Category: Employment Law

August 31, 2023

DOL Proposes Increased FLSA Exemption Threshold

On August 30, 2023, the Wage and Hour Division of the U.S. Department of Labor announced its intention to propose significant increases in the compensation required for several common minimum wage and overtime exemptions. If adopted following public review and comment, the FLSA exemption threshold for the administrative, executive, and professional exemptions would increase by more than 50% over the current salary requirement. The proposal also seeks an automatic adjustment every three years. In addition, the pay required to qualify for the FLSA’s “highly compensated employee” exemption would also increase substantially.

FLSA Minimum Wage and Overtime Requirements

The Fair Labor Standards Act applies to most employers across the United States. It generally requires that employees receive a minimum wage of at least $7.25 per hour and then receive overtime at time-and-a-half the employee’s regular rate for hours worked beyond 40 in a week. However, there are various exceptions and exemptions from those requirements.

Note that many states and some localities have additional minimum wage and overtime requirements. Employers are often subject to and must comply with both the FLSA and the applicable state/local standards.

“White-Collar” Exemptions

The FLSA permits a series of so-called “white-collar” exemptions that employers commonly rely on in structuring compensation for certain, typically non-manual, workers. The most generally applicable of these are known as the administrative, executive, and professional exemptions.

Under the FLSA, each of these exemptions has a salary basis requirement. To qualify for the exemption, an employee must be paid a salary that usually doesn’t vary based on how much the employee works in a given week.

Currently, the minimum salary for these exemptions is $684 per week ($35,568 annualized).

Proposed FLSA Exemption Threshold

The U.S. DOL has the authority to issue regulations interpreting the FLSA, including its exemptions. The salary requirement has historically been implemented through such administrative rulemaking.

The DOL has now proposed to base the salary requirement on the 35th percentile of weekly earnings of full-time salaried workers in this lowest-wage U.S. Census Region. The South is traditionally and currently the lowest-wage region.

Based on this method, the new FLSA exemption threshold would be $1,059 per week ($55,068 annualized). However, the DOL’s proposal indicates in a footnote that the actual threshold upon adoption of a final rule could be higher. Since some time will pass before the rule is finalized, the 35th percentile earnings in the South may increase. The DOL notes that given its current projection for future quarterly earnings data, the new weekly salary threshold could be up to approximately $100 higher than $1,059 upon adoption.

The proposal would also impose automatic updates to the salary requirement. The DOL would change the amount every three years to maintain the 35th percentile standard.

Highly Compensated Employee Threshold

The administrative, executive, and professional exemptions are not based solely on compensation. Employees’ duties must also meet particular standards. However, the FLSA recognizes an alternative potential exemption for some employees who do not fully meet the duty requirements of the other white-collar exemptions.

Currently, the “highly compensated employee” exemption could apply to an employee who makes a salary of at least $684 per week and overall qualifying annual compensation of at least $107,432.

As proposed, the new DOL rule would tie the overall annual compensation requirement to the 85th percentile of full-time salaried workers nationally. Based on current earnings statistics, that would initially be $143,988. Like the standard exemption salary threshold, this bar would also be subject to automatic updates every three years.

Rulemaking Process

Once the DOL’s proposal is formally published in the federal register, the public will be afforded at least 60 days to submit comments. After the comment period ends, the DOL can move forward with a final rule change. The new rule could be exactly what is currently proposed or include some revisions.

Given the necessary rulemaking timeline, it is unlikely the FLSA exemption threshold would change before 2024.

Potential Litigation

The last time the DOL tried to include automatic indexing of the FLSA exemption threshold, it was challenged in the courts and ultimately never took effect. Similar lawsuits will presumably be filed in response to the DOL’s current attempt to increase the salary requirement. The outcome of those cases cannot be as reliably predicted.

Impact of Proposals

The practical impact of the potential increases will vary depending on an employer’s circumstances. Some states already have higher exemption thresholds than what the DOL seeks here. Some companies already pay most exempt employees beyond this level. Nonetheless, many would need to either re-classify employees as non-exempt or increase their salaries, potentially significantly.

Even where the initial jump to $1,059 (or more) per week is not particularly problematic, the prospect of automatic indexing could be more so. This approach would almost certainly result in meaningful increases every three years. Notwithstanding other economic factors, some employers would raise salaries to meet the new higher thresholds, putting upward pressure on average weekly wages nationwide (and perhaps especially in the South, where fewer states currently impose thresholds beyond the FLSA level). As a result, it almost necessarily will become more expensive over time to maintain these exemptions.

For more employment law updates, sign up for the Horton Management Law email newsletter and follow us on LinkedIn.

August 25, 2023

Reviewing Your New York Anti-Harassment Policies (Webinar Recap)

On August 24, 2023, I presented a complimentary webinar entitled “Reviewing Your New York Anti-Harassment Policies”. For those who couldn’t attend the live webinar, I’m happy to make it available for you to watch at your convenience.

In the webinar, I discuss:

Sexual Harassment Policies
Other Protected Characteristics
Best Practices
Legal Impact
Training

and much more!

All New York employers must have a written sexual harassment prevention policy. The State has recently updated its model policy, and employers should be aware of the suggested changes. You should also consider how to address other forms of harassment in your employee handbook or other policy materials. Given relatively low bars for asserting unlawful harassment in New York, it is critical that employers continue to monitor their efforts in this area.

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

Why You Should Watch “Reviewing Your New York Anti-Harassment Policies”

New York State has updated its model sexual harassment prevention policy. While employers are not required to adopt the model policy, you must meet minimum guidelines established by the State. Unfortunately, it’s not so clear exactly how to do that. In this webinar, we discuss some strategies and best practices for compliance depending on your circumstances.

Of course, employees have legal rights to be free from harassment based on other characteristics as well. What do your current policies say about racial harassment, age-based harassment, and harassment against individuals with disabilities? Make sure your policies make sense together and are up-to-date in light of periodic changes in applicable employment discrimination laws.

The webinar also includes reminders about mandatory sexual harassment training and ideas on preventing harassment, which is the only way to genuinely reduce the risk of legal liability.

Don’t Miss Our Future Webinars!

Click here to sign up for the Horton Management Law email newsletter to be among the first to know when registration is open for upcoming programs! And follow us on LinkedIn for even more frequent updates on important employment law issues.

July 27, 2023

EEOC Issues Guidance on Visual Disabilities in the Workplace

As an employer, it’s crucial to understand the legal obligations and best practices for accommodating employees with disabilities. On July 26, 2023, the U.S. Equal Employment Opportunity Commission (EEOC) released a new technical assistance document specifically addressing visual disabilities in the workplace. While the EEOC focuses on the Americans with Disabilities Act (ADA), state or local laws may also be relevant to this topic.

The ADA

The ADA is a federal law that prohibits discrimination against qualified individuals with disabilities. Under the ADA, individuals with disabilities include those who have a physical or mental impairment that substantially limits one or more major life activities, have a record or history of such an impairment, or are subject to an adverse action because of an actual or perceived physical or mental impairment.

The ADA applies to private employers with 15 or more employees and all state and local government employers.

Visual Disabilities

The EEOC guidance uses the term “visual disabilities” to refer to disabilities related to an individual’s vision. It uses the term “vision impairments” to encompass various vision-related conditions such as blindness, low vision, limited visual fields, photosensitivity, color vision deficiencies, or night blindness. A vision impairment constitutes a visual disability if it meets one of the three definitions of disability: actual, record of, or regarded as.

Not everyone who wears glasses or contact lenses qualifies as an individual with a disability under the ADA. As the guidance explains, “An individual who uses ordinary eyeglasses or contact lenses that are intended to fully correct their vision typically will not be covered under the ADA as an individual with an ‘actual’ or a ‘record of’ a visual disability.”

Prevalence of Visual Disabilities

According to the U.S. Centers for Disease Control and Prevention (CDC), approximately 18.4% of all U.S. adults are blind or have difficulty seeing even when wearing corrective lenses. Vision impairments can start or occur throughout one’s lifetime and can be caused by various factors, including eye diseases, eye injuries, burns, or surgical complications.

Employer Obligations and Reasonable Accommodations

Many individuals with vision impairments can successfully and safely perform their jobs with or without reasonable accommodation. Under the ADA, employers should not deny employment opportunities to these individuals based on stereotypes or incorrect assumptions. The document provides guidance on when an employer may ask an applicant or employee questions about a vision impairment, what types of reasonable accommodations may be needed, and how to handle safety concerns.

Ultimately, if an employee’s visual disability cannot be accommodated in such a way as to prevent unreasonable safety risks, then an employer is not necessarily required to continue their employment.

Protecting Employees from Harassment

The document also addresses the importance of ensuring that no employee is harassed because of a visual disability. Employers have a responsibility to create a safe and inclusive work environment for all employees, including those with visual disabilities.

Confidentiality

The ADA requires employers to keep medical information about applicants and employees confidential. However, some internal disclosure regarding vision impairments is permissible for legitimate business purposes.

Retaliation

Like most employment discrimination laws, the ADA prohibits retaliation against individuals seeking its protections. Accordingly, employers must not treat employees negatively for any activities related to their rights under the law.