DOL Publishes Joint Employer Final Rule

The Department of Labor (DOL) today announced a final rule to update the regulations interpreting joint employer status under the Fair Labor Standards Act (FLSA). The regulations have not been meaningfully updated in more than 60 years.

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Eugene Scalia, Secretary of Labor

Under the FLSA, an employee may have, in addition to his or her employer, one or more joint employers — additional individuals or entities that are jointly and severally liable with the employer for the employee’s wages. The FLSA requires covered employers to pay their employees at least the federal minimum wage for every hour worked and overtime for every hour worked over 40 in a workweek.

“This final rule furthers President Trump’s successful, government-wide effort to address regulations that hinder the American economy and to promote economic growth,” said Secretary of Labor Eugene Scalia. “By giving greater clarity to businesses who want to work together, we promote an entrepreneurial culture that has driven American prosperity for decades.”

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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SECURE Act to Benefit Small Employers

The SECURE Act (Setting Every Community Up for Retirement Enhancement Act) became law as part of the year-end federal budget package signed by President Trump in December, and looks to be the most important piece of retirement legislation in a decade or more.

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The SECURE Act will help businesses adopt retirement plans.

The SECURE Act is particularly beneficial for small employers and their employees. Some of its provisions include:

Loosens plan eligibility for long-term, part-time employees. Under previous law, employers could require employees to work 1,000 hours in 12 months to be eligible to participate in the retirement plan. The new law opens up eligibility to those who work at least 500 hours in three consecutive 12-month periods. This change is effective for plan years beginning after Dec. 31, 2020.

Expands the availability of multiple employer plans (MEPs). Prior to the SECURE Act, small employers who wanted to pool retirement plans to share and save costs had to have a commonality of interest (same industry, for instance). Now, open MEPs are possibility, meaning there needn’t be any commonality of interest. This too is effective for plan years starting after Dec. 31, 2020.

Increases the income tax credit for small employers starting retirement plans. The credit for those small businesses adopting retirement plans now rises from $500 to $5,000.

Adds a new tax credit for small businesses that adopt auto-enrollment. Those small employers who adopt auto-enrollment into their retirement plans will receive a $500 tax credit for three years. Both tax credits are effective now.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Trader Joe’s Sued Over Excessive Fees in 401(k) Plan

Trader Joe’s, the iconic food retailer, has been sued over its retirement plan by former employees who claimed to have lost millions of dollars through the company’s mismanagement of their funds.

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Trader Joe’s, Pasadena, Calif.

At issue is the fee charged annually for the maintenance of each account. The plaintiffs’ lawyer argues that the fee rose to $140 per participant as opposed to a “reasonable” $40 record-keeping fee.

The lawsuit, filed under the provisions of the Employee Retirement Income Security Act (ERISA), claims the retailer sidestepped its “tremendous bargaining power” granted to it by its scale in assets under management — $1.6 billion — by “inappropriately” choosing relatively expensive mutual fund share classes, jacking up the percentage going to the plan maintenance firm.

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Blue State AGs Ask Supreme Court to Review Obamacare Ruling

UPDATE: On Jan. 7, the Supreme Court set a Friday afternoon deadline for ACA opponents to respond to the Blue State coalition’s request to expedite the case to be resolved before the November 2020 election.

Led by California, a coalition of 20 Blue State attorneys general (AGs), plus the District of Columbia, has petitioned the Supreme Court to review the December decision by the 5th U.S. Circuit Court of Appeals in the case of Texas v. U.S.

fifth-circuit-court-rejects-individual-mandateIn that ruling, a three-judge panel agreed with U.S. District Court Reed O’Connor that the individual mandate of the Affordable Care Act (ACA, aka Obamacare) is unconstitutional now that the penalty associated with not buying health insurance has been eliminated.

Recall that Chief Justice John Roberts, in the first high court review of the legality of the ACA, changed his mind at the last moment and ruled that the mandate was constitutional under Congress’s power to tax.

However, Judge O’Connor had also ruled in December 2018 that the whole law was unconstitutional and issued an injunction, which he then put on hold while appeals were filed and heard. The circuit judges refused to rule on the rest of the ACA, remanding it back to O’Connor. This put the legality of the whole ACA in limbo. Will he reopen the injunction or wait for the SCOTUS review?

Filing the Jan. 3 petition were the attorneys general of California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Massachusetts, Michigan, Minnesota (by and through its Department of Commerce), Nevada, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, as well as the governor of Kentucky.


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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New Overtime Rule Takes Effect Today

New Year’s Day ushers in a new Department of Labor (DOL) overtime rule, which raises the salary exemption threshold from $23,660 a year to $35,568, or from $455 a week to $684. Those employees making less than that new amount are eligible for overtime pay.

According to a DOL senior official, the new exemption threshold will make an additional 1.3 million workers eligible for overtime come 2020.

The rule does not change the duties test to determine who’s exempt from overtime.

Though some states, such as California, already have statutory higher thresholds, for the vast swatch of the businesses in the U.S., many employers now have to decide whether to raise affected workers’ salaries or establish overtime monitoring standards.

The DOL derives its authority to set overtime rules from the Fair Labor Standards Act (FLSA) of 1938.

In addition to the annual salary threshold hike, the DOL is:

  • raising the total annual compensation level for “highly compensated employees (HCE)” from the currently-enforced level of $100,000 to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
  • revising the special salary levels for workers in U.S. territories and in the motion picture industry.

A coalition of Blue State (Democrat) attorneys general was poised to challenge the new rule in court, arguing that the existing duties test makes it too easy for employers to classify workers as managers, thus making them exempt from overtime, but nothing has happened yet.

The Obama administration had an even heftier version of the overtime rule in 2016, which would have established an annual salary threshold of $47,476 a year, but that rule was eventually invalidated by a district judge in Texas. The 5th U.S. Court of Appeals in New Orleans held an appeal of that judge’s decision in abeyance while the DOL worked to rewrite the invalidated rule.

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Individual Mandate Unconstitutional, Rest of Obamacare in Hands of Texas District Judge

The 5th U.S. Circuit Court of Appeals today ruled unconstitutional the individual mandate portion of the Affordable Care Act (ACA, or Obamacare), but left the fate of its other provisions in the hands of a Texas judge, who in December 2018 ruled the entire law unconstitutional.

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Judge Reed O’Connor

“The most straightforward reading applies: the mandate is a command. Using that meaning, the individual mandate is unconstitutional,” today’s ruling states.

In 2012 when the Supreme Court ruled on the issue, “the individual mandate — most naturally read as a command to purchase insurance — was saved from unconstitutionality because it could be read together with the shared responsibility payment as an option to purchase insurance or pay a tax,” Wednesday’s opinion adds.

In ducking the remainder of the law’s fate, the justices — who heard appeals on July 9 — avoided throwing a repealed health care law into the midst of the ongoing presidential electioneering and thus put the heat on a sole judge, Reed O’Connor of Ft. Worth. The tactic also might delay appeals to the Supreme Court until its next session in October 2020.

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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NLRB Ends 5-Year Battle Over McDonald’s Status as Joint Employer

The National Labor Relations Board (NLRB) has ordered an administrative law judge (ALJ) to accept a settlement offered by McDonald’s USA, LLC in a case involving employees at Illinois franchises fired for their efforts in Fight for $15 picketing.

nlrb-ends-mcdonald's-lawsuitThe Obama-era NLRB and its general counsel supported the lawsuit, claiming the corporation was a joint employer liable for actions by its franchisees. Eventually, McDonald’s offered a cash settlement for all the fired employees, but at the same time denied joint employer status. The ALJ hearing the case denied the settlements. Yesterday, the Trump-era NLRB overruled the judge.

Citing its proposed rulemaking overturning the Obama-era standard on what constitutes a joint employer, the board instructed the judge to accept the settlements. In a statement, the agency announced: “The settlements do not impose joint and several liability on McDonald’s USA, LLC as a joint employer; however, they impose obligations on McDonald’s USA, LLC to support the remedies agreed to by McDonald’s Restaurants of Illinois and the franchisees.”

The Service Employees International Union-backed Fight for $15 called the settlement “illegitimate” and vowed to “forcefully” appeal the decision.

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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DOL Issues Final Rule on Regular Rate of Pay

The Department of Labor has announced a final rule that will allow employers to more easily offer perks and benefits to their employees.

dol-issues-rule-on-regular-rate-of-payThe rule released today marks the first significant update to the regulations governing regular rate requirements under the Fair Labor Standards Act (FLSA) in over 50 years. Those requirements define what forms of payment employers include and exclude in the FLSA’s “time and one-half” calculation when determining overtime rates.

The previous regulatory landscape left employers uncertain about the role that perks and benefits play when calculating the regular rate of pay. The new rule clarifies which perks and benefits must be included in the regular rate of pay, as well as which perks and benefits an employer may provide without including them in the regular rate of pay.

“This final rule encourages employers to invest in the American workforce, to the benefit of their employees,” U.S. Labor Secretary Eugene Scalia said. “In a robust economy with a million more open jobs than job seekers, we must allow employers to offer perks and benefits that will attract talent for open jobs and compensate employees for their hard work. This rule is an important step in that direction.”

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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Locked in a Freezer for Retaliation: Chipotle Must Pay

This from the National Law Review website (sounds pretty bizarre):

Austin Melton, a manager at a San Jose Chipotle store who was 22 years old at the time, was forced to endure pervasive verbal and physical harassment by his female supervisor. His supervisor propositioned Melton and his then-girlfriend for sex, touched him inappropriately, and posted a “scoreboard” in the main office to track the staff’s sexual activities.

chipolte-workers-sue-to-get-overtime-payWhen young Melton reported the harassment, he was locked in a freezer in retaliation. He eventually quit (after being released from the icebox), and the Equal Employment Opportunity Commission (EEOC) took up his case and filed suit.

Yes, Chipolte lost and was dinged $95,000 to Melton for lost wages and damages. It was also assigned, along with 27 other Chipoltes in the area, a anti-sexual harassment training regimen.

“This was my first job after high school, and it was hard to speak up about the harassment to management and then to the EEOC. But it was the right thing to do,” said Melton. “I hope this settlement will help to make the restaurants a better and safer workplace for everyone. I am thankful to the EEOC for standing up for me and seeing this through.”


NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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DOL Issues Holiday Warnings to Employers

The Occupational Safety and Health Administration (OSHA) and Wage and Hour Division (WHD) of the Department of Labor (DOL) remind employers to protect worker safety and pay during the holiday season.

dol-promotes-safe-holiday-shopping“During the busy holiday season, employers must focus on protecting their workers by anticipating and preventing potential hazards in the workplace,” said Principal Deputy Assistant Secretary of Labor for Occupational Safety and Health Loren Sweatt. “All workers deserve a safe workplace whether they are stocking shelves, packing boxes, delivering products or selling merchandise.”

OSHA offers holiday workplace safety resources on warehousing, tractor trailer drivers, forklift safety, winter weather and crowd management. General safety guides are also available, providing information on workers’ rights, the protection of temporary and seasonal workers, as well as safety for young workers.

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NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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