The timing for implementation is becoming clearer regarding the FLSA but the fog hasn’t completely passed as lawsuits are being prepared to impede its implementation. Also, there are more issues on the horizon. Just to keep it on your radar the left coast - California - became the first state to pass the $15 minimum wage. Not to be outdone, the right coast followed on March 31, 2016. New York will gradually raise its minimum wage to $15 an hour and become the first state to require that employees get 12 weeks of paid family and medical leave, under a bill expected to be signed by the Governor. As the world turns . . ..
Ready or Not the new Overtime Rules are on the Horizon
On March 30, 2016, the Department of Labor (DOL) sent to the Office of Management and Budget (OMB) its final changes for determining which workers are eligible for overtime pay. The revisions to the Fair Labor Standards Act regulations are expected to affect millions of employees currently considered exempt from overtime, requiring them to be reclassified as nonexempt. With an estimated 4-6 million more workers becoming eligible for OT (and many of whom work OT), the question becomes how employers mitigate the costs of a significant reclassification of the work force. After a review period—several months or as short as a few weeks—the final rule will be published in the Federal Register and take effect within 60 days of publication.
The proposed rule was published on July 6, 2015, and received more than 250,000 comments. Differences between the proposed and final rule won't be made public until the final rule is issued.
We will review the final rule to determine if the greatest fears still exist, including:
- Year to year uncertainty of whether certain employees will remain exempt
- Year to year decisions about how to react to employees who may be reclassified if salaries are raised
- Inability of companies to engage in long-term budgetary planning
- Introduction of cumbersome record-keeping requirements
- Year to year changes in workplace functions and job duties with frequent reclassifications occur and erosion of workplace flexibility for many employees
- Significantly complication (or possibly eliminate for many employees) to nondiscretionary bonus and incentive payment structures
Also, we will review the final rule to determine strategies to address the changes. Strategies may include, pay structure, raising salaries and reclassifications. Moreover, it is being reported several groups are preparing lawsuits to stop any implementation.
Pendulum Swings in Class Actions
Most of the recent decisions have dampened the Plaintiffs' pursuit of class action recovery. The question now is “has the court signaled a change in position?” The U.S. Supreme Court affirmed an Iowa Federal Court’s $5.8 million judgment in a Fair Labor Standards Act class action claiming the company unlawfully denied overtime pay for time spent putting on and taking off protective equipment (Tyson Foods, Inc. v. Bouaphakeo, U.S., No. 14-1146, 3/22/16). The Court held that estimates can prove overtime claims. Addressing the method used to calculate the company's liability, the court ruled that statistical or representative evidence could be used to estimate the average amount of time employees spent donning and doffing gear, since the company hadn't recorded how long employees actually took to change. The Court extended an olive branch to employers by stating representative testimony that's “statistically inadequate or based on unreasonable assumptions” couldn't lead to a “fair or accurate estimate” of the uncompensated hours an employee has worked.
Will the EEOC be liable for $4.7 million in attorneys’ fees?
The U.S. Supreme Court recently heard oral arguments regarding a 2009 case filed by the EEOC against trucking company, CRST in Iowa. The Supreme Court is considering whether a $4.7 million award of attorneys' fees and costs assessed against the EEOC are recoverable by an employer as a “prevailing party.”
As a background, the EEOC sued CRST for an alleged pattern or practice of tolerating sexual harassment of female trainees (involving 67 claimants). An Iowa federal district court found that the EEOC failed to show a pattern or practice of discrimination. It dismissed most of the EEOC’s individual claims finding that the EEOC did not fulfill its statutory pre-suit obligations to make separate investigations, reasonable cause determinations or conciliation attempts. Based upon Title VII statutory language allowing the award of fees and costs to the “prevailing party,” the trial court awarded CRST attorneys' fees and costs in the amount of $4.7 million. The 8th U. S. Circuit Court of Appeals reversed the award of fees, holding that CRST was not a statutory “prevailing party” under the law because CRST did not win “on the merits” of the EEOC claims.
On March 28, 2016, the United States Supreme Court heard arguments on this dispute. In a recently developed new theory, the EEOC argued that a defendant can only become a prevailing party by obtaining a court order barring further litigation and because such dismissal with prejudice was not entered by the district court, CRST cannot be a prevailing party. The EEOC’s position is that it did satisfy its pre-suit duties on a class-wide basis and asserts that it is not required to satisfy those duties as to each of the 67 claimants individually. CRST contends that the EEOC never identified the alleged discriminatory practice at issue in these 67 highly individualized cases and asserts that the trial court was within its discretion when it found that the EEOC had unreasonably short-circuited the statutory process. CRST argues that it prevailed by simply winning the case (with or without prejudice). CRST also contends that the EEOC waived this argument of requiring a dismissal with prejudice because the EEOC never raised this argument during the 6 years of litigation. However, CRST asserts that it actually did obtain a judgment with prejudice because the EEOC clearly understood that the trial court’s order “barred these claims from ever seeing the inside of a courtroom.”
Although the Supreme Court’s decision will not be issued until late June, employers are anxious to hear the outcome as to whether or not employers can recover fees when the EEOC brings a case against an employer that is unfounded and is filed without fulfilling the EEOC’s pre-suit obligations. We will provide a further update following a ruling from the Supreme Court.
New York Paid Family Leave
Under New York’s proposed budget bill, the State would phase in paid family leave in 2018. Workers would get eight weeks of leave at a pay rate of at least 50 percent of an employee's average weekly wage, with a cap of 50 percent of the statewide average weekly wage.
When fully effective in 2021, employers would have to provide 12 weeks of leave at a rate of pay equal to at least 67 percent of an employee's average weekly wage, capped at 67 percent of the statewide average weekly wage.
Employees would be eligible for leave after six months of employment with a single employer.
The paid leave program, which would be funded by a payroll deduction of 0.5 percent on employees, essentially would amend the state's Workers' Compensation Law to add family and medical leave benefits to the disability benefits already required by state law.
Paid family leave would be available to care for an infant, a family member with a serious health condition or for “any qualifying exigency” resulting from a family member being called to active military service.