Tuesday morning, June 28, 2016, Attorney Aimee Willett addressed a packed room of business leaders at the Altoona Grand Hotel, to talk about what the new overtime regulations will mean for businesses. The new regulations will change the status of many employees as it pertains to exempt and non-exempt status, so the Legislative Action Committee of the Blair County Chamber of Commerce organized the seminar in order to help employers understand in greater detail just how they will need to comply and how they should prepare for the new rules to take effect later this year.
Aimee regularly practices in the area of labor and employment law and has represented employers in matters before state and federal trial and appellate courts in Pennsylvania, arbitrations, local agency hearings and other administrative proceedings before the Pennsylvania Human Relations Commission, Equal Employment Opportunity Commission, and Pennsylvania Labor Relations Board.
Last year, the US Department of Labor published a proposed rule expanding overtime entitlement for millions of workers. The Department received a significant number of comments since then, both in favor of and opposed to the proposed rule, and today the Obama administration announced a final version of the overtime exemption rule.
The rule, which will go into effect December 1, 2016, will expand the class of people who will be eligible for overtime compensation. The Fair Labor Standards Act currently requires employers to pay employees one and one half times their regular rate for all hours worked in excess of 40 hours in a workweek. Some employees, however, are exempt from this requirement if they meet certain criteria. Specifically, in order to be exempt the employee must perform certain types of duties and must be paid a certain minimum salary. It is that minimum salary threshold that is altered by the new rule.
Under the current rule, in place since 2004, that minimum threshold has been $455 per week, or $23,660, per year. The new rule would double that, to $47,476, per year.
If an employer has any employee that currently is exempt, but who is paid less than $47,476, then starting December 1, the employer has several options if he or she wishes to maintain the exemption and avoid paying the overtime premium. For example, the employer can increase the employee’s salary to some amount above that threshold, to maintain the exemption. Of course, that is most feasible for those exempt employees who already are paid some amount close to that threshold.
What is more likely, however, is that many employers will reduce the number of hours worked, to limit the likelihood of overtime compensation. Alternatively, some employers may reduce the base pay for some employees, so that the same total compensation is paid after accounting for the new premium pay.
The new rule requires perhaps the most significant change in overtime rules in more than a decade, and employers now have about six months to plan and prepare.
This week, the Pennsylvania General Assembly passed legislation that would end the practice of basing teacher furloughs on seniority alone. Pennsylvania is one of only 6 states that bases such decisions on seniority alone, and the new law would allow schools to retain less senior teachers who have been rated satisfactory and instead furlough teachers who have been given poorer ratings. Seniority would still be used to break a tie in the event two teachers have been rated similarly in their performance.
Supporters of the new law, known as HB805, note examples in which Districts were forced to furlough distinguished teachers while keeping others that had been rated poorly, simply because they were not permitted to look at other factors than seniority. The new law recognizes that teachers, as professionals, are not all the same and that the student achievement and welfare should be of greater concern than seniority alone.
Governor Wolf, however, has threatened to veto the bill, which currently sits on his desk. Oddly, Governor Wolf claims this is a “local matter to be decided by districts,” yet he continued to threaten a veto of the bill that actually would give local districts the tools to make such a decision.
In addition, the new law would allow districts the ability to make furlough decisions on the basis of economic considerations, whereas now such decisions only can be made on the basis of specific reasons such as declining enrollment, program curtailment, and building or district consolidation.
Stay tuned to see whether the Governor actually provides local districts with these needed tools or follows through on his threat to veto.
EDIT: Governor Wolf in fact did veto the bill Wednesday, May 19, 2016, as threatened.
This week, the National Labor Relations Board (NLRB) announced that it has abandoned its rule, adopted several years ago, that would require employers to post notice of employees’ rights under the National Labor Relations Act. That Act provides basic rights for employees to form, join or assist – or refrain from joining or assisting – labor unions.
The NLRB had adopted the rule that would have required employers to post a notice, in a manner similar to other workplace notices, like with the Fair Labor Standards Act (FLSA) or the Family Medical Leave Act (FMLA). Several federal courts had invalidated the rule, noting that the NLRB does not have the power to make such a rule. The Courts essentially concluded that the rule was beyond the scope of the powers granted to the NLRB by the Act and that any notice posting requirement should only be enforceable if Congress included such a requirement in the actual law itself.
In a press release this week, the NLRB noted that it has dropped any appeals with this issue, essentially confirming that the rule no longer is in effect. The NLRB went on to urge employers to provide the notice voluntarily, saying:
The NLRB remains committed to ensuring that workers, businesses and labor organizations are informed of their rights and obligations under the National Labor Relations Act. Therefore, the NLRB will continue its national outreach program to educate the American public about the statute.
While the NLRB no longer will try to require that employers post notice of the employee’s rights, this does not have any impact on the actual rights that exist. The NLRB continues to be vigilant in enforcing the employees’ rights to form and assist labor unions, and you should contact your counsel if there are any questions about what rights you or your employees do have.
In light of the recent US Supreme Court decision in US v Windsor striking down provisions of the Defense of Marriage Act (DOMA), President Obama directed all federal agencies to update regulations and other published guidance, in order to address the fact that DOMA no longer prohibits federal recognition of same-sex marriage.
This week, the IRS-issued Revenue Ruling 2013-17 took effect, addressing how such marriages will be treated for tax purposes. In short, the IRS has decided to use what is known as the “state of celebration” rule. Under this rule, the IRS will consider a person to be married if the individual entered into a same-sex marriage in a state that recognizes such marriages. his is true regardless of whether the person actually resides in a state that recognizes or authorizes same-sex marriage.
Wednesday, September 18, the US Department of Labor released Technical Release 2013-04, in which the DOL also adopted this “state of celebration” rule for purposes of defining the terms “spouse” and “marriage” under employee benefit plans. Again, under this rule, a person is considered a spouse, for such purposes, if a marriage was celebrated in a state that recognizes same-sex marriage regardless of where the spouses actually reside.
This is in contrast to the “state of residency” rule, which applies in some other contexts, such as the FMLA. According to this rule, a person can be considered a “spouse” only if the person resides in a state that recognizes the marriage.
Employers should be aware, then, that these and other new federal guidelines will impact the application of various employer policies.