US DOL to Increase Minimum Salary Requirements for Overtime Exempt Workers

The U.S. Department of Labor (“DOL”) announced that it will be proposing a new regulation to raise the minimum salary threshold for overtime exempt employees under the Fair Labor Standards Act (“FLSA”). The proposed regulation would raise the minimum salary requirement to $55,068 per year for employees who are exempt from the FLSA’s minimum wage and overtime requirements for executive, administrative, and professional employees. Employees who do not receive at least that amount would need to be re-classified to non-exempt status (and entitled to overtime).

The proposed rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, which the DOL plans to publish in the Federal Register, would raise the threshold under the Fair Labor Standards Act to $1,059 per week, or $55,068 per year. The current FLSA rate is $684 a week, which amounts to a salary of $35,568 per year.

The proposed new standard salary threshold would be pegged to the 35th percentile of weekly earnings of full-time salaried workers in the Southern U.S., which is currently the lowest-wage U.S. Census region.  Meanwhile, the salary threshold for highly compensated employees under the proposal would be $143,988, tied to the 85th percentile of salaried workers nationally. (That would be an increase from the current minimum salary threshold of $107,432 for highly compensated workers). In addition to raising the salary threshold, the proposed rule would automatically update that ceiling every 3 years, based on then-current earnings data.

For New York employers, the proposed federal threshold is less than the current New York salary threshold for executive and administrative employees of $1,125.00 per week (in NYC, Long Island and Westchester) and $1,064.25 per week (for the rest of New York State). Thus, for employees who are exempted under the executive and administrative overtime exempt categories, the federal minimum salary requirements would be inapplicable.  However, there is no New York State minimum salary threshold for employees exempt under the professional exemption.  Thus, for such employees (e.g., nurses, therapists), the minimum salary would need to comport with the federal standard in order for the employees in that category to continue to be exempt from overtime.

Notably, our readers will recall that New York State’s own minimum salary thresholds for overtime exempt workers are calculated as being 75 times the State’s minimum wage rates.  Thus, as New York’s minimum wage rate goes up, again, in January 2024 (and again for the next 2 years), the minimum salary threshold will also increase.  Thus, again, the federal salary threshold changes will be largely irrelevant for New York employers with exempt employees who work in New York and who are exempt from minimum wage and overtime pay under the administrative and executive exemptions.  And it is unlikely that the federal minimums will surpass New York’s own requirements for minimum salaries for overtime exempt employees.   But, with respect to exempt workers under the professional exemption, New York employers should pay attention.

The DOL has previously stated that it would publish the proposed rule in August but, as of the date of this publication, August 31, the regulation has not yet been published in the Federal Register.

Employers, You can Continue to use Outdated FMLA Forms

June 30, 2023, has come and gone, but the Family and Medical Leave Act (FMLA) forms with that expired date can still be used, according to the U.S. Department of Labor (DOL).

Under the FMLA, eligible employees of covered employers may take unpaid, job-protected leave for specified family and medical reasons, such as pregnancy, chronic health conditions or the care of a family member with a serious health condition.  Employers use the forms to comply with the notice requirements under the Act and to request medical certification from an employee’s health care provider.  The five optional-use forms from the DOL are still applicable, regardless of the expiration date, the DOL noted on its website.

“The content of the information contained within the optional-use DOL form is still applicable, regardless of the expiration date,” said Edwin Nieves, a DOL spokesman. “The expiration date on the DOL forms is related to the collection of information as required by the Office of Management and Budget, and not relevant to the content of the required information.” The DOL is mandated to review the forms and notices every three years.

Employers are not required to use the DOL’s forms, which are only model versions. They may use their own forms if they provide the same basic notice information and require only the same basic certification information.   “Employers must accept a complete and sufficient certification” of the employee’s need for FMLA leave, “regardless of the format,” the DOL said. The employer cannot refuse:

  • A fax or copy of the certification.
  • A certification that is not completed on the employer’s standard company form.
  • Any other record of the medical documentation, such as a communication on the letterhead of the health care provider.

“The employer cannot reject a certification,” the DOL noted, “that contains all the information needed to determine if the leave is FMLA-qualifying.”

U.S. Supreme Court Modifies Test for Religious Accommodations in the Workplace

On June 29, 2023, the United States Supreme Court issued its decision in Groff v. Dejoy, in which the Court announced a heightened standard for employers attempting to demonstrate that an employee’s request for religious accommodation under Title VII would impose an undue hardship on its business.  All HR Departments and employer operators should take note of this decision because it is likely to require them to grant more religious accommodation requests than they had granted in the past.

In Groff, the Supreme Court held that an employer must demonstrate that an employee’s request for religious accommodation would impose a substantial difficulty or cost to its business operations before rejecting such request. This holding marks a departure from over 45 years of precedent, which held that any request for religious accommodation that created more than a de minimis cost – a low bar —would constitute an undue hardship on an employer.

In Groff, a former United States postal worker requested not to work Sundays because of his religious practices. The Postal Service denied the employee’s request, citing the requirements of the business and difficulties in scheduling, including needing to schedule other employees to cover the employee’s shifts, as an undue hardship. The District Court and the Third Circuit Court of Appeals sided with the employer, holding that the Supreme Court’s decision in Trans World Airlines allowed the employer to deny a religious accommodation where it could demonstrate that doing so would impose more than a de minimis cost, and therefore an undue hardship, to its business.

The Supreme Court disagreed with the Third Circuit’s reliance on this prior interpretation of Trans World Airlines, and instead explained that courts needed to determine whether an employer would be required to incur substantial difficulty or costs to implement an employee’s request for religious accommodation. Though employers have long been aware of their obligations to accommodate an employee’s religious beliefs under Title VII, they have understood their obligations to be something less than that of an undue burden under the Americans with Disabilities Act. The Supreme Court’s decision changes the standards by which employers will evaluate religious accommodation requests in a way that more employees are likely to qualify for religious accommodations when they previously would have been denied.

Covered Employers Must Update their EEOC Poster

The Equal Employment Opportunity Commission (EEOC) has updated the mandatory jobsite poster “Know Your Rights: Workplace Discrimination is Illegal.”  The EEOC laws apply to employers with 15 or more employees.

The June 27, 2023 version of the EEOC’s poster includes the latest employee protections under the Pregnant Workers Fairness Act. The EEOC Know Your Rights poster summarizes the Federal laws prohibiting job discrimination based on a host of factors including retaliation or litigation activities. The poster also informs workers how they can file complaints if they feel they have experienced discriminatory practices.

While the laws requiring the EEOC posting do not indicate a deadline for updating it at your workplace, employers are urged to “display the new one within a reasonable amount of time” according to the EEOC Poster FAQs.

Wage and Hour Issues in Inclement Weather

With winter weather fast approaching and potentially forcing businesses to reduce or cease operations, employers are reexamining their federal and state wage and hour obligations to employees affected by weather-related office closures and reductions in work hours. This alert summarizes the key wage and hour rules implicated in such situations.

Overtime-Exempt Employees

Subject to certain exceptions, the Fair Labor Standards Act (FLSA) requires employers to pay exempt employees their full salary for any week in which an exempt employee performs any work. An employer may not make deductions from an exempt employee’s salary for absences caused by the employer or by the operating requirements of the business. If an exempt employee is ready, willing, and able to work, deductions from the employee’s salary may not be made when no work is available. Thus, if a business is closed three days in a single week due to inclement weather, but an exempt employee performs work for the business for the rest of the week, the employee must receive his or her full salary for that week; no deductions from the predetermined salary may be made for the three days that the business was closed. However, if an employer’s office is closed for the entire workweek and exempt employees perform no work that week, they do not need to be paid their regular salary for that week.

Employers may lawfully make deductions from exempt employees’ salary for full-day absences due to personal reasons, other than sickness or disability. Thus, for example, if an office is open for business but an employee is unable to get to work because he or she lives in an area that has been affected by heavy storms (a personal reason), the employer may make a deduction from the employee’s salary for a full day’s absence.

Generally, deductions from exempt employees’ salary for partial-day absences are prohibited. Therefore, an employer cannot reduce an exempt employees’ salary by half of a day if the employee only works half of a day (for example, if the employee shows up to work late due to bad weather) or leaves work early (for example, if the office closes earlier to allow employees to arrive home before a snow storm).

Exempt employees who are able to work remotely from home, even when their primary work location is closed due to weather-related problems, must be paid their full salary.

If an employer provides employees with paid time off, the employer may make deductions from exempt employees’ paid time off accounts for absences occasioned by weather-related business closures or reduced work hours. Such deductions may be made in any amount, including partial days. If the employee does not have any paid time off accrued, however, no deductions may be made from their salary for any week in which they performed any work.

Non-Exempt Employees

The compensation rules for inclement weather situations are somewhat different for non-exempt employees. Employers are not required to pay non-exempt employees’ wages for any days that non-exempt employees do not work. Therefore, if a business is closed due to inclement weather, and non-exempt employees do not perform any work for the business during the closure, the business has no obligation to pay its non-exempt employees for time not worked. Importantly, non-exempt employees who work from home must be compensated for any time worked, even though the business might have been closed due to weather conditions.

Other Considerations

Employers’ wage and hour obligations with respect to non-exempt employees might be affected by state wage and hour rules. In New York, the Labor Law “call-in pay” provisions state that an employee who, by request or permission, reports to work on any day shall be paid at least the lesser of: a) four hours at the basic minimum wage rate; or (b) the number of hours in the employee’s “regularly scheduled shift” at the basic minimum hourly rate. Call-in pay is due regardless of whether an employee is “called in” or simply reports for work as scheduled.

Thus, for example, if an employee reports to work at his or her regularly scheduled time and, upon arrival, learns that the business is closed for the day due to weather conditions, a call-in pay obligation is potentially triggered if the employer failed to notify the employee not to come to work. Importantly, for most employees, there is no obligation to pay call-in pay if the total wages paid to an employee in a workweek involving call-in pay exceed the amount that would have been paid to the employee had he or she been paid at the minimum wage for all hours worked that week, plus any call-in pay owed. However, employers covered by the Hospitality Wage Order are not exempt from the call-in pay requirements, regardless of their employees’ earnings.

And of course, unionized employers should consult any applicable collective bargaining agreement concerning wage and hour obligations during weather-related business closures or reductions in hours.

Improper Deductions or Reductions in Pay

If an employer discovers that it has made isolated improper deductions from an exempt employees’ salary because of a weather-related office closure, the FLSA contains a safe harbor provision, which provides that the exempt status of a category of employees affected by improper salary deductions will not be lost if the employer has a “clearly communicated” policy that prohibits improper deductions, provides for a complaint mechanism, and mandates reimbursement for improper deductions, and the employer makes a good faith commitment to comply with the FLSA in the future. Thus, employers should ensure their employee handbooks contain such policies and generally encourage employees to report any errors in pay, without fear of reprisal.

Preparing for the New York State Paid Sick Leave Law

On April 3, 2020, New York State passed a law that will require employers with employees in New York to provide sick leave to their employees and, depending on the employer’s workforce size, this leave may have to be paid. This article addresses some frequently asked questions regarding the NYS Paid Sick Leave Law.

1. What employers are covered by this law?

All private-sector employers with workers in New York are covered by this law.

2. When is the NYS Paid Sick Leave Law effective?

The law takes effect 180 days after the enactment (i.e., September 30, 2020), and employees will begin accruing leave on that date. However, employees may NOT begin to use accrued NYS Paid Sick Leave until January 1, 2021.

3. How much time will employees receive under the NYS Paid Sick Leave Law?

Employees’ minimum accrual of time off under the NYS Paid Sick Leave Law is based on the employer’s size:

  • Employers with four or fewer employees and a net income of $1 million or less in the previous tax year are required to provide at least 40 hours of unpaid sick leave per calendar year.
  • Employers with four or fewer employees and a net income of greater than $1 million in the previous tax year are required to provide at least 40 hours of paid sick leave per calendar year.
  • Employers with five to 99 employees must provide at least 40 hours of paid sick leave per calendar year.
  • Employers with 100 or more employees must provide at least 56 hours of paid sick leave per calendar year.

To determine an employer’s size under the law, a “calendar year” is defined as the 12-month period from January 1 to December 31.

For the purpose of using and accruing paid or unpaid leave under the law, a “calendar year” means the 12-month period from January 1 through December 31, or any consecutive 12-month period, as determined by an employer.

4. Do we have to give the full required amount of sick leave (e.g., 56 hours) at once, or can we require the employees to “earn as they go”?

Employers have two options here. They can have the employee accrue as he/she goes. The minimum accrual rate is 1 hour accrued, per 30 hours worked (just like the NYC Paid Sick Leave Law). Or, employers can provide employees with the entire amount of leave at the beginning of the year. But, an employer who chooses to give its employees all the leave at once may not later reduce the amount of leave if the employee does not work sufficient hours to accrue the amount provided.

5. Can employees carry over the accrued and unused NYS Paid Sick Leave time at the end of the year, or must the employer pay any such accrued time out to an employee?

The accrued time may be carried over to the following year. There is no requirement to pay it out to the employee. However, employers who carry over any such time will still be limited to using the annual maximum amount in “year 2.” For example, if an employee has 10 hours accrued and left over in year 1, and the employee is working for a large employer, then in year 2, that employee will be able to use a total of 56 hours of paid sick leave (not 66 hours).

6. Can I limit the usage of yearly hours to a certain maximum?

Yes, the maximum usage is limited to 56 hours (or 40 hours, depending on the employer’s size and net income). Even if an employee carries over unused time from a previous year, the employee is always limited to either 56 hours or 40 hours of paid NYS Paid Sick Leave time per year.

7. What is the pay rate for employees who are receiving paid sick leave?

Paid sick leave must be paid at the employees’ regular rate of pay. If the regular rate is higher than New York minimum wage, employers are not permitted to pay for the use of NYS paid sick leave at the minimum wage rate. Again, the regular rate of pay must be paid when the paid time off is being utilized.

8. We are a NYC employer and already provide paid sick leave to employees per New York City Safe and Sick Leave. Do we now have to provide this additional time off under the New York State paid sick leave law?

Maybe. As covered NYC employers know, they are required to provide up to 40 hours of paid sick leave per NYC Safe and Sick Leave Law. Now, the NYS Paid Sick Leave Law requires (for large employers) that such employers provide at least 56 hours of paid sick leave. Such employers are required to provide a minimum total of 56 hours of paid sick leave. Such employers would not have to provide a total of 96 hours of paid sick leave.

9. If our current Sick Leave Policy allows employees to accrue up to 40 hours per year, do we now have to provide additional paid time off?

Maybe. First, the employer should consider its size. If the employer has 100 or more employees, then the employer will have to provide at least 56 paid sick leave hours per year to the employee. The employer’s policy providing 40 hours of paid time off will no longer suffice.

However, if the employer at issue has 50 employees, for example, then that employer is only required to provide at least 40 hours of paid sick leave. And, in that case, the employer would not have to provide more time off to its than 40 hours per year. Note, even though the total time off would not change in this example, the employer would have to update its written paid time off policy to ensure that it complies with the NYS Paid Sick Leave Law.

10. What happens to the accrued and unused sick time when an employee is terminated? Do we have to pay out that time?

Employers are not required to pay employees for accrued and unused sick leave upon an employee’s voluntary or involuntary separation from employment. To avoid any ambiguity in this regard, however, employers should have clearly written policies stating this forfeiture rule.

11. Does our employee handbook need to be updated to account for the NYS Paid Sick Leave Law?

Yes, employers must update their handbooks to reflect the new NYS Paid Sick Leave Law requirements.

12. What documentation must employers keep for purposes of complying with this Law?

Employers must track the amount of sick leave provided to employees. That information must be kept for at least six years, together with other information that an employer is obligated to keep and maintain as part of its payroll records.

An employee may request, verbally or in writing, a summary of the amount of sick leave they have accrued and used in the current calendar year or any previous calendar year. The law requires that an employer provide that information to a requesting employee within 3 business days.