Fair Labor Standards Act – Salary Level Threshold May Change in 2016

stroud_thumb2

The current salary level threshold for exemption is that an employee must be paid at not less than $455 per week or $23,660 annually to meet the salary level test under the FLSA. The new proposed salary threshold in proposed regulations for exemption is $970 per week or $50,440 annually.

Remember, however, to be exempt, an employee must meet all three tests, not just the salary level test.

The tests are: How employees are paid? (1) SALARY BASIS: Employee must be paid a pre-determined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed. (2) SALARY LEVEL: Currently this is $455/week or $23,660 per year; and (3) JOB DUTIES TEST: Each category of exemption – Executive, Administrative and Professional has different job duties as set forth in the regulations.

If this new salary level regulation goes into effect, any salaried “exempt” employees (i.e. currently ineligible for overtime pay) that make less than $970 per week will be reclassified as non-exempt and entitled to overtime when the final rule goes into effect. Also employers will be required to keep up with the DOL’s record keeping requirements for these new non-exempt employees including keeping records in these employees for: (1) Hours worked each day; (2) Total hours worked each week; (3) Daily/weekly straight time earnings for the workweek; and (4) Overtime earnings for the workweek.

The impact if this regulation is put into effect is that more employees will be entitled to overtime. The DOL estimates almost 5 million employees will become non-exempt under the new regulations, which will result in more overtime claims and lawsuits and an increase in number of Department of Labor audits.

How can employers prepare? Determine which employees will possibly be re-classified; determine how many work hours is the employee currently working for the compensation paid; beware of “hidden overtime”, meaning even if position is scheduled for less than 40 hours per week, are you confident that the employee is performing no duties outside working hours (e.g. answering emails, reading work materials, etc.), and install time tracking mechanism.

The comment period for these proposed rules ended on September 4, 2015. At this point, the Department of Labor will either: (1) Proceed with the proposed changes and issue a Final Rule, which means employers will likely have as little as 120 days to comply; (2) Issue a new or modified proposed rules, which will include a new comment period; OR (3) Take no action of the proposed rule.

Stay tuned—The proposed rules may or may not become effective. Colombo Kitchin Attorneys and I will keep you updated on this issue in this employment blog.

Employment Background Checks Revisited: What Every Employer Needs to Know

stroud_thumb2

In light of increased lawsuits against employers for violations under the Fair Credit Reporting Act (“FCRA”), every employer should insure it is performing employment background checks correctly. This law covers both credit and criminal background checks. A successful lawsuit under the FCRA can recover statutory damages between $100 and $1000 per violation, attorney’s fees, and costs, punitive damages as well as actual damages to the employee.

An employer must have written authorization and disclosure from a job applicant or employee prior to conducting an employment background check. The authorization and disclosure must stand alone, and cannot be combined with other forms or hidden within the job application. Many employers get the authorization and disclosure requirement wrong. Waiver forms or liability disclaimers cannot be added to the authorization form.

Another essential requirement of the FCRA is the adverse action notification. The Adverse Action is a two-step process that must be followed strictly. Many employers get tripped up by skipping one or even both steps: Step one, the “pre-adverse action” notice is sent to the applicant prior to making a “no hire” decision based on the background check. You have to provide the applicant with a notice, send a copy of the report, and attach a Summary of Rights under the FCRA. Step two, the “adverse action” notice, is sent after the final decision has been made and must contain information on how to dispute the background check.

Colombo Kitchin can provide you with the proper authorization and disclosure forms as well as proper adverse action notices. If you would like an evaluation of your employment background process, please contact our firm. We will be glad to help.