In This Issue
November-December 2016 | Volume 4 Issue 6
- D.C. Council approves bill providing paid family leave
- Puzder hearing set for January, Dems defend overtime rules
- New York adopts higher salary thresholds for exempt employees
- It’s time to cozy up to the new I-9
- California Equal Pay Act expansion takes effect January 1
- New law gives employees in Colorado access to personnel files
- New Tennessee law requires most employers to use E-Verify
- State Minimum Wage Increases for 2017
By: Thompson Information Service, Kate McGovern Tornone
The District of Columbia Council approved a bill on December 20 requiring employers to give workers eight weeks’ paid leave for the birth, adoption, or foster placement of a child. Employers will pay for the leave through a payroll tax.
In addition to the eight weeks of parental leave, the Universal Paid Leave Amendment Act of 2016 also provides six weeks of leave to care for a family member and two weeks of leave for an employee’s own serious health condition.
Employers will contribute 0.62% of wages for each covered employee. Workers will be eligible to receive up to 90% of their regular pay, up to $1,000 per week. Federal and city employees aren’t eligible.
The tax collection must begin by March 1, 2019, and the city must begin paying out benefits by March 20, 2020.
The program will allow the city’s workers to take family and medical leave without facing financial calamity, said Councilmember Elissa Silverman (I-At Large) in a statement. “The Council put forth a comprehensive paid family and medical leave program that will help us tackle one of our biggest challenges—ensuring that our city is a more equitable and fair place to live.”
Mayor Muriel Bowser, however, said that she couldn’t support the $250 million tax increase because it mostly benefits Maryland and Virginia residents who work in D.C. “It is wrong to raise District taxes to fund a costly, new government program that sends 66 percent of the benefits outside of the city, and leaves District families behind,” she said in a statement. “If the Council wants to raise $250 million in new taxes, shouldn’t the focus be on District residents and their needs?”
Bowser said she won’t sign the bill into law but didn’t make clear whether she would actually veto the bill. Instead, she could allow the law to take effect without taking action, according to the council.
But even if she did veto the bill, it passed 9-4 and therefore has the two-thirds majority required to override a veto. Finally, as with all D.C. legislation, the bill also must go to Congress for review.
By: Thompson Information Service, Kate McGovern TornoneL
The Senate has scheduled a January confirmation hearing for President-elect Donald Trump’s pick for secretary of labor.
Trump’s nomination of Andy Puzder, CEO of CKE Restaurants, was the death knell for the U.S. Department of Labor’s (DOL) new Fair Labor Standards Act (FLSA) overtime regulations, according to John Husband, a partner at Holland & Hart in Denver and an editor of Colorado Employment Law Letter.
It already was expected that the Trump DOL would withdraw the department’s appeal of an injunction blocking the rules, but Puzder’s nomination solidified that prediction, Husband previously said.
In a recent webinar, Leslie E. Silverman, a shareholder with Fortney & Scott, LLC, and a contributor to Federal Employment Law Insider, said that if lawmakers vote down party lines, Republicans have enough votes to confirm Puzder easily.
And they may try to do so quickly. Senator Lamar Alexander (R-Tennessee), chair of the Committee on Health, Education, Labor and Pensions, said in a statement that he met with Puzder and was impressed by him. “Mr. Puzder will be a good partner in creating an environment to help grow jobs for American workers,” Alexander said in the statement. “The Senate labor committee will promptly consider his nomination in the next Congress.” The committee said it will hold a hearing in January.
However, on December 22, the committee’s ranking member, Senator Patty Murray (D-Washington), said she has serious questions about Puzder’s ability to lead the DOL—specifically citing his opposition to the overtime rules. Murray called for a “vigorous and thorough” confirmation hearing.
Overtime rules update
Senator Bernie Sanders (I-Vermont) and 25 other members of Congress have urged the U.S. 5th Circuit Court of Appeals to reverse a lower court’s injunction halting the overtime rules.
The lower court erred in enjoining the rules, the lawmakers said in a brief. It contradicted 5th Circuit precedent allowing for a salary threshold, they argue.
The appeals court agreed to expedite the DOL’s appeal and set a deadline of January 31, 2017, for final briefs. That still puts the court’s decision after the inauguration, making it possible for Trump’s DOL to withdraw the appeal.
Days before the lawmakers filed the brief, a group of labor organizations asked to join the suit to take over defending the rules if Trump’s DOL backs out. The DOL has asked the lower court to hold off on making the injunction permanent until the 5th Circuit can review its appeal.
By: Thompson Information Service, Charles H. Kaplan, Sills Cummis & Gross P.C.
Employers in New York must increase the salaries of exempt executive and administrative employees by December 31 to meet the requirements of recently adopted regulations. Employers also must decide whether to increase exempt employees’ salaries each year to match annual increases required by the new regulations.
On December 28, the New York State Department of Labor (NYSDOL) adopted regulations that will increase the minimum salary thresholds for executive and administrative employees under the wage and hour provisions of New York state’s Labor Law. The Labor Law does not require a minimum salary for exempt professional employees.
On October 19, the NYSDOL published proposed amendments to New York’s minimum wage orders. On December 28, the NYSDOL adopted the proposed amendments without making any changes.
Currently, New York’s minimum salary threshold for the executive and administrative exemptions is $675 per week ($35,100 per year). The following increases (based on employer size and location) will go into effect for most employers (i.e., those covered by the Miscellaneous Industries and Occupations Wage Order):
New York City
Large employers (11 or more employees)
• $825 per week ($42,900 per year) on December 31, 2016
• $975 per week ($50,700 per year) on December 31, 2017
• $1,125 per week ($58,500 per year) on December 31, 2018
Small employers (10 or fewer employees)
• $787.50 per week ($40,950 per year) on December 31, 2016
• $900 per week ($46,800 per year) on December 31, 2017
• $1,012.50 per week ($52,650 per year) on December 31, 2018
• $1,125 per week ($58,500 per year) on December 31, 2019
Nassau, Suffolk, and Westchester Counties
• $750 per week ($39,000 per year) on December 31, 2016
• $825 per week ($42,900 per year) on December 31, 2017
• $900 per week ($46,800 per year) on December 31, 2018
• $975 per week ($50,700 per year) on December 31, 2019
• $1,050 per week ($54,600 per year) on December 31, 2020
• $1,125 per week ($58,500 per year) on December 31, 2021
Rest of the state
• $727.50 per week ($37,830 per year) on December 31, 2016
• $780 per week ($40,560 per year) on December 31, 2017
• $832 per week ($43,264 per year) on December 31, 2018
• $885 per week ($46,020 per year) on December 31, 2019
• $937.50 per week ($48,750 per year) on December 31, 2020
Certain industries in New York, including the hospitality, building services, nonprofit, and farm worker industries, have separate wage orders regarding minimum wage and salary threshold increases.
A nationwide preliminary injunction stopped the U.S. Department of Labor (DOL) from implementing its new overtime regulations, which would have significantly increased the salary threshold for the executive, administrative, and professional exemptions under the Fair Labor Standards Act (FLSA). On November 22, a federal district judge in Texas halted the increase, which was scheduled to take effect on December 1.
Even though New York employers do not have to increase salaries under the DOL’s overtime regulations, they must now raise executive and administrative employees’ compensation by December 31 to preserve the exempt status of those employees.
By: Thompson Information Service, Kate McGovern Tornone
It’s time for employers to get acquainted with the new Form I-9. The form is easier to use than the old version, but with just a few weeks left before employers must make the switch, it’s a good idea to get familiar with the form now, says Jacob Monty, managing partner at Monty & Ramirez, LLP, and a coeditor of Texas Employment Law Letter.
U.S. Citizenship and Immigration Services (USCIS) issued the form on November 14, 2016. While employers are free to use either form for now, they must use the new form beginning January 22.
Of the changes, the “smart” features are the most notable. They make the form much more user-friendly, Monty said. “It’s really the first time employers can have an automated experience that makes it idiot-proof,” he said.
According to Monty, one of the most common errors occurs in Section 2, where the form asks for documentation. Many employers mistakenly ask for too many documents. The new, automated form makes that error impossible now, he said.
“This is a welcomed version that employers really needed,” Monty said. But even though they make life easier, the new features make it important to switch to the new form early. “I would encourage employers to get familiar with it now,” he said.
Importantly, the smart features of the form require employers to have updated software. If you’re unable to use the form, USCIS still offers a “paper version.”
The form also makes clear that the person who reviews an employee’s documentation must be the person who signs the required attestation. Monty said some employers had hoped that a company representative could review the documents—for a new remote employee, for example—while a corporate official at another location signs the form. Under the previous version of the form, it was uncertain whether that was permissible, he said, but “the new form makes clear that the person who signs must be the person who looked at the documents.”
Short of meeting with the employee in person, that leaves employers with only one option: hire a representative to review the documents in the employee’s presence and sign the form. But, of course, employers still will be liable for any violations, according to USCIS’s website.
Despite the form’s new smart features, employers still must print I-9s and obtain required signatures on the hard copy.
As was the case before, only employers in Puerto Rico are permitted to use the Spanish version of the form. Monty acknowledged that creates a problem for some employees, but he discourages employers from serving as translators. It’s tempting to try to help an employee, he said, but the employer may take on the added responsibility of being the form’s preparer. “We really discourage that,” he said. At most, an employer could consider printing a completed sample I-9 for the employee to review. “But don’t actually complete it for the employee,” he said.
Time for an audit
In addition to switching to the new form, employers should audit their I-9s, Monty said. The federal government recommends audits as a best practice, and Monty encourages employers to conduct them internally.
But that doesn’t mean you need to look at every form, Monty said. If you have an inordinate number of employees, you don’t have to review the whole workforce. Maybe review only a third, Monty suggested, because you’re going to see the same errors repeated.
Also, it’s important that the person performing the audit is not the person who prepares the I-9s. “The most successful internal audits I’ve seen are when you have a second set of eyes look at the document,” he said. “If you were the one preparing the I-9, it’s not as helpful because you’re not going to see the error.”
And if you do discover errors, correct them in red ink, and date them accurately. “The law doesn’t require perfection, but it does require good faith,” Monty said. You never want to backdate an I-9 or falsely make it appear that you completed it correctly the first time. In fact, it’s better to call attention to the fact that you didn’t do it correctly the first time and avail yourself of the law’s strong good-faith defense, he said.
Ensuring that your I-9s are completed correctly may soon be more important than ever, Monty noted. If the Trump administration’s focus on immigration is any indication, “employers are going to be held accountable for getting this form right.”
To access all versions of the form and its instructions, visit www.uscis.gov/i-9.
By: Thompson Information Service, Cathleen S. Yonahara
California’s equal pay law will provide protections for race and ethnicity as well as gender as of January 1, 2017.
Since 1949, California law has prohibited gender-based wage discrimination, and in 2015, that protection was expanded to require equal pay for men and women who perform “substantially similar” work for an employer regardless of their location and to place the burden of proof on the employer to demonstrate that any pay gap is due to nondiscriminatory factors.
Effective January 1, the law also will protect employees from disparities in pay based on ethnicity. The new prohibitions on wage differentials based on ethnicity track the prohibitions on wage differentials based on gender. The employer bears the burden of proving that a wage differential is based on:
(1) A seniority system;
(2) A merit system;
(3) A system that measures earnings by quantity or quality of production; or
(4) A “bona fide factor” other than race or ethnicity such as education, training, or experience.
The employer must demonstrate that the “bona fide factor” isn’t derived from a race- or ethnicity-based differential in compensation, is job-related for the position in question, and is consistent with business necessity.
An employee can defeat that defense by showing that an alternate business practice would serve the same business purposes without producing the wage differential. In addition, the employer must demonstrate that each factor it relied on was applied reasonably and that one or more of those factors accounted for the entire wage differential. Also effective January 1, past salary won’t, by itself, justify a disparity in compensation.
Employers are advised to conduct an internal audit to ensure that any pay disparities between employees of different genders, races, or ethnicities performing substantially similar work can be explained using legitimate factors. Also, employers should refrain from asking job applicants about their salary history, and managers should be trained on how to comply with the requirements of the California Equal Pay Act.
By: Thompson Information Service, Brad Williams
A new state law going into effect January 1 requires most private-sector employers in Colorado to allow employees to inspect and copy their personnel files at least annually upon request. The new law also grants former employees the right to inspect their personnel files once after the termination of their employment.
The law doesn’t require employers to create or keep personnel files for current or former employees. Also, employers aren’t required to retain any particular documents that are or were in an employee’s personnel file for any particular period of time. However, if a personnel file exists when an employee asks to inspect it, the employer must allow access.
The inspection should take place in the employer’s office at a time convenient for both parties. The employer may have a manager of personnel data or another employee of its choosing present during the inspection. If an employee asks to copy some or all of the file, the employer may require payment of reasonable copying costs.
The law defines a “personnel file” as an employee’s personnel records used to determine qualifications for employment, promotion, additional compensation, termination, or other disciplinary action.
The law contains several exceptions. The following documents need not be made available:
• Documents required under federal or state law to be placed or maintained in a file separate from the regular personnel file;
• Records pertaining to confidential reports from previous employers;
• Information about an active criminal or disciplinary investigation or an active investigation by a regulatory agency; and
• Information that identifies another person who made a confidential accusation against the requesting employee.
The law won’t apply to financial institutions chartered and supervised under state or federal law, including banks, trust companies, savings institutions, or credit unions.
By: Thompson Information Service, Todd Photopulos
A new Tennessee law taking effect January 1 requires employers in the state with at least 50 employees to use the federal E-Verify employment verification process.
The new requirement is a result of an amendment to the Tennessee Lawful Employment Act (TLEA). Under the old law, private-sector employers had a choice: either use E-Verify for all newly hired employees or request and maintain copies of identity and work authorization documents from all newly hired employees before letting them work.
After January 1, employers with fewer than 50 employees can still choose to use E-Verify for newly hired employees or request and maintain documents under the TLEA’s list of authorized identity and employment eligibility documents. Although it isn’t required, using E-Verify can be helpful in creating a presumption of nonviolation in the event of an audit.
The TLEA covers not just employees but also “nonemployees,” defined as individuals who, while not employed directly by the employer, are nonetheless paid directly by the employer for labor or services. Companies in Tennessee are required to request and maintain copies of certain identity and work authorization documents for nonemployees unless the workers are employed by a separate company, which presumably would be in compliance with its obligations under the TLEA.
The TLEA contains significant penalties for violations of its work eligibility identification obligations, including company and per-violation fines. First-time offenders are subject to a $500 company penalty as well as a $500 fine for each employee and nonemployee the company failed to verify.
For repeat offenders, the penalties may rise to as high as a $2,500 company fine plus a $2,500 fine per occurrence. There are additional penalties for knowing violations as well as a $500-a-day penalty for failing to timely produce evidence of compliance within 45 days of a final order of violation. The TLEA penalties are in addition to sanctions allowed under federal law.
By: Thompson Information Service, Susan E. Prince, J.D., M.S.L., Legal Editor
For all wage changes, please see the BLR State Minimum Wage Chart.
Minimum wage increases will affect numerous states across the country in January 2017.
Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25 per hour, but the FLSA does not supersede any state or local laws that are more favorable to employees. Therefore, if a state has a minimum wage that is higher than the federal minimum, employers subject to the state minimum wage law are obligated to pay the higher rate to employees working in that state.
State minimum wage changes effective December 31, 2016
* $9.70 per hour for Greater New York
* $10.00 per hour for Nassau, Suffolk, and Westchester counties
* $10.50 for New York City (small employers)
* $11.00 for New York City (large employers)
State minimum wage changes effective January 1, 2017
Alaska: $9.80 per hour.
Arizona: $10.00 per hour. The minimum wage is also scheduled to increase to $10.50 per hour on January 1, 2018.
Arkansas: $8.50 per hour.
California: $10.50 per hour. The minimum wage is also scheduled to increase to $11.00 per hour on January 1, 2018.
Colorado: $9.30 per hour. The minimum wage is also scheduled to increase to $10.20 per hour on January 1, 2018.
Connecticut: $10.10 per hour.
Florida: $8.10 per hour.
Hawaii: $9.25 per hour. The minimum wage is also scheduled to increase to $10.10 per hour on January 1, 2018.
Maine: $9.00 per hour. The minimum wage is also scheduled to increase to $10.00 per hour on January 1, 2018.
Massachusetts: $11.00 per hour.
Michigan: $8.90 per hour. The minimum wage is also scheduled to increase to $9.25 on January 1, 2018.
Missouri: $7.70 per hour.
Montana: $8.15 per hour.
New Jersey: $8.44 per hour.
Ohio: $8.15 per hour (gross receipts of $297,000 or more); $7.25 per hour (gross receipts under $297,000)
South Dakota: $8.65 per hour.
Vermont: $10.00 per hour. The minimum wage is also scheduled to increase to $10.50 per hour on January 1, 2018.
Washington: $11.00 per hour. The minimum wage is also scheduled to increase to $11.50 per hour on January 1, 2018.
State minimum wage changes effective July 1, 2017
Washington D.C: $12.50 per hour on July 1, 2017. The minimum wage is also scheduled to increase to $13.25 per hour on July 1, 2018.
Maryland: $9.25 per hour on July 1, 2017. The minimum wage is also scheduled to increase to $10.10 per hour on July 1, 2018.
Oregon: $10.25 per hour standard rate on July 1, 2017; the Portland metro rate will increase to $11.25 per hour; and the nonurban counties rate will increase to $10.00. The minimum wage is also scheduled to increase to $10.75 per hour standard rate on July 1, 2018; the Portland metro rate will increase to $12.00 per hour; and the nonurban counties rate will increase to $10.50.
Minimum wage basics
The federal FLSA requires that a minimum wage be paid for all hours an employee is “suffered or permitted” to work and that an overtime wage be paid for all hours “worked” over 40 in a week. The FLSA does not specifically define “hours worked” or place a limit on the number of hours an employee may work; it requires only that overtime be paid for any hours worked over 40.
Generally speaking, work time includes all time that employees spend engaged in the principal activities that they are employed to perform. Hours worked can also include waiting time; travel time, other than time spent commuting to and from the employee’s regular place of work; breaks or meal periods that are less than 20 minutes long; and time the employee is required to spend in training, at seminars, or in meetings.
Hours worked for purposes of the FLSA does not include time spent on call, time spent waiting to work, or time when an employee is required to carry a pager or cell phone, provided the employee is otherwise free to effectively use the time for his or her own personal purposes. The FLSA does not obligate employers to pay employees for holidays, vacation, or sick days.
Under the de minimis rule, employers may disregard insubstantial or insignificant periods of time beyond the scheduled working hours, if, as a practical administrative matter, such time cannot be precisely recorded. If employees are checking e-mails for 2 or 3 minutes, employers will likely not have to pay for this time. But if employees are spending 10 to 15 minutes after work hours, employers will have to pay employees for this work time.
The rules are strict, but the penalties are stricter. Paying employees properly now will help you to avoid expensive fines, claims, and lawsuits down the line.