Author Archives: smithamundsen

DOL’s First FLSA Opinion Letter of the Decade Provides a Reminder—And Guidance—For Reconciling Non-discretionary Bonuses and Overtime Pay

Contributed by Steven Jados, January 16, 2020

money and clock

On January 7th, the U.S. Department of Labor’s Wage and Hour Division issued its first Opinion Letter of 2020, and the Letter serves as a reminder to businesses that retroactive overtime payments may be necessary if non-discretionary bonuses are paid to non-exempt (hourly-paid) employees.

The scenario at issue in the Letter is that an employer had an announced policy through which employees were paid a $3,000 bonus after they completed ten weeks of training.  A particular employee worked 40 hours per week in eight of those ten weeks. But in the fifth week he worked 47 hours, and in the ninth week he worked 48 hours, so he was entitled for overtime pay for those two weeks.

A bonus like this is considered non-discretionary under federal law because it was announced to employees in advance and not limited by any sort of discretionary language.  (Limiting discretionary language could take the form of a statement that the bonus would only be paid “when, in management’s sole discretion, company performance warranted bonus payments.”)  But there was no limiting, discretionary language, so the bonus is non-discretionary. 

And the characterization of the bonus as non-discretionary is critical because non-discretionary bonuses must be included in an employee’s regular rate of pay for purposes of determining the overtime pay rate for workweeks in which an employee works more than 40 hours.

Calculating overtime pay when a non-discretionary bonus covers a single week is relatively simple.  The employer multiplies the employee’s hourly rate by the total hours worked for the week, adds the bonus amount to that result, and then divides by the total hours worked to get the “regular rate” for the workweek.  Employees are to be paid 1.5 times the regular rate for each overtime hour worked.

But in situations in which a bonus applies to more than one workweek, the amount of the bonus must be apportioned, for overtime pay purposes, over the workweeks the bonus covers—and retroactive overtime payments must be made for each workweek in which an employee worked more than 40 hours.  Generally speaking, this means that the bonus must be divided equally among the workweeks at issue if it seems the bonus was earned in equal parts each workweek.  However, in other circumstances involving, e.g., performance-based bonuses, it might be more reasonable to apportion the bonus payment by the hour, not the week —particularly if the total hours worked varied significantly from week to week within the bonus period.   

For the ten-week training bonus, the DOL stated it was reasonable to consider the bonus earned in equal parts each week, so $300 was allocated to each of the workweeks. And to be clear, that $300 only factors into the two workweeks in which the employee worked more than 40 hours. No additional payment was owed for the eight weeks in which the employee worked only 40 hours.

The bottom line is that, in the new year—particularly in Illinois in light of the state’s increased penalties for wage and hour violations—it is critically important for employers to remember that retroactive overtime payments must be made for non-exempt employees who work more than 40 hours in any workweek for which a non-discretionary bonus is paid.  This may seem like a tremendous burden, particularly for small businesses, but rest assured that it is far less burdensome than defending a wage and hour lawsuit brought by one or more employees who were not properly paid under the law.         

What the W-4 is that? Answers to Your Questions about the New W-4

Contributed by Michael Wong, January 8, 2020

The process of filling out the W-4 form, shallow depth of field

Following the 2017 Tax Cuts and Jobs Act, which made major changes affecting taxpayer withholding, the IRS announced it would be redesigning Form W-4. The new W-4 has officially been released, creating confusion and questions (at the time of this article the new federal 2020 W-4 can be found on the IRS website).

First and foremost, employers do NOT need to get all employees to sign a new W-4. According to IRS Publication 15, employers are to remind employees before December 1 each year to submit a new W-4 form if their withholding allowances have changed or will change for the next year. If the employee does not submit a new W-4 form, the company must continue to withhold taxes pursuant to the last valid W-4 that was provided. If the employee has not ever submitted a valid W-4, the company must withhold tax as if the employee is single with no other adjustments.

So, again, just because there is a new W-4 form (that looks drastically different), you do not have to have all of your current employees fill out a new W-4. A W-4 previously filled out by an employee will continue to be good until the employee decides to change their withholdings. The only exception is employees who claim to be exempt from any withholdings (i.e. no taxes withheld at all from wages). As addressed below, employees must complete a new W-4 annually to maintain a full exemption

Employers should ensure that new W-4s are used as follows:

  • New employees. All new employees hired or paid in 2020 are required to use the current year’s W-4 form and applicable state W-4. 
  • Employees who want to change their withholdings. Life can sometimes change quickly, if something happens during the year and an employee wants to change his or her exemptions, adjustments, withholdings or credits, the employee will need to fill out a the new W-4 form and applicable state W-4.  Note, an employee is permitted to complete a W-4 anytime, not only when a major life event happens — this could be as simple as the employee realizing that instead of getting a refund, he or she wants to stop providing an interest free loan to the government.
  • Employees claiming exemption from withholding. All W-4s claiming an individual is exempt from any taxes being withheld expire on February 16th each year. This means, that any employee claiming to be exempt from withholdings, should be reminded to turn in a new W-4 (using the new form) by February 15th and advised that if they do not submit a new W-4, you are required to withhold taxes based on the last W-4 in which the employee did not claim to be exempt or, if the employee has always claimed a complete exemption, the employee will be treated as being single with no other adjustments.

To help employees (and you) the IRS has created an Estimator to help employees determine what they should put on their W-4 at www.irs.gov/W4App

Finally, W-4s have to be filled out for all non-U.S. Citizens (“Aliens”). Resident Aliens should be treated the same as U.S. Citizens when filling out the new W-4. Nonresident aliens should be provided the Supplemental Form W-4 Instructions for Nonresident Aliens, which provides:

  • Non-Resident Aliens cannot claim they are exempt from income tax withholding;
  • Non-Resident Aliens must request withholding as if they are “Single”, even if he or she is married;
  • Nonresident Aliens must still provide a SSN, they cannot enter an ITIN on Line 2.
  • Only certain nonresident aliens who are residents of Canada, Mexico, South Korea, or India may be eligible to claim an additional allowance for the child tax credit. To claim the child tax credit your child must have an SSN valid for employment issued prior to the due date of your tax return (including extensions).
  • Write “Nonresident Alien” or “NRA” in the space below Step 4(c) of Form W-4.

So, while the changes in the tax code and W-4 are championed as creating more transparency and simplifying the accuracy and simplicity of the W-4 form, as with all change it will initially create more confusion and panic, just like Y2K. But don’t worry, 2020 is just the beginning to another new decade.

Combatting the Opioid Crisis from Within

Contributed by Suzannah Wilson Overholt, December 27, 2019

Studio macro of a stethoscope and digital tablet with shallow DOF evenly matched abstract on wood table background copy space

The average life expectancy in the U.S. has declined for three consecutive years. The Centers for Disease Control and Prevention (CDC) links that decline to three factors: the rise in drug overdoses, an increase in liver disease, and a rise in suicide rates. More than 2 million Americans from all walks of life suffer from an opioid use disorder (OUD), and about two-thirds of those people are in the workforce. This has a tremendous financial impact on employers:  In 2016, U.S. large employers covered $2.6 billion on treatment for OUD and overdose, up from $0.3 billion in 2004.  

OUD and substance use disorder (SUD) more generally have a negative impact on the workplace through increased absenteeism, impaired job performance, and a decrease in the eligible workforce either due to candidates failing pre-employment drug screenings or fewer candidates applying as a result of their dependency. Employers can combat these issues by increasing accessibility to various treatments through their health plans and adopting policies allowing time for necessary treatment.

Studies indicate that the majority of employees would not seek help for a prescription opioid problem due to perceived stigma in the workplace. Educating employees about the risks and signs of opioid use disorder and taking steps to minimize stigma surrounding OUD/SUD can help address – and reduce – the problem before it starts. This can be accomplished by discussing the prevalence of OUD/SUD in America across all races, genders and socio-economic groups and recognizing individuals who have overcome the disease.  

If an employee does come forward to seek help with OUD or SUD, understanding the interplay of leave policies is important. As usual, the FMLA and ADA play the leading role here. Under both, there is a distinction between an employee’s ongoing substance use (not protected) and seeking treatment for that use (protected). 

Under the FMLA, the employee has to be in treatment or scheduled to start treatment for such time to qualify as FMLA covered leave. The addiction to be treated must constitute a serious health condition. The employee has to be referred for rehabilitation by a health care provider and the rehabilitation needs to be provided by a health care provider or by a provider of health care services, as those terms are defined by the FMLA.

The ADA provides that a person who has successfully completed a supervised drug or alcohol rehabilitation program or is participating in a supervised rehabilitation program and who is no longer engaging in substance use may be deemed a qualified individual with a disability. 

Employers may also want to evaluate their zero tolerance policies related to drug tests and drug and alcohol related conduct. Rather than require dismissal for a failed drug test or inappropriate behavior linked to OUD/SUD, a revised policy could refer the employee for treatment.

Any crisis requires a response plan to overcome and move beyond it. The opioid crisis is no different and, like most other issues, is best addressed through education and the consistent implementation of appropriate policies and procedures.

FMCSA Drug and Alcohol Clearinghouse Rule Deadline – Employers of DOT regulated employees have you registered yet?

Contributed by Carlos Arévalo and Mike Wong, December 20, 2019

While the Federal Motor Carrier Safety Administration’s (FMCSA) Clearinghouse Rule became effective on January 4, 2017, it has been a while so here is a reminder that the Rule goes into effect on January 6, 2020, just over a week away.

Despite delays, be assured the Clearinghouse website is now allowing employers to register.  So before you open that first present or have an eggnog in your favorite moose mug to enjoy the holidays, make sure you are registered and understand the new requirements. While the Clearinghouse’s FAQ’s are extremely helpful in providing information, here is a quick refresher.

The FMCSA amended its regulations to establish a database that will contain information about violations of DOT/FMCSA drug and alcohol testing programs for holders of CDLs, including test results and test refusals. This database is called the Commercial Driver’s License (CDL) Drug and Alcohol Clearinghouse A.K.A. the “Clearinghouse.” The purpose behind forming the Clearinghouse and establishing regulations for employers regarding the Clearinghouse is to improve roadway safety by identifying and making readily available information regarding commercial motor vehicle drivers who have committed drug and/or alcohol violations that would render them ineligible to operate a CMV on behalf of a carrier or transportation company.

Under the regulations, ALL DOT/FMCSA-regulated employers, Medical Review Officers, Substance Abuse Professionals, consortia/third-party administrators and other service agents are required to report violations of DOT drug and alcohol testing regulations by applicants and employees to the Clearinghouse. 

Additionally, the regulations require ALL DOT/FMCSA-regulated employers to conduct a query of the Clearinghouse, pursuant to an electronic consent from an applicant, as part of the pre-employment driver investigation process, as well as a query for each current CDL driver employee on an annual basis.  Essentially, instead of mailing, faxing, email or sending a messenger pigeon to prior employers disclosed by an applicant, FMCSA-regulated employers now must conduct a “query” or search of the Clearinghouse to see if the applicant has tested positive for drugs or alcohol in violation of DOT drug and alcohol rules, and if so, if they have completed the required evaluation and treatment before being eligible to operate a CMV again.

Who does this impact? Anyone who is required to conduct DOT drug and alcohol tests for safety sensitive transportation employees, including owner-operators, contractors and volunteers, as well as service agents. Quite simply anyone employing CDL drivers who operate commercial motor vehicles (CMVs) on public roads, including:

  • Interstate motor carriers
  • Federal, State, and local governments and municipalities
  • School Districts and Civic organizations (may include, disabled veteran transport, boy/girl scouts, etc.)
  • Faith-based organizations

Remember, “operating” can be as simple as a mechanic test driving a tractor before it goes back into service or a warehouse worker whose job it is to move trucks/trailers around the yard.

When do I have to do a Query? Pre-employment and on an annual basis for all current employees who are required to have a CDL and drive a CMV on a public roadway.

How much is this going to Cost? Generally, queries will cost $1.25 each, but bundled options and high volume packages are available.  

What else do I need to know? In addition to doing queries and reporting positive drug and/or alcohol tests, under § 382.601 of the DOT regulations, employers will have to provide “educational materials that explain the requirements [of the Rule] and the employer’s policies and procedures” to meet the Rule. In other words, either information regarding the Clearinghouse or revised employee policies notifying employees that the following will be reported to the Clearinghouse:

  • A verified positive, adulterated, or substituted drug test result
  • An alcohol confirmation test with a concentration of 0.04 or higher
  • A refusal to submit to a drug or alcohol test
  • An employer’s actual knowledge, as defined at 49 CFR § 382.107 regarding:
  • On duty alcohol use pursuant to 49 CFR § 382.205;
  • Pre-duty alcohol use pursuant to 49 CFR § 382.207;
  • Alcohol use following an accident pursuant to 49 CFR § 382.209; and
  • Controlled substance (including Cannabis) pursuant to 49 CFR § 382.213
  • A Substance Abuse Professional’s report of the successful completion of the return-to-duty process
  • A negative return-to-duty test
  • An employer’s report of completion of follow-up testing

Employers will also need to have drivers sign an acknowledgment that they received copies of the notice or policy amendments and maintain copies of such for their records. 

Finally, to ensure compliance the Rule also implements penalties provisions. Specifically, § 382.507 incorporates the penalty provisions in § 521(b)(2)(C) of Title 49 of the Code of Federal Regulations that impose a $2,500 fine for each offense. 

As such, in light of the upcoming deadline, we recommend that employers not only register and start running queries and reporting positive tests after January 6, 2020, but amend their policies and/or provide as noted above in order to be in compliance with the Rule requirements.

Refresher on the USERRA: Employers’ Obligations Regarding Employees in Military Service

Contributed by Allison P. Sues, December 20, 2019

American flag

This month, two federal circuit court of appeals reversed district courts’ grants of summary judgment in cases filed under the Uniformed Services Employment and Reemployment Rights Act (USERRA). With these twin cases, it seems as good of a time as any to provide a brief refresher on employee rights and employer obligations regarding those in military service. 

On December 3, 2019, the Tenth Circuit reversed a decision by the U.S. District Court of Kansas in Greer v. City of Wichita, which dismissed an USERRA claim alleging that a city museum denied an employee an interview for a supervisory position due to her military service in the reserves.  The Tenth Circuit found that there was sufficient evidence that a jury may find that anti-military animus was a “motivating factor” in the employer’s decision not to interview the employee where a supervisor had previously complained about the employee’s need to attend reserves training because it conflicted with her “real job.”  The court made clear that statements can reflect anti-military animus relevant to a USERRA claim even where the animus relates only to the effect the military service has on scheduling or the employee’s availability and does not contain negative comments about the military service more generally.

The next day, on December 4, 2019, the Seventh Circuit reversed a decision by the United States District Court for the Northern District of Illinois that granted summary judgment to an employee alleging that he was denied benefits due to his military service. In Mueller v. City of Joliet, a police sergeant alleged that he was discriminated against under USERRA when his employer placed him on unpaid leave and required him to use his benefit time when he needed to report to duty for the National Guard. The Seventh Circuit found that the district court incorrectly concluded that the employee’s service in the National Guard Counterdrug Task Force was not uniformed service covered by the USERRA.

These two opinions resurrecting USERRA claims provide a good opportunity for employers to review the key points and protections of USERRA to make sure that they are in compliance with this federal statute:

  • What does the USERRA do? It prohibits employers from discriminating against employees or applicants on the basis of their military status or military obligations. Specifically, employers may not deny initial employment, continued employment, reemployment, promotion or any benefit or employment because of an employee’s military status. 
  • What constitutes uniformed services under the statute? The statute defines uniformed service as the performance of duty on a voluntary or involuntary basis in uniformed service, including the U.S. Reserve forces and National Guards.
  • Does the USERRA also provide reemployment rights for those who must leave their civilian jobs to serve in the uniformed services? Yes. If an employee is eligible to be reemployed, employers must restore employees to the job and benefits they would have attained had they not been absent due to military service. This may require employers to make reasonable efforts to help returning veterans become qualified to perform the duties of the position they would have held but for the military service, including requiring employers to make reasonable accommodations for employees who have incurred or aggravated a disability during their military service. 
  • Who enforces USERRA violations?  Employees may file complaints with the U.S. Department of Labor, Veterans Employment and Training Service or bypass this process and file a civil lawsuit.

It’s a good idea for employers to check their applicable state statutes as well. In some instances states may extend further benefits to employees.

Flurry of NLRB Decisions Bring Holiday Cheer to Employers

Contributed by Suzanne Newcomb, December 18, 2019

Scales of Justice, Weight Scale, Balance.

It has been a busy week for the National Labor Relations Board which issued three decisions in quick succession on December 16 and 17. Each of the three is a clear win for employers.

In the first of the three, the Board restored employers’ right to stop deducting and remitting union dues after the expiration of the collective bargaining agreement requiring it to do so. Valley Hospital Medical Center, 368 NLRB No. 139 (2019). The Board held that so-called “dues checkoff provisions” exist only by virtue of the parties’ contract and therefore cease when that contract expires. This had long been the rule until the Board’s 2015 decision in Lincoln Lutheran of Racine, 362 NLRB 1655 (2015) found checkoff agreements were among those terms and conditions of employment that an employer can not unilaterally change absent the parties reaching a lawful impasse in negotiations. Monday’s decision expressly overruled Lincoln Lutheran restoring employers’ right to cease collections of union dues upon the expiration of the collective bargaining agreement.

On Tuesday, December 17, the Board’s decision in Apogee Retail, 368 NLRB No. 144 (2019), held that employer rules mandating confidentiality with respect to ongoing workplace investigations do not violate the National Labor Relations Act. The employer policy in question required those employees who reported “illegal or unethical behavior,” as well as  those employees who were interviewed in connection with investigations into such reports, to “maintain confidentiality regarding these investigations” and further cautioned that employees could be disciplined for engaging in “unauthorized discussion of investigation or interview with other team members.” In holding that it is presumptively lawful to impose such a rule during the course of the investigation, the Board overturned a 2015 decision requiring a case by case determination of whether the employer’s need to confidentiality as to the particular investigation outweighed the employees’ section 7 rights. The Board further held that an employer can impose confidentiality even after the investigation is complete without violating the NLRA if its legitimate reasons for imposing confidentiality outweigh the impact the confidentiality obligation has on the employees’ exercise of their Section 7 right to discuss terms and conditions of employment for “mutual aid or protection.” However, employers must be mindful of state and federal EEO laws and state laws such as the Illinois Workplace Transparency Act set to take effect January 1, 2020, that place separate limits on employer’s ability to require confidentiality with respect to workplace harassment. See our comprehensive overview of the new Illinois changes in our blog post from August 2019.  

Also on Tuesday, the Board overturned the 2014 Purple Communications decision, ruling that employers are once again free to legally prohibit employees from using company email / IT systems for non-work related reasons. Caesars Entertainment, 368 NLRB No. 143 (2019). As we reported back in 2014, Purple Communications had held that an employer that allowed its employees access to its email systems, was presumptively required (absent extenuating circumstances) to allow those employees to use that email system for discussions protected by Section 7, including discussions of terms and conditions of employment, union business, and union organizing during non-working time. Tuesday’s decision expressly overturned Purple Communications, holding “there is no statutory right to employees to use employer-provided email for nonwork, section 7 purposes in the typical workplace.” The majority of the Board concluded that a company’s communication systems are company property, and that Purple Communications had “impermissibly discounted employers’ rights in their IT resources while overstating the importance of those resources to [employee’s] Section 7 activity.” To be clear, it is still unlawful for an employer to discriminate against section 7 activity. An employer still cannot legally prohibit only union-related emails or other activities protected by section 7 while allowing other non-work communications either in the terms of the policy itself or in its enforcement. However, employers may now legally maintain “facially neutral” bans on non-work related use of company email and other communications systems so long as they do not apply those policies in a discriminatory manner.

NLRB Gives Gift To Employers: Modifies Obama Board’s “Quickie Election” Rule

Contributed by Jeffrey A. Risch, December 16, 2019

the word “union” in black and white

On December 13, 2019, the National Labor Relations Board (NLRB) issued notice of new regulations designed to materially change what is commonly referred to as the “Quickie Election” Rule. The new regulations, set to take effect on April 16, 2020, will materially help employers combat labor unions in the private sector by primarily providing more time to react to and educate the workforce on the “Good, Bad & Ugly” of what union representation actually means to workers.  

As a brief reminder… the “Quickie Election” Rule is a set of unprecedented regulations that the Obama NLRB published in 2014, and went into effect in 2015. The primary effect of the “Quickie Election” Rule limited the amount of time an employer had to respond to a petition filed by a labor union seeking to represent its workers, and oppose the union’s attempt to unionize the workforce. There were other significant pieces to the “Quickie Election” Rule, including, but not limited to: requiring employers (not unions) to submit a position statement on all issues the employer wanted or needed to raise as a result of the union’s proposed bargaining unit and the election in general – within 7 calendar days after receipt of the petition – and, any issues not timely raised are deemed waived; setting material limitations on issues to be considered in any pre-election hearing and pushing any review of objections related to the election to a post-election hearing (after votes are opened and counted); and eliminating any stay of certifying an election’s results in order to allow time for the NLRB to consider a request for review filed from a Regional Director’s Order directing an election to proceed in the first place.

In essence, the official vote to “go union” or not, went from approximately 42 days to around 21 days from the filing of the union’s petition, under the “Quickie Election” Rule, while tying the hands of employers to mount a comprehensive defense strategy along the way. With the changes found in the new regulations set to go into effect on April 16, 2020, the process will return to the days when employers had greater rights and abilities to fight against labor unions aiming to organize and represent their workers. In short, the new regulations include the following material changes from the current rules:

·       The pre-election hearing must be held within 14 business days from the filing of a petition (up from the current within 8 calendar days requirement);

·       Legal statements of position that identify issues and problems with any petition must be filed within 8 business days after service of the notice of hearing (up from the current within 7 calendar days requirement), and the union must file a formal response to a statement of position filed by an employer at least 3 business days before a scheduled pre-election hearing;

·       The pre-election hearing can include, once again, the litigation of disputes involving voter eligibility as well as the size/scope of the bargaining unit (not just the issue of whether valid and lawful representation exists);

·       The employer and the union can, once again, file post-hearing briefs  to any pre-election or post-election hearing within 5 business days from the close of the hearing;

·      Employers will be allowed more time to educate their workforce on union representation and mount a more robust counter-organizing campaign of their own in light of a new rule that provides that absent the parties’ agreement, a Regional Director “normally” will not schedule an election less than 20 business days after the Regional Director directs an election;

·       Employers will be permitted, once again, to file a Request for Review by the NLRB of any Regional Director’s adverse Order directing an election, within 10 business days of such Order, and if the request is pending at the time of the election then the ballots cast would not be opened while the NLRB resolves the controversies raised in the Request for Review;

·       Regional Directors will be prohibited from certifying results of any election while a Request for Review is still pending or at any time prior to the time a post-election request for review can be filed; and

·       Employers will generally be provided more time to provide voter eligibility lists and information to the NLRB after the Regional Director issues a direction of election.

In issuing notice of the new regulations, NLRB Chairman John F. Ring (R) stated, “These are common sense changes to ensure expeditious elections that are fair and efficient. The new procedures will allow workers to be informed of their rights and will simplify the representation process to the benefit of all parties.” Sole Democratic Board Member Lauren McFerran (D) vehemently opposed the changes. There is no doubt these Trump-era NLRB election rules will be opposed greatly by any future Democratic controlled NLRB. However, for now (starting in April 2020) employers will be in a much stronger position to successfully dispose of or counter union petitions seeking to represent workers in the private sector.