Employers Risk FMLA Violation By Delaying FMLA Notification, Designation While Employees Use Other Leave

March 19, 2019

A new U.S. Department of Labor’s Wage and Hour Division (WHD) Family and Medical Leave Act (“FMLA”) opinion letter says warns employers not to delay providing FMLA notice or designating a leave as FMLA-covered when coordinating FMLA protected leave with otherwise available paid or unpaid leave.

FMLA Opinion 2019-1-A states that a FMLA-covered employer must designate as FMLA protected and, absent extenuating circumstances, must provide notice of the designation of the leave as FMLA protected within five business days of the date the employer has enough information to determine an employee has experienced a FMLA qualifying event. The Opinion says this designation and notice must happen even if the employee would prefer that the employer delay the designation of the absence as a FMLA protected leave until the employee exhausts other available leave.

According to WHD, its FMLA regulations require employers to provide a written “designation notice” to an employee within five business days—absent extenuating circumstances—after the employer “has enough information to determine whether the leave is being taken for a FMLA-qualifying reason.”  Failure to provide timely notice requirement may constitute an interference with, restraint on, or denial of the exercise of an employee’s FMLA rights. 29 C.F.R. §§ 825.300(e), 825.301(e).  Consequently, the Opinion concludes that the employer is responsible in all circumstances for designating leave as FMLA-qualifying and giving notice of the designation to the employee within five days of learning if events triggering the FMLA eligibility. 29 C.F.R. § 825.300(d).

The Opinion also emphasizes that employers cannot delay the designation of a leave as FMLA protected and provision of notice while a FMLA-eligible employee uses otherwise available leave.  While acknowledging that the FMLA permits an employer to require, or to permit an employee to elect, to “substitute” accrued paid leave (e.g., paid vacation, paid sick leave, etc.) to cover any part of the unpaid FMLA entitlement period,the Opinion states that  “[t]he term substitute means that the paid leave provided by the employer … will run concurrently with the unpaid FMLA leave.” 29 C.F.R. § 825.207(a) (emphasis added).   While acknowledging that the FMLA allows employers to adopt leave policies more generous than those required by the FMLA. 29 U.S.C. § 2653; see 29 C.F.R. § 825.700, the Opinion also says an employer may not designate more than 12 weeks of leave—or more than 26 weeks of military caregiver leave—as FMLA-protected. See, e.g., Weidner v. Unity Health Plans Ins. Corp., 606 F. Supp. 2d 949, 956 (W.D. Wis. 2009) (citing cases for the principle that “a plaintiff cannot maintain a cause of action under the FMLA for an employer’s violation of its more-generous leave policy”).

Furthermore, the Opinion also openly rejects and disagrees with the Ninth Circuit’s holding in Escriba v. Foster Poultry Farms, Inc., 743 F.3d 1236, 1244 (9th Cir. 2014) that an employee may use non-FMLA leave for an FMLA-qualifying reason and decline to use FMLA leave in order to preserve FMLA leave for future use. Instead, the Opinion adopts the position that once an eligible employee communicates a need to take leave for an FMLA-qualifying reason, neither the employee nor the employer may decline FMLA protection for that leave. See 29 C.F.R. § 825.220(d) (“Employees cannot waive, nor may employers induce employees to waive, their prospective rights under FMLA.”); Strickland v. Water Works and Sewer Bd. of City of Birmingham, 239 F.3d 1199, 1204 (11th Cir. 2001) (noting that the employer may not “choose whether an employee’s FMLA-qualifying absence” is protected or unprotected by the FMLA).  Accordingly, the Opinion concludes that when an employer determines that leave is for an FMLA-qualifying reason, the qualifying leave is FMLA-protected and counts toward the employee’s FMLA leave entitlement.  Once the employer has enough information to make this determination, the employer must, absent extenuating circumstances, provide notice of the designation within five business days.  Therefore, the employer may not delay designating leave as FMLA-qualifying or providing notification, even if the employee would prefer that the employer delay the designation.

The Opinion also clarifies the WHD’s interpretation of the FMLA limits the protection of the FMLA to the statutory period set by the FMLA.   In this respect, the Opinion states, “An employer is also prohibited from designating more than 12 weeks of leave (or 26 weeks of military caregiver leave) as FMLA leave.”  Thus, while acknowledging that “[a]n employer must observe any employment benefit program or plan that provides greater family or medical leave rights to employees than the rights established by the FMLA.” under 29 C.F.R. § 825.700, the Opinion also states that “providing such additional leave outside of the FMLA cannot expand the employee’s 12-week (or 26-week) entitlement under the FMLA.” Therefore, the Opinion states that if an employee substitutes paid leave for unpaid FMLA leave, the employee’s paid leave counts toward his or her 12-week (or 26-week) FMLA entitlement and does not expand that entitlement.

As many employers currently coordinate and administer their FMLA and other leaves inconsistently with the positions stated in the Opinion, employers generally should consult with experienced legal counsel within the scope of attorney client privilege about the implications of the guidance set forth in the Opinion on their existing practices and about whether any corrective action or modifications are advisable in light of the Opinion to minimize potential exposure to FMLA liability.   In connection with this review, employers also generally will want to evaluate their other paid and unpaid military, medical, maternity/paternity, adoption and other absence and leave policies and associated employee benefit plans to confirm that these designs continue to operate as intended and that current coordination practices comport with existing guidance.

About the Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: ERISA & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for 30+ years of management focused employment, employee benefit and insurance, workforce and other management work, public policy leadership and advocacy, coaching, teachings, and publications.

Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer’s clients include employers and other workforce management organizations; employer, union, association, government and other insured and self-insured health and other employee benefit plan sponsors, benefit plans, fiduciaries, administrators, and other plan vendors;   domestic and international public and private health care, education and other community service and care organizations; managed care organizations; insurers, third-party administrative services organizations and other payer organizations;  and other private and government organizations and their management leaders.

Throughout her 30 plus year career, Ms. Stamer has continuously worked with these and other management clients to design, implement, document, administer and defend hiring, performance management, compensation, promotion, demotion, discipline, FMLA and other leave, reduction in force and other workforce, employee benefit, insurance and risk management, health and safety, and other programs, products and solutions, and practices; establish and administer compliance and risk management policies; comply with requirements, investigate and respond to government, accreditation and quality organizations, regulatory and contractual audits, private litigation and other federal and state reviews, investigations and enforcement actions; evaluate and influence legislative and regulatory reforms and other regulatory and public policy advocacy; prepare and present training and discipline;  handle workforce and related change management associated with mergers, acquisitions, reductions in force, re-engineering, and other change management; and a host of other workforce related concerns. Ms. Stamer’s experience in these matters includes supporting these organizations and their leaders on both a real-time, “on demand” basis with crisis preparedness, intervention and response as well as consulting and representing clients on ongoing compliance and risk management; plan and program design; vendor and employee credentialing, selection, contracting, performance management and other dealings; strategic planning; policy, program, product and services development and innovation; mergers, acquisitions, bankruptcy and other crisis and change management; management, and other opportunities and challenges arising in the course of workforce and other operations management to improve performance while managing workforce, compensation and benefits and other legal and operational liability and performance.

Past Chair of the ABA Managed Care & Insurance Interest Group and, a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, heavily involved in health benefit, health care, health, financial and other information technology, data and related process and systems development, policy and operations throughout her career, and scribe of the ABA JCEB annual Office of Civil Rights agency meeting, Ms. Stamer also is widely recognized for her extensive work and leadership on leading edge health care and benefit policy and operational issues. She regularly helps employer and other health benefit plan sponsors and vendors, health industry, insurers, health IT, life sciences and other health and insurance industry clients design, document and enforce plans, practices, policies, systems and solutions; manage regulatory, contractual and other legal and operational compliance; vendors and suppliers; deal with Medicare, Medicaid, CHIP, Medicare/Medicaid Advantage, ERISA, state insurance law and other private payer rules and requirements; contracting; licensing; terms of participation; medical billing, reimbursement, claims administration and coordination, and other provider-payer relations; reporting and disclosure, government investigations and enforcement, privacy and data security; and other compliance and enforcement; Form 990 and other nonprofit and tax-exemption; fundraising, investors, joint venture, and other business partners; quality and other performance measurement, management, discipline and reporting; physician and other workforce recruiting, performance management, peer review and other investigations and discipline, wage and hour, payroll, gain-sharing and other pay-for performance and other compensation, training, outsourcing and other human resources and workforce matters; audits, investigations, enforcement and defense; Civil Rights; privacy and data security; training; risk and change management; regulatory affairs and public policy; process, product and service improvement, development and innovation, and other legal and operational compliance and risk management, government and regulatory affairs and operations concerns.

A former lead consultant to the Government of Bolivia on its Pension Privatization Project with extensive domestic and international public policy concerns in pensions, healthcare, workforce, immigration, tax, education and other areas, Ms. Stamer has been extensively involved in U.S. federal, state and local health care and other legislative and regulatory reform impacting these concerns throughout her career. Her public policy and regulatory affairs experience encompasses advising and representing domestic and multinational private sector health, insurance, employee benefit, employer, staffing and other outsourced service providers, and other clients in dealings with Congress, state legislatures, and federal, state and local regulators and government entities, as well as providing advice and input to U.S. and foreign government leaders on these and other policy concerns.

Author of leading works on a multitude of labor and employment, compensation and benefits, internal controls and compliance, and risk management matters and a Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other related concerns by her service in the leadership of the Solutions Law Press, Inc. Coalition for Responsible Health Policy, its PROJECT COPE: Coalition on Patient Empowerment, and a broad range of other professional and civic organizations including North Texas Healthcare Compliance Association, a founding Board Member and past President of the Alliance for Healthcare Excellence, past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children (now Warren Center For Children); current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section, Past Chair of the ABA Health Law Section Managed Care & Insurance Section, a current Defined Contribution Plan Committee Co-Chair, former Group Chair and Co-Chair of the ABA RPTE Section Employee Benefits Group, past Representative and chair of various committees of ABA Joint Committee on Employee Benefits; an ABA Health Law Coordinating Council representative, former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division, past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee, a former member of the Board of Directors of the Southwest Benefits Association and others.

For more information about Ms. Stamer or her experience and involvements, see here or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advise or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

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Posted by Cynthia Marcotte Stamer

High Enforcement, New Tip Pool Rules Require Restaurants Reassess & Manage FLSA Risks

April 12, 2018

Restaurant employers should audit and tighten the employee wage, timekeeping and other wage and hour practices to minimize their exposure to heightened enforcement of the Fair Labor Standards Act and other federal wage and hour laws by the U.S. Department of Labor Wage and Hour Division (WHD) allowed WHD to recover more than $189 million in back pay from restaurant employers over the past five years, while also evaluating the implications of the new WHD Field Assistance Bulletin: Amendment to FLSA Section 3(m) Included in Consolidated Appropriations Act, 2018 (FAB) on their ability to legally use tip pools for their tipped employees in light of the enactment by Congress as part of the Consolidated Appropriations Act, 2018 (Act), Pub. L. No. 115-141, Div. S., Tit. XII, § 1201 (Act).

With WHD set to continue the aggressive wage and hour investigation and enforcement practices that it has used to recover more than $1.2 billion in back pay awards from employers over the past five years and having just announced the temporary availability of a pilot voluntary resolution program for employers to use to settle WHD wage and hour liability problems, prompt action is particularly important now.

Restaurants Face WHD Wage & Hour Responsibilities

Restaurant industry employers have been the subject of special wage and hour law investigatory and enforcement by the WHD for the past decade.  In fiscal year 2017 alone, WHD’s enforcement statistics restaurant industry initiative targeting restaurant employers enabled it to successfully recover $42,936,552 for 44,363 from 5,446 cases brought against restaurant employers.  See WHD Fiscal Year Data, Low Wage, High Violation Industries.  See also, Restaurant Owners Beware!

WHD began targeting the restaurant industry for aggressive compliance education, investigation and enforcement and its workers and their representatives for educational outreach after finding widespread noncompliance with minimum wage, overtime and other wage and hour rules throughout the industry.

Federal investigated and enforced by WHD includes the following general rules as well as applicable special rules for tipped employees:

  • Covered non-exempt workers generally are entitled to a federal minimum wage of not less than $7.25 per hour;
  • The 1996 Amendments to the FLSA allow employers to pay a youth minimum wage of not less than $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment by their employer. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage.  Workers under 16 years of age also are subject to special restrictions on their hours of work and the nature of work.  Federal law authorizes substantial additional penalties for violation of certain of these special requirements on youth employment;
  • Wages are due on the regular payday for the pay period covered;
  • Deductions made from wages for items such as cash shortages, required uniforms, or customer walk-outs are illegal if the deduction reduces the employee’s wages below the minimum wage or cuts into overtime pay;
  • Deductions made for items other than board, lodging, or other recognized
    facilities normally cannot be made in an overtime workweek;
  • The employer may take credit for food which is provided at cost but cannot take credit for discounts given employees on food (menu) prices;
  • The employer must pay employees overtime at a rate of at least one and one-half times the employee’s regular rate of pay for each hour worked in excess of 40 hours per week;
  • Equal pay requirements;
  • Family medical leave act requirements under the Family and Medical Leave Act; and
  • Others.

In addition to these generally applicable requirements, the FLSA also includes a number of special rules on restaurant’s compensation of “tipped employees.” These rules which often are the subject for WHD and other challenges are the subject of the amendments made by the Act and new FAB.  For purposes of these rules “tipped employees” are those who customarily and regularly receive more than $30 a month in tips.  Among other things, the FLSA tipped employee rules generally provide that a restaurant employer may consider tips part of wages (“tip credit”) provided by the employer only if it meets specific requirements including:

  • The employer must pay the tipped employee at least $2.13 an hour in direct wages;
  • The employer must ensure that the additional amount of tips a tipped employee receive coupled with the employee’s direct wages equals or exceeds the minimum wage;
  • The employer must inform tipped employees of the provisions about FLSA section 3(m) in advance if the employer elects to use the tip credit.
  • Employees must retain all of their tips, except to the extent that they participate in a valid tip pooling or sharing arrangement.
  • In determining the regular rate for a tipped employee, all components of the employee’s wages must be considered (i.e., cash, board, lodging, facilities, and tip credit).

Act Amends Tip Credit Rules

In addition to managing their overall compliance with the FLSA and other wage and hour rules, many restaurant employers of tipped employees also now much review and update their practices in responses to new rules on tip pools enacted by Congress earlier this year.  The Act amended the FLSA rules concerning tipped employees in several material respects.  The amendments made by the Act focus on tip pools.  Other requirements are left mostly undisturbed.

Specifically, the Act:

  • Prohibits employers from keeping tips received by their employees, regardless whether the employer takes a tip credit under 29 U.S.C. § 203(m);
  • Provides that portions of WHD’s regulations codified at 29 C.F.R. §§ 531.52, 531.54, and 531.59 that barred tip pooling when employers pay tipped employees at least the full FLSA minimum wage and do not claim a tip credit have no further force or effect pending future WHD action.
  • Gives WHD enforcement authority in FLSA sections 16(b) and 16(c) to, among other things, recover all tips unlawfully kept by the employer, in addition to an equal amount in liquidated damages.

Before enactment of the Act, WHD at the direction of the Trump Administration already was considering adopting a Proposed Rule published on December 5, 2017 that would have rescinded a 2011 Obama Administration-era WHD regulation barring tip-sharing arrangements in establishments where the employers pay full Federal minimum wage and do not take a tip credit against their minimum wage obligations.  That 2017 Proposed Rule provided that employers paying a full minimum wage to employees could require these workers to share their tips with other employees, including employees who do not customarily receive tips including restaurant cooks, dishwashers and other traditionally lower-wage classifications.

While WHD has not yet issued final rules implementing the changes enacted by the Act, earlier this week it published  a Field Assistance Bulletin: Amendment to FLSA Section 3(m) Included in Consolidated Appropriations Act, 2018 (FAB) that  discusses its enforcement policy regarding the Act’s amendments pending WHD’s future adoption of regulations.

The FAB states that employers who pay the full regular FLSA minimum wage (currently $7.25 per hour for regular time) to tipped employees are no longer prohibited from allowing employees who are not customarily and regularly tipped—such as cooks and dishwashers—to participate in tip pools. However, employers cannot allow managers or supervisors to participate in the tip pools as the Act equates such participation with the employer’s keeping the tips.

As an enforcement policy, the FAB states that WHD will use the duties test at 29 C.F.R. § 541.100(a)(2)-(4) to determine whether an employee is a manager or supervisor for purposes of section 3(m).

Finally, the WHD states that given the changes made by the Act, WHD will not apply WHD’s July 20, 2017 non-enforcement policy concerning retention of tips by tipped employees paid the full FLSA minimum wage to new investigations beginning on or after March 23, 2018. When an investigation covers periods before and after March 23, 2018, and the employee was paid at least the full FLSA minimum wage, however, the FAB states WHD will only cite violations of section 3(m) if they occurred after March 23, 2018.

In an April 9, 2018 press release issued in connection with its publication of the FAB,  WHD states that it expects to fully address the impact of the 2018 amendments made by the Act through formal rulemaking soon.  In the meantime, restaurant employers using or interested in using tip pools should ensure that their practices are tailored to respond to the FAB guidance as well as to otherwise comply with all WHD and other wage and hour rules.

Enforcement Risks  Merit Heightened Restaurant Compliance 

Confirming and maintaining appropriate wage and hour compliance and risk management is particularly imperative because of the WHD’s ongoing targeted enforcement efforts against industry employers.

The evidence makes clear that the restaurant industry’s high record of noncompliance makes it a continuing target for aggressive wage and hour law oversight, enforcement and compliance outreach by WHD.

To assist and encourage restaurant operators’ voluntary compliance with the FLSA and wage and hour rules, WHD offers a number of tip sheets and other resources specifically focusing on restaurant industry employers on its website as well as conducts other outreach. See e.g., Restaurants and Fast Food Establishments under the Fair Labor Standards Act.  Along with these compliance efforts, however, WHD also targets restaurant employers for aggressive oversight and enforcement, as well as conducts significant outreach educate and encourage state agencies and workers to enforce employee wage and hour rights.  See e.g., U.S. Department of Labor Undertakes Education and Enforcement Initiative To Improve Compliance in Green Bay-Area Restaurants (April 12, 2018);U.S. Department of Labor Sets Up Hotline for Back Wages Owed Employees at New Jersey and New York Houlihan’s Restaurants;  Workers Owed Wages.

Despite WHD’s highly publicized enforcement efforts and substantial compliance outreach to the industry, WHD enforcement statistics reflect that noncompliance remains an industry wide problem.  WHD reports that common violations include worker misclassification of workers, inappropriately claiming tip credit under FLSA 3(m); improperly deducting walkouts, cash register shortages, breakage, cost of uniforms, etc.,  improper classification of employees as exempt employees; and recordkeeping deficiencies.

WHD data also reflects that the WHD is continuing to successfully target restaurant employers aggressively under the Trump Administration.  WHD credits these efforts with allowing it to recover $42 million in back pay from restaurant employers in fiscal year 2017 alone.  2018 enforcement data reflects that WHD is continuing these efforts in 2018 with great success.

For instance, in February, WHD announced that the operator of 14 restaurants in Alabama, Georgia, and Virginia, Taziki’s Restaurants LLC doing business as Taziki’s Mediterranean Café was paying $135,844 to 26 employees to resolve violations of FLSA overtime and recordkeeping provisions.  According to WHD, Taziki’s violated the FLSA by failing to combine the hours that individual employees worked at multiple locations in the same workweek to determine whether overtime was due. Instead, the employer paid each employee with multiple paychecks corresponding to each location. This practice resulted in failure to pay overtime when an employee’s combined hours totaled more than 40 in a workweek.  Investigators also found that Taziki’s Restaurants LLC failed to pay workers for time they spent traveling between restaurants to perform work. This exclusion of work time from the payroll created a record keeping violation, and these previously unrecorded hours also resulted in additional overtime found due.

All indications are that it subsequently still is continuing its vigorous targeting of the industry.  WHD announced its establishment of a hotline for 1,471 current and former Houlihan’s employees of 17 of the restaurant chain’s New Jersey and New York locations to assist them in recovering back wages and liquidated damages.  See U.S. Department of Labor Sets Up Hotline for Back Wages Owed Employees at New Jersey and New York Houlihan’s Restaurants (April 12, 2018); U.S. Department of Labor Undertakes Education and Enforcement Initiative To Improve Compliance in Green Bay-Area Restaurants  (April 12, 2018); U.S. Department of Labor Investigation Results in Tennessee Restaurant Paying $48,197 to Resolve Minimum Wage and Overtime Violations (April 11, 2018).

Meanwhile, state wage and hour law enforcement and private enforcement of federal and state wage and laws also continues to rise, in part as a result of WHD’s concurrent educational outreach to industry workers , plaintiff’s attorneys and union representatives about rights and remedies and outreach, coordination and grant funding to state wage and hour enforcement agencies.

Amid these ongoing risks, WHD recently has given employer a new option for resolving FLSA and other wage and hour law violation exposures.  Under the new pilot self-audit Payroll Audit Independent Determination (PAID) program WHD announced on March 6, WHD says that it will allow employers accepted into the program after voluntarily disclosing violations to resolve their exposure WHD penalties and liquidated damages commonly assessed by WHD against employers for violating the FLSA minimum wage and overtime violations by:

  • Voluntarily disclosing the violations to WHD before becoming subject to investigation or enforcement and requesting admission to the program;
  • Paying affected workers 100 percent of the unpaid back pay due wrongfully denied by the end of the next full pay period after receiving the summary of unpaid wages from WHD confirming the back pay amount;
  • Working with WHD prospectively to correct noncompliant practices; and
  • Taking other actions to correct and prevent a recurrence of those violations.

While participation in the PAID program allows a participating employer to settle its exposure to prosecution for those violations by WHD, many employers may face challenges in using the program as a result of the inability to marshal the required capital to pay 100 percent of the back pay due within the required time period. In addition, acceptance into the program is not available for certain violations and other conditions and limitations apply.  See Employers Should Weigh New DOL PAID Program, Other Options To Manage Rising FLSA Minimum Wage & Overtime Risks.  While employers concerned about potential existing or past violation exposures will need to weigh the new option carefully with the assistance of experienced legal counsel,  the availability of this option coupled with the high risk of enforcement and resulting liability makes it important for employers to assess their potential risk and associated risk mitigation options promptly.  Consequently, restaurant employers are well advised to exercise extreme care to audit within the scope of attorney-client privileged  the adequacy of their practices and records and evaluate options for mitigating their wage and hour exposures with the assistance of legal counsel experienced with wage and hour and related workforce matters.

 About The Author

Recognized by her peers as a Martindale-Hubble “AV-Preeminent” (Top 1%) and “Top Rated Lawyer” with special recognition LexisNexis® Martindale-Hubbell® as “LEGAL LEADER™ Texas Top Rated Lawyer” in Health Care Law and Labor and Employment Law; as among the “Best Lawyers In Dallas” for her work in the fields of “Labor & Employment,” “Tax: Erisa & Employee Benefits,” “Health Care” and “Business and Commercial Law” by D Magazine, Cynthia Marcotte Stamer is a practicing attorney board certified in labor and employment law by the Texas Board of Legal Specialization and management consultant, author, public policy advocate and lecturer widely known for management work, coaching, teachings, and publications.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce, internal controls and regulatory compliance, change management and other performance and operations management and compliance. Her day-to-day work encompasses both labor and employment issues, as well as independent contractor, outsourcing, employee leasing, management services and other nontraditional service relationships. She supports her clients both on a real-time, “on demand” basis and with longer term basis to deal with all aspects for workforce and human resources management, including, recruitment, hiring, firing, compensation and benefits, promotion, discipline, compliance, trade secret and confidentiality, noncompetition, privacy and data security, safety, daily performance and operations management, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.

The author of the “Texas Payday Act,” and numerous other highly regarded publications on wage and hour and other human resources, employee benefits and compensation publications, Ms. Stamer is well-known for her 30 years of extensive wage and hour, compensation and other management advice and representation of restaurant and other hospitality, health, insurance, financial services, technology, energy, manufacturing, retail, governmental and other domestic and international businesses of all types and sizes.

A Fellow in the American College of Employee Benefit Counsel, the American Bar Foundation and the Texas Bar Foundation, Ms. Stamer also shares her thought leadership, experience and advocacy on these and other concerns by her service as a management consultant,  business coach and consultant and policy strategist as well through her leadership participation in professional and civic organizations such her involvement as the Vice Chair of the North Texas Healthcare Compliance Association; Executive Director of the Coalition on Responsible Health Policy and its PROJECT COPE: Coalition on Patient Empowerment; former Board President of the early childhood development intervention agency, The Richardson Development Center for Children; former Gulf Coast TEGE Council Exempt Organization Coordinator; a founding Board Member and past President of the Alliance for Healthcare Excellence; former board member and Vice President of the Managed Care Association; past Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; a member and policy adviser to the National Physicians’ Council for Healthcare Policy; current Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee; current Vice Chair of Policy for the Life Sciences Committee of the ABA International Section; Past Chair of the ABA Health Law Section Managed Care & Insurance Section; ABA Real Property Probate and Trust (RPTE) Section former Employee Benefits Group Chair, immediate past RPTE Representative to ABA Joint Committee on Employee Benefits Council Representative, and Defined Contribution Committee Co-Chair, past Welfare Benefit Committee Chair and current Employee Benefits Group Fiduciary Responsibility Committee Co-Chair, Substantive and Group Committee member, Membership Committee member and RPTE Representative to the ABA Health Law Coordinating Council; past Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a former member of the Board of Directors, Treasurer, Member and Continuing Education Chair of the Southwest Benefits Association and others.

Ms. Stamer also is a widely published author, highly popular lecturer, and serial symposia chair, who publishes and speaks extensively on human resources, labor and employment, employee benefits, compensation, occupational safety and health, and other leadership, performance, regulatory and operational risk management, public policy and community service concerns for the American Bar Association, ALI-ABA, American Health Lawyers, Society of Human Resources Professionals, the Southwest Benefits Association, the Society of Employee Benefits Administrators, the American Law Institute, Lexis-Nexis, Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, the HCCA, ISSA, HIMSS, Modern Healthcare, Managed Healthcare, Institute of Internal Auditors, Society of CPAs, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other symposia and publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications and speaks and conducts training for a broad range of professional organizations and for clients on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.

Want to know more? See here for details about the author of this update, attorney Cynthia Marcotte Stamer, e-mail her here or telephone Ms. Stamer at (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™ provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources here including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating your profile here.

NOTICE: These statements and materials are for general informational and purposes only. They do not establish an attorney-client relationship, are not legal advice or an offer or commitment to provide legal advice, and do not serve as a substitute for legal advice. Readers are urged to engage competent legal counsel for consultation and representation in light of the specific facts and circumstances presented in their unique circumstance at any particular time. No comment or statement in this publication is to be construed as legal advice or an admission. The author reserves the right to qualify or retract any of these statements at any time. Likewise, the content is not tailored to any particular situation and does not necessarily address all relevant issues. Because the law is rapidly evolving and rapidly evolving rules makes it highly likely that subsequent developments could impact the currency and completeness of this discussion. The presenter and the program sponsor disclaim, and have no responsibility to provide any update or otherwise notify any participant of any such change, limitation, or other condition that might affect the suitability of reliance upon these materials or information otherwise conveyed in connection with this program. Readers may not rely upon, are solely responsible for, and assume the risk and all liabilities resulting from their use of this publication.

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©2018 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press, Inc.™  For information about republication, please contact the author directly. All other rights reserved.

 

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Posted by Cynthia Marcotte Stamer

Obama Administration Proposal Would Extend FLSA Minimum Wage & Overtime Requirements To 5 Million+ Workers

June 30, 2015

U.S. should brace for potentially huge increases in their federal minimum wage overtime costs and liabilities if the U.S. Department of Labor Wage and Hour Division (WHD) implements a Proposed Fair Labor Standards Act Rule Change (Proposed Rule) that would extend overtime pay rights to nearly 5 million additional workers by guaranteeing overtime pay to most salaried workers earning less than an estimated $50,440 next year.  While the Proposed Rule has not yet been published in the Federal Register, the WHD released a prepublication copy for public review in connection with President Obama’s announcement of plans to implement the change yesterday.

The FLSA currently requires that covered employees be paid at least the federal minimum wage of $7.25 for all hours worked, plus time and one-half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers also must maintain accurate time and payroll records. The FLSA provides that employers who violate the law are liable to employees for their back wages and an equal amount in liquidated damages. Liquidated damages are paid directly to the affected employees.

These FLSA rules generally apply to all common law employees other than those that the employer can prove meet the requirements of one of a limited number of exemptions to these rules.  The Proposed Rule would change the requirements for one of the exemptions most commonly relied upon by employers for not paying overtime to salaried workers – the “White Collar Exemption.”

Since 1940 and last updated by the WHD while President George W. Bush was President, generally have required an employer prove that an employee meets each of three tests for one of the FLSA’s White Collar Exemptions to apply:

  • The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
  • The amount of salary paid must meet a minimum specified amount; and
  • The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations.

Among other things, the Proposed Rule if adopted as presently proposed would update current WHD regulations governing which executive, administrative, and professional employees (white collar workers) qualify as exempt from the FLSA minimum wage and overtime requirements often referred to as the “White Collar Exemption”:

  • Immediately raise the threshold under which most salaried workers are guaranteed overtime to equal the 40th percentile of weekly earnings for full-time salaried workers. As proposed, this would raise the salary threshold from $455 a week ($23,660 a year) to a projected level of $970 a week ($50,440 a year) in 2016.  WHD says nearly doubling the minimum salary threshold for a worker to qualify as exempt “minimizes the risk that employees legally entitled to overtime will be subject to misclassification based solely on the salaries they receive, without excluding from exemption an unacceptably high number of employees who meet the duties test.”;
  • Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
  • Establish a mechanism for automatically updating these qualifying standard salary and HCE total annual compensation requirements.

Beyond these changes, the WHD also is considering various changes to the duties test and invites suggestions for additional occupational examples in the current White Collar Exemption as well as comments on whether its regulations should require employers to take into account nondiscretionary bonuses when determining whether an employee meets the standard salary requirement.

The Administration claims that the Proposed Rule is needed to workers and their employers with greater “clarity” about when workers qualify for overtime.  Employers concerned about minimum wage, overtime and other wage and hour costs should recognize that the Proposed Rule would accomplish this clarification by substantially expanding the income and number of white collar workers that entitled to be paid in accordance with the FLSA’s minimum wage and overtime rules.

Even without the adoption of the Proposed Rule, U.S. businesses already face huge and ever-growing FLSA minimum wage, overtime and recordkeeping exposures.  The availability of substantial actual and punitive damages plus attorneys fees and difficulties that unprepared employers frequently encounter meeting their burdens of proof make wage and hour and overtime claims attractive lawsuits for disgruntled employees and their plaintiff’s counsel.  Meanwhile, the pro-worker’s rights Obama Administration has made enforcement of these rules a high priority.  Increasingly, the reach of these exposures has expanded further as plaintiffs and the WHD have challenges effectively many employers’ classification of workers as independent contractors.  See  $1.4M FLSA Back Pay Award Demonstrates Worker Misclassification Risks.  Amid these already substantial exposures, most employers will view proposals to expand the scope of workers eligible for FLSA rights and protections as extremely concerning.

Employers concerned about the potential implications of this rule should begin reviewing the Proposed Rule in preparation of providing comments and feedback to members of Congress, the WHD through its rulemaking comment process, and the public.  The deadline for commenting to the WHD will be 60 days from the date of publication of the Proposed Rule in the Federal Register.

For Legal or Consulting Advice, Legal Representation, Training Or More Information

If you need help responding to these new or other workforce, benefits and compensation, performance and risk management, compliance, enforcement or management concerns, help updating or defending your workforce or employee benefit policies or practices, or other related assistance, the author of this update, attorney Cynthia Marcotte Stamer may be able to help.

Recognized as a “Top” attorney in employee benefits, labor and employment and health care law extensively involved in health and other employee benefit and human resources policy and program design and administration representation and advocacy throughout her career, Cynthia Marcotte Stamer is a practicing attorney and Managing Shareholder of Cynthia Marcotte Stamer, P.C., a member of Stamer│Chadwick │Soefje PLLC, author, pubic speaker, management policy advocate and industry thought leader with more than 27 years’ experience practicing at the forefront of employee benefits and human resources law.

A Fellow in the American College of Employee Benefit Counsel, past Chair and current Welfare Benefit Committee Co-Chair of the American Bar Association (ABA) RPTE Section Employee Benefits Group, Vice Chair of the ABA Tort & Insurance Practice Section Employee Benefits Committee, former Chair of the ABA Health Law Section Managed Care & Insurance Interest Group,  an ABA Joint Committee on Employee Benefits Council Representative and Board Certified in Labor & Employment Law by the Texas Board of Legal Specialization, Ms.Stamer is recognized nationally and internationally for her practical and creative insights and leadership on health and other employee benefit, human resources and insurance matters and policy.

Ms. Stamer helps management manage. Ms. Stamer’s legal and management consulting work throughout her 27 plus year career has focused on helping organizations and their management use the law and process to manage people, process, compliance, operations and risk. Highly valued for her rare ability to find pragmatic client-centric solutions by combining her detailed legal and operational knowledge and experience with her talent for creative problem-solving, Ms. Stamer helps public and private, domestic and international businesses, governments, and other organizations and their leaders manage their employees, vendors and suppliers, and other workforce members, customers and other’ performance, compliance, compensation and benefits, operations, risks and liabilities, as well as to prevent, stabilize and cleanup workforce and other legal and operational crises large and small that arise in the course of operations.

Ms. Stamer works with businesses and their management, employee benefit plans, governments and other organizations deal with all aspects of human resources and workforce management operations and compliance.  She supports her clients both on a real time, “on demand” basis and with longer term basis to deal with daily performance management and operations, emerging crises, strategic planning, process improvement and change management, investigations, defending litigation, audits, investigations or other enforcement challenges, government affairs and public policy.  Well known for her extensive work with health care, insurance and other highly regulated entities on corporate compliance, internal controls and risk management, her clients range from highly regulated entities like employers, contractors and their employee benefit plans, their sponsors, management, administrators, insurers, fiduciaries and advisors, technology and data service providers, health care, managed care and insurance, financial services, government contractors and government entities, as well as retail, manufacturing, construction, consulting and a host of other domestic and international businesses of all types and sizes.  Common engagements include internal and external workforce hiring, management, training, performance management, compliance and administration, discipline and termination, and other aspects of workforce management including employment and outsourced services contracting and enforcement, sentencing guidelines and other compliance plan, policy and program development, administration, and defense, performance management, wage and hour and other compensation and benefits, reengineering and other change management, internal controls, compliance and risk management, communications and training, worker classification, tax and payroll, investigations, crisis preparedness and response, government relations, safety, government contracting and audits, litigation and other enforcement, and other concerns.

Ms. Stamer uses her deep and highly specialized health, insurance, labor and employment and other knowledge and experience to help employers and other employee benefit plan sponsors; health, pension and other employee benefit plans, their fiduciaries, administrators and service providers, insurers, and others design legally compliant, effective compensation, health and other welfare benefit and insurance, severance, pension and deferred compensation, private exchanges, cafeteria plan and other employee benefit, fringe benefit, salary and hourly compensation, bonus and other incentive compensation and related programs, products and arrangements. She is particularly recognized for her leading edge work, thought leadership and knowledgeable advice and representation on the design, documentation, administration, regulation and defense of a diverse range of self-insured and insured health and welfare benefit plans including private exchange and other health benefit choices, health care reimbursement and other “defined contribution” limited benefit, 24-hour and other occupational and non-occupational injury and accident, ex-patriate and medical tourism, onsite medical, wellness and other medical plans and insurance benefit programs as well as a diverse range of other qualified and nonqualified retirement and deferred compensation, severance and other employee benefits and compensation, insurance and savings plans, programs, products, services and activities.  As a key element of this work, Ms. Stamer works closely with employer and other plan sponsors, insurance and financial services companies, plan fiduciaries, administrators, and vendors and others to design, administer and defend effective legally defensible employee benefits and compensation practices, programs, products and technology. She also continuously helps employers, insurers, administrative and other service providers, their officers, directors and others to manage fiduciary and other risks of sponsorship or involvement with these and other benefit and compensation arrangements and to defend and mitigate liability and other risks from benefit and liability claims including fiduciary, benefit and other claims, audits, and litigation brought by the Labor Department, IRS, HHS, participants and beneficiaries, service providers, and others.  She also assists debtors, creditors, bankruptcy trustees and others assess, manage and resolve labor and employment, employee benefits and insurance, payroll and other compensation related concerns arising from reductions in force or other terminations, mergers, acquisitions, bankruptcies and other business transactions including extensive experience with multiple, high-profile large scale bankruptcies resulting in ERISA, tax, corporate and securities and other litigation or enforcement actions.

Ms. Stamer also is deeply involved in helping to influence the Affordable Care Act and other health care, pension, social security, workforce, insurance and other policies critical to the workforce, benefits, and compensation practices and other key aspects of a broad range of businesses and their operations.  She both helps her clients respond to and resolve emerging regulations and laws, government investigations and enforcement actions and helps them shape the rules through dealings with Congress and other legislatures, regulators and government officials domestically and internationally.  A former lead consultant to the Government of Bolivia on its Social Security reform law and most recognized for her leadership on U.S. health and pension, wage and hour, tax, education and immigration policy reform, Ms. Stamer works with U.S. and foreign businesses, governments, trade associations, and others on workforce, social security and severance, health care, immigration, privacy and data security, tax, ethics and other laws and regulations. Founder and Executive Director of the Coalition for Responsible Healthcare Policy and its PROJECT COPE: the Coalition on Patient Empowerment and a Fellow in the American Bar Foundation and State Bar of Texas, Ms. Stamer annually leads the Joint Committee on Employee Benefits (JCEB) HHS Office of Civil Rights agency meeting and other JCEB agency meetings.  She also works as a policy advisor and advocate to many business, professional and civic organizations.

Author of the thousands of publications and workshops these and other employment, employee benefits, health care, insurance, workforce and other management matters, Ms. Stamer also is a highly sought out speaker and industry thought leader known for empowering audiences and readers. Ms. Stamer’s insights on employee benefits, insurance, health care and workforce matters in Atlantic Information Services, The Bureau of National Affairs (BNA), InsuranceThoughtLeaders.com, Benefits Magazine, Employee Benefit News, Texas CEO Magazine, HealthLeaders, Modern Healthcare, Business Insurance, Employee Benefits News, World At Work, Benefits Magazine, the Wall Street Journal, the Dallas Morning News, the Dallas Business Journal, the Houston Business Journal, and many other publications. She also has served as an Editorial Advisory Board Member for human resources, employee benefit and other management focused publications of BNA, HR.com, Employee Benefit News, InsuranceThoughtLeadership.com and many other prominent publications. Ms. Stamer also regularly serves on the faculty and planning committees for symposia of LexisNexis, the American Bar Association, ALIABA, the Society of Employee Benefits Administrators, the American Law Institute, ISSA, HIMMs, and many other prominent educational and training organizations and conducts training and speaks on these and other management, compliance and public policy concerns.

Ms. Stamer also is active in the leadership of a broad range of other professional and civic organizations. For instance, Ms. Stamer presently serves on an American Bar Association (ABA) Joint Committee on Employee Benefits Council representative; Vice President of the North Texas Healthcare Compliance Professionals Association; Immediate Past Chair of the ABA RPTE Employee Benefits & Other Compensation Committee, its current Welfare Benefit Plans Committee Co-Chair, on its Substantive Groups & Committee and its incoming Defined Contribution Plan Committee Chair and Practice Management Vice Chair; Past Chair of the ABA Health Law Section Managed Care & Insurance Interest Group and a current member of its Healthcare Coordinating Council; current Vice Chair of the ABA TIPS Employee Benefit Committee; the former Coordinator and a Vice-Chair of the Gulf Coast TEGE Council TE Division; on the Advisory Boards of InsuranceThoughtLeadership.com, HR.com, Employee Benefit News, and many other publications.  She also previously served as a founding Board Member and President of the Alliance for Healthcare Excellence, as a Board Member and Board Compliance Committee Chair for the National Kidney Foundation of North Texas; the Board President of the early childhood development intervention agency, The Richardson Development Center for Children; Chair of the Dallas Bar Association Employee Benefits & Executive Compensation Committee; a member of the Board of Directors of the Southwest Benefits Association. For additional information about Ms. Stamer, see www.cynthiastamer.com, or www.stamerchadwicksoefje.com   the member of contact Ms. Stamer via email here or via telephone to (469) 767-8872.

About Solutions Law Press, Inc.™

Solutions Law Press, Inc.™  provides human resources and employee benefit and other business risk management, legal compliance, management effectiveness and other coaching, tools and other resources, training and education on leadership, governance, human resources, employee benefits, data security and privacy, insurance, health care and other key compliance, risk management, internal controls and operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press, Inc.™ resources at www.solutionslawpress.com including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information including your preferred e-mail by creating or updating your profile at here.

©2015 Cynthia Marcotte Stamer. Non-exclusive right to republish granted to Solutions Law Press. All other rights reserved.

Comments Off on Obama Administration Proposal Would Extend FLSA Minimum Wage & Overtime Requirements To 5 Million+ Workers | Uncategorized | Tagged: , , , , , , , , , , , , , , , , , , , | Permalink
Posted by Cynthia Marcotte Stamer