There have been some interesting developments in employment law recently that we are constantly monitoring.
The Overtime Rule
As you should all be aware by now, in 2016, the DOL was attempting to start a new “Overtime Rule” that would have increased the salary threshold for the FLSA white collar exemptions from $455 per week to $913 per week.
The DOL Overtime Rule was scheduled to take effect towards the end of 2016.However, just prior to its effective date, a court intervened, ordering that the rule not go into effect.Whether the rule would be struck down or merely postponed was not determined.This resulted in a state of flux for many employers.In anticipation of the changes, some employers increased wages to comply with the to-be-instituted regulation, while others changed employee classifications.
While nothing of significance had been happening on the legal front since the court ordered that the rule be postponed, some of the court filings indicated that, while the DOL still maintains that it has the right to implement a rule, it will be revisiting what the number should be.
Then, less than two weeks ago, on June 27, 2017, the DOL sent a Request for Information, in essence, announcing that it will seek public input for a new rule or for changes to the existing rule.This likely signals an intent to start the rulemaking process over, with the ability for employers to comment on the very real effects of the previously proposed increase.During confirmation hearings before the Senate, the DOL Secretary of Labor Alexander Acosta, indicated that he believed the salary threshold should be around $33,000 (approximately $635 per week).Therefore, if the salary threshold is going to change, there is already some indication as to what the threshold may ultimately be.
For now, employers can rest easy as immediate changes are not likely.
Comp Time in Florida
Another change could also be in the works.
Currently, under the FLSA, private employers in Florida must pay eligible employees time-and-a-half for all hours worked over 40 in a workweek.However, a new law could give employers and employees a different option.Under the proposed law, called the Working Families Flexibility Act, “comp time” could be an option if both the employer and employee agree.
“Comp time” is a concept that allows employees to accrue time off instead of wages.Under the proposed law, comp time can be provided to an employee “at a rate of not less than 1.5 hours” for each hour of overtime.So, if an employee makes $15 per hour and works 45 hours in one workweek, the employee can either receive $112.50 in overtime pay, or 7.5 hours of comp time.
This would provide employees with more flexibility as to how they receive their overtime—in wages or in extra paid time off.There are some additional requirements of this proposed law, including a prohibition on employers requiring employees to choose comp time instead of wages, and a deadline by which the employees must be paid the extra wages if they have not yet used their comp time.Opponents of the law are skeptical, in part, because the employer can decide when the employee can use the comp time thus taking ultimate control away from the employee.
While this proposed law has already passed the House, it has not passed the Senate.Therefore, as of now, the FLSA does not allow for comp time for private employers.Therefore, if your employee qualifies for overtime, your employee must be compensated with wages, not additional paid time off.
The Tip Credit Debate Continues
In some industries where tips are customarily received, employers can become entitled to a “tip credit.”This means that an employer can pay the employee less than minimum wage, and receive a credit for a certain amount of tips received by the employee.For example, in Florida, an employer could pay an employee a direct wage of $5.08 and receive a tip credit of $3.02 to arrive at the $8.10 minimum wage.This is most often seen in the food service industry.
In a typical scenario, an employer requires employees to participate in a mandatory tip pool, where tips are pooled and shared among other tipped employees (such as servers’ tips being shared with bussers).The employer also pays below minimum wage and uses a tip credit to meet minimum wage requirements, with employees typically making substantially more than minimum wage when all the tips are actually accounted for.In that arrangement, the tips cannot be pooled with non-tipped employees (such as the cook) or with the employer.Any sharing of tips with non-tipped employees can result in the tip credit being invalid, and the employer being subject to wage violations.
The DOL has historically taken the position that tips are the property of the employees.This is more obvious when the employee is receiving the tips and the employer is taking a tip credit.However, the DOL also takes the position that tips are the property of the employees even when the employer does not take a tip credit.
But, in a case decided less than two weeks ago, a court disagreed with the DOL’s long-standing position.In that case, an employee was being paid more than minimum wage.Her employer, however, did not allow her to keep any of the tips she received, instead retaining them for itself.There, the court ruled that under the FLSA, when an employer is not using a tip credit to supplement wages and instead pays direct wages of at least minimum wage, it is not required to give any tips to the employees.
Less than a year ago, a Florida court came to the same conclusion.Other courts, however, have taken different positions.This recent ruling is interesting for two reasons:(1) it may be another indication of courts becoming more employer friendly (as a side note, one of the judges who heard oral argument in the recent case, although he did not participate in the decision, is the most recent appointee to the U.S. Supreme Court); and (2) since there are now conflicts among different circuits, the U.S. Supreme Court may be more likely to hear a dispute regarding this issue.
Once the Supreme Court rules on the issue, it will become the law that is applicable to all states regardless of prior rulings that may have been made.Until then, the laws will not be applied consistently, and how they will be applied will depend upon what judicial district you are in.
We are monitoring employment law updates and will keep you apprised as developments occur.Should you have any questions in the meantime as to what laws apply to you or how they apply to you, you should contact your legal counsel who can provide you with answers that pertain to your fact-specific situation.
Cristina E. Groschel and Bruce E. Loren of Loren & Kean Law are based in Palm Beach Gardens and Ft. Lauderdale.Loren & Kean Law is a boutique law firm concentrating in construction law and employment law.Ms. Groschel focuses her practice on labor and employment law, representing the interests of employers and business owners.She has represented businesses in a wide range of disputes, including DOL investigations, discrimination claims, and state and federal wage litigation. Ms. Groschel is also certified as a Professional in Human Resources (PHR).Ms. Groschel and Mr. Loren can be reached at [email protected] or [email protected] or 561-615-5701.
