Save the Date! SmithAmundsen Complimentary Webinar on August 3rd — Employee Compensation and Benefits: Common Mistakes and Missed Opportunities

Employee pay and benefits plans can be one of the most significant expenses for an employer. Avoiding costly compliance mistakes and leveraging plans to effectively reward key employees is critical in today’s environment. Join Kelly Haab-Tallitsch and William Scogland on Thursday, August 3 at 12:00 PM CT for the latest installment of our Labor & Employment Quarterly Series as they discuss common mistakes and missed opportunities in designing and administering compensation and benefit programs. Specific topics include:

  • Additional qualified plan opportunities for highly compensated employees
  • Using equity or phantom equity to retain key personnel
  • Common 401(k) mistakes
  • Traps to avoid in a merger or acquisition
  • And more!

Register for the webinar here!

DOL Reinstates Wage and Hour Division Opinion Letter Process

By Steven Jados, June 29, 2017

On June 27, 2017, the United States Department of Labor (DOL) announced that it is reinstating the DOL’s Wage and Hour Division opinion letter process, which was in existence for more than 70 years prior to a change in procedure in 2010.

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gavel on a white background 

DOL opinion letters allow employers (and employees) to submit questions to the DOL regarding whether particular employment practices comply with the laws the DOL enforces. The DOL then has the discretion to respond, publicly, with appropriate guidance. Opinion letter guidance can be presented to courts and investigators—by the employer that submitted the question, or by any other employer that reasonably relied on the opinion letter’s guidance—as part of a good-faith defense to allegations of wage and hour law violations.

To aid the opinion letter process, the DOL has established a website that provides additional information on how to submit opinion letter requests, and how to access prior opinion letter guidance.

The bottom line: Employers with close-call questions as to whether their wage and hour practices comply with the law now have another avenue to use to avoid potential exposure to wage and hour claim liability.  With that in mind, employers who wish to make use of the DOL’s opinion letter process should review the DOL’s website, and contact experienced labor and employment counsel to obtain additional assistance with drafting and submitting opinion letter requests.

OSHA Delays Electronic Report Rule

Contributed by guest author Matthew Horn, June 27, 2017

This morning OSHA issued a press release announcing that it would be delaying the compliance date for its rule requiring most employers to electronically submit their injury and illness data to OSHA. The press release proposes pushing the compliance date back four months, from July 1, 2017 to December 1, 2017. We previously reported on the rule, its requirements, and its significant impact last year.

In the press release, OSHA echoes the Trump administration’s earlier promise to review and reconsider any recently enacted administrative rules and regulations. While the press release makes no mention of abolishing the rule altogether, the language of the press release seems to indicate that such an action may be inevitable. OSHA will likely provide additional guidance on the future of the rule in late November. Stay tuned.

REMINDER – Chicago Minimum Wage Increases Again and Cook County Minimum Wage Begins Starting July 1st 2017

Contributed by James F. Hendricks, Jr., June 23, 2017

On July 1, 2017, Chicago’s Minimum Wage increases to $11.00 per hour for non-tipped employees and $6.10 for tipped employees (Chicago Municipal Code §1-24). Cook County’s new minimum wage is $10.00 per hour for non-tipped and $4.95 for tipped employees.

Minimum Wage

Street sign that says “Minimum Wage Increase Ahead”

IMPORTANT NOTICE REQUIREMENTS: All employers that maintain a business facility within the geographic boundaries of  Chicago AND/OR are subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago are covered by Chicago’s Minimum Wage Ordinance and MUST do the following starting July 1st:

  1. Display applicable poster(s) by July 1st
  2. Include a copy of Chicago’s Minimum Wage Poster with the first paycheck issued after July 1st to each employee that is subject to the Ordinance (i.e. works at least 2 hours in Chicago, or at some point may work at least 2 hours in Chicago)

From our prior Chicago Minimum Wage Ordinance post, here are points that you need to know about the Chicago Minimum Wage Ordinance:

  1. Covered Employers: Any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons that has at least one employee and (1) maintains a business facility within the geographic boundaries of Chicago AND/OR (2) is subject to one or more of the license requirements in Title 4 of the Municipal Code of Chicago. Cook County: Work in the county, including compensated (sales, delivery, etc.)
  2. Covered Employees: Any employee who works for at least 2 hours in any two-week period within Chicago’s geographic boundaries, including driving through Chicago during work (e.g., that delivery driver that takes Route 94 from Evanston to Gary and gets stuck in rush hour traffic is covered).
  3. Hours subject to Chicago’s Minimum Wage: Chicago’s Minimum Wage only has to be paid for hours worked by the employee when he or she is physically present within the geographic boundaries of Chicago. This includes time spent driving during working hours, but does not include time commuting between home and work.
  4. Non-Tipped Employees’ Hourly Rate: Chicago’s Minimum Wage for non-tipped employees starting July 1, 2017 will be $11.00/hour; and increasing on July 1, 2018 to $12.00/hour; July 1, 2019 to $13.00/hour; and each July 1st thereafter, Chicago’s Minimum Wage will increase by an amount announced by the Commissioner of Business Affairs and Consumer Protection (and, of course, if the CCMW is less than the Illinois or Federal minimum wage, then the highest wage rate applies).
  5. Penalties & Damages: A fine of $500.00 to $1,000.00 per day for each offense that is not corrected. Potential license suspension or revocations and an order to pay restitution to underpaid employees. Additionally, employees can pursue a private cause of action to recover THREE times the underpayment, attorney fees and costs.
  6. Union/CBA Issues: There is no grandfathering for current “in-force” collective bargaining agreements. This means that, depending on the provisions of a current CBA, there could be an automatic increase in all employees’ wages (i.e., if only the lowest paid employee’s rates are defined and each other level is based a percentage higher), or the union could even demand to re-open bargaining mid-contract.

Zap! It’s the Devil – No Really: Accommodating Religious Beliefs

Contributed by Beverly Alfon, June 21, 2017

Imagine that in order to increase time and attendance record accuracy and efficiency, you have invested in a new biometric time clock system. This makes good business sense and overall, it is a straightforward issue…until HR tells you that an employee has refused to use the time clock for religious reasons.

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Man reading the definition of faith on a computer screen

In U.S. Equal Employment Opportunity Commission v. Consol Energy, Inc., (4th Cir. June 12, 2017), a coal mine worker who was a practicing evangelical Christian, refused to use a hand scanner time clock because he believed that it would “mark” him with the sign of the Antichrist. The employee offered to verbally report his time in or out, or to use a conventional punch clock. The employer responded with a letter from the scanner manufacturer indicating that because the Bible only refers to the “Mark of the Beast” as associated only with the right hand or forehead, use of the left hand in the scanner should not be of concern. The employer told the employee to use his left hand for the scanner. In response, the employee resigned and filed an Equal Opportunity Employment Commission (EEOC) charge.

Notably, the employer was already accommodating two other employees who had hand injuries.  They were allowed to enter their employee identification numbers into a keypad – instead of using the scanner. The EEOC brought an enforcement action against the coal mine for failure to accommodate the employee’s religious beliefs in violation of Title VII and construction discharge.  At trial, the EEOC and employee won. The award was $150,000 in damages, plus $436,860 in front pay, back pay and lost benefits. The coal mine appealed the decision.

The coal mine argued that there was no conflict between the employee’s religious beliefs and the requirement that he use the hand scanner system, especially in light of the employee’s admission that even his pastor did not believe that use of the hand scanner would produce a physical mark.    However, the appellate court found it significant that the employee clearly laid out his religious objection to using the system overall and there was no dispute that his beliefs were sincere. The court reasoned that it is not the employer’s place to “question the correctness or even the plausibility of [the plaintiff’s] religious understandings,” and affirmed the lower court verdict and findings.

Bottom line:  This case serves as a reminder that an employer cannot escape the requirement to accommodate simply because it thinks that an employee’s religious belief is nonsensical or mistaken. If there is enough evidence to show that the employee sincerely holds a religious belief that contradicts job requirements, an employer should consider an accommodation.

Doing Away with Your Vacation Policies

Contributed by Rebecca Dobbs Bush, June 16, 2017

Summer is unofficially here.  Kids are out of school.  Many employees are checking their vacation balances to see how much time they can take off work.

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Beach chair on white sand beach with a sunny sky in the background

For HR, vacation balances can be incredibly time-consuming. You have to worry about different accrual rates for different employees and set up tracking systems to account for those different rates. You have to make sure time off is being properly requested, approved and accounted for. After all, vacation not properly accounted for can lead to over-stated liabilities on company financials. For most companies, payroll is already the biggest operating cost as it is.

Or, maybe the real headache of your company’s vacation policy occurs every time you have to pay out unused days if an employee quits or is terminated from employment. The laws on what and when you have to pay employees at separation in regards to vacation varies state by state. However, in many cases, it can lead to significant financial liabilities.

You may have heard of the “unlimited” vacation policy. While it’s referred to as “unlimited” vacation, it’s technically a “no vacation” policy. With the right employee culture and the right managers, the vacation policy is torn up and thrown out, and employees can take as much vacation as they like – as long as they get their work done.

For companies, the “unlimited” policy can be a real game changer. No more financial liability on the company’s books. No more big vacation payouts when an employee leaves or is terminated. Also, “unlimited” vacation is a valuable benefit that can be touted when trying to attract the best talent to your organization. Granted, you do have to be cautious on how you transition from an accrual policy to an “unlimited” policy and make sure the transition complies with the state laws applicable to your organization. And generally, you won’t be able to apply the policy to your hourly / non-exempt employees.

However, the biggest issue to consider in transitioning is more likely – how will you know if employees are really getting their work done? There has to be some kind of measurable that allows you to hold employees accountable for abuse of the professional privilege of “unlimited” vacation. If there is, you also then need to make sure your managers and supervisors are properly trained and prepared on how to monitor and document when those measurables aren’t met by an employee.

If you’re not already in the small percentage of companies that offer “unlimited” vacation, you may, with the help of knowledgeable counsel, want to consider transitioning to one.

Update: Janus Files Petition for Appeal to the Supreme Court Seeking to Overrule Abood

Contributed by Carlos Arévalo, June 14, 2017

As previously reported on March 29th, the fight against the Supreme Court’s 1977 decision in Abood v. Detroit Board of Education continues. On June 6, 2017, Mark Janus, an Illinois state employee who is required to pay agency fees to AFSCME Council 31 pursuant to the Illinois Public Labor Relations Act, filed a petition for a writ of certiorari seeking review of a seventh circuit decision that affirmed the dismissal of his complaint. The petition poses the following question to the Supreme Court:  should Abood be overruled and public sector agency fee arrangements declared unconstitutional under the First Amendment?

The State of Illinois and AFSCME have 30 days to file their response to Janus’ petition for review. The Supreme Court is expected to consider the petition in late September, when the Justices return from their summer recess. If review is granted, the case would likely be argued in early 2018, with a decision due approximately a year from now.