HR Morning News, Page 23 Category

The DOL is changing the compensation game. It’s rewriting the FLSA’s overtime exemption rules in an effort to make more employees overtime-eligible. What’s this going to cost employers? 

Oxford Economics, a global analytics, forecasting and advisory firm, has done the math.

And based on the one thing we know for sure about the soon-to-be-released revisions to the FLSA — that the minimum salary threshold to be overtime-exempt is going to increase from $455 per week ($23,600 per year) — here’s what Oxford Economics has come up with:

• If the salary threshold increases to $610 per week ($31,700 per year), it’ll cost businesses $297 million nationwide.
• If the threshold rises to $808 per week ($42,000 per year), it’ll cost businesses $648 million.
• If the threshold climbs to a whopping $984 per week ($51,000), it’ll cost businesses $874 million.

And all of that is just in administrative costs — not actual increases to workers’ take-home pay.

In a report commissioned by the National Retail Federation, Oxford Economics said it’s unrealistic to think employers will do nothing to offset the increased costs of having more employees suddenly overtime-eligible.

In its report, the forecasting firm said that the action businesses are most likely to take is to initiate administrative changes to make “significant adjustments in the structure of their workplaces to compensate for the billions of dollars of added wages the new regulations would impose.”

Oxford Economics predicts that under this scenario, employers would “adjust compensation schemes to ensure they do not absorb additional labor costs.”

To do this, the firm predicts employers would:

• lower hourly rates of pay
• cut employee bonuses and benefits so they can increase base salaries above the new threshold, and
• reduce some workers’ hours to fewer than 40 per week in order to avoid paying overtime.

All of these actions would thus leave total pay largely unchanged.

But taking these actions would result in the expenses outlined above.

Oxford Economic drew these conclusions after analyzing recent academic research and interviewing retail and restaurant industry insiders.

The cost if employers don’t act

Not taking administrative actions to offset the effects of the increase to the overtime threshold would cost employers far more.

Oxford Economics’ predictions:

• Taking no action to offset an increase in the threshold to $610 per week would make roughly 800,000 more workers in the retail and restaurant industries overtime-eligible and would cost companies $1.1 billion each year.
• Taking no action to offset an increase to $808 per week would make 1.7 million more workers overtime-eligible and cost businesses $5.2 billion.
• Taking no action to offset an increase to $984 per week would make 2.2 million more workers overtime-eligible and cost employers $9.5 billion.

The most likely scenario

We’ll know any day now where the DOL wants to set the new threshold. The Secretary of Labor Thomas Perez recently announced that the proposed FLSA rule changes have been submitted to the federal Office of Management and Budget for review.

Once approved by that office, we’ll have our first look at what they are as they’re opened up for public comment.

But all the clues coming from Capitol Hill seem to indicate that the new salary threshold will land right in the middle of these figures at about $808 per week or $42,000 per year.

The infographic below shows you in more detail what kind of an affect that would have on employers and the workforce.

One government agency has just taken the wraps off a new way its officials intend to enforce employment laws. If this tactic spreads, it could be very costly for employers. 

New York City employers are now faced with the possibility of having government officials poking around their hiring practices disguised as job applicants.

Mayor Bill de Blasio (D) just enacted a new law (Bill 690-A) that requires the city’s Human Rights Commission to conducted “matched-pair” testing of at least five employers’ hiring processes between Oct. 1, 2015 and Sept. 30, 2016 — although there’s no limit to how many of these tests the commission can conduct.

The “matched-pair” testing will work like this: The commission will have two “testers” apply for, or inquire about, the same position at the same company. The testers will have similar qualification, but the major difference will be that one will have a characteristic protected by the city’s Human Rights Law.

The protected characteristic may be, among other things, the person’s:

• race
• color
• creed
• age
• national origin
• alienage or citizenship status
• gender/gender identity
• sexual orientation
• disability
• marital status
• partnership status
• criminal history
• unemployment status, and/or
• status as a victim of domestic violence, stalking or sex offenses.

The testers will be required to report any incidents of discrimination to the commission’s Law Enforcement Bureau.

More aggressive approach

While it’s not uncommon for government enforcement agencies like New York City’s Human Rights Commission to use investigators, their primary duties up until now have been to investigate complaints filed by aggrieved individuals.

This new action marks one of the first times an agency will actively seek out discrimination on its own, and this massive shift in mindset should have employers worried.

These investigations will be conducted without provocation or warning, and if they turn up significant employment law violations, you can bet this is a model that will be adopted by other government agencies across the U.S..

Caroline Berdzik, an attorney who chairs the employment and healthcare practice at Goldberg Segalla, told Crain’s New York Business, “This agency is supposed to enforce discrimination law, not create new actions. … This is going to open a whole can of worms.”

Other law firms, like Jackson Lewis P.C., are saying that while employers should obviously be doing everything they can to prevent discrimination in hiring and employment actions already, they must how approach every applicant as if he or she’s one of the investigators.

We could write tens of thousands of words on how the job interview process has changed since the dawn of employment. Instead, here’s what the evolution looked like. 

Video interview software maker Spark Hire’s created the following witty infographic to depict just how the job interview process has evolved as humans have evolved.

It also provides a look at what the next stage in the evolutionary process is likely to be.

Some points of note on mankind’s past:

• In the 18th and 19th centuries, professions were passed on from generation to generation, eliminating the need for the interview process altogether.
• In 1917, the first personality test was created to evaluate World War I solders. A similar test was soon adopted by businesses.
• In 1921, Thomas Edison created a test to evaluate job seekers’ knowledge, and it was leaked to the New York Times (test your knowledge using some of the questions listed on the infographic below).
• In 1969, the Internet is born, although it’s not released to the public in its current form until 1991.
• In 2003, LinkedIn is born.
• Two years later, YouTube is born.

Predictions for the future:

• Smart watches will allow face-to-fact interviews to be conducted on the go.
• Short-form interviews, lasting only a matter of seconds, will become popular.
• Holograms will take the place of in-person, face-to-face interviews.

For more on our past — and our future — check out Spark Hire’s graphic below:

Source: Spark Hire

Quick tip: An oral complaint about an alleged employment law violation is just as valid as an official, written one.  

We recently saw confirmation of that in Greathouse v. JHS Security Inc. A look the the case:

Darnell Greathouse worked as a security guard for JHS Security Inc. Greathouse His boss was Melvin Wilcox, president and part-owner of JHS. During his employment with JHS, Greathouse was, according to court papers, the victim of a number of improper employment practices, including non-payment and late payment of wages, and improper payroll deductions.

Although Wilcox repeatedly told Greathouse that he would receive his outstanding paychecks, the checks never arrived.

Finally, Greathouse complained to Wilcox that he had not been paid in several months. Wilcox responded, “I’ll pay you when I feel like it,” and, without warning, drew a gun and pointed it at Greathouse.

Greathouse took that encounter as a signal that his employment with JHS was at an end.

Invalid complaint?

Greathouse later filed a complaint in the U.S. District Court claiming various FLSA and New York State law violations, including missing and improperly reduced wages and retaliation for complaining about not getting paid.

After neither party appeared or filed an answer, the clerk of court entered defaults against both. The District Court then referred the matter to a magistrate judge to evaluate Greathouse’s claims for damages.

The Magistrate Judge recommendied that the district court enter a damages award in the total amount of $30,658.50, plus prejudgment interest, for Greathouse’s claims for unpaid overtime, unpaid wages, improper deductions, and liquidated damages.

As to the retaliation claim, however, the Magistrate Judge concluded that since Greathouse had not filed a complaint with any government agency or other prosecutorial authority — but had merely confronted his employer in person to demand his missing wages – his FLSA complaint was invalid.

The district court agreed.

Bowing to the High Court

But things were different when the case got to federal appeals court. There, the judges — which had previously held that an oral complaint was valid only if it was made directly to a government agency — bowed to the judgment of the Supreme Court ruling in Kasten v. Saint Cobainin in 2011.

In that case, the court held that an oral complaint is protected by FLSA’s anti-retaliation provision if the complaint is “sufficiently clear and detailed for a reasonable employer to understand it, in light of both content and context, as an assertion of rights protected by the statute and a call for their protection.”

And in the Greathouse case, the complaint fit the criteria.  So the case is remanded to the district court to hear Greathouse’s lawsuit for retaliation.

Ignore oral complaints at your peril

The takeaway from this decision? Here’s some guidance from attorneys  Esteban Shardonofsky and Howard M. Wexler from Seyfarth Shaw:

Following Kasten, and now Greathouse, it is even more important for employers to be sensitive to employees’ intra-company oral as well as written complaints regarding wages, overtime, and hours worked.  Managers and supervisors should be trained to recognize complaints under the FLSA and corresponding state laws and to respond to them appropriately. 

Whether an internal complaint rises to the level of protected activity is a context-specific inquiry.  While the courts continue to assert that there are no “magic words” that an employee must use to assert a complaint and that generalized statements or complaints regarding pay practices may not rise to the level of protected activity under the FLSA (or even under the National Labor Relations Act), this should not embolden employers to ignore vague complaints. 

After all, although you may believe today that a particular complaint is mere “venting” or “blowing off steam,” a court or a jury may later disagree.  Of course, following an employee’s complaint, employers need to ensure that any adverse action is based on legitimate, non-retaliatory reasons and not in response to the complaint.