Department of Labor Proposes Raising FLSA Salary Exempt Level to $55,068
The Department of Labor (DOL) has announced its proposed rule amending the salary basis test for white collar exemptions that would raise the minimum salary threshold to $55,068 per year ($1059 per a week) — a substantial increase from the current $35,568 ($684 per a week) threshold. The proposed rule would also increase the salary threshold for a “highly compensated employee” to $143,988 from the current $107,432 per year. The DOL believes its rule will disqualify 3,000,000 workers from exempt status and instead subject them to overtime and minimum wage requirements. The proposed rule is expected to be published soon in the Federal Register, after which, the public will have 60 days to comment. It is likely that the current proposed rule will face legal challenges similar to the DOL’s 2016 final rule raising the threshold to $47,476 per year. That rule was blocked by a federal court in Texas mere days before it was to take effect. Due to the change in the presidential administration at that time, the DOL did not pursue the rule further. It is not certain that the DOL’s rule will be blocked or that any opposition would be successful to the implementation of the current rule. Therefore, it is prudent to review your workforce salaries and prepare for a salary threshold increase to be implemented and, at a minimum, consider the following:
· Audit your exempt workers to ensure they are correctly classified.
White collar exempt employees are generally those that work in a “bona fide executive, administrative or professional capacity.” To qualify for exempt status, these employees must be 1) paid on a salary basis; 2) be paid at or above the minimum salary threshold (currently $35,568); and 3) perform exempt duties as their primary duties.
The most common error in misclassifying employees involves the third point, performing exempt duties as employees’ primary duties. The DOL has fact sheets detailing the requirements for each exemption, all of which are in this DOL overview of the white collar exemptions. When auditing your positions for compliance, make sure the employees perform each of the exempt duties as their primary duties. This would be a good time to correct any misclassifications with any other changes you may make in your labor force related to the proposed rule.
· Determine the Employees Who Will Be Affected by the Salary Threshold Increase
Create a list of exempt employees who currently earn between $35,368 and $55,068 a year to determine the impact that the rule change would have on your company if implemented as proposed. When the rule is finalized, you will need to decide whether to raise the salaries of each of the employees or convert their position to a non-exempt employee that is required to track time and is paid overtime. Tracking the hours of these employees now will allow you to estimate the impact of converting the employees to non-exempt, including administrative burdens, costs, overtime, etc. In compiling potential cost information, you should consider the following:
o How many overtime hours would the employee work if non-exempt?
o The potential “regular rate of pay” upon which overtime would be based. Employers are sometimes surprised at the items included in the regular rate of pay and when the amounts are added. These amounts can include non-discretionary bonuses, commissions, shift differential payments and some non-cash compensation.
o Will employees’ benefits and work rules be affected? Some employers have different benefits for exempt and not-exempt employees. You should consider the financial costs and employee morale costs of re-vamping your benefits and rules structure or switching employees to different rules and benefits.
o What work rules will be affected? Time keeping rules, including rules regarding overtime approval, work hours, etc., are the most likely rules to be altered to accommodate employees’ work requirements and processes. It is prudent to explore options as part of your cost analysis.
o Will employee morale be affected? There is some prestige in not having to clock in and out, not tracking hours or overtime, being free to check or send emails outside work hours, and exercising discretion and independent judgment in the workplace. Moving these employees to non-exempt status may indeed feel like a demotion and have a detrimental effect on affected employees’ view of work. You may want to prepare a communication plan for these employees to explain the changes and provide advance notice.
· Prepare to train employees converted from exempt to non-exempt. After determining which employees will have a new set of work rules and time tracking, create a training plan that trains both employees and supervisors. Cover timekeeping policies, meal and break policies, schedule and work hours, overtime approval policies, recordkeeping policies, personal and after-hours device usage and the prohibition of off the clock/non-recorded time.
Although the DOL’s rule may bring major employment changes to the workplace, it also simultaneously represents an opportunity to correct misclassifications and potentially re-configure workplace policies, workflow, etc.
NLRB Finds That Going it Alone Can Be Protected as Concerted Activity
The National Labor Relations Board (NLRB) announced a return to greater protection of protests by individual workers that could prompt future group worker actions in Miller Plastic Products, Inc. In so holding, the NLRB reversed its 2019 ruling in Alstate Maintenance that stated that solo protests are only protected when accompanied by “evidence of ‘group activities’” because it took too narrow a view of workers’ rights to organize. In Alstate, the board had considered the activity of a single airport porter who had been fired after he made an individual complaint to a manager about tips while work colleagues were nearby. The board held that the employee did not have protections under the NLRA because he had raised “a purely personal grievance” rather than a “truly group compliant.” The board found that such activity, without “prior or contemporaneous discussion of the concern between or among members of the workforce” was solely on behalf of the individual. The Alstate board further narrowed the test for determining concerted activity by replacing the precedential fact intensive approach with a limited five-factor test.
The Miller Plastic Products case involved a worker who was terminated for exclaiming in a March 2020 work meeting that he and his coworkers “shouldn’t be working” during the exploding COVID-19 crisis. In reaching its decision that Miller violated the NLRA for firing the worker, the board overruled Alstate, explaining that Alstate’s introduction of a mechanical checklist unduly constricted the concerted activity analysis by placing a “minimum threshold” on activity before it could be protected. The board found that this would leave some concerted activities unprotected, such as “spontaneous, informal” protests and questions that are frequently a method used to criticize a new policy and draw other workers to oppose the policy. The board announced a return to the fact-intensive approach that considers the totality of the evidence to determine whether activity is collective or concerted and not solely individual.
The Miller Plastic Products case represents a continuance of the return to – and reinforcement of – longstanding precedent protecting concerted activity. It also serves as a reminder to consider, prior to disciplining or terminating an employee for workplace complaints or comments, whether a worker’s seemingly solo or self-oriented complaints could be seen as an effort to raise awareness or support among coworkers and is activity that is protected under the NLRA.
OSHA Concludes Violence Can Be Work-Related, even if it Occurs Outside the Workplace
In its third Standard Interpretation Letter of 2023, the Occupational Safety and Health Administration (OSHA) addressed recordkeeping requirements for injuries and violence that occur outside of the workplace. OSHA was asked by a member of the public whether an injury that occurred when an employee was traveling in a work vehicle between service calls, during worktime on a public road and was involved in an accident with another driver, who then shot the employee, stole the truck and fled the scene was recordable. OSHA concluded that the injury was presumed to be work related and stated that the work-related “presumption encompasses cases in which an injury or illness results from an event at work that is outside the employer’s control, such as a lighting strike, or involves activities that occur at work but that are not directly related to production, such as horseplay.” Similarly, OSHA concluded that “OSHA’s recordkeeping regulation does not allow employers to exclude injuries and illnesses resulting from random acts of violence occurring in the work environment from their recordkeeping forms.” It is reasonable to conclude that, regardless of whether an incident occurs at the workplace, if an incident occurs during work hours while an employee is engaged in a work-related task, any injury sustained by an employee as a result of actions by an individual not part of the workplace, will be treated as a workplace injury and must be recorded on the employers OSHA 300 log.
Time to Roll out the New I-9 Form
The U.S. Citizenship & Immigration Service’s form is ready to implement for your new hires. Although the old form can be used through the end of October 2023, the new forms are available now in English and Spanish at: https://www.uscis.gov/i-9. Employers who continue to use the old form beyond October 2023 will be subject to penalties.
