All posts by stu

Overtime, Salaried employees, Wage and Hour

Federal judge puts new DOL Salary rules on hold

On November 22, 2016, a federal judge in the Eastern District of Texas granted a motion that temporarily bars the regulations from going into effect nationwide (State of Nevada et al. v. U.S. Department of Labor, Civil Action No. 4:16-cv-00731-ALM). The injunction is expressly nationwide in scope, including and applying to states that did not join in the lawsuit. Accordingly, pending further action, the December 1, 2016 implementation date of the Final Rule is postponed and employers need not adjust salaries upward in order to continue to claim exempt status.
The injunction was entered based on the judge’s conclusion that the DOL Final Rule, raising the salary basis test to $913/week, exceeded the Department of Labor’s delegated authority. Additionally, the judge concluded that DOL did not have the authority to automatically update the minimum salary level every three years.  Stay tuned for more news on this important subject.
Fair Labor Standards Act, Overtime, Tipped Employees, Uniforms

Improper uniform deductions, tip sharing and unpaid OT at Metro Diner

An investigation by the U.S. Department of Labor’s Wage and Hour Division’s Jacksonville District Office found that Windy City Doc Holding LLC, doing business as Metro Diner, violated minimum wage and overtime provisions of the Fair Labor Standards Act.  The Wage and Hour complaint identified three violations.  First, Metro Diner made improper deductions from workers’ pay when it charged servers for their uniforms – that resulted in them earning less than the legally required federal minimum wage of $7.25 per hour in the weeks that they paid for those items.  Second, the Diner’s practice of sharing the tips of tipped employees with non-tipped workers, such as dishwashers, also contributed to the minimum wage violations for affected servers.  Third, the Diner also calculated overtime incorrectly when it based servers’ overtime rates on time and a half of their direct cash wages, rather than basing it on the full minimum wage, as required.

The maximum tip credit that an employer currently can claim under the FLSA is $5.12 per hour ($7.25 – $2.13). The following is a sample calculation for paying overtime to a tipped employee who receives $2.13 in direct cash wages.  If a tipped employee works 45 hours in a workweek. The employee’s regular rate of pay is $7.25 per hour, the applicable minimum wage.  Step 1: Use the employee’s regular rate of pay to calculate the overtime rate.  $7.25 x 1.5 = $10.88  Step 2: Subtract the appropriate tip credit from the overtime rate to achieve the adjusted rate and multiply by the number of overtime hours worked that week. $10.88 – $5.12 = $5.76. Overtime is calculated $5.76 x 5 overtime hours = $28.80 overtime pay.  Step 3: Add the employee’s straight pay plus the overtime pay to calculate total pay that week.  40 hours x $2.13 = $85.20 straight time; $85.20 straight time + $57.60 overtime = $142.80 under federal law.

Metro Diner settled the Wage and Hour complaint, agreed to comply with the FLSA and paid 59 employees a total of $154,179 in back wages.  For more information on this topic, review the Wage and Hour Division’s Fact Sheet on Tipped Employees.

Hiring, I9 Form, Immigration

Revised I9 form now available

On November 14, the new #I9 form was released by US Citizenship and Immigration Services. #HR may use the new form immediately, although the old form will remain valid through January 21, 2017.  After that date, you must use the new form.  All employees who are responsible for completing the I-9, should be trained on the new form and the changes.

Here are some important directions and guidance about the new I9 form:

  1. The new I-9 can be completed as a fillable PDF to reduce errors, however, it is not an electronic I-9.  Employers must still print the completed I-9, obtain the appropriate signatures (which are not fillable via PDF) and retain the form for the proper retention period.  So, for employers completing the form in an office environment, this version will be helpful to reduce errors and remain readable because information is typed onto the form.  However, employers can still choose to complete any or all of the form using a pen to fill out sections after the document has been printed.
  2. Documents that are partly printed and partly handwritten are acceptable.  Employers may still use an electronic version of the I-9, provided the format is updated to the current version and the I9s are retained consistent with the USCIS rules.
  3. Employers do not re-verify current employees due to the new form. Use the new I-9 only for newly hired employees and when you are required to re-verify temporary work authorization.  All previously completed I9 forms must still be retained for the proper retention period. The form must be retained for as long as the employee works for you, plus three years after their hire date or one year after their termination date, whichever is later.
  4. To download the form from the USCIS website (uscis.gov/i-9), right click on the link to the new form—“Form I-9 (PDF, 535 KB).”

Notable changes to the form itself include the following:

  • The form contains on screen instructions for each field to help with questions.
  • When completed electronically, there are prompts to ensure information is entered correctly. For example, the form will validate that the correct number of digits are entered for an employee’s Social Security number and various expiration dates. Calendars and drop-down lists also include electronic assistance. After clicking “click to finish”, errors will be noted and need to be corrected.
  • Section 1, an employee only provides other last names used, as opposed to all other names used.
  • Below an employee’s signature line, they must complete the checkbox about whether a Preparer and/or Translator was used to complete Section 1.  If applicable, multiple names can be entered into that area.
  • There is a dedicated area for including additional information (read the instructions for when this needs to be completed).
  • If using fillable version, apartment number section must be completed using “n/a” if no apartment is applicable.
  • In Section 2, employers will find a new “Citizenship/Immigration Status” field in the first line with numbers one through four. These numbers correlate directly to the employee’s selected citizenship or immigration status entered in Section 1. If you use the fillable version of the form, the corresponding digit will pre-populate. If you use a paper version, enter the corresponding digit in this field. These fields (the top line of Section 2) help to ensure that the two pages of an employee’s Form I-9 remain together.
  • If using the fillable pdf form, the employee’s name will pre-populate onto the top of page 2 also.

The USCIS has released very helpful instructions for employers on the new I9 form, including detailed guidance on the correct abbreviations for Section 2 documents. A new Handbook for Employers (M-274) will likely be released in the future.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

Accommodation, EEOC, Title VII

“No pants” religious belief required accommodation by Employer

COLUMBIA, S.C. – Akebono Brake Corporation, a Michigan-based company that designs and manufactures automotive brake components, was alleged to have violated federal law when it refused to hire a temporary laborer because of her religion, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed today. The EEOC charged that the company discriminatorily interfered with the temporary laborer’s employment opportunities with her direct employer, a temporary labor service provider.

Clintoria Burnett is an observant member of the Apostolic Faith Church of God and True Holiness, a Pentecostal Christian denomination. Burnett holds the religious belief that she cannot wear pants because she is a woman, and that she is commanded to wear skirts or dresses. Burnett was hired as a temp to work at Akebono’s West Columbia, S.C.  Even while she was temping, Akebono maintained the ultimate authority to deny hire to any employee recruited by the TLSP.  Burnett was hired by the temp firm to work at Akabono, but the company maintained a dress code policy requiring employees to wear pants while at Akebono’s facility. Ultimately, Akebono directed the temp company not to hire Burnett due to her religious belief and the Company did not consider any potential religious accommodations. The temp agency withdrew her offer of employment.

Title VII of the Civil Rights Act of 1964 prohibits employers from refusing to hire people because of their religion. Unless it would be an undue hardship on the employer’s operation of its business, an employer must reasonably accommodate an employee’s religious beliefs or practices. The EEOC filed suit in U.S. District Court for the District of South Carolina, Columbia Division (EEOC v. Akebono Brake Corporation, Civil Action No. 3:16-cv-03545-CMC-SVH). When an employee or applicant needs a dress or grooming accommodation for religious reasons, she should notify the employer that she needs such an accommodation for religious reasons. If the employer reasonably needs more information, the employer and the employee should engage in an interactive process to discuss the request. If the request does not pose an undue hardship on the business, the employer must grant the accommodation.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

Overtime, Record Keeping, Salaried employees, Wage and Hour

Paying all Workers only fixed salaries leads to $424k back wage settlement

An Orlando based plastic recycling company agreed to pay $424,000 in back wages to almost 200 employees after a Department of Labor investigation alleged violations of the Fair Labor Standards Act (FLSA).  The investigation revealed that Ravago Americas LLC failed to pay overtime to employees and failed to record and track employee work time.  The investigation was performed by the Wage and Hour Division, Jacksonville District Office.

The employer paid workers fixed salaries, based upon a 40 hour workweek, without regard to how many hours they actually worked. When employees performed work before their shifts, after their shifts, during their meal breaks, and/or at home, those hours were neither recorded nor paid for. This practice created an overtime violation when the unpaid time pushed workers’ totals beyond 40 hours in a workweek, and no overtime premium was paid. The company also failed to maintain required time and payroll records.  After the investigation, the company agreed to: (1) pay $424,537 in back wages to 195 employees and comply with the FLSA in the future; (2) install an accurate time-keeping system to capture daily start and end times of employees; (3) include an accurate record of hours worked on pay stubs for all nonexempt personnel; (4) perform enterprise-wide training with all managers and employees on proper clock in/out procedures on installed time-keeping system, employee rights regarding compensable and non-compensable time; and (5) the proper procedures to correct inaccurate payroll caused by a time-keeping error.

Simply paying an employee a salary does not necessarily mean the employee is not entitled to overtime.  Other businesses, who may be paying in the same manner, should take note.  Also, it is important to remember that the DOL Salary rule change takes effect on December 1, 2016. An employee is exempt from both minimum wage and overtime pay requirements when they are employed in bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $913 per week (updated by Final Rule) as of Dec. 1, 2016.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

Department of Labor, Employee benefits, HR Compliance

Current model #CHIP Notice extended through November 30, 2016

Employers that provide medical insurance to employees in states with premium assistance through Medicaid or Children’s Health Insurance Program (CHIP) must inform employees about the potential opportunities for assistance in obtaining coverage.  This is usually accomplished by providing a notice annually at the time of open enrollment, and then added to the new hire benefit orientation package.  Recently, the U.S. Department of Labor has extended the effective date of its model Employer Children’s Health Insurance Program (CHIP) Notice through November 30, 2016 (even though the current model notice had been scheduled to expire on October 31, 2016).  Click here for the Spanish CHIP Model form.

The model notice gives employees information about the applicable state’s CHIP program, on and how employees can contact their state for additional information and how to apply for premium assistance.  The model notice contains information current as of July 31, 2016.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

EEOC, Medical Exams, New Hire

Required Post Offer Medical Examination leads to EEOC Lawsuit

A Southern Indiana manufacturing services company refused to hire or provide reasonable accommodations to a class of job applicants because of medical information it obtained during pre-employment medical examinations, the U.S. Equal Employment Opportunity Commission (EEOC) charged in a lawsuit filed on October 19, 2016.

According to EEOC’s lawsuit, Chemtrusion, Inc. made job offers to experienced, qualified applicants which were conditioned on successful completion of a medical examination. Chemtrusion summarily withdrew the job offers upon receiving notice of medical impairments and/or the lawful use of prescription medication without individualized analyses or good faith effort to determine whether reasonable accommodations existed. In so doing, Chemtrusion was alleged to have violated the Americans with Disabilities Act (ADA).  EEOC filed suit (Case No. 4:16-cv-00180) in the U.S. District Court for the Southern District of Indiana, New Albany Division.  The agency is seeking back pay, compensatory and punitive damages, and injunctive relief to prevent the Company  from rejecting qualified individuals on the basis of disability or from failing to engage in an interactive dialogue to determine if a reasonable accommodation exists to enable applicants to perform the job for which they received a conditional job offer.

Based on earlier EEOC cases, employers using medical examinations should conduct a functional job analysis and create written job descriptions for each position subject to a post-offer medical examination.  Employers are directed to individually assess whether an applicant’s medical impairments or medications prevent that applicant from performing essential job functions with or without a reasonable accommodation before rejecting an applicant because of a mental or physical impairment. Blanket rejections based on a medical condition does not meet the ADA interactive process requirements.  The same concepts will apply to the use of a post offer medical questionnaire.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

8(a)(1), Concerted Activity, Dress Code, NLRB

Firing an employee for discussing work warning with a co-worker is illegal

A staffing company learned an expensive lesson after it questioned and then terminated an employee (administrative assistant to the branch manager) who complained to a co-worker about unfair application of the company dress code policy.  The employee felt her discipline was unfair (because other similarly dressed employees were not disciplined) and she told a co-worker that she was thinking about bringing her complaint to a higher level of management (over the head of the local branch manager).  The co-worker later informed human resources about the conversation and complained that the employee had been disrupting his work.  The branch manager was informed, and he decided to terminate the employee (who had several other write ups for rule and policy violations).  He questioned her about the conversation with the co-worker and told her that she put the other employee in a “bad spot,” and that she should have complained to him instead.  The employee’s termination letter stated that she was discharged for being unprofessional, as well as attitude, dress code and negativity to other staff and corporate representatives. UniQue Personnel Consultants, Inc.  (25-CA-132398; 364 NLRB No. 112).

A unanimous National Labor Relations Board panel concluded that the Company violated Section 8(a)(1) of the NLRA by instructing an employee not to discuss her terms and conditions of employment with other employees, customers, or the general public, and by threatening her with legal prosecution if she discussed her terms and conditions of employment further.  A majority of the Board also concluded that the Company violated labor law by discharging the employee because of her protected concerted activity and by interrogating her about that activity.  It was legally protected conduct for the employee to solicit a coworker’s advice and support regarding how to respond to her discipline.  This was concerted activity and undertaken for the purpose of mutual aid or protection.

The Board’s Order required that the complaining employee be reinstated to her former position and make her whole for any loss earnings and other benefits lost as a result of the discrimination – and remove any reference to her termination in company records.  The company was required to post a notice stating that it shall cease and desist from instructing employees not to talk to or discuss with other employees, customers or the general public their terms and conditions of employment.  The company also had to rescind a letter sent to the local police department threatening employees with prosecution if they discussed working conditions with employees, customers or the public.

Do not question, discipline or terminate employees that voice disagreement with company policies with co-workers, or seek the support of co-workers to dispute instances of workplace discipline.  An employee is protected when he/she communicates with co-workers about work issues and seek mutual aid, protection and support.  These legal protections exist in both union and non-union workplaces.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

Accommodation, Construction, EEOC, Religion

Mandating Saturday work to employee costs Ready Mix Concrete company $42,500

With the busy #construction season in full gear, many companies ask employees to work on weekends and nights. #HR What happens when an employee is asked to work a Saturday shift and he turns it down because he says his faith does not allow him to work on the Sabbath?  A Greenville, NC ready mix concrete company recently agreed to pay a $42,500 settlement to an employee that refused to work on Saturday because he was a Seventh Day Adventist.  The EEOC initiated legal action against Greenville Ready Mix Concrete for allegedly violating Title VII of the Civil Rights Act when it refused to accommodate the employee’s religious beliefs and then fired him.

What happened?  The employee had worked at the company for 7 years as a truck driver.  In February 2014, the employee was baptized as a Seventh-day Adventist. His faith required him to refrain from working for hire on Saturdays, specifically from sunset on Friday to sunset on Saturday, in observance of the Sabbath.  The Company’s facilities were usually closed on Saturday and he was not normally scheduled to work on Saturday.  About one month after the conversion to his new faith, the Company asked him to work on a Saturday.  The employee refused to work and was later discharged.

Title VII of the Civil Rights Act of 1964 requires employers to make reasonable accommodations to sincerely held religious beliefs of employees absent undue hardship (more than a minimal burden on the operations of the employer’s business).  It does not matter that the employee had recently converted to a new religion, or that he had been able to work occasional Saturdays in the past.  According to the EEOC, examples of some common religious accommodations include flexible scheduling, voluntary shift substitutions or swaps, job reassignments, and modifications to workplace policies or practices. An accommodation may cause undue hardship if it is costly, compromises workplace safety, decreases workplace efficiency, infringes on the rights of other employees, or requires other employees to do more than their share of potentially hazardous or burdensome work.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

Construction, Independent Contractor, Wage and Hour

Plastering contractor misclassified workers from labor “broker”

The Wage and Hour Division in Louisiana announced a recent settlement with Brownlow Plastering LLC in Hammond, LA regarding violations of the overtime and recordkeeping provisions of the Fair Labor Standards Act (FLSA).  The Company misclassified its workers as independent contractors (instead of employees) and failed to pay overtime.  The company agreed to pay $365,291 in overtime wages to 147 employees, and also sign an enhanced compliance agreement.

The investigation revealed that the labor broker used by the contractor was an employee working directly for Brownlow Plastering. Workers hired by the “broker” to work for Brownlow were, in fact, direct employees. The labor broker only worked and provided services for Brownlow (as did the other workers). None of the workers were in business for themselves, Brownlow bid all the work and supplied all the materials.  Brownlow paid workers fixed hourly rates determined by the company.  They were not independent contractors just because they were recruited through a labor “broker.”

According to the DOL, the FLSA defines “employ” as including to “suffer or permit to work”, representing the broadest definition of employment under the law because it covers work that the employer directs or allows to take place.  A number of “economic realities” factors are helpful guides in resolving whether a worker is truly in business for himself or herself, or like most, is economically dependent on an employer who can require (or allow) employees to work and who can prevent employees from working.

Factors to consider when determining an employment relationship:

  • Extent to which the work performed is an integral part of the employer’s business.
  • Whether the worker’s managerial skills affect his or her opportunity for profit and loss.
  • The relative investments in facilities and equipment by the worker and the employer.
  • The worker’s skill and initiative.
  • The permanency of the worker’s relationship with the employer; and
  • Nature and degree of control by the employer.

Signing an independent contractor agreement that does not reflect the realities of the relationship is not the controlling factor  Contractors using misclassified workers are also in violation of state workers’ compensation laws and unemployment taxes, as well as federal FICA obligations.

Consultstu LLC provides fractional HR services to small/mid businesses to lower operational costs, improve business processes and comply with workplace regulations.  We deliver customized HR solutions that provide protection from expensive mistakes and strategies to improve workplace results. Call us at 727-350-0370 or visit http://www.consultstu.com

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