In This Issue
September-October 2016 | Volume 4 Issue 5
- New Minimum Wage for Contractors Takes Effect Jan. 1
- FMLA Implications of the New FLSA White Collar Overtime Rule
- California Extends Overtime Protections to Agricultural, Domestic Workers
- OvIn Equal Pay Claim, Job Duties Trump Employee’s Title
- New EEOC Guidance Addresses Retaliation, ADA Interference
New Minimum Wage for Contractors Takes Effect Jan. 1
By: Thompson Information Service
Employees performing work for federal contractors and subcontractors must be paid at least $10.20 per hour beginning January 1.
The U.S. Department of Labor (DOL) announced the increase September 20 in the Federal Register. While the change is only a 5-cent increase over this year’s minimum wage, tipped workers will receive almost an extra dollar per hour, according to the announcement.
President Obama first established a federal minimum wage for contractors in a 2014 executive order (E.O. 13658), setting the minimum at $10.10 and authorizing DOL to implement future increases.
The minimums apply to most individuals performing work on a contract or “contract-like instrument” for the federal government.
Next year, employees who receive tips will see an increase of 95 cents, raising their minimum wage from $5.85 to $6.80. E.O. 13658 mandates a 95-cent increase each year until the tipped minimum wage reaches 70 percent of the regular contractor minimum wage. After that, the minimum for tipped employees will be 70 percent of the regular contractor minimum.
Generally, contractors may pay the tipped minimum wage if a worker’s tips plus the cash wage equal at least $10.20 per hour. If the total amount does not equal the regular contractor minimum, the employer must make up the difference.
For more information on the rule, including coverage details, see DOL’s fact sheet.
FMLA Implications of the New FLSA White Collar Overtime Rule
By: Peter Susser AND George Wood. Credit: Littler Mendelson.
You have spent weeks agonizing over the Department of Labor’s (DOL) new Fair Labor Standards Act (FLSA) overtime rule, ultimately determining that you will need to move a number of employees from exempt to nonexempt status to remain complaint. Feeling good about your work, you kick back to enjoy your newfound leisure time, only to wonder: “How does the change in FLSA status for these employees affect their FMLA leave usage rights? For example, once these employees become nonexempt, how do I calculate their FMLA entitlement for intermittent leaves?”
Realizing that significant FMLA issues exist with this change, you drag yourself back to FMLA regulations to determine how this issue can be hammered out by the December 1, 2016, deadline for implementing the overtime rule.
Guiding FMLA principles
The starting point for the analysis of how the change in exemption status affects an employee’s FMLA entitlement is with the regulations themselves. Several principles within regulations guide the analysis:
1. FMLA bases its leave calculations on work weeks, not on hours. Key to the FMLA analysis is the rule that “[t]he actual workweek is the basis of leave entitlement.” (29 CFR § 825.205(b)(1)). Thus, an employer may not simply take 40 hours per week and multiply that by 12 to reach an hours limit. Rather, the employer must calculate the leave entitlement based on weeks, not hours. For example, “if an employee who would otherwise work 40 hours a week takes off eight hours, the employee would use one-fifth (1⁄5) of a week of FMLA leave. Similarly, if a full-time employee who would otherwise work eight hour days works four-hour days under a reduced leave schedule, the employee would use one-half (1⁄2) week of FMLA leave.” Thus, employers need to focus on the use of weeks—or partial weeks—of FMLA leave, not hours. As the comments to Section 825.205(b)(1) reiterate, “FMLA leave does not accrue at any particular hourly rate, and . . . the specific number of hours contained in the workweek is dependent upon the hours the employee would have worked but for the taking of leave.
2. Changes in work status/schedules may necessitate changes in the calculation of the use of workweeks for FMLA purposes. Where an employee moves from working on an exempt to a nonexempt basis, the number of hours worked in a week becomes more important for FMLA calculation purposes. See 29 CFR § 825.205(b)(2). In essence, where an employee’s schedule changes, “the hours worked under the new schedule are to be used for making [the FMLA usage calculation].” Id. Thus, the calculation for an employee who moves from exempt to nonexempt status must be changed to reflect the new schedule. If the now nonexempt employee remains full-time (i.e., working 40 hours per week), the calculation should be the same as under his or her exempt status. If, however, the employee becomes part-time, is required to work overtime, or has weeks that fluctuate in hours, the calculation will change. Several examples are provided below as to how to calculate these workweeks under differing arrangements.
3. Overtime hours now matter. Nonexempt employees who are required to work overtime are entitled to have that overtime included in the calculation of the new workweek (29 CFR § 825.205(b)(2), (3)). Thus, if an employee is required to work 8 hours of overtime per week, the calculation of the new work week would be based on 48 hours, not 40. This means that an employee who is taking intermittent leave of 8 hours per week and working 48 hours per week would be using 1/6 of a work week, whereas the employee who uses intermittent leave of 8 hours per week under a 40-hour workweek uses 1/5 of a week. This is important in an intermittent leave situation since it tends to lengthen the amount of time an employee may use FMLA intermittently.
4. FMLA allows the employer to determine the increments of accrual for leaves. Under Section 825.205(a), the employer is entitled to account for the use of leave using the shortest period of time the employer permits for other forms of leave “provided that it is not greater than one hour and provided further that an employee’s FMLA leave entitlement may not be reduced by more than the amount of leave actually taken” (29 CFR§ 825.205(a)(1)). An employer, however, “may account for FMLA leave in shorter increments than use for other forms of leave.” Id. Thus, if the employer permits personal leave to be taken hourly, it may require employees taking FMLA leave to do the same. If, however, the employer requires employees to take personal leaves in 4-hour blocks, the employer would be required, for FMLA purposes, to limit this 1-hour blocks. The employer may, however, choose to use less than 1-hour blocks of time (such as 15-minute increments) if it so chooses. Thus, in the majority of cases, the block of time for FMLA purposes is likely to be 1 hour.
Examples of intermittent leave issues
Using these guiding principles, you may now determine how FMLA rules apply to the employees who you have decided to switch from exempt to nonexempt under the overtime rule. Here are some examples:
1. A full-time employee working 40 hours per week. This is the most basic application of the rules. Here, the employee is entitled to have his or her FMLA leave calculated on the basis of the traditional 40-hour week. If the employee requires intermittent leave of 4 hours per day, the weekly total would be 20 hours, or 1/2 of a workweek based on this employee’s schedule.
2. A part-time employee working fewer than 40 hours per week. Once again, focusing on workweeks, not hours, is the key. If the employee works 30 hours per week and takes 8 hours of FMLA per week, the employee is using just in excess of 25 percent of a workweek for FMLA purposes (the actual amount would be 26.7777 percent). Prudence may dictate “rounding down” this number to 25 percent, since attempting to track FMLA on the basis of small percentages is difficult. If the employee works 20 hours per week and takes off 8 hours using FMLA leave, the amount of time used would be 40 percent of a workweek.
3. An employee with fluctuating workweeks. Where the employee’s workweek fluctuates over time, the calculation of leave needs to take into account those fluctuations. Each week is considered a separate week for calculation purposes, which may lead to fractional calculations being used for weeks. For example, if an employee works 40 hours in 1 week, 32 hours the next, and 24 the third week, but takes 8 hours of FMLA leave each week, the calculations would be 20 percent for the first week, 25 percent for the second week, and 33.33 percent for the third week. The employer needs to track these usages for total weeks used.
4. An employee who used partial weeks as exempt and the remainder as nonexempt. This should not be a difficult calculation since the employer would be tracking leave usage on a weekly basis before the change in exemption status and would continue to do so after the change based on the employee’s work hours.
FMLA usage calculations based on changes in exemption status under the new overtime rule must be made carefully on the basis of the guiding principles described above and on the work hours of each employee. Focusing on workweeks versus hours helps keep the focus on the proper scope for FMLA purposes and should allow employers to easily continue tracking FMLA leave usage properly.
California Extends Overtime Protections to Agricultural, Domestic Workers
By: Susan Prince, JD, M.S.L
California has extended overtime protections to agricultural and domestic employees in the state.
The Phase-In Overtime for Agricultural Workers Act of 2016 removes “the exemption for agricultural employees regarding hours, meal breaks, and other working conditions, including specified wage requirements, and creates a schedule that phases in overtime requirements for agricultural workers … over the course of 4 years, from 2019 to 2022….” The new law provides employers that employ 25 or fewer employees an additional 3 years to comply with the phasing in of these overtime requirements.
The current agricultural overtime law
Farm workers in California currently may not be employed more than 10 hours in a workday or more than 6 days in any workweek, unless they are paid 11/2 times their regular rate of pay for hours in excess of 10 in any workday and for the first 8 hours on the 7th day of work and double the employee’s regular rate of pay for all hours worked over 8 on the 7th day of work in the workweek (IWC Wage Order 14).
This exception does not apply to those employed in on-farm preparation of agricultural products for market and in the handling of products after harvest or for those whose primary duty is irrigation.
The new agricultural overtime law
Specifically, the new law states:
• Beginning January 1, 2019: For an employer that employs more than 25 employees, any person employed in an agricultural occupation must be paid 11/2 times his or her regular rate of pay for working more than 91/2 hours in any 1 workday or more than 55 hours in any 1 workweek. For employers with 25 or fewer employees, the effective date is January 1, 2022.
• Beginning January 1, 2020: For an employer that employs more than 25 employees, any person employed in an agricultural occupation must be paid 11/2 times his or her regular rate of pay for working more than 9 hours in any 1 workday or working in excess of 50 hours in any 1 workweek. For employers with 25 or fewer employees, the effective date is January 1, 2023.
• Beginning January 1, 2021: For an employer that employs more than 25 employees, any person employed in an agricultural occupation must be paid 11/2 times his or her regular rate of pay for working more than 81/2 hours in any 1 workday or more than 45 hours in any 1 workweek. For employers with 25 or fewer employees, the effective date is January 1, 2024.
• Beginning January 1, 2022: For an employer that employs more than 25 employees, any person employed in an agricultural occupation must be paid 11/2 times his or her regular rate of pay for working more than 8 hours in any 1 workday or more than 40 hours in any 1 workweek. For employers with 25 or fewer employees, the effective date is January 1, 2025.
• Beginning January 1, 2022: For employers that employ more than 25 employees, any person employed in an agricultural occupation must be paid double time for working more than 12 hours in 1 day. For employers with 25 or fewer employees, the effective date is January 1, 2025.
A day of rest must be provided to any person employed in an agricultural occupation effective January 1, 2017. In addition, meal periods must be provided effective January 1, 2017. Employees must be allowed a half-hour meal break during any work period of more than 5 hours per day.
Employees may voluntarily give up their meal breaks if the workday does not exceed 6 hours. Employees who work more than 10 hours per day must be provided a second meal period of not less than 30 minutes, except that if the total hours worked is less than 12 hours, the second meal period may be waived, but only if the first meal period was not waived.
Domestic “personal attendants'” overtime rights now permanent
Domestic workers in California have also recently obtained new overtime rights. The California Domestic Worker Bill of Rights provides overtime for domestic workers who are personal attendants if they work more than 9 hours in any workday or more than 45 hours during the workweek.
A “personal attendant” is defined as any person employed by a private household or any third-party employer recognized in the healthcare industry to work in a private household to supervise, feed, or dress a child or a person who, by reason of advanced age, physical disability, or mental deficiency, needs supervision. To have personal attendant status, the employee may not spend more than 20% of his or her weekly work time engaged in other duties.
There are several exceptions, including but not limited to casual babysitters, certain family members, workers employed by a licensed healthcare facility, and persons employed pursuant to a voucher. Nonattendant duties include making beds, housecleaning, cooking, laundry, or other duties related to the maintenance of a private household or the premises.
The law, which was implemented January 1, 2014, carried a 3-year sunset provision. California Governor Jerry Brown signed the bill into law on September 12, which has made the overtime protections permanent effective January 1, 2017.
Domestic workers who are not personal attendants
If an employee works in the home but is not a personal attendant, he or she is not covered by the Domestic Worker Bill of Rights. However, regular overtime protections apply under Wage Order No. 15, which sets overtime protections for domestic workers who are not personal attendants. There are different overtime protections depending on the type of work performed:
- Non-live-in domestic workers who are not personal attendants are entitled to overtime (1.5 x the regular rate of pay) for hours worked over 8 in a day or 40 regular hours in a workweek; overtime for the first 8 hours on the 7th consecutive day of the workweek; double time for hours worked over 12 in a day; and double time for hours worked over 8 on the 7th consecutive day of the workweek.
- Live-in domestic workers who are not personal attendants are entitled to overtime for hours worked over 9 in a day and for the first 9 hours worked on the 6th and 7th consecutive day of the workweek. Live-in employees are entitled to double time for hours worked over 9 hours on the 6th and 7th consecutive day of workweek.
In Equal Pay Claim, Job Duties Trump Employee’s Title
By: Thompson Information Service
An employee’s job title is irrelevant in an equal pay claim if she is performing the same work as her male coworker, a recent settlement agreement illustrates.
The U.S. Equal Employment Opportunity Commission (EEOC) announced September 7 that a school district in Minnesota has entered into a conciliation agreement with the commission to resolve a custodian’s equal pay charge. The school agreed to pay her $50,000 to settle the claims.
After conducting an investigation, the EEOC said it determined that the Montevideo School District failed to pay a female custodial aid wages equal to that of a custodian, a position held by her male coworker, even though the two performed job duties that were the same as or equivalent in skill, effort and responsibility.
The aid position was paid on an hourly basis and, overall, barely half as much as the salaried custodian position, according to EEOC. Because the positions performed the same work, the female employee’s lower pay violated the Equal Pay Act of 1963 and Title VII of the Civil Rights Act of 1964, the commission alleged.
To resolve the allegations, the employer agreed to pay the employee $50,000, reclassify her as a custodian and adjust her pay accordingly. The school district also must provide employees with annual anti-discrimination training and report any wage discrimination allegations to the EEOC.
Julie Schmid, acting director of the commission’s Minneapolis area office, said in a statement that “EEOC is committed to full enforcement of Title VII and the Equal Pay Act to ensure that women are paid equally for their work in the same jobs as men.”
New EEOC Guidance Addresses Retaliation, ADA Interference
By: Kate McGovern Tornone
The U.S. Equal Employment Opportunity Commission (EEOC) has issued a new guidance on its most frequently received charge, retaliation.
“Retaliation is asserted in nearly 45 percent of all charges we receive and is the most frequently alleged basis of discrimination,” said EEOC chair Jenny R. Yang in a statement. Charges of retaliation exceeded those alleging race discrimination beginning in 2009, according to the commission.
The document, Enforcement Guidance on Retaliation and Related Issues, replaces the commission’s 1998 manual on retaliation and has an accompanying question-and-answer publication and a small-business fact sheet. The guidance also discusses “interference” under the Americans with Disabilities Act (ADA).
Title VII provisions
The new guidance addresses things that have changed since EEOC issued its old manual, according to Philip K. Miles III, a shareholder with McQuaide Blasko and author of employment law blog Lawffice Space. This includes the U.S. Supreme Court’s position on third-party retaliation, “cat’s paw” liability and the requisite severity of a “materially adverse” action to state a claim for retaliation, he told HR Compliance Expert.
The guidance also includes three particularly “employee-friendly” provisions, Miles said: coverage of bad-faith reports, protections for sexual orientation discrimination opposition and the “manager rule.”
In the new document, EEOC takes the position that even an unreasonable or bad-faith internal report of discrimination constitutes protected activity, Miles said.
It is well settled that employers may not retaliate against employees who engage in “protected activity,” which includes both participation and opposition. Under the participation clause, employers may not retaliate against an employee because he or she “has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing,” Miles said, explaining that this usually means participating in the EEOC charge process or a lawsuit. The opposition clause protects an employee who has opposed an unlawful practice under the discrimination statutes by, for example, making an internal complaint of discrimination to the employer.
And while U.S. Supreme Court precedent (Clark County School District v. Breeden, 532 U.S. 268 (2001)) says that an employee opposing a practice must have a reasonable good-faith belief that the conduct violates a nondiscrimination law, EEOC has now taken the position that this good-faith requirement does not apply to the participation clause, Miles said. “[T]he participation clause broadly protects EEO participation regardless of whether an individual has a reasonable, good faith belief that the underlying allegations are, or could become, unlawful conduct,” the guidance states.
The commission also has taken the position that filing an internal complaint and participating in an employer’s internal complaint or investigation process are covered by the participation clause. “This leads to the odd conclusion that an internal report of discrimination—even if it is made in bad faith or not reasonable—is still protected activity,” Miles said. “I’m cautiously optimistic that courts will reject this conclusion.”
Sexual orientation discrimination
The guidance also restates the EEOC’s position that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation. This means that, according to EEOC, an employee’s complaint to the employer of sexual orientation discrimination is protected activity, Miles said.
The guidance offers the following example:
An employee believes he is being harassed by coworkers based on his sexual orientation, and complains to his manager and human resources. This is protected activity under Title VII because, in light of the EEOC’s stated legal position and enforcement efforts, it is reasonable for an individual to believe that sexual orientation discrimination is actionable as sex discrimination under Title VII.
Despite the commission’s position, the issue is far from settled in the courts. Miles said that while he certainly recommends that employers refrain from retaliating against an employee who complains of sexual orientation discrimination, “there remains a very open question about whether Title VII really prohibits sexual orientation discrimination in the first place.” See Plaintiff, EEOC seek rehearing on sexual orientation ruling.
The ‘manager rule’
In the new guidance, EEOC also takes the position that all employees who engage in opposition activity are protected from retaliation, even if they are managers or human resources personnel.
“Some courts had limited the protection of employees whose job duties entailed handling or reporting discrimination complaints—the so-called ‘manager rule.’ Other courts (and the EEOC’s new guidance) have rejected this rule,” Miles said, adding that he expects courts to generally side with the EEOC on this issue.
The new guidance also discusses provisions that apply only to disability discrimination claims. The ADA differs from the other laws in that it includes an “interference” provision and covers more than just discrimination, Miles said. “For example, employers may only require medical examinations or request medical records in limited circumstances, and employers must reasonably accommodate an employee with a disability.”
And while interference isn’t quite “retaliation,” it seems to fit into this guidance, Miles said. For example, the document says that employers cannot threaten or coerce employees into forgoing requests for accommodation or submitting to a medical exam.
EEOC also said that it would violate federal law to maintain “a policy or requirement that purports to limit an employee’s rights to invoke ADA protections (e.g., a fixed leave policy that states ‘no exceptions will be made for any reason’).” That is something to consider for your employee handbook, Miles said.
While the guidance offers some tips for staying off the EEOC’s radar—written policies, training, support and proactive follow-up—Miles noted that it is not binding on courts.
“So, to the extent the EEOC is trying to change the rules, a court may not recognize their interpretation,” he said.