Tag Archives: overtime

March 17, 2016

New Overtime Regulations May Be Finalized Sooner Than Expected

Biggs_JBy Jude Biggs

The U.S. Department of Labor’s (DOL’s) agenda specifies that its final overtime regulations are due to be published in July, but recent developments suggest they may be released a few months earlier.  With the salary threshold for the white collar exemptions going up from the current $23,660 to over $50,000 per year, employers need to prepare now for the changes.

DOL’s Overtime Rule Sent To OMB

On March 15, 2016, the DOL sent its proposed final overtime regulations to the Office of Management and Budget (OMB) which is the final step before the rule can be published. The OMB review process typically takes one to two months, but speculation suggests that the review of this rule may be sped up to allow for publication as early as April or May.

The political environment in Washington, D.C. and fact that this is an election year may be to blame for the expedited process. The Congressional Review Act (Act) provides Congress with 60 legislative days to review any final rule issued by a federal agency. If Congress disapproves of the regulation, which current Republicans in Congress are sure to do with the overtime rule, it may pass a resolution to nullify the rule. The President can veto that resolution, but then Congress has the opportunity to override the veto by a two-thirds vote.

Because of an unusual provision in the Act, any new rule that is not submitted to Congress within 60 session days of the adjournment of the Senate or House, may be subject to a renewed review by the new Congress in the next Congressional session (with potential veto by a newly elected President). Or, if Congress’s 60-day-review period extends after the presidential inauguration, the new President may let a resolution of disapproval stand, killing the rule. The Obama Administration will not want to take the chance that a new Congress and/or President gets to review the overtime rule in 2017 so it is expected that the White House will do everything possible to get the new overtime rule to Congress prior to the cutoff date.

Salary Threshold For Exemptions Will More Than Double

The DOL’s proposed rule raises the salary threshold for the white collar exemptions from the current $455 to an expected $970 per week, more than doubling the annual salary level to more than $50,000. The salary threshold for the highly compensated employee exemption will increase from the current $100,000 to more than $122,000 per year. The DOL estimates that almost five million U.S. workers who are currently exempt will be entitled to minimum wage and overtime compensation under the new salary level requirements. In addition, the final rule will include an automatic annual adjustment provision that will require that the salary thresholds be adjusted each year to keep up with inflation.

Next Steps

With a compressed timeline for the new rule to become effective, employers need to take steps now to decide how to handle employees who no longer qualify as exempt under the new rules. Some companies may choose to increase exempt employee salaries to meet the new threshold in order to retain the exemption. Others may choose instead to change the status of some workers’ status to non-exempt and pay them overtime. Either way, employers need to get a plan in place to prevent headaches and potential wage claims when the final rule goes into effect.

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December 12, 2014

Supreme Court Says No Pay For Security Screening Time

Supreme Court Says No Pay For Security Screening Time

By Brad Williams

Should employers pay employees for time spent in mandatory, post-shift security screenings designed to deter theft?  Not according to a recent Supreme Court decision.

On December 9, 2014, the Supreme Court unanimously held in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433 (2014), that post-shift, anti-theft security screenings are not compensable work time under the Fair Labor Standards Act (FLSA).  The decision reversed a Ninth Circuit decision holding that workers in two Amazon.com warehouses were entitled to pay for periods spent waiting for, and being screened at, security checkpoints after their shifts had ended.  The workers claimed that they spent roughly twenty-five minutes per day in such screenings, which included removal of their wallets, keys, and belts.

Splitting from other courts to have considered the issue, the Ninth Circuit held that such time was compensable because the workers’ post-shift screening activities were necessary to their principal work activities, and were performed for the benefit of their employer.  However, the Ninth Circuit’s understanding of compensable work time under the FLSA echoed that in earlier judicial decisions that had been expressly overruled by Congress.

Specifically, in response to a flood of litigation caused by the earlier decisions, Congress had passed the Portal-To-Portal Act in 1947 to clarify that employers are not obligated to pay employees for activities which are “preliminary” or “postliminary” to the principal activities they are employed to perform.  As such, time spent before or after a worker’s “principal activities” is not compensable unless it is spent on activities that are themselves “integral and indispensable” to the worker’s principal activities.  Regulations interpreting the Portal-To-Portal Act had long held that activities like checking into and out of work, or waiting in line to receive paychecks, is not compensable work time.

In its December 9th ruling, the Supreme Court reaffirmed that just because an activity may be required by, or may benefit, an employer, does not mean that it is a compensable “principal activity,” or is “integral and indispensable” to a principal activity.  The warehouse workers’ employer did not employ the workers to undergo security screenings; it employed them to retrieve products from warehouse shelves and to package the products for shipment to customers.  The security screenings were also not “integral and indispensable” to the warehouse workers’ principal activities because their employer could have eliminated the screening requirement altogether without impairing the workers’ ability to perform their jobs.

In reaching its decision, the Supreme Court stated a new definition of “integral and indispensable” activities to guide lower courts.  An activity is now “integral and indispensable” to an employee’s principal work activities if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.”  Examples include time spent by battery-plant employees showering and changing clothes because chemicals in the plant are toxic to humans.  It also includes time spent by meatpacker employees sharpening knives because dull knives cause inefficiency and other problems on the production line. 

The Supreme Court’s decision gives employers much-needed certainty regarding the compensability of certain “preliminary” or “postliminary ” activities.  It clarifies that most employers may continue performing uncompensated pre- and post-shift security or anti-theft screenings without fear of successful FLSA collective actions.  The decision is particularly relevant to employers in the retail industry, who regularly conduct anti-theft screenings, and to other employers who are increasingly performing security screenings in an era of heightened concerns over terrorism.

Because the FLSA sets minimum standards for wage and overtime payments, states may set higher standards for compensable work  time, including with respect to “preliminary” or “postliminary” activities.  Unions may also bargain with employers to make such activities compensable.  But the Supreme Court’s recent decision helps push back on the tide of FLSA collective actions filed by employees claiming that certain activities are compensable because they are essential to their jobs.  The decision also follows a similar Supreme Court decision in January 2014, Sandifer v. U.S. Steel Corp., No. 12-417 (2014), in which the Court held that time spent by union-employees donning and doffing personal protective equipment was not compensable.  Taken together, these decisions suggest a concerted judicial effort to address the explosion of FLSA collective actions.