MN Employment Law Report

MN Employment Law Report

The Bottom Line on Labor & Employment Law

Drug Tested Employee Can be Fired For Rejecting Agreed-Upon Treatment Provider

Posted in Drug and Alcohol Testing, Lesser-Known Employment Laws

 

Blog Pic - Drug TestingWe rarely see reported cases interpreting Minnesota’s workplace drug testing law so when such a decision is handed down, it is usually worth a look. That certainly proved true when the Minnesota Court of Appeals recently affirmed the termination of an employee who sought to attend a different chemical dependency treatment program from the one he consented to attend following his positive drug test.

Under the Minnesota Drug and Alcohol Testing in the Workplace Act (DATWA), Minnesota employers can’t fire an employee after their first positive drug or alcohol test unless two conditions are satisfied:

First, the employer must give the employee an opportunity to participate in “either a drug or alcohol counseling or treatment program, whichever is more appropriate, as determined by the employer after consultation with a certified chemical dependency [professional].”

Second, the employee has refused to participate in or failed to successfully complete the program.

With a Choice Between Options A and B, Choosing Option C Won’t Work

In Jones v. Green Bay Packaging, Inc. James Jones tested positive for marijuana after a workplace injury. His employer, Green Bay Packaging (“GBP”), placed him on an unpaid suspension and told him that he could return if he (1) immediately submitted to an evaluation by a chemical dependency treatment facility approved by GBP, and (2) successfully participated in a treatment program for the period of time recommended by that approved facility.

Jones initially agreed to the company’s proposal and identified two treatment facilities where he could be evaluated and treated, both of which GBP approved. Jones was then evaluated by one of the designated facilities and was told that he should receive outpatient treatment four times per week. Jones claimed he could not afford the gas money for travelling 30 minutes to this facility four times per week so he suggested that he attend a different facility closer to his home. Said no and said Jones would be terminated if he did not participate in the program where he had already been evaluated. When Jones refused, GBP fired him.

Jones sued GBP claiming that his termination violated DATWA because he was in fact willing to attend a treatment program. The trial and appellate courts both disagreed, noting that the company followed the statute by providing Jones with an opportunity to attend a treatment program that the company had approved. When Jones refused to attend that particular program, GBP was within its legal rights to terminate him. The Minnesota Court of Appeals explained that the plain language of DATWA did not require GBP “to grant Jones an additional opportunity to attend a different treatment program after the company had already approved the treatment center initially requested by Jones.”

Bottom Line

A Minnesota employer must provide an employee with an opportunity for counseling or treatment before discharging the employee following a first positive drug test under DATWA. However, once the counseling and/or treatment provider has been selected, the law does not let the employee keep shopping for alternative treatment programs. This helps move the process along and bring finality to the drug testing process and related follow-up.

 

Labor Board Stiff Arms College Players’ Unionization Attempt

Posted in Labor Law

two american football players walking rear view silhouetteToday, the National Labor Relations Board (“the Board”) issued a unanimous decision dismissing the election petition filed by scholarship football players at Northwestern University.  The Board punted on the issue of whether these players are “employees” under the NLRA, and instead exercised its discretion not to assert jurisdiction.

Given the unique nature and structure of NCAA Division I Football, the Board concluded that asserting jurisdiction in this case would not “promote stability in labor relations.”  First, unlike professional sports such the NFL or MLB, the vast majority of Division I schools are public institutions, which are not subject to the Board’s jurisdiction.  In fact, because all of the other schools in the Big10 are public institutions, the Board could not assert jurisdiction over any of Northwestern’s competitors.  Second, the Board noted that both the NCAA and individual conferences exercise considerable control over individual teams, so asserting jurisdiction over a single team would not promote stability in labor relations across the league.  Indeed, the Board noted that “all previous Board cases concerning professional sports involve league-wide bargaining units.”

In the end, the Board took care to limit the effect of this decision just to the case at hand.  They made clear that other athletic personnel (e.g., coaches, groundkeepers, etc.) may be subject to the Board’s jurisdiction and could seek to unionize.  Northwestern’s players, however, have been stopped short of the goal line.

Bottom Line

While nothing prevents the Board from changing its mind in the future, today’s decision likely means that the Board will likely decline to exercise jurisdiction over future election petitions filed by college athletes.  As such, those players will have to go back to the huddle and come up with a different game plan to seek greater control over their “work” environment.

Newspaper’s Response to Harassment Report Was a Winner

Posted in Discrimination

Blog-Pic---Extra-Extra.jpg 

The news got out quickly that University of Minnesota (U of M) Athletic Director Norwood Teague resigned following revelations that he engaged in sexually inappropriate behavior with two other U of M administrators .  Although this situation involved someone with a high public profile, it seemed like a relatively straightforward workplace harassment matter – employee allegations surfaced, the offender acknowledged his behavior (in the face of irrefutable evidence) and a departure quickly ensued.

But there was more.  The next day, Amelia Rayno, a sports writer for the Minneapolis Star Tribune, published a story recounting sexually aggressive behaviors she encountered from Teague, with whom she interacted regularly in her role as the beat reporter for U of M basketball.  Rayno had agreed to meet Teague for a drink, as she had done several times in the past in pursuit of information about Gopher sports.  She assumed that this would also be a discussion about basketball and U of M athletic department but, as Rayno reported, Teague grabbed at her, tried to put his arm around her and talked about their “chemistry.” Rayno said nothing to anyone about this incident at the time, but subsequent repeats of the behavior eventually led Rayno to seek out the Star Tribune Human Resources Department.

Rayno’s story described what is often referred to as “third party harassment”, i.e. harassing behavior endured by an employee at the hands of someone who does not work for the same company.  It might be a customer or client, a vendor, an independent contractor or a member of the general public.  Still, the behavior likely conflicts with the employer’s anti-harassment policy which usually promises protection against such behavior even if the perpetrator is employed by someone else.

Harassment Game Plan

In a typical harassment scenario involving two employees of the same company, the employer generally is not liable for the harassment unless they knew or should have known about the issue and then failed to take timely remedial action.  This remedial action could take the form of disciplinary action or even termination depending on the seriousness and frequency of the harassing behavior.  In addition, the employer might consider changing the offender’s work location or schedule to minimize further interaction with the complaining employee.  Other methods of persuasion might include a demotion, a salary reduction or additional training on appropriate workplace behavior.  Since the employer control’s the offender’s employment circumstances, they have a great many options from which to choose.

An employer’s menu of options for responding to a claim of third party harassment is much more limited because of the diminished ability to exercise control over the offender’s employment.  In some cases, the employer might be able to contact the offender’s employer to seek relief, or perhaps reassign their own employee to an account or location that eliminates their contact with the offending individual.

If these methods are not viable, or if they did not relieve the problem, the employer might have to consider discontinuing the relationship with the offender and the customer or vendor who assigned that individual to work with the company. In all such cases, the employer must try to minimize any actual impact on the complaining employee so as to avoid any appearance of reprisal for having raised the concern.  For example, if reassignment to a new account or location is to be considered, the employer should make sure that this does not represent a loss of pay, status or convenience for the complaining employee.

This can be tricky.  If the offending person is, or works for, the employer’s biggest customer, the harassed employee may not want to miss the opportunity of working on that account, and the employer may be wary losing the business.   Similarly, if the employee’s job absolutely requires interaction with the offender because that is what the employee was hired to do, the choices for how to respond to harassment may not be all that clear.

Response was a Slam Dunk

In Rayno’s situation, the Minneapolis Star Tribune’s response was a slam dunk.  Rayno reported that after informing the newspaper, they gave her several options:

  • The company could contact Teague to demand that he cease the inappropriate behavior;
  • They could contact Teague’s superiors to inform them of his behavior;
  • They could switch her to a different (but presumably equally prestigious) beat; or
  • They could accept Rayno’s request that she simply be allowed to wait to see if Teague’s behavior persisted.

Ultimately, the Star Tribune accepted Rayno’s request that they hold off on taking any further action so that she could continue covering Gopher basketball the way she wanted. Still, they let her know that they stood behind her and would carry the matter forward if need be. This fulfilled their legal obligation to protect her from harassment by a third party, but it also respected the employee’s desire not to impair her working relationship with her primary “customer.” In so doing, Rayno’s and the Star Tribune’s patience carried the day – Rayno’s work with U of M basketball continues but now without the burden of facing further inappropriate advances from Teague.

Bottom Line

Third party harassment cases can be nuanced and complex. Employers facing those challenges would be wise to follow the Star Tribune’s lead in making sure that your employees are protected against harassment regardless of its source and to take timely and appropriate action whenever such harassment shows itself.

NLRB Tells Employers to Hand Over Witness Statements

Posted in NLRB

NLRB---GIF.gif

The National Labor Relations Board (NLRB) recently affirmed that employers may not reject union requests for access to witness statements that the company obtained while investigating claims of employee wrongdoing. This decision marks the latest in a tortuous path that now overturns more than 30 years of legal precedent.

Way back in 1978, the NLRB declared in Anheuser-Busch, Inc., 237 NLRB 982 (1978) that a witness statement was different from other employer data and therefore was not within the scope of information that unions could demand from employers. That legal standard held firm until 2012 when the NLRB changed course, deciding that the employer had an obligation to turn over witness statements to the union. That decision was vacated, however, when the US Supreme Court ruled that President Obama’s “recess appointments” to the NLRB were unconstitutional and the decisions issued during their tenure were invalid.

Witness Statements are Not Confidential

After new members were officially seated, this issue was considered anew and the reconstituted NLRB again overturned Anheuser-Busch, ruling in American Baptist Homes of the West (Piedmont Gardens) that employers must turn over witness statements when demanded to do so by the union. The NLRB reasoned that a unionized employer has a duty to provide information relevant to a union’s performance of its bargaining duties, and that they were “not persuaded that witness statements are so fundamentally different from other types of information that a blanket exemption from disclosure is warranted.”

The NLRB acknowledged that there might be some instances where protection of witness statements was warranted (e.g. avoiding witness intimidation or harassment) but there simply was no reason why a general exemption should apply. Thus, from now on, when access is requested, an employer seeking to prevent disclosure has the burden of establishing a legitimate confidentiality interest that outweighs the union’s need for the statements.

The dissenting members of the NLRB cited the risk that employees might now be more reticent about providing statements since they are more likely to be exposed to intimidation and retaliation. This in turn will impair employers’ abilities to maintain safe and productive workplaces. These concerns failed to carry the day.

Bottom Line

This decision could make it very difficult for unionized employers to conduct adequate investigations. While employees participating in investigations may have understood that they could be called upon to testify in an arbitration or court proceeding, they also knew that most such matters got resolved long before testimony was required. Now that the union can access witness statements in every investigation, it might be far more difficult to persuade employees to participate when they know that they will be second-guessed and judged by the union, their co-workers and the accused.

Of course, it is also good to remember that employers have the same right to demand statements from the union, and employers should always consider requesting that the union produce any witness statements or recordings for the purpose of evaluating the merits of a grievance

NLRB Says its OK to Lie…Sometimes

Posted in Labor Law, NLRB

 

Bloc-Pic---Construction-Worker.jpgI Never Promised You a Weingarten

If you are a unionized employer, you almost certainly know that your employees have something called “Weingarten” rights, meaning that unionized employees may request (and must then receive) union representation as a condition of participation in any interview the employee reasonably believes may result in disciplinary action. The rule does not apply, however, where the employee could not reasonably believe that an interview may lead to discipline – e.g., run-of-the-mill shop-floor conversations, task-related instructions, training or corrections, or meetings in which previously determined discipline is actually imposed.

While Weingarten guarantees the presence of a union representative upon request, it does not give that representative the right to turn the interview into a full adversarial proceeding. The Supreme Court has ruled that employers still may investigate the issue at hand without interference, including the right to insist on hearing the employee’s account of the events rather than a sanitized version offered by the union representative. Still, recent National Labor Relations Board (NLRB) decisions have begun to authorize expanded rights for the union representative, including the right to “remind” the suspect employee of his story by writing out answers to the employer’s questions, and the right to direct the employee not to respond until the employer “clarified” the questions to the union representative’s satisfaction.

No Truth + No Union Rep = No Worries

The NLRB recently went one step (or perhaps two or three) further in the case of E.I. Dupont de Nemours & Co., where an employee with a history of dishonesty was questioned on multiple occasions by managers about an alleged work-related injury he claimed to have suffered. The employer denied his requests for union representation and then fired him for providing what the NLRB described as “seemingly inconsistent and dishonest answers. . .” to the employer’s questions.

The employee and union filed an unfair labor practice charge against the company, which the NLRB upheld. Essentially, they assumed that a union representative would have protected the employee from acting contrary to his best interest and therefore, the employee should not be held accountable for dishonesty or intemperate behavior taking place during an unlawful investigative interview. The employee was ordered reinstated with full back pay.

This decision is particularly significant, and not just because of the NLRB’s attenuated reasoning. In previous cases, employees did not necessarily get their jobs back if the NLRB concluded that an employee was suspended or discharged for reasons unrelated to the denial of the employee’s Weingarten rights. Now, the NLRB seems to tell us that any misconduct during an unlawful interview will be considered out of bounds for disciplinary action, and that the employer will need to be able to prove that they would have discharged the employee even absent the purported interview-related misconduct.

Bottom Line

It is now more important than ever that employers understand the protections afforded union employees and their representatives when planning to conduct workplace interviews. Employers must determine in advance whether the interview is or is not investigative, how they will respond to a demand for representation and how they will deal with the increasingly broad rights union representatives now have during interviews.

New DOL Guidance Says “Most” Workers (including Independent Contractors) Are Covered By FLSA

Posted in Wage & Hour

Contractors DatabaseThe U.S. Department of Labor (DOL) has now issued guidance in the form of an Administrator’s Interpretation (the Guidance) intended to curb the misclassification of employees as independent contractors.  The DOL contends that “most” workers qualify as “employees” under the Fair Labor Standards Act (“FLSA”) and therefore are subject by the Act’s minimum wage and overtime protections.  Treating such workers as independent contractors would therefore violate the FLSA.

Background

The DOL contends that the use of independent contractors to perform work previously done by employees is on the rise.  They even suggest that some employers deliberately misclassify their workers this way to cut costs and avoid legal compliance.  The DOL recently has stepped-up scrutiny in this arena, recovering more than $79 million in back wages for more than 109,000 workers in various industries in 2014.

WHD Administrator’s Interpretation No. 2015-1

The Guidance notes that the FLSA is extremely broad and covers any entity that “suffers or permits” an individual to work.  Under the “economic realities test,” the following factors are generally used to determine whether a worker is an independent contractor or an employee:

  1. the extent to which the work performed is an integral part of the employer’s business;
  2. the worker’s opportunity for profit or loss depending on his or her managerial skill;
  3. the extent of the relative investments of the employer and the worker;
  4. whether the work performed requires special skills and initiative;
  5. the permanency of the relationship; and
  6. the degree of control exercised or retained by the employer.

The Guidance directs these factors to be considered in totality and according to the “overarching principle that the FLSA should be liberally construed to provide broad coverage for workers.”

The Guidance sets out contrasting examples of how each of these factors is to be evaluated in order to give effect to the broad coverage they claim is intended under the law.  A few highlights include:

Is the work an “integral” part of the business:

For a construction company that frames residential homes, carpenters are integral to the business – the company is in business of framing houses and that is what carpenters do.

In contrast, that company’s software developer might create programs that help track bids, schedule projects and maintain inventory.  Such work is beneficial but not integral to the company’s business.  Thus, this factor weighs in favor of independent contractor status.

The “managerial skill” factor:

A worker for an office cleaning service performs tasks outlined for him by the company.  He does not make the schedule, nor does he solicit additional clients, advertise his services, or seek out ways to reduce costs. His efforts to earn more depend solely upon being assigned more hours by the company.  There is no managerial skill involved, which indicates an employment relationship between the worker and the cleaning company.

If that same worker advertised his services, negotiated contracts with clients, set the cleaning schedule and brought in additional help when needed, this level of managerial skill would point toward an independent contractor status.

The “relative investment” factor:

The same cleaning company worker is issued all cleaning equipment and supplies for his jobs, and is assigned a vehicle for travelling to assignments.  Although the worker may occasionally bring his own preferred cleaning products to his jobs, the company’s investment into the work is clearly greater and therefore favors a determination of an employment relationship.

If the worker buys a van not suitable for personal use and uses it to travel to various worksites, rents space to store the vehicle, and purchases all the material, supplies and equipment he uses to clean his clients’ facilities, an independent contractor relationship is suggested.

The “control” factor:

A registered nurse is listed with a nurse registry to provide skilled nursing.  The registry interviewed the nurse and required her to undergo their multi-day training.  The registry then sends the nurse a list of potential clients each week and requires the nurse to fill out a form with them prior to contacting any clients. The registry sets the wage range, limits the available work days and must be contacted if the nurse will miss any work to which she was assigned.   This level of control points toward an employment relationship. ,

Another registered nurse might list with a different registry, which merely sends a list of potential clients.  This nurse then is free to work for as many or as few clients as she wishes, may negotiate her own wage rate and may determine her own schedule with the client. In this scenario, the degree of control exercised by the registry is not indicative of an employment relationship.

Bottom Line

This is just an administrative interpretation that does not have the force of law.  Nevertheless, it is a clear indication of how the DOL looks at the law and how they will decide claims of this type that are presented to them.  Moreover, we know that courts often look to the DOL’s interpretations for guidance in deciding cases in their jurisdictions.  Therefore, employers currently utilizing workers classified as independent contractors should revisit those arrangements to be very certain that they pass muster in an environment where employment status is so clearly the presumption in the eyes of the government regulators.

Internships Part 2: The Return of Unpaid Status

Posted in Wage & Hour

Internship Blue MarkerUnpaid internships are back in the spotlight after a federal appeals court reversed a ruling classifying a movie company’s unpaid interns as employees entitled to compensation. The Second Circuit Court of Appeals decision in Glatt et al. v. Fox Searchlight Pictures, Inc. et al. casts doubt over the Department of Labor’s (DOL) restrictive view of this issue and may set the stage for a more practical and employer-friendly test to determine the right script for an internship.

Old Standard

The DOL has had a longstanding requirement that the following six tests all had to be met before a true internship could be found:

1. The internship is similar to training that might be provided in an educational environment;

2. The internship experience is for the benefit of the intern;

3. The intern does not displace regular employees;

4. The employer derives no immediate advantage from the intern’s activities, and on occasion its operations may actually be impeded;

5. The intern is not necessarily entitled to a job after the internship and

6. The parties mutually understand that wages are not expected.

While courts are not absolutely bound by DOL regulations, they often look to them for guidance on interpreting the law.

The Second Circuit viewed things through a different lens, setting out a new test focusing primarily on who is the “primary beneficiary” of the internship. If the intern is the star of the show, the relationship can be billed as an unpaid internship even if the employer gets some benefit from the intern’s efforts.

New Standard

This new approach looks to the practical, economic realities of the relationship and requires a balancing of all relevant factors, including those that the DOL previously identified, such as:

1. The extent to which the parties clearly understand that is, or is not, expected;

2. The extent to which the internship provides training similar to what might be given in an educational environment, including clinical and hands‐on training;.

3. How much the internship is tied to the formal educational program through integrated coursework or the receipt of academic credit for the experience;

4. Whether the internship accommodates the intern’s academic commitments by corresponding to the academic calendar;

5. The extent to which the internship’s duration is limited to a specific period for beneficial learning (rather than continuing on with no prescribed agenda);.

6. The extent to which the intern’s work complements the work of paid employees instead of displacing them; and

7. The extent to which there is an understanding that there is no promise of a paid job when the internship ends.

The fate of the individual interns in the case remains up in the air since the matter was remanded to the lower court to evaluate the claims under the new Second Circuit test.

Bottom Line

This decision comes after another large entertainment company, Viacom, recently settled the wage and hour claims of several unpaid interns who argued they should have been classified as paid employees, as we reported on June 5.

Make no mistake – the DOL intends to apply their rigid six-factor test when claims are filed with them, and they will certainly advocate their test in the courts. However, employers defending those claims now have a new argument for the validity of internships even if they don’t meet all of the DOL factors. It remains to be seen how other courts (especially the Eighth Circuit which encompasses Minnesota) intend to handle this issue. Until we know, use caution in setting up unpaid internships to make sure there is a happy ending to the story.

ACA Reporting Penalties Increased In New Trade Bill

Posted in Employee Benefits

Blog-Pic---Emergency.jpgThe trade bill recently signed into law included provisions steeply increasing the penalties related to employers’ Affordable Care Act (ACA) reporting.

Large employers (employers with 50 or more FTEs) are required to provide information on health coverage to their employees using Form 1095-C; they must further file this information with the IRS using Form 1094-C.  If an employer fails to provide and/or file the forms, the employer is subject to IRS penalties.

The trade bill made steep increases in the penalties for reporting failures. In addition to applying to Forms 1094-C and 1095-C, these increased penalties also apply to other information returns and filings required to be filed or furnished after 2015, such as W-2s.

  • The general penalty for failure to file will increase from $100 per return to $250 per return.
  • The cap on the total amount of penalties for such failures during a calendar year will increase from $1,500,000 to $3,000,000.
  • If a failure relates to both an information return (e.g., a Form 1094-C required to be filed with the IRS) and a payee statement (e.g., Form 1095-C required to be furnished to the individual), the penalties may be doubled.

If a failure is caused by intentional disregard, the new $250 penalty is doubled to $500 for each failure, and no cap applies to limit the amount of penalties that can be applied with respect to that calendar year.

The IRS has stated that it will not penalize employers who  “make good faith efforts to comply” with the ACA reporting requirements. Therefore, employers should document their efforts to comply with the ACA reporting requirements to avail themselves of a “good faith” compliance defense, if need be, against any assessed “failure to file penalties.”

 

Minnesota’s Minimum Wage is Going Up, and Up and . . .

Posted in Wage & Hour

Money in the hands of the peopleAmid the hubbub of proposed federal regulations expanding overtime eligibility, let’s also remember that minimum wage for Minnesota employees is set to increase on August 1.

Right now, minimum wage for employees working for large companies (defined as $500,000 in annual gross revenues) is $8.00 per hour, while workers for smaller companies are entitled to at least $6.50 per hour (although they must receive at least $7.25 per hour if they are covered by the federal minimum wage).

When the new regulation takes effect on August 1, 2015, the minimum wage at large employers must be $9.00 per hour while the standard for smaller employers will be $7.25.   Don’t get too used to those numbers, though – the rates increase again on August 1, 2016 to $9.50 and $7.75 respectively.  Thereafter, the minimum wage in Minnesota will be indexed for inflation, although state regulations limit any such increase to 2.5%.

Remember that Minnesota permits all employers to pay a training wage to any worker under 20 years of age for their first 90 days of employment, and to all workers under the age of 18.  Those rates also increase to $7.25 next month and to $7.75 on August 1, 2016.

For more information, contact Dennis Merley at 612-373-8434 or dmerley@felhaber.com.

DOL Proposes Overhaul to Overtime Rules

Posted in Wage & Hour

man holding drawing moneyToday, the U.S. Department of Labor (DOL) proposed significant changes to the federal overtime regulations.  The Proposed Rules are in response to a March 2014 order from President Obama, which directed the DOL to overhaul its overtime regulations.

The new Proposed Rules more than double the salary basis needed to qualify for one of the white collar exemptions (administrative, executive, professional), from $455 a week ($23,660 a year) to $970 a week ($50,440 a year) in 2016.  The Proposed Rules also seek to establish a mechanism for automatically updating the salary and compensation levels annually, to prevent the level from becoming outdated with the often lengthy passage of time between rulemakings.

In its Proposed Rules, the DOL also solicits comments regarding the current “duties test” framework and the possibility of including nondiscretionary bonuses to satisfy a portion of the standard salary requirement.

Key Provisions

While we are still reviewing the nearly 300 pages of proposed regulations, the Proposed Rules focus primarily on updating the salary and compensation levels needed for white collar workers to be exempt.

Specifically, the DOL proposes to:

  1. Set the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers (which, in  2013, was $921 per week, or $47,892 annually);
  2. Increase the total annual compensation requirement needed to exempt highly compensated employees (HCEs) to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually); and
  3. Establish a mechanism for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.

According to the DOL’s calculations, the 40th percentile of weekly earnings will be $970 a week ($50,440 a year) in 2016.  Thus, the Proposed Rules establish $970 per week as the initial salary basis, but would automatically update the salary and compensation thresholds on an annual basis using either a fixed percentile of wages or the Consumer Price Index (CPI-U).

To be exempt, employees would still need to satisfy the “duties test,” which the DOL does not change (at least yet).   Instead, the DOL solicits comments regarding the current “duties test” framework and the possibility of including nondiscretionary bonuses to satisfy a portion of the standard salary requirement.

Bottom Line

The Proposed Rules will undoubtedly make it more difficult for employees to qualify for any of the FLSA’s white-collar exemptions.  Indeed, by the DOL’s own calculation, more than 4.6 million workers who are currently classified as “exempt,” will no longer be exempt under the Proposed Rules.

While the Proposed Rules still need to go through the notice and comment period before final regulations are promulgated, employers would be wise to begin reviewing their payrolls to determine whether the exemption status of any of its employees may be affected if the Proposed Rules are eventually adopted.

We will continue to monitor this story as it develops.