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On March 6, 2018, the U.S. Department of Labor announced a new nationwide pilot program called “PAID” – Payroll Audit Independent Determination. For an initial 6 month trial period, employers can self-audit their wage and hour practices.  If violations are found, an employer can voluntarily report it to the DOL’s Wage and Hour Division (WHD), in hopes of resolving the potential violations without liquidated damages penalties (usually an amount equal to the back wages due) and with a release of claims (as to the violations only).

Why? The DOL is hopeful that employers who discover violations will come forward and pay the employee 100% due promptly, in exchange for a settlement waiver and no liquidated damages, lawsuit, attorneys’ fees, etc. In turn, employees are paid faster than in a lawsuit or DOL investigation, and 100% of what is allegedly due.

Who is eligible? All employers subject to the FLSA. The program cannot be used for any pending investigation, arbitration, lawsuit, or threatened lawsuit (with an attorney involved). Also repeat offenders are ineligible.

What’s the catch? The DOL notes that it is an employee’s right to not accept the back wages, and not release any private right of action against the employer (and they cannot be retaliated against for such refusal). Further, unlike a typical litigation settlement release, the release must be narrowly tailored to only the identified violations (i.e. overtime, minimum wage, off-the-clock, misclassification, recordkeeping (for every violation)), and time period for which the back wages are paid. The WHD can still conduct future investigations of the employer, and employers cannot use the program to repeatedly resolve the same violations. So, in reality, an employer could notify 100 employees that they were paid incorrectly, and 90 accept and 10 reject and file a lawsuit seeking liquidated damages and attorneys’ fees (since they were just told by the employer that they “stole” their wages).

That being said, an employer could, as always, pay the employee the alleged back wages due in a supplemental check, and thus cut off their alleged damages as to that portion (which makes it a lot less attractive as a case to a plaintiff’s attorney), but they will not get a release. Sure, the employee cannot be forced to cash the check, but that would be a remote occurrence. Of course, the employee could still sue, stating they are entitled to interest or liquidated damages, etc., but such suit would likely not sit as well before a court without additional claims (i.e. you were paid what you were due, why are you taking up our limited judicial resources…).

How does the process work? Employers wanting to participate must review the program information and compliance assistance materials that will be available on the PAID website.  The employer then conducts the audit and identifies the potential violations, affected employees, time frame, and back wages. Next, the employer contacts WHD to discuss the issues, and the WHD determines if it will allow the employer to participate in the program. If allowed, the employer must then submit information such as the backup calculations, scope of violations for release, certification that this is all in good faith and the materials have been reviewed, and that practices will be adjusted to avoid the same violation in the future. The WHD finally issues a summary of unpaid wages (this is likely the same form they use today except no liquidated damages will be assessed).  KEY – once this process has been completed, the employer must issue the back wages by the end of the next full pay period.  Thus, employers should be careful to not begin/end the process until ready and able to pay.

In reality…while some are calling it a “get out of jail free card” for employers, I really don’t see it. An employer who discovers an error after a good faith internal investigation can chose to report itself to the DOL. Now, they are on the DOL’s radar with an admission that they believe they have paid their employees in error. The DOL can reject participation in the program and conduct a full investigation. If the DOL allows participation, all affected employees will be notified of the error (who may not have otherwise known), and can chose to opt-out and file a private lawsuit against the employer that just came clean. Further, neither relieves the employer of a future DOL investigation. Get out of jail free card? I think not. More like playing a game of Risk.

In August 2017, the EEOC sued Estee Lauder Companies, Inc. based on a parental leave program that provided employees with paid leave to bond with a new child, as well as flexible return-to-work benefits. Mothers were given 6 additional weeks of paid bonding leave, while fathers were only given 2 weeks, and were not provided the flexible return-to-work benefits. The EEOC alleged such a policy violated Title VII and the Equal Pay Act of 1963, prohibiting discrimination in pay or benefits based on sex. It was recently announced that the lawsuit has been settled, while the terms have yet to be disclosed.

What does this mean for employers? While bonding leave or parental leave policies that go above and beyond any legal requirement are more common and certainly routed in good intentions, you should consider taking another look at any such policy that provides different benefits based on gender.

 

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.

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.

Joining its twin city, St. Paul’s Earned Sick and Safe Time (EEST) Ordinance is now in effect. As of July 1, 2017, employers located in St. Paul with 24 or more employees must provide 1 hour of EEST for every 30 hours worked, commencing on their start date, up to 48 hours per year (or more). Of course, it can’t be this simple! A complete “how to” can be found on St. Paul’s website here.  In addition, the latest Rules can be found here, updated June 30, 2017.

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.

Mark DaytonOn 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!

hurryAs 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.

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.