June 2016
Almost two years after President Obama directed the United States Department of Labor to update certain overtime regulations, those regulations have finally been announced.  

It is expected that 4.2 million workers who are currently exempt from having to be paid overtime under the Fair Labor Standards Act ("FLSA") will now have to be paid at overtime rates when they work more than 40 hours in a work week.  

See the Feature story below for details. Contact Meredith Savitt or myself if you have any questions or would like her assistance in any matters. 

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FEATURE: US Dept of Labor Issues Final Rule on Overtime....FINALLY
Effective December 1, 2016, although there are no changes to the duties tests, the minimum weekly salary threshold for the administrative, executive, and professional FLSA exemptions has been raised from $455/week or $23, 660/year to $913/week or $47, 476 annually. 

However, the increases to the threshold do not stop there. The new rules provide a mechanism for automatically updating the salary and compensation levels every three years. Under the old rule there was no automatic increase and the last change occurred in 2004 when the weekly threshold level was raised to $455. In order to calculate whether an employee meets the threshold level and to make the new salary standard more palatable to employers, the new rule now lets employers apply non-discretionary bonuses and incentive payments (including commissions to satisfy up to 10 per cent of the new standard salary level. In order to apply such payments toward the standard salary level test, any such payment must be made on a quarterly or more frequent basis, but the amount will be capped at 10 percent of the required salary amount).

The new rule also raises the total annual compensation threshold for an individual to be exempt as a "highly compensated employee" from $100,000 to $134,004. However, for these employees, employers may not credit discretionary bonuses or incentive payments toward the threshold salary amount (although non-discretionary bonuses and incentive payments, such as commissions) may count toward the total annual compensation requirement.

What is an employer to do? According to the Department of Labor, employers covered by the FLSA essentially have "plenty of options with the new overtime rule." An employer could pay employees overtime whenever they work more than 40 hours in a work week. Or, an employer (assuming the employee meets the duties test) could raise an employee's salary to meet the minimum standard salary threshold to keep the employee exempt from having to be paid overtime. This may make sense when an employee is already being paid close to the threshold level, but less so for lower paid employees. Another option to avoid paying overtime is to ensure that employees are not permitted to work overtime. Alternatively, an employer could hire more employees and have each employee work fewer hours. And, when looking at these options, employers should not forget in making their calculations to apply 10% of certain non-discretionary incentive and bonus payments to determining whether the minimum threshold level is met.

And don't forget, any employees whose classification under the new regime is converted from exempt to non-exempt must have records kept for all hours that they work and meal breaks.

As for not-for-profit corporations, while there is no specific exemption for them from the overtime requirements, some not for profit companies may not be covered by the FLSA. As consolation to the not for profit sector, the Department of Labor has issued specific guidance for the not profit sector on the overtime final rule. Generally speaking an employer with an annual volume of sales made or business done of $500,000 or more per year is covered by the FLSA. (However, certain named enterprises, such as hospitals, schools, pre-schools and businesses providing medical or nursing care for residents" are covered by the FLSA regardless of the total of their annual sales or business done or their not for profit status). Not for profit charitable organizations are not covered by the FLSA, however, unless they engage in ordinary commercial activities that result in sales made or business done that meets that threshold, like operating a gift shop or other business enterprise. Activities, such as providing free goods are not considered business activities, but charitable in nature. But not for profit companies must still be careful because even if the organization is not covered, they can employ employees who are individually covered. Employees who engage in interstate commerce are covered by the FLSA. These kinds of activities include making out of state phone calls, mailing information or conducting business by the U.S. mail, ordering or receiving goods from an out of state supplier or handling credit card transactions, or certain fundraising activities. Of course, while charitable, religious and educational not for profit entities are permitted to use volunteer time that is unpaid, but that volunteer time may not be given to an employee's own not for profit employer performing the same type of work for which they are employed.
EEOC and Leaves of Absence as Reasonable Accommodation
Disability claims filed with Equal Employment Opportunity Commission "EEOC" are at an all time high. One of the driving factors is employer practices that deny or restrict the use of leave as a reasonable accommodation. EEOC has issued new guidance to educate employers about workplace leave as a reasonable accommodation under the Americans with Disabilities Act. Under the EEOC policy statement, employees with disabilities must be provided with leave on the same basis as all other similarly situated employees. EEOC states, "The purpose of the ADA's reasonable accommodation obligation is to require employers to change the way things are customarily done to enable employees with disabilities to work." Therefore, the EEOC confirms that time off from work is a reasonable accommodation because it enables an employee to return to work following the period of leave. A leave of absence in the case of disability must be considered even if the employer does not offer leave as an employee benefit, if the employee is not eligible for leave under the employer's policy or the employee has exhausted his/her leave time. Insofar as only unpaid leave need be considered, the EEOC would require leave as a reasonable accommodation in cases where a leave policy does not cover employees until they have worked six months and the employee has worked less than that, sick leave days in excess of what is provided to an employee according to a tier based system when employees with longer tenure are entitled to more sick leave, or an employer's leave policy does not cover employees who work a certain number of hours each week. Maximum leave policies that have no exceptions for reasonable accommodation requests are essentially unlawful. An employer can deny requests for leave only when it can show that providing the leave accommodation would impose an undue hardship on its operations or finances.

Also employers faced with requests for leave as a reasonable accommodation must, like in the case of other reasonable accommodation requests, engage in the interactive process with an employee to determine whether the leave accommodation may be provided. Employers may still obtain information from the employee's health care provider (with the employee's permission) to confirm or to elaborate on information that the employee has provided and to explain the need for leave, the amount and type of leave required and whether other accommodations other than leave may be effective for the employee. In cases where the employee has been granted leave and then seeks additional leave, the employer's obligation to engage in the interactive process continues.

Finally, an employer will violate the ADA if it requires an employee with a disability to have no medical restrictions - that is to be 100% healed or recovered before returning to work -- if the employee can perform her or his job with or without reasonable accommodation unless the employer can show providing the needed accommodations would cause an undue hardship. The interactive process obligation on the employer continues with the receipt of a request for reasonable accommodation from an employee on leave for a disability who wants to return to work or upon receiving a doctor's note outlining work restrictions.

Whether a request for leave imposes an undue hardship must be judged on a case by case basis. Where an employee's medical provider can provide only an approximate date or a range of dates for return to work, a leave request may need to be modified and re-evaluated. Only a request for an indefinite leave will constitute an undue hardship per se. Faced with a request from an employee for additional time off, the employer may consider in determining whether an undue hardship exists, the impact of the leave already taken and the additional impact on the employer's operations in granting more leave time off.

With the issuance of this new guidance, employers should review their time off policies and accommodation procedures and policies to ensure that they comply with the latest guidance from the EEOC.
The EEOC has just issued final rules to determine whether wellness programs offered by employers that request health information from employees and their spouses are lawful.  The rules permit wellness programs to operate consistent with their stated purpose of improving employee health, while including protections for employees against discrimination.  Because employers are generally prohibited under federal law from obtaining and using information about employees' own health conditions or the health conditions of their family members, the regulations allow employers to ask health related questions and conduct medical examinations to determine risk factors or to provide health services as part of a voluntary wellness program.  Although the final rules will not go into effect until 2017, employers who operate these programs should start reviewing their programs to make sure they comply with the new regulations.
Please visit the Employment Law page of our website for past issues of EMPLOYMENT ALERT NEWSLETTER to get information on other important topics.  
NYC Commission on Human Rights and Pregnancy Discrimination
New York City employers be aware that the City Commission has  issued Enforcement Guidance on discrimination on the basis of pregnancy. Guidelines indicate employers must provide reasonable accommodations to employees because of pregnancy, miscarriage, fertility treatments, abortions and related to lactation/expressing breast milk.  Required accommodations include minor changes in work schedules, adjustments to uniform requirements or dress codes, additional water or snack breaks, allowing an individual to eat at her work station, extra bathroom breaks or additional breaks to rest and physical modifications to a work station, including the addition of a fan or seat. Schedule modifications, job restructuring and reassignment to a vacant position may also qualify as reasonable accommodation. The guidelines state that such accommodations may include adjustment of start or end time, reduced or modified work schedule, desk duty or transfer to an alternate position. Employers must initiate a "cooperative dialogue" with employees to determine whether an employee requires an accommodation under this law when an employer learns, either directly or indirectly, that an employee needs an accommodation due to pregnancy, childbirth, or related medical condition. Even where an employee has not requested an accommodation, the employer has an affirmative obligation to initiate a cooperative dialogue when the employer:
1) has knowledge that an employee's performance at work has been affected or that her behavior at work could lead to an adverse employment action; and
2) has a reasonable basis to believe that the issue is related to pregnancy, childbirth, or a related medical condition. 

Guidelines also contain specific requirements for how "cooperative dialogue" must be conducted. Employers may not require an employee to provide medical confirmation of pregnancy, childbirth or related condition, except when an employee is requesting time away from work other than for the 6-8 week presumptive period after childbirth or the employee is requesting to work from home. Other limitations are included on the right to seek documentation. 

The law also requires that employers provide all employees with written notice of their right to be free from discrimination in relation to pregnancy, childbirth and related medical conditions. Notice should be given to all new employees at the beginning of employment, posted in an area accessible to all employees and provided to incumbent employees if not already provided. The commission provides a poster available on its website to provide notice to employees.

Employers in New York City who employ employees who are pregnant or have just given birth, should review their current policies and practices, familiarize themselves with the new requirements, and train supervisors and managers on how to handle these situations.

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