Department of Labor Clarifies Stance on Still-Pending Overtime Rule

By James Pieper

In 2016, a dramatic overhaul of the rules for eligibility and payment of overtime under the Fair Labor Standards Act (FLSA) was on the verge of taking effect before being halted by an injunction issued by a federal judge.

With a new administration taking over the Department of Labor, the status of the overtime revisions has been uncertain.  Nor was it known whether the Department would defend its authority to revise the rules in the subject litigation.

In a brief filed on June 30, the Department’s new leadership finally provided some clarity.  The Department defended its legal authority to adopt a new rule (as had been challenged by the plaintiffs), but did not defend the actual changes proposed by the prior administration.

Accordingly, although the rule remains in legal and administrative limbo, it is clear that it will not take effect in the form proposed in 2016.  Should the courts conclude that the Department does have authority to set the earning threshold (under which overtime must be paid to non-exempt employees) by administrative rule, then the new Department leadership will adopt a threshold lower than the amount of $47,476 that was set prior to the injunction.

© 2017 Vandenack Weaver LLC
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Department of Labor Withdraws 2016 Guidance on “Joint Employment”

By James Pieper

On June 7, 2017, new Secretary of Labor Alexander Acosta withdrew guidance provided under the prior administration by the Department of Labor’s Wage and Hour Division that had staked out a broader interpretation of when “joint employment” exists pursuant to the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

When two or more employers “jointly” employ an employee, the employee’s hours worked for all of the joint employers during the workweek are aggregated and considered as one employment, including for purposes of calculating whether overtime pay is due. Additionally, when “joint employment” is found to exist, all of the joint employers are jointly and severally liable for compliance with the FLSA and MSPA.

Under a traditional “common law” approach to employment, such “joint employment” would only exist if both employers are able to exercise “control” over the employee’s work.  The 2016 guidance sought to recognize “broader economic realities of the working relationship” and thus “cover some parties who might not qualify as [employees] under a strict application of traditional agency law principles.”

Accordingly, the guidance indicated that a number of scenarios that have not been historically considered “joint employment” – including, particularly, franchisee, staffing-agency and subcontractor relationships – might give rise to “joint employment” under the FLSA and MSPA, thus broadening the potential legal exposure for entities that had in the past not been considered joint employers.  The intent of the Department of Labor to implement such a broader interpretation is now withdrawn.

Although the action reduces some of the potential legal risk, particularly for franchisors and franchisees – who had actively sought the withdrawal of the guidance – the potential for “joint employment” remains a complex area requiring careful attention to potential penalties.

© 2017 Vandenack Weaver LLC
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New Minimum Wage Law in Iowa

Iowa enacted a new law, Iowa House File 295, that prohibits counties and cities from regulating certain employment matters that are regulated by the state. On a practical level, for employers, this will reduce some compliance burdens, including eliminating different minimum wage rates across the state. The law, which took effect on March 30, 2017, preempts city and county rules pertaining to minimum wage, employment leave, hiring practices, employee benefits, and similar matters that pertain to terms of employment. For example, Johnson County, Iowa, had a minimum wage of $10.10 an hour, but that has preempted with the new state law, which means the minimum wage in Johnson County is now $7.25 an hour. Now, regardless of the action taken by county or city government, including actions taken prior to the new Iowa law, the state law will preempt and govern practices by employers.

© 2017 Vandenack Weaver LLC
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Employers in Nebraska and Iowa Should be Aware of Changes in Pay Discrimination Lawsuits

A recent court case, stemming from an Iowa employer, may have a significant impact on how employers throughout Nebraska and Iowa view pay differential between employees. On April 3, 2017, the Eighth Circuit Court of Appeals ruled in Dindinger v. Allsteel, Inc., a case pertaining to gender based pay discrimination. In the ruling, the Court suggested that market forces and economic conditions, often used as an affirmative defense in pay discrimination claims, may not be sufficient as a defense without a clear connection. The result is that an employer may not be able to assert that economic conditions are the reason for pay differential between men and women without being able to show how the economic conditions caused the pay differential for the specific employees in question.

 

This case stems from an Iowa furniture manufacturer, where three female employees claimed gender based pay discrimination. As an affirmative defense, the business argued that market forces and economic conditions were the reason for the pay differential, not gender discrimination. This affirmative defense is often raised by employers and, generally, does not require a specific correlation between the economic condition and the employee. However, the Court in this case noted that to successfully argue the “factor other than sex” defense, the business must show how economic conditions directly resulted in the pay differential. For employers in the Court’s jurisdiction, including those in Nebraska and Iowa, an increased burden may exist when asserting the market forces affirmative defense and could necessitate taking action before any potential pay discrimination claims arise.

 

Employers should recognize the added challenge of defending pay discrimination lawsuits and, potentially, take preemptive action by auditing current pay and employment practices. A copy of the opinion can be found at the following link:  http://media.ca8.uscourts.gov/opndir/17/04/161305P.pdf

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The Saga Continues: The DOL Appeals the Court’s Ruling Halting The New Overtime Rules

In the latest chapter in the ongoing saga of the newly revised (and currently halted) overtime rules, on December 1, the Department of Labor appealed the lower court’s ruling to the United States Court of Appeals for the Fifth Circuit.

As we previously reported, last week Judge Amos Mazzant issued a temporary injunction stopping the implementation of the revised overtime rules scheduled to go into effect on December 1.  The appeal by the Department of Labor challenges that ruling.

Judge Mazant’s temporary injunction remains in place for now until the Court of Appeals rules on the appeal.  The Court of Appeals’ ruling will likely not come until 2017.  Of course, no matter what the Court of Appeals decides, one of the parties may appeal that ruling to the Supreme Court further prolonging a final resolution of the issue.

However, President-elect Trump has signaled that he is not in favor of the new rule; therefore, the new administration may have little interest in continuing to pursue the matter after he takes office.

The bottom line is, for now, the temporary injunction halting the implementation of the new overtime regulations continues unless and until the higher court rules otherwise.

We will continue to monitor the situation and keep you updated.

© 2016 Vandenack Weaver LLC
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NEW OVERTIME RULES TEMPORARILY SUSPENDED

For employers preparing to comply with the new salary exemption regulations, designated to start on December 1, 2016, the new rules have been temporarily suspended. The new regulation would have increased the minimum salary required to qualify for the executive, professional, and administrative exemptions, increasing the minimum salary from $23,660 to $47,892 annually. These exemptions are often referred to as the “white collar” exemption and if an employer failed to meet the minimum salary requirement, the employer would have to pay the employee overtime for time worked past 40 hours in a week.

The temporary injunction means the rule is suspended and will not affect employers until further hearings are held. However, due to the current political climate, it is unclear whether further hearings will occur. Thus, employers do not have to comply with the new exemption rules, but should remain prepared to implement procedures to pay overtime to employees that would not meet the new white collar exemption rules.

For employers that have already implemented policies and procedures to comply with the pending white collar exemption regulations, or those that have communicated pending changes with employees, please contact Vandenack Weaver, LLC, to discuss your options.

© 2016 Vandenack Weaver LLC
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Nebraska Voters Approve Minimum Wage Increase

By Eric W. Tiritilli.

The 2014 midterm elections saw a number of significant races and ballot measures across the country.  One of particular importance to Nebraska employers is Initiative Measure 425 which sought to raise the minimum wage in Nebraska.  This measure passed by a large margin.

As a result, beginning on January 1, 2015, the minimum wage in Nebraska will rise from $7.25 per hour to $8.00 per hour.  Then, beginning on January 1, 2016, the minimum wage will raise to $9.00 per hour.  Nebraska was one of four states in the 2014 elections that passed measures to raise their state’s minimum wage.

© 2014 Parsonage Vandenack Williams LLC

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