Department of Labor Proposed Changes!

April 8, 2019

Recently, the Department of Labor announced proposals for significant (and much needed) regulatory updates to the definitions of “regular rate” and “joint employer”.

The DOL proposed an update to the definition of “regular rate” under the Fair Labor Standards Act.

The proposal would permit employers to exclude the following from an employee’s regular rate of pay thereby not having to include the below items in the calculation of overtime:

  • the cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • payments for unused paid leave, including paid sick leave;
  • reimbursed expenses, even if not incurred “solely” for the employer’s benefit;
  • reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements;
  • discretionary bonuses;
  • Benefit plans, including accident, unemployment (federal, not state), and legal services; and
  • Tuition programs, such as reimbursement programs or repayment of educational debt.

This change, if finalized, would be significant, as it would exclude these items of compensations from non-exempt employees’ overtime pay. According to the DOL, this change is needed to encourage employers to offer more financial perks to their employees, as, under the current rules, employers don’t offer these perks out of a fear that it will lead to increased overtime pay. Keep in mind, an individual state, may still include any of the above. As an example, California employers have to include bonuses in the calculation of overtime.

Secondly, the DOL proposed a new four-factor test to determine whether two entities are joint employers over the same employees. Under this proposed new test, to qualify as a joint employer, the entity would have to “actually exercise the power” to:

  • hire or fire employees;
  • supervise and control employees’ work schedules or conditions of employment;
  • determine employees’ rate and method of payment; and
  • maintain employees’ employment records.

This change, if finalized, would also be significant, as it would limit a potential joint employer’s exposure for wage and hour liabilities of the primary employer. This would be an excellent benefit for employers and would substantially reduce the risk of class action lawsuits.

I will keep you posted!

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Workplace Culture, an Important Aspect of any Business!

March 25, 2019

I came across this article on the internet and thought it was very good and wanted to pass it on. It discusses workplace culture in terms of what it is, why it matters, and how to define it.

Culture is the character and personality of your organization. It’s what makes your business unique and is the sum of its values, traditions, beliefs, interactions, behaviors, and attitudes.

Positive workplace culture attracts talent, drives engagement, impacts happiness and satisfaction, and affects performance. The personality of your business is influenced by everything. Leadership, management, workplace practices, policies, people, and more impact culture significantly.

The biggest mistake organizations make is letting their workplace culture form naturally without first defining what they want it to be.

Why Workplace Culture is Important

Culture is as important as your business strategy because it either strengthens or undermines your objectives. Positive culture is significant, especially because:

  • It attracts talent. Job candidates evaluate your organization and its climate. A strong, positive, clearly defined and well-communicated culture attracts talent that fits.
  • It drives engagement and retention. Culture impacts how employees interact with their work and your organization.
  • It impacts happiness and satisfaction. Research shows that employee happiness and satisfaction are linked to strong workplace culture (Source: Deloitte).
  • It affects performance. Organizations with stronger cultures outperform their competitors financially and are generally more successful.

What Impacts Culture in the Workplace?

The short answer is everything. A multitude of factors play a role in developing workplace culture, including:

Leadership

The way your leaders communicate and interact with employees, what they communicate and emphasize, their vision for the future, what they celebrate and recognize, what they expect, the stories they tell, how they make decisions, the extent to which they are trusted, and the beliefs and perceptions they reinforce.

Clarity of mission, vision, and values and whether they honestly reflect the beliefs and philosophies of your organization, how inspiring they are to your employees, and the extent to which the mission, vision, and values are stable, widely communicated, and continuously emphasized.

Work Environment

Objects, artifacts, and other physical signs in your workplace. These include what people place on their desks, what the organization hangs on its walls, how it allocates space and offices, what those offices look like (color, furniture, etc.), and how common areas are used.

Communications

The manner in which communication occurs in your workplace. Importantly, the degree, type, and frequency of interaction and communication between leaders and employees, and managers and employees, including the extent of transparency in sharing information and making decisions.

Defining Your Workplace Culture

Most of us let our workplace culture form naturally without defining what we want it to be, and that’s a mistake. For example:

  • We create policies and workplace programs based on what other employers do versus whether they fit our work environment.
  • We hire employees who don’t fit.
  • We tolerate management styles that threaten employee engagement and retention.
  • We don’t create and communicate a clear and inspiring mission, vision, and set of values.
  • Our work environments are lackluster.
  • We don’t consider how our everyday actions (or inactions) as leaders are affecting the formation of our culture.

For these reasons, it’s important to step back, evaluate, and define your workplace culture—both what it is now and what you want it to be in the future — and how all of these factors either contribute or take away from your desired culture.

Although it can be very difficult to define, assessment tools and surveys can help you gauge your culture. They may reveal gaps between the culture you want to attain and the culture you currently have.

In addition, observation, examination of workplace behavior, meetings, discussions, and interviews can expose your workplace climate. The important part is to start somewhere and open a dialogue with your leadership team about it.

Keep in mind that culture is always a work in progress. It can and will change. Make culture as important as your business strategy. It’s too significant to ignore, and shaping it is one of your most important responsibilities as leaders and HR professionals.

Give this article some thought! I will.


Proposed Federal Minimum Exempt Salary to Take Effect!

March 18, 2019

Be on notice that the United States Department of Labor (“DOL”) announced a proposed rule that would increase the minimum salary required to qualify as exempt from overtime under the federal Fair Labor Standards Act’s white collar exemptions (executive, administrative, and professional employees).  The proposed increase would raise the minimum annual salary for exempt status from $23,360 to $35,308 (an increase in the weekly rate from $455 to $679).  This is a much smaller increase than the increase that had been adopted by the Obama administration DOL in 2016.  That increase would have raised the minimum salary for exempt status to $47,476 per year, but a court blocked that increase from taking effect.

In addition to increasing the minimum salary to qualify for exempt status under the white collar exemptions, the proposed rule also would substantially increase the minimum annual compensation to qualify for the FLSA’s “highly compensated employee” exemption, from $100,000 to $147,414 (of which, at least $679 per week must be paid on a guaranteed salary or fee basis).

The rule sets some special minimum compensation rates for employees in the motion picture industry and employees in Puerto Rico, Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.

In addition to raising the minimum salary to qualify for exempt status under federal law, the proposed rule is also significant in that it would allow non-discretionary bonuses and incentive compensation to be used to satisfy up to 10% of the salary level.  Additionally, employers would have one catch-up period at the end of a 52-week period to make up any shortfall in the employee’s salary to bring it up to the required minimum.  In other words, the employer could pay the employee a guaranteed minimum salary of $611.10 per week (90 percent of the new minimum weekly salary), with the thinking that the employee’s non-discretionary bonuses and incentive compensation would bring the employee’s total annual salary to at least $35,308.  If the bonus and incentive compensation fell short of meeting the minimum salary, the employer would have one chance to make up the difference.

The proposed rule does not include any changes to the “duties tests” to qualify for exempt status, nor does it provide for additional automatic periodic increases to the minimum salary level.  However, the proposed rule calls for the DOL to “review” the salary level every 4 years to consider whether an adjustment is needed.

The public will have 60 days to submit comments on the proposed rule, which ultimately is expected to take effect January 1, 2020.

California employers are reminded that they have to comply not only with the FLSA’s minimum salary for exempt status, but also with California law, which has a higher minimum salary requirement for white collar exempt status ($49,920 for employers with 26 or more employees).  Additionally, California does not have a highly compensated employee exemption. Finally, California does not have any provision allowing bonuses and incentive compensation to be counted in determining whether an employee’s salary meets the minimum salary threshold for exempt status.  With this in mind, the newly proposed DOL rule primarily will impact employers with multi-state operations and employees in states other than California.


How Bad Does the Harassment Need to be to be Actionable?

March 11, 2019

Employers consistently ask, “How bad does the conduct have to be to support a harassment claim?” The following is an illustration of what an employer should not permit at any level.

A recent racial harassment case supports my position. The plaintiff worked as an engineer at a Chicago school. He alleged that his supervisor committed three distinct acts of harassment over the nine-month period.

  • The employee claimed that he was told by his supervisor that he would not be promoted because he was black.
  • The employee also claimed that months later the same supervisor told him that “when someone farts and a black guy’s sitting there,” it’s called a “shit-sniffing nigger.”
  • A third comment, according to the black employee, occurred months after that at a meeting where the supervisor told him that he’s “tired of you people,” and when the employee asked his supervisor to whom he was referring, the supervisor responded, “Nigger, you know what I’m talking about.”

Now, for some reason, the district court granted summary judgment in favor of the employer and dismissed the claim stating that “the workplace that is actionable is one that is ‘hellish.'” The 7th Circuit, however, squarely rejected this standard and reinstated the harassment lawsuit.

While a “hellish” workplace is surely actionable, plaintiffs’ evidence need not show a descent into the Inferno… The issue is whether the discriminatory conduct the employee testified to qualify as sufficiently severe or pervasive to alter the conditions of his work environment.… In short, when the harassment involves such appalling racist language in comments made directly to employees by their supervisors, we have not affirmed summary judgment for employers.…

If the only evidence of racial harassment the employee had was a co-worker’s use of the three epithets uttered by the supervisor, we would likely reach a different conclusion in this case. Given the fact that it was the supervisor, a jury could reasonably find that the employee suffered an actionable hostile work environment.… A jury would likely have a difficult time concluding that a supervisor calling his employee the “N-word” and threatening to write up his “black ass” were not examples of harassing comments motivated by race. Although the supervisor’s conduct was relatively infrequent and not “physically threatening” or “humiliating” in a public setting, it was severe and humiliating.

Case closed (or at least, case going to a jury to decide).

Let me also suggest, however, that the academic debate of how severe or pervasive is severe or pervasive enough to rise to the level of a Title VII violation is not your concern as an employer.

If an employee complains about misconduct, your reaction should never be, “Well, I understand, but it’s not that bad, or at least not bad enough for you to sue us; now go back to work” which is what happened here. Your obligations as an employer recipient of complaint of workplace harassment never changes—investigate and take prompt remedial action to reasonably ensure that the harassment stops and does not repeat. In my opinion, it was ridiculous for this employer to have pushed a defense based on these circumstances. This matter should have been resolved with the first complaint and certainly when the attorney letter was received. Supervisors and managers are held to a higher level and this supervisor should have been fired upon the first complaint levied by the employee.

 


New Decision: Call-in Reporting Pay

March 4, 2019

California has a relatively unique wage/hour law that requires employees to be paid “reporting time pay” on certain occasions where they are required to report to work but are sent home without being given at least half of their scheduled day’s work.  In these circumstances, the employee must be paid for half of their usual or scheduled day’s work, but in no event less than two hours or more than four hours.  A new California Court of Appeal decision addresses the issue of whether reporting time pay is owed when employees are required to call in two hours before their scheduled shift to see whether or not they are needed to report to work and the answer is no, so the employees end up not having to work.  Does the fact that the employee had to call in two hours prior to shift entitle them to two hours of “reporting time” pay?  According to the court in Ward v. Tilly’s, Inc., the answer is yes.  The court reasoned that if an employee is required to be available to work a scheduled shift on two hours’ notice, they cannot reasonably schedule other activities for the day, e.g. attending school, working other jobs, etc., and must have day care arranged, if applicable.  Because of these burdens and limitations on employees’ use of their personal time, the court concluded that having to call in two hours before a scheduled shift is a form of “reporting” for purposes of California’s reporting time pay requirement, and that the requirement is not limited to situations where an employee “physically” reports to work.

Employers should note that this decision conflicts with some recent California district court interpretations of the same issue (Casas v. Victoria’s Secret, C.D. Cal. 2014, and Culley v. Lincare, E.D. Cal. 2017).  In those cases, the courts held that the reporting time pay requirement is triggered only when an employee physically reports to work but is not put to work or is sent home early.  However, the California Court of Appeal decision in Tilly’s is binding on all California trial courts.  As such, employers who utilize this type of call-in scheduling practice should review and modify their practices to ensure compliance with California’s reporting time pay requirement.

 


Emojis: Any Possibility of Discrimination and Harassment?

February 25, 2019

Can you believe “Emojis” are now entering the harassment and discrimination workplace litigation lawsuit arena! Logically, emojis are a form of communication, and work is all about communication. Which would suggest that we would start seeing them in harassment and discrimination cases. And now we have in federal discrimination cases.

While harassment cases dominate these filings, it’s not just employees who are using 🍆 to establish a hostile work environment. Employers are using employees’ use of emojis to respond to alleged acts of harassment (such as 😄, or 😉, or 😉) to help establish that the alleged hostile work environment was either welcomed or subjectively not offensive.

For example, in one case the court held that the plaintiff’s use of a smiley face emoji in a text message to her accused harasser helped establish an absence of a hostile work environment. In other case these emojis were at issue: 😉 😘 and 😉; and (😊).

Honestly, there is another side of the coin. You might have heard when celebrity Chef Michael Isabella was sued for sexual harassment. In his case he referred to an attractive female customer as “corn” afterwards’ one of his chef’s commented that one woman was “so hot, he’d eat the corn out of her s—.” The lawsuit alleged further acts of harassment via text messages with corn emojis 🌽. This was obviously way out of line.

The question that arises is whether or not employers now need a policy against the use of emojis in the workplace in any form of communication. Emails, text messages or any other form would be the concern. My opinion, at this time, is “not really.” My reasoning is simple because most employers already have such a policy under their “harassment” policy. You do not need a separate policy to forbid your employees from using what is becoming an acceptable form of communication.…

We can still have a healthy debate over the professionalism of emoji use in business communications but a common sense attitude should be all that it takes. There are surveys out there that have stated nearly half (41%) of workers use emojis in professional communications. And among the senior managers polled, 61% said its fine, at least in some situations. My sense is that your view of this issue will depend on a combination of your age, and your comfort level with technology.

As for me, I use emoji all the time, even at work. Email is notoriously tone deaf. It’s easier for me to drop a 😊 into an email or text message to convey an easy response. Especially when I am driving! Just kidding! In other words, 😁. Emojis are 👌, and it’s perfectly fine to ❤ them at work 👍.

 


Do You Know How to Spot an Employee at Risk for Violence?

February 19, 2019

Last Friday afternoon, an employer informed one of its employees, Gary Martin, of his termination. Shortly thereafter, he opened fire with a .40-caliber Smith & Wesson, killing five of his co-workers and wounding five police officers. Martin himself was the sixth casualty, killed in a shootout with police.

After the news of this tragedy broke, reports surfaced of Martin’s history of violence—six prior arrests by the local police department for domestic violence, and a decades-old felony conviction for aggravated assault.

All of which begs the question, should this employer have known that Martin was prone to violence, and, if so, should it have taken added measures in connection with his termination.

A criminal history of violent arrests and offenses is not necessarily a predictor of workplace violence. Still, there are certain warning signs for which an employer can look to help determine whether an employee is at risk for potential violence.

Research has shown that these warning signs include:

  • A chronic inability to get along with fellow employees
  • Mood swings and anger control issues
  • Expressions of paranoia or persecution. Being a “victim”
  • A history of problems with past jobs and and/or personal relationships
  • An inability to get beyond minor setbacks or disputes at work
  • A fascination with guns, weapons, or violent events
  • A sudden deterioration in work habits or personal grooming
  • Signs of stress, depression, or suicidal ideation
  • A major life problem, such as divorce or legal problems

If one more of these red flags surface, it is recommend that you refer this employee to seek attention through the company’s employee assistance program, for assessment and treatment.

If you are compelled to fire an employee who you think poses a risk of violence, it is recommended that you take further steps to mitigate against the risk of your termination transforming into a workplace tragedy.

It is highly recommended that employers consider following:

  • Consider a professional threat assessment
  • Consider using a neutral manager or outside security consultant to carry out the termination
  • If there is manager or supervisor who has been the object of threats or anger, that person should not be the person to conduct the termination
  • Have security nearby—not in the same office, but close enough to hear signs of a problem and to act
  • Do not take a break. There are numerous instances of an employee asking for a bathroom break or time to compose him- or herself, and using the break to retrieve weapons
  • Wait until the end of the workday to terminate, if possible. This protects the dignity of the fired employee and minimizes the number of employees on hand should a situation escalate
  • Minimize any reasons why the employee would have to revisit the workplace. Mail a check; have uncollected belongings sent to the person’s home via a delivery service
  • Allow the person as much dignity as possible, but be brief and to the point. Do not get into a back and forth
  • Emphasize any severance benefits and outsourcing help that may be available. Some organizations decide they will not contest unemployment or offer the option of resigning.

As with most issues in the workplace, the proverbial ounce of prevention really matters. While there exists no foolproof way to protect your workplace against these kinds of tragedies, a few preventative steps can go a long way to putting you in the best place to deter and respond.

As many of you are aware, we offer active shooter training through our violence in the workplace preparedness program. If you would like some assistance in this area please feel free to contact us.