The United States Department of Labor (DOL) recently announced its decision to once again issue Opinion Letters, Ruling Letters, Administrator Interpretations and Field Assistance Bulletins.  They will be published on the DOL website here, along with past opinions (pre-2009).  Interpretations by the DOL Administrator that interpret the Fair Labor Standards Act (FLSA), Davis-Bacon Act (DBA) or Walsh-Healey Public Contracts Act (PCA), are considered “official rulings”, and thus, provide employers with a good faith reliance defense when so relying. This guidance is very helpful when employers are trying to understand how to interpret the FLSA, DBA or PCA with various facts.

Often, numerous employers have the same questions of interpretation, and thus, opinion letters are very helpful when such common questions arise. The last opinion letters were published in January 2009, and withdrawn by the Obama Administration when the letters were literally not put in the mail in time before the administration changed. If you’d like to receive a notice when new rulings and interpretations come out, you can do so here.

 

 

On June 30, 2017, the Department of Labor filed its reply brief with the 5th Circuit Court of Appeals.  A copy of the brief can be found here. Thus, the Texas lawsuit that has put the overtime regulations overhaul on hold nationwide, is now in the hands of the 5th Circuit.  Any question as to whether the Department of Labor would chose to withdraw the appeal has been answered in the negative. Significantly, however, the Department of Labor has withdrawn its appeal with respect to the legality of the specific $913 per week ($47,476/year) salary threshold:

“The Department has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.  Accordingly, the Department requests that this Court address only the threshold legal question of the Department’s statutory authority to set a salary level, without addressing the specific salary level set by the 2016 final rule. In light of this litigation contesting the Department’s authority to establish any salary level test, the Department has decided not to proceed immediately with issuance of a notice of proposed rulemaking to address the appropriate salary level….Instead, the Department soon will publish a request for information seeking public input on several questions that will aid in the development of a proposal.”

Accordingly, the question now is simply whether the Department of Labor has the authority to set a specific threshold or whether Congress must do so. And again, we wait.

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.

On Friday, June 30, 2017, the Minneapolis City Council passed a $15 minimum wage ordinance on a vote of 11-1, amending Title 2, Chapter 40 of the Minneapolis Code of Ordinances relating to Administration: Workplace Regulations (link is to the draft ordinance). The Ordinance requires that large employers (100 or more employees) pay Minneapolis workers $15 per hour by July 1, 2022, and small employers pay $15 per hour by July 1, 2024, over a 5 and 7 year phase-in period (see table below). As with State law, employers may not take a tip credit for hospitality workers. So what does this mean?  Only time will tell, but it may be a “be careful what you wish for” situation, similar to what Maine has recently went through.  Restaurant employers in Maine saw a hit in their tips only a few weeks after that $12 minimum wage ordnance passed (even despite the fact that the higher wages didn’t yet go into effect), causing the Maine Senate and House to vote overwhelmingly in favor to repeal and restore the tip credit, which Governor LePage has indicated he will sign into law (there are a few more votes and steps in the process).

Who/What Does the Ordinance Apply To?

All employees (full-time, part-time, joint or temporary) are counted to determine size. A franchise is a large employer (no matter how many employees at a single location) if the brand has at least 10 national locations (no matter who operates the franchise). A full service restaurant in Minneapolis, with fewer than 10 national locations is a single employer. State, County, and local governments (except the City of Minneapolis) are exempt from the $15 minimum wage requirement. Notably, and ripe for debate (similar to the sick and safe leave ordinance that since has been limited to employers with an actual work location in the City), is the requirement that it applies to “all time worked within the geographic boundaries of the city”. Employees who work outside the City, but perform at least two (2) hours per week or more in Minneapolis, are covered by this ordinance.

Important for construction and other transportation industries typically passing through: “Time spent in the city solely for the purpose of travelling through the city from a point of origin outside the city to a destination outside the city, with no employment-related or commercial stops in the city, except for refueling or the employee’s personal meals or errands, is not covered by this article.” Thus, a charter bus picking up kids in Minneapolis for summer camps, but located elsewhere could be covered if that driver spends more than 2 hours in the City. A caterer from outside the City who is contracted to cater a party in the City could be covered, as could a construction company that delivers materials into the City. In short, as enacted, it seems the ordinance is going to affect a whole lot of employers located outside the City boundaries.

When Are the Wages Due?

The current tiered phase-in hourly wages are as follows:

Date Large business: five years Small business: seven years
Jan. 1, 2018 $10 No increase
July 1, 2018 $11.25 $10.25
July 1, 2019 $12.25 $11
July 1, 2020 $13.25 $11.75
July 1, 2021 $14.25 $12.50
July 1, 2022 $15 $13.50
July 1, 2023 $15 indexed to inflation $14.50
July 1, 2024 $15 indexed to inflation $15

There is a 90 day training wage for employees under the age of 20 of 85% of minimum wage.

What Happens Next?

The Minneapolis Department of Civil Rights is in charge of enforcement, though the Ordinance does allow a private right of action (employers may be sued by individuals for failing to pay the proper minimum wage). Employers must post notice of these rights, similar to the other State required notices.  As with the sick and safe leave ordinance, chances are that St. Paul and Duluth are not far behind.

 

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.

arrow-23284On 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.

Wheelchair ParkingOn 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.

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.

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.