 1, 2017 Minneapolis Sick and Safe Time ordinance that is now in effect. I’ve written about this before, but as July 1 has rolled around, I wanted to remind Minneapolis employers to be sure your policies and procedures are compliant now. If your business “resides” in Minneapolis and you have 6 or more employees, be sure to provide at least 1 hour of paid sick leave (or PTO, etc. that can be used for the same mandated reasons) for every 30 hours worked (unpaid if less than 6 employees). As an update, the Minnesota Chamber of Commerce’s case is still on appeal before the Minnesota Court of Appeals and thus, the temporary injunction is still in effect for non-Minneapolis employers with workers in Minneapolis. This means, the City is not enforcing this ordinance with respect to non-Minneapolis based employers.
On June 7, 2017, the U.S. Department of Labor announced its withdrawal of two Obama-era opinion letters, stating the removal does not “change the legal responsibilities of employers under the Fair Labor Standards Act (FLSA) or Migrant and Seasonal Worker Protection Act”. However, certainly such withdrawal is meaningful from an enforceability standpoint, as well as the deference such interpretations have been historically given by the courts. That being said, the DOL has not issued replacement guidance, so how the DOL’s interpretation will change is not yet clear. What we do know is that courts will no longer consider these interpretations, let alone provide them deference in deciding how to interpret the law.
The first, Administrator’s Interpretation No. 2015-1 (July 15,2015), is, “The Application of the Fair Labor Standards Act’s ‘Suffer or Permit’ Standard in the Identification of Employees Who Are Misclassified as Independent Contractors.” In short, AI 2015-1 boldly concluded that, “In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors…”. By withdrawing such opinion, the DOL has signified a shift toward more targeted requirements when determining whether an individual is an employee or independent contractor.
The second, Administrator’s Interpretation No. 2016-1, is “Joint employment under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act.” When published, this opinion letter established, for the first time, the distinction between “horizontal” and “vertical” employment. It concluded that joint employment has become more common, and that joint employment should be “regularly considered” in FSLA and MSPA cases. Further, referring to AI-2015-1 (the other opinion letter withdrawn), the DOL stated, “As with all aspects of the employment relationship under the FLSA and MSPA, the expansive definition of ’employ’ as including ‘to suffer or permit toward’ must be considered when determining joint employment, so as to further the statutes’ remedial purposes.” Similarly, we don’t yet know what the DOL’s position is now with respect to joint employment under the FLSA, but it is very likely that it will be less onerous on employers.
On May 10, 2017, in LaCurtis v. Express Med. Transporters, Inc. (8th Cir., 2017), the Eighth Circuit Court of Appeals held that 7 passenger paralift van drivers are not exempt under the Motor Carrier Act (MCA) exemption to the Fair Labor Standards Act (FLSA), even though the vans (which are less than 10,000 pounds) were originally designed to transport up to 12 or 15 passengers.
The FLSA has an exception for (and thus, does not regulate) certain drivers and helpers who are covered under the Department of Transportation Secretary’s authority. However, the Motor Carrier Act exemption to the FLSA was narrowed in 2008 by the SAFETEA-LU Technical Corrections Act (TCA). The TCA provides that certain employees are eligible for overtime under the FLSA (and not covered by the MCA exemption), if their work affects the safety of operation of motor vehicles weighing 10,000 pounds or less – UNLESS – the vehicle is “designed or used” to transport more than 8 passengers (including the driver).
Accordingly, in this case, the vans at issue are less than 10,000 pounds, but were originally designed to transport up to 12 and 15 employees, respectively. However, in the conversion to paralift vans, seats were removed, and the vans reconfigured for wheelchairs. Thus, the dispute rested on whether the term “designed” meant as originally designed (for up to 12 or 15 persons), or as currently designed (for up to 7 persons plus a driver). The Eighth Circuit concluded that Congress intended for the term “design” to not be limited to a vehicle’s original design. The Court held that as the vans were comprehensively redesigned and substantially modified to seat 7 passengers, and weighed less than 10,000 pounds, the employees were eligible for overtime and the MCA exemption to the FLSA did not apply.
On May 30, 2017, Minnesota Governor Mark Dayton announced that he vetoed “Chapter 2, Senate File 3”, the Uniform State Labor Standards bill (aka, the “Preemption Act”). In doing so, Governor Dayton (correctly) explained that the bill would “preempt local governments’ ability to set wage and benefit levels higher than state law.” Indeed, one of the intentions of the bill was to relieve multi-location employers of the administrative (and other) burdens associated with local ordinances with various requirements concerning leave policies.
Governor Dayton opined that this is not the role of state government, and that local officials, elected by communities, should be able to “retain the right” to set higher wage and benefit levels for their residents. He did not address how this affects non-resident workers in a community. Governor Dayton further noted that state government “does not always know what works best for every community, and may lag behind when improvements are needed.” As an alternative, Governor Dayton stated that the legislature should have instead proposed to increase Minnesota’s minimum wage and statewide sick and safe time.
What does this mean for multi-location Minnesota employers? For now, status quo – employers must continue to ensure compliance in each location for which it is doing business. If there are conflicts between two ordinances, or an employee works in multiple locations and the business is headquartered in another, be sure the proper benefits and wage rates are used!
As I wrote about earlier, the Overtime Bank of America does not exist! Private employers may not allow compensatory (or “comp”) time, in lieu of overtime. If a non-exempt (hourly) employee works 48 hours in a workweek, and wants to carry the 8 hours of overtime into the next workweek to get paid while taking Friday off, he or she cannot do it – unlike government employees. Even if the employee begs, an employer simply cannot do it. Again, an employee cannot waive his or her own FLSA rights (here, the right to overtime pay – not comp time).
The Working Families Flexibility Act of 2017, H.R. 1180, seeks to amend the Fair Labor Standards Act, 29 U.S.C. 207 to change the disparity between government and private employees. The Act would allow private employers to provide employees the choice of being paid overtime or getting comp time. Such comp time could be used for any reason, such as caring for a sick child or school appointments, or an employee could chose to be paid overtime instead. Employees would be permitted to use comp time “within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the employer”.
Under this Act, employers would not be able to force employees to take comp time in lieu of overtime. Further, an employee must have worked 1,000 in a period of continuous employment with the employer during the preceding 12 months, and there must be a written or otherwise verifiable statement that the employee and employer agree to such comp time before it accrues. An employee would be able to accrue up to 160 hours of comp time each year, with any unused paid out at the end of the year (or employment). However, an employer, with 30 days’ notice, could chose to pay the employee overtime for unused comp time in excess of 80 hours. Similarly, an employee could withdraw his or her agreement to comp time at any time, and must then be paid for such time within 30 days. Notably, comp time, when paid out, is paid at the “regular rate earned by such employee when the compensatory time was accrued; or (ii) the regular rate earned by such employee at the time such employee received payment of such compensation, whichever is higher”. In other words – not time and a half…as currently drafted.
On May 2, 2017, the Act was approved by the U.S. House of Representatives, and the Trump Administration issued a Statement of Administration Policy stating that, if presented President Trump in its current form, his advisors would recommend he sign the bill into law. The current text can be found here. What’s next? The bill was received in the Senate on May 3, 2017. It will be introduced in the Senate, go through Committee, get on the schedule to be considered and put to a vote.
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.
The 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.
In 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.
Spring 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.
Gone 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.