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New Administrator’s Interpretation Could Expand FMLA Coverage
Under the Family Medical Leave Act (“FMLA”), eligible employees are provided up to twelve weeks of unpaid, job-protected leave per year. Eligible employees can take FMLA leave for, among other things, the birth and care of a newborn child. Although the FMLA broadly defines a “son or daughter” under this provision to include a “biological, adopted, or foster child, a stepchild, a legal ward, or a child of a person standing in loco parentis”, it does not expressly confirm whether employees may take leave to care for a son or daughter over the age of eighteen.
In reality, many parents remain the responsible caregiver to an adult child who cannot care for themselves due to a mental or physical disability. For these parents, the age of eighteen does not signal the end of their care duties; indeed, the care they provide may continue for many more decades.
The Department of Labor (“DOL”) recently issued an Administrator’s Interpretation wherein it clarified that FMLA leave may be available for adult sons and daughters. In order to qualify for FMLA leave to care for an adult child, the adult child must; (1) have a disability as defined by the Americans with Disabilities Act (“ADA”), (2) have a serious health condition, (3) be incapable of self care due to his or her disability, and (4) be in need of care due to their health condition.
Prior to issuing this interpretation there was significant debate as to whether the adult child’s disability must have developed before the child reached age 18. The Administrator’s Interpretation now clarifies that the age of onset of the disability is irrelevant. Additionally, the Interpretation reinforces that the ADA, as amended in 2008, must be used to when defining “disability.”
The Administrator’s Interpretation will certainly lead to more leave requests for employees seeking time off to care for adult children with special needs and employers should be prepared to accommodate employees under the new Interpretation. Accordingly, employers would be well-served to review this Administrative Interpretation and to update policies and manuals as necessary to become compliant. In particular, employers should give special attention to ensure that the adult child triggers all four elements before a leave is approved.
W. Chapman Hopkins is an associate with McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Hopkins concentrates his practice in litigation, with a focus on employment, business, and equine law. He is located in the firm’s Lexington office and can be reached at chopkins@mmlk.com or at (859) 231-8780.
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.
Employers and the “Contraceptive Mandate”
While the Patient Protection and Affordable Care Act (“ACA”) has been largely left to health care lawyers to dissect and review, the “contraceptive mandate” has gained wide media publicity and many employers are interested in how these particular regulations will affect them.
First, some background: one of the ACA’s many mandates was that employers must offer individual and group health plans for certain preventive services to a plan participant with zero cost-sharing. In August 2011, there were additional preventive services added, one of which required contraception coverage to women. This requirement is largely referred to as the “contraceptive mandate” and it encompasses all FDA-approved contraceptive methods. The requirement that private, non-grandfathered health insurance plans provide coverage for preventive services, including contraceptive coverage, is currently in effect for plan or policy years beginning on or after August 1, 2012. The law exempted certain non-profit religious employers that offered insurance to their employees from the requirement, and others that did not qualify for the exemption have a one-year temporary safe harbor, until Aug. 1, 2013, to comply.
The regulation first exempted from the mandate only churches, synagogues, mosques, and other strictly worship-related institutions whose sole function was serving those who share their religious beliefs. A flurry of lawsuits followed once the contraceptive mandate was instituted, initiated by non-profit entities like hospitals and colleges, non-qualifying religious institutions, and for-profit companies who religiously objected to providing such services for employees.
On February 1st, the Internal Revenue Service, Department of Labor, and the Department of Health and Human Services issued new proposed rules that sought to reach a compromise with these objectors:
New definition of “religious employer”:
Included in the proposal is a clarification of the definition of “religious employer.” The simple definition of religious employer for purposes of the exemption would now follow the Internal Revenue Code. This proposed change is to clarify that a house of worship would not be excluded from the exemption because it provides charitable social services (like a soup kitchen) to persons of different religious faiths or employees persons of different faiths.
Accommodations for religious institutions and non-profit organizations:
Additionally, under the proposed rule, religious-affiliated non-profit organizations and religious institutions (that previously did not qualify) would not be forced to pay for employee contraceptives. Instead, they would notify their insurer of their objection, and the insurer automatically would be required to notify the employees that it will provide the coverage without cost sharing or other charges through separate individual health insurance policies.
For religious-affiliated workplaces that self-insure, the third party administrator would be expected to work with an insurer to arrange no-cost contraceptive coverage through separate individual health insurance policies.
The cost of providing this separate coverage would be shouldered by the insurance companies. It is possible the companies will recoup some of the costs through lower health care expenses as a result of fewer births. It should be noted that the proposed rules do not address objections by profit-making companies owned by religious individuals or families.
The validity of the contraceptive mandate may ultimately be decided by the Supreme Court. The Department of Justice has been defending against the numerous lawsuits across the country with mixed results, signaling that the Circuits have their own views on its constitutionality.
We’ll keep you updated on how this plays out; it presents a fascinating clash of employment law, freedom of religion, and health care concerns that all employers should know about.
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.
Your Employees Get Tips, So Should You
Some tips for complying with state and federal wage and hour laws for tipped employees.
At the beginning of this year, I explained to a young child how important it is to leave a tip for your waiter/waitress, I explained that a tip is part of his/her pay, helps to pay his/her bills, and that you might choose to leave a larger tip for excellent service. I’m pretty sure that the message got through, because each time we’ve eaten out since then, that same child calculates the tip and exclaims his rationale — “She was really nice,” “He brought lots of drinks,” “She smiled a lot” – for an extraordinary tip. I can’t help but wish that employers gave tips this much attention.
If you employ individuals who receive tips as part of their compensation, it is imperative that you understand your obligations with regard to minimum wage calculations, overtime pay and other tipping policies. Violations of wage and hour laws related to employee tips can have significant consequences to your immediate bottom line as well as to your reputation.
Here are a few important points to consider:
– In Kentucky, you are required to pay your employees at least regular minimum wage, unless they are engaged in an occupation in which more than $30 dollars per month is customarily and regularly received in tips. For those employees, you may be able to pay a minimum wage of $2.13/hr (adjusted with the regular federal minimum wage), but only if records can establish that for each week in which you pay this reduced rate, the employee’s salary plus tips is not less than the regular minimum wage.
– You may not require your employees to remit any gratuity to you, the employer, except for the purpose of withholding amounts required by state or federal law.
– Though tipping pools may seem like a great way to share the love amongst your service employees or to even out customer distribution (seating sections, number of tables, number of customers, preferred hours, etc.), Kentucky law prohibits involuntary tipping pools. Voluntary tipping pools are permitted, and you may inform your new employees about the customary tipping arrangements followed by most employees at your company. You may also provide a place for safekeeping of funds placed in a voluntary tipping pool, but there are specific laws and regulations which must be honored with respect to segregation of funds and examination by pool participants.
– It is important that you keep good records of your wages paid, including a record of cash wages paid to a tipped employee. Again, you must be able to show that your tipped employees have received at least the regular minimum wage after consideration of tips and salary. If you need employee assistance to get the information you need to keep the requisite records, make sure your written policies and procedures are clear, and make sure you train tipped employees on such procedures and record keeping.
– Tipped employees are generally not exempt from overtime wage and hour laws, so it is equally important that you are aware of applicable laws and regulations surrounding overtime compensation.
Finally, to the extent possible, make sure your tipped employees feel they are being treated fairly. Explaining employees’ rights, implementing and following clear policies and providing an avenue for grievances can help to create this sense of fairness. While this is more of a practical point than a way to avoid technical legal violations, it is nearly impossible to overstate the effect that a well-placed social media campaign by an angry employee can have on your business. Recently, Lynn’s Paradise Cafe, a local restaurant favorite in Louisville, Kentucky learned this lesson first-hand. After allegedly implementing a new policy requiring that tipped employees come to work holding at least $100.00 in cash at all times, including at the start of their shift, in order to “tip out” employees. A recently terminated employee complained on the Facebook page of a local news channel about her former employer’s policy, claiming that she could not afford to comply with the policy. This, of course, invited several comments from the news channel’s followers, some regarding the illegality of mandatory tipping pools and some generally bashing the restaurant. While the truth about Lynn’s policies and practices not fully known, there is little doubt that the restaurant’s reputation was harmed by the social media posts. Lynn’s closed abruptly shortly thereafter, after twenty-two years of business.
If you employ individuals who receive tips as part of their compensation, it is important that you fully understand these points, as well as several other relevant state and federal wage and hour laws and regulations. You may wish to consult with counsel to make sure that you haven’t made any inaccurate assumptions about how to pay your tipped employees.
Ryan Colleen Daugherty is an associate and member of the firm’s Litigation group. She focuses on employment and other commercial litigation, as well as estate administration and planning matters. She can be reach at rdaugherty@mmlk.com or at (859) 231-8780.
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.
Inclement Weather and Time Off Issues: To Pay or Not to Pay
With winter closing in, the possibility of bad weather brings potential attendance issues to the forefront of our minds. Icy roads and snow storms in Kentucky often cause delays and closings of not only schools but also businesses. Of course safety is the primary concern for everyone in extreme weather conditions, but employers must think beyond the logistics of employees getting to work or staying home. Absences due to bad weather impact the productivity of a business, and raise questions regarding the calculation of pay and how an employee’s time should be tracked. These issues are further complicated when dealing with a mix of exempt and non-exempt employees, however the U.S. Department of Labor (DOL) does offer some guidelines to assist an employer in determining their rights and responsibilities when bad weather impacts employee attendance.
Let’s consider several scenarios:
The business decides to close due to bad weather and sends non-exempt employees home: Employers are required to pay hourly employees only for the hours worked. Under the Fair Labor Standards Act (FLSA), an employer is not obligated to pay for hours not worked. Therefore, non-exempt employees when unable to attend work, or sent home due to weather do not have to be compensated for the time off. This is a fairly straightforward and uncomplicated practice, unlike dealing with the complex nature of exempt employees.
The business is open, but an exempt employee chooses not to come in: An exempt employee almost always has to be paid, in any circumstance. Under the FLSA an employer is prohibited from docking the pay of an exempt employee who chooses not to come into work for inclement weather. In this position as well, any business that decides to close due to weather is required to pay exempt employees their regular salaries. The only instance in which an employer can deduct pay from a salaried exempt employee is if the facility is closed for more than a week. Another point to note is that the FLSA does not require that an employer provide vacation or leave time. Therefore there is nothing to prevent the employer from deducting the inclement weather days off from the employees’ paid time off or vacation to cover the missed work. This sounds on its surface like a positive solution to the problem. However, complications arise when an employee has not accrued enough time off or when they have already scheduled and been approved to take their remaining time off at a later date. In both cases, an employer is still restricted from deducting the difference from the employees’ salary. The days off can be deducted from future earned leave. However, serious consideration should be given to instituting this practice as it complicates the employee/employer relationship and cause morale issues which can lead to a decline in productivity or a loss of good employees.
Employer’s Plan: An inclement weather policy should be a standard document in all employee handbooks. Now is the time to review that policy and consider whether it covers all of the issues that need to be addressed to protect both the employees and the employer. Several points to consider when reviewing the policy both for its applicability and validity are as follows:
1) How are closures communicated and who is the decision-maker?
2) Can employees who are faced with daycare or school closings bring their children to the workplace?
3) Are employees permitted to work from home? What conditions apply in this instance?
4) Outline eligibility for pay, how it is determined, and if paid time off will be applied for the absence(s).
5) Will non-exempt employees be given an opportunity to make up some or all of the time missed? Will this occur within the same pay period?
Whatever the forecast this winter, with proper planning, understanding the legal obligations and a clear and concise policy an employer can reduce the likelihood of confusion created by weather-related absences. So plan now for Jack Frost, and you’ll be able to enjoy the winter wonderland without the stress of the question “to pay or not to pay.”
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.
This article is intended as a summary of newly enacted federal law and does not constitute legal advice.
CONSEQUENCES OF MISCLASSIFYING WORKERS AS INDEPENDENT CONTRACTORS
Over the past several years, more and more employers are attempting to cut costs by hiring individuals as independent contractors as opposed to employees. This trend, however, has caught the attention of the Federal Department of Labor, which this year has again increased its budget to “detect and deter” misclassification of workers as independent contractors. This budget also includes the addition of dozens of new full time employees dedicated to investigate possible violations resulting from misclassification.
Misclassification occurs when businesses hire independent contractors to do the work that an employee would normally do. In order to determine whether you have properly classified a worker, it is helpful to understand some of the general characteristics of each type of worker:
EMPLOYEE
- Typically does not have a contract.
- Is paid by the hour.
- Tools to do the job are provided by the Employer.
- Is reimbursed expenses.
- The work is controlled by the employer in terms of hour, nature, method, and manner of work.
CONTRACTOR
- Typically is hired under a written contract.
- Is paid by the job or project.
- Provides own tools and supplies.
- Expenses related to the project are included in the contract price.
- Is largely left unsupervised to complete the job or project.
If you have misclassified workers, you can expect fines and penalties from nearly every government agency that oversees employees – from the IRS, to the Department of Labor, to the Unemployment Commission, to the Department of Workers’ Claims. Each of these departments loses tax revenue when the individuals are misclassified.
To avoid a costly and time-consuming investigation, any business owner who hires independent contractors should immediately conduct a self-audit to determine if the business is misclassifying its workers. This is true even if you believe that you are not vulnerable. All it takes is one worker making an anonymous call to the state or federal department of labor to trigger an investigation into your hiring practices. Such an investigation is likely to result in fines and costs which exceed any potential cost savings.
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.
The Professional Overtime Exemption
Earlier this month, Wal-Mart agreed to pay over $4.8 million in back wages and damages to employees across the country for failure to pay overtime wages as a result of an investigation of the U.S. Department of Labor. The Department of Labor found that Wal-Mart misclassified over 4,500 managers as exempt from federal regulations requiring overtime wages to be paid for work over forty hours per week.
If employers are to take anything away from the Wal-Mart investigation, it is that the duties of each position will govern whether an employee is subject to receiving overtime regulations. At least annually, employers should take the time to re-examine their classification of certain employees to ensure that they are not running afoul of federal regulations. A common area of concern is classifying employees who hold the title of manager, and who are paid a salary, as exempt overtime regulations without conducting any sort of analysis of the duties that the individual manager is required to perform.
To further complicate this analysis is the prevalent use of smartphones and twenty-four hour access to work emails. Many employers require their managers to maintain email communication beyond normal working hours. While this poses no problems for exempt managers, if there is a misclassification of that employee, employers can find themselves liable for overtime wages for work performed using a smartphone after normal working hours.
Misclassification of employees is one of the largest (and most costly) problems an employer can face and is a growing area for litigation. The Department of Labor does not just target large, national employers such as Wal-Mart, but companies of every size should also be concerned.
Cynthia L. Effinger, an Associate of the firm, joined McBrayer, McGinnis, Leslie & Kirkland, PLLC in 2012. Ms. Effinger has a broad range of legal experience gained through 13 years of practice throughout the Commonwealth of Kentucky where her clients conduct business. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. She also has experience with First Amendment litigation, securities litigation and complex litigation. Ms. Effinger can be reached at ceffinger@mmlk.com or at (502) 327-5400, ext. 316.
