Reminder: Guidance Available on Avoiding Employee Misclassification Under the FLSA

DOL Guidance Outlines ‘Economic Realities’ Test

As a reminder to employers, the U.S. Department of Labor’s (DOL) Wage and Hour Division previously issued guidance on how to avoid misclassifying employees as independent contractors for purposes of the federal Fair Labor Standards Act (FLSA).

Economic Realities Test
In order to make the determination of whether a worker is an employee or an independent contractor under the FLSA, courts and the DOL use the multi-factorial “economic realities” test, which focuses on whether the worker is economically dependent on the employer or in business for him or herself. Each factor of the “economic realities” test is outlined below.

  • Is the Work an Integral Part of the Employer’s Business? If the work performed by a worker is integral to the employer’s business, it is more likely that the worker is economically dependent on the employer. A true independent contractor’s work, on the other hand, is unlikely to be integral to the employer’s business.
  • Does the Worker’s Managerial Skill Affect the Worker’s Opportunity for Profit or Loss? This factor should not focus on the worker’s ability to work more hours, but rather on whether the worker exercises managerial skills and whether those skills affect the worker’s opportunity for both profit and loss.
  • How Does the Worker’s Relative Investment Compare to the Employer’s Investment? The worker should make some investment (and therefore undertake at least some risk for a loss) in order for there to be an indication that he or she is involved in an independent business. The worker’s investment should not be relatively minor compared with that of the employer. If the worker’s investment is relatively minor, that suggests that the worker and the employer are not on similar footings and that the worker may be economically dependent on the employer.
  • Does the Work Performed Require Special Skill and Initiative? A worker’s business skills, judgment, and initiative, not his or her technical skills, will aid in determining whether the worker is economically independent.
  • Is the Relationship Between the Worker and the Employer Permanent or Indefinite? Permanency or indefiniteness in the worker’s relationship with the employer suggests that the worker is an employee. However, a lack of permanence or indefiniteness does not automatically suggest an independent contractor relationship. The key is whether the lack of permanence or indefiniteness is due to operational characteristics intrinsic to the industry or the worker’s own business initiative.
  • What is the Nature and Degree of the Employer’s Control? The employer’s control should be analyzed in light of the ultimate determination of whether the worker is economically dependent on the employer or truly an independent businessperson. The worker must control meaningful aspects of the work performed such that it is possible to view the worker as a person conducting his or her own business.

Most workers are employees under the FLSA, according to the guidance. The text of the guidance is available by clicking here. Additional information and resources on employee misclassification, including fact sheets and press releases, are available from the DOL’sWage and Hour Division.

Note: Additional guidance on distinguishing employees from independent contractors for federal tax withholding purposes is available from the Internal Revenue Service.


$600 Million in Workers’ Compensation Liens Filed by Convicted or Indicted Physicians, Providers

Oakland—The Department of Industrial Relations (DIR) and its Division of Workers’ Compensation (DWC) today announced that $600 million in liens filed against injured employees’ claims for workers’ compensation benefits have been filed by convicted or criminally indicted parties from 2011 through 2015.

“While California has made great strides in increasing benefits to injured workers, improving appropriate care and reducing employers’ costs, we are pursuing legislation to prohibit criminal and indicted providers from lining their pockets through liens and to address the assignment of liens,” said Christine Baker, DIR Director.

California’s workers’ compensation law allows certain claims for payment of services or benefits provided to or on behalf of injured workers to be filed as a lien against an employer in an employee’s claim for workers’ compensation benefits.  The filing of a lien generates collateral litigation between the lien filer and defendant (insurer or employer) over the validity of the claim and the necessity, extent and value of any services provided.  The parties may then settle on an amount due or adjudicate the dispute in a lien trial before the Workers’ Compensation Appeals Board.

SB 863 (De León), which took effect on January 1, 2013, included a number of provisions to reduce costs by reducing the volume of lien claims and lien claim litigation in the workers’ compensation system, including the reestablishment of lien filing fees to preclude frivolous lien filings, creation of an Independent Bill Review system to remove most billing disputes from litigation, and restrictions on the ability of third parties to collect on assigned lien claims.

Despite these efforts, the 68 businesses comprising the top one percent of lien filers filed more than 273,000 liens totaling $2.5 billion in accounts receivable on adjudicated cases between 2013 and 2015.  Two of the business owners are indicted and three others have pled guilty.  Legislation is underway to stay liens of physicians or providers who are criminally charged with workers’ compensation fraud, medical billing fraud, insurance fraud, and Medicare or Medi-Cal fraud.

Assignments of Accounts Receivables are proving fertile ground for fraud

The assignment of liens by service providers to those who file and collect on liens are, in essence, the buying and selling of injured workers’ treatments and fertile ground for presenting fraudulent claims.  DIR’s review of filing dates indicates that lien claimants tend to wait until after the primary case is settled rather than seeking early resolution of medical necessity.  Even if lien claimants – especially those who bundle and buy or sell accounts receivables – only make pennies on the dollar, returns can still be high.

DIR is leading an effort to identify and address strategies for improved anti-fraud efforts in the workers’ compensation system. DIR and the Department of Insurance convened working groups in June to gather stakeholder input and evidence of fraudulent activity in the system.  At the direction of the Secretary of the California Labor and Workforce Development Agency, DIR will be preparing a report on further recommendations to the Governor and the Legislature by no later than Fall of 2016.

DIR protects and improves the health, safety and economic well-being of over 18 million wage earners, and helps their employers comply with state labor laws. Its Division of Workers’ Compensation (DWC) monitors the administration of workers’ compensation claims, and provides administrative and judicial services to assist in resolving disputes that arise in connection with claims for workers’ compensation benefits.


Illinois Amends Secure Choice Savings Program

Law Aims to Promote Retirement Savings

A new law amends the Illinois Secure Choice Savings Programs Act (Secure Choice).

Secure Choice requires Illinois businesses with at least 25 employees—that have been in business for two or more years and that do not currently offer a qualified retirement savings plan—the option to eitheroffer a private market savings plan or automatically enroll their employees into Secure Choice.

Secure Choice participants will be enrolled into a default target date Roth IRA with a default 3% payroll deduction, but can choose to change their contribution level or opt out of the program altogether at any time. Secure Choice accounts are owned by individual participants and will be portable from job to job.

Implementation of the program is underway, and the program is estimated to be open for enrollment in 2017.

Amended Law
Recent legislation amends the Secure Choice Savings Program Act by providing that (among other things):

  • The total annual expenses (rather than the annual administrativeexpenses) of the trust fund administered by the Secure Choice Board may not exceed 0.75% of the total trust balance;
  • The Secure Choice Board investment policy—and any changes to the investment policy—must be published on the board’s (or state treasurer’s) website at least 30 days prior to implementation; and
  • Small employers’ use of automatic enrollment is subject to final rules from the U.S. Department of Labor, and that utilization of automatic enrollment by small employers may be allowed only if it does not create employer liability under the federal Employee Retirement Income Security Act (ERISA).

The law is effective as of July 15, 2016. Click here to read the text of the new law. More information on the Illinois Secure Choice Savings Program Act is available from the Illinois State Treasurer.


New Hampshire Law Prohibits Retaliation Based on Flexible Work Schedule Requests

Law Effective September 1, 2016

Under a new law in New Hampshire, an employer may not retaliate against an employee solely because he or she requests a flexible work schedule.

The law does not require an employer to accommodate a flexible work schedule, nor does it create a cause of action for failure to provide a flexible work schedule at an employee’s request.

Note: Employers may have related obligations under other federal, state, and/or local laws, such as the reasonable accommodation requirements of the federal Americans with Disabilities Act or the leave requirements of the federal Family and Medical Leave Act.

The new law is effective September 1, 2016. Click here to read the text of the law.


Illinois Enacts Child Bereavement Leave Act

Law Applicable to Certain Large Employers

A new law in Illinois allows certain employees to take child bereavement leave. Highlights of the law are presented below.

The law covers (among other entities) employers with 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year.

Employees are generally covered if they:

  • Work for a covered employer;
  • Have worked at least 1,250 hours during the 12 months prior to the start of leave;
  • Work at a location where the employer has 50 or more employees within 75 miles; and
  • Have worked for the employer for at least 12 months (not required to be consecutive).

State Bereavement Leave
Covered employees are entitled to use a maximum of 2 weeks (10 work days) of unpaid bereavement leave to:

  • Attend the funeral (or alternative to a funeral) of a child;
  • Make arrangements necessitated by the child’s death; or
  • Grieve the child’s death.

Bereavement leave under the provisions above must be completed within 60 days after the date on which the employee receives notice of the child’s death.

Note: “Child” means an employee’s son or daughter who is a biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis.

An employee must provide the employer with at least 48 hours’ advance notice of the employee’s intention to take bereavement leave, unless providing such notice is not reasonable and practicable.

The law is effective as of July 29, 2016. The text of the law features additional provisions affecting employers and employees.


Rhode Island Law Prohibits Certain Wage Deductions Without Employee Approval

Approval May Be Written or Electronic

Under a new law in Rhode Island, an employer may not deduct or withhold any monies not authorized by federal or state law or by court order from an employee’s wages, without first getting written or electronic approval from the employee.

Permissible Deductions
State law permits employers to make certain deductions from employee wages, including (among other things):

  • Trade union or craft dues or other obligations imposed by a collective bargaining contract;
  • Contributions to a pension plan in which the employee is a participant not required by a collective bargaining agreement entered into between the authorized collective bargaining representative of an employee and his or her employer;
  • Contributions to or for insurance or under an insurance plan for accident, health, or life coverage not required by a collective bargaining agreement entered into between the authorized collective bargaining representative of an employee and his or her employer; or
  • Amounts to be credited to a share, deposit, or loan account in any credit union.

The deductions listed above must be made in accordance with awritten request by the individual employee (see § 28-14-10).

Note: Guidance regarding certain deductions from wages under the federal Fair Labor Standards Act (FLSA) is also available, along with specific guidance on exempt employees. Remember that when state laws differ from the federal FLSA, an employer must comply with the standard most protective to employees (that is, the one that provides the greater benefit to employees).

New Law
Under the new law, an employer may not deduct or withhold any monies not authorized by federal or state law or by court order from an employee’s wages, without first getting written or electronic approval from the employee.

The law is effective as of July 20, 2016. Click here to read the text of the law.


Louisiana: Hotels Required to Display Human Trafficking Poster

Louisiana: Hotels Required to Display Human Trafficking Poster

Law Effective as of August 1, 2016

Under a new law in Louisiana, effective August 1, 2016, each hotel must post information regarding the National Human Trafficking Resource Center hotline in the same location where other employee notices required by state or federal law are posted.

All of the following establishments are also required to post information regarding the National Human Trafficking Resource Center hotline:

New Law 

  • Each hotel mustpost the information in the same location where other employee notices required by state or federal law are posted.
    • “Hotel” means and includes any establishment (both public and private) engaged in the business of furnishing or providing rooms and overnight camping facilities intended or designed for dwelling, lodging, or sleeping purposes to transient guests.
      • Note: The new law doesnot encompass any hospital, convalescent or nursing home or sanitarium, or any hotel-like facility operated by or in connection with a hospital or medical clinic providing rooms exclusively for patients and their families, nor does it include bed and breakfasts (lodging facility having no more than ten guest rooms where transient guests are fed and lodged for pay) or certain other facilities.
    • Such posting must be no smaller than 8 and 1/2 inches X 11 inches and must contain the following wording in bold typed print of not less than 14-point font: “If you or someone you know is being forced to engage in any activity and cannot leave, whether it is commercial sex, housework, farm work, or any other activity, call the National Human Trafficking Resource Center hotline at 1-888-373-7888 to access help and services.”

Click here to download the poster. Additional requirements are listed in the text of the law.


Child Labor in the District of Columbia (DC)

Both state and federal law restrict the employment of minors. When state youth employment laws differ from the federal provisions, an employer must comply with the higher standard. State child labor standards are presented below.

Minimum Wage

Individuals under the age of 18 may be paid the minimum wage established by the federal government.

Marion S. Barry Summer Youth Employment Expansion Amendment Act

The District of Columbia recently amended the Youth Employment Act to authorize the mayor to provide employment or work-readiness training for participants 14 through 24 years of age (prior to this law, only youths aged 14 to 21 were eligible to participate).

Specifically, the law provides that the mayor must establish and implement (subject to the annual appropriation of funds) a summer youth jobs program to provide for the employment or training each summer of 10,000 to 21,000 youth. Youth must be 14 through 21 years of age on the date of enrollment in the program; provided, that forFiscal Year 2016 and Fiscal Year 2017, the program may provide for the employment or training each summer of no more than 1,000 youth22 through 24 years of age on the date of enrollment in the program.

Individuals involved in the program must be paid at the following rates:

  • Youth 14 or 15 years of age at the date of enrollment must receive an hourly work readiness training rate of at least $5.25.
  • Youth 16 through 21 years of age at the date of enrollment must be compensated at an hourly rate of $8.25.
  • Youth 22 through 24 years of age at the date of enrollment must be compensated at no less than the District’s minimum wage, or the federal minimum wage plus $1 (if the federal minimum wage is greater than the DC minimum hourly wage).

These provisions are effective as of May 12, 2016. Click here to read the text of the law.

Restrictions on Time & Hours Worked

Minors under 18 are generally prohibited from working:

  • More than 6 consecutive days in any 1 week;
  • More than 48 hours in any 1 week; or
  • More than 8 hours in any 1 day.

Note: Certain minors in agricultural work, housework, or in the distribution or sale of newspapers are exempt from these requirements. Different requirements may apply to minors employed in certain live performances or minors employed stuffing newspapers.

Minors 16 and 17 Years Old

  • Minors 16 or 17 years of age may not be employed, permitted, or suffered to work before 6:00 a.m. or after 10:00 p.m.

Minors Under 16

  • Minors under 16 years of age may not be employed, permitted, or suffered to work before 7:00 a.m. or after 7:00 p.m., except during the summer (June 1 through Labor Day) when such minors may work until 9:00 p.m.

For More Information

Please Note: The state laws summaries featured on this site are for general informational purposes only. In addition to state law, certain municipalities may enact legislation that imposes different requirements. State and local laws change frequently and, as such, we cannot guarantee the accuracy or completeness of the information featured in the State Laws section. For more detailed information regarding state or local laws, please contact your state labor department or the appropriate local government agency.



Rhode Island: Mandated Short Term Disability Rates Increase

Weekly Maximum and Minimum Benefit Rates Increase

Rhode Island has announced that its weekly maximum and minimum short term disability rates have increased.

Rhode Island’s temporary disability insurance program provides income support to individuals who are out of work because of a non-work related illness or injury. To be eligible, an individual must meet certain earnings requirements and be medically certified by a qualified health care provider as unable to work.

An individual’s weekly benefit rate will be equal to 4.62% of the wages paid in the highest quarter of his or her base period.

Updated Rates
For claims with a “Benefit Year Begin Date” of July 3, 2016 or later,$89.00 is the minimum benefit rate and $817.00 is the maximum benefit rate. This does not include dependency allowance. The weekly benefit rate remains the same throughout the entire benefit year.

Click here for more information on Rhode Island’s temporary disability program.

Originally Published by HR 360, Inc.

DOL Revises Federal Minimum Wage and Employee Polygraph Workplace Posters

2016 Federal Banner for Blog
Revised Posters Must Be Posted as of August 1, 2016

The U.S. Department of Labor (DOL) has recently updated its Fair Labor Standards Act and Employee Polygraph Protection Act posters. The new versions are now included in our State & Federal Combination Posters, as well as various versions of our Federal All-In-One Posters.

The federal Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. Covered nonexempt workers are entitled to at least the federal minimum wage, and overtime pay at a rate not less than one and one-half times the regular rate of pay is required after 40 hours of work in a workweek.

Note: Employers may also have certain obligations under state and/or local laws, including minimum wage and overtime pay requirements. When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.

The federal Employee Polygraph Protection Act (EPPA) prohibits most private employers from using lie detector tests, either for pre-employment screening or during the course of employment. Employers generally may not require or request any employee or job applicant to take a lie detector test, or discharge, discipline, or discriminate against an employee or job applicant for refusing to take a test.

Revised Posters
Every employer of employees subject to the FLSA’s minimum wage provisions must post (and keep posted) a notice explaining the law in a conspicuous place in all of their establishments so as to permit employees to readily read it.

Additionally, every employer subject to the EPPA must post (and keep posted) on its premises a notice explaining the law. The notice must be posted in a prominent and conspicuous place in every establishment of the employer where it can readily be observed by employees and applicants for employment.

As of August 1, 2016, employers must post these revised versions. All In One Poster Company has revised all posters containing these notices as of July 29, 2016.