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Federal Stop to New Overtime Rules

Do Not Disturb

Six months ago, Partner and Florida Bar Board Certified Labor and Employment Attorney Ellen Leibovitch wrote to tell you about new overtime regulations that were to go into effect on December 1 (see below). However, on November 22, 2016, a federal judge in Texas issued a nationwide preliminary injunction which effectively put a stop to these rules – for now.

The injunction will preserve the status quo until the court decides the rule’s validity, a decision which will come weeks or months down the road and will likely be appealed in any event.

For employers, this ruling means that the new rules will not go into effect on December 1 and that the old regulations will continue to apply until further notice. Additionally, measures the employers planned in contemplation of the new rules going into effect on December 1 can be put on hold for the time being. Employers can decide if measures already taken in anticipation of the sweeping rule changes – such as raising the salary of exempt employees to meet the expected $47,476/year (or $913/week) threshold – should remain in place, although reversal of these changes may be met with employee backlash.

A note of caution: employers should not assume that the overtime rules will never go into effect. This situation is eerily similar to the rule changes made in 2015 regarding the companionship exemption under the Fair Labor Standards Act. In that situation, the Department of Labor announced changes which would render the exemption inapplicable to third party (home care) providers, then the federal court issued an injunction to prevent the changes from going into effect, then an appeals court struck down the injunction; and the changes eventually went into effect a year after the original date. Given the current political climate, your guess is as good as mine as to whether this same scenario will occur with respect to the overtime rules. As always, I will continue to keep you apprised of any developments.

Ellen is a Florida Board Certified Labor and Employment Attorney with Assouline & Berlowe, P.A.  For any employment and labor questions, please contact Ellen below.

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main: (561) 361-6566

Fax: (561) 361-6466

Email: EML@assoulineberlowe.com

http://www.assoulineberlowe.com/

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New Overtime Regulations Impacting You

 

 

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Board Certified Labor and Employment Partner Ellen Leibovitch will be speaking on October 20, 2016 about important changes to the overtime regulations under the Fair Labor Standards Act (FLSA) that will go into effect on December 1, 2016.  Ellen, who recently appeared in the Boca Raton Observer, will discuss what employers need to know about the changes to the FLSA to protect their companies.

Please join the South Palm Beach County Bar Association’s Labor & Employment Committee on October 20, 2016 for breakfast and a panel discussion on the scope of the new rules and best practices for making sure your business is fully compliant as of day one.  To register online, click here.

Ellen is a Florida Board Certified Labor and Employment Attorney with Assouline & Berlowe, P.A.  For any employment and labor questions, please contact Ellen below.

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main: (561) 361-6566

Fax: (561) 361-6466

Email: EML@assoulineberlowe.com

http://www.assoulineberlowe.com/

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Significant Changes to Overtime Regulations!

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Just this week, the Department of Labor (DOL) released its much-anticipated final changes to the overtime regulations under the Fair Labor Standards Act (FLSA). The new guidelines will go into effect on December 1, 2016, so now is the time for covered employers to start preparing.

What has changed?

Most significantly, the new rules change the salary requirements for exempt employees. Under the old rules, employees could be classified as exempt from overtime if they were earning a salary of $455/week (or $23,660/year) and if they performed exempt professional, managerial, executive or administrative duties. Under the new rules, however, employees must earn $913/week (or $47,476/year) – MORE THAN DOUBLE THE PRIOR SALARY LEVEL – to meet the salary component of the exemption. The salary threshold will automatically be updated every three years, so this is a moving target. Note that the final rule did not include a change to the duties test.

Also, the new rule raises the salary threshold level for the highly compensated employee (HCE) exemption from $100,000 to $134,004. To be exempt, a HCE must customarily and regularly perform any one or more of the exempt duties or responsibilities of a professional, managerial, executive or administrative employee and have the primary duty of performing office or non-manual work. Like the standard salary level, the highly compensated employee salary level will increase every three years, beginning Jan. 1, 2020.

What does this mean?

For exempt employees earning at least $913/week, nothing will change. However, employees who are now classified as exempt but who are earning less than $913/week will lose their exempt status as of December 1, 2016. Becoming non-exempt means that these employees will be eligible for overtime pay when working over 40 hours in a work week, which 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.

Note that employers will be able to count non-discretionary bonuses, incentive payments and commissions toward as much as 10% of the salary requirement. However, such payments must be made on at least a quarterly basis.

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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

Florida Board Certified Labor and Employment Attorney

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main:  (561) 361-6566

Fax: (561) 361-6466

Email: EML@assoulineberlowe.com

http://www.assoulineberlowe.com/

Intellectual Property, Labor & Employment Law, Bankruptcy, Commercial Litigation, Real Estate, and Corporate Law

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More American Workers Sue Employers for Overtime Pay – USATODAY.com

By Paul Davidson, USA TODAY

Americans were pushed to their limit in the recession and its aftermath as they worked longer hours, often for the same or less pay, after businesses laid off almost 9 million employees.

Now, many are striking back in court. Since the height of the recession in 2008, more workers across the nation have been suing employers under federal and state wage-and-hour laws. The number of lawsuits filed last year was up 32% vs. 2008, an increase that some experts partly attribute to a post-downturn austerity that pervaded the American workplace and artificially inflated U.S. productivity.

Workers’ main grievance is that they had to put in more than 40 hours a week without overtime pay through various practices:

•They were forced to work off the clock.

•Their jobs were misclassified as exempt from overtime requirements.

•Because of smartphones and other technology, work bled into their personal time.

“The recession (put) more pressure on businesses to squeeze workers and cut costs,” says Catherine Ruckelshaus, legal co-director of the National Employment Law Project. If employers had to bear the actual expense of overtime, she says, they likely would have hired more workers in the economic recovery.

In response, employers are playing defense. They’re drawing clearer lines between workers and managers, and in many cases, reining in modern office privileges, such as company-issued smartphones and telecommuting. The upshot, in many instances, could be a very different American workplace.

Courts, meanwhile, must reconcile decades-old labor laws with ever-evolving technology. The spread of BlackBerrys and iPhones has many workers tethered to employers, for better or worse, even during off hours and vacations.

The controversy has reached the Supreme Court, but in a case involving an age-old profession: sales. Monday, the justices will hear oral arguments in a class-action lawsuit against drugmaker GlaxoSmithKline. Pharmaceutical sales representatives — traditionally classified as exempt from overtime pay — say they’ve been misclassified, a stance backed by the Labor Department in another case. Glaxo says the sales force clearly is exempt under current law.

Legacy of another time

Employers say the explosion of lawsuits shows how the 1938 Fair Labor Standards Act (FLSA) — at the center of the Glaxo case — has become outmoded in an age when most employees want the flexibility to work at home or answer office e-mail while running about on their free time.

“The law has not kept pace with the contemporary workplace,” says Randy MacDonald, IBM‘s head of human resources.

Many companies have reclassified salaried executives as hourly employees — often to the consternation of the workers themselves, says Dan Yager, general counsel of the HR Policy Association, which represents human resource professionals. Such a strategy lets employers head off lawsuits by paying a lower basic wage that accounts for expected overtime.

Under the FLSA, employees are entitled to overtime unless they’re executives who manage and hire and fire employees; administrators who make key decisions; or professionals — such as lawyers and engineers — with advanced degrees, among other criteria. Also exempt are certain information technology workers and sales representatives whose hours can’t easily be tracked.

Employees must earn at least $455 a week to be exempt. While all hourly employees are entitled to overtime, salaried workers may also qualify if they don’t fall under any of the exemptions.

Last year, 7,006 wage-and-hour suits, many of them class actions, were filed in federal court, nearly quadruple the 2000 total, according to defense law firm Seyfarth Shaw. Meanwhile, in fiscal 2011, the Labor Department recovered $225 million in back wages for employees, up 28% from fiscal 2010.

Labor has added 300 wage-and-hour investigators the past two years, increasing its staff by 40% to 1,050. The department “has stepped up its efforts to protect workers,” particularly “in high-risk industries that employ low-wage and vulnerable workers,” such as hotels and restaurants, says Nancy Leppink, deputy administrator of the wage-and-hour division.

Several attorneys for plaintiff workers say employers wrung more output from fewer employees during recoveries following the 2001 and 2007-09 recessions. Both upturns initially yielded sluggish job growth.

“A lot of companies make a business decision to say, ‘We can cut corners on this, and we won’t get sued,’ ” says plaintiffs’ attorney David Schlesinger of Nichols Kaster in Minneapolis.

U.S. productivity, or output per labor hour, rose 2.3% in 2009 and 4% in 2010 — a period that includes the recession’s final months and its aftermath — vs. increases of 0.6% to 1.6% the previous four years. Some economists say the gains are overstated because many overtime hours were not properly counted, as employees worked off the clock.

Richard Alfred, chairman of Seyfarth Shaw’s wage-and-hour practice, has a different view. He agrees that the recession helped drive the growth in lawsuits, but he says that’s because many laid-off workers became lead plaintiffs in class-action suits to reap financial windfalls after they couldn’t find new jobs.

The biggest reason for the lawsuit surge, he says, is that lucrative settlements a decade ago prompted labor lawyers to file copycat complaints, and the suits are far simpler and less costly to pursue than discrimination cases.

With class-action cases exposing companies to multimillion-dollar judgments, “the liability becomes so substantial that a vast majority of these cases settle,” says Garry Mathiason, vice chairman of Littler Mendelson, which defends companies in such lawsuits.

Case in point: In November, Oracle agreed to pay $35 million to settle claims by 1,666 software testers, technical analysts and project managers that they were denied overtime because they were misclassified as administrators or professionals. The company did not admit wrongdoing.

The vice of technology

The newest variety of plaintiff is a worker with a handheld device. Jeffrey Allen, a sergeant in the organized crime unit of the Chicago Police Department, says he got a near-constant barrage of e-mails, text messages and calls on his department-issued BlackBerry until around 10 p.m. every weeknight. Each required a response lasting from a minute to an hour or two, he says.

While dining with his family, mowing the lawn or watching his son play soccer, Allen often had to step away to coordinate search warrants and compile reports on seized assets, among other tasks. Two years ago, he filed a class-action suit against the city on behalf of himself and other hourly paid police officials. Allen says they’re owed back overtime pay from 2007 to 2010. The case is pending.

“You feel like you don’t really get a break from your job,” says Allen, 47, who still works for the department, but in a different role.

Roderick Drew, a spokesman for the city’s law department, says it’s policy to let police officials request overtime. In a legal filing, the city argued that Allen failed to show that his communications were more than an insignificant amount. Some courts have said that applies to anything less than 10 or 15 minutes.

Other wage-and-hour cases seek compensation for off-the-clock work in the office. In a class-action complaint filed in February against Verizon Wireless, customer service representative Heather Jennings says she had to be at a Mankato, Minn., call center 10 to 15 minutes before her shift officially started. Jennings says workers such as herself had to log into their computers and open databases so they were ready to take calls.

“I thought it was unfair,” says Jennings, 31, who was laid off by Verizon last May.

Verizon spokesman Tom Pica says the company “compensates its employees fairly and fully.” In a legal filing, Verizon said that Jennings’ pre-shift activities were minimal and that she failed to take advantage of complaint procedures at the time.

Other lawsuits allege that employers gave workers fancy titles to avoid paying overtime.

Richard DeLeon is among more than 750 current and former assistant store managers of Big Lots in Florida suing the discount department store chain. DeLeon, 57, says he spent his workday running cash registers, unloading trucks and tidying the Cutler Ridge, Fla., store.

He says managerial functions — such as assigning tasks to employees — took up 10% to 15% of his time, but he couldn’t hire, fire or discipline workers. DeLeon says he typically worked about 60 hours a week and earned $43,000 a year. His workload increased, he says, when managers had to run stores with fewer employees in 2009.

“This is really a game plan by the company to keep labor costs down,” says DeLeon’s lawyer, Mitchell Feldman of Feldman Fox & Morgado.

Big Lots did not return messages seeking comment. In court papers, the company said the “primary duty” of the lawsuit’s lead plaintiff, Angela Schenburn, was assistant manager, but “at times” she may have done lower-level tasks “concurrently.”

Even office workers who sometimes earn $100,000 a year, such as securities brokers and financial advisers, are demanding overtime pay, arguing they’re just salespeople rather than key decision-makers.

In a class-action case, Scott Finger, 46, a former MetLife mortgage loan officer, says he had to work about 65 hours a week at the firm’s Melville, N.Y., office to meet sales targets while earning about $5,700 a month in commissions. While he recommended whether to approve loans, he says, underwriters made the final decisions.

MetLife spokesman Ted Mitchell would not comment on pending litigation. The company has asked a judge to dismiss the case, saying it duplicates a previously filed suit.

A changing workplace

Companies say the lawsuits have forced them to grant workers less flexibility.

Several years ago, IBM voluntarily reclassified 7,000 salaried technical and support workers earning an average $77,000 a year to hourly employees after it settled a class-action labor suit for $65 million. The company cut their base salaries 15% to account for potential overtime, says IBM’s MacDonald.

IBM’s Shar Anderson oversaw 20 workers in a customer service group. “It made me feel less valuable to the company,” says Anderson, 55, who has a bachelor’s degree in computer science and several professional certifications. Anderson, who’s now in a similar but higher-level salaried position, says she “wasn’t able to do my job” because she sometimes had to hand off emergency responses to colleagues after 5 p.m.

In a survey by the HR Policy Association last year, a third of the 155 large member firms that responded said they’ve restricted telecommuting as a result of the lawsuits, and 56% said they’ve curbed the use of communications devices outside the office.

Johnna Torsone, head of human resources for mailing systems maker Pitney Bowes, says the firm would like to give about 30 overtime-eligible sales support staffers the ability to work from home but has held back while searching for a way to track their time.

“You just don’t take the risk,” she says.

This article was published in USATODAY.com:

More American workers sue employers for overtime pay – USATODAY.com.

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