Category Archives: Wage-Hour — Fair Labor Standards Act (FLSA) and Colorado Wage Order

June 26, 2024

The Significance of Pay Transparency: A Persistent Legislative Trend and Its Relevance for Employers

Janae Ruppert

The 2023 and 2024 legislative landscape witnessed a surge in states and cities implementing diverse pay transparency requirements. Despite the progress in recent years in reducing the wage gap, gender pay disparities persist, with current studies indicating that women, particularly women of color, earn only 84 cents for every dollar earned by men. Pay transparency laws aim to rectify these disparities by providing salary and other benefit information to applicants during the hiring process. This additional information is intended to equip applicants with the tools to negotiate compensation, which theoretically may reduce the gender wage gap. In response to this trend and the intent to further address the gender wage gap, several states have introduced varying levels of pay transparency regulations. Read more >>

April 29, 2024

DOL Issues Final Rule Increasing Salary Limits for Overtime Exemptions – Now What?

Janae Ruppert

By Janae Ruppert and Bryan Benard

The highly anticipated Department of Labor (DOL) final rule is here with a potential July 1, 2024 implementation date. The rule significantly increases the minimum salary threshold for certain overtime exemptions under the Fair Labor Standards Act (FLSA) and could impact millions of employees’ currently exempt from overtime pay and their compensation structures.

Background

Bryan Benard

The FLSA generally requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime pay of at least 1.5 times an employee’s regular rate of pay, provided the employee does not fall within a classified exemption. The new rule affects individuals who are employed in positions meeting the requirements for the executive, administrative, professional, and highly compensated employee exemptions. In addition to meeting other requirements outlined in the FLSA related to their specific job duties, employees’ pay must meet certain thresholds to qualify for the exemption.

Final Rule Threshold Increase

Beginning July 1, 2024, the final rule increases the salary threshold for FLSA’s bona fide executive, administrative, and professional employees from $684 per week ($35,568 annually) to $844 per week ($43,888 per year).
Beginning January 1, 2025, the final rule increases the salary threshold for FLSA’s bona fide executive, administrative, and professional employees to $1,128 per week ($58,656 per year).
With respect to the highly compensated employees exemption, beginning July 1, 2024, the final rule will raise the annual compensation threshold from $107,432 to $132,964 per year. Beginning January 1, 2025, the annual compensation threshold for this exemption is raised to $151,164 per year.
Beginning July 1, 2027, and every three years thereafter, the salary thresholds will automatically update, using the methodology in effect at the time of each update.

October 31, 2023

Breastfeeding Accommodations in the Workplace

Dana Dobbins

By Dana Dobbins

The ability to pump breast milk in the workplace is protected by the FLSA. In 2010, the Break Time for Nursing Mother Act was passed as part of the Affordable Care Act (ACA) and amended the FLSA to include break time and space requirements for nursing to pump breast milk at work. The PUMP Act was signed into law on December 29, 2022, further amending the FLSA to extend the reasonable break time requirement and expand lactation space requirements. The PUMP Act also extended available remedies for violations. Employers should be cognizant of the PUMP Act requirements, as well as any further protections imposed by state and local law.

Break Time Requirements

The PUMP Act requires employers to allow covered employees, for one year after the child’s birth, to take reasonable break time each time such employee has need to express the milk. The PUMP Act is silent as to what is considered a reasonable break time or how many breaks are permitted, reinforcing the drafters’ intent that these issues are to be determined on a case-by-case basis depending on the individual needs of the employee. The Department of Labor (DOL) has explained that the frequency and duration of breaks will depend on a variety of factors, including the location of the lactation space, and the steps reasonably necessary to express breast milk, such as pump setup. An employer cannot deny a break for a covered employee who needs to pump. Read more >>

September 23, 2020

New Department of Labor Proposed Rule Makes It Easier to Classify Workers as Independent Contractors under the Fair Labor Standards Act

By Devra Hake and Laurie Rogers, Holland & Hart LLP

Laurie Rogers

On Tuesday, September 22, the United States Department of Labor’s Wage and Hour Division announced a proposed rule that clarifies whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The proposed rule adds a new Part 795 to the Code of Federal Regulations. Employees are subject to the FLSA’s minimum wage and overtime protections, whereas independent contractors are not. In the past, courts across the nation have implemented varying multifactor tests to determine whether workers are employees or independent contractors. These tests can be unwieldy and make it challenging for companies to predict outcomes. The Department of Labor’s proposed rule clarifies that the department will use the “economic reality test,” and it identifies two core factors and three guideposts that make up the test. The economic reality test is more business-friendly and makes it easier for employers to classify workers as independent contractors.

The Economic Reality Test

The “economic reality test” is a test to determine whether a worker is economically dependent on a company for work or if the worker is in business for him or herself. If the worker is economically dependent, the worker is an employee. If the worker is in business for him or herself, the worker is an independent contractor. The proposed rule identifies two “core factors” that should be considered when deciding whether a worker is economically dependent:

The nature and degree of the worker’s control over the work. To the extent the worker exercises substantial control over the performance of the work, including setting work hours and selecting work projects, this factor weighs in favor of the worker being an independent contractor. To the extent the putative employer exercises substantial control over the performance of the work, including controlling work hours, workload, and requiring exclusivity, this factor weighs toward the worker being an employee.
The worker’s opportunity for profit or loss based on initiative and/or investment. To the extent a worker has an opportunity to earn more or less profit based on the worker’s own investment in the business or initiative (for example, business acumen or skill), the factor weighs toward independent contractor status. To the extent a worker’s profit or loss is based on the worker’s ability to work more efficiently or the putative employer giving the employee more or less hours, this factor favors classification of the worker as an employee.

January 27, 2020

CO Department of Labor and Employment Adopts New Wage and Hour Rules

Read our article about the most recent updates to the COMPS order.

By Brad Williams

Brad Williams

What’s new?

On Wednesday, January 22, 2020, the Colorado Department of Labor and Employment (“CDLE”) adopted the Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”) #36, which replaces Colorado Minimum Wage Order #35. The adopted rules will go into effect on March 16, 2020.

The two most significant changes between Minimum Wage Order #35 and the new COMPS Order that will impact Colorado employers are:

The new COMPS Order applies to all Colorado employers, unless specifically exempted; and
The new order raises the minimum salary threshold required for employees to qualify for exemptions from overtime protections under Colorado law.

The new COMPS Order also makes numerous additional—albeit less significant—changes and clarifications to Colorado wage and hour rules. These include changes and clarifications relating to pre- and post-work time, tips, rest periods, and other issues. Read more >>

September 26, 2019

New Overtime Rule Raises Annual Salary Threshold to $35,568

By Laurie Rogers

On September 23, 2019, the U.S. Department of Labor (DOL) issued its Final Rule relating to exemptions and overtime. The most significant change for employers is an increase to the salary threshold for exempt employees up to $35,568 from the $23,660 threshold established in 2004. The new rule, set to take effect on January 1, 2020, likely means an additional 1.3 million workers will now be compensated for working overtime.

Key Takeaways from the Final Rule

Raises the salary threshold to $684 per week ($35,568 per year) from the currently enforced level of $455 per week ($23,000 per year).
Modifies the total annual compensation threshold for Highly Compensated Employees to $107,432 from the current threshold of $100,000.
Recognizes evolving pay practices by allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10 percent of the standard salary level.
Revises the special salary level for U.S. Territories and motion picture industry workers.

June 20, 2019

U.S. DOL Proposes New Joint Employer Test

By: Mark Wiletsky

Employers often struggle to determine whether they might be considered “joint employers” with other entities under the Fair Labor Standards Act (FLSA). The U.S. Department of Labor (DOL) is proposing new guidance on this topic, providing much-needed clarity for employers across the country.

DOL’s Proposed Rule Would Clarify Joint Employer Test Under the FLSA

In today’s economy, businesses often work together to provide services or products to consumers and other entities. For example, companies sometimes rely on staffing agencies to augment their workforces, and organizations contract with vendors to provide services such as landscaping, building maintenance, and cleaning. These and other business arrangements create the significant—and often difficult to assess—risk that the associated entities may be deemed “joint employers” under the FLSA, even if they are independently owned and operated. If associated entities are considered joint employers, each may be liable for paying minimum wage and overtime to employees, which can pose huge liability concerns where one entity fails to comply with applicable wage and hour law.

Unfortunately, determining whether two or more entities are in fact joint employers is no easy task. Different courts have formulated different tests for joint employer status, and the tests are often complicated and indeterminate.

October 2, 2018

Wyoming Employer Sued for Paying Female RNs Less Than Male RNs

Brad Cave

by Brad Cave

Paying an experienced female registered nurse (RN) less than a newly licensed male RN has a Wyoming healthcare employer defending a lawsuit brought by the Equal Employment Opportunity Commission (EEOC). On September 28, 2018, the EEOC filed a complaint in the federal court in Wyoming alleging that Interim Healthcare of Wyoming, Inc. (Interim) violated the Equal Pay Act and Title VII by paying employees of one sex lower wages than employees of the opposite sex for substantially equal work.

Pay Inequity Among RNs is Alleged

According to the complaint, female Nicole Aaker was hired by Interim as a Home Care RN in November 2015. Aaker had received her RN license from the Wyoming State Board of Nursing in June 1998 and at the time of her hire, had about 17 years of professional RN experience. Interim paid her $28 per hour.

The complaint alleges that Interim hired male RN Bailey Jessee as a Home Care RN in late May 2015, about six months prior to hiring Aaker. Jessee had just received his RN license from the State Board of Nursing in February 2015 and he had about two months of professional RN experience. Interim paid him $29 per hour.

Further statements in the complaint allege that at least five additional female nurses were paid hourly rates less than the $29 per hour rate paid by Interim to Jessee, including the following:

Female RN with about 2 years of experience was paid $26 per hour
Female RN with about 18 years of experience was paid $28 per hour
Female RN with about 30 years of experience was paid $26 per hour
Female RN with about 26 years of experience was paid $28.50 per hour
Female RN with about one month of experience was paid $26 per hour, and was given a raise to $28 per hour after over a year of employment with Interim.

Employer Allegedly Fails to Respond to Internal Complaints

Interestingly, it was the male RN, Bailey Jessee, who appears to have raised the initial complaints to Interim about the disparity in his pay and Aaker’s pay, according to the complaint. Jessee allegedly raised the pay disparity issue at least twice to Interim Administrator Crystal Burback who responded that the pay difference was due to experience. When Jessee replied that Aaker had a lot more nursing experience than he did, Burback allegedly became angry and told Jessee that he shouldn’t discuss his salary at all.

The complaint further alleges that on another occasion, Jessee told Interim Director of Healthcare Service Lori Norby and Crystal Burback that he would be willing to take a pay cut to make his pay rate equal with Aaker’s hourly rate. Although Norby seemed willing to accept that offer, Burback allegedly became angry and defensive. A few months later, Jessee resigned from Interim.

The allegations in the complaint state that Aaker also complained to Burback about the pay discrepancy between her hourly rate and Jessee’s rate. Burback allegedly first responded that she was paid “per experience,” and then responded that it didn’t matter if Aaker had more experience than Jessee – she was hired at $28 per hour and it would not change. The complaint alleges that after receiving no response to her complaints, Aaker was constructively discharged on April 29, 2016.

Sex Discrimination Claim

Although the Equal Pay Act violation is front and center in the EEOC’s complaint, the allegations include that Aaker and other female nurses were subjected to working conditions involving sex discrimination that were so intolerable that the female nurses felt compelled to resign. In alleging constructive discharge based on sex, the EEOC writes that Burback engaged in inappropriate workplace conduct, including regularly demeaning Aaker, calling Aaker “stupid,” telling Aaker that she was not doing her job, slapping Aaker on the buttocks, and, in the presence of Aaker, grabbing a female social worker’s breast.

EEOC Seeks Damages and an Injunction

The EEOC has made enforcement of equal pay laws one of its six national priorities as specified in its Strategic Enforcement Plan. In the Interim lawsuit, the EEOC seeks a permanent injunction to stop Interim from engaging in compensation discrimination based on sex. The agency further seeks back pay damages for the female nurses for lost wages, liquidated damages, damages to compensate for pain and suffering, and punitive damages.

Audit Your Pay Practices for Disparities

Due to the EEOC’s focus on compensation practices that discriminate based on gender, employers are well advised to audit their own pay practices to determine whether they are paying employees in substantially similar jobs differently along gender lines. If so, take proactive steps now to correct any equal pay issues so that you do not become the EEOC’s next target.

July 3, 2018

California Supreme Court Changes Test for Independent Contractor Status

Bryan Benard

by Bryan Benard

For purposes of compliance with California wage orders, a company seeking to establish that a worker is an independent contractor rather than an employee now must meet a three-part test, according to a recent opinion by California’s highest court. This new test is a significant departure from the previous multi-factor test that has been the standard in California since 1989.

The New “ABC” Test

The Industrial Welfare Commission (IWC) regulates wages, hours, and working conditions in California, and issues wage orders that specify required minimum wages, meals and lodging credits, exemptions, meal and rest periods, seating and temperature requirements, and other work-related requirements in the state. These wage orders apply to employees, not to independent contractors, so the IWC’s definition of what it means to “employ” an individual is key in determining proper classification. Under the IWC’s wage orders, “employ” means “to engage, suffer or permit to work.”

In its recent decision, the California Supreme Court stated, “[i]n determining whether, under the suffer or permit to work definition, a worker is properly considered the type of independent contractor to whom the wage order does not apply, it is appropriate to look to a standard, commonly referred to as the “ABC” test, that is utilized in other jurisdictions in a variety of contexts to distinguish employees from independent contractors.” Dynamex Operations West, Inc., v. Superior Court, S222732 (Cal. Apr. 30, 2018). Under the ABC test, a hiring company must establish the following three factors in order to show that a particular worker (or group of workers) should be considered an independent contractor rather than an employee:

A. that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B. that the worker performs work that is outside the usual course of the hiring entity’s business; and

C. that the worker is customarily engaged in an independently established trade, occupation, or business.

If the hiring company is unable to prove any one of these three parts of the test, the worker will be considered an included employee for purposes of the California wage order, not an independent contractor.

Previous Borello Test Abandoned

By setting forth the ABC test for independent contractor status under the wage orders, the Court rejected the previously accepted test which had been in place since 1989. The so-called Borello test was established by the California Supreme Court in the case of S.G. Borello & Sons Inc. v. Dep’t of Industrial Relations, and it set forth a multi-factor test for determining independent contractor status, relying primarily on the principal factor of whether the person to whom service is rendered has the right to control the manner and means of accomplishing the result desired. The Borello test also included nine additional factors that were not to be considered separate tests, but instead were intertwined and whose weight would often depend on the particular circumstances of employment/engagement.

In establishing the new three-part ABC test, the Court stated that its “interpretation of the suffer or permit to work standard is faithful to its history and to the fundamental purpose of the wage orders and will provide greater clarity and consistency, and less opportunity for manipulation, than a test or standard that invariably requires the consideration and weighing of a significant number of disparate factors on a case-by-case basis.”

Consequently, going forward the ABC test now replaces the Borello test for determining independent contractor status for purposes of the California wage orders. An open question is whether the new test will apply retroactively to existing and/or past worker relationships or prospectively only. Reports state that the California Employment Law Council has filed an amicus request to ask the Court to clarify whether the new test is prospective only.

Wage-and-Hour Class Certification at Issue

The new ABC test arose out of a delivery company’s challenge to class certification of a class of delivery drivers whom the company treated as independent contractors. The drivers alleged that they had been misclassified and were instead employees, entitled to the wages and protections afforded by the relevant wage order.

Applying the new ABC test to the delivery drivers in the case, the Court concluded that there was a sufficient commonality of interest to support the certification of the proposed class. In particular, the Court wrote that there is sufficient commonality of interest under part B of the test as the hiring entity is a delivery company and the work performed by the proposed class is as delivery drivers. This means that in this case, deciding whether the certified class performed work within or outside the company’s usual course of business would be determinable on a class basis. Similarly, with regard to part C of the test, the Court found that there would be sufficient commonality on whether the drivers engaged in an independently established trade, occupation, or business, as the class was limited to drivers who performed delivery services only for Dynamex. As a result, the Court upheld the class certification.

California Employers Should Re-examine Independent Contractor Status

The new ABC test will apply to the IWC’s wage orders, meaning that California employers who classify any workers as independent contractors should review whether they meet the new ABC test. If they do not meet all three prongs of the new test, they should be reclassified and treated as employees under the applicable wage orders. At present, this ruling will not change the test for independent contractor status for any purposes other than the wage orders, such as for unemployment or workers’ compensation purposes.

May 21, 2018

Arbitration Agreements Waiving Class Actions Do Not Violate the NLRA, Rules Supreme Court

By Dora Lane and Emily Hobbs-Wright

Dora Lane

The U.S. Supreme Court ruled today that arbitration agreements requiring that an employer and an employee resolve any employment disputes through one-on-one arbitration do not violate the National Labor Relations Act (NLRA). In an opinion authored by Justice Neil Gorsuch, the Court ruled 5-to-4 that the Federal Arbitration Act (FAA) dictates that arbitration agreements be enforced, and nothing in the NLRA overrides that policy to permit employees to bring class or collective actions when employees have agreed otherwise. Epic Systems Corp. v. Lewis, 584 U.S. ___, (2018).

NLRA Does Not Protect Class and Collective Lawsuits

Emily Hobbs-Wright

In three cases consolidated before the Court, employees alleging wage claims sought to pursue collective lawsuits, joining with other allegedly harmed employees, under the Fair Labor Standards Act (FLSA) and applicable state wage laws. In each case, the employer sought to dismiss the collective lawsuits and instead resolve each employees’ allegations through individual arbitration as provided in arbitration agreements signed by the employees. The employees argued that the class-action waivers in the arbitration agreements were unlawful, violating their rights to engage in concerted activities for their mutual aid and protection under §7 of the NLRA. The employers asserted that the FAA demands that the individual arbitration agreements be enforced, as the NLRA does not override the FAA’s enforcement provision.

The Court ruled that the FAA requires courts to enforce arbitration agreements on the terms that the parties select, subject to courts’ refusal to enforce arbitration agreements “upon such grounds as exist at law or in equity for the revocation of any contract” (e.g., fraud, duress, unconscionability – not arbitration-specific defenses). In the majority opinion, the Court stated that the NLRA does not override the FAA, and that §7 focuses on the right of employees to organize unions and bargain collectively, not on the right to pursue class or collective actions. The Court concluded that neither the NLRA nor the FAA’s savings clause protected the employees’ ability to resolve employment disputes through collective or class action when the employees have agreed to arbitrate their disputes with their employers on a one-on-one basis.

Dissent Focuses On Employee Rights

Justice Ruth Bader Ginsburg wrote a scathing dissent, that was joined by Justices Breyer, Sotomayor, and Kagan. The dissenting opinion notes that an individual employee’s claim against his or her employer for unpaid wages, or a similar employment law violation, may be relatively small and not worth the expense and effort of pursuing, when going it alone. But by seeking redress for commonly experienced wage losses on a collective basis, banding together to confront an employer, employees are placed on a more equal footing with employers and may better safeguard employee rights.

Justice Ginsburg writes that the majority’s decision “is egregiously wrong.” The dissent states that lawsuits to enforce workplace rights fit within the NLRA umbrella of “concerted activities for the purpose of . . . mutual aid or protection.” The dissent points to over 75 years of Board rulings that have held that the NLRA safeguards employees from employer interference when they pursue joint, collective, and class suits related to the terms and conditions of their employment. The dissent further states, “Forced to face their employers without company, employees ordinarily are no match for the enterprise that hires them. Employees gain strength, however, if they can deal with their employers in numbers.” The dissenting justices believe that NLRA §7 rights include the right to use class or collective litigation to resolve disputes over wages and hours, and would hold that class-action waivers in arbitration agreements are unlawful.

Big Win For Employers

In this not-unexpected result, the more conservative members of the Court have sanctioned the use of arbitration agreements by employers to help avoid class actions in the employment context. By using arbitration agreements with their employees, employers are able to resolve employment disputes in front of a neutral arbitrator rather than in the more public setting of a state or federal court. By requiring that disputes be arbitrated on an individual, rather than a class or collective basis, employers avoid lengthy and expensive class action lawsuits that often involve hundreds, if not thousands, of current and/or former employees who allege they have similar claims against the employer. The Supreme Court’s decision is a clear win for employers who now may use individual arbitration agreements to better control the cost, publicity, and liability exposure related to alleged violations of employment laws.