JKD Law Blawg

Legal Insights For HR & Business Professionals

Seven Employment Law Trends to Watch in 2017

2017 will most definitely be a wild one for employment law.  While the Trump Administration will be in active repeal mode, some state and local governments will counter with their own progressive legislation.  Think of it like two great oceans with very different currents coming in contact with each other… strong storms will definitely result. This recent article from SHRM provides a helpful summary of seven employment law trends to watch in what will certainly be a tumultuous year: Seven Employment Law Trends for 2017.

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Changes to White Collar Overtime Exemptions: What Employers Should Be Doing Now

Unless you’ve been living under a rock, you are probably aware that some significant changes to the white collar overtime exemptions under the Fair Labor Standards Act (FLSA) will become effective on December 1, 2016.  These changes are a result of a recent revision of the regulations (an updated “Final Rule”) defining the finer points of the FLSA regarding the white collar exemptions (executive, administrative and professional).  These changes have the potential to have significant financial and other impacts on employers. Here’s a brief summary of some of the changes:

  • The minimum weekly salary required to classify a position as exempt under the white collar exemptions increases from $455 a week ($23,660 a year) to $913 a week ($47,476 a year).
  • The increase in the weekly salary requirement reflects a significant policy change by the DOL. In the past, the salary requirement was set so that the lowest 20% of the full-time salaried workforce would be treated as non-exempt (i.e., eligible for overtime).  It is now the DOL’s stated intention to treat the lowest 40% of the full-time salaried workforce as non-exempt.  The DOL is intentionally trying to shrink the percentage of the workforce that can be treated as exempt.
  • For the first time ever, the minimum weekly salary requirement will be automatically updated every three years (starting on January 1, 2020). Most agree that the current weekly amount of $455 has become outdated and largely irrelevant as the years have past. However, with automatic updates, the weekly salary requirement will stay relevant and present an ongoing challenge for employers (e.g., it is anticipated that exempt employees will need to make the equivalent of $50,000 a year when the minimum weekly salary requirement is adjusted in 2020).
  • The Final Rule did not alter any of the applicable job duties tests (please remember that in order for a position to qualify for exempt status under the white collar exemptions, it must meet both the weekly salary requirement AND the applicable job duties test).

The above summary is not comprehensive or all inclusive—for more detailed information please see the US Dept. of Labor’s (DOL’s) website: https://www.dol.gov/whd/overtime/final2016/)

What Should Employers Be Doing Now?

If you haven’t already started, it is definitely time to review your current exempt classifications—in particular, any positions currently classified as exempt which are below the new weekly salary level of $913 must be reviewed (I’ve been encouraging my clients to, at a minimum, closely examine exempt positions making $60k a year or less).  For those positions currently being treated as exempt which are below the new salary level, the DOL has listed at least four options (in addition to the most basic option of simply changing the position to non-exempt status, setting an hourly rate, and paying applicable overtime):

  1. Raise the weekly salary to $913 or above to maintain the exemption.
  1. Continue to pay the employee a weekly salary, but pay overtime for any hours over 40 (see the link to the DOL article below for a list of options for this type of arrangement). This is referred to as “salaried non-exempt (SNE).”  Please be aware that you must still track all work hours for such employees.  FYI, I like SNE arrangements about as much as I liked the lima beans my mother tried to feed me as a kid—I am not a big fan of such arrangements because they often lead to compliance problems down the road—and you still have to track work hours anyway.
  1. Reclassify the employee as non-exempt and adjust/reduce work hours to reduce or avoid overtime exposure. There is nothing illegal about reducing work hours to avoid having to pay overtime and you can do this for both hourly and salaried pay arrangements.
  1. Reclassify the employee as non-exempt and back into their old salary amount by determining the equivalent hourly rate (or the salary level if SNE) and overtime premium to keep their annual total compensation at the same general level based upon average hours worked.

The following DOL article provides a more comprehensive summary of the above-listed options starting on page 5: https://www.dol.gov/whd/overtime/final2016/general-guidance.pdf

One other thought about things that employers should or could be doing now: most if not all employers have at least some exempt employees who are probably misclassified as a result of not meeting white collar exemption job duties tests (they may meet the new salary requirement but they don’t and may have never met the job duties tests).  It is always awkward and potentially risky to try and clean up such situations.  The changes effective December 1, 2016, may give employers the best opportunity they’ve had in years to clean up any ongoing misclassifications by lumping them together with any changes mandated by the revised Final Rules (obviously, any such reclassifications should be carefully reviewed by qualified legal counsel prior to any changes being made).

 Waxing Philosophical about the State of Wage & Hour Laws

Frankly, our wage and hour laws are a bit of a mess and I don’t see that changing any time soon (and it goes well beyond the issues discussed here).  Unfortunately, the DOL is enamored with an old-style compliance model developed in the 1930’s Great Depression era (the FLSA was passed in 1938)—think traditional factory and office jobs that have well-defined work hours.  However, more and more employees are seeking flexible work arrangements and our technology now often allows people to work from anywhere 24/7.  Unfortunately, the laws we have were not designed for such arrangements.

Leading up to the release of the new Final Rule, the DOL was touting the upcoming changes as a way of increasing employee wages.  However, the FLSA was designed to incentivize employers into creating more jobs by charging a premium on any work beyond 40 in a week—in other words, it discourages employers from working employees more than 40 hours a week.  That mechanism is still in place today and will continue to discourage employers from working employees longer hours (and with increased technological options available today, I don’t think the FLSA is as effective in creating new employment opportunities as it used to be).

As a result, many experts are skeptical that the new rule will actually increase wages for employees.  Even the DOL seems to be backing off this claim now, at least somewhat.  In their “Overview and Summary of Final Rule” (which reads in places a bit like a marketing piece), they state that the new rule will “put more money into the pockets of many middle class workers—or give them more free time (italics added).” In the long debate we’ve been having on this issue, I don’t remember more free time for employees being a major objective.  Many analysts have expressed concern that the changes will require more low and middle-income workers to obtain second and third jobs.  That’s not progress.

I do think we have concerns about income equality in this country.  I would like to see employee wages move higher (especially for low to mid wage earners).  I am just not confident that the DOL’s new Final Rule will provide the desired result.

This article should not be construed as legal advice.  Copyright © 2016 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved.  Jonathan K. Driggs is an employment law attorney with over 23 years of experience, including 3 years with the Utah Labor Commission.

Training supervisors, managers and executives on key employment topics is becoming more and more important.  I have been providing effective and engaging employment law seminars for corporations around the country for over twenty years.  For additional information click here.

You are also welcome to connect with me on LinkedIn.

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Study Shows DOL’s New Overtime Rule may not be Helpful to Employees

Let’s be honest, it’s a tough thing to try and regulate your way to a perfect workplace. An article from the Society for Human Resource Management discusses a recent study done by the Mercatus Center at George Mason University which found that employers and employees are likely to respond in “unintended ways” to the U.S. Department of Labor’s efforts to dramatically increase the minimum weekly salary for exempt status under the FLSA.  The end result is that the new overtime regulations may hurt employees more than help:

“In response to the regulation, employers may reduce base salaries, cut overall compensation and replace workers with machines or higher-skilled workers, the April study found.

Rather than increasing the number of people employed by encouraging companies to cut individuals’ hours to avoid paying overtime, the new rule may instead result in more employees taking on second jobs, the study predicted.”

The well-intended DOL has forgotten that the overtime provision of the FLSA (passed in 1938 during the Great Depression) was intended to create a disincentive for employers to work employees beyond 40 hours a week by imposing a half-time premium on additional hours.  This disincentive mechanism still exists in the FLSA today… and with the DOL’s new regulations it will only become even more active once fewer employees qualify as exempt.

Training supervisors, managers and executives on key employment topics is becoming more and more important.  I have been providing effective and engaging employment law seminars for corporations around the country for over twenty years.  For additional information click here.

You are also welcome to connect with me on LinkedIn.

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Utah’s 2016 Legislative Session in Review: Some New Laws for Employers

As most are probably aware, federal law establishes most of the basic requirements of employment law in the United States. States (and even local governments) can then choose to embellish the law in favor of employees beyond the federal standards.  In regards to the Utah Legislature, for many years I could confidently say, “compared to many other states, Utah is pretty hands off when it comes to creating employment-related legislation.”

There are some early signs, however, that this may be changing—at least to a degree. No, I am not saying we’re going to catch up with the California Assembly any time soon (please, no!), but it’s fair to say that the Utah Legislature is warming up to the idea.  Now, I am not necessarily saying change is always a bad thing (despite being an employer-side attorney, I am certainly not opposed to any and every bill that might benefit employees). I do think it is important, however, for Utah employers to realize that their normally conservative legislature is getting more comfortable with the idea of creating pro-employee legislation.  If they are not careful, their laid back, non-involved attitude of “there is no way that crazy bill could ever pass,” well,… may result in some unpleasant surprises sometime down the road.  With this in mind, let’s take a quick look at what happened in the 2016 session.

Restrictions on Non-Compete Agreements

The biggest employment-law related story of the 2016 session has to be the passage of HB 251 placing restrictions on non-compete agreements. After working through many versions (including the initial version which included an outright ban on non-competes), the bill was scaled down considerably but still has some impact.  The bill puts in place the following (click here to read full text: http://le.utah.gov/~2016/bills/hbillenr/HB0251.pdf):

  • Restrictive covenants that last for more than one year from end of employment are prohibited (effective for agreements entered into on or after May 10, 2016).
  • Employers who seek to enforce a non-compete through arbitration or civil action and lose, are liable for the employee’s arbitration or court costs, as well as actual damages.
  • Exceptions apply for situations involving the sale of a business or severance agreements. This bill also does not apply to non-solicitation and non-disclosure agreements.

While many may be surprised that a conservative, pro-business legislature like Utah’s could pass a bill placing any type of limit on non-compete agreements, the love/hate nature of such agreements likely aided passage (while many businesses love to have non-competes on their employees, many executives who run these businesses hate having them applied to themselves personally). Could the bill have resonated with many of the legislators as a result of their own personal experiences?

Frankly, the passage of this bill may also be the consequence of some employers over-reaching with their non-compete agreements throughout the years (both in length/scope, and the types of employees applied to), resulting in too many stories circulating in the community about unconscionable restrictions. While in some ways the passage of this ultimately watered down bill simply codifies existing case law, the requirement that a losing employer pay the employee’s arbitration/court costs as well as actual damages, clearly raises the stakes in this age-old “game of chicken.”  Perhaps most importantly, after the bill passed, Mike Schultz (R-Hooper), the bill’s chief sponsor, told the Deseret News that, “this isn’t over.”  It’s probably fair to say proponents of the bill hope to wring some of the water out of it in future legislative sessions.  Stay tuned!


SB 59 was passed which amends the Utah Antidiscrimination Act to prohibit discrimination based upon “pregnancy, childbirth, breastfeeding, or related conditions” (click here to read the full text—starting about line 353: http://le.utah.gov/~2016/bills/static/SB0059.html).   Included in this is a requirement for employers to provide reasonable accommodations for these conditions when requested by the employee unless an undue hardship is created.

Obviously, legal protections for pregnant employees aren’t new. Federal law has prohibited discrimination on the basis of pregnancy since 1978.  But the deliberate listing of “childbirth, breastfeeding, or related conditions,” is clearly meant to expand upon existing federal protections.  It will take some time for us to learn how these new protections will be interpreted, but the clear intent of the amendment is to increase protections for women regarding a wider-range of pregnancy and maternity-related issues.  Many employers have already discovered that providing a wide range of pregnancy/maternity-related accommodations to their female employees is a great way to develop good will and loyalty.  Employers slow on the take may now learn the hard way if they fail to be sensitive to the needs of their female employees.

This new bill also requires publicizing these new accommodation rights in either employee handbooks or workplace posters (hmmm… something tells me your going to get bombarded with junk mail from all of those workplace poster companies telling you that your current posters are obsolete and that you must buy all new posters… lucky you!) It is worth noting that this is the second year in a row that the Legislature has added additional protected classes to the Utah Antidiscrimination Act.

Joint employers

Federal HB 116, which passed, is a reaction to a recent ruling from a federal agency broadly expanding the definition of “joint employers” (the purpose is to try and make larger, often “behind the scenes” entities share liability for the employees of smaller associated organizations—e.g., franchisors viewed as joint employers of their franchisees’ employees, etc.) The bill prohibits the State of Utah from using the new federal definition of joint employers (with some limitations). This bill shows that the Legislature can still be relied upon to pass pro-employer legislation (which I don’t think was ever in question).  The text of the bill can be viewed here: http://le.utah.gov/~2016/bills/static/HB0116.html

Employee computer abuse

HB 241 (read it here: http://le.utah.gov/~2016/bills/static/HB0241.html) is another pro-employer bill that allows businesses to sue individuals (including current and former employees) who damage or access information without authorization on a “protected computer.”

So, it was a relatively impactful session for employers this year. As representatives of the employer community, I encourage you to share your thoughts with your elected representatives regarding employment-related matters which are important to you.

This article should not be construed as legal advice.  Copyright © 2016 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved. 

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EEOC’s New Requirement for Employee Pay Data on EEO-1 Forms Shouldn’t Come as Big Surprise

As you are probably aware, the EEOC recently announced a proposed revision to the annual EEO-1 form that employers with 100 or more employees are required to submit providing workforce demographic information on sex, race, etc.  This proposed revision would require employers to also submit aggregate pay data as well as information about hours worked for the respective EEO categories.  The EEOC justified the additional reporting requirements for the following reasons:

“The new pay data would provide EEOC and the Office of Federal Contract Compliance Programs (OFCCP) of the Department of Labor with insight into pay disparities across industries and occupations and strengthen federal efforts to combat discrimination. This pay data would allow EEOC to compile and publish aggregated data that will help employers in conducting their own analysis of their pay practices to facilitate voluntary compliance. The agencies would use this pay data to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”

These proposed changes represent a significant increase in the reporting requirements imposed upon non-federal contractor employers, as well as require the disclosure of sensitive information most employers work hard to keep out of the hands of competitors (but don’t worry, the government never gets hacked!)  Nevertheless, the proposed changes should not come as a big surprise considering the recent appointment of Jenny Yang as the Chair of the EEOC on September 1, 2014.

Prior to joining the EEOC, Yang was a high-profile plaintiff attorney that brought many large wage equity class action lawsuits, including the well-known U.S. Supreme Court case of Walmart v. Dukes, in which she and her firm attempted (unsuccessfully) to create what would have been the largest class of plaintiffs (1.5 million) ever seen in employment law-related litigation.  Now, as Chair of the EEOC, Yang is in a very advantageous position to use the EEOC’s broad enforcement powers (much broader than she ever had as a plaintiff attorney) to pursue “systematic discrimination” cases (aka “class actions”) without many of the limitations imposed upon her by the Supreme Court.  With the ability of the EEOC to take a look into nearly every employer’s compensation data, we should expect to see an increase of class action-style litigation brought by the agency.

As an employment law attorney with over 23 years of experience, I am seeing subtle and not-so-subtle indications that the employment law landscape in our country is becoming more challenging for employers.  In my experience, the best solution to minimizing risk is found in prevention. For over 20 years I have been presenting my Employment Law for Managers Seminar onsite for corporations around the country.  This engaging and interactive seminar teaches managers, supervisors and executives how to comply with the law while effectively managing personnel.  Additional information about my seminars can be found here.

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The DOL Proposes BIG Changes to Overtime Exemption Minimum Salary Requirements

This is BIG news—perhaps the biggest employment law-related news since the passage of the Affordable Care Act. It will have a major impact on which employees may be treated as exempt from overtime pay—and could have a major impact on company budgets and staffing strategies.  Employers need to be considering the potential impact of the proposed changes now.

A quick recap: in March of 2014, President Obama issued an Executive Order directing the US Department of Labor (DOL) to “modernize and streamline” its rules that define finer points of the white-collar overtime exemptions under the Fair Labor Standards Act (FLSA). In this context, “modernize and streamline” is just a more politically palatable way for the President to say, “I want to make a lot more workers eligible for overtime.”

The white-collar exemptions are the FLSA overtime exemptions most commonly used by employers. They consist of the following categories: executive, administrative, professional (including computer professionals) and outside sales.  While the FLSA is a law passed by Congress, the law gives the DOL the power to pass regulations (i.e., “rules”) that determine many of the underlying details of the FLSA.  As a result, the DOL has significant power to determine what the FLSA ultimately requires of employers.

Well, after many delays and intense debates behind closed doors at the White House and the DOL, a “Notice of Proposed Rulemaking” was issued on July 6, 2015. “Proposed” means that the rules are not final (nor in effect), and that the DOL is seeking input from the public about what adjustments, if any, should be made to the final version of the rules (the DOL will accept input through September 4, 2015).  In a nutshell, here are the key points from the proposed rule:

  • Significant increase to weekly minimum salary: The minimum weekly salary required for exempt status would be increased from $455 a week to approximately $970 a week (note: since the new minimum amount will be determined by formula, rather than established as a fixed amount, it is hard to say exactly what the minimum amount will at the time the rule becomes effective, but if the proposed rule is adopted as written, it should be quite close to this amount).  This is an increase of more than 100% and would set the annual salary amount to around $50,440 from the previous $23,660.  In other words, employees making less than about $50,440 (again, this is an approximate number) could NOT be treated as exempt under the white collar exemptions.


  • Minimum weekly salary to be set by formula with built in annual updates: As mentioned above, instead of a fixed amount (like the previous $455 a week), the minimum weekly salary requirement will be set by formula. While different options have been proposed for the formula, they are designed to make the lowest 40% of the salaried workforce non-exempt. This is a noteworthy change and is indicative of the Obama administration’s intent to make more workers eligible for overtime (the DOL’s previous standard was to make the lowest 20% of the salaried workforce non-exempt).  So, if you run the numbers and conclude that the percentage of your workforce who can be treated as exempt will be getting smaller, you’re right.  Lastly, instead of a static weekly minimum, the DOL is proposing annual updates to the weekly minimum salary requirement to ensure that the minimum continues to reflect the current 40% threshold.  Creating such a “moving target” could require employers to annually review exemption status to ensure compliance.


  • Increase to minimum annual salary for highly compensated employee exemption:  The proposed rule would change the minimum annual salary for this hybrid exemption from $100,000 a year to $122,148 a year.  In a manner similar to the regular minimum weekly salary requirement above, it is designed so that only those salary workers above the 90th percentile could be eligible for this exemption (and yes, the proposal includes annual adjustments).


  • No changes to job duties tests: Surprisingly, the DOL did NOT propose any changes to the job duties tests for any of the particular exemption classifications (executive, administrative, professional and outside sales). Rather, they are seeking input about possible changes to be made sometime in the future (including when the Final Rule is issued) by posing various questions to business leaders.  I wouldn’t put it past the DOL to be sneaky on this issue and try to slip something in on the Final Rule.

Other thoughts regarding the proposed rules:

  •  Could a portion of variable pay be included in the minimum salary requirement?  The DOL is asking for input about whether employers should be able to include a small portion of non-discretionary bonuses (10%) towards the minimum weekly salary requirement.


  • Read up and give your input!  The DOL’s website for the proposed rule can be found at: http://www.dol.gov/whd/overtime/NPRM2015/ (the FAQ has a lot of helpful explanatory information)… and also, don’t be afraid to share your input with the DOL! (See above deadline above.)


  • What’s next? While it is hard to give an exact timeline, the DOL will review comments from the public and then issue a final rule with an effective date most likely sometime in 2016. The final rule could include minimum salary requirements that are less than, the same as, or greater than what is included in the proposed rule—so prepare yourself for anything (I doubt they will be lower than what is found in the proposed rule, and if they are, they won’t be lowered by much).  Ultimately, the new final rule could be challenged in court, resulting in a possible delay of the effective date… anything is possible in this crazy and highly politicized process.

So, what does this all mean? With an annual salary requirement of about $50,000, a lot of lower level managers will lose exempt status (one of the main purposes of the proposed rules is to make low level managers in the retail and restaurant industries non-exempt). As a result, employers should start reviewing how many of their employees currently treated as exempt fall below the proposed minimum threshold and start thinking about what changes may need to be made when the effective date hits. Depending upon the business, this could require some meaningful (and expensive) adjustments.

The creation of an annual salary update is also going to keep the FLSA a lot more current than it’s been in the past—requiring employers to review FLSA compliance annually. Some employer advocates believe that this is just the beginning of the DOL looking for ways to further narrow the number of workers who can be treated as exempt (the current DOL does not like exempt status—and it is their intention to limit the number of workers who can qualify).

The problem is that the DOL can pass all the rules they want to, but not necessarily get the desired effect (i.e., increase worker take home pay—which is ultimately what this is all about). In order to stay in the black, however, many employers will make corresponding adjustments (e.g., eliminate overtime pay, employ fewer people, hire more part-time workers, etc.) and we’ll just continue on in this cat and mouse game we’ve been playing for years.  Make no doubt about it, however, the game is definitely heating up.

This article should not be construed as legal advice.  Copyright © 2015 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved. 

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Something Significant This Way Comes: Potentially Big Changes to Overtime Exemptions Loom

Question: What 2015 regulatory development could have a major financial impact on employers?

Answer: The US Department of Labor’s release of a proposed rule revising the white-collar overtime exemptions under the Fair Labor Standards Act.

Heads up people, this is big—at least potentially.  Here’s the scoop: in March of 2014, President Obama issued an Executive Order directing the US Department of Labor (DOL) to “modernize and streamline” the regulations that layout the finer points of the white-collar overtime exemptions under the Fair Labor Standards Act (FLSA).  In this context, “modernize and streamline” is just a more politically digestible way for the President to say, “hey DOL, I want to make a whole lot more people eligible for overtime!”

The white-collar exemptions are the FLSA overtime exemptions most commonly used by employers.  They consist of the following categories: executive, administrative, professional (including computer professionals) and outside sales.  While the FLSA is a law passed by Congress, the law gives the DOL the power to pass regulations (i.e., “rules”) that interpret many of the finer points of the FLSA.  As a result, the DOL has significant power over what the FLSA ultimately requires.

The DOL is expected to release its Proposed Rule any day now (most likely sometime in Q1 of 2015).  There will then be a period allowing for public comment, followed by the release of the new Final Rule.  In order to minimize political complexities, the DOL is expected to proceed quickly through the rule-making process and get them in place as far before the November 2016 presidential elections as possible.

What changes might we expect to be made to the white collar exemptions?  While we will not know for sure until the Proposed Rule is issued, many experts predict things like:

  •  The minimum weekly salary amount for the white-collar exemptions may be increased.  The minimum currently sits at $455 a week ($23,660 a year).  A recent study funded by the DOL recommended that the weekly minimum be set at $970 per week ($50,440 a year).  While it is hard to say exactly what the new minimum will be, based upon the DOL’s posture on other issues as of late, I expect them to be aggressive.  As a result, many employees who currently qualify as exempt would have to be treated as non-exempt (or have their salaries raised).
  • The executive exemption may be narrowed.  Based upon the President’s comments, it is clear that he wants to drastically reduce the use of the executive exemption for lower level managers.  In particular, lower level management positions in retail and food establishments will be a target of the rule revision.  Options include: eliminating the ability of exempt employees to have concurrent non-exempt duties and still be deemed exempt (e.g., their responsibilities must focus on doing exempt-level work as opposed to being allowed to do some non-exempt work); imposing a quantitative test (e.g., at least 50% of all work must be exempt-level work); and, narrowing the definition of “department or subdivision thereof” (to be exempt, employees must be responsible for a recognized department of the business—the DOL may tighten up how this is defined).
  •  The computer professional exemption may be narrowed.  This may be a bit more challenging for the DOL since this exemption is spelled out more precisely in the language of the FLSA (and thus, the DOL must respect the language of the statute), but it is clear that the DOL views the expanded use of this exemption by employers to be problematic and they would like to reign it in.

I am extremely curious to see what the DOL proposes with their new rule.  There is no question that the DOL feels emboldened as of late.  With the economy doing well—while wage levels remain stagnant and the wage gap between that haves and have nots continues to widen—it may just be the perfect opportunity for the DOL to roll out some major changes (and get away with it politically).

To be fair, there may be some legitimate policy arguments for narrowing the application of certain exemptions.  However, our workplaces have changed dramatically since the FLSA was passed in 1938 and there are now new, professional-level jobs that deserve (and need) to be treated as exempt, but cannot be under the current law and regulations.  It’s funny how the “modernize and streamline” argument seems to work only one way. 

This article should not be construed as legal advice.  Copyright ©2015 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved. 

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Pres. Obama Issues Executive Order to Review FLSA Overtime Regs

When I was a kid, David Bowie sang about ch-ch-changes.   Well, there is an important change looming off in the distance, one with a potentially meaningful financial impact for employers.  With the US Congress tied up in political knots, you’d think there wouldn’t be much activity to report on the federal level when it comes to employment law.  However, there is a lot of activity going on but it is not coming from the legislative branch of the government.  Rather, it’s coming from the executive branch (i.e., President Obama and the government enforcement agencies he oversees).  

There is a reason for this: with Congress in gridlock, the executive branch is attempting to move forward it’s stymied legislative agenda by using the authority it has over government agencies.  There is nothing unusual about this—both parties do it to some degree when they are in power—but it is probably fair to say that President Obama is more aggressive about using his authority in this way than most of his predecessors.

As an attorney who represents and advises employers, my concern is that many business leaders are less aware of what is happening on the regulatory (executive) level than they are on the legislative level.  As a result, important changes can be made to existing employment laws without as much awareness from the employer community.

Case in point: on March 13, 2014, President Obama issued an important Executive Order (EO) directing the US Department of Labor (DOL) to review its regulations regarding which employees may be treated as exempt from overtime pay under the Fair Labor Standards Act (FLSA).  The FLSA is our main federal wage and hour law and it has been around for a very long time (since 1938).   It sets standards for minimum wage and overtime pay (including exemptions from overtime pay).  The DOL has the authority to enforce the FLSA and to issue regulations interpreting the finer points of the law—including setting many of the specific requirements for the oft-used “white collar” exemptions (i.e., executive, administrative and professional exemptions).  These regulations have a major impact on how the law is interpreted.

President Obama’s specific charge to the DOL is to revise the regulations so that more employees will be eligible to receive overtime pay.  Once finalized, it will cost more to employ certain types of employees.  While it is still unclear exactly what changes will be made, at least two things are likely to happen:

  1. Job duty requirements for exemption status will become more strict.  Examples could include additional requirements on what type of work does and does not qualify as supervisorial, thus narrowing the executive exemption.  It is also possible that requirements may be imposed about the amount of exempt level work an employee must perform each week to qualify for the exemption (e.g., at least 20 hours or 50% of work time).  It is clear that one of the intentions behind President Obama’s EO is to establish once and for all that many of the low level supervisors found in the restaurant (fast food in particular) and retail industries must be treated as non-exempt.  In other words, they’re targeting the more “borderline” professional-level employees.
  2. The minimum salary requirement for exempt status will be raised.  In order to be exempt under the white collar exemptions, employees must currently receive a weekly salary of at least $455.  A very easy way to limit the use of white collar exemptions is to raise the weekly salary requirement.  Probably the only real question is how high the DOL will try to raise it.  There are all sorts of rumors circulating, but we simply won’t know until the new regulations are finalized.  While such changes are well-intentioned, the increased cost of labor will result in fewer employment opportunities being available (the more expensive you make employment, the fewer employment opportunities there will be). 

So, now that the EO has been issued, where do we go from here?  The DOL will issue proposed regulations and then give the public time to comment (and yes, your comments are important!)  The DOL will then review the comments, make the changes they want to make, and then seek approval of the final regulations through the Office of Management and Budget.  While lots of things could happen in the meantime, I don’t suspect the process will be derailed.  The estimates are that it will take 12 to 18 months to go through the rule-making process.

To be clear, I am not automatically opposed to making changes to the FLSA.  However, as we make more lower-level employees non-exempt, I wish we could update the FLSA to bring it into the 21st Century to more accurately reflect the realities of our modern workplaces (e.g., there are some genuinely professional-level workers who cannot be treated as exempt because the law didn’t comprehend their existence when it was written 75 years ago).  Nevertheless, employers should stay tuned for some important ch-ch-changes coming down the road that could have a meaningful fiscal impact.

 This article should not be construed as legal advice.  Copyright ©2014 by Jonathan K. Driggs, Attorney at Law, P.C.  All rights reserved. 

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NLRB Abandons Efforts to Require Mandatory Workplace Rights Poster

According to a press release issued by the National Labor Relations Board (NLRB) on January 6, 2014, the agency will not pursue Supreme Court review of two U.S. Court of Appeals decisions invalidating its controversial Notice Posting Rule.  This Rule would have required most private sector employers to post notices in workplaces explaining employee rights under the National Labor Relations Act (NLRA).  While the NLRA is known as the union-rights law, it also addresses many issues applicable to non-union workforces.

The NLRB was highly criticized by the employer community for overstepping its authority under the NLRA when it issued the Notice Posting Rule.  The NLRB was also criticized for the content of the notice, which many thought was too pro-union in tone, while providing insufficient attention to the right of employees to not unionize.

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EEOC Declares Transgender Workers Protected Under Title VII

The EEOC recently issued a decision declaring that the term “sex” under Title VII of the Civil Rights Act includes biological sex and gender identity/transgender status (Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, April 20, 2012). This is the first time the EEOC has formally taken such a position. The result is that employees may now have the ability under federal law to file complaints of discrimination with the EEOC based
upon gender identity and expression. Examples of such complaints would include:

  • Anemployee, who was born male, claiming discrimination for expressing herself as female;
  • A female employee claiming discrimination for not conforming to gender-based stereotypes (i.e., acting in a manner deemed to be too masculine).

Approximately half of the states in the U.S. do not have laws that prohibit sexual orientation or gender identity discrimination (including the state of Utah). As a result, this is an important development for employers in states without such legislation. This decision results in a major expansion of a protected class and serves as one more reason why employers should consider adding sexual orientation and gender identity to  their EEO policies if they haven’t done so already.

This article should not be construed as legal advice.

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