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Thursday, June 02, 2011

Department of Labor Announces New Minimum Salary Requirements

The Fair Labor Standards Act requires employers to pay employees overtime at a rate of 1 ½ times their normal hourly rate. However, employers can exempt certain categories of employees from the overtime requirement if they fit into an exempt job classification.

The Department of Labor (DOL) sets minimum salary levels required to meet this exemption. DOL released its final version of new regulations concerning salaries for employees exempt from overtime pay today. The new rule goes into effect December 1, 2016.

Some, but not all, exempt job classifications require the employer to pay the employee on a “salary basis.” As a general rule, “salary basis” means the employee receives a regular, unchanging amount of pay from paycheck to paycheck, without deductions for hours missed and no additional pay for working more than 40 hours in a workweek. DOL has consistently refused to consider commissions and bonuses as part of salary for this calculation.

The current salary needed to meet the minimum “salary basis” test is $455 per week ($23,660.00 annually). DOL set this minimum salary level in 2004. Although the minimum is stated as a weekly amount, exempt employees can be paid on any regular schedule—weekly, biweekly, monthly or semi-monthly.

The rule issued by the DOL today a little more than doubles the minimum salary basis to $913 per week ($47,476 annually) beginning December 1 of this year. The new rule also implements an automatic increase in the minimum salary basis every three years to adjust to the 40th percentile of full-time salaries earned by workers in the lowest-wage Census region.

Finally, the new rule increases the amount of the highly compensated employee exemption to $134,004.00 from $100,000.00. This amount includes all non-discretionary compensation such as commissions and nondiscretionary bonuses.

Now is the time for all employers, large and small, to review all job descriptions with your attorney to determine compliance with the new rule and how it will impact your business on December 1, 2016.


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Interesting article regarding joint employment relationships from Akerman LLP written by Laurie M. Weinstein. Read the full article below:

In its first application of the landmark Browning-Ferris decision, the National Labor Relations Board (NLRB) has determined that ACECO, a contractor, was not a joint employer with Green Jobworks, its staffing agency. In Browning-Ferris, the NLRB held that two or more entities would be considered joint employers if each one possessed sufficient control over employees’ essential terms and conditions of employment. As discussed more here, this is significant because, even if the company is not the actual employer of workers, the company may be required to bargain with a Union and held liable for unfair labor practice charges if found to be a “joint employer.”

In the Green Jobworks case, the NLRB revisited the broader joint employer test of Browning-Ferris, and this time found that the Union failed to establish specific, detailed and relevant evidence demonstrating a joint employment relationship between Green Jobworks and ACECO. Green JobWorks is a staffing company that provides temporary labor to construction companies. ACECO is a demolition and remediation contractor who supplements its workforce with Green JobWorks employees.

Green JobWorks and ACECO entered into a Master Labor Services Agreement requiring Green JobWorks to provide workers who are responsible for tracking Green JobWorks employee hours, determining breaks, and removing Green JobWorks workers from the construction site, if necessary. Under the agreement, Green JobWorks was exclusively responsible for the following duties: (1) employee recruiting, hiring, counseling, discipline and discharge; (2) establishing and paying employee wages; (3) providing worker’s compensation insurance and fulfilling unemployment compensation obligations; and (4) maintaining personnel and payroll records for Green JobWorks employees. Project orientation and day-to-day schedules were determined by the general contractor.

The Local Union asserted that ACECO was a joint employer because: (1) the Master Labor Services Agreement gave ACECO the right to direct managers and supervisors, and to dismiss staff employees under certain circumstances; (2) ACECO had requested specific Green JobWorks employees with particular skills; and (3) ACECO effectively controlled the wages of Green JobWorks employees.

The NLRB rejected the Union’s argument, and distinguished the facts from those in Browning-Ferris. ACECO’s right to refuse or terminate a Green JobWorks employee was limited and not unqualified. ACECO could request specific employees, but the staffing agency was under no obligation to meet the request. Additionally, Green JobWorks employees could individually negotiate higher wages, and Green JobWorks was not prohibited from paying its employees more than ACECO paid its employees.

Regarding day-to-day supervision, ACECO, who was a subcontractor, did not determine the job tasks for Green JobWorks employees. Instead, they received project orientation and day-to-day schedules from the general contractor. Additionally, Green JobWorks field supervisors traveled to project sites to interact with lead employees, and lead employees were responsible for tracking Green JobWorks employee hours and determining breaks and rest period.

Accordingly, the NLRB found that ACECO was not a joint employer with Green JobWorks. The decision highlights the importance of an agreement that gives as much discretion to the staffing agency as possible. The Green Jobworks case is a reminder to franchisors, subcontractors, and business entities to pay careful attention to the “joint employer” standard.

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