Recent guidance from the U.S. Department of Labor (DOL) reiterates that the DOL will allow telemedicine visits—generally speaking, health care appointments held via video conference—to qualify as in-person visits to a health care provider under certain circumstances.
As our readers know, the FMLA provides certain employees up to 12 workweeks of leave for, among other things, a “serious health condition.” An employee can show the existence of a serious health condition by several methods that include establishing that the employee has an illness or injury that involves “continuing treatment by a health care provider.” Under federal regulations, “treatment by a health care provider” means actually visiting a health care provider in-person. That regulation was added in 2008 to make clear that phone calls, letters, emails, and text messages exchanged with a doctor are not “treatment.”
However, in response to the COVID-19 pandemic, the DOL issued guidance in July 2020 that was confirmed and extended by a more recent DOL Wage and Hour Division Field Assistance Bulletin, which states that telemedicine, which “typically involves face-to-face examinations or treatment of patients by remote video conference via computers or mobile devices” will be considered an “in-person” visit, provided the visit meets these three criteria:
It is an examination, evaluation, or treatment by a health care provider;
it is permitted and accepted by state licensing authorities; and,
it generally should be performed by video conference.
That said, the Field Assistance Bulletin also made clear that “a simple telephone call, letter, email, or text message” remains “insufficient, by themselves” to satisfy the in-person requirement.
Bearing all of that in mind, employers evaluating the adequacy of FMLA certification documents must, at least for the duration of the ongoing pandemic, consider telemedicine appointments to be “treatment” for purposes of the FMLA provided the three criteria above are satisfied. And as always, questions regarding the application of this and any other COVID-19-related employment law issues should be directed to experienced counsel.
On December 22 the Federal Department of Labor (DOL) published a Final Rule changing the FLSA regulations for tipped employees. The Final Rule takes effect 60 days after publication. A caveat before we dig into the Final Rule; the change affects only federal law. As with all things wage-and-hour-related, many states, and some local governments, enforce more stringent requirements. Some jurisdictions prohibit tip credits entirely. This post focuses on the federal standard only. Employers must adhere to the requirements applicable to their particular business in each location in which they operate.
The FLSA has long allowed a “tip credit” to cover a portion of the minimum wage an employer would otherwise be required to pay certain employees who regularly receive gratuities. One requirement is that the tipped employees retain all of their tips with the exception of a qualified tip pool. The regulations surrounding tip pools have changed over the years due to a range of court rulings, legislative action, and agency rule making. The Final Rule is the latest iteration of regulations surrounding the “tip credit provision” [29 USC § 203(m)(2)(A) often referred to as simply “section 3(m)”].
Under the newly published Final Rule:
Employers may continue to enforce mandatory tip pooling arrangements;
If the tip credit is taken, the employer may not include employees who do not routinely receive tips (i.e. kitchen staff) in a mandatory tip pool;
Employers that do not take the tip credit (i.e. those that pay tipped employees a set hourly wage that is at or above the applicable minimum wage for non-tipped employees) may include employees who do not routinely receive tips in mandatory tip pools;
Managers and supervisors (as determined based on the duties portion of the test for the FLSA’s executive exemption) are prohibited from participating in tip pools (regardless of whether a tip credit is taken);
Tip pool funds must be paid out at least as frequently as the employer pays out base hourly wages; and
Finally, employers may take a tip credit for time spent performing tasks that do not generate tips (i.e. cleaning, stocking, rolling silverware, etc.) as long as the non-tip generating duties relate to the tipped occupation and are performed contemporaneously with, or immediately before or after, the duties for which the employee does receive tips. The Rule expressly rejects the 80/20 rule referenced in some opinion letters and court decisions.
A final reminder that is particularly relevant in light of the massive sustained blow the service industry has taken of late; the tip credit cannot exceed the amount of tips the employee actually receives. Also, if an employee’s base hourly rate, plus the tips actually received, adds up to less than the applicable minimum wage for any particular shift, the employer must make up the difference.
It’s that time of year and even a pandemic will not stop Illinois, Cook County and the City of Chicago from increasing their minimum wages on July 1, 2020 as follows:
Tipped Employees (Claiming the Tip Credit)
Illinois (all employers)
$10.00 per hour
$6.00 per hour
Cook County (employers in municipalities that did not opt-out)
$13.00 per hour
$6.00 per hour*
*Technically, the Cook County Minimum Wage Ordinance for tipped employees only increases to $5.30. However, since that is less than the new State minimum wage for tipped employees of $6.00, following the Cook County Minimum Wage Ordinance for tipped employees would be a violation of the Illinois Minimum Wage Law.
The July 1 change for the City of Chicago includes significant changes and new nuances that employers must be aware of, including different wage rates based on number and age of employees.
Large Employers (21 or more employees)
Small Employers (4 to 21 Employees; and Employers with 0 to 21 Domestic Workers)
Youth Workers (Under 18, subsidized temporary youth employment program or transitional employment program)
$14.00 per hour
$13.50 per hour
$10.00 per hour (same as State Min Wage)
Tipped Workers (Claiming the Tip Credit):
$8.40 per hour
O’Hare and Midway Airport Certified Service Providers: $14.15 for non-tipped employees and $7.65 for tipped employees.
WARNING MAJOR CHANGES
However, the biggest change that employers must take note of does NOT pertain to the wage rate, but WHO will be subject to the City of Chicago’s Minimum Wage and Paid Sick Leave Ordinances. The Amendment to the Chicago Minimum Wage and Paid Sick Leave ordinance passed on November 11, 2019, redefines and expands what employers are covered. Currently, only employers who (1) maintain a business facility within the geographic boundaries of the city and/or (2) are subject to one or more of the City’s license requirements in Title 4 of the Chicago Code are subject to Chicago’s minimum wage and paid sick leave ordinances.
Chicago Minimum Wage
The City’s revisions that go into effect July 1 delete the requirement that an employer must have a business facility within the geographic boundaries of the City and/or be subject to the City’s license requirements to be covered. After July 1, the new definition for employer in the Chicago Minimum Wage and Paid Sick Leave ordinances will be “a person who gainfully employees at least one employee.”
Under this change, it can be interpreted that any employer who has an employee who performs at least two (2) hours of work within the geographic boundaries of the City, during any particular two-week period, must pay that employee the Chicago minimum wage for the time spent working within the City of Chicago.
Chicago Paid Sick Leave
Furthermore, the Chicago Paid Sick Leave ordinance uses the SAME definition for “Employer” as the Chicago Minimum Wage ordinance. This means that ANY employer who has ANY employee perform at least two (2) hours of work within the geographic boundaries of the City, during any particular two-week period, must document and record the amount of paid sick leave accrued by that employee for the time spent working in the City!
As an example of the potentially drastic nature of this change is this scenario: a Texas business sends its non-exempt employee to New York. The employee’s flight has a 2 ½ hour layover at O’Hare (O’Hare and Midway are both within the geographic boundaries of the City of Chicago). Technically under Chicago’s Paid Sick leave ordinance, the Texas business would have to record the amount of paid sick leave that the employee accrued during the 2 ½ hours that the employee was “working” in Chicago.
Any employer who has employees going into the City of Chicago, now MUST review and understand their obligations and whether they are subject to the Chicago Minimum Wage and Paid Sick leave ordinances after July 1.
For employers that are subject to the Cook County or Chicago minimum wage and paid sick leave ordinances, you will need to get the most up-to-date required poster, which can be found on the City of Chicago webpages for Minimum Wage and Paid Sick Leave in English or Spanish. Additionally, under Chicago’s new rules, employers will have to provide written notice each year with the first paycheck after July 1, whether by paper or electronic means.
Employers that are unsure whether they must comply, what they must do to comply or that fail to implement compliant policies, including tracking sick leave accrual or carryover, should discuss options with employment counsel to mitigate exposure and minimize risk.
In a follow up to our recent
post, the US Department of Labor (DOL) has now issued its final rule regarding the
salary thresholds for exempt status. The final rule will go into effect on
January 1, 2020 and establishes the following rules:
Salary exempt employees must earn at least $684/week (equivalent to $35,568 per year for a full-year worker) (which is slightly more than was proposed in March 2019 due to inflation/updated data but less than was proposed during the Obama Era);
Employers can use non-discretionary bonuses and incentive payments that are paid at least annually to satisfy up to 10% of the salary basis for the white collar exemptions (if this is utilized the minimum salary paid can be no less than $615.60/week) (however, it should be noted that (1) if the employee does not earn the bonus the employer will need to pay the amount anyway no later than one week from the end of the 52 week period or the salary basis will not be met and (2) if the employee leaves employment before the bonus is paid/earned the employer will have to pay the pro-rata share of the bonus at termination to ensure the minimum salary threshold was met);
In order to qualify for the “highly compensated exemption” employees must earn at least $107,432/year (formerly $100,000/year) and must be paid at least $684/week (however, Illinois employers should note this is not applicable in Illinois because Illinois did not adopt the highly compensated exemption); and
Revises the special salary level for the motion picture industry and US territories.
We anticipate the new rule will receive legal challenge. However, litigation is unpredictable, so employers should begin preparing now to ensure they are ready for January 1, 2020.
The workplace is changing: Millennials, Generation Z-ers,
and Baby Boomers looking to supplement their retirement income. These
individuals are more interested in autonomy and avoiding bad managers, office
politics and lengthy, non-productive staff meetings. Plus, the tax-savvy
individual knows the economic advantage of having access to traditional
business deductions through a Schedule C, rather than being limited to the
standard deduction or itemizing as a W-2 employee would be.
More and more businesses also seem to be interested in the advantages of a gig workforce, also called freelancers, subcontractors, contingent workforce, and more. After all, it allows a business to gain access to skills and talent without having to commit to hiring an individual as a full-time employee. According to Deloitte’s 2018 Global Human Capital Trends study, more than 40% of workers in the U.S. are employed in “alternative work arrangements.” These arrangements include contingent, part-time, or gig work.
So, is it a win-win for all involved? The problem is that current employment laws are simply not evolving at the pace required to keep up with this modern-day independent contractor. With this, a minefield is created for the unwary business.
Under the Obama administration, the DOL had issued broad guidance suggesting that gig workers were likely to be considered “employees.” That guidance was rescinded with the change in administration. Then, on April 29, 2019, the DOL issued an atypical, 10-page opinion letter on the subject. The opinion letter lays out a detailed analysis of all the relevant factors for independent contractor status and then comes to the conclusion that the gig workers at issue are not employees.
For now, if your business is participating in the trend of the gig worker, you want to make sure the relevant factors are met. Those factors and the analysis change depending on which law the issue is being examined under. Some of the more common factors are: control, permanency of the relationship, integrality to business operations, ability to sustain a profit or loss, accountability for operating expenses, etc. In other words, is the individual truly operating as a stand-alone business?
If you choose to engage gig workers, make sure to avoid these common mistakes:
Do not treat the individuals as employees. Do not even use the word “hire.” Instead, you are “engaging” their services, or “contracting” with them. And, commit to the arrangement in writing.
Do not be tempted to offer them benefits. Putting them in your health plan or letting them participate in a 401(k) will jeopardize any argument that they are not otherwise an employee. If it walks like a duck, quacks like a duck….
Do not make them sign a non-compete agreement. A critical factor in most cases is whether the individual is free to take on work from others or whether they are completely dependent on your business for work. If the individual is subject to a non-compete agreement and effectively being prevented from working for others, you will not win on this factor.
Because of the amount of exposure involved with a
misclassification lawsuit, it is worthwhile to have competent employment
counsel review your situation and any independent
contractor agreement or contracts that you are using to help you make
sure it’s being handled in the best possible manner to strengthen the
individual’s status as an independent contractor.
As a follow up to our March
4th blog, three days later the DOL announced a proposed
OT rule increasing the minimum salary required for an employee to
qualify for exemption from federal overtime
pay requirements. The proposed increase in salary level is from $455 per week ($23,660
annually) to $679 per week ($35,308 annually). In addition, the proposed rule
includes the following changes:
The proposal increases the total annual
compensation requirement for “highly compensated employees” from the
currently-enforced level of $100,000 to $147,414 per year (note, this overtime
exemption is not applicable in Illinois as it was not adopted by the Illinois
Minimum Wage Law);
A commitment to periodic review to update the
salary threshold, but not an automatic adjustment as was the case with the 2016
proposed rule. Updates would continue to require notice-and-comment rulemaking;
A special salary level for Puerto Rico, the
Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands, a
separate special salary level for American Samoa and an updated special weekly
“base rate” for the motion picture producing industry; and
Allowing employers to use nondiscretionary
bonuses and incentive payments (including commissions) that are paid annually
or more frequently to satisfy up to 10 percent of the standard salary level,
which was also part of the 2016 proposed rule. (Note, the proposed rule would
allow a one-time yearly catch up payment if the employee does not earn the
anticipated bonuses. The proposed rule states that as long as an employer pays
90% of the standard level ($611.10) and if at the end of the 52-week period the
salary paid plus the nondiscretionary bonuses and incentive payments (including
commissions) paid does not equal the standard salary level for 52 weeks
($35,308), the employer would have one pay period to make up for the shortfall
(up to 10 percent of the standard salary level, $3,530.80).)
There were no changes to overtime protections for police
officers, firefighters, paramedics or nurses. There were also no changes
impacting laborers including non-management production-line or non-management
employees in maintenance, construction and related occupations.
Most notably, the proposed rule stayed away from any changes
to the job duties test. We anticipate legal challenges to the proposed
rule may be lodged by both the business community and employee rights groups as
this rulemaking is a significant change from the current law and a deviation
from the 2016 proposed rule. Employers
will have 60 days to submit comments to the DOL. Once the comments are
considered, the DOL will issue and publish a final rule. In light of the
proposed rule, we encourage employers to begin examining how it might impact
them. This includes review of applicable state law as employers are
required to comply with whichever law is most favorable to employees. We
will be available to address any concerns or questions you may have. And
as always, we will keep an eye on any other developments and will keep you
We previously reported that in 2018, the U.S. Department of Labor (DOL) began issuing opinion letters again after nearly a decade of silence. While the legislature makes laws, the consequences of presidential elections flow into the executive agencies charged with administering and enforcing the laws.
As of the close of 2018, the DOL had issued more than 30 new opinion letters involving the Family and Medical Leave Act (FMLA) or Fair Labor Standards Act (FLSA), and those letters addressed a variety of topics including minimum wage and overtime for employees paid varying rates, the compensability of frequent rest breaks required as a reasonable accommodation for a disability, and travel time. The DOL’s opinion letters represent the agency’s official interpretation of how it would enforce the statutes under its jurisdiction. Employers, especially those operating close to the margins of the law, should pay careful attention to these opinions and adjust their practices accordingly.
Companies with questions or
concerns relating to FMLA and FLSA practices may
also wish to seek their own opinions letters—which may be submitted
anonymously, through counsel—for clarity regarding complicated compliance matters. Additionally, given the substantial risks and
liabilities that may arise from medical
leave and wage & hour administration,
companies should also err on the side of
caution by seeking
the advice of knowledgeable employment counsel, and
regularly undertaking audits of FMLA and
FLSA-related policies and practices.
Constantly evolving employment risk, often brought on by a change of administration (federal or state), is one of the most difficult aspects of running a successful business. Overnight, a lawful employment practice might be interpreted as unlawful, necessitating change to avoid charges of discrimination, unfair labor practice charges, agency scrutiny, and other issues related to running the business.
FMLA, family medical leave act
Agency opinion letters – guidance on how an agency interprets a fact-specific situation under the laws it enforces – are one useful tool to stay abreast of these developments. On August 28, 2018, the U.S. DOL issued FMLA opinion letters FMLA2018-1-A and FMLA2018-2-A. The last FMLA opinion letter was issued in January 2009.
FMLA2018-1-A – Organ Donor Leave
In FMLA2018-1-A, the DOL opined that an otherwise healthy employee that chooses to donate an organ may be entitled to FMLA leave because the resulting recovery generally is a serious health condition requiring one (or more) night’s stay in the hospital. As a result, an employee’s organ donation may be protected by both state and federal mandated leave laws, requiring case-by-case analysis.
FMLA2018-2-A – Application of Points Systems to Employees on FMLA Leave
FMLA2018-2-A is likely to impact many more employers. Here, the DOL issued guidance on the appropriateness of a no-fault attendance policy that have features that suspend attendance point accumulation and also suspend attendance point dissipation during a period of FMLA leave. The DOL found such policies do not violate the FMLA, if applied in a nondiscriminatory manner. Point reduction is a reward for working, and thus a benefit to which an employee on FMLA leave might not be entitled – as long as employees on other types of leave are treated the same.
FMLA2018-2-A is significant. Under such a policy, an employee who has accumulated attendance points and is getting close to disciplinary action (or termination) cannot “game the system” by taking FMLA leave, because the employee’s point total will remain frozen (and not automatically reduced by operation of time) during the period of the leave, up to 12 weeks.
Policies must be applied in a nondiscriminatory fashion – including treating employees on FMLA in the same fashion as employees on other types of leave. For example, if there would be no “freeze” of the points policy for an employee taking a 2-week vacation or intermittent personal days, then an employee taking a 2-week FMLA leave or using intermittent FMLA should be treated the same.
Experienced counsel should review attendance and leave policies in conjunction with other conduct policies to ensure a cohesive and comprehensive scheme.
Similarly, careful analysis of the specific facts of a particular issue may help avoid legal complications down the road.
On April 12, 2018, the Department of Labor (DOL) issued an opinion letter addressing the intersection between the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA) when an employee needs multiple rest breaks throughout the day due to an FMLA covered serious health condition.
Employee working with clock in background
The FLSA generally requires employers to compensate employees for all time spent working. Although the Act does not require employers to provide rest or meal breaks, it does regulate whether such breaks—if provided by the employer—must be paid as compensable working time. Specifically, breaks of up to 20 minutes are generally considered primarily for the benefit of the employer and must be paid.
The FMLA, on the other hand, provides eligible employees with up to 12 weeks of unpaid job-protected leave for employees with a serious health condition. FMLA leave may be taken incrementally and, in certain circumstances, in periods of less than one hour.
Employers are not required to pay for excessive breaks
What if an employee needs to take multiple breaks during the work day due to his/her serious health condition? According to Opinion Letter FLSA 2018-19, such breaks are not compensable because they are not “primarily for the benefit of the employer.” Importantly, however, the DOL noted that an employer must still compensate the employee for breaks she would have received regardless of her serious health condition. To illustrate this point, the DOL provided the following example:
[I]f an employer generally allows all of its employees to take two paid 15-minute rest breaks during an 8-hour shift, an employee needing 15-minute rest breaks every hour due to a serious health condition should likewise receive compensation for two 15-minute rest breaks during his or her 8-hour shift.
Employers can rest easy knowing that they do not have to pay employees for unlimited rest breaks simply because they are necessitated by an FMLA-approved serious health condition. Employers should carefully administer and track any such breaks to ensure compliance with both the FMLA and FLSA—along with any applicable state or local laws (e.g., local paid sick leave laws and required paid rest breaks).
In April 2018, the US Department of Labor (DOL) Wage and Hour Division, launched the six-month pilot Payroll Audit Independent Determination (PAID) program which provides a voluntary framework for employers to self-report potential FLSA overtime and minimum wage violations to the DOL and to resolve those violations without incurring additional penalties or liquidated damages. There are important benefits (and potential risks) to consider before signing up for PAID:
Dollar bills with clock in background
The benefit of the program is that if an employer self-reports, the DOL will only require the employer to pay back wages owed to current and former employees, but not liquidated damages (double the back wages) or civil money penalties. The employer can obtain a release from the employees under the FLSA, thereby fully resolving the violation without paying attorney’s fees or engaging in a class action lawsuit.
One risk of the PAID program for employers is that the company is exposing itself to potential liability. The DOL has indicated the process will be fast (estimated 90 days start to finish), and the company will be required to pay 100% of the back wages due based on the audit on the next pay period after the DOL’s determination. But the biggest risk is that not all employees will accept the payment though the PAID program and instead will choose to file an individual or class-action lawsuit. The employer itself may have laid the groundwork for the employee to collect liquidated damages and attorney’s fees in federal court. Moreover, the PAID program will not provide a release for state wage and hour claims, even if employees cash their back wage check.
Additionally, the DOL has discretion to accept or decline any company from the PAID program; however the DOL has stated (in a webinar on April 10, 2018) if the company is declined, that declination will not be used to start a DOL audit.
PAID might be the right avenue for a company to address wage and hour compliance issues, but companies should speak with their labor and employment counsel to fully understand the risks and benefits of the PAID program prior to voluntary submission.