As many employers are reviewing handbooks and policies for revisions for the new year, Employers without a business located in Minneapolis (but who have workers working in Minneapolis) should note that you do not yet need to comply with the City of Minneapolis Sick and Safe Leave Ordinance. On September 18, 2017, the Minnesota Court of Appeals upheld the temporary injunction as to non-Minneapolis resident employers. Thus, while Minneapolis employers must continue to comply with the Minneapolis Sick and Safe Leave Ordinance, non-Minneapolis resident employers are off the hook for now (keep in mind it is just a temporary injunction). That being said, employers can certainly chose to revise existing policies to comply with the ordinance’s requirements, but do not need to (yet – maybe someday, or maybe never). We will have to wait until the final Court order when it is heard on the merits.
Effective January 1, 2018, Minnesota large employers (annual gross revenue of $500,000 or more) must pay a minimum wage of $9.65 per hour; small employers must pay $7.87 per hour. This is HIGHER than federal minimum wage of $7.25 per hour. Accordingly, Minnesota law applies, and so generally no Minnesota employee (with some exceptions) should earn less than $7.87 per hour (and, I know you know this, but there is no “tip credit” allowed in Minnesota).
But wait – there’s more! As I wrote about earlier, Minnesota employers subject to the Minneapolis Minimum Wage Ordinance must pay an even higher minimum wage starting January 1, 2018. Thus, for those employers, Minneapolis’ ordinance will trump both Minnesota state law and Federal law (hence, the Chamber of Commerce’s lawsuit that is pending). Starting January 1, 2018, large businesses (more than 100 employees) that fall under the Minneapolis ordinance will need to pay a minimum wage of $10 per hour. Starting July 1, 2018, small businesses that fall under the Minneapolis ordinance will need to pay $10.25 per hour, and large businesses $11.25 per hour. Thereafter, the hourly wages increase each July 1 until 2024, when all employers that fall under the Minneapolis ordinance will need to pay the minimum wage of $15 per hour. You can read more about it on the City’s website here.
Minnesota employers should be careful to be familiar with all wages laws and ordinances that may apply to your business. For example, a business can be a small employer under the $7.87 Minnesota State minimum wage (based on annual gross revenue), but a large business (more than 100 employees) under the Minneapolis Ordinance; in this case the employer would need to pay the higher of the minimum wage rates – the $10 per hour under the Minneapolis Ordinance.
On November 10, 2017, the Minnesota Chamber of Commerce filed another lawsuit against the City of Minneapolis, this time challenging the Minneapolis minimum wage ordinance, set to take effect on January 1, 2018. In a press release, the Chamber noted that, “a patchwork of inconsistent local laws creates an administrative nightmare for employers, especially those with facilities in multiple locations.” Sound familiar? Recall earlier this year, the Chamber also sued the City of Minneapolis over its Sick & Safe Leave Ordinance under a similar theory. The Minnesota Court of Appeals recently affirmed part of the decision in that suit (against the Chamber), but notably, temporarily enjoined the City from enforcing that ordinance against businesses without a physical location in the City of Minneapolis.
As it stands, Minnesota State minimum wage is currently $9.50 per hour, and increases annually each year by inflation. Thus, effective January 1, 2018, Minnesota’s minimum wage will be $9.65 per hour. Minneapolis’ ordinance, on the other hand, requires a minimum wage of $10 per hour starting January 1, 2018 for large businesses (more than 100 employees). Starting July 1, 2018, Minneapolis requires $10.25 per hour minimum wage for small businesses, and $11.25 per hour for large business. By July 1, 2022, the Minneapolis Ordinance requires a $15 minimum wage for large business, and the same by July 1, 2014 for small businesses. Thereafter, the minimum wage increases by inflation January 1 of every year.
Until the Court rules otherwise, however, employers (even those with collective bargaining agreements) must follow the Minneapolis Minimum Wage Ordinance if it is applicable to your business. If you are not sure whether the ordinance applies to your business (i.e. employers not located in Minneapolis but who have employees working in or passing through Minneapolis), I’d encourage you to seek counsel before the end of the year.
I suspect you have all heard by now, but on September 5, 2017, Judge Mazzant of the Eastern District of Texas declared the proposed overtime overhaul regulations to be invalid. As a result, the minimum salary levels remain as before the revisions -$23,600 annually, or $455 per week. For highly compensated employees, the amount will remain at $100,000 annually.
I know what you’re thinking – I did all that work and preparation for nothing!? Fear not! With a few exceptions, this was actually a good exercise for many employers who, upon doing an internal audit, discovered that based on the duties test, some employees were likely misclassified. Remember, you can never err by paying overtime, only by not paying overtime if the employee is entitled to it. Accordingly, I’d caution advisers to hesitate before reverting an employee back to exempt (no matter how bad they want it to) without really performing an exempt analysis of the position.
So, now what happens? The U.S. Department of Labor has moved to withdraw its Fifth Circuit Court of Appeals case, and will not appeal the Order. Instead, it has noted its intention to revisit this entire issue, and is seeking public comments on changes to consider making in the future. For employers, continue to evaluate positions as you have been before the revisions, although it wouldn’t hurt to look especially carefully at positions whose annual salary is less than $47,476.
HR Generalists tasked with the EEO-1 report can celebrate. On August 29, 2017, the White House’s Office of Management and Budget sent a memo to EEOC Acting Chair Victoria Lipnic, stating that it is reviewing the September 29, 2016 pay data collection revisions to the existing EEO-1, and while it does so, the pay data collection will be stayed. In other words, the new data requirement (aimed at determining equal pay issues) is on hold but employers need to be sure to continue to collect the normal data as usual, by March 2018.
In its memo, the OMB noted that the EEOC released data file specifications for employers to use in submitting EEO-1 data that were not contained in the Federal Register notice, and thus, could not obtain public comments: “As a result, the public did not receive an opportunity to provide comment on the method of data submission to EEOC.” Accordingly, “OMB has also decided to stay immediately the effectiveness of the revised aspects of the EEO-1 form for good cause, as we believe that continued collection of this information is contrary to the standards of the PRA (Paperwork Reduction Act). Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.”
In short, employers may continue using the previously approved EEO-1 form to comply with FY2017 reporting requirements!
It’s been a month since the City of Minneapolis Sick and Safe Time Ordinance has gone into effect (July 1, 2017), and thus, employers based in Minneapolis with workers in Minneapolis should have already modified their existing paid time off (PTO) policy, or created a new sick and safe time policy. The most frequent question I’ve been getting recently is regarding whether an employer must comply if they are not located in Minneapolis, or if they are located in Minneapolis, but employees do not work in Minneapolis. The confusion is quite understandable, as the answer is not found in the ordinance, but the result of a temporary injunction issued in a Hennepin County District Court case (Minnesota Chamber of Commerce et al v. City of Minneapolis, Court File No. 27-cv-16-15051).
The City of Minneapolis is currently not enforcing its ordinance against employers who are not physically located in Minneapolis, or employers who are located in Minneapolis but whose employees do not physically work in Minneapolis. The City of Minneapolis Sick and Safe Time Ordinance is currently only being enforced against Minneapolis-based employers with employees performing more than 80 hours of work a year in the city limits of Minneapolis (which does not include pass-thru drivers). However, keep in mind that this is only a temporary pause in enforcement. On January 26, 2017, the City appealed the decision to the Minnesota Court of Appeals, and has noted in the rules that, “Once a final order has been issued through the court process, the City may amend these rules to provide additional guidance.”
Oral arguments were heard on July 11, 2017. Accordingly, as I find myself saying way too much these days, we wait. Employers not located in Minneapolis but with workers in Minneapolis not wanting to wait have two options: (1) continue business as usual; or (2) amend your PTO or vacation policy to meet the ordinance requirements, even though they are not being enforced. Recall you may always offer employees more than they are entitled to, just not less.
On July 26, 2017, the Department of Labor asked the public for comments concerning revisions to the overtime rules. Only a week later, the DOL has received over 12,000 comments. However, it appears a move is underway whereby individuals are cutting and pasting the same statement literally thousands of times. It appears an individual posted the 70th comment on July 31, 2017 (WHD-2017-0002-2990), stating that President Ford set the salary threshold in 1975 at what would be $58,000 today, and thus, the DOL should keep the $47,476 in tact (or greater). From what I can tell, the remainder 11,930 submissions so far have simply cut and pasted this comment. This makes it incredibly difficult to find and review different positions and share them here. Perhaps the DOL could institute an “Agree” or “Disagree” feature in the future?
The United States Department of Labor officially published its Request for Information (RFI 1235-AA20); Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, today. In doing so, the DOL expressly acknowledged many employer’s concerns that the previously-set salary threshold of $913 per week was too high, it inappropriately excluded too many workers from the exemption who otherwise would pass the standard duties test, and it adversely impacted low-wage regions and industries. Accordingly, the RFI is intended to gather additional data regarding how the December 1, 2016 regulations affected employers and employees, and how the regulations could better be updated moving forward.
The RFI can be found at regulations.gov, where comments may be electronically submitted with a single click. Given the pending litigation in the District of Texas and the 5th Circuit Court of Appeals, the DOL is merely asking for public comment at this time, versus publishing a formal Notice of Proposed Rulemaking. The DOL acknowledges that the RFI is issued consistent with President Trump’s February 24, 2017 Executive Order 13777, “Enforcing the Regulatory Reform Agenda” which tasks federal agencies to identify regulations for repeal, replacement, or modification which meet certain requirements, such as hindering job growth.
The DOL is asking employers to weigh in on eleven (11) questions (summarized below):
- Should the DOL simply update the 2004 salary level ($455/wk) for inflation?
- Should multiple salary levels be created, and if so, how (size of employer, region, etc.)?
- Should there be different salary levels for executive, administrative and processional (as it was prior to 2004)?
- Should the DOL return to using the long and short test salary levels (and would the duties test need to change if so)?
- Does the 2016 salary threshold ($913/wk) in effect negate the duties test? And if so, at what threshold does it not negate the duties test?
- What actions did employers take to prepare for the December 1, 2016 regulation (i.e., increase salaries, change hours, reduce pay, etc.)?
- Would it be preferable to base exemptions on duties only (no salary threshold)?
- Does the $913/wk threshold exclude occupations traditionally covered as exempt?
- Is the 10% non-discretionary bonus and incentive payment credit towards satisfying the salary threshold appropriate?
- Should the highly compensated thresholds have multiple levels, and if yes, how (i.e. size of employer, region, etc.)?
- Should the salary levels be automatically updated periodically, and if so, how/when?
The public has until September 25, 2017, to submit comments. Following the close of the comment period, employers can expect more waiting, as usual. It appears from the RFI that the DOL will not be issuing a Notice of Proposed Rulemaking while the cases are ongoing, so as is the norm, we will continue to wait.
The United States Department of Labor announced today that, as indicated in the 5th Circuit Appeal recently, it will be publishing a new Request for Information (RFI) concerning the overtime regulations (technically, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees”) tomorrow. The July 26, 2017 RFI will seek public comments regarding the salary level test (recall the DOL told the 5th Circuit that it was dropping the $913/wk overtime threshold), the duties test, varying cost-of-living (i.e. the fact that one salary threshold may be inappropriate nationwide), inclusion of non-discretionary bonuses and incentive payments, highly compensated employee salary test, and automatic updating of such salary levels.
The RFI will be open for 60 days during which the public may submit comments.
Just when employers were embracing the (other) new Form I-9, the United States Customs and Immigration Services (USCIS) has once again updated Form I-9, with a new revision date of “07/17/17 N”. Employers may start to use the revised form immediately, but the revised I-9 does not need to be used exclusively until September 18, 2017. The revised I-9 can be found on the USCIS website: www.uscis.gov/i-9.
What is new and revised? A few revisions to the instructions and, more importantly, the list of acceptable employment authorization documents. Specifically, List C now allows a Consular Report of Birth Abroad (Form FS-240) as evidence. In addition, USCIS has combined onto List C #2 all the certifications of report of birth issued by the Department of State (Form FS-545, Form DS-1350 and Form FS-240). Thus, the List C documents were renumbered (except the social security card).
Finally, the USCIS issued a revised Handbook for Employers: Guidance for Completing Form I-9 (M-247). While I’m not often “wooed” with government “guidance” documents such as this, this particular handbook is actually very helpful and useful for employers. For example, it addresses when certain documents can expire without re-verification, and when others need to be re-verified upon expiration (hint: all documents must be unexpired when first presented). However, given its content, it was extremely long; the revised handbook is indeed much easier to navigate and a great place for employers to start with I-9 questions.