the roller-coaster ride of wage and hour developments€¦ · wage and hour developments ... nash,...

2019 CORPORATE LABOR AND EMPLOYMENT COUNSEL EXCLUSIVE

OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 6-1

THE ROLLER-COASTER RIDE OF

WAGE AND HOUR DEVELOPMENTS

Cynthia A. Bremer – Ogletree Deakins (Minneapolis)

Robert R. Roginson – Ogletree Deakins (Los Angeles)



I. Introduction

This year has been a busy one for the U.S. Department of Labor (DOL) in terms of new

proposals and compliance guidance. These developments include new and proposed regulations

revising the overtime regulations, clarifying joint employment obligations, and the proposed

regular rate requirements, among other items, as well as several new opinion letters. In addition,

significant state minimum wage increases and tip credits are scheduled to take effect on January

1, 2020. This session will cover these latest federal wage and hour and state minimum wage

developments, provide an examination of litigation trends, and describe how in-house counsel

can manage compliance and reduce risk by considering wage and hour audits.

II. What’s New and What’s Next in the DOL Wage & Hour Division?

A. New Secretary of Labor

President Trump nominated Eugene Scalia to be Secretary of Labor on August 27, 2019,

and the U.S. Senate confirmed Scalia’s nomination on September 26, 2019.

Scalia, a son of the late Supreme Court Justice Antonin Scalia, served as Solicitor in the

Labor Department during the Bush Administration. He has worked as a lawyer in private

practice representing employers and companies in employment and regulatory matters. He

attended the University of Virginia as an undergraduate. He earned his law degree from the

University of Chicago Law School.

B. New Wage and Hour Administrator

President Trump nominated Cheryl Marie Stanton to serve as the Administrator of the

Department’s Wage and Hour Division (WHD), and the U.S. Senate confirmed Stanton’s

nomination on April 10, 2019. She was sworn in as WHD’s Administrator on April 29, 2019.

Stanton served as the Executive Director of the South Carolina Department of

Employment and Workforce. Stanton served as the White House’s principal legal liaison to the

DOL under President George W. Bush. She is a graduate of Williams College, and earned her

law degree from the University of Chicago Law School. She also clerked for Samuel Alito on

the United States Court of Appeals for the Third Circuit.

Stanton worked at Ogletree Deakins form February 2002 to November 2006 and again

from July 2008 to June 2013, following her service in the White House.

C. Opinion Letters

As part of the administration of the Federal Labor Standards Act (FLSA), interested

parties may seek and officials of the Wage and Hour Division (WHD) may provide official

written explanations of what the FLSA requires in fact-specific situations. Opinion letters serve

as a means by which the public can develop a clearer understanding of what FLSA compliance

entails.



Opinion letters issued by the Administrator may be relied upon as a good faith defense to

wage claims arising under the FLSA, and such letters may provide a complete affirmative

defense to money damages where the employer proves that it acted “in good faith in conformity

with and in reliance on any written administrative regulation, order, ruling, approval, or

interpretation” by the Administrator of the Wage & Hour Division.1 Thus, for example, if an

employer relied on an Opinion Letter and applied its conclusions to the same set of facts, the

employer could assert a complete defense to liability if later sued under the FLSA on that

practice. Similarly, an employer could preclude or limit liquidated (i.e. double) damages or a

longer statute of limitations (for example, a third-year of damages for willful violations) by

showing “good faith,” and reliance on an Opinion Letter with similar facts would be good faith.2

In 2019, the WHD issued the following Opinion Letters:

FLSA2019-1 (March 14, 2019) – Wage and recordkeeping requirements for

residential janitors and “good faith” defense

Residential janitors are not exempt from the FLSA’s minimum wage and overtime

requirements, notwithstanding exempt status of such workers under state law and

relying on the state law exemption is likely not a good faith defense to noncompliance

with the FLSA.

FLSA2019-2 (March 14, 2019) – Compensability of time spent participating in an

employer-sponsored community service program

Employee’s time spent participating in an employer’s optional volunteer program,

which awards a bonus to certain participating employees, does not count as hours

worked under the FLSA.

FLSA2019-3 (April 2, 2019) – Whether a youth residential care facility may

implement an “8 and 80” overtime pay system

Employers “engaged in the operation of a hospital [or] an institution primarily

engaged in the care of the sick, the aged, or the mentally ill … who reside on the

premises of such institution” are able to utilize a “8 and 80” overtime system.

FLSA2019-4 (April 2, 2019) – Application of the teacher exemption to Nutritional

Outreach Instructors employed by a public university

Nutritional Outreach Instructors” ho have the primary duty of “teaching, tutoring,

instructing or lecturing in the activity of imparting knowledge” and are employed by

an “educational establishment.” qualify as teachers under section 13(a)(1) and are

therefore exempt from the FLSA’s minimum wage and overtime pay requirements.

1 Section 10 of the Portal-to-Portal Act, 29 U.S.C. 259; 29 C.F.R 790. 2 29 U.S.C. 260



FLSA2019-5 (April 2, 2019) – Application of the agricultural exemption to the

freezing, cutting, packing, storing, and/or transportation of a farm’s own fruit,

vegetable, or meat products

FLSA2019-6 (April 29, 2019) – Whether a service provider (gig worker) is an

employee under the FLSA or an independent contractor

Applying the “economic realities test” to the detailed facts, the DOL concluded that

the service providers were independent contractors.

FLSA2019-7 (July 1, 2019) – Calculating Overtime on Nondiscretionary Annual and

Quarterly Bonuses

Explains and discusses how employers may account for overtime pay as part of

annual and quarterly nondiscretionary bonuses.

FLSA2019-8 (July 1, 2019) – Exempt status of paralegals

Paralegals qualified as exempt under the highly compensated employee exemption

even if they did not exercise discretion and independent judgment with respect to

matters of significance.

FLSA2019-9 (July 1, 2019) – Permissible rounding practices

Employer’s rounding practice which is based on recorded time entries converted into

decimal form and rounded to two (2) decimal points complies with the FLSA’s

regulations because it is neutral on its face, and the practice appears to average out so

that it fully pays its employees for all of the time that they actually work.

FLSA2019-10 (July 22, 2019) – Compensability of time spent in a truck’s sleeper

berth while otherwise relieved from duty

Time spent by drivers in sleeper berths does not constitute compensable working time

under the FLSA, resolving an apparent conflict in DOL guidance arising from

different regulations.

FLSA2019-11 (August 8, 2019) – Application of the section 7(k) overtime exemption

to public agency employees engaged in both fire protection and law enforcement

activities

FLSA2019-12 (August 8, 2019) – Employment status of volunteer reserve deputies

who perform paid extra duty work for third parties

The volunteer reserve deputies’ performance of extra duty work for third parties does

not result in the loss of their volunteer status.



FLSA2019-13 (September 10, 2019) -- Ordinary meaning of the phrase “not less than

one month” for purposes of FLSA section 7(i)'s representative period requirement

Six, but not four, consecutive weekly pay periods, as well as three, but not two,

consecutive bi-weekly pay periods, satisfies the retail or service establishment

exemption’s requirement that a representative period be not less than one month.

D. Proposed Regulations (Rulemaking)

The WHD issued its final overtime regulations on late September and they take effect on

January 1, 2020. In addition, the WHD is currently reviewing comments submitted on two

significant notices of proposed rulemaking (NPRM). One NPRM is on the regular rate

determination under the FLSA in Part 778 of Title 29 of the Code of Federal Regulations; its

comment period closed June 12, 2019, after an extension from its May 28, 2019, original closure

date. The other NPRM addresses joint-employer status under the FLSA, as defined in Part 791.

The comment period for it closed on June 25, 2019, after an extension from the original closure

date of June 10, 2019.

Finally, the WHD has three new proposals for review by the Office of Information and

Regulatory Affairs (OIRA) of the Office of Management and Budget.

1. Final Overtime Regulation

On September 24, 2019, the WHD released its final overtime rule, setting the salary level

or amount test at $684 per week, or $35,568 per year, for exempt executive, administrative, and

professional employees of section 13(a)(1) of the Fair Labor Standards Act (FLSA). The total

annual compensation test for a highly compensated employee is $107,432. These new thresholds

for exemption from both the overtime and minimum wage provisions of the FLSA go into effect

on January 1, 2020.

This final rule is the culmination of a long-term effort to increase these salary and total

annual compensation requirements—set forth in part 541 of title 29 of the Code of Federal

Regulations—which were last increased in 2004. These regulations define and delimit the

exemptions for bona fide executive, administrative, and professional employees. The total

annual compensation level for highly compensated employees of $107,432 is lower than that

proposed earlier this year in its NPRM because it is based on the 80th percentile of weekly

earnings of full-time salaried employees nationally.

In addition to finalizing the salary amount test for exempt employees and the total annual

compensation requirement for highly compensated employees, the final rule also permits

employers to apply non-discretionary bonus and other incentive payments to satisfy up to 10

percent of the standard salary level, provided such non-discretionary payments are paid at least

annually or more frequently. Also in keeping with its proposed rule, the final overtime rule

does not include a provision that automatically would increase the salary level test or total annual

compensation amount on some regular or periodic basis. Most significantly, the final overtime

(part 541) rule does not make any changes to any of the duties tests for these exemptions.



In 2016, employer-aligned interests brought suit to challenge the final overtime rule

issued during the final year of the Obama administration. The litigation was successful, and the

2016 final rule was enjoined by a federal district court in Texas and has never gone into effect.

The 2019 final part 541 rule formally rescinds the 2016 final rule.

2. Regular Rate

On March 28, 2019, the WHD issued a NPRM on proposing to clarify and update the

regulations governing the regular rate requirements under the Fair Labor Standards Act (FLSA).

The FLSA generally requires overtime pay of at least one and one-half times the regular rate for

hours worked in excess of 40 hours per workweek. Regular rate requirements define what forms

of payment employers include and exclude in the “time and one-half” calculation when

determining workers’ overtime rates. The regulations governing the interpretation of what must

be included in the regular rate have not been significantly revised in over 50 years.

In this rulemaking, WHD proposes updates to a number of regulations intended to both

provide clarity and better reflect the 21st-century workplace. The WHD contends, “these

proposed changes would promote compliance with the FLSA; provide appropriate and updated

guidance in an area of evolving law and practice; and encourage employers to provide additional

and innovative benefits to workers without fear of costly litigation.”

The NPRM focuses primarily on clarifying whether certain kinds of perks, benefits or

other miscellaneous payments must be included in the “regular rate” used to determine an

employee’s overtime pay. In relevant part, WHD proposes clarifications to the current

regulations to confirm the following:

that the cost of providing wellness programs, onsite specialist treatment, gym access

and fitness classes, and employee discounts on retail goods and services may be

excluded from an employee’s regular rate of pay;

that payments for unused paid leave, including paid sick leave, may be excluded from

an employee’s regular rate of pay;

that reimbursed expenses need not be incurred “solely” for the employer’s benefit for

the reimbursements to be excludable from an employee’s regular rate;

that reimbursed travel expenses that do not exceed the maximum travel

reimbursement permitted under the Federal Travel Regulation System regulations and

meets other regulatory requirements may be excluded from an employee’s regular

rate of pay;

that employers do not need a prior formal contract or agreement with the employee(s)

to exclude certain overtime premiums described in sections 7(e)(5) and (6) of the

FLSA; and

that pay for time that would not otherwise qualify as “hours worked,” including bona

fide meal periods, may be excluded from an employee’s regular rate unless an



agreement or established practice indicates that the parties have treated the time as

hours worked.

WHD also proposes to provide examples of discretionary bonuses that may be excluded

from an employee’s regular rate of pay under section 7(e)(3) of the FLSA and to clarify that the

label given a bonus does not determine whether it is discretionary. WHD also proposes to

provide additional examples of benefit plans, including accident, unemployment, and legal

services, that may be excluded from an employee’s regular rate of pay under section 7(e)(4) of

the FLSA.

Additionally, WHD proposes to clarify that tuition programs, such as reimbursement

programs or repayment of educational debt, could be excluded under several different provisions

of section 7(e), and welcomes comments about how employers currently administer such

programs.

Finally, WHD proposes two substantive changes to the existing regulations. First, the

Department proposes to eliminate the restriction in §§ 778.221 and 778.222 that “call-back” pay

and other payments similar to call-back pay must be “infrequent and sporadic” to be excludable

from an employee’s regular rate, while maintaining that such payments must not be so regular

that they are essentially prearranged. Second, WHD proposes an update to its “basic rate”

regulations. Under the current regulations, employers using an authorized basic rate may

exclude from the overtime computation any additional payment that would not increase total

overtime compensation by more than $0.50 a week on average for overtime workweeks in the

period for which the employer makes the payment. WHD’s proposal would update this

regulation to change the $0.50 limit to 40 percent of the federal minimum wage—currently

$2.90.

3. Joint-Employment

On April 1, 2019, the DOL announced an NPRM to amend its existing regulations

regarding joint employment under the FLSA. The NPRM aims to provide stakeholders with

clear, bright line rules regarding the circumstances in which an employer may be deemed a joint

employer of another company’s employees. This is the first meaningful proposed revisions to the

FLSA’s joint-employer regulation since it was originally promulgated in 1958.

The DOL proposes a four-part balancing test that would assess whether the potential

joint-employer:

Hires or fires the employee;

Supervises and controls the employee’s work schedule or conditions of employment;

Determines the employee’s rate and method of payment; and

Maintains the employee’s employment records.

The NPRM makes clear that “[o]nly actions taken with respect to the employee’s terms

and conditions of employment, rather than the theoretical ability to do so under a contract, are

relevant to joint employer status under the Act.” (Emphasis added.) Further, the proposal also

expressly details that certain business models (e.g., franchises), certain business practices (e.g.,



allowing an employer to operate a facility on premises), and certain business agreements (e.g.,

requiring vendors to institute sexual harassment policies), do not make a finding of joint-

employer status more or less likely. Finally, the proposed regulations also provide illustrative

hypotheticals to help explain how the proposed joint-employer regulation would apply to a

variety of business scenarios.

4. Revisions to White-Collar Overtime Exemption Rules

On August 12, 2019, the WHD submitted to OIRA a NPRM to revise the white-color

overtime exemption requirements. This rulemaking dates back to the last administration and its

unsuccessful efforts to update the salary level tests for the executive, administrative, and

professional exemptions of Section 13(a)(1) of the Fair Labor Standards Act (FLSA). After

litigation successfully challenged the 2016 final rule, the Trump administration engaged in

extensive rulemaking to revise the salary level tests and (to continue the baseball analogy) is one

out away from finalizing a new, more reasonable amount. Once OIRA approves it and it is

published in the Federal Register, it will go into effect either 60 or 90 days after publication or

late this year or early next year at the latest.

5. Reforms to Tip Regulations

On July 26, 2019, the WHD submitted to OIRA an NPRM to revise the tip regulations in

light of the amendments to Section 3(m) of the Fair Labor Standards Act (FLSA), which

Congress passed last year. This rulemaking addresses the amendment to the FLSA that Congress

passed in the Consolidated Appropriations Act of 2018 in March 2018. Congress intervened in a

dispute over tipping practices where an employer did not take a tip credit and amended Section

3(m) of the FLSA to address certain issues involving tips, tip pools and the tip credit. Congress

took the following actions:

Clarified that tips are the property of tipped employees and an employer may not keep

any tips of its tipped employees

Clarified that managers or supervisors cannot share in any tip-pooling arrangement or

keep any portion of employee tips

Nullified regulations prohibiting a tip-pooling arrangement that requires tips be

shared among tipped employees and nontipped employees such as cooks and

dishwashers where an employer does not take a tip credit

The effect of this amendment is also to leave unchanged the existing rules on tip-pooling

arrangements where an employer does take a tip credit in that tips can be shared only with or

among tipped employees. To provide guidance to the regulated community, WHD issued Field

Assistance Bulletin No. 2018-3 on April 6, 2018, in which it laid out its interpretation and

enforcement policy in light of the amendment. While it is not known at this time, it is possible

that this NPRM could also address WHD’s dual jobs regulation and its November 8, 2018,

interpretation in Opinion Letter FLSA2018-27.



6. Modifications to Fluctuating Workweek Regulations

On August 15, 2019, the WHD submitted to OIRA an NPRM to revise the fluctuating

workweek regulation found in Section 778.114. This rulemaking stems from an uncompleted

effort in the last year or so of the George W. Bush administration to revise the regulations.

Instead, the Obama administration completed the rulemaking, finalizing a rule that differed from

the proposal and limiting the ability of employers to use the fluctuating workweek methodology

to comply with the overtime requirement of the FLSA.

III. State and Local Minimum Wage Increases

In 2020, a number of states’ minimum wage rates will increase. The chart attached as

Attachment A summarizes the rates that will increase for certain states (and several localities) at

any time during 2019 and 2020, including all state changes that will become effective in the

following years. The federal minimum wage will remain at $7.25 per hour for non-tipped

employees and $2.13 per hour for tipped employees.

IV. Wage Audits

Compliance with state and federal wage and hour laws is an evolving and complicated

struggle and an aggressively proactive approach can reduce or eliminate liability and damages.

One way to buttress compliance is to audit existing policies and practices. Strategic audits are

key tools to reduce or avoid liability and financial risk. Done properly, they also help identify

areas needing closer attention and policies that need revision as well as areas where compliance

efforts are wholly lacking.

A wage audit is a systematic review of a company’s wage and hour policies, procedures,

and practices that provides an opportunity to discover problems – or potential problems – and to

proactively address them before the situation escalates into litigation. Audits address legal

compliance, further strategic initiatives, and trigger best practices. A basic internal audit is often

time-consuming, especially if it is done infrequently. The reasons for doing an audit, however,

far outweigh that investment of time, and can be summarized in three words: avoidance,

discovery, and resolution.

A summary of critical preliminary considerations for conducting a wage and hour audit

are set forth in Attachment B.

V. Conclusion

While the federal administration provides some relief respecting the federal enforcement

of wage and hour laws, several states and local governments have enacted new wage and hour

mandates which have presented new challenges for employers, particularly those with operations

in several states and municipalities. Employers will continue to be challenged in developing

compliance policies that can be implemented and effectively monitored and enforced.

OUR INSIGHTS

State-by-State Minimum Wage Updates for 2019 andBeyond

Author: Charles E. McDonald, III (Greenville)

Published Date: December 20, 2018

In 2019, a number of states’ minimum wage rates will increase. The below chart summarizes the rates

that will increase for certain states (and several localities) at any time during 2019, including all state

changes that will become effective next year.

Minimum Wage Increases for 2019

The federal minimum wage will remain at $7.25 per hour for non-tipped employees and $2.13 per hour

for tipped employees.

The following chart lists the minimum wage increases for 2019 (and future years if available), along

with the related changes in the maximum tip credit and minimum cash wage for tipped employees.

State Minimum WageMaximum Tip

Credit

Minimum CashWage

(Tipped Employees)

Alaska$9.84 (current) $9.89 (effective1/1/2019)

Tip credit not allowed Tip credit not allowed

Arizona

$10.50 (current)$11.00 (effective1/1/2019)$12.00 (effective1/1/2020)

Not applicable to"small businesses"that have less than

$3.00 (current)(unchanged)


The minimum cashwage may be $3.00per hour less than the

$500,000 in annualgross revenues andare exempt frompaying minimum wageunder federal law (29U.S.C. § 206(a)). Ariz.Rev. Stat. § 23-362(B)and (C).

minimum wage.

Arkansas

$8.50 (current)$9.25 (effective1/1/2019)$10.00 (effective1/1/2020)$11.00 (effective1/1/2021)

$5.87 (current)$6.62 (effective1/1/2019)


California

Employers with 26 ormore employees:$11.00 (current)$12.00 (effective1/1/2019)$13.00 (effective1/1/2020)$14.00 (effective1/1/2021)$15.00 (effective1/1/2022)

Employers with 25 orfewer employees:$10.50 (current)$11.00 (effective1/1/2019)$12.00 (effective1/1/2020)$13.00 (effective1/1/2021)$14.00 (effective1/1/2022)$15.00 (effective1/1/2023)


Los Angeles:Employers with 26 ormore employees:$13.25 (current)$14.25 (effective7/1/2019)$15.00 (effective7/1/2020)$15.00 (effective7/1/2021)

Employers with 25 orfewer employees:$12.00 (current)$13.25 (effective7/1/2019)$14.25 (effective7/1/2020)$15.00 (effective7/1/2021)

San Diego:$11.50 (current)$12.00 (effective1/1/2019)

Santa Monica:Employers with 26 ormore employees:$13.25 (current)$14.25 (effective7/1/2019)$15.00 (effective7/1/2020)$15.00 (effective7/1/2021)

Employers with 25 orfewer employees:$12.00 (current)$13.25 (effective7/1/2019)

$14.25 (effective7/1/2020)$15.00 (effective7/1/2021)

Colorado




Delaware




District ofColumbia



$3.89 (current)$4.45 (effective 7/1/2019)$5.00 (effective7/1/2020)

Florida$8.25 (current)$8.46 (effective1/1/2019)



Illinois

Chicago:$12.00 (current)$13.00 (effective7/1/2019)

Cook County:$11.00 (current)$12.00 (effective7/1/2019)

Chicago:$5.75 (current)TBD (effective7/1/2019)

Cook County:$5.90 (current)TBD (effective7/1/2019)

Chicago:$6.25 (current)TBD (effective7/1/2019)

Cook County:$5.10 (current)TBD (effective7/1/2019)

Maine




$12.00 (effective1/1/2020)

$6.00 (effective1/1/2020)

$6.00 (effective1/1/2020)

Maryland

MontgomeryCounty: Employerswith 51 or moreemployees:$12.25 (current)$13.00 (effective7/1/2019)

Employers with 50 orfewer employees:$12.00 (current)$12.50 (effective7/1/2019)

MontgomeryCounty:Employers with 51 ormore employees:$8.25 (current)$9.00 (effective7/1/2019)

Employers with 50 orfewer employees:$8.50 (effective7/1/2019)

MontgomeryCounty:Employers with 51 ormore employees:$4.00 (current)(unchanged)

Employers with 50 orfewer employees:$4.00 (current)(unchanged)

Massachusetts

$11.00 (current)$12.00 (effective1/1/2019)$12.75 (effective1/1/2020)$13.50 (effective1/1/2021)$14.25 (effective1/1/2022)$15.00 (effective1/1/2023)



Michigan

$9.25 (current)

$9.45 (est. effectivelate 3/2019)*

$9.65 (effective1/1/2020)$9.87 (effective1/1/2021)$10.10 (effective1/1/2022)$10.33 (effective1/1/2023)$10.56 (effective

$5.73 (current)$5.86 (est. effectivelate 3/2019)*

The tip credit willcontinue to be thedifference betweenthe tipped minimumcash wage rate andthe applicableminimum wage rate.

$3.52 (current)$3.59 (est. effectivelate 3/2019)*

The tipped minimumcash wage is equal to38 percent of theapplicable minimumwage rate.

1/1/2024)$10.80 (effective1/1/2025)$11.04 (effective1/1/2026)$11.29 (effective1/1/2027)$11.54 (effective1/1/2028)$11.79 (effective1/1/2029)$12.05 (effective1/1/2030)

*Pursuant to amendedlegislation signed intolaw on December 14,2018; expected to gointo effect in lateMarch 2019,depending on the datethe current legislativesession ends.

Minnesota

Large Employers(annual gross sales of$500,000 or more):$9.65 (current)$9.86 (effective1/1/2019)

Small Employers(annual gross sales ofless than $500,000):$7.87 (current)$8.04 (effective1/1/2019)

Minneapolis:Large Employers(more than 100 totalemployees):$11.25 (current)


$12.25 (effective7/1/2019)$13.25 (effective7/1/2020)$14.25 (effective7/1/2021)$15.00 (effective7/1/2022)

Small Employers (100or fewer totalemployees):$10.25 (current)$11.00 (effective7/1/2019)$11.75 (effective7/1/2020)$12.50 (effective7/1/2021)$13.50 (effective7/1/2022)

Missouri


Not applicable toretail and servicebusinesses whoseannual gross salesare less than$500,000.



Montana $8.30 (current) Tip credit not allowed Tip credit not allowed

$8.50 (effective1/1/2019)

NewJersey




NewMexico

Albuquerque:$8.95 (current)$9.20 (effective1/1/2019)

Employers providinghealthcare and/orchildcare benefits ofat least $2,500:



Employers providinghealthcare and/orchildcare benefits ofat least $2,500:$2.60 (current)$2.70 (effective1/1/2019)


New York

$10.40 (current)$11.10 (effective12/31/2018)$11.80 (effective12/31/2019)$12.50 (effective12/31/2020)

Fast Food Workers:$11.75 (current)$12.75 (effective12/31/2018)$13.75 (effective12/31/2019)$14.50 (effective12/31/2020)$15.00 (effective7/1/2021)

New York City:Employers with 11 or

Hospitality IndustryCurrently variesbased on positionwithin the hospitalityindustry and type ofemployer.

Tipped ServiceEmployees:$1.75 (current)$1.85 (effective12/31/2018)

Tipped Food ServiceWorkers:$2.90 (current)$3.60 (effective12/31/2018)

New York City:Employers with 11 or

Hospitality IndustryCurrently variesbased on positionwithin the hospitalityindustry and type ofemployer.Tipped ServiceEmployees:$8.65 (current)$9.25 (effective12/31/2018)

Tipped Food ServiceWorkers:$7.50 (current)$7.50 (unchanged)(12/31/2018)

New York City:Employers with 11 ormore employees:

more employees:$13.00 (current)$15.00 (effective12/31/2018)

Employers with 10 orfewer employees:$12.00 (current)$13.50 (effective12/31/2018)$15.00 (effective12/31/2019)

Fast Food Workers(NYC):$13.50 (current)$15.00 (effective12/31/2018)

Nassau, Suffolk, andWestchesterCounties:$11.00 (current)$12.00 (effective12/31/2018)$13.00 (effective12/31/2019)$14.00 (effective12/31/2020)$15.00 (effective12/31/ 2021)

more employees:Tipped ServiceEmployees:$2.15 (current)$2.50 (effective12/31/2018)


Employers with 10 orfewer employees:Tipped ServiceEmployees:$2.00 (current)$2.25 (effective12/31/2018)


Nassau, Suffolk, andWestchesterCounties:Tipped ServiceEmployees:$1.85 (current)$2.00 (effective12/31/2018)


All service employees

Tipped ServiceEmployees:$10.85 (current)$12.50 (effective12/31/2018)TippedFood ServiceWorkers:$8.65 (current)$10.00 (effective12/31/2018)

Employers with 10 orfewer employees:Tipped ServiceEmployees:$10.00 (current)$11.25 (effective12/31/2018)


Nassau, Suffolk, andWestchesterCounties:Tipped ServiceEmployees:$9.15 (current)$10.00 (effective12/31/2018)

Tipped Food ServiceWorkers:$7.50 (current)$8.00 (effective12/31/2018)All service employeesmust meet tipthresholds foremployer to claim tip

must meet tipthresholds foremployer to claim tipcredit.

credit.

Ohio


Small Employers(annual gross receiptsof $314,000 or lessper year after1/1/2019):$7.25 (effective1/1/2019)


$4.15 (current)$4.30 (effective 1/1/2019)

Oregon

Standard MinimumWage Rate:$10.75 (current)$11.25 (effective7/1/2019) $12.00(effective 7/1/2020)$12.75 (effective7/1/2021) $13.50(effective 7/1/2022)

Portland MetroEmployers (i.e.,employers locatedwithin the urbangrowth boundary of ametropolitan servicedistrict):$12.00 (current)$12.50 (effective7/1/2019) $13.25(effective 7/1/2020)$14.00 (effective7/1/2021) $14.75(effective 7/1/2022)


Employers inNonurban Counties:$10.50 (current)$11.00 (effective7/1/2019) $11.50(effective 7/1/2020)$12.00 (effective7/1/2021) $12.50(effective 7/1/2022)

RhodeIsland




SouthDakota

$8.85 (current)

$9.10 (effective1/1/2019)

$4.42 (current)

$4.55 (effective1/1/2019)

$4.43 (current)

$4.55 (effective1/1/2019)

Vermont$10.50 (current)$10.78 (effective1/1/2019)


Applies only to“service or tippedemployees,” definedas employees of ahotel, motel, touristplace, or restaurantwho regularly earnmore than $120 permonth in tips for directand personalcustomer service.


Applies only to“service or tippedemployees,” definedas employees of ahotel, motel, touristplace, or restaurantwho regularly earnmore than $120 permonth in tips for directand personalcustomer service.

Washington

$11.50 (current)$12.00 (effective1/1/2019)$13.50 (effective


1/1/2020)

Seattle:Large Employers(more than 500employeesworldwide),regardless ofpayments toward anemployee’s medicalbenefits (no longer a2-tiered system forlarge employers as of2019):$15.45 (current)$16.00 (effective1/1/2019)

Small Employers (500or fewer employeesworldwide) who donot contribute towardsan individualemployee’s medicalbenefits:$14.00 (current)$15.00 (effective1/1/2019)$15.75 (effective1/1/2020)

Small Employers (500or fewer employeesworldwide) who dopay toward anindividual employee’smedical benefits:$11.50 (current)$12.00 (effective1/1/2019)$13.50 (effective1/1/2020)

© 2018, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

Tacoma:$12.00 (current)$12.35 (effective1/1/2019)

We will continue to monitor and update you on any developments regarding state and local minimum

wage rates.

Charles E. McDonald, III (Greenville)

Mr. McDonald is a shareholder in the Greenville office and practices primarily in

the area of employment litigation and advise and counseling. He was certified as

a specialist in employment and labor law by the Supreme Court of South

Carolina in 2006. Mr. McDonald represents a variety of employers in employment

litigation matters ranging from breach of employment contracts to cases involving

discrimination in areas of race, sex, age, and disability in both individual and

class actions. He...

ATTACHMENT B

WAGE AND HOUR AUDIT

PRELIMINARY CONSIDERATIONS

I. Issues to Consider before the Audit

A. Possible Findings from an Audit

1. The audit may confirm that employer is in full compliance with all wage and hour laws

2. The audit may lead to discovery of issues that are not violations but may lead to wage-and-hour violations (or allegations of such violations) in the future if left uncorrected

3. The audit may detect minor violations (recordkeeping issues, isolated violations)

4. The audit may uncover systemic wage-and-hour violations that require correction and payment of back wages.

B. Reasons to Conduct a Wage-and-Hour Audit

1. Early detection of wage-and-hour violations, allowing employers to address such issues in advance.

2. Detection of inefficient or ill-advised practices that could lead to wage-and-hour violations

3. Detection of employee complaints (even if those complaints do not constitute a wage-and-hour violation)

4. As evidence in subsequent litigation (1) to rebut allegations of willfulness, and (2) to support good faith defense.

C. Reasons to Rely on Outside Counsel to Conduct a Wage-and-Hour Audit

1. Independent analysis from third party with expertise in wage-and-hour law

2. Results of audit may be protected from by attorney-client privilege

3. May allow employer to rely on the good faith defense in litigation to eliminate liquidated damages

ATTACHMENT B

4. Explain that pleading good faith defense in subsequent litigation may result in waiver of attorney-client privilege

II. Scope of Audit

A. Which issues will be evaluated?

1. Do you need to pay particular attention to any specific issues? Consider making a list of the issues and payroll practices that you’ll want to cover.

2. High risk areas include:

a. Exempt employee classifications b. Independent contractor classifications c. Inclusion of bonuses in calculating employees’ regular rates of pay d. Employee timekeeping/recordkeeping practices e. Meal and rest breaks f. Hospitality Industry: Tip credit

B. Which worksites/facilities/departments will be covered in the audit?

C. Which employees/positions will be covered in the audit?

D. Records to be Reviewed

1. Written Position/Job Descriptions

2. Payroll Records (Pay stubs, etc.)

3. Timekeeping Records (Time Sheets, Time Clock Punch Cards or Reports)

4. Personnel and Independent Contractor Records

5. Security Records Showing Employees’ Entry and Exit Times

6. Computer Login Records (showing when employees logged onto computer, e-mail, intranet, etc.)

7. Collective bargaining agreements

8. Policies, written procedures, or employee training materials addressing:

a. Compensation/Payroll b. Timekeeping/Time Worked c. Overtime pay

ATTACHMENT B

d. Overtime work (e.g., requiring authorization before working overtime)

e. Meal and Rest breaks f. Holidays, sick leave, vacation, PTO, etc. g. Deductions from pay h. Expense reimbursement

E. Interviews to be Conducted

1. Evaluate the extent to which you need to conduct interviews with exempt and non-exempt employees.

2. Determine how best to conduct interviews while minimizing operational disruptions.

3. Determine how the interviews will be conducted and what questions you’ll be asking.

1

The Roller-Coaster Ride of Wage and Hour Developments

Presented by

Cynthia A. Bremer (Minneapolis)

Robert R. Roginson (Los Angeles)

Look Familiar?

2

Agenda

Minimum Wage

DOL Opinion Letters

Regulatory Update

Litigation Trends

Audits

Best Practices

Minimum Wage

Federal v. State

Several State Increases in 2019

Several More State Increases on the Horizon

3

18 1819

14

3

0

2

4

6

8

10

12

14

16

18

20

2019 2018 2017 2016 2015

# of States Beginning 2019 with New Minimum Wage*

2019 State Minimum Wage Changes

4

Current Minimum Wage

States with Future Enacted Minimum Wage Increases

5

U.S. Secretary of Labor Eugene Scalia

Opinion Letters

Issued by DOL

– Many in past years

– Several in 2019

Various Topics

Some Industry-Specific

6

2019 Opinion Letters

Permissible rounding practices

Service provider – virtual marketplace: Employee or independent contractor?

DOL Fall 2019 Regulatory Agenda

AMBITIOUS

Regular Rate

7

Overtime Regulations

New Exempt Level: $684/week, $35,568/year

New Highly Compensated Employee Level: $107,432

https://www.dol.gov/whd/overtime2019/index.htm

FLSA Litigation

5,925

6,380 6,234

5,7235,949

3,479

2014 2015 2016 2017 2018 2019*

FLSA Cases in Federal District Court2014-2019*

8

FLSA Litigation

Health Care, 1,176

Retail, 1,136

Construction, 1,123

Business Services (Staffing, Sanitary,

Accounting, Advertising, etc), 1,120

Services (Architecural, Legal, Social, etc), 1,053

TOP 5 INDUSTRIES WITH MOST FLSA FILINGS2014-2019

2018 FLSA Case Filings in Federal District Courts

In 2018, nearly 30% of all FLSA cases filed in federal district courts were filed in New York.

9

2019 FLSA Case Filings in Federal District Courts

In 2019, more than 25% of all FLSA cases filed in federal courts have been filed in New York.

FLSA Class/Collective Litigation

2,831

3,199 3,253

2,972 3,046

1,816

2014 2015 2016 2017 2018 2019

FLSA Class / Collective Actions Filed in Federal District Courts2014-2019

10

FLSA Class/Collective Litigation

677

663

643

633

600

560 580 600 620 640 660 680 700

Health Care

Retail

Construction

Leisure (Restaurants, Hotels, etc)

Business Services(Staffing, Sanitary,

Accounting, Advertising, etc)

Top 5 Industries with FLSA Class/Collective Actions2014-2019

2019 FLSA Class/Collective Actions Filed in Federal District Courts

In 2019, 32% of all FLSA class and collective actions were filed in New York.

11

Audits

DOL vs. Internal

Compliance vs. Restitution

Employee Communication

Avoiding Litigation

2018: Record Year DOL Back Wages Recovered

$240 Million

$245Million

$266Million

$270Million

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

$304Million

12

FY 2018 DOL Back Wages Recovery

$835,000/day

DOL back wage recovery averaged

$1,150/employee

DOL Back Wage Recovery

$240Million

$266Million

$304Million

22,557

20,522

19,534

18,000

18,500

19,000

19,500

20,000

20,500

21,000

21,500

22,000

22,500

23,000

0

50000000

100000000

150000000

200000000

250000000

300000000

350000000

FY 2014 FY 2015 FY 2016 FY 2017 FY 2018

Back Wages Recovered Complaints

Number of complaints decreasing –Recovery Increasing

13

The Roller-Coaster Ride of Wage and Hour Developments

Presented by

Cynthia A. Bremer (Minneapolis)

Robert R. Roginson (Los Angeles)

Cynthia A. BremerO�ce Managing Shareholder || Minneapolis

Cynthia Bremer is the managing shareholder of the Minneapolis o�ce.

Cynthia has extensive experience in employment law and complex

litigation ma�ers. While Cynthia’s primary focus has been employment

litigation defense in federal and state courts throughout the Midwest,

including class and collective actions, Cynthia also advises companies

on employment law issues involving past and present employees.

Further, Cynthia has litigated numerous restrictive covenants suits,

including seeking and defending preliminary injunctions and merit

proceedings. In addition to extensive litigation and advising experience

in employment law, Cynthia’s experience also includes securities

arbitrations, commercial and civil litigation, and intellectual proper�

litigation.

Prior to entering private practice in Minnesota in ��, Cynthia was in

private practice in North Dakota. While in North Dakota, Cynthia was

also a Special Assistant A�orney General for the State of North Dakota

and represented the State in dozens of administrative hearings and

appeals.

Cynthia started her legal career as an Assistant A�orney General for the

State of Missouri, assigned to the Complex Litigation group. Her cases

as an Assistant A�orney General included jury and bench trials,

petitions for certiorari to the U.S. Supreme Court on constitutional law

issues, and key involvement in one of the largest civil RICO cases ever

brought in Missouri. Cynthia was also appointed as a Special Assistant

A�orney General for the prosecution of election law violations.

In addition to being very involved within the legal and business

communities, Cynthia is a frequent seminar presenter, addressing a

varie� of human resource and employment law issues.

https://ogletree.com/locations/minneapolis

tel:+16123366868

mailto:[email protected]

https://ogletree.com/wp/wp-admin/admin-post.php?action=get_vcard&pid=3697&name=cynthia-a-bremer

https://ogletree.com/

Robert R. RoginsonManaging Shareholder || Los Angeles

Robert Roginson is the Managing Shareholder of the Los Angeles O�ce

and Chair of the Firm’s Trucking and Logistics Industry Group. His

practice focuses on all aspects of California and federal wage and hour

and pay practice counseling and class action defense.

Mr. Roginson represents employers in administrative agency

investigations and state and federal class action litigation. Mr. Roginson

has defended dozens of employers, motor carriers, and other companies

in class actions and PAGA lawsuits involving a varie� of allegations,

including worker misclassification, meal and rest period violations,

reimbursement claims, o�-the-clock claims, and record keeping

violations. He also counsels employers and companies on California

and federal wage and hour and pay practice laws, federal preemption

ma�ers, prevailing wage laws, project labor agreements (PLAs), labor

relations and union ma�ers. Mr. Roginson is regarded by clients as a

trusted strategic advisor focused on developing e�ective and practical

solutions to complex legal employment challenges. He is adept at

developing compliant policies and practices to avoid and minimize

litigation.

From November �� until March ��, Mr. Roginson served as Chief

Counsel for the California Division of Labor Standards Enforcement

(DLSE). Appointed by Governor Arnold Schwarzene�er, Mr. Roginson

represented and advised the California Labor Commissioner and her

sta� in all aspects of enforcement and interpretation of California’s

labor and wage/hour laws, licensing requirements, and retaliation

statutes. He also managed and directed the Division’s litigation and

handled ma�ers involving meal and rest period and wage and hour

compliance and enforcement, public works and prevailing wage

requirements, the Talent Agency Act, and the Private A�orney General

Act (PAGA). As Chief Counsel, Mr. Roginson authored the DLSE amicus

brief in the landmark California Supreme Court Brinker case, and his

brief set forth the standard adopted by the Court for what constitutes

lawfully providing a meal period under California law. Mr. Roginson

also authored several significant DLSE opinion le�ers clari�ing and

explaining California law. �ey include opinion le�ers a�rming

California’s on-du� meal period requirements, a�rming an employer’s

right to take deductions for vacation and sick time for partial-day

absences for exempt employees, a�rming an employer’s right to

implement proportionate salary and work schedule reductions for

exempt employees, authorizing the use of debit pay cards and

convenience checks, and approving temporary alternative workweek

schedules. Mr. Roginson has also served as an expert witness and

consultant in several wage and hour and public works ma�ers.

Mr. Roginson focuses a significant portion of his practice to counseling

and representing contractors, developers, and companies regarding state

and federal prevailing wage laws, including the Service Contract Act

https://ogletree.com/locations/los-angeles

tel:+12134575873

mailto:[email protected]

https://ogletree.com/wp/wp-admin/admin-post.php?action=get_vcard&pid=4414&name=robert-r-roginson

https://ogletree.com/

and Davis-Bacon Act. Mr. Roginson counsels national employers on

steps to achieve multi-state compliance with state prevailing wage laws.

Mr. Roginson regularly defends contractors and subcontractors against

DLSE Civil Wage and Penal� Assessments, seeks public works

coverage determinations, and analyzes and counsels clients on complex

public works coverage issues. While Chief Counsel of the DLSE, Mr.

Roginson co-wrote and edited the DLSE’s Public Works Manual. Before

becoming an a�orney, Mr. Roginson worked in the industrial relations

department for a multi-employer construction trade where he

represented construction contractors in labor grievance and arbitration

ma�ers in addition to the negotiation of the Southern California

building trades master labor agreements.

the roller-coaster ride of wage and hour developments€¦ · wage and hour developments ... nash,...

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