Author: Scott Horton

Scott has been practicing Labor & Employment law in New York for almost 20 years. He has represented over 400 employers and authored 100s of articles and presentations and wrote the book New York Management Law: The Practical Guide to Employment Law for Business Owners and Managers. Nothing on this blog can be considered legal advice. If you want legal advice, you need to retain an attorney.

Students Out of Unions

NLRB Proposes to Keep Students Out of Unions

On September 23, 2019, the National Labor Relations Board (NLRB) issued a proposed rule that would address whether college and university students who work for their schools can join unions. This rulemaking is a new approach to resolving a labor law question that has not had a consistent answer in recent decades. The proposed rule would enable institutions of higher education to keep their students out of unions.

Are Students Employees?

Many students hold jobs with their schools. For example, many graduate students serve as teaching assistants. The students often receive compensation for this work, whether direct compensation or credit toward their education costs.

The question of interest under the National Labor Relations Act (NLRA) is whether these students qualify as “employees” who have the right to form or join a union. Specifically, that is, a union that would negotiate on their behalf with the school over the terms and conditions of their employment.

This question has even come up in recent years regarding college football players. Should they be able to unionize because they receive a scholarship to play football?

(Note: The NLRB only has jurisdiction over private, non-governmental employers. Accordingly, public colleges and universities are outside its jurisdiction. However, the many private schools in the country are within its purview.)

Historical Approach

For many years, the NLRB has interpreted the NLRA primarily through adjudicating cases. It rarely used formal rulemaking to establish legally binding interpretations of the law. The Board’s adjudicative approach has increasingly produced a back-and-forth pendulum on many contentious issues. As a result, the labor law’s protections depend more and more on which party controls the NLRB.

In 1974, the NLRB ruled in a case involving Stanford University that graduate student research assistants are not “employees”. Instead, the Board ruled, they were “primarily students”. This decision kept college students out of unions for more than 25 years.

Then, in 2000, the NLRB held for the first time that certain New York University graduate students were employees under the NLRA. That conclusion was reversed, however, just 4 years later in a case involving Brown University.

Most recently, the NLRB went back in the direction of its NYU decision, and beyond. In 2016, the Board ruled that both graduate and undergraduate students at Columbia University could qualify for the NLRA’s protections as employees, even if their positions were externally funded.

Proposed Rule to Exclude Students from Unions

Seeking to stop the bouncing ball, the current NLRB has shifted toward rulemaking on significant labor policy issues. On the student-employee issue, the Republican Board majority takes a position that would keep students out of unions. In other words, the NLRB would not assert jurisdiction over them under the NLRA.

As an exception to standard jurisdiction over private colleges and universities, the proposed rule provides:

“Students who perform any services, including, but not limited to, teaching or research assistance, at a private college or university in connection with their undergraduate or graduate studies are not employees within the meaning of Section 2(3) of the [NLRA].”

Comment Period

As required under federal law, the NLRB has allowed time for the public to comment on the proposed rule.

Interested parties can file comments up until December 16, 2019. In addition, comments responding to other comments can be filed until December 30, 2019.

Given these deadlines, the NLRB will not be able to issue a final rule this year. However, it is likely there will be a final rule that will keep college and university students out of unions beginning in 2020.

What This Means for Employers

If you work for a private college or university, the potential impact is somewhat apparent . . . at least in the short term. With this change, students who work for the school will not have rights under the NLRA to engage in collective activity for their mutual aid and protection. They will not be able to join unions if the employer objects. But, if the political tides shift in Washington, the rule could be eliminated or revised in the future.

For other private employers, this signals a trend toward pro-employer rulemaking by the NLRB. Generally, this is a positive sign of greater leeway to run your business. But, again, the trend could be shortlived. Employers will continue to be at the mercy of the party that controls the NLRB–generally, the one that holds the Presidency. So, you can never get too comfortable in your understanding of the NLRA’s impact on your workplace.

 

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Federal Overtime Rules

Federal Overtime Rules Won’t Change Much in New York

On September 24, 2019, the U.S. Department of Labor finalized long-awaited changes to the federal overtime rules. The rules increase the salary requirement for the most common overtime exemptions. The higher threshold applies throughout the United States, but it does not trump most state overtime requirements. New York already has higher salary requirements for most of its overtime exemptions. Thus, the federal changes won’t force most New York employers to raise wages.

“White Collar” Exemptions

The Fair Labor Standards Act (FLSA) is a federal law requiring employers to pay minimum wage and overtime. Most employees must receive overtime for working over 40 hours in a week. Some exceptions apply. The most prevalent ones are the “white collar” exemptions.

The “white collar” exemptions include the administrative, executive, professional, and outside sales exemptions. All but the outside sales exemption have minimum salary requirements.

To qualify for the administrative, executive, and professional exemptions, most employees must satisfy both duties and salary requirements. (There is no salary requirement for doctors, lawyers, and teachers under the FLSA professional exemption.)

2020 Federal Overtime Rules

Beginning January 1, 2020, the weekly salary requirement for the FLSA administrative, executive, and professional exemptions will increase from $455 to $684. The new threshold is slightly higher than the $679 level first proposed earlier this year. However, it is much lower than the $913 level that the DOL tried to implement under President Obama in 2016.

Nondiscretionary Bonuses and Incentive Payments

Although the salary requirement has always been measured on a weekly basis, there is now a slight exception. For the first time, the new federal overtime rules will allow employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the salary requirement. Employers can review compliance on an annual basis and make a year-end “catch-up” payment if necessary.

Employers can determine the relevant 52-week period (measured consecutively), but must do so in advance. Otherwise, the calendar year is the default. They must make any necessary catch-up payment within one pay period after the end of the chosen 52-week period.

The total 52-week “salary” requirement is $35,568. Of that, up to $3,556.80 could be satisfied by bonuses or other incentive compensation.

Employers may pro-rate the requirement for employees who do not work the entire 52-week period. If an employee leaves employment the employer would need to ensure compliance and make any catch-up payment within one pay period after the end of employment.

Highly Compensated Employees

The FLSA’s special “highly compensated employee” exemption currently requires that the employee receive at least $100,000 in total compensation in a year.

The new federal overtime rules increase that to $107,432 in total annual compensation. The employee must receive at least $684 in salary on a weekly basis.

Earlier this year, the U.S. DOL proposed increasing this threshold much higher to $147,414. By comparison, the 2016 rule would have required annual compensation of at least $134,004.

The “highly compensated employee” exemption applies where the employee meets the compensation threshold and also performs at least one of the duties of an exempt executive, administrative, or professional employee. Most employees who qualify for this exemption would also be eligible for the full executive, administrative, or professional exemption anyway. So there may be relatively few situations where employers really need to increase compensation to maintain this special exemption.

New York’s Overtime Exemptions

The minimum wage varies throughout New York State based on geographic location, among other factors.

Click here for complete charts on the various New York minimum wage rates and overtime exemption salary levels.

For most occupations, the current New York minimum hourly wage ranges from $11.10 for Upstate workers to $15.00 for some employees in New York City.

New York has overtime pay rules that are similar to those found in the FLSA. These include similar exemptions, such as the administrative, executive, and professional exemptions.

New York’s administrative and executive exemptions already require that employees receive a salary higher than $684 per year. However, unlike the FLSA, New York’s professional exemption does not have a salary requirement. That means that some exempt professionals might need a raise to stay exempt in 2020.

A Caveat for Public Employers in New York

Most New York employers are subject to both the federal FLSA and the similar New York State laws.

However, the New York minimum wage and overtime rules don’t apply to governmental entities in the State, with limited exceptions. But the FLSA does.

So, public employers in New York will need to review the federal overtime rules to evaluate the potential impact on their workforces. Most public employees in New York eligible for exemptions already make more than $684 per year. But some, including part-time exempt employees, do not. (The FLSA salary requirement does not decrease for part-time employees.) Preserving exemptions for part-time employees may or may not be important, depending on whether they ever work over 40 hours in a week, which would trigger FLSA overtime obligations.

Act Soon, If Necessary

If you have employees in states where the new federal salary requirement exceeds the applicable state exemption threshold, then you need to be prepared to make changes by January 1, 2020. You will either need to increase compensation or remove the exemption and pay overtime where earned.

In New York, the new federal overtime rules only affect some public employers and professional employees. Most private-sector employers, including non-profits, will just need to focus on maintaining exemptions under New York law.

 

The full notice of the new FLSA regulations is available here:

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees

Classifying People in Your Workplace Webinar

Classifying the People in Your Workforce (Webinar Recap)

On September 24, 2019, Julie Bastian and I presented a complimentary webinar called “Classifying the People in Your Workforce”. For those who couldn’t attend the live webinar, We’re happy to make it available for you to watch at your convenience.

In the webinar, we discuss:

  • Employees vs. Independent Contractors
  • Interns and Volunteers
  • Legal Standards
  • Challenges of Getting it Right
  • Ramifications of Getting it Wrong
  • Documenting the IC Relationship

By default, most workers are employees. Sometimes the circumstances warrant a different arrangement. But there are potentially costly pitfalls of making an improper independent contractor classification.

Don’t have time to watch the whole webinar right now? Click here to download the slides from the webinar.

Why You Should Watch “Classifying the People in Your Workforce”

Many organizations rely on work by non-employees. Or, at least, people that they don’t classify as employees. These other workers can include independent contractors, unpaid interns, and volunteers. And they often include people who legally speaking actually do qualify as employees!

Improper independent contractor classifications can put an employer in violation of numerous legal obligations. These include tax reporting, insurance premiums, overtime requirements, and many more.

State and federal government agencies have obvious financial incentive to police improper worker classifications. Even a single complaint or dispute can bring your entire organization under scrutiny. This webinar will better inform you of factors to consider before considering someone to be an independent contractor. We also discuss how to document a valid IC arrangement.

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