Wage and Hour

USDOL Issues Proposed Regulations to Increase the Salary Level to Qualify for the White Collar Exemptions

March 8, 2019

By Subhash Viswanathan

On March 7, 2019, the U.S. Department of Labor issued proposed regulations that would increase the minimum weekly salary to qualify for the Fair Labor Standards Act white collar exemptions from $455 per week ($23,660 per year) to $679 per week ($35,308 per year).  These new proposed regulations are intended to replace the USDOL's 2016 regulations raising the minimum weekly salary to $913 per week ($47,476 per year), which were held by the U.S. District Court for the Eastern District of Texas to be invalid approximately one week before those regulations were set to take effect.

Read More >> USDOL Issues Proposed Regulations to Increase the Salary Level to Qualify for the White Collar Exemptions

New York State Department of Labor Drops Proposal Regarding Call-In Pay . . . For Now

March 1, 2019

By Subhash Viswanathan

The New York State Department of Labor announced recently that it does not intend to implement its proposed regulations that would have imposed burdensome requirements on employers to provide call-in pay to employees under a variety of circumstances not currently covered under existing regulations.  The regulations were initially proposed in November 2017, and then were revised in December 2018 after public comments were received and reviewed.  The NYSDOL now intends to let the regulatory process expire with respect to the proposed regulations and potentially revisit this issue in the future.

Read More >> New York State Department of Labor Drops Proposal Regarding Call-In Pay . . . For Now

Second Circuit Court of Appeals Holds That Cosmetology Students at a For-Profit Cosmetology Training School Were Not Employees Under the Fair Labor Standards Act or New York Labor Law

February 28, 2019

By Samuel G. Dobre

On February 5, 2019, the Second Circuit Court of Appeals held that students at a for-profit cosmetology school who provided cosmetology services to the general public at the school's salon as part of the requirements to qualify for taking the New York cosmetology licensing exam were not employees who were entitled to compensation under the Fair Labor Standards Act or the New York Labor Law.  In Velarde v. GW GJ, Inc., the Court applied the "primary beneficiary" test established in its previous decision in Glatt v. Fox Searchlight Pictures, and concluded that the students were the primary beneficiaries of the relationship because the practical experience they gained at the salon was a necessary prerequisite to becoming licensed cosmetologists.

Read More >> Second Circuit Court of Appeals Holds That Cosmetology Students at a For-Profit Cosmetology Training School Were Not Employees Under the Fair Labor Standards Act or New York Labor Law

How Do Vacation and Sick Leave Buy-Back Programs Affect the Calculation of the Regular Rate for Overtime Purposes?

February 21, 2019

By Theresa E. Rusnak

Employers who provide sick leave and vacation leave time may also have a policy or practice of allowing employees to “sell back” accrued, unused time.  Under these “buy-back” programs, the employer will, for a select time period, pay employees for their unused time, in addition to any actual work performed by the employee in that workweek.  This then raises the question:  do these payments for sick and vacation time have to be counted as part of the employee’s “regular rate” for purposes of computing overtime due during the workweeks in which that time is paid out to the employee?

Read More >> How Do Vacation and Sick Leave Buy-Back Programs Affect the Calculation of the Regular Rate for Overtime Purposes?

Reminder: New York Minimum Wage Rates and Salary Thresholds for the Executive and Administrative Exemptions Will Increase on December 31, 2018

December 7, 2018

By Subhash Viswanathan

Although the minimum wage rate under the Fair Labor Standards Act remains $7.25 per hour and the U.S. Department of Labor has not issued any new proposed regulations to raise the minimum salary to qualify for a white-collar exemption under federal law, employers in New York will be required to comply with the new state minimum wage rate and the new state salary threshold to qualify for the executive and administrative exemptions, effective December 31, 2018.

Read More >> Reminder: New York Minimum Wage Rates and Salary Thresholds for the Executive and Administrative Exemptions Will Increase on December 31, 2018

U.S. Supreme Court Rejects Narrow Construction of FLSA Exemptions - April 2018

April 6, 2018

By Subhash Viswanathan and Stephanie H. Fedorka

On April 2, the U.S. Supreme Court held, in Encino Motorcars, LLC v. Navarro, that service advisors at automobile dealerships are exempt from the overtime requirements of the Fair Labor Standards Act.  The Court was divided 5-4 on this issue, with Justice Thomas writing the opinion on behalf of the majority and Justice Ginsburg writing the opinion on behalf of the 4 dissenting Justices.  The Court reversed a Ninth Circuit Court of Appeals' decision, which found that service advisors were non-exempt employees who were eligible for overtime pay.

Read More >> U.S. Supreme Court Rejects Narrow Construction of FLSA Exemptions - April 2018

USDOL Reissues 17 Opinion Letters That Were Withdrawn in 2009

January 23, 2018

By Subhash Viswanathan

On January 5, 2018, the U.S. Department of Labor’s Wage and Hour Division reissued 17 opinion letters that were withdrawn in 2009, shortly after President Obama began his first term in office.  The USDOL under the Obama administration withdrew the 17 opinion letters on March 2, 2009, stating that they were being withdrawn “for further consideration” and that it would “provide a further response in the near future.”  However, it does not appear that the USDOL actually revisited any of the opinion letters that had been withdrawn, so the USDOL under the Trump administration has now reissued those opinion letters and has renumbered them as FLSA2018-1 through FLSA2018-17.

Read More >> USDOL Reissues 17 Opinion Letters That Were Withdrawn in 2009

Reminder: New York Minimum Wage Rates and Salary Thresholds for the Executive and Administrative Exemptions Will Increase on December 31, 2017 - New York Labor and Employment Law Report

December 21, 2017

By Subhash Viswanathan

Although the minimum wage rate under the Fair Labor Standards Act remains $7.25 per hour and the U.S. Department of Labor’s efforts to raise the minimum salary to qualify for a white-collar exemption under federal law have stalled, employers in New York should be aware that the state minimum wage rate and the state salary threshold to qualify for the executive and administrative exemptions will increase effective December 31, 2017.

The increases to the state minimum wage effective December 31, 2017, are as follows:

  • Employers outside of New York City, Nassau, Suffolk, and Westchester counties:  $10.40 per hour
  • Employers in Nassau, Suffolk, and Westchester counties:  $11.00 per hour
  • Employers in New York City with 10 or fewer employees:  $12.00 per hour
  • Employers in New York City with 11 or more employees:  $13.00 per hour

Fast food employees will be entitled to an even higher wage rate effective December 31, 2017, as follows:

  • Fast food employees outside of New York City:  $11.75 per hour
  • Fast food employees in New York City:  $13.50 per hour

The salary threshold to qualify for the executive and administrative exemptions effective December 31, 2017, are as follows:

  • Employers outside of New York City, Nassau, Suffolk, and Westchester counties:  $780.00 per week
  • Employers in Nassau, Suffolk, and Westchester counties:  $825.00 per week
  • Employers in New York City with 10 or fewer employees:  $900.00 per week
  • Employers in New York City with 11 or more employees:  $975.00 per week

New York does not set a salary threshold to qualify for the professional exemption, so employees must meet the current federal salary threshold of $455.00 per week to qualify for the professional exemption.  For all of the white-collar exemptions, employees must also meet the applicable duties requirements.

A chart summarizing the minimum wage rates, tip credits, uniform maintenance allowances, meal and lodging credits, and exempt salary thresholds under the Miscellaneous Industries Wage Order can be found here.  A chart summarizing this same information under the Hospitality Industry Wage Order can be found here.

New York Proposes New “Call-In” Pay and Scheduling Requirements

November 14, 2017

By Andrew D. Bobrek

Employers in New York will be subject to new “call-in” pay and scheduling requirements under recently-proposed state Regulations.  Governor Andrew Cuomo recently announced these proposed Regulations, which the New York State Department of Labor (“DOL”) will reportedly publish in the State Register on November 22, 2017.

New York regulators have recently focused their enforcement sights on the so-called “just-in-time” or “on-demand” scheduling of workers.  According to Governor Cuomo, this practice entails the scheduling or cancelling of a worker’s shift with little or no advance notice.  At the Governor’s direction, the DOL recently held hearings across the state on this issue, which then led to issuance of the proposed Regulations.

If enacted, the proposed Regulations would amend New York’s catch-all “Miscellaneous Industries” minimum wage order, including those portions applicable to non-exempt “nonprofitmaking institutions” across the state.

Call-In Pay Under Current New York Law

Under the Miscellaneous Industries minimum wage order, non-exempt employees who report to work are currently entitled to call-in pay equal to the lesser of four hours of pay or pay for the number of hours in the regularly-scheduled shift, at the state minimum wage rate.  Notably, the DOL has interpreted this provision, such that it only effectively applies to non-exempt workers who earn at or very near the state minimum wage.  In this regard, the DOL previously stated in Opinion Letter No. RO-09-0133, dated December 2, 2009:  “[I]f the amount paid to an employee for the workweek exceeds the minimum and overtime rate for the number of hours worked and the minimum wage rate for any call-in pay owed, no additional payment for call-in pay is required during that workweek.” (emphasis added).

In other words, under DOL’s interpretation, New York employers could potentially apply an “offset” — for amounts paid to workers above the state minimum wage and overtime rates during the same workweek — against any “call-in” pay otherwise due to workers.

Additionally, under current law, employers are generally free to schedule, and, when necessary, cancel shifts before employees report for work, without incurring any additional payment obligation.

Call-In Pay Under the Newly-Proposed DOL Regulations

  • The recently-proposed Regulations would create a number of new circumstances when non-exempt employees will be eligible to receive “call-in” pay, including the following:
  • Employees who report to work for a shift that was not scheduled at least 14 days in advance will be entitled to an additional two hours of call-in pay;
  • Employees whose shifts are cancelled within 72 hours of the start of that shift will be entitled to at least four hours of call-in pay;
  • Employees who are required to be on-call and available to report to work for any shift will be entitled to at least four hours of call-in pay; and
  • Employees who are required to be in contact with their employer, within 72 hours of the start of a shift, to confirm whether or not to report to work for that shift will be entitled to four hours of call-in pay.

Under the Regulations, the above call-in pay must be calculated at the current state minimum wage rate (which now varies by location and workforce size) without any allowances, and employees must receive their “regular rate” for their actual time of attendance.  However, these new requirements will not apply to otherwise covered employees whose weekly wages exceed 40 times the applicable state minimum wage.

The proposed Regulations will also replace current “call-in” pay requirements with the following:

  • Employees who report to work for any shift will be entitled to at least four hours of call-in pay.

Notably, the proposed Regulations state:  “Call-in pay shall not be offset by the required use of leave time, or by payments in excess of those required under” the applicable minimum wage order.  Although this provision is not entirely clear on its face, conceivably, it was drafted with the intent of curtailing application of the above-referenced weekly “offset” provided under prior DOL interpretation.

Finally, the proposed Regulations state that the above requirements will not apply to certain employees “who are covered by a valid collective bargaining agreement that expressly provides for call-in pay.”  Further, the requirements may not apply in certain other circumstances, such as when a business cannot begin or continue operations due to a state of emergency or other “Act of God” beyond its control.

Employers should also be mindful that New York City recently passed a similar law that will become effective on November 26, 2017.  This other local law places somewhat similar requirements on retail employers, and also places additional requirements on certain fast food establishments.

According to DOL, the proposed Regulations will be subject to a 45-day comment period after official publishing.  We will update this article with any further developments, and will be announcing a free webinar on the proposed Regulations in the coming days.

If you have any questions about this issue in the meantime, please contact Andrew D. Bobrek, any of the attorneys in our Labor and Employment Law Practice, or the attorney in the firm with whom you are regularly in contact.

Author’s Note:  A special thanks to Richard White, who assisted in drafting this article.

U.S. Department of Labor Issues Request for Information on White Collar Exemption Regulations

July 26, 2017

By Subhash Viswanathan

Today, July 26, 2017, the U.S. Department of Labor (“USDOL”) published a Request for Information (“RFI”) in the Federal Register regarding the regulations defining the Fair Labor Standards Act (“FLSA”) exemptions for executive, administrative, professional, outside sales, and computer employees.  Public comments can be submitted by any of the methods set forth in the RFI by September 25, 2017.

Before summarizing some of the subjects on which the USDOL is soliciting input from the public, here is a quick review of the history of the USDOL’s efforts to revise its FLSA white collar exemption regulations.  As you certainly recall (who can forget?), the USDOL issued final regulations last year increasing the salary threshold from $455.00 per week to $913.00 per week in order to qualify for the executive, administrative, professional, and computer employee exemptions.  Those regulations were supposed become effective December 1, 2016.  However, shortly before the effective date, the U.S. District Court for the Eastern District of Texas issued a nationwide injunction prohibiting the USDOL from implementing its revised regulations based on its holding that Congress intended the white collar exemptions to be defined with regard to duties — not with regard to a minimum salary level.  The USDOL appealed to the Fifth Circuit Court of Appeals.  In its recent reply brief, the USDOL stated that it no longer wishes to argue in support of the $913.00 salary level, but instead only intends to argue that it has the authority to establish a salary level test for the white collar exemptions.  The USDOL informed the Fifth Circuit that it intends to undertake further rulemaking to determine what the appropriate salary level should be if the Court holds that it has the authority to establish a minimum salary level.

The USDOL’s publication of this RFI is a preliminary step toward its issuance of a notice of proposed rulemaking.  There are many questions posed by the USDOL in its RFI.  Some noteworthy questions are:

  • Would updating the 2004 salary level ($455.00 per week) for inflation be an appropriate basis for setting the standard salary level and, if so, what measure of inflation should be used?
  • Should the regulations contain multiple standard salary levels and, if so, how should these levels be set:  by size of employer, census region, census division, state, metropolitan statistical area, or some other method?
  • Should the regulations contain different salary levels for the executive, administrative, and professional exemptions?
  • To what extent did employers, in anticipation of the implementation of the $913.00 per week salary level, increase salaries of exempt employees to retain their exempt status?
  • To what extent did employers intend to convert exempt employees to non-exempt status in anticipation of the implementation of the $913.00 per week salary level, but change their implicit hourly rates so that the total amount paid would remain the same even with overtime?
  • Would a duties-only test for the white collar exemptions be preferable?
  • Should the salary levels be automatically updated on a periodic basis and, if so, what mechanism and what time period should be used for the automatic updates?

It is a positive development for employers that the USDOL no longer intends to defend the increase in the minimum salary level to $913.00 per week in order to qualify for the executive, administrative, professional, and computer employee exemptions.  However, the USDOL will likely propose some changes to its white collar exemption regulations upon receipt of input from the public with respect to its RFI and after the Fifth Circuit issues its decision.  Those proposed changes could include an increase in the minimum salary level, but such a proposed increase will almost certainly not be as drastic as the one that nearly went into effect last year.

FAQs About Employee Travel Time -- Is It Compensable?

March 14, 2017

By Jessica C. Moller
There are few things more confusing to employers than the nitty-gritty rules of what is and is not compensable time for non-exempt employees under the Fair Labor Standards Act (FLSA).  There are also few things more costly to employers than when a mistake is made and a non-exempt employee is not paid for time he/she should have been paid for.  With the continuous onslaught of FLSA lawsuits being filed every day, it is important for employers to be familiar with the rules that affect their obligation to pay non-exempt employees. Here are some answers to common questions that are often asked with regard to the compensability of time non-exempt employees spend traveling in connection with work. 1.  Do employees have to be paid for the time they spend commuting to work? Ordinarily, travel from home to an employee’s regular place of work, or from work to home, does not count as “time worked.”  Once an employee’s work day ends, the time the employee spends traveling from his/her last job site to home is considered ordinary commuting time for which the employee will generally not be owed wages.  If an employee has a regular work site, but he/she is required to report to a different work site on occasion, the time spent traveling from home to the different job site (or from the job site back home at the end of the work day) is also not compensable, as long as the different job site is within the same general locality as where the employee regularly works.  For employees who do not have regular work sites and instead travel to different work sites each day, all home-to-work and work-to-home travel time is generally considered non-compensable commuting time, even if the distances traveled are long and the time spent commuting is substantial. 2.  What if the employee uses a company car -- do you have to pay for the employee’s commuting time then? Generally, no.  An employee’s home-to-work and work-to-home travel in a company-owned vehicle is not generally considered to be hours worked, as long as:  (1) it is a vehicle of a type normally used for commuting; (2) the employee is able to use his/her normal route for the commute; (3) the employee does not incur any additional costs using the company vehicle; (4) the home-to-work and work-to-home travel is within the company’s normal commuting area; and (5) the use of the vehicle is subject to an agreement between the company and the employee. 3.  Do you have to pay an employee for travel during the work day? Once an employee arrives at his/her regular work site and begins work for the day, the employee’s travel during the course of the work day is compensable.  For example, the time the employee spends traveling between two work sites will count as “time worked,” just as will the time an employee spends traveling between other places for work-related reasons during his/her work day.  Such travel time therefore is compensable as work time for both minimum wage and overtime purposes. 4.  Do you have to pay an employee for time spent traveling on an overnight trip? Whether or not travel in connection with overnight trips is compensable work time generally depends on when the travel occurs.  If an employee goes on an overnight trip for work and the travel occurs outside of the employee’s regularly scheduled work hours, generally the travel time will not be deemed work time.  If, however, the time the employee spends traveling is during his/her regular work hours, that travel time will generally count as "time worked" -- even if the travel occurs on a day that the employee would not ordinarily have worked!  For example, if an employee regularly works 9:00 a.m. to 5:00 p.m. Monday to Friday, but travels for work from 4:00 p.m. to 10:00 p.m. on Sunday, the employee would have to be paid for the hour from 4:00 p.m. to 5:00 p.m. because that time overlaps with the hours during the days that the employee regularly works, even though Sunday is not a regular work day for that employee.  The hours from 5:00 to 10:00 p.m. need not be paid because they are outside the hours that the employee regularly works.  This rule may seem counterintuitive, but it what is currently required under the law. 5.  Does it matter whether the employee uses public transportation or drives himself/herself for the overnight work trip? Yes.  If an employee uses public transportation to get to the distant location, whether or not the travel time is compensable will be determined as set forth in Question 4 above.  If the employee is not offered the option of using public transportation and is required to drive himself or herself, the entire time spent driving is compensable.  However, if an employee is offered the option of using public transportation and instead chooses to drive himself or herself to the distant location, the employer can count as compensable “work time” either the actual time spent driving or the hours that overlap with the employee’s regular work hours as set forth in Question 4 above. Take the following scenario, for example.  Employee A regularly works Monday to Friday from 9:00 a.m. to 5:00 p.m. and has to travel from New York City to Syracuse for an overnight trip.  The employer offers the employee the option of air travel, which would require the employee to take a flight departing New York City at 4:00 p.m. on Sunday and arriving in Syracuse at 5:05 p.m. that same day.  The employee instead opts to drive the 5 hours from New York City very early on Monday morning instead of flying to Syracuse on Sunday.  In this scenario, the employer has the option of paying the employee for either the one hour from 4:00 p.m. to 5:00 p.m. on Sunday since it overlaps with the employee’s regular work hours of 9:00 a.m. to 5:00 p.m., or the five hours the employee spends driving on Monday morning before his/her regular workday would otherwise begin. 6.  Do you have to pay an employee for the entire time he/she is away on an overnight work trip? If, while on an overnight trip for work, a non-exempt employee performs work outside of his/her regularly scheduled work hours, the time the employee spends doing that work will count as “time worked” and has to be compensated just as it would had the employee worked that time under ordinary circumstances.  But time that the employee spends idly or on personal activities will not count as “time worked” and will not have to be compensated. 7.  What about one-day work trips to a different city that do not require an overnight stay -- do you have to pay an employee for the entire day? Different rules apply when an employee usually works in a single location, but goes on a special one-day work trip to a different city than where he/she regularly works.  In that circumstance, if the employee uses public transportation to get to the destination city, the employee does not have to be paid for time he/she spends commuting from home to the train station or airport (whichever applies), because that is considered to be the employee’s ordinary commuting time.  But the employee does have to be paid for all of the time he/she spends at the airport or train station (yes, flight delays and the like will be deemed compensable), and actually traveling between the train station or airport to the other city, regardless of whether or not the travel occurs during the employee’s regular work hours.  If the employee instead drives himself/herself to the destination city instead of taking public transportation, the time spent driving would be compensable as work time.  If, however, the driving employee first drives to his/her regular work location before or after driving to the destination city, that home-to-work travel to the regular work location would be considered the employee’s ordinary commute and therefore non-compensable.  Regardless of whether public transportation is used or the employee drives to the destination city for a one-day work trip, the time the employee spends for meal breaks (assuming he/she is not working during those breaks) and any idle time (i.e., time spent neither working nor traveling) outside of his/her regular work hours is not compensable and does not count as “time worked.” 8.  Are these rules the same under the FLSA and any state-specific wage and hour laws? The wage and hour rules are not necessarily the same from state to state, so it is always important to be mindful of any state-specific laws that could affect an employer’s obligation to pay its non-exempt employees.  For employers with operations in New York State, the New York State Department of Labor has indicated that it interprets the relevant New York Labor Law provisions and accompanying state regulations “in line” with the FLSA’s “travel time” rules, but that is not a guarantee that the state and federal laws will always be in congruity.  It is always possible that the New York State Department of Labor could take an inconsistent position on a particular “travel time” issue, so it is important to always double check and not just assume that the federal rules apply.