HR & the Law in the News
June 2016, Volume 15, Issue 6
Please enjoy this latest edition of FiveL Company's monthly e-newsletter, bringing you current news related to employment policies, practices and programs. 

This is the last month in which the discounted, annual subscription to FiveL Company's 2016 webcast series is available.  Subscribe by June 21st for the 6 remaining webcasts and get one FREE! The June 22nd webcast is, "FLSA Update: The New Regulations and Calculating their Impact," pre-approved by SHRM and HRCI for 1.25 business credits! Click here for more info or to register. 
Ignorance is Bliss?     
Protecting Your Business in the Regulatory Reign
A young businesswoman protects a house from the elements - rain or storm and sun. Blackboard drawing top view.
Many states reported record rain in May. In the business and HR worlds news of the FLSA regulations reigned (boy, I had to reach for that one, eh?) 

No doubt everyone has heard by now that on May 18th the US Department of Labor (DOL) filed the "final" Fair Labor Standards Act (FLSA) regulations. When they were published in the Federal Register on May 23rd, however a special "Announcement of Policy" was also published with an enforcement exception (see "special announcement" below). 

In all, business owners, managers and HR professionals are asking what options are available to help them comply with the regulations while reducing the adverse fiscal impact to their company or organization.  The following is a brief and high-level review of just some of the key changes and at least five options available to you. Remember, an employee must meet all three tests in order to be properly classified as exempt.   
  1. Minimum salary test - This modified and increased the guaranteed, minimum salary to $913/week or $47,476/year. 
  2. Duties tests - there were no changes to the duties tests. 
  3. Salary basis test - this was modified and actually gives employers a little more flexibility to meet the minimum salary test. You may now still classify an employee as exempt even if the employee's guaranteed minimum salary is below $47,476 if: (1) you pay to an employee at least quarterly a bonus that provides him with an annual salary of at least $47,476; and (2) the total bonus payments are not more than 10% of the annual minimum salary or $4,747.60. Beware #1: This can be tricky if the bonus is tied to performance and the employee does not earn the bonus in a quarter. There is a "catch up" provision but if not followed you may be liable for overtime hours worked in the quarter in which the bonus was not paid.  
The new regulations will go into effect for most covered employers December 1, 2016. Why most employers?  Per my reference above to a special announcement, the DOL will not be enforcing the new regulations as they apply to certain residential care homes and facilities with fewer than 15 beds. So what do you do now with any employee whom you currently have classified as exempt but whom you also pay an annual salary of less than $47,476? The following options all assume the person is properly classified as exempt today.
  1. Increase the person's guaranteed minimum salary to meet the new threshold of $47,476 and keep the employee properly classified as exempt. Let's say an employee's guaranteed minimum salary today if $45,000 you may increase that effective December 1, 2016 to $47,476 and maintain the employee's exempt status. 
  2. Simply convert the exempt employee to non-exempt at his current rate of pay and start paying overtime for all hours worked over 40 in a work week
  3. This is nearly the same as Option #2 above but you then limit or prohibit overtime hours worked.  
  4. Follow Option #3 above, limit or prohibit the overtime and then hire a part-time employee whom you will pay straight time and you avoid paying your current employee the overtime.  
  5. This is my favorite but don't let that sway you. Convert the employee to non-exempt at an hourly rate that should keep his current, total annual compensation the same as it is now, including with the overtime.  You can use a spreadsheet to calculate an hourly rate that is lower than the result you would get in Option #2 above but that will provide the employee with the same total compensation he currently has, including overtime. The only figure you need in advance is the average number of hours the employee has worked per week over the last twelve months. If you have not been tracking or recording time worked by your exempt employee then estimate, guesstimate or simply ask the employee and proceed on good faith. If you would like a copy of FiveL Company's FLSA calculator register for this month's FLSA webcast on June 22nd.  Click here for more information or to register.  
Beware #2: Every option above has associated pros and cons.  You need to weigh the impact of each to your organization from an employee relations standpoint, fiscal impact and administrative burdens tied to each option.  

Beware #3: Don't forget your state regulations!  At least 16 states have their own "white collar" regulations that apply different definitions and thresholds for determining exempt classification so be sure you check those as well. You may have an employee that qualifies for exempt status under the federal regulations but not the more stringent regulations of your state(s) of operation. For a list of those 16 states click here.

Want to learn more and walk through some practical examples? Join the June 22nd FLSA webcast where we'll do just that, spend time on calculating the impact of the various options (yes, that means we'll be doing some math), and look at some pending legislation that could defer or delay the implementation date. Pre-approved by SHRM and HRCI for 1.25 business credits. Click here for more information or to register.  
Depressed tired businessman with hands on head
Weather Forecast: Regulatory Reign Continues
The first article is just a taste of what's to come.  The DOL recently published its Spring regulatory agenda listing what it plans to address through regulatory reform in the next six months.  Among the myriad issues, including approximately 32 from OSHA, the DOL now plans to issue its Request for Information (RFI) seeking feedback from employees and employers regarding how employers are tracking all time worked by non-exempt employees using "Electric Devices" particularly during non-traditional work hours like nights and weekends. I still get a chuckle out of the reference; it makes me think the inquiry will be about how employees use alarm clocks, toasters, coffee makers and other electric devices to get their work done. 

Preceding that, on March 22nd the National Labor Relations Board's (NLRB) General Counsel issued a memorandum listing some issues that may be addressed prospectively including and not limited to: 
  • Replacement of workers out on an economic versus Unfair Labor Practice (ULP) strike
  • Flop the flip - Reconsidering (again) whether Weingarten rights apply to non-union workers e.g., the right to have a representative present for meetings related to or that may lead to corrective action
  • Broader rights for employees to access employers' e-systems (and property) for the purpose of engaging in protected activity
  • Worker misclassification (what agency isn't looking at this?!)
  • ...and more!
That's moving forward.  Now let's take a quick peek at just a few more changes that came about last month. 

May 11th - If you use Non-Disclosure Agreements (NDA) ensure you are complying with the Defend Trade Secrets Act, which took effect this date. The new law enables an owner of a trade secret that is misappropriated to bring a civil action if the trade secret is related to a product or service used in, or intended for use in, interstate or foreign commerce. In exchange the owner (employer) simply needs to provide the individual with some specific language.  Click here for the sample language and options for meeting the notice requirements. 

May 16th - The EEOC published the final rule on Workplace Wellness programs. The limit on incentive programs is the same as it was in the proposed rule, capped at 30% of the total cost of self-only health care coverage. 

I dare say that's enough for now.  So go rest, relax and find some quality down time that is electronic-device-free. Then come back next month and let's see where we are.  Thanks for reading!
Upcoming Events!

Next Webcast: "FLSA Update: The New Regulations and Calculating Their Impact," Wednesday, June 22nd 10:00 - 11:15 a.m. Pre-approved by SHRM & HRCI for 1.25 business credits. Click here for more information or to register. 

Wednesday, June 1st - "Employment Law, Legislative & Regulatory Update" presented for the members and guests of MAAAO, Columbia, MD 

Tuesday, June 7th - "The State of HR: Legal Update" presented for the members of CUPA-HR Maryland Chapter, Germantown, MD.  

Tuesday, June 21st - "How the New Overtime Rule Will Impact Your Non-Profit and What to Do About it," presented during SHRM's 2016 annual conference, 10:45 - 12:00 noon. 

Wednesday, June 22nd - "FLSA Update: The New Regulations and Calculating the Impact" FiveL's monthly webcast series. Pre-approved by SHRM & HRCI for 1.25 business credits. Click here.  

For a full list of upcoming events click here
Here it is...the infamous and oh-so-important disclaimer...This publication does not constitute the rendering of legal advice.  You should consult your company's employment or legal counsel for guidance on any particular issue.