Tag Archives: Holland & Hart

September 20, 2016

Overtime Rule Lawsuit Seeks To Stop December 1st Changes

Twenty-one states have sued the federal Department of Labor (DOL) seeking to prevent the new overtime exemption salary boost from going into effect on December 1, 2016. In a lawsuit filed in the Eastern District of Texas, the states argue that the DOL exceeded its authority when it issued its final rule increasing the salary level for exempt employees to $47,476 per year, with automatic updates to the salary threshold every three years.

Legal Challenge To The Overtime Rule

In the states’ complaint against the DOL, the states argue that the new rule is unlawful. One of their primary arguments is that enforcing the Fair Labor Standards Act (FLSA) and the new overtime rule against the states infringes upon state sovereignty in violation of the Tenth Amendment. The complaint cites the increased payroll costs to the states that would result from having to comply with the new exempt salary levels.

The states argue numerous other reasons why the new overtime rule should be stopped, including that the DOL exceeded the authority granted to it by Congress when it focused on the salary level as the litmus test for exempt status rather than on the duties of white collar workers. The states argue that exempt status should apply to any “bona fide executive, administrative, or professional” employee, even if their salary falls below the new threshold.

The states also take issue with the automatic increases in the new rule through which the DOL will index the salary thresholds every three years. The states assert that the DOL should have to go through the normal notice and comment period in order to make future changes to the salary levels. Read more >>

September 13, 2016

Colorado Hospital Targeted For Alleged Age Discrimination Against Nurses

By Steve Gutierrez

senior nurse A Chief Nursing Officer (CNO) is alleged to have stated that a younger nurse could “dance around the older nurses.” Not hard to imagine that such a statement would raise the hackles of many nurses over age 40, but do comments like that mean that the hospital discriminated against one or more nurses on the basis of their age when the nurses were discharged or resigned? That is the question facing Montrose Memorial Hospital after the Equal Employment Opportunity Commission (EEOC) filed an age discrimination lawsuit against the Western Slope hospital last Friday.

EEOC Cites Numerous Age-Related Comments

In its complaint, the EEOC alleges that Montrose Memorial Hospital’s CNO, Joan Napolilli, made various age-biased statements to charging party Katherine Casias and other nurses. Casias began work for the hospital in 1985 as a licensed practical nurse but then earned her degree cum laude as a registered nurse (RN). The alleged comments attributed to Napolilli include:

a younger RN could “dance around the older nurses;”
younger nurses are “easier to train” and “cheaper to employ;”
Casias was not “fresh enough” and was chastised for not smiling or saying hello enough;
referring to Casias as an “old bitch;”
older workers at the hospital were “a bunch of monkeys” and she’d “like to fill the hospital with new nurses and get rid of all the old ones;” and
telling a nurse supervisor to “work that old grey-haired bitch into the ground” and to work her “long and hard until she quit or got fired.”

The complaint also alleges that Nurse Manager Susan Smith told an RN that “you’re getting too old for this job.”

If proven to have actually been said, comments expressing an aversion to workers over 40 and a preference for younger workers can be direct evidence of age discrimination under the Age Discrimination in Employment Act (ADEA). Read more >>

September 6, 2016

Tips For Avoiding Retaliation Claims Under EEOC’s New Guidance

By Bryan Benard

In recent years, the Equal Employment Opportunity Commission (EEOC) has received more retaliation charges than any other type of discrimination claim. Last year, almost 45 percent of EEOC charges included an allegation of retaliation – yes, almost half!

Because of the alarming frequency of charges and the need for employees to report discrimination without fear of reprisal, the EEOC recently issued a new enforcement guidance on retaliation that replaces and updates its 1998 compliance manual on the subject. Even though the EEOC’s position is not necessarily the final word on these issues, as courts often disagree with the EEOC’s interpretation of federal discrimination laws, employers should know how EEOC staff, including its investigators and litigators, will approach retaliation charges. Here is a look at the new guidance with tips on how to avoid becoming another retaliation charge statistic.

Overview of Retaliation and Protected Activities

The federal discrimination laws enforced by the EEOC, such as Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA) and others, prohibit employers from taking adverse action against an employee or applicant because the individual engaged in “protected activity.” Adverse actions that can be seen as retaliatory by the EEOC include not just discipline or discharge, but also transferring the employee to a less desirable position or shift, giving a negative or lower performance evaluation, increasing scrutiny, or making the person’s work more difficult.

“Protected activity” falls into two categories: participation and opposition. Participation activity is when an individual “participates” in an EEO process, which can include filing a charge, being involved in an investigation, or testifying or serving as a witness in a proceeding or hearing. Opposition activity is when an individual complains, questions, or otherwise opposes any discriminatory practice. Employees have the right to engage in both types of protected activity without being subject to retaliation from their employer.

Harassment As Retaliation

According to the EEOC, harassing conduct can be seen as retaliation, even if it does not rise to the level of being severe or pervasive enough to alter the terms and conditions of employment. The agency states that harassment can constitute actionable retaliation so long as the conduct is sufficiently material to deter protected activity in the given context.

Evidence That May Support a Retaliation Finding

To determine whether there is a causal connection between a materially adverse action and the individual’s protected activity, the EEOC will consider different types of relevant evidence, alone or in combination. Some of the facts that may lead to a retaliation finding include:

Suspicious timing, especially when the adverse action occurs shortly after the individual engaged in protected activity;
Inconsistent or shifting explanations, such as where the employer changes its stated reasons for taking the adverse action;
Treating similarly situated employees more favorably than the individual who engaged in protected activity;
Statements or other evidence that suggest the employer’s justification for taking the adverse action is not believable, was pre-determined, or is hiding a retaliatory reason.

June 21, 2016

Supreme Court Avoids Deciding Whether Car Dealership Service Advisors Are Exempt From Overtime Pay

By Brian Mumaugh

The U.S. Supreme Court rejected the Department of Labor’s (DOL’s) 2011 rule that stated that “service advisors” at car dealerships are not exempt under the Fair Labor Standards Act (FLSA), but declined to take the final step by declaring them exempt under the FLSA. Instead, the Court sent the case back to the Ninth Circuit Court of Appeals to analyze whether service advisors are exempt under the applicable FLSA provision without regard to the DOL’s 2011 regulation. Encino Motorcars, LLC v. Navarro, 579 U.S. ___ (2016).

Duties of Service Advisors

At issue are the “service advisors” in a car dealership’s service department. These advisors typically greet the car owners who enter the service area, evaluate the service and repair needs of the vehicle owner, recommend services and repairs that should be done on the vehicle, and write up estimates for the cost of repairs and services before the vehicle is taken to the mechanics for service.

While service advisors do not sell cars, and they do not repair or service cars, they are essential in the sale of services to be performed on cars in the Service Department. Consequently, the issue is whether they fall within the FLSA exemption for salesmen, partsmen, or mechanics. The case before the Court involved numerous service advisors who sued their employer alleging, among other things, that the dealership failed to pay them overtime wages.

DOL Had Flip-Flopped On Exempt Status

In 1970, the DOL took the view that service advisors did not fall within the salesman/mechanic exemption and should receive overtime pay. Numerous courts deciding cases challenging the DOL’s earlier interpretation, however, rejected the DOL’s view and found service advisors exempt. After the contradictory rulings, the DOL changed its position, acquiescing to the view that service advisors were exempt from overtime pay. In a 1978 opinion letter, as confirmed in a 1987 amendment to its Field Operations Handbook, the DOL clarified that service advisors should be treated as exempt.

After more than 30 years operating under that interpretation, the DOL flip-flopped again in 2011. After going through a notice-and-comment period, the DOL adopted a final rule that reverted to its original position that service advisors were not exempt and were entitled to overtime. It stated that it interpreted the statutory term “salesman” to mean only an employee who sells automobiles, trucks, or farm implements, not one who sells services for automobiles and trucks, as service advisors do.

Dealerships were understandably unhappy with the final rule and continued to challenge the DOL’s position in court. As cases went up on appeal, the Fourth and Fifth Circuit Courts of Appeals ruled that the DOL’s interpretation was incorrect. The Ninth Circuit disagreed, ruling instead to uphold the agency’s interpretation. Those contradictory decisions led the Supreme Court to take on the issue in the Encino Motorcars case. Read more >>

June 15, 2016

OFCCP’s New Sex Discrimination Rule Expands Employee Protections Based on Pregnancy, Caregiver Status, and Gender Identity

By Jude Biggs

This week, the OFCCP updated its sex discrimination guidelines on topics such as accommodations for pregnant workers, gender identity bias, pay discrimination, and family caregiving discrimination. Intended to align the OFCCP’s regulations with the current interpretation of Title VII’s prohibitions against sex discrimination, the new rule will require federal contractors to examine their employment practices, even those that are facially neutral, to make sure that they do not negatively affect their employees. The new rule takes effect on August 15, 2016.

Overview of New Sex Discrimination Rule

The existing OFCCP sex discrimination guidelines date back to the 1970s. The new rule is designed to meet the realities of today’s workplaces and workforces. Today, many more women work outside the home, and many have the financial responsibility for themselves and their families. Many women have children while employed and plan to continue work after giving birth to their children. Women sometimes are also the chief caregivers in their families. The updated regulations are meant to offer women and men fair access to jobs and fair treatment while employed.

The new rule defines sex discrimination to include discrimination on the basis of sex, pregnancy (which includes childbirth or related medical conditions), gender identity, transgender status and sex stereotyping. The rule specifies that contractors must provide accommodations for pregnancy and related conditions on the same terms as are provided to other employees who are similarly able or unable to perform their job duties. For example, contractors must provide extra bathroom breaks and light-duty assignments to an employee who needs such an accommodation due to pregnancy where the contractor provides similar accommodations to other workers with disabilities or occupational injuries.

The new rule also incorporates President Obama’s July 2014 Executive Order that prohibits federal contractors from discriminating on the basis of sexual orientation and gender identity. In addition, contractors that provide health care benefits must make that coverage available for transition-related services and must not otherwise discriminate in health benefits on the basis of gender identity or transgender status.

The rule prohibits pay discrimination based on sex. It recognizes the determination of “similarly situated” employees is case-specific and depends on a number of factors, such as tasks performed, skills, effort, levels of responsibility, working conditions, job difficulty, minimum qualifications, and other objective factors. Notably, the OFCCP rule says that employees can be “similarly situated” where they are comparable on some of the factors, but not all of them.

Unlawful compensation discrimination can result not only from unequal pay for equal work, but also from other employer decisions. Contractors may not grant or deny opportunities for overtime work, training, apprenticeships, better pay, or higher-paying positions or opportunities that may lead to higher-paying positions because of a worker’s sex. Employees may recover lost wages for discriminatory pay any time a contractor pays compensation that violates the rule, even if the decision to discriminate was made long before that payment. Read more >>

June 6, 2016

Colorado’s New Pregnancy Accommodation Law

Effective August 10, 2016, Colorado employers will commit an unfair employment practice if they fail to provide a reasonable accommodation for an employee, or an applicant for employment, for health conditions related to pregnancy or physical recovery from childbirth, absent an undue hardship. Last week, Colorado Governor John Hickenlooper signed into law House Bill 16-1438 which requires Colorado employers to engage in an interactive process to assess potential reasonable accommodations for applicants and employees for conditions related to pregnancy and childbirth. The new law, section 24-34-402.3 of the Colorado Anti-Discrimination Act, also prohibits employers from denying employment opportunities based on the need to make a pregnancy-related reasonable accommodation and from retaliating against employees and applicants that request or use a pregnancy-related accommodation.

Posting and Notification Requirements

The new law imposes posting and notification requirements on Colorado employers. By December 8, 2016 (120 days from the effective date), employers must provide current employees with written notice of their rights under this provision. Thereafter, employers also must provide written notice of the right to be free from discriminatory or unfair employment practices under this law to every new hire at the start of their employment. Employers in Colorado also must post a written notice of rights in a conspicuous place at their business in an area accessible to employees.

For more information on this new law, read our full post about its requirements here.

Click here to print/email/pdf this article.

June 2, 2016

Colorado Bill Will Give Employees Right to Review Their Personnel Files

By Brad Williams

Most employees in Colorado currently have no legal right to review or copy their personnel files. But that is about to change. A bill awaiting signature by Colorado Governor John Hickenlooper will require private employers to allow employees to inspect and copy their personnel files at least annually upon request. If enacted, House Bill 16-1432 will also grant former employees the right to inspect their personnel files one time after termination of employment. Once signed, the bill will become effective on January 1, 2017.

Employers Must Allow Access to Pre-Existing Personnel Files

Under the bill, employers are not required to create or keep personnel files for current or former employees. They are also not required to retain any particular documents that are – or were – in an employee’s personnel file for any particular period of time. However, if a personnel file exists when an employee asks to inspect it, the employer must allow access.

The inspection should take place at the employer’s office and at a time convenient for both parties. Employers may have a manager of personnel data, or another employee of their choosing, present during the inspection. If an employee asks to copy some or all of his or her file, the employer may require payment of reasonable copying costs. Because the bill is silent regarding whether employees may bring others (such as their lawyers) to inspections, employers should likely limit inspections to only the requesting employees.

What Constitutes a “Personnel File”?

The bill defines a “personnel file” as an employee’s personnel records which are used to determine his or her qualifications for employment, promotion, additional compensation, employment termination, or other disciplinary action. This encompasses both records kept in an actual file, and those employers may collect through reasonable efforts. Put differently, employers cannot avoid the bill’s mandates by simply scattering employee records amongst multiple file cabinets.

The bill provides numerous exceptions to the documents that must be made available for inspection. The following are not included in the definition of “personnel files” and need not be made available:

documents required to be placed or maintained in a separate file from the regular personnel file by federal or state law;
records pertaining to confidential reports from previous employers;
an active criminal or disciplinary investigation, or an active investigation by a regulatory agency; and
information which identifies another person who made a confidential accusation against the requesting employee.

May 23, 2016

Limitations Period For Constructive-Discharge Claim Starts When Employee Gives Notice of Resignation

The Supreme Court made clear today that the filing period for a constructive-discharge claim begins to run when the employee gives notice of his or her resignation. In a 7-to-1 decision, the Court favored the five-circuit majority who recognized such timeline and rejected the Tenth Circuit’s reasoning that the clock begins to run on the date of the “last discriminatory act.” Green v. Brennan, 578 U.S. ___, (2016). Although the case involved a federal employee, the Court noted that the Equal Employment Opportunity Commission (EEOC) treats federal and private sector employee limitations periods the same so this ruling should affect constructive-discharge claims against private employers as well.

Discriminatory Act That Triggers Limitations Clock

In the case before the Court, Marvin Green, a postmaster in Colorado, claimed he was denied a promotion because of his race. A year after that matter was settled, Green filed an informal EEO charge with the Postal Service alleging that he was subjected to retaliation for his prior EEO activity due to his supervisor threatening, demeaning, and harassing him. After the Postal Service’s EEO Office completed its investigation of his allegations, he was informed he could file a formal charge, but he failed to do to.

A few months later, Green was investigated for multiple infractions, including improper handling of employee grievances, delaying the mail, and sexual harassment of a female employee. Green was placed on unpaid leave during the investigation. Federal agents quickly concluded that Green had not intentionally delayed mail, but neither Green nor his union representative was told. Instead, the Postal Service began negotiating with Green’s union representative to settle all the issues against Green, resulting in Green signing a settlement agreement in December 2009 that included giving up his postmaster position. On February 9, 2010, Green submitted his resignation which was to be effective March 31.

During that time, Green filed multiple charges with the Postal Service’s EEO Office. By regulation, federal employees must contact an equal employment opportunity officer in their agency within 45 days of “the date of the matter alleged to be discriminatory” before bringing suit under Title VII. Green’s allegations included that he had been constructively discharged by being forced to retire.

Green eventually sued the Postal Service in federal court in Denver. The district court dismissed Green’s constructive discharge claim, ruling that he had not contacted an EEO counselor about his constructive-discharge claim within 45 days of the date he signed the settlement agreement in December. On appeal to the Tenth Circuit Court of Appeals, Green argued that the 45-day limitations period did not begin to run until he announced his resignation, even though that was months after the last alleged discriminatory act against him. The Tenth Circuit disagreed with Green, ruling that the clock began to run on the date of the “last discriminatory act” giving rise to the constructive discharge, as two other circuits have held.

Limitations Period Begins When Employee Gives Notice of Resignation

On appeal to the Supreme Court, Green asserted that the statute of limitations began when he actually resigned due to constructive discharge, the act that gave rise to his cause of action, which was consistent with the rulings of numerous other Courts of Appeals. Interestingly, the Court agreed with the position taken by the Postal Service, which was different from the Tenth Circuit’s decision, ruling that the limitations period for a constructive-discharge claim begins to run when the employee gives notice of his resignation.

In an opinion written by Justice Sotomayor, the Court explained that “the ‘matter alleged to be discriminatory’ in a constructive-discharge claim necessarily includes the employee’s resignation.” The Court noted that to the “standard rule” governing statutes of limitations, the “limitations period commences when the plaintiff has a complete and present cause of action.” It means that period begins when the plaintiff “can file suit and obtain relief.” In effect, a constructive-discharge claim is like a wrongful-discharge claim which accrues only after the employee is fired. With nothing in Title VII or its regulations to the contrary, the Court therefore found that the limitations period should not begin to run until after the discharge itself.

So precisely when does an employee resign for purposes of triggering the limitations period for a constructive-discharge claim? The Court ruled that the limitations period begins on the day the employee tells his employer of his resignation, not the employee’s actual last day of work.

The Court did not decide the factual question of when Green actually gave notice of his resignation to the Postal Service, sending the matter back to the Tenth Circuit to determine that fact.

Significance of Decision for Employers

The practical effect of the Court’s ruling is to extend the period in which an employee may allege a constructive discharge beyond the limitations period for the underlying discriminatory acts that gave rise to the resignation. Hypothetically, employees who resign may be able to bootstrap any alleged discriminatory act during the course of their employment to their decision to abandon employment. In his dissent, Justice Thomas further opined that a discrimination victim may extend the limitations period indefinitely simply by waiting to resign. Yet the Court believed such concerns to be overblown, doubting that a victim of employment discrimination would continue to work under intolerable conditions only to extend the limitations period for a constructive-discharge claim. Nonetheless, even if the applicable Title VII limitation period (typically 180 or 300 days for private employers) for the underlying discrimination has passed, an employee may still have a timely claim for constructive discharge under the Court’s rule.

Time will tell if Justice Thomas’s concerns were more realistic that his colleagues believed.

Click here to print/email/pdf this article.

May 20, 2016

Employers Who Prevail In A Title VII Case May Seek Attorneys’ Fees Even Without A Ruling On The Merits

By Dora Lane

In a unanimous decision, the U.S. Supreme Court ruled that a Title VII defendant is not required to obtain a favorable judgment on the merits of the underlying discrimination case to be eligible to recover its attorneys’ fees. The decision means that employers who are able to dispose of Title VII claims for non-merits reasons, such as a dismissal on statute-of-limitations grounds, lack of subject matter jurisdiction, failure of the EEOC to conciliate, or something similar, may ask a court to award the attorneys’ fees incurred in contesting the claims (assuming, of course, it satisfies the remaining requirements for an attorneys’ fees award). Refusing to decide whether the EEOC must pay the $4 million attorney fee award at issue, the Court sent the case back to the Eighth Circuit Court of Appeals to consider an alternative theory proposed by the EEOC. CRST Van Expedited, Inc. v. EEOC, 578 U.S. ___ (2016).

Trucking Company Gets Sexual Harassment Claims Dismissed

In the case before the Court, a new female driver at a large trucking company, CRST Van Expedited, Inc., filed a discrimination charge with the EEOC alleging that she was sexually harassed by two male trainers during her 28-day over-the-road training trip. After a lengthy investigation and unsuccessful conciliation, the EEOC filed suit alleging sexual harassment on behalf of the driver and other allegedly similarly situated female employees. During discovery, the EEOC identified over 250 other women who had supposedly been harassed.

Years of legal battles ensued, during which the district court ultimately dismissed all of the EEOC’s claims for various reasons, including expiration of the statute of limitations, lack of severity or pervasiveness of the alleged harassment, employees’ failure to complain timely, CRST’s prompt and effective response to harassment complaints, and discovery sanctions for the EEOC refusing to produce certain women for depositions. Upon dismissing the lawsuit, the court ruled that CRST was a prevailing party and invited them to apply for attorneys’ fees. CRST did, and the court awarded CRST over $4 million in fees.

The EEOC appealed (twice) and the Eighth Circuit Court of Appeals, among other things, reversed the award of attorneys’ fees. Bound by previous decisions in its circuit, the Court of Appeals held that before a defendant could be deemed to have prevailed for purposes of recovering attorneys’ fees, the defendant had to obtain a favorable judicial determination on the merits of the case. The Eighth Circuit then determined that CRST had not prevailed on the claims brought on behalf of 67 women because their claims were dismissed due to the EEOC’s failure to investigate and conciliate, which was not a ruling on the merits. As a result, the Eighth Circuit ruled that CRST was not entitled to an award of attorneys’ fees on those claims. CRST appealed to the Unites States Supreme Court.

Defendant As “Prevailing Party”

Title VII provides that a court, in its discretion, may award reasonable attorneys’ fees to the prevailing party. Accordingly, before deciding whether to award attorneys’ fees in any given case, a court must determine whether the party seeking fees has, in fact, prevailed. That determination is relatively clear when a plaintiff proves his or her discrimination case and a favorable judgment or court order is entered in the plaintiff’s favor. But there has been no clear definition on how courts should determine whether a defendant has prevailed, especially when the complaint is dismissed for procedural deficiencies or on jurisdictional grounds.

In rejecting the Eighth Circuit’s requirement that “prevailing party” status depends on a ruling on the merits, the Court stated that “[c]ommon sense undermines the notion that a defendant cannot ‘prevail’ unless the relevant disposition is on the merits.” Instead, the Court held that a defendant fulfills its primary objective whenever it can rebuff the plaintiff’s case, irrespective of the precise reason for the court’s decision. Looking to the congressional intent for Title VII’s fee-shifting provision, the Court ruled that a defendant may “prevail” even when the court’s final judgment in not on the merits.

Fees Expended in Frivolous, Unreasonable, or Groundless Litigation

The Court noted that under Title VII’s fee-shifting provision, prevailing defendants may seek attorneys’ fees whenever the plaintiff’s claim was frivolous, unreasonable, or groundless. The Court recognized that defendants spend significant attorney time and expenses contesting frivolous and unreasonable claims that result in their favor, whether on the merits or not, and that a request for an award of fees in such cases is appropriate.

Good News For Employers

The Court’s decision is good news for employers defending Title VII claims because it makes clear that a defendant may ask for attorneys’ fees when it gets a favorable judicial result for reasons not on the merits, where the defendant can show that the plaintiff’s claim was frivolous, unreasonable, or groundless. That clarification may help deter the EEOC and individual plaintiffs from filing or continuing to litigate groundless claims.

That said, we may not have seen the final word on application of the Title VII fee-shifting provision as the Court sent the CRST case back to the Eighth Circuit to consider a new argument put forth by the EEOC, namely that a defendant must obtain a preclusive judgment in order to be the “prevailing party.” We’ll keep tabs on this case and let you know of any further developments.

Click here to print/email/pdf this article.

May 18, 2016

New Overtime Rule: $47,476 Annual Salary Required For White Collar Exemptions

By Jude Biggs

Exempt white collar workers must be paid an annual salary of at least $47,476 under the Department of Labor’s (DOL’s) just-released final overtime rule. That salary threshold is more than twice the current salary requirement for the white collar exemptions under the Fair Labor Standards Act (FLSA). Highly compensated employees must be paid at least $134,004 per year (increased from $100,000) to meet that exemption. The new rule is effective December 1, 2016, so employers have about six months to decide what to do with current exempt white collar workers who do not meet the new thresholds.

Salary Level Will Automatically Adjust Every Three Years

In a change from its proposed rule, the DOL will now automatically update the salary levels once every three years. Originally proposed as an annual update, the final rule will raise the standard threshold to the 40th percentile of full-time salaried workers in the lowest-wage Census region. The first adjustment will be posted August 1, 2019, 150 days in advance of its effective date on January 1, 2020.

Duties Tests Are Unchanged

Since 2004, the duties tests for the white collar exemptions have not included a limit on the amount of time that an employee can spend on nonexempt duties before the exemption is lost. Believing that a rise in the salary level will provide an initial bright-line test for the exemptions, the DOL refrained from changing the duties tests.

Nondiscretionary Bonuses, Incentive Payments, and Commissions

In the past, the DOL has not included nondiscretionary bonuses, incentive pay, or commissions when determining whether an employee’s salary meets the white collar exemption threshold; it looked only at actual salary or fee payments made to employees. In its final rule, the DOL will allow up to 10 percent of the salary threshold for non-highly compensated employees to be met by non-discretionary bonuses, incentive pay, or commissions. Note that these types of payments must be made on at least a quarterly basis to be included as “salary.” The DOL stated that this new policy was included in response to “robust comments” received from the business community which use these forms of pay as part of overall compensation packages for managerial and other exempt employees.

Next Steps

Over the next six months, you need to decide how to address previously exempt employees who no longer meet the salary thresholds. In order to meet the December 1 effective date, use the following checklist of steps to keep your pay practices compliant.

Examine your payroll records to determine which employees are potentially affected by the changes in the white collar exemptions.
Review the tasks performed by each white collar exempt employee to determine whether each meets the duties test under an applicable exemption.
If an employee does not meet the duties tests, you must treat them as non-exempt, regardless of salary.
Review if you are paying exempt employees on a salary basis, meaning they get paid their salary without reduction due to variations in the quantity or quality of work.
If an employee otherwise meets an exemption but is not currently paid at or above the new salary levels, decide whether to raise their salary to meet the new threshold or convert them to non-exempt and pay them time and one-half for all hours worked over 40 per week.
For any employees no longer treated as exempt, inform and train the employee, supervisors, and payroll administrators on proper timekeeping and overtime obligations. If appropriate, make sure such employees work as little overtime as possible, to hold down costs.
Consider whether the base rate of pay for such employees can be adjusted, so that with overtime pay, the employees earn about the same as before.
For employees who meet the exemption, implement procedures to update salary levels every three years to keep up with the DOL’s automatic adjustments.

Click here to print/email/pdf this article.