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Lawyer to Lawyer Newsletter
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April 2016
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Dedicated to providing fellow lawyers, as well as accountants and other business advisers, with the latest news on the developing law of the workplace, written by nationally recognized lawyers who are committed to representing employers exclusively in matters of labor, employment, immigration and human resources law.
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From the Desk of James B. Sherman, President/CEO:
 Drastic Changes from DOL's Final Rule on Overtime Pose BIG TROUBLE for Most Employers in 2016!
What do you get when the U.S. Department of Labor abruptly more than doubles the minimum salary employees must be paid in order to qualify as exempt from the overtime requirements of the Fair Labor Standards Act (FLSA)? For starters, you impact many millions of employees (an estimated 4-5 million). Employers are faced with the dilemma of choosing either to: (1) increase salaries of affected employees to the new minimum - increases of up to 100% in some cases - in order to keep them exempt from overtime; or (2) reclassify workers from exempt to non-exempt status, thus making them eligible for overtime pay. So what's the big deal? The Obama administration claims
the final rule, which takes effect on December 1, 2016, will result in big pay hikes for millions of employees whose salaries currently fall below the new $47,476 annualized minimum exempt salary level
. The administration's theory is that employees will receive a DOL imposed salary hike, or lots of extra pay in the form of overtime pay at the FLSA required rate of 1½ times the regular rate for all hours worked over 40 hours in a workweek. To be sure, employers who fail to assess the impact of the sweeping changes under the DOL's new rule, will likely see huge spikes in payroll costs before the year is out; that, or lawsuits from plaintiff wage and hour lawyers who are just licking their chops at the many prospects for claims against unsuspecting employers. The potential impact to the bottom line may be enough to put some employers out of business. Particularly hard hit are retail, hospitality, healthcare and non-profit organizations, although employers in manufacturing, transportation, food and many other industries will no doubt be affected as well. Wessels Sherman aims to help employers deal with these changes.
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The NLRB and Now the Seventh Circuit Appellate Court in Chicago, Threaten Arbitration Agreements That Prevent Class Action Lawsuits by Employees
The use of arbitration as a means to resolve disputes that otherwise would proceed in court, has grown exponentially over the past decade. Besides the cost savings over litigation (at least in theory), one of the biggest reasons employers have turned to arbitration is the ability to include "class waivers" in such agreements. A class waiver clause in an arbitration agreement requires the employee to take his or her dispute through arbitration alone, and forego class or collective claims with other employees. These agreements have withstood challenges in court brought under the Federal Arbitration Act (FAA). More recently, however, the National Labor Relations Board (NLRB) has decided to get involved. In its 2012 decision in D. R. Horton, the NLRB held that the right of employees to join together for mutual aid and protection - "concerted activities" protected by federal labor law - includes their right to pursue class-action arbitration or lawsuits outside the realm of the National Labor Relations Act (NLRA). This far-reaching decision was promptly shot down by the U.S. Court of Appeals for the 5th Circuit, in New Orleans. However, on May 26, 2016, the 7th Circuit Court of Appeals in Chicago, adopted the NLRB's position in upholding its decision in Epic Systems Corp. In doing so, the 7th Circuit gave broad deference to the NLRB's opinion even though the Board was essentially straying far afield from labor matters. For example, the decision would ban class waivers of everything from wage and hour to discrimination and harassment claims.
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EEOC, Department of Justice Make Transgender Equality a Priority
Discrimination against transgender individuals in their workplaces, as well as in the public, is an issue many companies are currently dealing with. Especially with the issue of bathroom access, many employers struggle to balance the privacy concerns of cisgender employees, some of whom may be wary about sharing restrooms, with the rights of transgender employees, for whom using a restroom that conforms with their gender identity is an important aspect of their transition. Although Title VII of the Civil Rights Act of 1964 does not explicitly outlaw discrimination on the basis of gender identity, both the EEOC and the Department of Justice have taken the position that companies and laws that restrict transgender individuals' access to public restrooms such as North Carolina's controversial bathroom law, violate the law. North Carolina and the Department of Justice have both filed federal lawsuits to determine whether the law is discriminatory.
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Challenges to the DOL's Persuader Rule
Treating workers as non-employee, "independent contractors" can land employers in trouble with a wide variety of federal and state government agencies if the workers are determined to be employees under any number of laws, each with its own definition of who is an "employee." Misclassifying employees as independent contractors typically means that no employment taxes are withheld, no unemployment taxes are remitted worker's compensation and group health insurance is not provided, among other liabilities. Consequently, when federal or state agencies such as the IRS or Minnesota Department of Employment and Economic Development challenge employers using independent contractors through an audit or in response to a worker's complaint, the liability can be massive.
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Recent Minnesota and U.S. Supreme Court Decisions Show How Employers Can Unintentionally Increase the Time an Employee Has to Pursue a Claim for Workplace Discrimination, Harassment, or Retaliation
Employers often want to know when enough time has passed that they are safe from potential lawsuits or charges of discrimination, harassment and/or retaliation. Under federal laws such as Title VII, the ADA, or ADEA, employees generally have 300 days (i.e. roughly 10 months) to file a charge with the EEOC. However, the Minnesota Human Rights Act gives employees one full year to bring such claims under state law. Unfortunately, these already-ample limitation periods for employees to sue their employers may be extended even longer. How? Two recent court decisions - one from the Minnesota Appellate Court and the other from the U.S. Supreme Court - demonstrate how certain actions employers may unwittingly take, in good faith, to informally address complaints before such claims are pursued can wind up extending the statutes of limitation for workplace lawsuits.
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Final DOL Overtime Exemption Rule Webinar
June 2nd 1:00 - 2:00 PM
Presented by Wessels Sherman shareholders
James B. Sherman, Esq. and Sean F. Darke, Esq.
In this webinar, we discuss:
- Deciphering the new 2016 White Collar Exemption Regulations that radically alter exempt/non-exempt salary criteria;
- Understanding how and to what extent, non-discretionary and incentive payments be credited toward a portion of the new minimum salary;
- Evaluating the DOL's "catch-up" option; and
- Special issues concerning automatic adjustments to the minimum salary, every 3 years.
Cost: $100
Location: ONLINE
1.00 CLE Credit has been approved in WI, IL, IA
1.00 CLE Credit has been applied for in MN
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About Us
We regularly work with other lawyers, accountants and business advisers as a trusted resource for their clients, whether as co-counsel, local counsel (from any of our 5 offices in MN, WI, IL or IA), or referrals in our concentrated area of practice. Your client relationships as a referring professional are highly respected. Our goal is to provide your clients with exceptional and cost conscious representation in our concentrated area of practice.
Sincerely,
James B. Sherman, Esq.
Wessels Sherman
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Contact James Sherman at:
(952) 746-1700
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