Tag: exemption

DEPARTMENT OF LABOR EXPANDS WHITE COLLAR OVERTIME PROTECTIONS

On May 18, 2016, President Obama announced that the U.S. Department of Labor published its final rule updating overtime regulations affecting white collar, salaried workers.  The new rule focuses on increasing the salary and compensation levels triggering the executive, administrative and professional workers exemption.

Under the Fair Labor Standards Act, employees are required to be paid minimum wage and overtime at the rate of one-and-one-half times their regular rate of pay for every hour worked in excess of 40 hours per workweek.  However, employees employed as bona fide executive, administrative and professional employees are exempt from both minimum wage and overtime pay.  In order to qualify for the exemption, employees must meet certain tests regarding their job duties, and prior to this new rule, also be paid a salary of not less than $455.00 per week ($23,660 per year).  For example, if an employee met the “duties” requirement to qualify for the exemption, but made more than $455.00 per week, they would not be entitled to overtime pay.  This new rule, however, increases the salary threshold to $913.00 per week ($47,476 annually).

This update extends overtime protection to over 4 million workers.  This means that workers will either gain new overtime protections or an employer may raise their salary to the new salary threshold in order to maintain their exempt status.  The effective date of the final rule is December 1, 2016.

THIRD CIRCUIT RULES THAT ARMORED CAR DRIVERS ENTITLED TO OVERTIME PAY UNDER FLSA

In a precedential ruling, the U.S. Court of Appeals for the Third Circuit affirmed the lower court’s ruling that armored vehicle driver, Ashley McMaster, was entitled to overtime pay under the Fair Labor Standards Act (“FLSA”). The Court held that the motor carrier exemption, which exempted certain drivers of commercial vehicles from overtime pay laws, did not apply to truck drivers, such as McMaster, who spent all or part of their time operating vehicles under 10,000 pounds.

The Court reasoned that the Corrections Act of 2008, which revised the FLSA, applied to the instant case. The Corrections Act states that the motor carrier exemption does not apply to drivers, driver’s helpers, mechanics, and loaders who spend all or part of their workweek operating certain vehicles weighing under 10,000 pounds. As such, the Court ruled that since McMaster spent approximately 51 percent of her time driving vehicles more than 10,000 pounds and 49 percent driving vehicles under that weight, she fell within the purview of the Corrections Act and was entitled to overtime pay for work performed in excess of 40 hours per week.

Defendant, Eastern Armored Services, Inc., argued that certain district courts have held that subjecting truck drivers to the Motor Carrier Act when they drive vehicles over 10,000 pounds and also to the FLSA when they drive trucks that weigh less “would require burdensome record-keeping, create confusion and give rise to mistakes and disputes.” However, the Court stated that this policy statement cannot overcome the “express change to the statutory scheme.” The case was remanded back to the district court for assessment of wages owed to McMaster.

This decision is significant as there have been conflicting decisions amongst district courts regarding whether overtime pay is required to be paid to commercial drivers who spend part of their time operating a noncommercial vehicle, instead of a commercial vehicle.

The case is Ashley McMaster v. Eastern Armored Services, Inc.

CAPITAL ONE AGREES TO SETTLE MANAGERS’ OVERTIME CASE FOR $3 MILLION

Last Friday, a New York federal judge gave preliminary approval to a $3 million settlement of a lawsuit commenced by assistant branch managers against Capital One NA for unpaid overtime.   Assistant branch managers sued the bank in March 2014 alleging that the bank violated the Fair Labor Standards Act and wage and hour laws in New York, New Jersey and Maryland by classifying them as exempt employees under state and federal law.  A hearing has been set for November 14, 2014 to make a final determination, determine the amount of attorneys’ fees and hear any objections.

It is common for companies to falsely classify managers and assistant managers as “exempt” employees under the executive exemption under both state and federal law in order to escape paying overtime.  However, a close review of the actual job duties often show, as in this case, that the “managers” are just regular workers who are entitled to overtime pay.   Employers frequently give employee fancy job titles and pay them on a salary basis to make employees mistakenly believe they are not entitled to over time pay.

PRESIDENT OBAMA ISSUES EXECUTIVE ORDER REGARDING EXPANSION OF OVERTIME PAY

On March 13, 2014, President Obama issued an executive order requesting that the U.S. Labor Department issue regulations that mandate overtime pay to employees who otherwise would be exempt under the federal Fair Labor Standards Act (“FLSA”).  The administration hopes to qualify employees, such as fast-food managers, office workers and other employees that are currently classified as exempt white-collar employees, for overtime pay under the FLSA.  Generally, these workers are exempt from the overtime requirements of the FLSA because they are deemed to be “administrative, executive or professionals.”

The proposed changes will likely be subject to public comment before final approval by the Labor Department, and may result in modifications of the original proposal.