Business Groups Ask Court To Expedite Ruling On Overtime Exemption Rules

Posted in *New Exemption Rules, Litigation

In our last post we reported that the U.S. Chamber of Commerce and fifty-plus other business groups suing to block the U.S. DOL’s overtime  exemption rule from taking effect had not yet moved to expedite the court’s ruling on the case, making it unlikely that the court would issue any sort of ruling before the rules take effect on December 1, 2016. Well, now they have. In a motion for expedited summary judgment filed Friday October 14, the business groups are now asking the court to rule on the merits of their case on the same timetable as is set for its hearing of the motion for preliminary injunction in the parallel lawsuit being pursued by a coalition of 21 states. On Monday, the business groups followed up with a motion asking the court to consolidate their case with the parallel state lawsuit. According to the motion, the states and the DOL do not oppose consolidating the cases.

The Court’s docket indicates that the DOL’s response to the motion for summary judgment is due on October 31, 2016. The DOL’s response to the states’ parallel motion for a preliminary injunction is likewise due on October 31, with the states’ reply due on November 10 and any sur-reply by the DOL due on November 15. The motion is set for hearing on November 16, 2016 at 9:00 a.m.

Both cases are pending before District Judge Amos L. Mazzant. Mazzant was nominated to the bench by President Obama in 2014. He previously served as a United States Magistrate Judge from 2009 to 2014, and as a justice of the Court of Appeals for the Fifth District of Texas from 2004 to 2009.

It is conceivable that these combined cases could offer employers some relief from the new rules before the effective date. But we’re not holding our breath. While employers might sensibly delay announcing any changes while these lawsuits play out, they should still be preparing to comply by December 1.

States Seek Preliminary Injunction Blocking New Overtime Rules

Posted in *New Exemption Rules, Litigation

On September 20 we reported about a lawsuit by 21 states seeking to block the U.S. DOL’s new overtime exemption rules. This week, the states followed up their complaint by filing an Emergency Motion for Preliminary Injunction, asking the court to block enforcement of the new rule pending a final ruling on the states’ claims. According to the court’s docket no hearing date has been set.

There have been no further developments in a similar lawsuit filed on the same day by the U.S. Chamber of Commerce and a coalition of business groups. To date, the business groups have not filed a motion for a preliminary injunction. The court’s docket reflects that the Labor Department’s answer to the complaint is not due until November 21, 2016.

At this point, we cannot recommend that employers pin their hopes on these lawsuits to relieve them from having to comply with the new FLSA exemption rules effective December 1, 2016.

Note: This post has been corrected. The original post stated that the Chamber of Commerce lawsuit does not challenge the base salary increase included in the new rule. It does. 

House Votes to Delay OT Rule But Employers Are Not Out of the Woods Yet

Posted in DOL News, Overtime

Yesterday, the United States House of Representatives passed a bill, H.R. 6094 (the “bill” referred to as the Regulatory Relief for Small Businesses, Schools and Nonprofits Act), that would delay the effective date of the Department of Labor’s new overtime rule by 6 months, from December 1, 2016 to June 1, 2017.  The Vote passed the House 246-177, with 5 Democrats voting in favor of it.  This is just the latest challenge to the DOL’s doubling of the minimum salary threshold for the white collar exemptions (executive, administrative, and professional) under the Fair Labor Standards Act.  Business groups, congressional Republicans and State Officials have all criticized the drastic economic impact such a measure would have on businesses.

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21 States File Suit Challenging the DOL’s New Overtime Rule

Posted in DOL News, Overtime

US-Department-of-Labor-logo.jpgYesterday, a group of 21 states filed a lawsuit in the United States District Court for the Eastern District of Texas challenging the Department of Labor’s new overtime rule, which is set to take effect on December 1, 2016.  The group challenging the rule is led by Texas and Nevada, and includes the following states:  Alabama, Arizona, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Mississippi, Nebraska, New Mexico, Ohio, Oklahoma, South Carolina, Utah, and Wisconsin. The lawsuit names as Defendants the DOL and its Wage and Hour Division, Secretary of Labor Thomas Perez, and Wage and Hour Administrator David Weil, and Assistant Administrator for Policy Mary Ziegler.

As most know by now, in May 2016, the DOL issued its final rule establishing a new minimum salary threshold for the white collar exemptions (executive, administrative, and professional) under the Fair Labor Standards Act (FLSA). This new threshold of $913 per week ($47,476 annualized) more than doubles the current minimum weekly salary threshold of $455 per week ($23,660 annualized), and is scheduled to increase every three years.

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What Is The Section 7(i) Exemption And Does It Apply To Auto Dealer Service Advisers?

Posted in Exemptions

Over the summer, the U.S. Supreme Court punted on the question of whether “Service Advisers” or “Service Writers” at auto dealerships fall within the Fair Labor Standards Act’s exemption for “any salesman, partsman, or mechanic primarily engaged in selling or servicing automobiles.” For those outside of the auto industry, these are the people who greet you when you pull into the service department and communicate with you about what work your car might need. Since the question of whether service advisers count as “salesmen” may not be definitively resolved for some time yet, many auto dealers find themselves looking for other overtime exemptions that may apply to these positions.

The Section 7(i) Exemption

The “white collar” exemptions for executive, administrative, and professional employees don’t fit because service advisers don’t perform the sorts of job duties that fall under those exemptions, and many of them are paid mostly on commission rather than on a salary basis. There is, however, another exemption that may apply to at least some service advisers. Section 7(i) of the FLSA creates an exemption that applies when all three of the following conditions are met:

  1. The employee must be employed by a retail or service establishment.
  2. The employee’s regular rate of pay must exceed one and one half times the minimum wage for every hour worked in a workweek in which any overtime hours are worked.
  3. More than half of the employee’s total earnings in a “representative period” must consist of “commissions.”

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Have you updated your FLSA and EPPA posters?

Posted in Minimum Wage

FLSA Poster imageRegular readers may have noticed that this blog took a bit of a hiatus over the summer while the authors spent some time away from work, and then working to catch up from the time away. Now that summer is winding down, the kids are heading back to school and life is starting to return to a more normal routine, it’s time to catch up on some wage and hour developments over the last month or so.

One of those developments is the release of a new FLSA minimum wage poster by the U.S. Department of Labor. The poster can be downloaded in .pdf format from the DOL website. Print copies will, according to the DOL, “be available for order soon.”

The DOL has also issued an updated poster under the Employee Polygraph Protection Act (EPPA), also available for download from the DOL website in .pdf form.

If you haven’t done so already, you should immediately print or obtain a copy of the new posters and post them in a “conspicuous place” in your establishment so that employees can readily read them.

Here's a tip: Don't skim from employee tips

Posted in Tip Credit

TipJar_cropped14346183.jpgHospitality industry employers take note: If you claim a “tip credit” toward the minimum wage for any of your employees, you need to make sure that all tips are properly distributed to employees. A recent case from the Fifth Circuit Court of Appeals involving a Texas restaurant chain illustrates the hazards of making a mistake with the tip credit rules. Steele v. Leasing Enterprises, Ltd. (.pdf)

Here’s a summary of this cautionary tale:

Tip Credit Background

Under the Fair Labor Standards Act, employers are require to pay most employees at least $7.25 per hour. The FLSA allows tips received by employees to count for up to $5.12 of this total, meaning that an employer can pay tipped employees as little as $2.13 per hour so long as their tips are sufficient to make up the difference between their hourly wage and the federal minimum wage. But there are some restrictions. Employers can take advantage of this “tip credit” only if three conditions are met: Continue Reading

The Supreme Court Shoots Down DOL Regulations, But Declines To Rule Whether Service Advisors are Exempt From Overtime Pay Requirements

Posted in DOL News, Exemptions, Supreme Court

Yesterday, the United States Supreme Court issued its long-awaited decision in the Encino Motorcars, LLC v. Navarro case, that many hoped would resolve the issue as to whether Service Advisors at auto dealerships are exempt from the overtime provisions of the Fair Labor Standards Act (FLSA).  As we reported back in January 2016, the Supreme Court agreed to hear a petition filed by an auto dealership, Encino Motorcars, challenging a Ninth Circuit decision holding that Service Advisors were not exempt from overtime pay requirements.  Encino asked that the Court “restore uniformity” in legal precedent and hold that Service Advisors are exempt from the FLSA’s overtime pay requirements.  Auto dealers were hoping that the Supreme Court would bring certainty to this issue and follow prior decisions from the Fourth and Fifth Circuits holding that Service Advisors are salespeople exempt from overtime, instead of following the Ninth Circuit’s contrary decision.  Although the Supreme Court ultimately vacated the Ninth Circuit’s decision, the Court’s opinion leaves the issue open to further consideration. Continue Reading

Converting Salary to an Hourly Rate

Posted in *New Exemption Rules

iStock_000013089958XSmall-thumb-200x132-14260.jpgSince the U.S. DOL published its new overtime exemption rules, several people have asked me how one goes about converting a salary to an hourly rate that will give employees about the same amount of pay once overtime is factored in. There are really two parts to this calculation – one quite simple, the other a bit harder. Continue Reading

Employer Concerns About The New Overtime Exemption Rules Aren't A Myth

Posted in *New Exemption Rules

Every economist knows that there’s no such thing as a free lunch. That’s as true in the labor market as in any other area of the economy, but you’d hardly know that by reading the DOL’s publications promoting its new overtime exemption rules. For example, in a recent blog post, Dr. David Weil, Administrator of the DOL’s Wage and Hour Division, set out to debunk some purported “myths” about the new rules. Reading this post, one is left with the impression that the new rules will benefit pretty much every affected employee with no real burden on employers. Here are some thoughts on these “myths” and the “truths” that Dr. Weil offers in response to each: Continue Reading