The Department of Labor Wage and Hour Division (WHD) recently released a new fact sheet providing guidance on the “white collar” exemptions under the Fair Labor Standards Act (FLSA) for positions common in Higher Education Institutions. These positions include teachers, coaches, professional employees, administrative employees, graduate teaching assistants, research assistants, and student residential assistants. As I know you know, the FLSA provides a so-called “white collar” exemption from minimum wage and overtime requirements for employees who perform executive, administrative, professional, or outside sales duties.

The new fact sheet notes that professors, instructors, and adjunct professors generally qualify under the exemption. The WHD also noted that “the regulations do not restrict where bona fide teaching may take place, to whom the knowledge can be imparted, or how many hours a teacher must work per week to qualify for the exemption.” Thus, the exemption may also apply to faculty who teach online or remotely.  The WHD notes that it is unlikely that recruiters qualify, and whether a coach qualifies depends on (among other things), the amount of time instructing student-athletes in a team sport. Additionally, the fact sheet indicates that professional employees including certified public accountants, psychologists, certified athletic trainers, librarians, and postdoctoral fellows, generally are exempt under the professional employees’ exemption. Employees may also be exempt under the administrative employees or the academic administrative employee’s exemption. Such employees may include admissions counselors, student financial aid officers, and department heads.

I think I’ve said this ad nauseam, but for each test, it is important to look at an employee’s actual job duties, qualification and education for determining whether an employee is exempt under any of the “white collar” exemptions. Employers cannot just rely on Fact Sheets, but must put each job to the test. Additionally, don’t forget the employee must also meet the salary basis test – currently a salary at a rate not less than $455 per week.

As food industry businesses are well aware, in Minnesota, you cannot take a credit for tips when computing minimum wage, nor can an employer require tip pooling (Surly Brewing recently paid $2.5 Million in back wages for alleged tip pooling).  In response to cities in Minnesota passing or introducing higher minimum wage ordinances (such as $15 in Minneapolis and St. Paul), Republican lawmakers introduced a bill that would allow employers to pay their tipped employees a lower minimum wage. The bill is in response to concerns from primarily restaurants and bars, regarding the strain a higher minimum wage will incur on them.  The House committee is currently debating this proposed bill.

Under the bill, large employers (employers with annual gross receipts of $500,000 or more), may cap an employee’s minimum wage at $9.65, so as long as the employee makes an average of $14 per hour, including tips.  For small employers (employers with annual gross receipts of $500,000 or less), an employer may cap an employee’s base wage at $7.87 if the employee makes an average of $12 per hour, once the tips are included. If an employee does not make $14 or $12 per hour, depending on the employer’s size, the employer is required to pay them the higher of the Minnesota or federal minimum wage. Stay tuned!

As I’ve blogged about numerous times, I-9s are nothing to mess around with. As with other government websites, the U.S. Citizenship and Immigration Services (USCIS) launched a new website yesterday for E-Verify.gov. As most of you know, E-Verify is a voluntary program; however, employers with a federal contract or subcontract that contains the Federal Acquisition Regulation (FAR) E-Verify clause must enroll in E-Verify. E-Verify also allows all employers to use it to confirm the eligibility of employees to work in the United States. Most employers can obtain employees’ work authorizations instantly or within 24 hours by using E-Verify. Employers can visit the new website to obtain more information on E-Verify and Form I-9. Additionally, employers that have a Minnesota state contract for more than $50,000 must E-Verify all new hires who will perform work on behalf of the state.

On March 23, 2018, President Trump signed into law the Consolidated Appropriations Act. As you may remember, earlier this year the U.S. Department of Labor (DOL) sought comments related to rescinding portions of the 2011 Obama Administration’s ban on tip-sharing arrangements (see my earlier blog here). However, the Act eliminated the issue before the DOL could address it. Under the Act, “employers who pay the full FLSA minimum wage are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools.” However, there are two important caveats worth mentioning. First, the Act does not eliminate the prohibition on managers and supervisors from participating in tip pools. Second, the Minnesota Fair Labor Standards Act (MnFLSA) prohibits employers from requiring employees to share tips (it has to be their choice to tip pool).  Thus, while the FLSA now allows tip pooling, employers in Minnesota are still prohibited from requiring employees to share tips.  Additionally, the Act amends the FLSA to prohibit employers from keeping tips.

The DOL issued a Field Assistance Bulletin on April 6, 2018, further detailing the impact of the amendment, noting it expects to proceed with rulemaking in the near future to address what this means exactly. Importantly, the DOL stated that when determining whether an employee is a supervisor or manager for purposes of tip pooling, it will use the duties test set forth at 29 CFR 541.100(a)(2)-(4). This test looks at whether the individual’s primary duty is management of the business or a department or subdivision, whether that person customarily and regularly directs the work of two or more employees, and whether the individual may hire or fire other employees or whose suggestions and recommendations as to hiring/firing/promotions/other change of status is given particular weight. Violations of the amended Act may result in recovery of all tips unlawfully held by the employer plus an equal amount as liquidated damages as well as possible civil money penalties.

The Wage and Hour Division (WHD) launched their new program, the Payroll Audit Independent Determination (PAID) program on Tuesday, April 3, 2018. As I wrote about previously, PAID is the WHD’s 6-month pilot program that allows employers to self-audit their payroll practices. If an employer discovers an overtime or minimum wage violation under the Fair Labor Standards Act (FLSA), PAID allows them to voluntarily report it to the WHD. The goal behind PAID is to encourage resolution of claims promptly without litigation.  The catch to the program is employees are not required to accept the back wages from the employer or release any private right of action against the employer. Thus, an employer could still be subjected to a lawsuit. Additionally, the DOL can reject participation in the program and conduct a full investigation after the employer voluntarily reported a violation. As I said in my last post, participating in the program is more like playing a game of Risk than a get out of jail free card…

On April 2, 2018, the Supreme Court ruled in Encino Motorcars v. Navarro that car dealership service advisors (individuals that consult and sell customers on servicing solutions at car dealerships), are exempt from the Fair Labor Standards Act’s (FLSA) overtime requirements. While this is certainly a win for car dealerships, the biggest win for all employers is the Supreme Court’s holding in this ruling that the FLSA is not to be read narrowly, but “fairly”:

Because the FLSA gives no ‘textual indication’ that its exemptions should be construed narrowly, ‘there is no reason to give [them] anything other than a fair (rather than a ‘narrow’) interpretation.'”

Since 1966, service advisors have been deemed exempt under an exemption added to the FLSA covering “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles [. . .].” However, confusion sprung when, in 2011, the Department of Labor (DOL) issued a rule rejecting the interpretation of “salesman” to include service advisors.

Thus, in 2012, relying on the DOL’s rule, current and former Encino service advisors sued the Mercedes Benz dealer, claiming Encino violated the FLSA for failing to pay them overtime. The case has been bouncing around ever since. In 2016, the Supreme Court reversed the 9th Circuit Court of Appeals, finding it improper for courts to defer to the 2011 DOL rule, because “the regulation undermined significant reliance interests in the automobile industry by changing the treatment of service advisors without a sufficiently reasoned explanation.” Accordingly, this ruling finally puts the issue to rest – service advisors are exempt from the FLSA’s overtime requirement.

The Equal Pay Act (EPA) requires that all individuals are paid equally for performing the same job, regardless of gender. But what does that mean exactly? When are jobs equal? On March 21, 2018, in Berghoff v Patterson Dental Holdings, the Honorable Judge Frank ruled that jobs of males and females “need not be identical to be considered equal under the EPA”, and that “job titles and classifications are not dispositive.” (D. Minn., March 21, 2018, Case No. 16-2472). Judge Frank noted there are only four exceptions to the EPA: “(1) a seniority system; (2) a merit system; and (3) a system that measures quantity or quality of production; or (4) that the pay differential was based on a factor other than gender.” In this case, the employer argued that the Plaintiff’s compensation was lower not because she was female, but because the product she marketed for the company generated less revenue than her male counterparts (who marketed products that brought in higher revenue for the company). While the jobs being compared were “essentially [all] marketing positions”, and the revenue generated by each of the respective products being marketed is relevant, the Court held that fact issues “surrounding the economic analysis on that point” precluded summary judgment. In sum, because there was a dispute regarding the use of revenue streams to show that the Plaintiff’s job involved less responsibility, the lawsuit goes on. However, Judge Frank similarly hinted that Plaintiff’s claim appeared weak and that “settlement would serve the interests of all parties.”

Take away for employers? Especially as your company grows, restructures, or changes compensation and commission plans, take a look at similar positions and ensure that there is no apparent pay disparity based on gender (or anything other than the four exceptions noted above).

Employers! It’s almost that time again – Seaton, Peters & Revnew’s 13th Annual Upper Midwest Labor Law Forum is set for May 23, 2018 at…you got it…Target Field! Come hear the latest on what’s happening with the NLRB; regulatory and employment law updates (DOL, MDHR, EEOC, OFCCP, OSHA); and handling discipline, grievance and the arbitration process. The seminar (SHRM credits will be applied for) is from 8:15 am to 11:45 am., then stay for the 12:10 pm Twins v. Detroit Tigers game and enjoy lunch with us in a private suite! Be sure to register early for the discount, and note that tickets to the game are limited to the first 75 to register (the box is only so big…).

Highlights of the program include presentations on:

  •  The “New” NLRB, including a review of the recently confirmed Board members, and major new cases and guidance affecting union and non-union employers.
  • Handling the Discipline, Grievance and Arbitration Process, including a panel discussion of hypothetical arbitration cases by experienced arbitrators; strategies for dealing with employees failing to meet expectations; methods of conducting workplace investigations, imposing discipline, and discharging employees; and interpreting the contract.
  • Regulatory and Employment Law Roundup: An Update on Agency and Caselaw Developments for Employers, covering the ever-changing regulatory and case law landscape, including new or amended regulations, rules, and initiatives from the Department of Labor (DOL), the U.S. Equal Employment Opportunity Commission (EEOC), the Minnesota Department of Human Rights (MDHR), the Office of Federal Contract Compliance Programs (OFCCP), the Occupational Safety and Health Administration (OSHA), and other related agencies and strategies for defense.

Registration will open soon – Go Twins!

It’s that time of year again. March Madness, spring break, and teens that are looking forward to summer and getting a job, or working extra hours at their current job during spring break. What does this mean as a Minnesota employer?

Wages – The youth wage rate is (as of January 1, 2018) $7.87/hr. for teens under 18. Since federal is lower (currently $4.25), the higher rate applies to Minnesota employers.

Work Hours – Here is what I get asked about most (as always, there are some quirky exceptions which I have omitted):

  • Under 14 – Can only be employed as newspaper carrier, in agriculture, as an actor/model/actress, or a youth referee.
  • Under 16
    • During school year:
      • Cannot work before 7 am or after 9 pm or during school hours (this basically means they can only work after school until 9 pm)
      • Cannot work more than 40 hours a week or 8 hours per day (except ag)
    • During summer:
      • Cannot work before 7 am or after 9 pm
      • Cannot work more than 40 hours a week or 8 hours per day
  • Age 16 & 17
    • During school year:
      • Cannot work after 11 pm on an evening before school day
      • Cannot work before 5:30 am
      • Parents may approve expansion to 4:30 pm and 11:30 pm
    • During summer:  work away!

Type of Work – Also, I’d be remiss not to remind employers that teens are limited in certain work or jobs, the full list can be found here. For example, under 16 cannot operate machinery, portable power-driven tools/machinery (drills, sanders, polishing, etc.), meat slicers, and bakery machinery.  Examples for under 18, they cannot operate power-driven machinery such as forklifts, saws, logging or paper operations, gravel pits, building maintenance more than 12 feet above ground level, woodworking machinery.

Employers – don’t forget your 2017 EEO-1 report is due by March 31, 2018! Remember this is required to be filed with the EEOC every year, and the preferred method is online here. Also recall, W-2 pay and hours worked data is NOT being collected as the Office of Management and Budget has stayed the EEOC’s collection of that information. If you are a private employer with 100 employees or more, or a federal contractor with 50 employees or more and $50,000 in federal contracts, you should have gotten an email regarding this, and should be filing your EEO-1.