Martha Zackin

DOL Issues New Overtime Rule for Exempt Employees

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By Alexandra D. Thaler

With the U.S. Department of Labor’s new overtime rule becoming effective in less than two months, on January 1, 2020, employers are well advised to be working now to implement any needed changes by the new year.

This fall, the DOL issued its final rule affecting pay requirements for exempt executive, administrative and professional employees (the so-called “white collar” exemptions) under the Fair Labor Standards Act (FLSA).  The rule:

  • Raises “standard salary level” required for the white collar exemptions to $684 per week (annualized to $35,568), up from the $455 per week level that has been in place since 2004;
  • Raises the annual compensation requirement for “highly compensated employees” (those who have at least one exempt duty) to $107,432 per year, up from $100,000;
  • Allows nondiscretionary bonuses and incentive payments (including commissions) to be used to satisfy up to 10% of the standard salary level, including in a one-time catch-up payment, if certain conditions are met; and
  • Revises certain special salary levels applicable to workers in U.S. territories and the motion picture industry.

Employers that elect to transition currently exempt employees into overtime-eligible status, and decide to change from salary to hourly pay, will need to determine a method for setting the pay rate.  While the “reverse engineering” method, which uses the current salary to arrive at an hourly rate, may address business needs in some cases, employers should note that use of this method may be constrained in states with stringent Equal Pay laws.  Employers interested in using the 10% allowance to meet the new pay obligations are advised to consult with counsel before proceeding, as failure to meet the conditions in the new rule results in loss of the exemption and therefore liability for overtime pay.

Employers that decide to move forward with the shift from exempt to non-exempt status should plan ahead to address likely logistical and employee relations challenges, for example:

  • Ensuring accurate recording and timely reporting of hours of work for a new cohort
  • Ensuring compliance with meal and rest break requirements in certain states
  • Changing wage payment timing, in states where non-exempt pay must be more frequent
  • Devising appropriate messaging to deal with such issues as potential concerns of employees who view the change as a demotion or reduction in status, or who have questions about past practices

As a reminder, businesses must also comply with state and local overtime pay requirements and exemption standards.   Where those standards already exceed the new FLSA levels, such as in New York, California, and Alaska, the new DOL rule will have little practical impact on exempt employees’ pay.  More generally, however, companies should track overtime pay obligations on the state and local level to ensure these obligations are met as to non-exempt employees.  For example, California, Colorado, and several other western states have daily (not just weekly) overtime pay requirements.  In addition, some states do not recognize the same exemptions from overtime as are available under the FLSA, while others apply different duties tests when determining whether an exemption applies.

While the DOL rule appears fairly simple at first glance, it can raise complicated compliance issues, which should be considered carefully before changes are implemented.  At the same time, employers that have been considering changes to employee classifications may find this is a logical time to implement them.  Your Bello Welsh, LLP counsel is available to advise you on these matters and to work with you to determine available options, assess legal and business risk, and implement an agreed plan.

Martha Zackin

Massachusetts Paid Family and Medical Leave Act: Updated

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By Martha J. Zackin and Hayley Cotter

Following weeks of piecemeal changes and updates, the Department of Family and Medical Leave (“DFML”) has now issued the final regulations (effective July 1, 2019).  Click here for a revised Bello / Welsh alert, which has been updated to be consistent with both the final regulations and the bill passed last week. The most significant changes are as follows: Read more →

Martha Zackin

New Deadlines Established for Massachusetts Paid Family and Medical Leave Law

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On December 3, 2018, we posted about the new Massachusetts Paid Family and Medical Leave Law (“PFML”).  Although the post was accurate at the time published, the Department of Paid Family and Medical Leave (the “Department”), has since pushed out some deadlines and made other changes.  We will be posting substantive guidance shortly, but in the meantime the updated deadlines are as follows:

  • April 29, 2019, the applications for private plan exemptions were made available online at MassTaxConnect.
  • June 30, 2019, written PFML notices must be distributed to all employees and contract works (pay reported on IRS Form 1099-MISC)
  • July 1, 2019
    • PFML laws and regulations effective (note that final regulations are now expected to be published on July 1, the effective date)
    • PFML posters posted
    • Payroll tax deductions begin (unless the company has applied for and been granted a private plan exemption)
  • September 20, 2019, applications for private plan exemption for Quarter 1 due
  • October 1, 2019, first quarterly report filed through MassTaxConnect
  • October 30, 2019, payments for Quarter 1 (July 1- September 30) remitted
  • January 1, 2021, most benefits available
  • July 1, 2021, all benefits available
Martha Zackin

Administrative Law Judge Recommends Dismissal of Department of Labor’s Pay Discrimination Claims Against Federal Contractor

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By Justin L. Engel

Following a two-week trial, Bello Welsh has secured a major victory for a federal contractor in an enforcement action alleging gender-based pay discrimination brought by the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) under Executive Order 11246.  The case, OFCCP v. Analogic Corporation, No. 2017-OFC-00001, is the first and only OFCCP case in the United States claiming gender pay discrimination to go to trial, and the decision is likely to have significant implications for OFCCP’s dealings with federal contractors going forward.

The origins of the case date back to an OFCCP compliance review that began in December 2011.  Over two years later, in January 2014, OFCCP issued a Notice of Violation claiming that the contractor violated the federal Executive Order by paying females in two specific positions less than males in those same positions.  A trial was held before Administrative Law Judge Colleen A. Geraghty in October 2017, and briefs were submitted in February 2018.

On March 22, 2019, Judge Geraghty issued a 43-page decision recommending that OFCCP’s pay discrimination claims be dismissed, rejecting the theory of discrimination presented by OFCCP’s expert, and finding instead that the contractor’s expert demonstrated that there was no such discrimination.  In so ruling, Judge Geraghty held that OFCCP failed to prove a pattern and practice case of pay discrimination under either a disparate impact or disparate treatment analysis.

Judge Geraghty specifically found OFCCP’s disparate impact claim to be deficient because OFCCP never identified a specific policy or practice that caused the alleged pay disparity.  Further, the statistical evidence offered by OFCCP’s expert to demonstrate a pay disparity was effectively refuted by the statistical evidence presented by the contractor’s expert.

Judge Geraghty also found OFCCP’s disparate treatment claim to be deficient because, again, OFCCP’s statistical evidence was rebutted by the contractor’s more persuasive statistical evidence.  Judge Geraghty further determined that OFCCP had failed to present “anecdotal evidence” – that is, specific instances – of intentional discrimination, while the contractor offered substantial evidence that it did not discriminate against women.

A final decision in the case will be issued by the Department of Labor’s Administrative Review Board.

The import of this case is substantial, as it is likely to impact the types of statistical and other evidence that will be deemed sufficient to support a pattern and practice claim of pay discrimination, be it based on gender or any other protected status.

Bello Welsh will be providing a more detailed discussion of the decision and its potential implications in the coming weeks.

Martha Zackin

Amendments to Massachusetts Law Concerning Criminal History Inquiries

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By Justin L. Engel

In October 2018, amendments to Massachusetts law concerning employer criminal history inquiries became effective.  Under the previous version of the law, employers were prohibited from asking about: (i) an arrest, detention, or disposition regarding any violation of law in which no conviction resulted; (ii) a first conviction for any of the following misdemeanors: drunkenness, simple assault, speeding, minor traffic violations, affray, or disturbance of the peace; or (iii) any conviction of a misdemeanor where the date of the conviction or the completion of any period of incarceration resulting therefrom, whichever is later, occurred more than five years prior to the inquiry, unless the person had been convicted of any offense in the five years immediately preceding the inquiry.  Also, employers seeking information about an applicant’s prior arrests or convictions have long been required to include specific language notifying the applicant that he or she may answer “no record” in response to an inquiry about a matter that is sealed and providing other disclaimers.  Additionally, since 2010, Massachusetts employers have been prohibited from making any criminal history inquiries on the initial written employment application or prior to an interview.

The new law amends these restrictions in three ways: Read more →