On October 27, 2016, The New York City Council unanimously passed a local law, the Freelance Isn’t Free Act, aimed to enhance protections for freelancers and purportedly to prevent wage theft. Under the law, freelancers include individuals (and organizations having no more than one person) retained as an independent contractor to provide services in exchange for payment. The law, however, excludes from coverage sales representatives (as defined in section 191 of the New York Labor Law), persons engaged in the practice of law under the contract at issue (and who are members in good standing of a bar and not under any restrictions with respect to the practice of law), and licensed medical professionals. The law does not apply to the United States government, New York City, and New York State (and their respective offices, departments, agencies, authorities, etc.) any local government, municipality, or county, along with any foreign government.
Category: Wage and Hour
Earlier this month, Massachusetts became the latest state to pass expansive pay equity legislation to combat the gender wage gap, surpassing even the rigorous new requirements passed by New York and California in late 2015. Notably, Massachusetts is the first state to ban employers from requesting salary history as part of the interview or employment application process. The legislation, which passed unanimously and was signed into law by Governor Charlie Baker, will go into effect on January 1, 2018. To prepare for its implementation, employers with employees in Massachusetts should begin to adjust their hiring process and compensation policies, and consider conducting a self-evaluation of their pay practices to take advantage of Massachusetts’ law’s affirmative defense.
The United States Department of Labor (“the DOL”) has finally issued the long-awaited rules dramatically increasing the minimum salary level for the overtime-exempt classifications under the Fair Labor Standards Act (“the FLSA”). The new rules also incorporate mechanisms to adjust this salary level in the future. The effect of future adjustments will require an employer to pay wage increases unrelated to the employer’s financial condition or employee performance. The new rules will have the greatest impact on those employees currently classified as exempt but who will not meet the new minimum salary threshold. These rules go into effect December 1, 2016, a date later than DOL originally communicated, which gives employers an opportunity to conduct a self-analysis to prepare for these changes.
With summer around the corner, it is a good time for a refresher on legal implications when hiring interns. Specifically, when must interns be paid and what other legal protections do interns have? Wage and Hour Issues – As has been widely publicized in recent years, a number of companies who utilize unpaid interns have found themselves the object of lawsuits. It is thus important for companies to make an informed decision on the compensation issue before the hiring process begins.
Senate and House Republicans pushed back on the DOL’s proposed final rule on the “white-collar” overtime exemptions by proposing a new bill, the Protecting Workplace Advancement and Opportunity Act, seeking to invalidate the DOL rule. Under current regulations, employees must satisfy certain tests regarding the job duties they perform and be paid at least $23,660 per year, on a salary basis to be considered exempt under the FLSA’s “white-collar exemptions.” The DOL’s proposed final rule, however, seeks to more than double the minimum salary level from $23,660 to $50,440 per year and provides for automatic annual increases to the minimum salary threshold. Although the proposed final DOL rule does not include any specific changes to the “job duties” component of the exemptions, such changes may be included in the final rule.
EEOC to Collect Wage and Hour Data Based on Race, Ethnicity, and Gender in Effort to Aid Enforcement of Laws Requiring Pay Equity
The United States Equal Employment Opportunity Commission (“EEOC”) has proposed a change to the EEO-1 Report, the standard form used to collect workforce profiles from certain private industry employers and federal contractors. In its current iteration, the form annually requires employers to categorize their workforces based on gender, race, ethnicity, and job category, using data collected from one pay period occurring in July, August, or September of the reporting year. The amended form would require further categorization of employees based on W-2 earnings and hours worked.
The U.S. Department of Labor (“DOL”), Wage and Hour Division (“WHD”) recently issued an Administrator’s Interpretation (“Interpretation”) on joint employer liability under the Fair Labor Standards, Act, 29 U.S.C. § 1801 et seq. and the Migrant Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 201 et seq., that provides additional guidance to employers but also may demonstrate the DOL’s increased efforts to focus on joint employer liability for wage and hour compliance. According to the WHD, the workplace increasingly involves use of outsourcing, shared employees, integrated employers, and other forms of co-dependent business models. The WHD seeks to ensure compliance with wage and hour laws for entities that rely upon such alternative workforces. While the Interpretation is not binding upon the courts and constitutes guidance for employers, it lists factors extrapolated from court decisions, other DOL guidance, and related sources that should be considered where an employer utilizes alternative labor sources or has sister or related entities that share common operations or are interdependent.
On Labor Day, President Obama issued an Executive Order that increases paid time out for employees of federal contractors. In legislation similar to that enacted in recent years in municipalities, cities, and states across the country, Executive Order 13706 mandates that federal contractors provide paid sick leave on an accrual basis. More specifically, employees must be able to accrue one (1) hour of paid sick leave for every 30 hours worked. While the Order states that its goal is to ensure that employees on federal contracts “can earn up to 7 days or more of paid sick leave annually,” it requires that contractors “not set a limit on the total accrual of paid sick leave per year, or at any point in time, at less than 56 hours.” Thus, the Order mandates a minimum of seven (7) paid days, but permits an employer to allow accrual of a larger number of days. Although the paid time is not required to be paid out when an employee separates from employment, it must be eligible for carry-over from year to year if unused, and must be reinstated if an employee separates and is rehired by the same employer within twelve (12) months. In addition to time needed for an employee resulting from his or her own “physical or mental illness, injury or medical condition,” the Order permits a broad range of uses, such as obtaining diagnostic or preventive care; “caring for a child, a parent, a spouse, a domestic partner, or other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship” and who needs care for an illness, injury or condition, or diagnostic or preventive care “or is otherwise in need of care;” or for recovery from or attending to matters related to domestic violence, sexual assault, or stalking, whether for the employee or any of the members of the employee’s family as defined above. Notably, the Order’s definition of those whom the employee may use paid time to care for – individuals “related by blood or affinity whose close association with the employee is the equivalent of a family relationship” – is among the most expansive of any similar legislation.
In a much anticipated decision in Glatt v. Fox Searchlight Pictures, Inc., the United States Court of Appeals for the Second Circuit recently adopted the “primary beneficiary” test for determining whether individuals performing services for no compensation have been properly classified as “unpaid interns” or are, in fact, “employees” who have been improperly denied wages mandated by the Fair Labor Standards Act (FLSA). The district court, in an opinion that received a great deal of attention, had ruled that the plaintiffs were employees for FLSA purposes, applying the factors enumerated in the test proposed by the U.S. Department of Labor (DOL). The Second Circuit rejected the DOL’s test and, accordingly, reversed the district court’s order granting the plaintiffs’ motion for partial summary judgment and their motion to certify a collective action.
Supreme Court Upholds Department of Labor’s Authority to Issue Interpretive Rules Without Public Notice or Comment
Rules promulgated by agencies of the federal government can be divided into those which have the force and effect of law and those which are merely “interpretative” or provide general statements of policy concerning the agency’s view of the law. When an agency wishes to promulgate rules having the force and effect of law it must comply with the requirements of the Administrative Procedures Act (APA) by, among other things, publishing the proposed rules in advance, allowing sufficient time for public comment and responding to significant comments received. In Perez v. Mortgage Bankers Association, the United States Supreme Court addressed the issue of whether the Department of Labor (the “DOL”) was free to reverse itself about the proper interpretation of the laws over which it has enforcement responsibility without giving notice or allowing public comment of the proposed change. The Court unanimously held that the DOL was free to do so.