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.”

Unemployment Rate Edges Lower, NY Employers Receive Additional UI Tax Charges

According to the Society for Human Resources Management, U.S. employers added 209,000 new jobs in June, below economists’ expectations for the month, and unemployment rate fell to 3.6 percent.

In New York, New York employers have been receiving letters from the Unemployment Insurance Board which demand additional payments for the “IAS Surcharge.” As a reminder, the surcharge is intended to replenish the State’s UI fund, and make up for the fact that the New York State Department of Labor entirely depleted the UI fund by paying out so many benefits during the pandemic. (As we had written on other occasions, the State’s Comptroller found that the Department of Labor errors caused the State to pay out “an estimated billions of dollars” in UI benefits.) The State’s website explains the reasons for the IAS Surcharge that employers will have to pay this year, and potentially for many years to come:

“In March 2020, the federal government passed the CARES Act, creating several pandemic unemployment programs to support out-of-work Americans impacted by the COVID-19 pandemic. As New York State hit unemployment levels not seen since the Great Depression, the Department of Labor would go on to pay more than $105 billion dollars in unemployment and pandemic unemployment benefits between March 2020 and September 2021. As a result of this unexpected emergency, the Unemployment Insurance (UI) Trust Fund was depleted. Like dozens of states around the country, New York State borrowed funds from the federal government to maintain UI and pandemic benefits while the pandemic programs were in effect.

During periods in which there is an outstanding federal loan, New York State law requires contributing employers to pay an annual Interest Assessment Surcharge, or IAS. Beginning in June 2023, employers who make unemployment insurance contributions will be notified of the 2023 IAS amount due. Payment of the IAS is due within 30 days of the date of this notice. Unless the Federal government chooses to abate all or part of the interest incurred or the principal balance amount is repaid with no more interest accrued, businesses will be required to make annual IAS payments until all interest has been fully paid off.”

US DOL Tip Credit Rule Stays, Says a Federal Judge

The U.S. Department of Labor’s rule limiting subminimum-wage payments to tip-earning workers is permissible under federal labor law, a Texas federal judge ruled on Thursday, declining restaurant industry groups’ competing bid for a win and renewed request to block the law. The rule, which took effect in December 2021, allows employers to pay tipped wages for no more than 30 consecutive minutes when a tipped worker is engaged in a nontip-producing task and also disallows tipped wages if a worker spends more than 20% of their workweek on tip-supporting work.  The law also requires employers to pay full minimum wage, not a tipped wage, for nontipped duties like maintenance work, and put time limits on when employers can pay workers subminimum wages when they are engaged in side work that does not produce tips, such as a bartender preparing garnishes or a server cleaning the dining room. 

Restaurant and other industry groups sued to block this rule, arguing that the Department misconstrued the FLSA in promulgating the rule.  However, the judge agreed with the U.S. Department of Labor, finding that the Department’s rule was a “permissible construction” of the tip credit statute, which allows employers to pay workers subminimum wage based on the expectation they will make up the earnings in tips.  The restaurant association is likely to appeal the court’s decision.  In the meantime, employers are expected to adhere to the Department’s rule. 

Food Delivery Giants Seek to Block NYC Wage Law for Delivery Workers

Food delivery giants DoorDash and Grubhub asked a New York state court to block implementation of a New York City rule that would raise wages for delivery workers, arguing that the regulatory process was flawed.  The rule at issue would compel delivery companies to either pay workers $20 per hour they spend logged into food-delivery apps or $33 per hour spent making deliveries. The rule, which is set to take effect July 12, is the result of the New York City Council’s 2021 passage of Local Law 115, which authorized the City’s Department of Consumer and Worker Protection (“DCWP”) Bureau to study the pay and working conditions of food delivery workers and issue new minimum pay rules for the industry.

Grubhub and DoorDash accused the DCWP of neither studying the issue accurately nor applying its learnings fairly. The companies said that the rule was largely built on survey data of delivery workers that was subjective and biased.  “DCWP merely swept aside all criticism of the surveys claiming without citation to any authority … that it had ‘reviewed the methodological critiques provided in comments but was not persuaded that the survey is inappropriate,” the companies said. “These conclusory statements do nothing to remedy any … systemic methodological failures.”

The companies also criticized the City’s decision to exempt companies like Instacart that primarily service grocery and convenience stores, rather than restaurants, from the new wage rule. Local Law 115 directed the DCWP to study the working conditions of all food delivery workers, the companies said, not to target specific firms or subindustries for reform.

The companies also said that the rule’s goal of compensating workers for all time spent on call, not just time spent delivering food, was irrational. In contrast to employees, who, under the Fair Labor Standards Act, are entitled to pay while waiting for work assignments, the companies said app-based delivery workers are free to work for competitors, complete personal chores or just hang out between deliveries.

“App-based workers choose to log in to petitioners’ systems entirely on their own; they are not under the platform’s control; and they have independent authority to accept, deny, or ignore offers … as they please,” the companies said. “DCWP’s attempt to analogize its rule to FLSA requirements is irrational.” The companies asked the court to immediately block the city from enforcing its wage rule, as well as completely vacate and annul it.

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.

IRS Issues Warning about ERC Credits

The Internal Revenue Service (IRS) is continuing to caution employers about claiming the Employee Retention Tax Credit (ERTC), noting that there have been aggressive and unlawful tactics by various ERC filing services.  The IRS is aware that a number of these providers are persuading ineligible businesses to seek and obtain the ERC credit.  As a result of these unscrupulous business practices, the IRS has committed to “step up” enforcement action regarding ERTC claims.  The IRS is expected to focus on employer eligibility, substantiation of financials underlying the eligibility determination and claim, and a review of any amended returns by the employer. Penalties range from 20% for errors in accuracy to 75% if the IRS detects fraud.

The statute for the ERTC permits civil action by the IRS for two years after the refund is issued. The statute of limitations for fraud or misrepresentation, however, extends to five years.

Reminder: NY Paid COVID Sick Leave is still in Effect

A number of employers have inquired whether the New York State paid sick leave legislation is still in effect, in view of the lifting of the federal Public Health emergency.  Unfortunately, the New York Paid COVID Sick Leave, which is codified in the Supplemental Paid Leave and COVID-19 Paid Family Leave Law, does not have an expiration date.  Thus, unless the Legislature amends the law, employers will be obligated to continue providing and paying for COVID sick leave.  However, while the statute requires employers to provide “up to 14 days” (for “large” employers), note that the amount of leave granted to an employee is based on Centers for Disease Control and Prevention (CDC) isolation and quarantine guidelines, which are regularly changing (and the recommended amount of sick leave for infected employees is decreasing).

NY Legislature Passes Law to Seal Conviction Records, with Intent to Ease Hiring of Individuals with Criminal Convictions

In the final days of the 2023 legislative session, the New York Legislature passed the “Clean Slate Act.” If signed by Governor Hochul, it will provide for the automatic sealing of the records of certain convictions after specified periods of time.  The measure would not take effect, however, until one year after signing. It is intended to increase employment opportunities for those with past criminal histories who have had no recent convictions. 

After taking effect this bill would immediately seal the records of criminal convictions under state law as follows: (a) Misdemeanors would be sealed three years from the individual’s release, or the imposition of sentence if there was no sentence of incarceration and (b) Felonies would be sealed after 8 years from release. Not eligible for sealing would be Class A-I felonies, for which a maximum sentence of life imprisonment may be imposed (e.g., murder, first-degree kidnapping, first-degree arson, and first-degree illegal narcotics possession) and convictions requiring registration as a sex offender.

Sealing would be automatic except where the convicted individual has a criminal charge pending or is on probation or under parole supervision when the statutory time period for automatic sealing elapses.

The bill would amend the New York State Human Rights law1 to prohibit employers from making any inquiry regarding or discriminating against individuals based upon automatically sealed conviction records.  Records automatically sealed under this bill could still be accessed and used under these circumstances, such as when the record is necessary to any entity authorized to conduct a fingerprint-based background check on job applicants who would be working with children, the elderly or vulnerable adults.

Notably, the Clean Slate Act would only seal convictions under New York’s penal law.  The Act would not seal criminal convictions under federal law or the criminal law of any state other than New York. Again, this Act is not final and there has been a lot of back-and-forth with the Governor’s office about this bill.  We will continue to monitor the status of this law and advise employers if compliance is necessary.