Happy New Year (almost)! Minnesota employers should be reminded that, effective January 1, 2021, minimum wage rates increase to $10.08 per hour for large employers and $8.21 for small employers (as well as a 90-day training wage for those under 20 and youth wage for those under 18).

Also – don’t forget to update your minimum wage rate poster that must be displayed in your workplace for employees to view.  You can download here in various languages (along with other state-required posters).

Further, recall that Minnesota does not allow a tip credit (i.e. it does not matter if an employee receives tips, you must still pay the minimum wage).  Since Minnesota’s minimum wage is greater than federal minimum wage, the state minimum wage applies.

Finally, looking forward a bit – Minneapolis’ minimum wage rates will increase again July 1, 2021 (to $12.50/$14.25) and St. Paul’s will also increase July 1, 2021 (to $10/$11/$12.50).

On November 3, 2020, the U.S. Department of Labor’s (DOL) Wage and Hour Division issued opinion letter FLSA2020-16, regarding the compensability of travel time for non-exempt (hourly) foreman and laborers. These are issue that frequently arise with construction employers, so it is nice the DOL has finally provided some additional guidance.  Especially where, as the DOL finally acknowledged, the employee benefits from the arrangement.

This opinion letter considers three commute scenarios. The first is local job sites close to, or within the same city as employer’s principal place of business, wherein the foreman hops in a company vehicle at the principal place of business and drives to the job site and laborers either ride with the foreman or drive directly to the job site. The second is remote job sites, which the DOL describes as a job site between 1½ to 4 hours away from the business. Here, the employer pays for hotel accommodations and a per-diem meal stipend, foreman receive and return a company vehicle at the beginning and end of the job, and laborers drive their own vehicles to and from the remote job site (or ride with foreman). The third scenario is the same as the second, except that the laborers decide to drive home instead of staying at a hotel.

In these scenarios, the DOL opined that the foremen’s travel time between the employer’s principal place of business and job sites is compensable, while their travel time to and from home and the employer’s place of business is not. The DOL’s opinion turns on the fact that the foremen are required to report to the central location as they need the company truck (which the inquiring company required to be secured at its place of business) to transport tools and materials around the job site—an integral part of the job. This is not earth-shattering, and is the scenario that is most easiest to identify and answer.

Regarding laborer’s time in these scenarios, their time is not compensable under the first scenario as this travel constitutes normal commuting between work and home. In the second, it is compensable regardless of whether they drive or are passengers and the travel time cuts across their normal work hours. Passenger travel time is generally not compensable outside of the employee’s normal working hours, unless it was during normal working hours on a day the employee normally has off. In the third scenario, laborers would not be compensated for anything beyond the first and last drive to the remote job site as it is deemed time at their personal disposal. These examples (detailed in the opinion) do help ferret out common situations otherwise somewhat murky.

On November 3, 2020, the U.S. Department of Labor’s (DOL) Wage and Hour Division issued opinion letter FLSA2020-15 regarding compensation under the Fair Labor Standards Act (FLSA) for time employees spend attending voluntary training programs such as outside, ongoing continuing education classes (CEUs). The employer at issue is a non-profit hospice care provider with clinical staff such as nurses, social workers, health aids and providers, all of whom have ongoing continuing education requirements for their profession’s licensing. However, the employer does not require certain classes be attended; attendance is always voluntary. Yet, if an employee wants to maintain his/her license, they need to keep up on their CEUs. The employer provides each employee funds to use for CEUs, though they do not need to use the CEU Funds.

The DOL explains that there are 4 factors to consider whether training programs and other similar activities count as working time.  It is not “work time” if:

  1. Attendance is outside of the employee’s regular working hours;
  2. Attendance is voluntary;
  3. The course, lecture, or meeting is not directly related to the employee’s job; and
  4. The employee does not perform any productive work during such attendance.

There are two exceptions where training may not count as work time even though it directly relates to the employee’s job: (1) an employer established program that corresponds to independent programs; and (2) where an employee attends an independent school, college, or trade school after hours on their own initiative. The DOL then addresses six detailed hypothetical situations to further clarify the above, largely related to on-demand viewing of webinars. If you find yourself analyzing the compensability of online training, you may find some further guidance there.

On September 11, 2020, the U.S. Department of Labor’s (DOL) Wage and Hour Division revised the paid leave provisions (including sick leave and expanded family and medical leave) of the Families First Coronavirus Response Act (FFCRA). As a reminder, the paid leave requirements under the FFCRA are (currently) set to expire on December 31, 2020.

Specifically, the DOL made the following clarifications related to paid leave:

  • Employees may only take FFCRA leave if work would otherwise be available to them.
    • If an employer closes the worksite, the employee is not entitled to paid leave.
  • An employee must have employer approval to take intermittent FFCRA leave.
    • Example – Medical need due to health conditions
    • Example – To care for a healthy newborn or adopted child
  • The term “healthcare provider” has been redefined (narrowed) to include only employees who meet the definition of that term under the Family and Medical Leave Act regulations or provide certain medical services that would adversely impact patient care in the event they were not provided.
  • Employees must provide documentation supporting their need for extended FFCRA leave to their employer “as soon as practicable”.

For more information on the FFCRA and related COVID-19 wage and hour issues, see my past blog posts on the subject.

On September 22, 2020, the U.S. Department of Labor (DOL) announced a proposed rule simplifying the test to determine whether a worker is considered an “employee” under the Fair Labor Standards Act (FLSA) or an “independent contractor”. In short, the proposed rule uses the “economic reality” test as the basis for whether a worker is an employee or independent contractor. The “economic reality” test considers whether a worker is: 1) in business for him/herself (thus, an independent contractor); or 2) economically dependent on an employer for work (thus, an employee).

The DOL identifies two “core factors” in the analysis: 1) the nature and degree of the worker’s control over the work; and 2) the worker’s opportunity for profit or loss based on initiative and/or investment. These core factors hold the greatest weight in this determination. However, three lower impact factors to consider include: 1) the amount of skill required for the work; 2) the degree of permanence of the working relationship between the worker and the potential employer; and 3) whether the work is part of an integrated unit of production. Nonetheless, the DOL notes that treatment of the worker is more relevant than what is included in the worker’s contract (where applicable).

Employers should keep in mind that the IRS has its own test regarding whether a worker is an independent contractor or employee. Thus, employers should not only analyze the position based on the DOL test but the IRS test as well.

On August 31, 2020, the U.S. Department of Labor (DOL) issued an opinion letter addressing whether employees’ hours must fluctuate above and below 40 hours per week to qualify for the fluctuating workweek method (FWM) of calculating overtime pay. Although this post is primarily for employers who have already instituted the FWM, if you’re curious on what the FWM is or how it works, check out my previous post. Additionally, the DOL recently issued a rule allowing employers to pay bonuses, premium payments, or other additional pay to FWM employees, which I also wrote a post about.

As to the opinion letter prompting this post, the DOL recently concluded that the FWM requires only that an employee’s hours worked fluctuate from week to week—not that they fluctuate above and below 40 hours worked per week. This means, assuming the employee meets all other qualifying conditions, that an employee may qualify for the FWM even if they are always working more than 40 hours per week but their overtime hours fluctuate (e.g. 41 hours one week, 52 the next). There is no requirement for an employee’s hours to dip below 40 hours per work for an employer to use the FWM.

The DOL also noted that employers using the FWM may not deduct an employee’s pay for absences, even once the employee has exhausted their sick leave or have not banked enough sick leave to cover an absence, with the exception of occasional disciplinary deductions for willful tardiness/absences or infractions of major work rules.

On June 25, 2020, the U.S. Department of Labor (DOL) issued two opinion letters concerning the exemption of outside salespeople. In FLSA2020-6, the DOL opined that an employee qualifies for the outside sales exemption when deployed to high-population areas and events to sell products via stylized trucks (which is not itself a “place of business” as it is not fixed location), stocked with merchandise, marketing displays and demonstration units. In this set of facts, the salesperson is deployed at least 4 days per week (80%) with the truck at different locations each day. The salesperson is responsible for event planning and inventory management (done in the other the 20% of time), and is paid a base salary plus commission based on their sales (which they make using tablets issued to them).  Accordingly, the DOL found the salespersons’ primary duty is making sales customarily and regularly away from the employer’s place of business, and thus, the exemption is proper.

In FLSA-2020-8, the DOL issued an opinion regarding the overtime exemption for outside salespersons in various situations where they set up displays and perform demonstrations at retail locations (not owned by their employer). As the opinion is limited to a very specific, unique type of outside salesperson, it can be instructive for providing examples of when an employee qualifies for the exemption (but way too much to specifically blog about here!). In short, most of the examples for this type of salesperson was found to be exempt (working at home and garden shows, trade shows, and fairs). The exception/open question was when such employee is primarily located a a big-box third-party retailer, if they are obtaining commitments from customers and credited for those sales they are probably exempt; if not, they are merely promoting an employer’s product (versus selling) and probably not exempt.

On June 26, 2020, the U.S. Department of Labor issued Field Assistance Bulletin No. 2020-3, clarifying that, for purposes of federal child labor laws (which dictate hours of work for minors), schools that are “closed” for COVID-19 are “in session” so long as the child is required to participate in virtual or distance learning. While summer school is considered “outside of school hours”, if a school district makes summer instruction mandatory to make up for lost instruction time due to COVID-19, then summer school is treated as an extension of the regular (mandatory) school schedule for purposes of hours of work for minors. I am currently unaware of any Minnesota district that is doing this, but for Minnesota employers doing business in other states, it is something you should certainly keep in mind.

On June 26, 2020, the U.S. Department of Labor (“DOL”) issued Field Assistance Bulletin No. 2020-4, addressing employee paid leave under the Family First Coronavirus Response Act (FFCRA) to care for a child whose summer camp, enrichment or other program is closed due to COVID-19. The FFCRA allows an employee up to 10 weeks paid leave (Expanded Family and Medical Leave – EFMLA) to care for a child(ren) “whose place of care is closed due to COVID-19 related reasons.”  29 C.F.R. 826.20(a)(v), (b). During the school year, it was relatively clear whether a school was closed, and whether the child went to the school. However, summer care, typically filled with various camps and other enrichment programs for school-aged children, can present more problems when an employer must determine whether the employee is eligible for EFMLA leave based on a summer camp they cannot sign up for whether it is closed, or enrollment limited.

In short, the DOL instructs that the question is: “whether a specific summer camp or program would have been the place of care of an employee’s child had it not closed for COVID-19 related reasons, which must be established by a preponderance of evidence in any enforcement action (i.e. more likely than not).”

The DOL recognizes a “multitude of possible circumstances” regarding summer camp registration prevents a “one-size-fits-all rule”, but offers some general examples:

  • Current enrollment (sufficient).
  • Mere interest in camp (insufficient).
  • Past attendance in 2018 or 2019 (sufficient so long as continued to meet requirements such as age range).
  • Being accepted to a wait list (sufficient).
  • Summer school registration (sufficient).
  • Past attendance but no longer eligible (i.e. too old) (insufficient).
  • Submission of application prior to camp closure (sufficient).
  • Submission of a deposit (sufficient).

Employers should remember the above threshold – did the employee provide proof that their child was more likely than not going to attend the cancelled program.

On May 20, 2020, the U.S. Department of Labor (DOL) published its final rule allowing employers to pay bonuses and incentives to employees who are paid a salary plus overtime on the fluctuating workweek method (FWM) of computing overtime (employees who are paid a salary whether they work few hours or many, plus 1/2 overtime rate – usually seasonal businesses such as landscaping – see my earlier post about how this method works if you are interested). In the past, additional payments would cause the pay structure to be defeated (improper), resulting in additional overtime due for each hour worked. In other words, employers had a disincentive to pay employees additional compensation such as bonuses.  Now, certain additional payments are compatible with the use of the fluctuating workweek method under the Fair Labor Standards Act (FLSA).

The final rule amends 29 CFR 778.114(a) by allowing employers to pay bonuses, premium payments, or other additional pay (i.e. commissions and hazard pay), to FWM employees (but the pay must be included in the calculation of the regular rate unless excludable under FLSA sections 7(e)(1)–(8)). The final rule cleans up the rule (makes it easier to read) and adds examples related to night shift differentials and productivity bonuses. Finally, the title of the regulation was changed from “Fixed salary for fluctuating hours” to “Fluctuating Workweek Method of Computing Overtime” (which is how the Courts refer to it).