Category Archives: Wage and Hour

UPDATE ON STATUS OF CHANGES TO OVERTIME SALARY THRESHOLDS

By Laurie A. Petersen

On August 31, a U.S. District Judge for the Eastern District of Texas struck down the controversial high salary threshold hikes that the Department of Labor under President Obama set for overtime exemptions putting to rest employer concerns about their obligations when or if the Rule was ever implemented.  The Rule was to have gone into effect on December 1, 2016, but Judge Amos L. Mazzant III entered a nationwide injunction about a week prior to the effective date of the rule.  The Final Rule more than doubled the minimum salary necessary for an employer to consider a particular job (executive, administrative, professional, outside sales) exempt from overtime and significantly increased the salary threshold exemption for highly compensated employees.

While the Obama Administration appealed Judge Mazzant’s injunction to the Fifth Circuit, the Department of Justice under President Trump decided not to pursue the appeal.  Instead, the Trump Administration’s Department of Labor is seeking information from the public regarding the exemptions and salary levels and published a Request for Information in late July 2017.  Submissions are due on or before September 25, 2017 and request information regarding salary thresholds and the duties test.  Details of the request for information and links to submit comments can be found at www.federalregister.gov.

It appears likely that the Trump Administration will still modify the overtime rule, potentially increasing the salary threshold, but the result is not expected to be as generous for workers or as costly to employers.

Lindner & Marsack, S.C. will continue to keep you posted on further developments with changes to the overtime exemptions. For more information about the DOL’s overtime exemption rules or your general employment law needs, please contact Attorney Laurie Petersen at (414) 226-4804 or by email at lpetersen@lindner-marsack.com or any of the other attorneys you work with at Lindner & Marsack, S.C.

GOVERNOR WALKER PROPOSES TO ELIMINATE THE LABOR AND INDUSTRY REVIEW COMMISSION

By:  Jonathan T. Swain

February 13, 2017

In his recently published proposed biennial budget for fiscal years 2018 and 2019, Governor Walker has proposed to eliminate the Wisconsin Labor and Industry Review Commission (LIRC).  LIRC is an independent three member commission appointed by the Governor that currently handles all appeals of Administrative Law Judge (ALJ) decisions for unemployment compensation cases, worker compensation claims, as well as state fair labor standards cases and fair employment cases in the Equal Rights Division and public accommodation cases.  LIRC would be phased out over the next three fiscal years.

Presently, LIRC has the authority to affirm, overturn and remand ALJ decision in these areas.  LIRC decisions are appealable to the State’s circuit courts.

Under Governor Walker’s proposal, Worker Compensation ALJ decisions will be reviewable by the State Department of Administration, while jobless claims and Equal Right Division decisions will be Agency administrators.  In his budget statement, Governor Walker stated that the proposed elimination of LIRC will eliminate “an unnecessary layer of government” and will make this second layer of review decisions occur much more quickly.

Of course, this is a proposed budget and, as such, is subject to negotiation with the legislature and subsequent amendment.  Further, stakeholders in the business, labor and legal community have yet to weigh-in on the Governor’s proposal.  As this issue advances, we will keep you up to date and informed.

Employers Must Now Use New Form I-9

NEW I-9 FORM AVAILABLE: As of January 22, 2017, employers must use the NEW version of the Form I-9 — whether for new employees or for the reverification of expiring authorizations for existing employees. Prior versions of the Form I-9 should no longer be used. Employers who do not use the new Form I-9 are considered to be in technical violation of the law and can expose themselves to penalties for each occasion they have failed to use the new form.

If you have questions or concerns about I-9 compliance or need assistance in conducting an I-9 compliance audit, please contact Sally Piefer at spiefer@lindner-marsack.com or at 414.226.4818, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Wisconsin Among 21 States to Challenge DOL’s New Overtime Rules

By Sally A. Piefer

With less than 90 days before the Department of Labor’s new white collar overtime rules take effect, Wisconsin is among a group of 21 states challenging the Final Rule.

On May 18, 2016, the Department of Labor (“DOL”) issued Final Rules changing the eligibility for overtime for employees falling in the executive, administrative or professional exemptions. The Final Rule more than doubles the minimum salary necessary for an employer to consider a particular job exempt from overtime, increasing the salary threshold from $23,600 to $47,476 annually ($913 per week). In addition, the Final Rule provides for automatic indexing of the minimum salary threshold every three years. This new “salary” test is expected to affect approximately 4.2 million U.S. employees who are currently considered exempt. The Final Rule was set to take effect on December 1, 2016.

The lawsuit, filed yesterday in federal court in Texas, charges that the DOL failed to analyze the type of work that an employee is doing in these exempt classifications and simply determined that the amount of salary received by the employee was the best indicator of whether the employee fit within one of the exemptions. The DOL, the lawsuit claims, failed to consider any changes to the duties tests because those changes would have been “more difficult.”  They charge that salary should not be used as a “proxy” for duties and that employees who satisfy the duties portion of the test should still be considered exempt. In addition, the States challenge the automatic indexing because the use of automatic indexing is “without specific Congressional authorization” and is therefore invalid. Instead, if the DOL wants to use automatic indexing, the Plaintiff States say this process should go through the normal administrative agency notice and comment rulemaking process.

In addition, the lawsuit states that the payment of overtime to employees who will no longer be eligible to be considered exempt would force not only state and local governments – but also private employers – to substantially increase labor costs. Unlike private businesses, the Plaintiff States allege that state and local governments have fewer discretionary funds available and therefore have less ability to reduce costs or increase revenue. The result of the Final Rule, they claim, will force state and local governments to reduce or eliminate essential government services and functions.

The Plaintiff States allege that the Final Rule violates the 10th Amendment. The Tenth Amendment, a section of the Bill of Rights, essentially says that any power that is not given to the federal government is given to the people or the states. The States say that compliance with the Final Rule will impair the States’ ability to run their governments because of the huge impact the Final Rule will have on their respective budgets. The States ask the Court to declare the Final Rule invalid. At this point, the Plaintiff States have not sought immediate injunctive relieve preventing the rule from taking effect on December 1, 2016, but perhaps that will come as the deadline draws closer.

Other states joining Wisconsin in the lawsuit are Alabama, Arizona, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, Nevada, New Mexico, Ohio, Oklahoma, South Carolina, Texas, and Utah.

Shortly after this lawsuit was filed, the U.S. Chamber of Commerce and fifty different business groups also filed suit in federal court in Texas challenging the Final Rule. The Chamber’s lawsuit also alleges that the Final Rule disqualifies millions of employees from the executive, administrative, and professional employee exemption and that “the new salary threshold is no longer a plausible proxy for the categories exempted from the overtime requirement.”  The lawsuit also argues that the automatic update to the salary threshold every three years without rulemaking or seeking input from stakeholders is not authorized under the law.

Lindner & Marsack, S.C. will continue to keep you posted on further developments. However, in the interim, you should proceed as though the Final Rule will take effect on December 1, 2016, so that you are not scrambling or putting your business in jeopardy of running afoul of the Final Rule.

For more information about the DOL’s new overtime exemption rules or your general employment law needs, please contact Attorney Sally Piefer at (414) 226-4818 or spiefer@lindner-marsack.com or any of the other attorneys you work with at Lindner & Marsack, S.C.

Awaiting The Implementation Of The Overtime Regulations…

By: Laurie A. Petersen and Samantha J. Wood

Employers continue to question when the Department of Labor (“DOL”) will finalize the changes to the Fair Labor Standard Act’s overtime regulations. Because the comment period ended on September 4, 2015, it was previously expected that the DOL would issue a final rule in early 2016.

However, last month at a Labor and Employment Law Conference, the Solicitor of Labor, M. Patricia Smith, stated that the DOL likely will not issue its final rule until late 2016. This is because the DOL must sift through approximately 270,000 comments that it received during the proposed rule’s commentary period (three times the amount of comments received in 2004 when the overtime rules were last updated).

Because the estimated timing of the final rule may coincide with the 2016 election, political commentators have suggested that the election may have an effect on the rulemaking process. For instance, if the proposed rule is implemented just prior to the election, it may be used as a campaign platform. Because of the uncertainties of an election, the current administration may impose a very short window of time for the rule to take effect (30-60 days) to ensure the rule is not reversed by the next administration. If the rule is not finalized or effective prior to a new administration, it is possible that the rule could be delayed or substantially changed.

Irrespective of the possible effects the election may have on the final rule, employers should plan and develop a strategy in the event the proposed rule will takes effect in Q3 or 4 of 2016. In their 2016 planning strategies and budget considerations, employers should analyze which employees will and will not be affected by the proposed changes, and should determine the appropriate steps to ready compliance should the rule take effect. Employers may choose to increase employee salaries to meet the new salary level threshold (estimated to be $970/week) or may reclassify employees from exempt to non-exempt. If the employer chooses to reclassify its employees from exempt to non-exempt, it will also need to consider the impact of overtime pay, the impact on employee morale, options to avoid overtime pay (such as hire additional staff), and implementation and communication of time-keeping policies.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

DOL’S PROPOSED CHANGES TO THE OVERTIME REGULATIONS SEEK TO RAISE THE SALARY THRESHOLD FOR EXEMPT EMPLOYEES TO $970 A WEEK

By:  Laurie A. Petersen and Samantha J. Wood

As directed by President Obama in March 2014, the Department of Labor (DOL) has issued a proposed rule regarding the Fair Labor Standard Act’s overtime regulations.

The rule focuses primarily on updating salary and compensation levels.  It proposes increasing the standard salary threshold level for exempt employees from $455 a week to approximately $970 a week.  This increase would set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers (nationwide) in 2016.  While the standard salary level was set at the 20th percentile of weekly earnings for full-time salaried workers in 2004, the DOL states that an increase is necessary to fully account for the simplified duties test that was created in the DOL’s 2004 changes.

The rule also proposes salary increases to the “highly compensated employee” exemption.  Currently, the regulations provide an exemption for employees if they earn at least $100,000 in total annual compensation and customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee.  The DOL is proposing increasing this figure to $122,148, which would set the salary standard at the 90th percentile of all full-time salaried workers.

Furthermore, the DOL has proposed a mechanism for annually updating the salary and compensation levels going forward.  It is considering and is seeking commentary on two possible methodologies: (1) annually updating the thresholds based on a fixed percentile of earnings for full-time salaried workers, or (2) annually updating the thresholds based on changes in the Consumer Price Index for all Urban Consumers (CPI-U).

Despite these drastic changes, the DOL has included a silver lining for employers.  The DOL has proposed allowing non-discretionary bonuses and incentive payments, such as bonuses tied to productivity and profitability, to count toward 10% of the standard weekly salary level of $970, for the executive, administrative, and professional exemptions.  In order to include the bonuses within the salary, the bonuses would have to be non-discretionary and employees would need to receive the bonuses more frequently than annually (i.e., monthly or quarterly, rather than a yearly “catch-up” payment).

While the DOL is not proposing any specific changes to the standard duties tests, it is seeking commentary to determine whether, in light of the salary level proposal, changes to the duties tests are necessary.

Upon publication of the proposed rule, the public is encouraged to provide commentary through the online portal at www.regulations.gov under Rule Identification Number 1235-AA11.  After considering the comments, the DOL will make revisions to its rule and will issue a Final Rule sometime thereafter.

If you have questions about this material, please contact Laurie A. Petersen or Samantha J. Wood by email at lpetersen@lindner-marsack.com or swood@lindner-marsack.com, or any other attorney you have been working with here at Lindner & Marsack, S.C.

Supreme Court Gives Employers Holiday Gift

December 11, 2014

By:    John E. Murray

On Tuesday, the Supreme Court issued its decision in Integrity Staffing Solutions, Inc. v. Busk.  The question in that case was whether employees are entitled to be paid for time spent in anti-theft security screenings at the end of their shift.

Integrity Staffing supplied employees to Amazon’s warehouses.  These employees retrieved products from warehouse shelves and packaged them for delivery to Amazon’s customers.  At the end of each shift, employees were required to submit to a security screening similar to the process used for airport security.  Employees were required to remove anything containing metal, and to pass through a metal detector.  The purpose of this screening was theft prevention.

Much like the airport screening procedure, this anti-theft process resulted in long lines.  On average, it took employees 25 minutes to get through this process before they could leave work for the day.  A class of employees claimed they should be paid for this time.  The Supreme Court disagreed.

The Supreme Court ruled that employees are not entitled to compensation for pre-shift or post-shift activities unless they are not necessary for the safe or effective performance of their jobs.  For example, meat cutting employees should be paid for time spent sharpening their knives because, without sharp knives, they would be ineffective.  Also, the time employees spend changing clothes and showering after working in a battery plant is compensable because these employees work around toxic chemicals.  The Court found the anti-theft screenings of the Amazon warehouse workers to be different.  Employees could safely and effectively do their jobs without these screenings.  Therefore, the time spent waiting for and submitting to these screenings is not compensable.

The Supreme Court’s decision will benefit every employer who wishes to use post-shift screening procedures to minimize theft or enhance security.  If you have questions about how your organization could implement or benefit from such a procedure, please call John Murray at (414) 226-4818, or any other Lindner & Marsack attorney at (414) 273-3910.