Recap of the Webinar, “The New Overtime Rules Are Coming – Are You Ready?”

On  Thursday, July 30th, McBrayer hosted a webinar entitled, “The New Overtime Rules Are Coming – Are You Ready?” The webinar was hosted by attorney Cynthia L. Effinger of McBrayer’s Louisville office. This well-attended drew participants eager to understand how the recently-released Department of Labor Notice of Proposed Rulemaking will affect employers throughout the state and nation. This webinar focused on the following core concepts:

  • The current state of the overtime exemption
  • The proposed rules, their effect, and a timeline for implementation
  • How businesses should start preparing to comply with the new regulations
  • The consequences of misclassification of employees

Ms. Effinger gave up-to-the-minute information on how employers should contemplate and prepare for the new rules and answered questions from those anxious to know how these sweeping changes will affect their day-to-day operations. If you missed this webinar, don’t worry! The visual presentation slides and a recording of the webinar are available. In addition, the following is a recap of important points from the webinar:

How are the new rules going to change the overtime exemption for “white collar” employees?

Currently, there is an exemption under the Fair Labor Standards Act for employees in certain categories of employment (administrative, professional, executive, etc.) from regulations  regarding overtime pay. If those employees perform certain defined duties and meet a minimum salary standard, employers do not have to pay a time and a half hourly rate when those employees exceed 40 hours in a workweek. That minimum salary is currently $455 a week, or $23,600 per year. That minimum is very low, considering that it is meant to exempt higher-level employees in “white collar” jobs who are ostensibly compensated for their overtime hours through higher pay. The president directed the Department of Labor to revise those standards, and the DOL recently released a Notice of Proposed Rulemaking that raised the minimum salary to the 40th percentile of wages, which will likely be $970 per week ($50,440 per year) when the regulation takes effect.

When will this regulation take effect?

The open comment period closes in early September, and a final rule could be issued before the end of the year. However, the DOL itself has stated that the final rule will likely be released sometime in 2016.

Will this exemption salary level stay the same as in years past?

The DOL is looking to create a mechanism to adjust the minimum salary level to keep up with inflation, wage growth or cost of living, so the minimum salary will likely fluctuate upwards with time. There are currently two mechanisms the DOL is evaluating for doing this: 1. Keeping the minimum salary set at all times to the current 40th percentile of all wages, and 2. Adjusting the minimum salary with measurements set by the Consumer Price Index for All Urban Areas, which is a measure of inflation.

How should employers prepare?

It is imperative that employers begin to prepare for these changes now. First, employers should conduct an internal audit to determine which employees will be affected by an increase in the minimum salary for overtime exemptions. Employers should use a higher figure than the $50, 440 minimum salary in the first year, as this number will likely rise over time. Estimating with a higher number will provide employers a few years of breathing room for compliance with the regulations. ODaily Time Record With Blank Payroll Time Sheetnce employers have determined which employees will now be non-exempt under the rules, employers should decide to either raise the salaries of those employees to a level where they are still exempt from overtime pay or determine how to track the hours of those employees to provide them with the overtime pay they’ll require when applicable. Employers should also reevaluate their overtime policies (including other work time not generally accounted for, such as answering emails or taking calls after work hours) and mechanisms for tracking employee hours. Finally, employers need to budget for the changes.

What are the dangers of misclassification?

The Department of Labor looks heavily at employee classification, and it can conduct an audit either based on a tip or under its own auspices. Employers that misclassify employees are subject to penalties and liability to those employees, including back wages, liquated damages, attorney’s fees and court costs. There is a two year statute of limitations for failure to pay overtime, and a three year period if the violation was intentional. Recent penalties against employers have been in the millions of dollars, so these violations can add up.

We hope that all attendees found the webinar helpful and insightful. If you are an employer with questions and concerns about the new overtime regulations, please don’t hesitate to contact us!

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C. Effinger

Cynthia L. Effinger, attorney with McBrayer, McGinnis, Leslie & Kirkland, PLLC is located in the firm’s Louisville office. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. Her employment law practice is focused on drafting employment manuals and policies, social media, wage and hour, non-compete agreements and workplace discrimination. Ms. Effinger can be reached at ceffinger@mmlk.com or (502) 327-5400.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

NLRB Protects a New Kind of Employee Activity: Worrying About Your Job

The National Labor Relations Board (“NLRB”) has been on a roll in recent years, protecting such employee activity as complaining on Facebook or even hitting the “Like” button. In the case of Sabo, Inc.¸ the NLRB recently ruled that letting other employees know about an open position and speculating on terminations falls within a category of concerted employee activity protected by the National Labor Relations Act (“NLRA”).[1]

Two work colleagues sat together talking

In Sabo, the employee, LaDonna George, drove a route for a vending machine company. The day after attending her father’s burial and upon learning that her request for a couple days off the following week was denied, she became emotional and unable to stay at work, scrawling a note to her employer and leaving early. On returning to the job the following week, George struck up a conversation with a fellow driver, Steve Boros, in which she mentioned having seen an employment ad online for a route driver, speculating that it was placed by their employer and implying that it might be because one of the route drivers was about to be fired. Boros believed that he was the one to be fired and approached the employer about it. The employer then subsequently fired George for other employment infractions as well as spreading gossip and telling the other employees they were about to be fired.

The three-member panel of the NLRB found that Section 7 of the NLRA protects George’s right to discuss workplace conditions, and that by firing her, the employer violated Section 8(a)(1), which prohibits interfering with an employee’s rights under Section 7. The panel held that employee communications that are held for the purposes of “mutual aid and protection” are protected, and certain conversations are “inherently concerted” for purposes of the law, such as discussions about wages, etc.[2] In this case, discussions about job security have the same status as wage discussions, and the NLRB panel found that George’s discussion with fellow employees about whether the online job post signaled an upcoming firing is inherently concerted activity, protected by Section 7.

Of course, if this case seems familiar, it’s because this decision, handed down in April of 2015, is a re-deciding of the same case in an opinion that came out from the NLRB panel in 2012. That panel had two members whose appointments were later found unconstitutional by the Supreme Court in NLRB v. Noel Canning, 573 U.S. ___, 134 S.Ct. 2500 (2014), so the panel released this new decision once panel members had been properly appointed. The new decision essentially tracks the outcome of the first decision, which contains the fact pattern and rationale for the decision.

The key takeaway for employers here is that the NLRB has expansively interpreted Section 7, providing broad protections to nearly all manner of employee speech as long as that speech concerns the workplace in any meaningful way. The NLRB does not read the language of Section 7 to include a discussion of future concerted action, further opening the door to categories of inherently concerted activity and speech. In other words, employment decisions based upon mere employee discussions in either the physical or the digital realm should be highly suspect. For assistance with your workplace policies, or training on employer best practices, contact the attorneys of McBrayer.

Luke A. Wingfield Luke Wingfieldis an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Wingfield concentrates his practice in employment law, insurance defense, litigation and administrative law. He is located in the firm’s Lexington office and can be reached at lwingfield@mmlk.com or at (859) 231-8780. 

This article is intended as a summary of federal and state law and does not constitute legal advice.

[1] Sabo, Inc., 362 N.L.R.B. 81

[2] Sabo, Inc., 359 N.L.R.B. 36 at 3

The Obergefell Decision and Employers

The recent United States Supreme Court decision in Obergefell v. Hodges significantly altered the legal landscape with respect to same-sex marriages, finding that the Fourteenth Amendment to the United States Constitution requires all states to both license in-state same-sex marriages and recognize valid same-sex marriages performed out-of-state. The Court did not, however, go so far as to reach issues such as discrimination in employment or public accommodation. So, while legal same-sex marriage is the law of the land, those newly-married couples may face legal uncertainty when it comes to discrimination in public accommodations or their place of employment, unless contravening state law applies. That said, there are still several ways that the Obergefell decision and its counterpart, United States v. Windsor, will affect employers and employees.

Wedding Rings 3DAs an initial matter, Windsor changed how federal benefits applied to same-sex couples. Specifically, the Department of Labor published a final rule in February that defined a “spouse” for purposes of the Family and Medical Leave Act (“FMLA”) to include same-sex spouses if their marriage was legal in the place of celebration. Thus, employees can now take FMLA leave to care for sick or injured same-sex spouses. In addition, FMLA now provides leave for employees when a child is born or adopted, and Obergefell opened the door to more adoptions by same-sex married couples, which are now legal in the state of Kentucky.

The real issue for employers is how to treat same-sex spouses for purposes of employee benefits. Many employers offer benefits for employee spouses, but these benefits are not mandatory under state or federal law. Private business benefits plans covered by the Employee Retirement Income Security Act (“ERISA”) are required to provide qualified joint and survivor annuities (“QJSA”) as a form of retirement benefits in the case of all married employees. While the terms “spouse” and “marriage” include all legally-married same-sex spouses, ERISA allows private employers that choose to sponsor an employee health plan to determine who is an “eligible dependent” for the provision of health benefits. However, benefit plans that include exclusionary language and offer benefits only to opposite-sex spouses may come into conflict with what is now the legal definition of the word “spouse” in Kentucky, and employers should be wary of continuing policies that discriminate between same-sex and opposite-sex couples for the purposes of employee benefits.

Obergefell, Title VII of the Civil Rights Act of 1964, and Kentucky state law do not explicitly include same-sex individuals as a protected class for purposes of employment discrimination. However, employers should still be cautious and consider any local laws that prohibit discrimination in employment or public accommodations on the basis of sexual orientation or gender identity. In fact, the Equal Employment Opportunity Commission (“EEOC”) has already taken the position that any discrimination against LGBT employees is impermissible sex discrimination based on Title VII.

Although it will take some time for the legal consequences of Obergefell to become clear, employers should expect discrimination protections to expand.

For more information on how the Obergefell decision affects employers in Kentucky, contact the attorneys of McBrayer.

Amanda StubblefieldAmanda B. Stubblefield joined McBrayer as an Associate in 2014 as a member of the litigation department. She received her J.D. from the University of Kentucky College of Law in May of 2014 and was elected to the Order of the Coif. Ms. Stubblefield focuses her practice on general litigation, administrative law, and employment law.

This article is intended as a summary of state and federal law and does not constitute legal advice.

Does your ADA accommodation have to be perfect, or can it just get the job done?

The Americans with Disabilities Act (“ADA”) requires that employers provide “reasonable accommodations” to those with disabilities to perform the essential functions of their jobs. These accommodations cannot impose an undue hardship on the employer, however. This necessarily raises the question as to whether an accommodation must be the accommodation a disabled employee requests or if an employer may substitute an accommodation that reasonably facilitates the employee in his or her employment. The Second Circuit, in the case of Noll v. IBM, recently sided with the employer, ruling that an employee is not entitled to the “perfect” accommodation, merely a reasonable one.

Noll is an employee of IBM, which provided American Sign Language (“ASL”) interpreters to deaf employees on an as-needed basis. IBM also operates an intranet where employees can access and post pertinent videos for training and other purposes. Noll requested that these videos all be transcribed and captioned. IBM objected, noting that these videos may be posted at any time by any employee, and they do at a prodigious rate (in one quarter of 2013, 3500-4000 video files were added to the intranet). Instead, IBM provided text transcriptions of the videos as needed and offered ASL interpreters to interpret the videos in real time for deaf employees. Noll countered that delays in the transcript request process and the inconvenience of having to read along with a video render the accommodation unacceptable.

The Second Circuit disagreed with Noll, suggesting that flaws in an accommodation system “do not invalidate the system itself as a reasonable accommodation.”[1] Noll v. IBM¸No. 1:2012-cv-06239 (2nd Cir. 2015) at 5. As Noll had conceded that live interpreters were acceptable for business meetings, the court found that there was no real difference between such a meeting and a video. Also, despite IBM’s failure to engage in an interactive process to create a new reasonable accommodation, the court found that there is a difference between refusing to undertake an accommodation and refusal to explore every other possible accommodation when the accommodation already provided was reasonable.

Disabled. Single flat icon on white background. Vector illustration.

The Sixth Circuit (which includes Kentucky) recently touched on the issue of whether employees are entitled to the accommodation they seek in the case of EEOC v. Ford Motor Company. In that case, an employee with irritable bowel syndrome sought an accommodation to telecommute on days when her illness became difficult. Ford contended that telecommuting would hinder the performance of essential functions of her job. The court held that the employee is not entitled to decide that the employee’s preferred accommodation is the only reasonable one, and that if an accommodation interfered with essential job functions, the employee is not qualified for such an accommodation under the ADA. Specifically, the Sixth Circuit states, “[t]he Americans with Disabilities Act (ADA) requires employers to reasonably accommodate their disabled employees; it does not endow all disabled persons with a job—or job schedule—of their choosing.” Equal Employment Opportunity Commission v. Ford Motor Company, No. 12-2484 (6th Cir. Apr. 10, 2015) at 1.

The tenor of these cases suggest that the ADA draws a line between accommodations that will be effective versus accommodations that provide the employee with the highest degree of accommodation, and that employers have some leeway in making these determinations. Employers should still be wary of refusing employee accommodations before engaging in an interactive process of determining how best to accommodate the disabled employee. The attorneys of McBrayer can guide employers in that process, protecting employers and increasing the efficacy, safety and satisfaction of the workplace.

 D. TrimbleAndrew H. Trimble is an associate in the Lexington, Kentucky office. Mr. Trimble focuses practice on general litigation, employment law and criminal defense. Mr. Trimble can be reached at (859) 231-8780, ext. 136 or atrimble@mmlk.com.

ALERT – Department of Labor Set to Change Overtime Exemption Regulations under the FLSA

On July 6th, the Department of Labor (“DOL”) issued a Notice of Proposed Rulemaking with the potential to affect an untold number of employers. The proposed rule, published in the Federal Register at 80 FR 38515, drastically changes the DOL’s interpretation of the Fair Labor Standards Act with respect to overtime exemptions. The current rule, put in place in 2004, exempts employees with salaries of at least $455 a week ($23,660 a year) and who perform executive, administrative, professional, outside sales and computer duties from overtime regulations.

Daily Time Record With Blank Payroll Time SheetIn a Presidential Memorandum in March of 2014, President Obama directed the DOL to update the overtime exemption regulations concerning both the salary requirements and job classifications. The proposed rule would raise the salary exemption level to the 40th percentile of weekly earnings for full-time salaried workers as well as seek comment on how to change and adapt the “standard duties test” to determine which employees are eligible for the exemption. Using 2013 data, the salary exemption figure would be $921 per week ($47,892 per year). The DOL estimates that this figure will rise to $970 a week by 2016, the likely first year of the final rule. In addition, Highly Compensated Employees (“HCE”) – those who make over $100,000 a year but less than $122, 148 – may be eligible for overtime if they meet the minimal HCE duties test but not a standard duties test.

The DOL estimates that 4.6 million workers and as many as 36,000 HCE workers will be newly qualified for overtime in the first year of this new rule, and the average annualized direct employer costs would total around a quarter of a billion dollars per year.

The comment period for the proposed rule ends on September 4, 2015, and a final rule will be issued sometime thereafter, taking effect 30-90 days from issuance. This means there is a high probability that the final rule will begin to effect employers as early as 2016, so employers should update their overtime policies and revisit employee classification as soon as possible to comply with the eventual rule.

Cindy EffingerCynthia L. Effinger, attorney with McBrayer, McGinnis, Leslie & Kirkland, PLLC is located in the firm’s Louisville office. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. Her employment law practice is focused on drafting employment manuals and policies, social media, wage and hour, non-compete agreements and workplace discrimination. Ms. Effinger can be reached at ceffinger@mmlk.com or (502) 327-5400.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

FLSA Wage Increase

President Obama announced this week a proposed rule change to the Fair Labor Standards Act (“FLSA”) that will affect every business.  The proposed rule change will increase the minimum required salary for employees to qualify as exempt under the FLSA from $455 a week to $970 a week.  Accordingly, this rule will require employers to pay overtime to those employees

vector live report concept, live news, hands of journalists with microphones and tape recorders

earning $50,440 a year ($970 a week) or less.  It will expand the number of people eligible for overtime from approximately 8 percent of the salaried workforce to about 40 percent according to the fact sheet provided by the Department of Labor.  Under this rule, 5 million more Americas will be entitled to overtime pay.

The new regulation is the most sweeping policy undertaken by the President to assist the middle class, and the most ambitious intervention in the wage economy in at least a decade. Administration aides have warned the new regulation will not always lead to wage increase because in many instances employers might cut back employee hours worked rather than pay the required time-and-a-half. Conservatives and business groups are fiercely opposed to the new policy, which means this executive order, like all executive policies, will be challenged in court and most likely in Congress.

Wage and hour laws are also under reform in Louisville, Kentucky.  This week, a new minimum wage ordinance took place raising wages from $7.25 an hour to $7.75 an hour. On June 29, 2015, a circuit court judge upheld ruled the City’s minimum wage ordinance, but that decision is likely to be appealed.  The law will gradually increase the city’s minimum wage to $9 an hour by July 1, 2017.

In light of these new and proposed regulations, employers will have many considerations.  In Louisville, the main consideration is budgetary.  However, when the FLSA is amended, employers will have to review all current exempt positions and determine if under the new minimum salary requirements those employees will remain exempt.  This, too, has obvious budgetary implications, but it will also impact the overall management and operations of the business.  Employers will be faced with determining whether to provide a salary increase to those employees making less than $970 a week to be within the minimum weekly salary or change their classification to non-exempt allowing for overtime compensation.  This may also require a review of a company’s employee policy manual with regard to when overtime will be approved.

We will be following the changes to the FLSA closely and are available to provide guidance on these issues.

C. Effinger

Cynthia L. Effinger, attorney with McBrayer, McGinnis, Leslie & Kirkland, PLLC is located in the firm’s Louisville office. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. Her employment law practice is focused on drafting employment manuals and policies, social media, wage and hour, non-compete agreements and workplace discrimination. Ms. Effinger can be reached at ceffinger@mmlk.com or (502) 327-5400.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

Gone, But Not Forgotten – A Deactivated Facebook Account Can Be Discoverable

Courts have long grappled with social media in a legal context. The struggle to understand social media issues — and to craft coherent applicable legal policy — renders Crowe v. Marquette Transportation Co. Gulf-Inland, LLC amusing to show how the less-than-honest actions of an employee-plaintiff can make these difficult legal questions fairly simple for a court.

In May of 2014, Brannon Crowe sued Marquette Transportation, his employer, for an injury to his knee that he claimed to have suffered in an accident at work. Interestingly, however, Crowe allegedly sent a co-worker a message on Facebook which stated that he received the injury during a fishing trip, and not at work. When confronted with the message to the co-worker by opposing counsel during a deposition, Crowe stated the account the message was sent from was Brannon “CroWe,” and it couldn’t be his because he didn’t have a capital “W” in his last name.

Bucharest Romania - Jan 23 2014: Photo of Facebook web page. Facebook is an online social networking service. Its name comes from a colloquialism for the directory given to students at some American universities.

At the deposition, Crowe also said that he no longer had an account after the previous October, and his response to a discovery request for the contents of his account was that, in addition to such a request being vague, overbroad and unduly burdensome, he didn’t presently have a Facebook account. The court ordered Crowe to provide the contents of his account for the court to review in camera to determine if the contents of the account should indeed be discoverable. Later, however, Crowe’s counsel submitted to the court 4,000 pages of Facebook account information from the Brannon CroWe account, with an interesting wrinkle – the records of the account indicate that the account was deactivated – not deleted – four days after the discovery request for the account’s contents.

The court was understandably unamused, and suggested that the in camera review of 4,000 pages of Facebook account information would be a waste of time since this account information should have been produced earlier in response to Marquette’s request. The contradiction with Crowe’s testimony alone was enough to render the account information discoverable. Rather than review the documents fully in camera, the court ordered Crowe to turn over every single page of the Facebook account history to Marquette, as well as any login information for any Facebook accounts Crowe had at that time or in the past, and Crowe was ordered to consent to any authorization for Marquette to subpoena his Facebook information.

In effect, Crowe made the contents of the account discoverable through his attempts to keep it from being discovered, and that made the court’s decision on the issue clear. Luckily for Crowe, he only deactivated the account rather than deleted it, since he had a duty to preserve evidence in litigation. Spoliation of evidence is the negligent or intentional destruction or alteration of evidence that may be required in a lawsuit. Even though the evidence doesn’t look good for Crowe in the present case, had he deleted the account entirely, he would have been subject to the spoliation inference, which is a negative evidentiary inference in favor of the opposing party. A showing that a party has destroyed relevant evidence can lead to punitive sanctions against him as well.

Social media provides an abundant resource of data about a litigant, and both employers and employees alike should be a wary of even private messages sent to others in that context. When employees raise issues against employers in a legal setting, their interactions with coworkers on social media may be discoverable. This case also raises questions about how far those involved in legal proceedings can or should go to protect themselves with regard to their social media accounts. As courts become increasingly comfortable with the legal implications of social media and technology, issues such as evidence spoliation through deactivation and deletion will become more and more prominent as a trap for the unwary.

The legal issues surrounding social media accounts and courts are myriad and complex. For help in making sense of it all, contact the attorneys at McBrayer.

Brittany KochBrittany Blackburn Koch is an associate attorney practicing in the Lexington office of McBrayer, McGinnis, Leslie & Kirkland, PLLC. She is a native of Pikeville, Kentucky, and a graduate of Centre College and the University of Kentucky College of Law. Ms. Koch’s practice focuses primarily on family law, employment law, criminal law and civil litigation. She may be reached at bkoch@mmlk.com or at (859) 231-8780, ext. 300.

This article is intended as a summary of  federal and state law and does not constitute legal advice.