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DOL Plans to Rescind Trump-Era Rules on Independent Contractor and Joint Employment Status

The Department of Labor (“DOL”) has announced a plan to roll back the Trump administration’s rules for determining independent contractor and joint employment status. These rules were heavily criticized by pro-employee organizations for not affording adequate protections to workers and being too favorable to employers.

Independent Contractors

The proposed rule laid out a five-factor “economic reality” test to determine if an individual should be classified as an independent contractor or an employee: (1) the nature of the work and the degree of control the hiring entity has over the work performed; (2) the worker’s opportunity for profit or loss based on their own initiative and investment; (3) the skill required to perform the work; (4) the permanency of the working relationship between the worker and the hiring entity; and (5) whether the work being performed is integral to production.

In its notice to rescind this rule, the DOL stated that this test has not been supported by prior court decisions or used by the DOL, that it misconstrued the law, and that it disproportionately benefited employers.

Joint Employment 

The DOL also announced its intention to rescind the final rule outlining the test for joint-employer status though this rule, from its inception, had faced strong opposition from states’ attorneys general.  The rule established a four-factor balancing test to determine if Company #2 could be considered a joint employer of Company #1’s employee: does Company #2 (1) hire or fire Company #1’s employees, (2) supervise and control work schedules or conditions of employment of Company #1’s employees, (3) determine the rates and methods of payment of Company #1’s employees, and (4) maintain the employment records for Company #1’s employees?

The DOL wanted further analysis as the proposed rule differs “from the analyses and tests applied by every court to have considered joint employer questions.”

The DOL has invited public comment on the withdrawal of these rules but has yet to announce any proposed new rules. Suffice it to say the Biden administration will be more employee-friendly in any upcoming labor and employment-related lawmaking. 

For any questions about the above changes, please contact Ellen below:

Ellen M. Leibovitch

Board Certified Labor & Employment Lawyer

ASSOULINE & BERLOWE, P.A.

2101 N.W. Corporate Blvd., Suite 410

Boca Raton, Florida 33431

Main: 561-361-6566
Direct: 561-948-2479

[Bio] [V-card] [Directions]

eml@assoulineberlowe.com

www.assoulineberlowe.com

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LABOR LAW UPDATE – Exempt Employee Thresholds

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It is Finally Here!

Over the years, the U.S. Department of Labor (DOL) has attempted to change certain rules applicable to implementation of the Fair Labor Standards Act (FLSA) and increase the salary threshold for exempt employees from $455 per week (the level it has been at since 2004).

Many may recall that a rule to increase the salary thresholds for exemptions was first enjoined and subsequently invalidated by the U.S. District Court for the Eastern District of Texas in 2016.   A year later, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further DOL rulemaking regarding a revised salary threshold.  In other words, the DOL has consistently enforced the 2004 salary level for the last 15 years.

However, the DOL has now finally announced a final rule which is expected to make 1.3 million American workers eligible for overtime pay under the FLSA.  In a nutshell, this rule, which will go into effect on January 1, 2020, accomplishes three primary objectives:

First, the rule updates the earnings thresholds – from $455 to $684 per week – necessary to exempt certain white collar positions, i.e., executive, administrative and professional employees, from the FLSA’s minimum wage and overtime pay requirements.

Second, the new rule will allow employers to meet up to 10% of the new salary level from nondiscretionary bonuses and incentive payments (including commissions).

Third, the rule will increase the salary requirements for the “highly compensated employees (HCE)” exemption from $100,000 to $107,432 per year.

Again, please note that the final rule will be effective on January 1, 2020.

Additional information about the final rule is available at www.dol.gov/whd/overtime2019.  Please feel free to contact me if you have any questions.

Ellen M. Leibovitch, Head of Labor & Employment Practice – Boca Raton Office and can be reached by email at eml@assoulineberlowe.com or by Telephone: 561-361-6566.

 

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EMPLOYMENT LAW UPDATE – Significant Changes to Overtime Regulations!

 

For loyal followers of these updates, this Department of Labor “update” may seem like déjà vu.  Indeed, three years ago I sent out an update notifying you that the Department of Labor (DOL) had released final changes to the overtime regulations under the Fair Labor Standards Act (FLSA) and that the changes were scheduled to go into effect on December 1, 2016.  Well, as it turned out, the new regulations never did go into effect, but the DOL recently decided to revisit the issue.

So what’s new?

In a nutshell, the proposed rule (which is expected to go into effect in January 2020) would require that all employees earning less than $35,308 per year (or $679/week) – regardless of their job duties – be paid overtime for working 40 hours in a work week.  Overtime is typically equal to one and one-half times the employee’s regular rate of pay.  This means that employees who are now exempt from receiving overtime will no longer remain exempt if they earn less than $35,308 per year.

Without sounding like the boy who cried wolf, now is the time for covered employers to start preparing.

What does this mean?

For exempt employees earning at least $679/week, nothing will change.  However, employees who are now classified as exempt but who are earning less than $679/week will lose their exempt status if and when the new rule goes into effect.

Becoming non-exempt means that these employees will be eligible for overtime pay when working over 40 hours in a work week, and it also means that these employees will be required to record their hours worked.  For exempt employees who never “punched a clock,” this may be demoralizing, although some may welcome the opportunity to earn overtime.

What should you do?

Step 1: EVALUATION

  • Determine which employees will be impacted by these new rules if anyone.
  • Assess the cost of reclassifying these employees as non-exempt or increasing their salaries in accordance with the new guidelines to keep these employees exempt.
  • For employees who will be reclassified as non-exempt, no additional costs will result:
    • if the newly non-exempt employees do not work overtime.  Remember that even if you have a policy that requires all overtime hours be approved in advance, non-exempt employees who work over 40 hours a week must be paid at the time and one-half rate.
    • if the hourly rate paid to the newly non-exempt employees is reduced to take into account the need for these employees to work some overtime hours each week.
  • Remember to train all newly-exempt employees on your time-keeping procedures.

Employers impacted by these new rules may need to consider covering increased overtime costs by reducing benefits, but this will certainly result in a drop in employee morale.

Step 2: COMMUNICATION

  • Notify impacted employees that changes are the result of new rules imposed by the DOL rather than a company decision
  • Assure reclassified employees that the changes do reflect the employer’s opinion of their work or the employees’ value to the company

As always, you should contact legal counsel for any specific questions you may have about the applicability of the FLSA to your business, these new rules and how to best implement same.

 

Ellen M. Leibovitch

Board Certified Labor & Employment Lawyer

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main: 561-361-6566
Direct: 561-948-2479

[Bio] [V-card] [Directions]

eml@assoulineberlowe.com

www.assoulineberlowe.com

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LABOR LAW Update – 11th Circuit Clarifies Liquidated Damages Awards in FLSA Cases

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In the case of Davila v. Menendez, decided on June 10, 2013, the Eleventh Circuit Court of Appeals, which controls all federal courts in Florida, clarified the respective roles of the jury and the district court in deciding issues relevant to claims arising under the Fair Labor Standards Act (FLSA) claims.

In the Davila case, the trial court entered a directed verdict in favor of the defendant employer on the issue of intentional, reckless or willful behavior, thus precluding an award of liquidated (double compensatory) damages.  The plaintiff appealed, arguing that the jury was first required to decide whether the defendant willfully violated the FLSA before the court could rule on liquidated damages.

The Eleventh Circuit agreed and held that the district court erred when it entered judgment as a matter of law that the defendant did not violate FLSA.  The appellate court clarified that the district court was required to await the finding of the jury as to whether the defendant willfully or in good faith violated the law before assessing liquidated damages.  The court further noted that a jury’s finding of willfulness will establish both the period of limitations (willful violations of FLSA allow for a three-year look back period whereas non-willful violations allow only a two-year look back) and the propriety of liquidated damages.  A jury’s finding of willfulness mandates liquidated damages whereas a non-willful finding leaves the question of liquidated damages to the district court’s discretion.

Davila v. Menendez, __ F.3d __, 2013 WL 2460199 (C.A.11 (Fla.)).

For more information on any labor or employment issues, please call

Labor & Employment Partner Ellen Leibovitch.

For more information on Mrs. Leibovitch’s practice, go to: http://www.assoulineberlowe.com/Ellen_Leibovitch.asp or you can contact her by e-mail at eml@assoulineberlowe.com

Assouline & Berlowe is a full service business law firm with offices in Miami, Ft. Lauderdale, and Boca Raton.

ASSOULINE & BERLOWE, P.A.

Miami: 305-567-5576

Ft. Lauderdale: 965-929-1899

Boca Raton: 561-361-6566

 

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