Author Archives: smithamundsen

US DOL Changes to Exempt Salary Status on the Horizon – Are you ready?

Contributed by Sara Zorich, September 17, 2019

scale weighing money and time. financial concept. illustration in flat design on blue background

The United States Department of Labor (DOL) is expected to implement its proposal to amend the minimum salary requirements for exempt employees under the Fair Labor Standards Act (FLSA) no later than the end of 2019. As you may recall, a similar proposal was set for 2016 but was not implemented due to a court injunction. Under the FLSA, the current minimum salary threshold for exempt employees is $455/week ($23,660 annually) which is anticipated to increase under the DOL’s proposal to $679/week ($35,308 annually). Note, state law requirements may be more generous than the FLSA and employers must follow the law that is most beneficial to the employee.

While you may be having déjà vu from 2016 and think “been there, done that,” it is still important to review your current exempt employee pay mechanisms in light of the potential changes and analyze the following:

  • How many of your current employees will be impacted by this new rule?
  • Is a salary increase for those who do not currently meet the salary requirement a plausible financial decision to the required increases?
  • Are there job positions that should now be reclassified as non-exempt and the employees will now be entitled to overtime if they work over 40 hours?
  • Tightening up policies regarding working overtime and working with management to limit the number of overtime hours worked for non-exempt employees.
  • Reviewing job descriptions.
  • Reviewing handbooks and policies regarding exempt and non-exempt status.
  • Reviewing benefits applicable to exempt and non-exempt employees and how a change in status may impact the benefits to your employees.

Employers have options:

  • Increase the employee’s salary to that proposed in the new regulations so they continue to meet the exemption;
  • Keep the salary the same and pay the required overtime payments based on the employee’s regular rate of pay;
  • Reduce the employee’s salary or change the employee to hourly at a lower rate so the total earnings do not change after overtime is paid;
  • Eliminate the employee working any overtime hours; or
  • Some combination of the above options.

Employers should begin analyzing their exempt workforce now so they are prepared when the DOL changes are implemented. 

FMLA leave can be Tricky, Tricky, Tricky

 Contributed by Mike Wong, September 12, 2019

FMLA family medical leave act ,FMLA

In 2014, the Seventh Circuit Federal Appellate Court that covers federal courts in Illinois, Indiana and Wisconsin, held that an employee’s trip to Las Vegas qualified for FMLA leave and was protected by the FMLA because he was providing daily care to his terminally ill mother.  Ballard v. Chicago Park District, 741 F.3d 838 (7th Cir. Jan. 28, 2014).

This case highlighted the fact that in looking at whether something like a trip to Las Vegas qualifies for FMLA leave, we have to look past the initial issue and ask whether it is to care for an immediate family member (spouse, child or parent – but not parent “in-law”) with a serious health condition.

The Department of Labor (DOL) recently doubled down on this proposition in an August 8, 2019 Opinion Letter in which it concluded that FMLA covers an employee’s attendance to school meetings where the employee’s child’s individualized education program (IEP) would be discussed.

The DOL Opinion Letter is based on a situation where an employee has two children with serious health conditions. The employee has been approved for intermittent FMLA leave to provide care for the children, including taking the children to doctor appointments. However, the employer has denied the employee’s request to take FMLA leave to attend meetings at the children’s school to discuss the children’s IEP.

Public Schools are required to develop an IEP for children with disabilities, including preschool-age children under the Individuals with Disabilities Education Act (IDEA). Under the IDEA, once a child is determined to have a qualifying health condition, parents must be notified and meetings will be held in which an IEP will be developed and reviewed.  Those meetings can include participation by a speech pathologist, school psychologist, occupational therapist and/or physical therapist employed or contracted by the school district, all of whom provide services to the child under the child’s IEP. Each IEP is designed to meet a child’s exact needs.

The DOL determined that attendance to the school meetings to address the IEP is a qualifying reason for taking intermittent FMLA leave. In doing so, the DOL noted that “to care” for a family member with a serious health condition includes “to make arrangements for changes in care.” This includes taking leave to help make medical decisions on behalf of a hospitalized parent or to make arrangements to find suitable childcare for a child with a disability. See Romans v. Michigan Dep’t of Human Servs., 668 F.3d 826, 840–41 (6th Cir. 2012) (holding that an employee was entitled to take FMLA leave to join his sister at a hospital to make a decision regarding whether to keep their mother on life support); Wegelin v. Reading Hosp. & Med. Ctr., 909 F. Supp. 2d 421, 429–30 (E.D. Pa. 2012) (holding that an employee was entitled to take FMLA leave to find a daycare to care for her daughter with an autism spectrum disorder and a visual impairment); see also Ballard v. Chicago Park Dist., 741 F.3d 838, 840 (7th Cir. 2014) (noting that the FMLA “speaks in terms of ‘care,’ not ‘treatment’”). Additionally, an employee may “make arrangements for changes in care,” even if that care does not involve a facility that provides medical treatment. Wegelin, 909 F. Supp. 2d at 430 (quoting 29 C.F.R. § 825.124).

This Opinion Letter provides us a lot of great reminders and takeaways:

·       When an employee requests time off for school meetings or to change daycares/nursing homes, we need to ask more questions, as those would qualify for FMLA leave if it is with respect to an immediate family member with a serious health condition.

·       Not all school meetings would qualify for FMLA leave – for example, disciplinary meetings would likely not qualify for FMLA leave under this opinion.

·       Make sure supervisors and managers understand that our FMLA obligations are triggered when they are put on notice by an employee – i.e. an employee telling a supervisor that he needs to take a day off to help move his father into a nursing home, or find a new daycare for his special needs son, or attend a school meeting to talk about his son’s IEP.

That being said, it is also important to recognize that employees are required to provide notice of the foreseeable need for leave and provide appropriate certification to support the leave request – i.e. it should not be a last minute leave request. More importantly, while the FMLA may be Tricky, you just need to keep on Rocking!

Documenting Employee Performance Problems May Become Key Defense in Future Retaliation Claims

Contributed by Allison P. Sues, September 10, 2019

Employee performance evaluation form on a desk.

According to the U.S. Equal Employment Opportunity Commission (EEOC), retaliation claims continue to be the most frequently filed charges of discrimination at the federal agency by far. According to the EEOC’s Fiscal Year 2018 Enforcement and Litigation Data, retaliation claims made up 51.6 percent of all charges filed last year. Given their frequency, employers should be as proactive as possible in protecting themselves from these claims.

The Seventh Circuit recently affirmed summary judgment in a Title VII retaliation case, and in doing so sent a reminder to employers about the importance of properly documenting employee performance concerns. In Rozumalski v. W.F. Baird and Associates, Ltd., the Seventh Circuit held that the plaintiff could not establish her retaliation claim due to an “insurmountable problem with timing,” where her employer was able to point to negative performance feedback that predated any of her protected activity. Indeed, an employer may be able to negate an inference that it disciplined an employee because he engaged in protected activity if it can point to documentation of its concerns forming the basis for the discipline before the employee ever complained of discrimination or harassment. 

Creating strong records of employee performance problems may serve as a strong defense to future retaliation claims. Employers should keep the following in mind regarding job evaluations and other documentation:

  • All concerns with employee performance should be documented in writing, even including verbal counseling on performance issues.
  • Documentation should avoid vague references to performance problems. For example, performance evaluations should not note problems such as “bad attitude” or “not a culture fit.”  These vague criticisms are too subjective and do not provide adequate coaching to the employee on what needs to be improved. Instead, employers should list specific examples of performance or attitude problems and the dates on which they occurred.
  • Evaluations of job performance should never include personal attacks. The documentation should focus on the performance problem – not the individual.  For example, rather than telling an employee that they are a very disorganized person, instruct the employee on what files or work matters need to be reviewed and filed or maintained in a more orderly fashion. 
  • Company expectations also need to be defined through concrete instructions.  For example, rather than vaguely instructing an employee to always be on time, the documentation should note that the employee is expected to be present and ready every Monday for the daily 9 am meeting. 
  • Each criticism of an employee’s job performance should be paired with specific coaching on how to improve and a deadline by which the employer expects the improvement to be achieved.
  • Documentation should communicate that the employer is taking the performance problem seriously. This can be done by the employer following up on the problem to ensure it has been improved. The employer should also explain the specific consequences for not improving the performance problem by a certain date.
  • Employee coaching or performance evaluations should allow for two-way communication between the employee and the employer so a discussion can occur regarding the problems and expected solutions. Documentation of the coaching or evaluation should confirm that the employee had an opportunity to discuss the issue.
  • Documentation should be created so that a third party with no knowledge of the specific issues can understand the performance problem and the expected improvement. The documentation should give enough information to provide context to the issue and fully explain the circumstances.

Does Your Attendance Policy Violate the FMLA?

Contributed by Steven Jados, September 5, 2019

The recent decision in Dyer v. Ventra Sandusky, LLC, issued by the U.S. Sixth Circuit Court of Appeals (which has jurisdiction over Kentucky, Michigan, Ohio, and Tennessee), should motivate employers to take another look at whether their attendance policies run afoul of the Family and Medical Leave Act (FMLA).

There are plenty of gray areas in the law, but it is generally clear that employees are not to be disciplined because they are absent for FMLA-covered reasons. That also means that employees should not accumulate attendance “points,” e.g., under a no-fault attendance policy, for FMLA-covered absences when such points can contribute to discipline up to and including termination of employment.

Clocking In

To its credit, the employer in Dyer did not assign attendance points for FMLA-covered absences.  But unfortunately for the employer, that is not the end of the story.

Under the employer’s attendance policy, employees were eligible for a one-point “reduction” of their attendance point balance for every 30-day period in which the employee had “perfect attendance.” The employer’s definition of perfect attendance was not self-explanatory.  For instance, an employee could be absent for several different reasons — including vacation, bereavement, jury duty, military duty, holidays, and union leave — and still have “perfect attendance” and eligibility for attendance point reductions.

However, FMLA-covered absences were not included among the types of absences that preserved perfect attendance status and point-reduction eligibility. And if an employee had a FMLA-covered absence, his progress toward the 30-day point reduction goal was reset to zero.

The Sixth Circuit noted that the FMLA’s regulations generally require that an employee not lose benefits while on FMLA leave. Because attendance point reductions (and progress toward such reductions) are benefits, the Sixth Circuit noted that, at the very least, progress toward the 30-day goal should be frozen while employees are on FMLA leave, rather than being reset to zero. The court also indicated that if other “equivalent,” but non-FMLA forms of leave were counted toward the 30-day goal, then FMLA-covered absences should also be counted toward the 30-day goal.

The bottom line is that the Dyer decision instructs employers that disciplinary and benefit policies must be closely scrutinized to determine whether they might dissuade employees from taking FMLA leave — or otherwise harm employees who take FMLA leave. If harm results, or if employees are faced with the decision of taking FMLA leave or forgoing benefits, potential exposure to liability under the FMLA may exist.

Legalized Marijuana, Non-Citizens and Immigration Risks

Contributed by Jacqueline Lentini McCullough, August 22, 2019

book with words “immigration law” and glasses.

In May, we reported on Illinois becoming the eleventh state to permit recreational marijuana beginning January 1, 2020. Noncitizens in these eleven states and the District of Columbia may reasonably conclude that using marijuana in accordance with state law will have no bearing on immigration status. Unfortunately, that is a wrong assumption. Federal law controls immigration, and it remains a federal offense to possess marijuana. For the unsuspecting foreign national, this is a legal distinction that many will not understand. Customs and Border Protection (CBP) Officers at the nation’s borders are the first line of defense in preventing illegal importation of narcotics, including marijuana. U.S. federal law prohibits the importation of marijuana and CBP Officers will continue to enforce the law.

For immigrant marijuana users, federal law prohibits the use of federal funds to prosecute state-legal medical cannabis, but allows funds to prosecute state-legal recreational cannabis, thus creating an enforcement distinction. There will also be increased scrutiny relating to travel outside the U.S. for green card and Naturalization applicants.

In some jurisdictions such as Colorado, the U.S. Citizenship and Immigration Service (USCIS) is adding questions to the Adjustment of Status (green card) interview and medical examination process to determine if a foreign national uses marijuana or has in the past.

Naturalization

Naturalization eligibility requires the individual to establish “good moral character,” as defined in the Immigration and Nationality Act. A person who engaged in certain conduct as described in the Act is statutorily barred from establishing good moral character. In states such as Washington and Colorado where marijuana has been legal since 2012, the USCIS is aggressively questioning Naturalization applicants regarding marijuana use. For example, a legal permanent resident (LPR) who is applying for Naturalization, and who is in possession of marijuana is barred under federal law from establishing good moral character. The individual will be found to be inadmissible.

Any arriving foreign national who is determined to be a drug abuser or addict or who is convicted of, or admits to committing acts which constitute the essential elements of a violation of any law or regulation of the U.S relating to a controlled substance, is inadmissible to the U.S. Furthermore, a naturalization applicant who has admitted possessing marijuana to a federal government official must not travel outside the U.S. The person may be found inadmissible upon reentry.

There are several legislative efforts afoot in Congress to resolve the complex issues created by the conflict between federal and state cannabis laws. In the meantime, though, noncitizens should take a very conservative approach.  

Takeaways for noncitizens living in the U.S.:

  • Never discuss conduct regarding marijuana with a government official such as a CBP Officer, USCIS, Embassies/Consulates abroad, et al.;
  • If you live in a state that legalized marijuana consumption, do not use it until you are a U.S. citizen;
  • Do not carry a medical marijuana card, pot related stickers, T-shirts, or paraphernalia, and delete any mention of marijuana on social media; and
  • If you’ve worked in the marijuana industry, obtain legal counsel before leaving the U.S. or applying for Naturalization

Stay tuned for further developments in this growing area of law.

Common FLSA Violations: Mistakes can be Costly

Contributed by Debra Mastrian, August 20, 2019

Clock with money on white background

Under the Fair Labor Standards Act (FLSA), employees must be properly classified as either exempt or nonexempt, and nonexempt employees must be paid overtime (1½ times their regular rate of pay for all hours worked over 40 hours in a workweek). All compensation, including commissions and non-discretionary bonuses, must be included in the regular rate of pay for purposes of calculating overtime, unless the compensation is one of eight specified types of payment (e.g., holiday gift, birthday gift, discretionary bonus, and certain profit sharing payments).

Employees may be classified as exempt if they satisfy one of the specified statutory exemptions, the most common of which are the administrative, executive, and professional exemptions. To satisfy these exemptions, an employee has to meet both a salary basis test (be paid at least the minimum required amount of salary each workweek)and job duties test (have certain job responsibilities).

The title of the position is not relevant. The work that the employee is actually performing on a daily basis is the main inquiry.

Two of the most common mistakes made by employers involve misclassification of employees (exempt versus nonexempt) or improper calculation of overtime (did not include all hours worked and/or did not use the correct regular rate of pay).  Lawsuits under the FLSA, involving these types of mistakes, have been on the rise the past few years.

Earlier this year, an Indiana automotive service business agreed to pay over $1 million in overtime back wages and liquidated damages after an audit by the Wage and Hour Division  (WHD) of the U.S. Department of Labor found that the company failed to include bonuses, commissions, incentive pay and shift differentials in the regular rate of pay overtime calculations.

On July 1, the WHD issued an opinion letter on the proper calculation of overtime for non-discretionary bonuses (quarterly and annual). A non-discretionary bonus paid, based on the number of straight time hours worked, required the employer to recalculate the regular rate of pay for any period the bonus covered and pay additional overtime. A quarterly bonus paid as a percentage of straight and overtime compensation did not require recalculation of overtime, because the bonus necessarily included all overtime as a matter of arithmetic.

FLSA lawsuits have been on the rise, in part, because employers face “strict liability” for violations, meaning no defense for honest or unintentional mistakes. Good faith can be a defense to avoid certain penalties, such as liquidated damages, but it is not a defense to the underlying wage, back pay and attorneys’ fees awarded under the statute.

A self-initiated, internal wage and hour audit is an important risk management tool that can identify potential issues and resolve compliance concerns before they result in wage claims. The audit should be done in conjunction with legal counsel.

In addition to reviewing the company’s written pay policies, the company should examine whether employees are properly classified as exempt or nonexempt. The company must first decide whether to review all positions or certain job categories of concern. Such an audit would necessarily include monitoring and assessing the employees’ actual job duties, reviewing the job descriptions, making sure that the job descriptions are updated and accurately reflect what the employees are doing, and then determining on a case-by-by case basis whether the employees are properly classified.

In examining pay practices, the company would assess how it calculates and pays wages. For example, are nonexempt employees being paid minimum wage and overtime in compliance with federal and/or state law? Are all applicable payments being included in calculating the regular rate and overtime pay? Are the deductions being made proper?

The company also needs to determine whether all hours worked are being recorded and paid. Questions to ask include:

·         Does the company’s timekeeping system provide for accurate recording of hours worked?

·         Do nonexempt employees record all hours worked, including time reviewing and responding to emails/calls outside of regular working hours, travel time, meeting time, time worked during unpaid lunch and break times?

·         Do the company’s rounding practices comply with applicable law?

Misclassification of employees and miscalculation of overtime can lead to expensive lawsuits or enforcement actions. Taking care to identify and resolve potential FLSA compliance issues before they occur can help to avoid costly mistakes.

State Comptroller Wants to Enforce the Illinois Prevailing Wage Act???

Contributed by Jeffrey A. Risch – August 16, 2019 – www.illinoisprevailingwage.com

“Prevailing Wage” on white paper with pen

On August 13, 2019, Illinois Comptroller, Susana Mendoza, signed an Executive Order (EO) aimed at enforcement of the state’s prevailing wage law (aka mandatory top line union wage/benefits scale) for “construction” projects receiving state money. On the surface, one would say “hey, that’s a pretty good idea.”  But… the EO invites more questions than answers.  More importantly, it encourages organized labor to target contractors that they have disputes with (without any proof or evidence of actual non-compliance with prevailing wage law) and the Comptroller may take whatever action she wants, including withholding funds.

The EO, in relevant part, reads as follows (with questions and comments following each main point of the EO):

  • Grants and Contracts. The Illinois Office of Comptroller shall not accept the submission of any grant, contract, or any other award by the State of Illinois of any type to finance, in whole or in part, public works projects under the Rebuild Illinois program or other public works projects, unless the grant, contract, or other award includes a certification that the contractor of the public works project is in compliance with the Prevailing Wage Act (820 ILCS 130).

BUT… what does “compliance” mean?  Could the Comptroller hold up a contract if a contractor was found to have made a clerical mistake years ago on a prevailing wage project?  What if a contractor merely classified the worker as a laborer vs. an operator and was assessed by the Department of Labor for a few hundred dollars?

  • Duty to Pre-audit. The Illinois Office of Comptroller shall have the duty to pre-audit or cause to be pre-audited each grant, contract, or other award under the Rebuild Illinois program and other public works projects.

Who is going to conduct the audit? What do they know about prevailing wage? What will they be searching for? 

  • Publication. The Illinois Office of Comptroller’s official website shall provide information on grants, contracts, and other public works project awards and shall provide a Prevailing Wage Inquiry Form that allows localities, contractors, labor organizations, and other interested parties to submit inquires to the Office.

Okay… so, this function seems fairly benign.  It allows the public to view what projects are in the works. But… couple this function with the “Receipt of Inquiries” order and chaos can ensue.

  •  Receipt of Inquiries. The Illinois State Comptroller’s Prevailing Wage Enforcement Officer is designated to receive inquiries from labor organizations or other interested parties regarding the status of a public works contract or grant on file with the Illinois Office of Comptroller and compliance with the Prevailing Wage Act.

Here’s where we can see efforts by organized labor to target certain contractors that they have problems with.  Again, what does “compliance” mean?  What’s stopping anyone from making an inquiry about a contractor with absolutely no proof or evidence that there’s any non-compliance issue to begin with?  This third party inquiry piece will invite unintended (or, perhaps intended) consequences that could impede progress on a much needed construction project.

  • Review. The Illinois Office of Comptroller, through the Prevailing Wage Enforcement Officer, shall work in collaboration with the Department of Labor and other public works agencies to address inquires that require further review for potential violations of the Prevailing Wage Act.

Will the Comptroller’s Office tell the Illinois Department of Labor what to do or who to target for investigation or audit even without any proof of any non-compliance issue?  

  • Other Necessary Action. The Illinois Office of Comptroller shall undertake the appropriate action to inform all state agencies of the requirements promulgated hereunder and shall undertake all necessary action to implement and effectuate this Executive Order.

What action will the Comptroller take?  Withhold funds?  Delay progress?

Of course, time will tell what the actual impact of this EO will be on contractors and construction projects on a state level in Illinois. But, there are certainly many questions and concerns that anyone working in the construction industry should have with this type of order. Undoubtedly, if anyone is securing, financing, performing or managing public “construction” work in Illinois, an intimate understanding of all things prevailing wage is a must.