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.

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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.

Coverage
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.

Notice
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.

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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.

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

• Every massage parlor, spa, or hotel that has been found to be apublic nuisance for prostitution;
• Every strip club or othersexually-oriented business;
• Every full-service fuel facility adjacent to an interstate highway or highway rest stop; and
• Everyoutpatient abortion facility.

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.

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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

• District of Columbia Child Labor Law
• Federal Child Labor Regulations

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.

 

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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.

Background
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

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.

Background
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.

DOL Issues Guidance for Private Employers on Final Overtime Rule

Guidance Provides Options for Compliance

The U.S. Department of Labor (DOL) has released guidance on its final overtime rule to help private sector employers evaluate current practices and transition to the rule’s requirements.

Background
The DOL’s final rule, effective December 1, 2016, updates the regulations governing which executive, administrative, and professional employees (“white collar” workers) are entitled to the minimum wage and overtime pay protections of the federal Fair Labor Standards Act (FLSA). The rule focuses primarily on updating the salary and compensation levelsneeded for such workers to be exempt. In particular, the final rule:

• Raises the salary threshold from $455 a week to $913 per week (or$47,476 annually) for a full-year worker;
• Sets the highly-compensated employee (HCE) total annual compensation level equal to $134,004 annually;
• Establishes a mechanism for automatically updating the salary and compensation levels every 3 years, beginning on January 1, 2020; and
• Amends the regulations to allow employers to use nondiscretionary bonuses, incentives, and commissions to satisfy up to 10% of the new standard salary level, so long asemployers pay those amounts on a quarterly or more frequent basis.

Note: When both the FLSA and a state law apply, the employee is entitled to the most favorable provisions of each law.

New Guidance
Among other things, the DOL’s guidance details some of the options employers may exercise in determining how to comply with the final rule. Employers have certain options for responding to the changes to the salary level, and the DOL does not dictate or recommend any method. Such options include:

• Providing pay raises that increase workers’ salaries to the new threshold;
• Spreading employment by reducing or eliminating work hours of individual employees working over 40 hours per week for which no overtime is being paid; or
• Paying overtime.

Note: The rule does not require employers to convert a salaried worker making less than the new salary threshold to hourly status; employers can pay non-exempt employees on a salary basis and pay overtime for hours worked beyond 40 in a week.

Click here to read the guidance. Additional information on the final rule, including fact sheets and Q&As, is available on the DOL’s final rule webpage.

Originally Published by HR 360, Inc.

Penalties Increase for Employers Violating Certain Federal Labor Laws

Employers that do not comply with certain requirements under a number of federal labor laws will face increased fines beginning with civil penalties assessed after August 1, 2016 (whose associated violations occurred after November 2, 2015).

Key Penalty Increases
Penalty increases announced by the U.S. Department of Labor that may be of particular interest include:

• Repeated or willful violations of the Fair Labor Standards Act (FLSA) minimum wage or overtime pay requirements will be subject to a penalty of up to $1,894 per violation (formerly $1,100);
• Willful violations of the Family and Medical Leave Act (FMLA) posting requirement will be subject to a penalty not to exceed $163 for each separate offense (formerly $110) (note: covered employers must post this general notice even if no employees are eligible for FMLA leave);
• Failure to provide employees with a Children’s Health Insurance Program (CHIP) notice will be subject to a penalty of up to $110 per day per violation (formerly $100);
• Failure to provide a Summary of Benefits and Coverage (SBC) will be subject to a penalty of up to $1,087 per failure (formerly $1,000);
• Failure or refusal to file a Form 5500 will be subject to a penalty of up to $2,063 per day (formerly $1,100); and
• Violations of the Occupational Safety and Health Administration’s posting requirement will be subject to a maximum penalty of $12,471 for each violation (formerly $7,000).

Originally Published by HR 360, Inc.

Minnesota Minimum Wage Rates Increase on August 1, 2016

New State and Federal Combination Poster Available for Purchase at
www.AllinOnePosters.com

The minimum wage rates in Minnesota will go up on August 1, 2016, according to the following schedule:

• Large employersmust pay at least $9.50 an hour (annual gross volume of sales made or business done of $500,000 or more);
• Small employersmust pay at least $7.75 an hour (annual gross volume of sales made or business done of less than $500,000);
• Thetraining wage rate is $7.75 an hour (90-day training rate paid to employees who are younger than 20 years of age); and
• Theyouth wage rate is $7.75 an hour (may be paid to employees younger than 18 years of age).

Note: In cases where an employee is subject to both the state and federal m
inimum wage laws, the employee is entitled to the higher of the two minimum
wages.

A new state and federal combination poster reflecting the updated rates is available for purchase. Additional information regarding Minnesota’s minimum wage rates is available by clicking here.

Colorado Repeals Certain State Employment Verification Requirements

Employers Still Must Comply with Federal Employment Verification Requirements

A new law in Colorado, effective August 10, 2016, repeals certain state employment verification requirements.

State Verification Law Repealed
Under current state law (until August 10, 2016), each employer in Colorado must:

• Make an affirmation within 20 days after hiring a new employee and keep a written or electronic copy of the affirmation for the term of employment of each employee; and
• Keep a written or electronic copy of the employee’s documents required by 8 U.S.C. § 1324a (commonly known as Form I-9 identity and employment authorization documents) and retain the copies for the term of employment of each employee.

Effective August 10, 2016, these requirements are repealed.

Federal Law Still Applicable
The law does not repeal a provision allowing the state Department of Labor and Employment to request documentation that demonstrates compliance with federal verification requirements.

Federal law requires employers to hire only individuals who may legally work in the United States—either U.S. citizens or foreign citizens who have the necessary authorization. To comply with the law, employers must verify the identity and employment authorization of each employee hired to work in the United States by completing and retaining Form I-9,Employment Eligibility Verification.

Employers must have a completed Form I-9 on file for each person on their payroll (or otherwise receiving remuneration) who is required to complete the form. Employers must also keep completed Forms I-9 for a certain amount of time after their employees stop working for them. Once an employee no longer works for the employer, the employer must determine how much longer to keep the employee’s Form I-9. To calculate how long to keep an employee’s Form I-9, click here.

Click here to read the text of the new state law. Additional information regarding Form I-9 is available by clicking here

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